Souied; Secretary, Department of Social Services and (Social services second review)
[2017] AATA 332
•16 March 2017
Souied; Secretary, Department of Social Services and (Social services second review) [2017] AATA 332 (16 March 2017)
Division
GENERAL DIVISION
File Number
2016/1977
Re
Secretary, Department of Social Services
APPLICANT
And
Mr Mohamad Souied
RESPONDENT
DECISION
Tribunal Mr D. J. Morris, Member
Date 16 March 2017 Place Melbourne The Tribunal sets aside the decision of the Social Services and Child Support Division dated 8 March 2016 and affirms the original decision that Mr Mohamad Souied’s compensation preclusion period is from 19 March 2014 until 25 April 2017.
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D. J. Morris, Member
SOCIAL SERVICES – Compensation Preclusion Period – lump sum compensation payment – application for DSP and Newstart Allowance – meaning of special circumstances – alleged theft of funds – other expenditure – health conditions – special circumstances not made out – SSCSD decision set aside and original decision affirmed
LEGISLATION
Social Security (Administration) Act 1999
Social Security Act 1991 ss 17, 1169, 1170, 1184K
SECONDARY MATERIALS
Guide to Social Security Law – 4.13.4.20
CASES
Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9; [2007] FCA 25
Drake v Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Groth v Secretary, Department of Social Security (1995) 40 ALD 541; [1995] FCA 1708
Taylor and Secretary, Department of Families, Community Services and Indigenous Affairs [2013] AATA 161REASONS FOR DECISION
D. J. Morris, Member
16 March 2017
BACKGROUND
The Applicant, the Secretary of the Department of Social Services, seeks review of a decision made by the Social Services and Child Support Division of the Tribunal (AAT1) on 8 March 2016 that set aside the decision under review and decided that so much of the Respondent’s (Mr Mohamad Souied’s) lump sum compensation preclusion period be disregarded so as to end this period on 26 October 2015.
On 20 March 2008 Mr Souied was injured at work. He made a compensation claim which was settled out of court by his employer on 24 October 2013 for a sum of $278,500 with an additional impairment payment of $15,488 paid on 7 June 2013 (total $293,988). Until 18 March 2014 he received weekly compensation payments.
In cases where compensation is settled out of court by means of a lump sum payment, 50 per cent of the lump sum is considered to have been made in respect of economic loss. The compensation preclusion period, during which period a person is not able to claim compensation affected payments, is therefore calculated under section 17(3)(a) of the Social Security Act 1991 (the Act) based on 50 per cent of the lump sum received, in Mr Souied’s case $293,988 ÷ 2 = $146,994. In order to determine the preclusion period, this figure is then divided by $905.10 being the pension income cut off amount at the time. Applying this formula, the Department calculated that the preclusion period was 162 weeks from 19 March 2014.
Accordingly, on 18 March 2014 the Department of Human Services (the Department) sent Mr Souied a letter advising him that he was now subject to a lump sum preclusion period from 19 March 2014 to 25 April 2017.
On 25 June 2014 Mr Souied contacted the Department to discuss his situation and, according to the Departmental records before the Tribunal, an officer advised him that he would need to live on the lump sum payment until the end of his preclusion period on 25 April 2017.
On 28 April 2015 Mr Souied lodged a claim for Disability Support Pension (DSP). The Department records indicate that he said he was aware of the preclusion period but wished to claim special circumstances were applicable to his case owing to hardship. Mr Souied was also advised at this time that he was ineligible for Newstart Allowance, because, like DSP, it is a compensation affected payment.
On 8 May 2015 an officer of the Department decided to reject Mr Souied’s application for DSP on the basis that he was precluded from receiving income support payments, and Mr Souied was so advised in writing.
Mr Souied requested a review of the original decision. The decision was reviewed by an authorised review officer (ARO), a departmental officer not involved in the original decision. On 21 October 2015, the ARO affirmed the original decision.
Mr Souied applied to AAT1 for review of the decision. A hearing was held on 8 March 2016 and after considering the matter, AAT1 set aside the original decision and decided that so much of the original decision should be set aside so that the preclusion period applicable to Mr Souied should end from 26 October 2015.
The Secretary of the Department then sought a review before the General Division of the Tribunal, and that is this hearing.
HEARING
The hearing took place on 2 December 2016 by telephone. Ms Ailsa Bramley, a solicitor from the Department of Human Services, represented the Applicant. Mr Souied represented himself, gave evidence under affirmation and was cross-examined.
The Tribunal admitted into evidence documents lodged by the Respondent under section 37 of the Administrative Appeals Tribunal Act 1975 (the T-Documents).
The Tribunal received into evidence an email dated 29 November 2016 to the Department from Detective Sergeant Dennis Williams of Victoria Police.
Subsequent to the hearing, the Tribunal received the following additional documents:
·Letter to the Respondent from Western Health Adult Specialist Clinics (Outpatients) dated 21 September 2016 confirming an appointment at Footscray Hospital on 14 December 2016.
·Medical certificate for the Respondent dated 27 October 2016 from Dr Hanna El-Khoury at Complete Family Care Medical Centre, Newport.
·Medical letter (part) dated 27 October 2016 to Professor Robert Whitbourn at Wyndham Private Specialist Consulting Rooms, Werribee, relating to the Respondent.
·Letter (part) dated 29 January 2015 to the Respondent from the Bank of Melbourne.
·Letter dated 27 January 2015 from Sargeants Conveyancing, Caroline Springs, to the Respondent.
·Statement of Adjustment and Statement of Account dated 28 January 2015 from Sargeants Conveyancing, Caroline Springs, to the Respondent.
·Photocopies of a bank cheque stub dated 29 January 2014 to Live Consulting and a bank cheque stub dated 29 January 2014 to Tarneit Realty Pty Ltd.
·Submission dated 19 January 2017 from Ms Bramley, representing the Applicant.
There are two issues before the Tribunal: (1) whether the preclusion period was correctly calculated. (2) If so, whether there are special circumstances in Mr Souied’s case that make it appropriate to exercise the discretion provided for in section 1184K of the Act to disregard part, or all, of the compensation lump sum amount paid to him.
Compensation and social security benefit payments
Section 1169 of the Act applies to people who have received lump sum compensation payments. It provides that a person cannot receive a compensation affected payment during a compensation preclusion period.
The definition of a compensation affected payment is set out in section 17(1) of the Act and, inter alia, includes “a social security benefit”. Section 17(2) defines ‘compensation’ to include payment made wholly or partly in respect of lost earnings or capacity to earn resulting from a personal injury.
Section 1170 of the Act sets out how a lump sum compensation preclusion period is calculated, including the applicable formula. The Applicant submitted that the calculation had been done correctly and that the period should be affirmed as starting on 19 March 2014 and ending on 25 April 2017.
Section 1184K(1) of the Act provides:
(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.
Neither the Act nor the Social Security (Administration) Act 1999 defines the phrase “special circumstances”. The Tribunal is aware that the phrase has been extensively considered by the courts and by the Tribunal itself.
The Applicant argued that it is a “fundamental principle” of the social security system that people who are unable to work owing to a compensable injury are prevented from receiving income support from both the social security and compensation systems for the same period. The Secretary contended that the rules are designed to ensure that persons who find themselves in this situation receive income support from those with primary responsibility to provide that support, such as insurers or statutory compensation schemes.
The Applicant drew the Tribunal’s attention to the Minister’s second reading speech for the Social Security Legislation Amendment Bill (No. 1) 1995 which said in part:
The compensation recovery provisions of the act [i.e. the Social Security Act] protect the social security system from ‘double dippers’ — that is, those who might receive social security payments, as well as compensation, for the same period.
There was no dispute at the hearing by Mr Souied about the calculation of the compensation preclusion period. He agreed that he had received the letter of advice of 18 March 2014 from the Department telling him that the period would be from 19 March 2014 to 25 April 2017.
The Tribunal had before it the calculations for the period and finds that the preclusion period was correctly calculated and affirms that Mr Souied is subject to a preclusion period from 19 March 2014 to 25 April 2017.
Are there ‘special circumstances’ in Mr Souied’s case which would justify treating all or part of his compensation payment as not having been received?
Because the Act does not define what constitutes ‘special circumstances’ in section 1184K, the Tribunal must look at how this phrase has been considered by the Courts and have regard to similar cases before this Tribunal.
In Groth v Secretary, Department of Social Security (1995) 40 ALD 541; [1995] FCA 1708, Kiefel J considered the meaning of the expression “special circumstances”. Her Honour said at [545]:
The phrase ‘special circumstances’, it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle’s case [Beadle v Director-General of Social Security] (at ALR 229 ALD 674), and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. (Emphasis added.)
27.In Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9; [2007] FCA 25, Besanko J warned against requiring exceptional circumstances before there may be said to be special circumstances at [33]:
I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word “exceptional” is emphasised. It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words “unusual” or “uncommon” are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context. (Emphasis added.)
The Tribunal must look at the request from Mr Souied that the compensation preclusion period be varied so that he can apply for DSP and whether the circumstances applying to him are out of the ordinary, unusual or uncommon, or whether the particular circumstances distinguish his case from others in similar circumstances.
Mr Souied submitted to the Department that the period should be varied in his case because he meets the special circumstances criteria as he had told the ARO that his mortgage broker “stole $90,000” which he intended to be a deposit for a house he was buying in Truganina. In this hearing under cross-examination Mr Souied said he believed special circumstances were applicable to him because he had cancer, and because of the money he said was stolen from him.
The Tribunal will therefore examine these two circumstances applicable to Mr Souied to determine whether they are sufficient to justify the exercise of the discretion available under section 1184K in his favour.
How has the remaining lump sum compensation payment been spent?
Generally, the Tribunal is reluctant to exercise the discretion provided in section 1184K to shorten or disregard the preclusion period on the grounds of financial hardship. Senior Member McDermott (as he then was) said in Taylor and Secretary, Department of Families, Community Services and Indigenous Affairs [2013] AATA 161, at [16]:
In considering the issue of financial hardship it becomes necessary to consider the nature of the expenditure of the settlement funds. The applicant contends that in four months he expended the sum of $108,000. It is not possible on the evidence before me to see how the funds from the compensation payment have been dispersed … in giving telephone evidence at this Tribunal … the applicant states that he has no money in the bank but has not provided any documentary evidence to show how the settlement funds have been applied. I would be reluctant to exercise the discretion under s 1184K of the Act in circumstances where there is no documentary evidence of how the settlement funds have been applied.
In his evidence about how his lump sum compensation payment had been disbursed, Mr Souied told the ARO that he had paid rent in advance to the landlord of the house he and his family occupy at Point Cook in the amount of $31,200 (i.e. $300 per week for two years) and had spent $100,000 on “living expenses” over two years. He also told the ARO that he had paid a deposit of $90,000 to his mortgage broker towards a house he was purchasing in Truganina, an amount which had been ‘stolen’.
However, in his evidence to AAT1, these figures changed. Mr Souied’s evidence to AAT1 was that he had paid $24,000 for a deposit for the Truganina house and $18,500 for two years’ advance rent. He also said he had spent $14,000 purchasing a motor vehicle for his son.
In this hearing, Mr Souied said in April 2014 he had given $80,000 to his mortgage broker towards settlement for the Truganina property. The settlement he said was to take place at the end of January 2015 however the broker kept changing the date for settlement. He stated that he reported the theft of the funds to Victoria Police in ‘early 2016’. When asked in cross-examination why he took eleven months to report the alleged theft, he did not have an explanation except to say perhaps he should have gone to the police earlier but was sick at the time.
The Tribunal had before it an email dated 29 November 2016 from Detective Sergeant Williams, an officer of the Wyndham Crime Prevention Unit of Victoria Police. In that email, Detective Sergeant Williams recorded that an investigation had taken place in relation to some monies provided by Mr Souied to another person to “facilitate obtaining a loan”. The police officer said the payment made totalled approximately $78,000 and the person to whom they had been paid had been interviewed and had told the police that the funds had been provided as a loan by Mr Souied and that the person intended to repay him. The police report said that Mr Souied has confirmed to them that this person had requested to retain the money as a loan.
Victoria Police concluded that they were not able to demonstrate a dishonest intent, and the email concluded:
Mr SOUIED presented as being quite naïve, and I strongly believed that the suspect took advantage of him. I am sure he “lost” a significant sum of money in the process. However, investigators were not able to obtain evidence of criminal conduct by the suspect. The investigation has now been closed as No Offence Disclosed.
In the hearing, the Tribunal asked the Respondent to provide an outline of his expenditure of $100,000 over two years on “living expenses” when he had told the Tribunal that his rent had been paid in advance and there was evidence that during this period his wife was in receipt of social security benefits, namely carer allowance, carer payment and family tax benefit. His only response was to refer to the purchase of the motor car for his son and to admit that perhaps the family had overspent. I note in the Department records an officer refers to Mr Souied saying on 17 April 2015 that he had bought a house and “had spent all the other money on household furniture and children’s school fees, etc”. I do not know whether this is an accurate record of the Department officer’s conversation with Mr Souied but the Respondent did not advance any other information at the hearing on how he had spent the funds except to say he had ‘overspent’.
Mr Souied stated that he could provide corroborative material to the Tribunal which detailed the amount he had spent on rent in advance and the deposit. Following the hearing he subsequently provided bank cheque records for one bank cheque receipt dated 29 January 2014 to a consulting firm in the amount of $13,000 and a bank cheque receipt dated 4 December 2014 in the amount of $20,000 to a real estate company. However, in spite of saying in the hearing that he would provide bank statements with the particulars of the expenditure, the Respondent did not do so.
Mr Souied also provided evidence from the Bank of Melbourne dated 29 January 2015 of a direct debit in the amount of $23,980 in relation to fees and associated costs for settlement of the Truganina property.
Mr Souied has not explained the relevance of the bank cheque to a consulting company. Even if I were to accept, in spite of the frailty of the evidence, that the bank cheque receipt of $20,000 was for the deposit for the Truganina property, this does not assist Mr Souied much in his claim of unusual financial hardship.
There is no evidence before the Tribunal to account for much of this expenditure, other than the evidence given by the Respondent himself, which has not been consistent to the ARO, to AAT1 and to this hearing. There is no proof of the amount of money he says he gave to a mortgage broker and which he said was subsequently stolen, other than the Victoria Police advice which is based only on Mr Souied’s complaint. There is no independent evidence of the amount of rent he says he paid in advance or of the amount he says he paid for his son’s motor car. There is also no evidence of the proof of income he provided to the bank in order to secure his home loan, which would better indicate his financial position. He told the Tribunal in the hearing that he would be able to provide bank statements to verify his expenditure, but he did not, and the other material he did provide does not provide satisfactory proof.
Do the Respondent’s medical conditions and treatment amount to special circumstances?
The Guide to Social Security Law (the Guide) is an internal policy document used by Department officers as an aid to applying the provisions of the Act. Paragraph 4.13.4.20 of that Guide (factors to consider when determining special circumstance provisions) while noting that the factors listed are not exhaustive, says that the state of a person’s ill health should be “more severe” than the majority of DSP recipients, and that the injury for which the person received compensation cannot generally be regarded as a special circumstance.
The Tribunal is not bound to follow the Guide, but, adopts the view taken in Drake v Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, that where it was permissible for a decision-maker to take government policy into account in making a decision, the Tribunal is entitled to treat such government policy as a relevant factor in the determination of an application for review of that decision.
In this case, Mr Souied told the Tribunal that he had had cancer. This is a medical condition unconnected with the reason for which he was awarded a compensation payment, which was for a frozen shoulder condition. The diagnosis of his cancer was confirmed in a medical certificate dated 4 December 2015 of Dr Saville Waid, which was before the Tribunal. He told AAT1 that he had surgery in February 2016 and had lost “most of” his stomach as a result. Dr El-Khoury’s medical certificate dated 27 October 2016 recorded that Mr Souied had undergone a partial gastrectomy for gastric cancer. A further medical certificate from Dr Murphy of Sunshine Hospital dated 24 December 2015 confirmed he would be undergoing a course of chemotherapy.
Mr Souied told the Tribunal that he had embarked on a course of chemotherapy but had ceased the treatment because it had caused a heart attack. In questioning by the Tribunal about his current state of health, he stated that he “was feeling ok” and had had no health problems for the last three months. He said that he had to watch his diet and that he would attend a regular medical review with his doctor every three months.
Mr Souied told the Tribunal that special circumstances are applicable in his case, first because of the disability with his right hand side and, secondly, because of his stomach cancer.
It is clear on the evidence given by Mr Souied and the medical reports he provided that he has faced significant health challenges, particularly with his stomach cancer, and they have inhibited his ability to work. However, I have to balance up these particular circumstances with the fact that he has received funds specifically in compensation for his shoulder incapacity. His stomach cancer condition seems, on the evidence available to the Tribunal, to have been resolved to the extent that his doctors have treated it with surgery and are now monitoring him.
The Guide is not particularly helpful in this area. It is logically impossible for me to pronounce whether Mr Souied’s health conditions make his ill health, in the wording of the Guide, “more severe” than “the majority” of DSP recipients. But there is insufficient evidence before me to positively find that his current health situation should be such that, by itself, it warrants exercise of the discretion in the Act because of incapacity. In addition, I did not have evidence before me of Mr Souied having incurred significant medical costs in the period, nor of medical or other evidence pointing to looming costs, which might be able to be considered to be an unusual and unforeseen personal circumstance applying to him.
CONCLUSION
The last two or three years have not been the best for Mr Souied. He has apparently ‘lost’ a significant amount of money which he gave to another person with the expectation they would use it in the settlement of a residential property. He also apparently gave two years’ advance rent for the house he was living in, on his evidence to the same person, and says this person then sold the rental house without his knowledge and he lost the funds. Victoria Police said that he told them that the recipient of the money had asked for it to be regarded as a loan, but in the Tribunal Mr Souied said that was wrong. He has had a major health challenge, cancer, which was compounded by heart trouble apparently precipitated by the chemotherapy course to treat it.
I note in passing that it is somewhat incongruous that the Bank decided to extend to the Respondent a house loan at a time when the only household income was, apparently, his wife’s social security benefits. But the facts remain, however, that Mr Souied entered into the purchase of the residence with his eyes open. He knew about his compensation preclusion period. He also could not explain to the Tribunal how he managed to spend $100,000 in two years on ‘living expenses’ when at the time his rent had apparently, on his evidence, already been paid and his wife was receiving social security benefits.
I am not unsympathetic to Mr Souied’s situation in regard to his health, but to properly exercise the discretion provided for in section 1184K, I must consider his entire circumstances to see if there is something which distinguishes his particular circumstances from those of others in similar positions who are subject to a compensation preclusion period. Some proof of a substantial theft of funds might be an ingredient, but no such proof has been provided. Some unexpected and unavoidable expenditure applicable to a person might also be an ingredient, but there is no evidence of such before the Tribunal in this case.
I asked Mr Souied why he paid his rent in advance and whether this was something his then landlord had stipulated, and his evidence was that it was not. He had just decided to pay this amount forward. He also did not put before the Tribunal any other documentation of unforeseen and unavoidable expenditure which might enliven application of the discretion available under the Act.
In demonstrating unusual or uncommon circumstances which are special to him or her, a person must provide satisfactory corroborative evidence to illustrate that such circumstances exist, not just make assertions about undocumented expenditure. Mr Souied has made some financial decisions that are hapless, and it may well be that he has been naïve and, in the vernacular, ‘ripped off’, but he has not provided proof either of the payment which he said was stolen, nor of the advance rent. Additionally he has not explained in adequate detail other very substantial personal and family expenditure out of his lump sum payment.
In these circumstances, with the paucity of evidence, the original decision was correct. I adopt the approach of (now) Deputy President McDermott in Taylor (supra) and decide that the exercise of the discretion conferred by section 1184K in this case is not appropriate.
The Tribunal notes that Mr Souied will be disappointed by this outcome, but also that his compensation preclusion period will end in April 2017.
DECISION
The Tribunal sets aside the decision of the Social Services and Child Support Division dated 8 March 2016 and affirms the original decision that Mr Mohamad Souied’s compensation preclusion period is from 19 March 2014 until 25 April 2017.
57.
58. I certify that the preceding 56 (fifty-six) paragraphs are a true copy of the reasons for the decision herein of Member D. J. Morris.
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Associate
Dated 16 March 2017
Date of hearing 9 January 2017 Advocate for Applicant Ms Ailsa Bramley
Respondent By phone
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