Yousef Hares and Secretary, Department of Social Services

[2014] AATA 389

[2014] AATA 389

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2013/4783
Re	Yousef Hares
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Deputy President RP Handley
Date	20 June 2014
Place	Sydney

The decision under review is affirmed.

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Deputy President RP Handley

SOCIAL SECURITY – compensation preclusion period – whether special circumstances to treat part of the compensation payment as not having been made – financial hardship – applicant spent a large portion of the compensation payment on a house – visual impairment – no special circumstances – decision affirmed

Legislation

Social Security Act 1991 (Cth) ss 17, 1169, 1170, 1171, 1184K

Cases

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

Beadle v Director-General of Social Security (1985) 7 ALD 670

Re Groth and Secretary, Department of Social Security (1995) 40 ALD 541

Re Krzywak and Director-General of Social Services (1988) 15 ALD 690

Holmes and Secretary, Department of Family and Community Services [2005] AATA 812

Morgan and Department of Family and Community Services (1999) 56 ALD 579

Re Zaccardi and Secretary, Department of Social Security (1995) 40 ALD 760

REASONS FOR DECISION

Deputy President RP Handley

1. This decision is about whether the payment of social security benefits to Mr Hares should be subject to a preclusion period arising from a compensation payment he received following a motor vehicle accident.

   BACKGROUND

2. Mr Hares was born in 1991 and is aged 23. He is visually impaired and was granted the Disability Support Pension (DSP) from 14 March 2007 on the basis of that impairment.

3. Mr Hares was injured in a car accident on 24 December 2007, when he was travelling as a passenger, sustaining injuries to his back and legs. Mr Hares lodged a claim with the driver’s insurer, GIO, for compensation for his injuries.

4. On 23 December 2010, Centrelink wrote to Mr Hares’ lawyers, Drexler and Partners, advising of the possible imposition of a compensation preclusion period, and that money paid by Centrelink could be recovered from a lump sum compensation payment. In a further letter of the same date to Mr Hares’ lawyers, Centrelink estimated that the repayment amount would likely be $28,336.16 and the preclusion period would likely date from 24 December 2007 to 3 September 2017.

5. On 25 March 2011, Mr Hares signed an agreement of release which provided for the payment of $650,000 in settlement of Mr Hares’ claim against GIO in relation to the accident. On 30 March 2011, GIO advised Centrelink that the lump sum payment had been made to Mr Hares.

6. On 13 April 2011, Centrelink reassessed the effect of the lump sum payment to Mr Hares and imposed a compensation preclusion period commencing on 24 December 2007 and ending on 27 September 2015.  In two letters dated 13 April 2011, Centrelink advised Mr Hares and his lawyers of the compensation preclusion period, and that an amount of $31,007.42 would be deducted from Mr Hares’ compensation payment, representing the social security payments already received by Mr Hares during the preclusion period.

7. In its letter to Mr Hares dated 13 April 2011, Centrelink informed him that his DSP had been cancelled because of the preclusion period and that he would not be eligible for the DSP again until 27 September 2015. He was advised to contact the Centrelink Financial Information Services Officer or the Compensation Recovery Team who would explain the impact of the preclusion period. 

8. On 6 May 2011, Centrelink wrote to Mr Hares once again notifying him of the preclusion period and asking him to sign and return the enclosed ‘Letter of Acknowledgement’ – acknowledging that as a result of the lump sum compensation payment he had received, a preclusion period would apply until 27 September 2015. On 16 May 2011, Mr Hares signed this and returned it to Centrelink.

9. After legal and other costs had been deducted, as well as the amount recovered by Centrelink, Mr Hares received the balance of $481,210.85. With that money, he purchased a property for approximately $400,000 in March 2013. He also bought furniture for the house. Mr Hares moved out of his parents’ house and into this property, where he now lives with his wife and brother. His brother does not pay rent but does contribute to household expenses.

10. On 16 April 2013, Mr Hares filed a new claim for the DSP and also a claim for Newstart Allowance pending the assessment of his DSP claim. A Treating Doctor’s Report from Dr Ali El Jaam, dated 14 April 2013, which accompanied Mr Hares’ DSP claim, states that Mr Hares experiences “[left] leg pain, low back pain (post traumatic)”.

11. On 30 April 2013, Mr Hares’ claim for Newstart Allowance was rejected because of the compensation preclusion period. Mr Hares asked for a review of that decision on the ground that he is in financial hardship. On 21 June 2013, an Authorised Review Officer of Centrelink affirmed the decision on the basis that there were no special circumstances warranting a reduction of the preclusion period.

12. Mr Hares then appealed to the Social Security Appeals Tribunal (SSAT) which affirmed the decision on 23 August 2013. On 23 September 2013, Mr Hares applied to the Administrative Appeals Tribunal for a review of the SSAT decision.

    LEGISLATION & ISSUES

13. Section 1169 of the Social Security Act 1991 (the Act) provides that, where a preclusion period is imposed, a compensation affected payment (relevantly, in this case, both Newstart Allowance and DSP), is not payable to a person for the duration of that period. The issue for the Tribunal is whether the preclusion period imposed on Mr Hares should be reduced.

14. The preclusion period is calculated by reference to section 1170. The length of the period is calculated by dividing the compensation component of the lump sum payment by the ‘income cut out amount’. The income cut out amount is calculated in accordance with a formula in section 17(8). Mr Hares does not dispute the calculation of the preclusion period and acknowledges that he was aware of its imposition.

15. Section 1184K effectively gives the decision-maker discretion to reduce the preclusion period by treating part of the compensation payment as not having been made. It states relevantly:

    (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.

16. The question for the Tribunal is whether there are special circumstances that make it appropriate to disregard part of the compensation payment, and therefore reduce the preclusion period.

    MR HARES’ CASE

17. Mr Hares gave evidence by telephone at the Hearing. He said he used his compensation to purchase a house in order to secure a roof over his head for the future and with a view to starting a family. He had previously been living in his parents’ house but it was very crowded given the size of the family: there are eight boys and six girls all of whom have to share rooms. The house Mr Hares bought has four bedrooms, two bathrooms and a study/storage room. He and his brother moved into the house approximately two weeks after the purchase was finalised in about March 2013 having bought furniture. Mr Hares said he bought the house from a friend and it was a good buy at $400,000. He did not want to buy a smaller house or a unit in order to avoid having to move again if he needed extra accommodation. At the time, he did not know he was going to run out of money.

18. Mr Hares travelled to Lebanon with his family in September 2013 where he got married, returning to Australia about two months later. While there, he stayed with his wife’s family. His father helped him with the expenses involved in travelling to Lebanon and in bringing his wife to Australia. He has not yet worked out how much he owes his father but it is in the region of $4,000 to $5,000. His wife arrived in Australia on 20 March 2014. He is encouraging her to learn to speak English so that in future she is able to work.

19. Mr Hares said his money ran out in about December 2013. Apart from the expense involved in purchasing his house and furniture, he also repaid debts and supported himself. Since that time, his brother, who is living with him, has paid for all the outgoings and at least $200 per week for food and household goods. His brother works in air conditioning.

20. Mr Hares said he had hoped and has tried to get a job but with no success. He is limited by his visual impairment – he could not work as a clerk because he would be unable to read the paperwork, and he is unable to drive, which is commonly a job requirement. The accident has also limited what he can do - he can only stand for about 10 minutes before getting bad pain in the back and neck. For the past two years, he has also suffered from bad reflux for which he needs medication.

21. Mr Hares said that renting out his house and finding a smaller house or unit to rent would only generate an extra $50 to $100 per week. Now that his wife is living with him, renting out rooms in his house is not an option. He cannot borrow more money from his father who is still paying off his own house. Borrowing from a bank is against his religion.

22. Mr Hares said he has tried hard to get work but has just not been able to get a job. He has to learn to live with his situation. He did not anticipate running out of money. He needs an income and asked that the discretion be exercised in his favour.

    THE SECRETARY’S CASE

23. Mr Misrachi, for the Secretary, noted that the Guide to Social Security Law states that that the purchase of a house and the consequent exhaustion of the compensation paid to a person does not, of itself, give rise to special circumstances. There must be compelling reasons to find that special circumstances exist sufficient to warrant exercising the discretion in section 1184K(1) of the Act.

24. Mr Misrachi noted that the purpose of the relevant law imposing preclusion periods is to prevent double dipping by persons from both compensation, paid following an accident to compensate for loss that includes compensation in respect of the person’s incapacity for work, and social security benefits paid where a person is unable to work. He submitted that there is nothing unusual about Mr Hares’ situation which is not unlike that of many income support claimants who have received compensation settlements. Mr Hares should not have exhausted his compensation settlement when he knew he was subject to a preclusion period.

    SPECIAL CIRCUMSTANCES

25. The issue is whether there are special circumstances which justify the Secretary disregarding all or part of the compensation payment.  The term ‘special circumstances’ is not defined in the Act. In Beadle v Director-General of Social Security (1985) 60 ALR 225 (Beadle), the Full Federal Court affirmed the decision in Re Beadle and Director-General of Social Security (1984) 6 ALD 1, in which the Tribunal, whilst acknowledging that the phrase “special circumstances” is “incapable of precise or exhaustive definition”, said, nevertheless, that the circumstances “must have a particular quality of unusualness that permits them to be described as special” (at 3).

26. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J, after referring to the Federal Court’s decision in Beadle, observed that special circumstances:

    would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary 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.

    DISCUSSION

27. Financial hardship on its own is insufficient to establish special circumstances.  The cases indicate that financial hardship must go beyond 'straitened' circumstances and be able to be classed as exceptional: Re Krzywak and Director-General of Social Services (1988) 15 ALD 690, 700; Re Zaccardi and Secretary, Department of Social Security (1995) 40 ALD 760.

28. Mr Hares explained how he spent his compensation settlement in purchasing a house and furniture, paying off debts, supporting himself until he ran out of money in about December 2013, and on travelling to Lebanon and the expenses associated with his getting married there. However, he still has a substantial asset in his house. In my view, he has not fully explored a range of options that may be open to him to borrow money against the security of his house. This would assist him in supporting himself until the end of the preclusion period. While I understand his desire to secure accommodation for his future, Mr Hares has not been sufficiently prudent with his compensation settlement as is reasonably expected given that the compensation he received was in part for his ongoing support.

29. Mr Hares hoped to be able to get a job in order to support himself and I accept that he has tried. I appreciate how difficult this is given his visual impairment and his neck and back pain. These conditions obviously impose significant limitations on him.

30. However, Mr Hares’ visual impairment is not a factor that can be taken into account when considering special circumstances. This is a permanent condition which has affected him for many years and, therefore, since before the time of the car accident and subsequent compensation settlement. There is no evidence of a significant change in the condition since that time and, in my view, it cannot be considered a relevant factor (See also Holmes and Secretary, Department of Family and Community Services [2005] AATA 812 and Morgan and Department of Family and Community Services (1999) 56 ALD 579.)

31. Mr Hares suffers from left leg pain and low back pain as a result of the accident. These are the injuries for which he was compensated and the resulting condition also does not constitute a relevant factor for the purposes of the s 1184K(1) discretion. If he were to receive both compensation for incapacity for work and social security benefits in respect of this period, this would be contrary to the purpose of the legislation in imposing preclusion periods and preventing ‘double dipping’.

32. In conclusion, whilst I am not unsympathetic to Mr Hares’ situation, considering that situation in its entirety, I am not satisfied that there are special circumstances in his case that warrant exercise of the discretion to treat the whole or part of the compensation payment as not having been made, which would have had the effect of reducing the preclusion period. His application does not therefore succeed.

    DECISION

33. The decision of the SSAT dated 23 August 2013 to refuse to exercise the discretion in s 1184K(1) of the Act is affirmed. The compensation preclusion period applied in Mr Hares’ case will therefore end on 27 September 2015.

I certify that the preceding 33 (thirty three) paragraphs are a true copy of the reasons for the decision herein of Deputy President RP Handley

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Associate

Dated   20 June 2014

Date(s) of hearing	18 June 2014
Date final submissions received	18 June 2014
Applicant	In person
Solicitors for the Respondent	S Misrachi; Department of Human Services