Maroki and Department of Family and Community Services
[2001] AATA 913
•1 November 2001
DECISION AND REASONS FOR DECISION [2001] AATA 913
ADMINISTRATIVE APPEALS TRIBUNAL Nº V2001/989
GENERAL ADMINISTRATIVE DIVISION
Re: WALED MAROKI
Applicant
And: SECRETARY TO THE
DEPARTMENT OF FAMILY AND
COMMUNITY SERVICES
Respondent
DECISION
Tribunal: Regina Perton, Member
Date: 1 November 2001
Place: Melbourne
Decision:The Tribunal affirms the decision under review.
(sgd) Regina Perton
Member
SOCIAL SECURITY – preclusion period – recovery of social security payments - special circumstances
Social Security Act 1991 s17(2), 17(3), s1165(8), s1184
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Hajar and Secretary, Department of Social Security (1988) 16 ALD 716
Re Jensen and Secretary, Department of Family and Community Services [2001] AATA 37
Re Beadle and Director-General of Social Services (1984) 6 ALD 1
Re Morgan and Secretary, Department of Family and Community Services [2001] AATA 734
Secretary, Department of Social Security v a'Beckett (1990) 21 ALD 79
REASONS FOR DECISION
1 November 2001 Regina Perton, Member
This is an application by Waled Maroki (the applicant) for review of a decision of the Social Security Appeals Tribunal (the SSAT) made on 23 July 2001. The SSAT affirmed a decision of a Centrelink delegate of the Secretary to the Department of Family and Community Services (the respondent). The original decision of the respondent was to impose a preclusion period from 7 August 1999 to 16 April 2004, being a period during which the applicant was not eligible to receive Centrelink payments, by virtue of having received a lump sum compensation payment.
The hearing of this matter took place on 4 October 2001. The applicant represented himself. An Arabic interpreter facilitated communication. The respondent was represented by Ms Rhonda Bradley of Centrelink's Advocacy & Administrative Law Team. The written material before the Tribunal comprised the documents lodged under s37 of the Administrative Appeals Tribunal Act 1975 (the T documents) and several documents tendered by the applicant during the hearing which comprise Exhibits A1 to A11.
BACKGROUNDThe applicant suffered a workplace injury on 15 August 1996 which prevented him from continuing to work. He initiated court proceedings in relation to the injury and started receiving weekly workers' compensation payments from his employer's insurer on 26 November 1996. The payments continued until 6 August 1999. On 23 July 1999, the applicant signed a Deed of Release under which he accepted the sum of $205,000 in settlement of all outstanding claims in relation to the injury. The applicant was advised by his solicitor that acceptance of the settlement would be likely to affect his eligibility for social security payments for some years.
On 29 March 2000, the applicant attended a Centrelink office and asked about his eligibility for social security assistance. He lodged a claim for newstart allowance on 14 June 2000. The applicant subsequently attended an interview at Centrelink on 22 June 2000 to discuss his entitlement to social security payments in light of the compensation payment. On 28 June 2000, a decision was made by Centrelink that the applicant was subject to a preclusion period from 7 August 1999 to 16 April 2004 because of that settlement. On 30 June 2000, the applicant was notified of the refusal of newstart allowance and his ineligibility until 16 April 2004 due to the preclusion period. Centrelink's decision was based on provisions in the Social Security Act 1991 (the Act) which render a person ineligible for newstart allowance and certain other payments for a prescribed period following the acceptance of a lump sum of compensation in lieu of weekly payments.
In July 2000, the applicant applied for, and was granted, a Low Income Health Care Card which has since been renewed on the basis of his having no income.
On 29 March 2001, the applicant made fresh enquiries at Centrelink about his eligibility for disability support pension. He attended an interview at Centrelink on 9 April 2001 and was told that the preclusion period still applied. The applicant applied for a review of the decision that he was subject to a preclusion period. An authorised review officer affirmed Centrelink's decision on 7 June 2001, as did the SSAT on 23 July 2001.
The applicant applied to this Tribunal for review on 3 August 2001. In the application form, he gave the following reasons for applying for review:
1)Unfit for work.
2)Still living in pain and spending a lot of my money on exercises and pain relief therapy.
3)Being in debts for my living.
4)No social security benefits of any type until 2004.
5)No help from any body or party.
EVIDENCE
The applicant told the Tribunal that he was of Iraqi origin and that he had migrated to Australia in 1992 after spending some time in Italy. He was sponsored by an older brother with whom he initially lived. He has five brothers and one sister, all of whom live in Melbourne. His mother was widowed in 1999, shortly before he received his compensation settlement. Before he bought the house in which he is now living, he lived with his mother and youngest brother in a rented flat. The applicant has never married. At the time of the accident in August 1996, the applicant was working in a biscuit factory, where he had worked since 1992. He has not been able to work since August 1996.
The applicant said that he had decided to accept the offer of settlement outside the court door as his solicitor had suggested to him that he might receive far less if the matter actually went to hearing. He conceded that his solicitor had warned him that accepting the settlement would result in his being barred from receiving social security payments for more than four years. He said that he knew of several other people who had received settlements of up to $500,000 and who had only been banned from getting social security payments for a year.
Of the $205,000 received at settlement of his compensation claim, the applicant spent $151,000 on a three-bedroom brick house which is solely in his name. He has no mortgage. Stamp duty and ancillary expenses amounted to another $9,000. He spent $15,000 on furniture and appliances. A further $12,500 was absorbed by legal fees. That left $17,500 which had been spent on rent on the unit he lived in before he purchased the house, other bills, food etc. The applicant said that he had decided to buy a house rather than continue to rent, as then he would no longer have to pay $700 a month for rent. It also meant that he would always have somewhere to live. The applicant said that he had also been concerned that he might otherwise have frittered away much of the money, particularly on gambling. He tendered a statement dated 23 September 2001 signed by fourteen people) which read, "We witness that Waled Maroki is a gambler for many years" (Exhibit A4).
The applicant said that he lives in the house alone. His mother now moves around staying with his other siblings for varying periods of time. She visits him regularly. He said that his personality is now such as a result of the daily pain he confronts that he has become very difficult to live with. Hence he does think it wise to have someone else share the house with him even if it would help defray the costs. The applicant said that it is not practical for him to move in with any of his married brothers or sister and rent his house out. He said they have families and limited room and they also find him difficult to live with because of his health problems and resultant moods. His youngest brother is sharing a house with friends.
The applicant told the Tribunal that he believed he met the "special circumstances" which would allow Centrelink to waive the preclusion period. The applicant said that he has a lot of expenses and no income at all to pay for food, power, rates, other living expenses, medical expenses or for any leisure. The applicant stated that he had been borrowing money from his brothers to survive. He tendered a bank statement which indicated a very low balance (Exhibit A2). He said that he has outstanding bills that he cannot pay and tendered an account dated 10 September 2001 from his local pharmacy with an amount owing of $427.10 (Exhibit A6). He also tendered a letter from his workers compensation insurer dated 7 June 2001 (Exhibit A9) telling him he needed to provide documentation from his treating practitioner to show that recent treatment/medication was related to his workplace injury before they would refund pharmaceutical and treatment expenses he had incurred. He told the Tribunal that such reports had recently been provided to the insurer.
The applicant tendered a number of medical reports from his general practitioner, Dr S Grokop. A report dated 3 October 2001 (Exhibit A1) stated that the applicant "has had chronic disabling low back pain since 1996 . . .". His doctor also stated that the applicant's "discomfort is worsened by prolonged sitting, standing, repeated twisting or bending . . ." and that his "symptoms prevent him from working or seeking work . . .". Several other medical reports written by Dr Grokop concerning the applicant's symptoms and medication over the past few years were also tendered. The applicant said that he is currently on four different medications including Xenical which costs him $132 per month and which is not subsidised and cannot be substituted.
The applicant said that he had felt pressured to settle his compensation case because his solicitor had made him fearful that he might receive far less if the matter actually went to hearing. He also cited the situations he had heard of where people with larger awards of compensation than his were able to get social security payments within a year or so of receiving the money. He reiterated his love of gambling and said that he now only spends a few dollars that his brothers or friends give him if he goes to the "pokies". However, had he not quarantined his money by purchasing the house and furnishing it, he may well have gambled much of it away. The applicant said that all of these factors together, including his lack of income, his inability to work, the cost of medication, his other living expenses, his propensity to gamble had he not spent the settlement moneys on a house and the other factors cited above combined to provide the sort of "special circumstances" that should lead to a curtailment of the preclusion period.
CONSIDERATION OF ISSUESSection 17(2) of the Social Security Act 1991 (the Act) provides that "compensation" for the purposes of the Act includes a payment in settlement of a claim for damages if there is some component referable to lost earnings or lost earning capacity. Section 17(3) provides that where a claim is settled, 50 per cent of the total settlement is deemed to be in respect of lost earnings or lost earning capacity (compensation part of a lump sum compensation payment). The Tribunal is satisfied that the applicant's settlement sum included a component for lost earnings or lost capacity to earn and that therefore the formula in s1165(8) of the Act must be applied to work out a preclusion period during which the applicant cannot be paid a compensation affected payment.
Section 1165(8) provides the formula for working out the preclusion period:
1165 (8) If a compensation lump sum is received on or after 20 March 1997, the number of weeks in the preclusion period is the number worked out under the following formula:
Compensation part of lump sum
Income cut-out amountNote 1: For "compensation part of lump sum", see section 17.
Note 2: For "income cut-out amount", see section 17.
The respondent submitted that the income cut out amount in the formula is to be taken as that figure applying at the time of the settlement, although this is not specifically provided for in the Act. With effect from 20 September 2001, an amendment to the Act (Family and Community Services Legislation (Simplification and Other Measures) Act Nº 71 of 2001) provides that the income cut out amount is the amount in force when the compensation was received. In Re Morgan and Secretary Department of Family and Community Services [2001] AATA 734, the Tribunal decided that although the legislation prior to the amendment does not specifically so state, the date should be that at the time of settlement. The Tribunal agrees with that approach. At the date of the applicant's settlement in July 1999, the income cut out amount provided for in the Act was $417.80.
The "compensation part of the lump sum compensation" is defined in s17(3) of the Act as 50 per cent of the settlement amount. Applying the formula in s1165(8) to the settlement amount in the applicant's case, the Tribunal is satisfied that the resultant period is 245 weeks, beginning on 7 August 1999 and ending on 16 April 2004.
The central issue for the applicant in this case is the question of special circumstances. This is provided for in s1184 of the Act.
1184.(1) 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.
The meaning of special circumstances was discussed by the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1. That case is authority for the proposition that special circumstances must be unusual, uncommon or exceptional and are taken to be circumstances where the imposition of the statutory charge would result in unfairness. Section 1184 allows the decision-maker to consider the particular circumstances of each case and the factors which alone or together might be considered to take the case out of the ordinary. There must be something to distinguish the case from others, to make it stand out from the usual or ordinary case (Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545).
In this case, the matters raised included the applicant's continuing ill health, the consequent medical costs, his total lack of income resulting in his having to borrow to meet his daily living expenses and his inability to undertake paid work. They also include his expectation that the preclusion period might have been shortened based on anecdotal information from other compensation recipients and the pressure he felt his solicitor had exerted on him to settle the compensation case. A further factor raised was the applicant's need to tie up the funds by buying a house and furniture so that he would not dissipate the settlement money through gambling.
The Tribunal accepts that the applicant is currently in difficult financial circumstances. However, the applicant has a significant asset in his house, to which he has clear title. As was discussed with the applicant during the hearing, the applicant could raise additional funds through a mortgage. He could rent out his house and move into cheaper accommodation, or with a member of his family. He could also bring in others to share the house with him.
The preclusion period appears to have been introduced to prevent "double dipping", namely an applicant receiving compensation for potential loss of income due to injury and at the same time receiving a social security benefit on account of that injury. The length of the preclusion period at first glance appears unduly harsh. However, the Tribunal concurs with the following sentiments expressed in the respondent's submission in their Statement of Facts and Contentions:
10.15Mr Maroki now has assets which he previously did not have. The mere fact that Mr Maroki has chosen to convert the compensation money into assets does not of itself constitute a special circumstance ([Re] Jensen and Secretary, Department of Family and Community Services [2001] AATA 37 and [Re] Hajar and Secretary, Department of Social Security 16 ALD 716).
10.16It is further submitted that the intent of the legislation was to ensure that people use compensation settlements for the purpose they are paid, namely the replacement of income and that to reduce or waive the preclusion period so that Mr Maroki can receive social security payments would be to give him an advantage over those people who, rather than putting their money into assets, use it to support themselves during the relevant period.
The Tribunal accepts that the applicant is adversely affected by his back condition. This, by itself, does not put the applicant in a different position to others injured in the workplace, who are subject to preclusion periods. While the applicant may enjoy gambling, the Tribunal is not satisfied that the applicant's level of gambling is at problem levels. In his oral evidence, he stated that when he was still earning an income, he would pay bills before spending money on the poker machines. Even if he did spend more of his income than might be prudent on gambling, the Tribunal is not satisfied that the only viable solution was for him to put most of his compensation moneys into a property in which he lives. Other solutions are available to him as canvassed above (paragraph 21). The Tribunal is not satisfied that the circumstances in this case are unusual, exceptional, uncommon or unfair enough to amount to "special circumstances". The Tribunal finds that the circumstances in this case are not sufficient to persuade it to exercise the discretion in the legislation to shorten the preclusion period.
The Tribunal finds that the preclusion period between 7 August 1999 and 16 April 2001 has been validly imposed. It also finds that there are no special circumstances to warrant disregarding the compensation in whole or in part.
DECISIONThe Tribunal affirms the decision under review.
I certify that the twenty-five [25] preceding paragraphs are a true copy of the reasons for the decision herein of
Regina Perton, Member(sgd) Catherine Thomas
ClerkDate of Hearing: 4 October 2001
Date of Decision: 1 November 2001
Solicitor for the Applicant: Nil — self-represented
Solicitor for the Respondent: Nil — Mrs R. Bradley, Advocate with Centrelink
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