Shinwari and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2009] AATA 317

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2009] AATA 317

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No   2008/3809

GENERAL ADMINISTRATIVE DIVISION		)
Re		MAEEN SHINWARI

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Ms N Isenberg, Senior Member

Date6 May 2009

PlaceSydney

Decision The Administrative Appeals Tribunal affirms the decision under review.

......................[sgd]........................

Ms N Isenberg
  Senior Member

CATCHWORDS

SOCIAL SECURITY – lump sum workers’ compensation payment – preclusion period – whether special circumstances exist to justify the exercise of the discretion to disregard all or part of the compensation payment being made - gambling as special circumstances considered

LEGISLATION

Social Security Act 1991 – sections 1170 and 1184K

CASE LAW

Beadle v Director General of Social Security (1985) 7 ALD 670
Secretary, Department of Social Security v Hulls (1991) 22 ALD 570; 13 AAR 414
Department of Social Security v Smith (1991) 30 FCR 56; 23 ALD 277; 13 AAR 454
Secretary, Department of Social Security v Ellis (1997) 24 AAR 535; 46 ALD 1
Haidar v Secretary Department of Social Security (1998) 52 ALD 255 at 264; 28 AAR 288 at
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Secretary, Department of Social Security v Ellis (1997) 24 AAR 535; 46 ALD 1
ReMales and Secretary, Department of Family and Community Services (1999) 57 ALD 793
Davis and Department of Family and Community Services [1999] AATA 84
Stavrakis and Secretary, Department of Family and Community Services (2003) 73 ALD 432
Re Secretary,Department of Family and Community Servicesand Pearce (2003) 78 ALD 771

REASONS FOR DECISION

6 May 2009 Ms N Isenberg, Senior Member

DECISION UNDER REVIEW

1.        This is a review of a decision of the Social Security Appeals Tribunal (“the SSAT”) dated 28 July 2008, affirming a decision made by an authorised review officer on 14 May 2008 not to waive a compensation charge of $6,326.70.

BACKGROUND

2.        On 5 December 2000 Mr Shinwari was injured in a motor vehicle accident.  At the time he was being paid Newstart Allowance.  Mr Shinwari brought personal injury proceedings against the other driver and that matter was settled on 23 November 2007 for $50,000, inclusive of out-of-pockets and costs.  His solicitors paid some money to Medicare on account of medical expenses paid on Mr Shinwari’s behalf in association with the accident and also paid to Centrelink an amount of $6,326.70,  which had been calculated as the compensation charge.

3.        Mr Shinwari was given a cheque for $38,183.30, which he deposited into he and his wife’s joint account on 24 January 2008. The next day, he withdrew $38,000.00 in cash from two different branches of the bank.

4.        On 1 May 2008, Mr Shinwari asked Centrelink to review its decision to recover the $6,326.70 because the money was all gone.  Centrelink affirmed its decision.  The decision was also affirmed by the SSAT. 

LEGISLATION

5. Briefly, the scheme of the legislation is aimed at preventing those receiving lump sum compensation payments for loss of income from receiving benefits from the public purse. Where the lump sum settlement includes a component of economic loss, Part 3.14 of the Social Security Act 1991 (“the Act”) has the effect that 50% of the lump sum is taken to be for lost earnings or lost capacity to earn. This amount is the “compensation part of the lump sum” and is then used, by application of a statutory formula, to calculate a period of time when a person will not be eligible to receive Centrelink payments. This is called “the preclusion period”. If, during the preclusion period, the person has received Centrelink payments, then the Act creates a statutory charge over the settlement funds to the extent of the payments made. The licensed insurer is obliged to pay the amount of the charge to Centrelink in priority to payments to the person entitled to the benefit of the settlement.

6.        The Act provides potential relief from the strict application of the compensation preclusion period, by giving decision-makers a discretion to disregard the whole or part of the compensation payment in “special circumstances”, as follows: 

“Secretary may disregard some payments

1184K(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.”

ISSUE BEFORE THE TRIBUNAL

7.        There was no dispute that if the statutory formula were applied to Mr Shinwari’s circumstances, a preclusion period of 32 weeks would apply and that the amount relating to this period totalled $6,326.70.

8.        The only issue was whether there are any “special circumstances” in Mr Shinwari‘s case to reduce the length of the preclusion period, so as to result in a re-payment to Mr Shinwari of some or all of that amount.

DISCUSSION AND FINDINGS

9.        I had before me documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 ("the T-documents"), which I took into evidence.

In addition, the following documents were tendered:

Exhibit A1 - letter from Mr. Shinwari’s counsellor at Wesley Mission Counselling

Ehibit A2 - letter from Dr. K Hamid regarding Mr. Shinwari’s medical condition.

Exhibit A3 - bank statement of Mr Shinwari, dated 1 July 2008

10.      Mr Shinwari told me that he had withdrawn $38,000.00 in cash and had taken it all home.  He took $7,000 and went to Rooty Hill RSL and played the poker machines, and lost it all.  He went to that club and two others over the next 10 days and spent the entire amount.  After that, his wife insisted on separate accounts.

11.      He told me that he had started gambling on poker machines in about 2003, spending whatever he could.  He accrued credit card debts totalling about $15,000, mostly due to his gambling.  In 2006, after losing about $350 in one session, he sought assistance form Wesley Mission Gambling Counselling Services.  He had been referred there by ‘a security guard’ at one of the clubs he frequented.  The counsellor destroyed his credit cards and negotiated a re- payment schedule through which Mr Shinwari is to pay a total of $100 per fortnight off the cards. 

12.      He said he saw the counsellor every 2-3 months.  A letter was provided from the counsellor noting five attendances between December 2006 and May 2008.  Four of those attendances were before Mr Shinwari received the cheque.  A further letter dated 14 November 2008 referred to Mr Shinwari not having gambled in the previous four months.  Mr Shinwari’s evidence, though, was that he last gambled in January 2009, after he had last seen the counsellor.

13.      Mr Shinwari told me that his only family debt is the credit card debt.  He and his wife and their nine children, aged between 2 and 20 years, live in Housing Commission premises.  He receives disability support pension and an education supplement (to learn English at TAFE).  From the records, his wife receives carer pension, Family Tax Benefit, and parenting payment.  After the fortnightly credit card repayments, he uses the balance to pay household expenses.  Centrelink is the family’s only source of income and he does not like being reliant on the government.

14.      Mr Shinwari told me he is depressed because of his situation.  A letter from his medical G.P., Dr Hamid (Exhibit A2), notes his depression as well as conditions of Hepatitis C, discogenic lower back pain, diabetes, poor concentration, poor memory and unstable mood.  Dr Hamid wrote that Mr Shinwari was under the care of Dr Chaudary psychologist, but Mr Shinwari denied being under psychological or psychiatric care.

15.      I had available to me the account of Mr Shinwari’s evidence to the SSAT.  It was noted in the SSAT’s decision that there were inconsistencies with what he had previously told Centrelink.  I am prepared to overlook those inconsistencies and accept, as fact, what Mr Shinwari told me at the hearing, because ultimately, it remains that all the money was spent on gambling over a short period of time.

16.      The discretion to disregard the whole or part of a compensation payment can be exercised where application of the usual rules would lead to a result that is unfair or inappropriate (see Beadle v Director General of Social Security (1985) 7 ALD 670 and Secretary, Department of Social Security v Hulls (1991) 22 ALD 570; 13 AAR 414). The Federal Court in Secretary, Department of Social Security v Smith (1991) 30 FCR 56; 23 ALD 277; 13 AAR 454 held that it is appropriate for the discretion to be used where the arbitrary nature of the “50% rule” results in unfairness in a particular case.

17.      Section 1184K(1) is a way of alleviating the harshness of the statutory provision in appropriate cases where there are special circumstances. Special circumstances do not have to be statistically “extreme” or “unique”; it is sufficient if there is something that takes the matter out of the usual ordinary case, (see Haidar v Secretary Department of Social Security (1998) 52 ALD 255 at 264; 28 AAR 288 at 297, in which Hill J cited the earlier Federal Court cases of Groth v Secretary, Department of Social Security (1995) 40 ALD 541 and Secretary, Department of Social Security v Ellis (1997) 24 AAR 535; 46 ALD 1).

18.      The Centrelink advocate referred me to a number of cases where gambling was contended as amounting to special circumstances. For example, in ReMales and Secretary, Department of Family and Community Services (1999) 57 ALD 793, the Tribunal exercised the discretion to disregard some of the compensation lump sum on the basis of the combined impact of Mr Males’ behaviour, described as “out of control” when gambling, and an absence of any realisable assets that could be used to maintain himself. Other decisions, however have taken a contrary view, distinguishing between a gambling addiction (as a psychological/psychiatric condition) and a lifestyle choice: for example, Davis and Department of Family and Community Services [1999] AATA 84 where there was no evidence that the applicant was addicted to gambling or drinking, and that Mr Davis’ behaviour could only be described as “grossly irresponsible”. In Stavrakis and Secretary, Department of Family and Community Services (2003) 73 ALD 432, the Tribunal expressly referred to the diagnostic criteria for pathological gambling in the Diagnostic Statistical Manual volume lV and concluded that the diagnostic criteria had not been met. However, in Re Secretary,Department of Family and Community Servicesand Pearce (2003) 78 ALD 771, the Tribunal accepted Mr Pearce’s gambling was not a lifestyle or personal choice but “something in the form of an addiction and having pathological consequences” despite the lack of medical or specialist evidence.

19.      Other cases before the Tribunal have considered gambling as only one of the factors to be considered.  In this matter, though, Mr Shinwari could not identify other aspects of his circumstances that might make his situation special; his only contention was that he had gambled all the money.

20.      Mr Shinwari has admitted that he gambled away all the money in a very short space of time.  His wife, sensibly, separated their accounts so that the family’s livelihood was not further jeopardised.  For a man with nine children, he has acted very irresponsibly.  He had previously had some counselling, but does not appear to have been referred for psychological or psychiatric treatment for an addiction.  Notwithstanding that all the money was gone, on his evidence, by mid-February 2008, he did not attend counselling again until May 2008, some 12 months after his last session.  In the later letter, the counsellor wrote that she understood him not to have gambled in the four months to November 2008.  This does not appear to be the case, and he has also gambled since that time.  However, in the absence of him receiving psychological or psychiatric intervention, I do not accept that he has or has had an addiction to gambling.  He had money and took the opportunity to spend it as he saw fit. 

21. I find that the application of the formula contained in section 1170 of the Act does not produce an unfair, unjust or unintended outcome. Further, I find that Mr Shinwari’s circumstances are not “special circumstances” for the purposes of section 1184K and that none of his compensation payment should be treated as not having been made.

DECISION

22.      The Administrative Appeals Tribunal affirms the decision under review.

I certify that the twenty-two [22] preceding paragraphs are a true copy of the reasons for the decision herein of
Ms N Isenberg, Senior Member

Signed:....................................[sgd]...........................................

Shanthi Silva, Associate

Date of Hearing  21 April 2009
Date of Decision  6 May 2009
Appearance for the Applicant        Self-represented       
Appearance for the Respondent    Ken Bullock, Centrelink Legal Services