Yaghmour and Department of Family and Community Services

[2002] AATA 150

DECISION AND REASONS FOR DECISION [2002] AATA 150

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2001/410

GENERAL  ADMINISTRATIVE  DIVISION     )          
           Re      Rachid Yaghmour            
  Applicant
           And    SECRETARY, Department of Family and Community Services
  Respondent

DECISION

Tribunal       N Bell , Member       

Date8 March 2002 

PlaceSydney

Decision      The Tribunal sets aside the decision under review and substitutes therefor a decision to impose a preclusion period of 115 weeks from 20 January 1999 to 3 April 2001.       
  ..............................................
  N Bell, Member    
CATCHWORDS
Social Security – compensation payments – lump sum settlement – preclusion period – whether special circumstances exist to disregard part or whole of compensation payment

Social Security Act 1991 sections 17, 1165 and 1184.

Beadle v Director-General of Social Security (1985) 7 ALD 670
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Riddell v Secretary Department of Social Security (1993) 42 FCR 443

REASONS FOR DECISION

N Bell, Member                   

1. This is an application by Rachid Yaghmour ("the Applicant") for review of the decision by the Social Security Appeals Tribunal ("SSAT") made on 18 February 2001 which affirmed the decision of a delegate of the Secretary, Department of Family and Community Services ("the Respondent"), dated 17 March 1999, affirmed by an Authorised Review Officer on 5 October 1999, to impose a preclusion period from 17 February 1999 to 1 May 2001.

2. The Applicant attended the hearing without representation and the Respondent was represented by Ms Fahey, an advocate from the Advocacy and Administrative Law team at Centrelink.  The Applicant gave oral evidence to the Tribunal, as did his wife, Mrs Yaghmour.  The following documentary evidence was before the Tribunal:
   Exhibit No  Description                Date  
   T1 Documents prepared pursuant to section 37 of the AdministrativeAppeals Tribunal Act 1975
   R1      Respondent's Statement of Facts and Contentions     14 December 2001 
   background

3. It is common ground between the parties that the Applicant received, on 16 February 1999, a compensation settlement of $95,000.00 in respect of injuries he sustained on 6 September 1995.  He was advised by his barrister that a preclusion period would be imposed in relation to social security payments and he was advised of the preclusion period by the Respondent by letter dated 17 March 1999.
   issues

4. The issues to be considered by the Tribunal in this application are:

   (1)whether the decision by Centrelink to impose a preclusion period from 17 February 1999 to 1 May 2001 was correct; and

   (2)if so, whether there are special circumstances, which warrant the disregarding of all or part of the Applicant's compensation payment in the  calculation of the preclusion period.

legislation

1. The relevant legislation to be considered in this application is sections 17, 1165 and 1184 of the Social Security Act 1991 ("the Act").
   applicant's evidence

2. The Applicant's evidence and that of his wife was that he spent his compensation moneys of  $71,000.00 in his hand as follows:
   Furniture and household goods  $15,000.00
   Repayment of loan from friend  $14,300.00
   The remainder of the moneys was used for living expenses and regular bills.  These bills include private school fees, with Mr and Mrs Yaghmour's daughter having recently completed Year 12 at Meriden School, one son attending Trinity Grammar and two sons attending Islamic school. The total annual school fees are approximately  $31,000.00.

3. Mr Yaghmour told the Tribunal that when he received his settlement he bought a half share in a fruit shop business for $34,500.00.  He found he was unable to perform the work required and his partner agreed to repay the purchase price but did so by instalments.  The amount was repaid in full to the Applicant .

4. Mrs Yaghmour told the Tribunal that she had a mixed business until 1999 when she sold her business for $12,000.00.  She also told the Tribunal that after having requested a refund of her husband's superannuation contributions some two years ago, her husband was paid $69,000.00 by his superannuation fund in November of 2001.  From this money they paid back debts of $25,000.00 to a friend.  They have $25,000.00 remaining in savings.  They are now debt free and their school fees have been paid for 2001.

5. Mr Yaghmour described his current health as "up and down" with some days better than others.  He said he still sees Dr Mahony approximately every 2 months and takes Celebrex and Panamax for his back together with Zantac for his stomach.  He said that he has tried to work but finds that he is unable to do so.

6. Mr and Mrs Yaghmour said they have no assets or property and currently rent their home.  They said that currently Mrs Yaghmour is in receipt of family tax benefit, Mr Yaghmour is receiving sickness allowance and their daughter is receiving Austudy payments.
   submissions

7. Mr Yaghmour submitted that as a person who has paid taxes over many years he should be entitled to adequately support his family.  He wished the Tribunal to note that he had not gambled his settlement moneys away and had simply tried to provide for his family.

8. Mrs Yaghmour submitted that their choice to send their children to private schools was one that would also benefit the community by producing well-educated and good citizens.

9. Ms Fahey for the Respondent submitted that the "compensation part" of the Applicant's compensation settlement payment of $95,000 is 50 per cent of that amount, ie $47,500 pursuant to section 17 of the Act. She detailed the formula, contained in section 1165 of the Act, for calculating the length of the preclusion period applicable to the Applicant and demonstrated that an amount of $47,500 divided by an "income cut-out amount" of $412.70 yields a preclusion period of 115.09 weeks. When rounded down to a full week, under section 1165(9) of the Act, the preclusion period was 115 weeks, which commenced on the day that the loss of earnings or lost capacity to earn began, ie, the day of the Applicant's settlement, 16 February 1999.

10. Ms Fahey also advised the Tribunal that she had learnt on the morning of the hearing that the Compensation Section of Centrelink had, and was attempting to have confirmed, some further information about the weekly compensation payments that had been made to Mr Yaghmour by the insurance company.The additional information may have an impact on the length of the preclusion period that should correctly be imposed.  The hearing was adjourned to give Ms Fahey time to obtain confirmation of the information and to forward the information to the Tribunal and to the Applicant before the Tribunal made it's decision.

11. Some time after the hearing, Ms Fahey provided additional information to the Tribunal to the effect that:

• On 30 November 1998 an amount of $13,978.44 nett was paid to the Applicant by the insurance company;

• The Applicant was last paid compensation payments on 19 January 1999; and

• The preclusion period should have been from 20 January 1999 (the day after compensation payments ceased) to 3 April 2001 instead of from 17 February 1999 to 1 May 2001.

1. This additional information was accompanied, however, by a submission that no change needed to be made to the original decision as to the preclusion period because "the effect would be the same".  This is so, although not stated by the Respondent, because the lengths of the two periods are the same.  The Applicant was provided with the additional information by the Respondent and given an opportunity by the Tribunal to comment on it but elected not to do so.

2. In relation to the question of whether any special circumstances exist to warrant the exercise of the discretion contained in section 1184 of the Act, Ms Fahey referred the Tribunal to a number of decisions, including Beadle v Director-General of Social Security (1985) 7 ALD 670, and submitted that the discretion provided for should be exercised consistently with the objects and purposes of the legislation, that is, to prevent "double dipping", unless it would be unjust to enforce the liability for which the legislation otherwise provides. To treat compensation payments in any other manner in this case, it was submitted, would frustrate the object of the legislation in the absence of any special circumstances in which it would be reasonable to do so. It was submitted that there is nothing about the Applicant's situation, which sets him apart from other income support recipients.
   Consideration

3. It is not in dispute that the Applicant received a lump sum settlement of $95,000.00 on 16 February 1999.  The Tribunal accepts, on the basis of the further information provided by the Respondent to the Tribunal, and not contested by the Applicant, that the Applicant was last paid a periodic payment of compensation on 19 January 2001.  The Tribunal also accepts the evidence of the Applicant and of Mrs Yaghmour, as to the way in which the settlement moneys were spent, the borrowings made by them and additional amounts that became available to them.

4. The Tribunal has considered the application by the Respondent of sections 17 and 1165 of the Act to the circumstances of the Applicant as it finds them to have been. Section 17(2) of the Act provides:

   "Compensation

   17.(2)  For the purposes of this Act, compensation means:

   (a)       a payment of damages; or
   (b)       a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or
   (c)       a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or
   (d)       any other compensation or damages payment;
   (whether the payment is in the form of a lump sum or in the form of a series of periodic payments) that is:
   (e)       made wholly or partly in respect of lost earnings or lost capacity to earn; and
   (f)        made either within or outside Australia."

5. "Compensation", as defined in section 17(2) of the Act forms the basis of the calculation of any charge or preclusion period under section 1165(7) of the Act using the "compensation part of a lump sum compensation payment" (as defined in section 17(3) of the Act and the "income cut-out amount (as defined in section 17(8) of the Act)."

6. Section 17(3) of the Act provides:

   "Compensation part of a lump sum

   17.(3)  For the purposes of this Act, the compensation part of a lump sum compensation payment is:

   (a)       50% of the payment if the following circumstances apply:

   (i)        the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or  condition; and

   (ii)       the claim was settled, either by consent judgement being entered in respect of the settlement or otherwise; or

   (ab)     50% of the payment if the following circumstances apply:

   (i)        the payment represents that part of a person's entitlement to periodic compensation payments that the person has chosen to receive in the form or a lump sum; and

   (ii)       the entitlement to periodic compensation payments arose from the settlement (either with or without admission of liability) of a claim that is, in whole or in part, related to a disease, injury or condition; and

   (iii)      the claim was settled, either by consent judgement being entered in respect of the settlement or otherwise; or

   (b)       if those circumstances do not apply—so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn."

7. Section 17(8) of the Act provides:

   "17.(8)  For the purposes of the definition of income cut-out amount in subsection (1), the formula is as follows:

2.5      [Maximum basic rate  +        Pharmaceutical amount for a single person] +        Ordinary free area limit     

52  

where:
maximum basic rate means the sum of the amount specified in column 3 of item 1 in Table B in point 1064-B1 and the amount of pension supplement worked out under point 1064-BA2 for a person who is not a member of a couple.
Note:   Point 1064-BA2 refers to maximum basic rate.  Maximum basic rate depends on a person's family situation.  The rate used here is the rate for a person who is not a member of a couple.
ordinary free area limit means the amount specified in column 3 of item 1 in Table E-1 in point 1064-E4.
pharmaceutical amount for a single person means the amount specified in column 3 of item 1 in the Pharmaceutical Allowance Amount Table in point 1064-C8."

1. Section 1165(2AA) of the Act provides:

   "1165.(2AA)  If:

   (a)       a person receives or claims a compensation affected payment; and
   (b)       the person is a member of a couple; and
   (c)       the person receives a lump sum compensation payment (whether before or after the person receives or claims the compensation affected payment) on or after 20 March 1997;

   no compensation affected payment is payable to the person for the new lump sum preclusion period."

2. The lump sum preclusion period is to be calculated in accordance with sections 1165(8) and (9) which provide:

   "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 amount

1165.(9)  If the number worked out under subsection (4) or (8) is not a whole number, the number is to be rounded down to the nearest whole number."

1. According to section 1165(5) of the Act the preclusion period must be calculated from the day after the last day of the periodic payment period, that is, the day after periodic payments ceased. Attachment "A" to the Respondent's Additional Statement of Facts and Contentions shows advice from Allianz Australia Insurance Limited, the insurance company that made payments of compensation to the Applicant, that periodic compensation payments were made to the Applicant up until 19 January 1999.

2. The Respondent was therefore correct in calculating the length of the preclusion period as follows:

   $47,500.00 (Compensation part of lump sum)
   $412.70 (Income cut-out amount as at 20/1/99)
   =115.9 weeks rounded down to 115 weeks

3. However, as submitted by the Respondent, the preclusion period should begin on the day after periodic payments ceased, that is, on 20 January 1999.  The period of 115 weeks after 20 January 1999 ends on 3 April 2001.

4. It remains for the Tribunal to consider whether the circumstances of the case make it appropriate to disregard the whole or part of the compensation. Section 1184(1) of the Act provides:

   "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."

5. The decision of the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 is often quoted in relation to the interpretation of "special circumstances". In that decision, the Tribunal said at 6 ALD 3:

   "An expression such as `special circumstances' is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special."

6. The breadth of the discretion in relation to "special circumstances" was also commented on by the Full Federal Court in Riddell v Secretary Department of Social Security (1993) 42 FCR 443 at 450:

   "Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other."

1. The Tribunal is of the view that there is nothing in the Applicant's circumstances, as described by him or by Mrs Yaghmour, that "has a particular quality of unusualness that permits them to be described as special" (Beadle [supra]).  Unfortunately, it is not unusual for a person who has had a period of unemployment, arising out of an accident or otherwise, to have accumulated some debts or to have continuing physical limitations on his or her ability to work.

2. Mr and Mrs Yaghmour's decision to send their children to private schools and to incur some $30,000.00 per annum in school fees is not a special circumstance but is rather a choice made by them.  The Tribunal is mindful of additional amounts of money that, on the Applicant's and Mrs Yaghmour's evidence, became available to them during the period from 1999 including the proceeds of the sale of Mrs Yaghmour's business and drawings of $69,000.00 made by Mr Yaghmour on his superannuation.  At the date of the hearing the Applicant and Mrs Yaghmour had available savings of approximately $25,000.00.

3. The Tribunal considers that the Applicant's circumstances are not special and do not render it appropriate to treat his lump sum compensation payment, or any part of it, as having not been made.
   Determination

4. The Tribunal sets aside the decision under review and substitutes therefor a decision to impose a preclusion period of 115 weeks from 20 January 1999 to 3 April 2001.

   I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell

   Signed:         .....................................................................................
     Associate

   Date of Hearing  18 December 2001
   Date of Decision  8 March 2002
   Representative for the Applicant   Self
   Advocate for the Respondent       Ms Fahey