Khaled and Secretary, Department of Family and Community Services

[2005] AATA 41

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 41

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No: N2004/909

GENERAL ADMINISTRATIVE DIVISION		)
Re		KASSIEN KHALED

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES 

Respondent

DECISION

Tribunal Robin Hunt, Senior Member

Date18 January 2005

PlaceSydney

Decision The Tribunal affirms the decision of the Social Security Appeals Tribunal that the compensation preclusion period from 2 June 1999 to 9 May 2000 applies and that Centrelink properly recovered the amount of $9,272.17 from the Applicant.

[Sgd]Robin Hunt

Senior Member

CATCHWORDS

SOCIAL SECURITY – Disability support pension – affected by compensation payment – lump sum – terms of settlement by consent – compensation preclusion period - preclusion period applies to disability support pension – no special circumstances

LEGISLATION

Social Security Act 1991 s 17, 1170 and 1184K

CASE LAW

Secretary, Department of Family and Community Services v Chamberlain (2002) 68 ALD 357

Re Secretary, Department of Family and Community Services and Bolton (1989) 18 ALD 464

Re Beadle and Director of General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

18 January 2005 Robin Hunt, Senior Member         

summary

1         Mr Khaled, the Applicant, was already receiving a disability support pension when he was further injured in a car accident on 2 June 1999.  Mr Khaled also had been working casually as a part time taxi driver when he had the accident. Mr Khaled sought compensation from the other driver and his insurer and the parties settled the claim on 8 March 2004 for $63,000 inclusive of costs and out of pocket expenses. The terms of settlement before the Tribunal and correspondence from Mr Khaled’s solicitor to Centrelink show that there was an economic loss component in the settlement. The amount of the economic loss component was not specified in the terms. When Centrelink received notification of the settlement from the insurer’s solicitors as required, Centrelink notified Mr Khaled that he must repay $9,272.17 in consequence of the settlement having taken place. Centrelink recovered this amount from the insurer prior to Mr Khaled receiving the balance and Mr Khaled sought recovery. The Tribunal has affirmed the decision of the SSAT that the compensation preclusion period from 2 June 1999 to 9 May 2000 applies and that Centrelink properly recovered the amount of $9,272.17.

issue

2         The matters for the Tribunal’s decision were whether a compensation preclusion period applied and, if so, did Centrelink correctly calculate the amount of compensation it was entitled to recover. The Tribunal further considered whether any special circumstances affected Mr Khaled which would allow an adjustment in his favour.

evidence

3.       Mr Khaled told the Tribunal at a hearing that he believed there was no component of economic loss in the terms of settlement he had agreed to. As well, Mr Khaled said he had been taking pethidine when he agreed to the terms and was not really aware of what he was doing. He said he had felt pressured into settling but could not afford an appeal.

4.        In addition, Mr Khaled told the Tribunal that he was suffering economic hardship. He could no longer work as a taxi driver because he had to wear a leg brace. He said that in May 2001 he had undergone a knee reconstruction and had no income since apart from that received from Centrelink. He had used the compensation amount to pay out debts. He produced a bundle of documents showing various bills and expenses he had incurred in 2004. Mr Khaled could not recall the exact amount of debts covered by his compensation payment but said it had all been used up. He said his solicitors had paid his medical bills but was unsure what was deducted from the settlement monies. He had borrowed some money to pay late bills.

5.        Under questioning by the Respondent’s counsel, Mr Khaled said that he and his wife had purchased a home for themselves and their four children. They had previously lived in a house provided by the Department of Housing but found it inadequate for their needs. To make the purchase, they had borrowed $20,000 from relatives and $290,000 from the Commonwealth Bank. He later explained that the house price was $222,000 and there was a redraw facility. Mr Khaled said “the kids’ money goes straight to the Bank”. Mr Khaled said he had put about $17,000 into the mortgage from his own pocket and made up the difference with borrowings. Mr Khaled’s evidence was somewhat confused but he said that mortgage repayments were made from Centrelink payments to his wife for their children.

5.        Mr Khaled said they purchased the house in June 2004. A statement from the Commonwealth Bank showed an account in the name of his daughter, Soad Khaled, between 23 April 2004 and 20 October 2004. The statement showed an opening balance of $19,922.38 with an amount of $19,970 withdrawn on 3 June 2004. Mr Khaled gave evidence that he had borrowed $5,000 each from four of his relatives in order to meet the Bank’s requirement that he put around $48,000 or $49,000 into the purchase price of the house. Mr Khaled said he owed four brothers-in-law $5,000 each still. During the course of the hearing, two men arrived and handed Mr Khaled a receipt for $10,000 dated the day of the hearing, 24 November 2004. Mr Khaled told the Tribunal that the men were his father and brother and that they were unable to stay long enough to give oral evidence. The other relatives who had lent him money were also unavailable. Mr Khaled said his brother-in-law had drawn up the receipt for $10,000 during a break in the hearing when Mr Khaled made a telephone call. Mr Khaled produced the receipt to the Tribunal

6.         Mr Khaled also told the Tribunal that he and his family had been so short of funds on some occasions that they had approached the Salvation Army for assistance. He said he had visited them twice in 2004 and about 9 times in the last 3 years. They had given him financial assistance. Among the documents Mr Khaled produced were bills for energy supplies to the family’s house, medical bills, a letter from the NSW Department of Housing dated 29 May 2004 concerning a debt of $247 and an invoice for NRMA membership requiring payment by 9 June 2004. Mr Khaled said he owned a Nissan motor vehicle. He gave evidence that the bill from the Department of Housing was for a handrail and that he had since paid this debt. He believed that his circumstances warranted the return of the money received by Centrelink out of the settlement.

legislation

7 Section 17(2) of the Act defines compensation to include payment of damages. Pursuant to section 17(3) of the Act the compensation part of a lump sum compensation payment is 50% if the claim is settled. The term “lump sum” is not defined but is not at issue in this case.

8. Section 1170 contains provisions dealing with the effect of receipt of a lump sum compensation payment on pension entitlements. Persons may have to repay an amount where both compensation and the pension have been received for a period. A preclusion period may apply to certain social security payments. Subsection 1170(3), as amended, provides, in part:

“1170(3) … the lump sum preclusion period is the period that:

(a) begins on the day on which the loss of earnings or loss of capacity to earn     began; and

(b) ends at the end of the number of weeks worked out under subsections (4) and  (5).”

9. The Secretary is empowered to disregard some payments if he or she thinks it is appropriate in some cases. Section 1184K(1) gives relief as follows:

“For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:

(a) not having been made; or

(b) not liable to be made;

if the Secretary thinks it is appropriate to do so in the special circumstances of the case.”

analysis

10.      Mr Khaled has not disputed the method of calculation of the preclusion period assessed by the Secretary. He has contested whether a preclusion period should apply at all on the basis that there may not have been any provision for economic loss in the terms of settlement. He has further claimed that he should be given special consideration for financial hardship.

11. As to whether the terms of settlement agreed in his case contained provision for economic loss, it is clear from Mr Khaled’s statement of claim, correspondence between the solicitors and letters to Centrelink about the settlement as well as the actual terms drawn up and signed by the parties, that the terms covered economic loss as well as other heads of damage. In any event, I am satisfied that the deeming provisions of section 17(3) of the Act catch the compensation settled in favour of Mr Khaled. In Secretary, Department of Family and Community Services v Chamberlain (2002) 68 ALD 357, Keifel J pointed out that the decision-maker is not required to consider what component of a settlement relates to economic loss. Therefore, the Tribunal has not examined further whether, as Mr Khaled claimed, all of the award covered compensation for injury rather than economic loss or only past loss of earnings rather than future loss of earnings.

12.      As to Mr Khaled’s claim that he should be given consideration due to his special circumstances, I have taken into account the matters he referred to in his oral evidence as well as the documents he produced in support of his case. Mr Khaled’s oral evidence was inconsistent and confusing. Concerning his debts and borrowings, Mr Khaled was imprecise in some respects. As pointed out by the Respondent’s counsel, Mr Khaled did not mention previously a debt to his relatives that he raised at the Tribunal’s hearing. It was not noted by the SSAT according to the reasons for decision which that Tribunal provided. Mr Khaled gave oral evidence before the present Tribunal that he borrowed $20,000 from relatives in 4 amounts of $5,000 and that he still owed this money to them. However, he shortly afterwards produced a receipt for $10,000 from his father and brother.

13.      Even if I were to accept that Mr Khaled is in debt to his father, brother and brothers-in-law or some of them in the amount of $20,000, I am not persuaded that Mr Khaled is suffering severe hardship. I note that he has found it necessary to seek assistance from time to time from the Salvation Army but this might be attributable to poor management or temporary difficulties while he was awaiting his compensation payment as much as continuing special circumstances. I also have taken into account that Mr and Mrs Khaled have four children to care for and that bringing up children is expensive.

14.      Offsetting Mr Khaled’s expenses, is the assistance he has received and continues to receive. The amount of financial assistance he and his wife are receiving from Centrelink is considerable and, on his own evidence, the children’s benefits are sufficient to make the mortgage payments. He and his wife have not fallen behind in these payments. In addition, the couple are fortunate enough to have family who are prepared to help them financially. As well, Mr Khaled received a considerable amount of compensation and has not fully explained how this sum was dissipated. He has not provided any statement setting out the balance he received after payment of his outstanding expenses and his accounting as to his expenses is not precise.

15.      The Federal Court has given some guidance as to what are special circumstances. In ReBeadle and Director of General of Social Security (1984) 6 ALD 1, O”Loughlin J, said of a provision similar to section 1184K, that the phrase “special circumstances” was sufficiently understood not to need a judicial gross. There are many examples of cases where the phrase has been considered. Circumstances which may be taken into account in exercising the discretion to modify the rules include unusual and exceptional circumstances and unfair and inappropriate application of a rule. In Re Secretary, Department of Family and Community Services and Bolton (1989) 18 ALD 464, DP Todd suggested that a global assessment of the circumstances was appropriate. I have followed these decisions in turning my mind to the overall amount of the settlement and in considering the joint income of the couple involved, noting that Mrs Khaled receives allowances for herself and the children.

decision

16. On balance, I am not persuaded that Mr Khaled is suffering severe hardship. Neither is it correct to say that Mr and Mrs Khaled, taken as a couple, are suffering severe hardship. Many persons eligible to receive pensions and allowances are quite unable to purchase a house in which to live and are totally reliant on public assistance to survive. Mr and Mrs Khaled are not in such a dire position. Therefore, I am not satisfied that the discretion available under section 1184K should be exercised and have decided to affirm the decision under review.

I certify that the 16 preceding paragraphs are a true copy of the reasons for the decision herein of Robin Hunt, Senior Member.

Signed:         .....................................................................................
  Associate: Reuben Mansour

Date of hearing  22 November 2004
Date of decision     18 January 2005
Representative for the Applicant  Self Represented

Advocate for the Respondent  Ms A Garcia