Zakout and Anor and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs - [2008] AATA 867

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 867

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2008/0656 & 2008/0817

GENERAL ADMINISTRATIVE DIVISION		)
Re		KHADER ZAKOUT and SOZAN AIASH

Applicants

And

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

Respondent

DECISION

Tribunal

Dr I Alexander, Member

Date30 September 2008
PlaceSydney

Decision

(1) The requirements of s 1184K of the Social Security Act 1991 have not been satisfied in that there are no special circumstances in this case that would make it appropriate to disregard the whole or part of Mr Zakout’s compensation payment.

(2) The decision under review is affirmed.

…............[sgd]..........................
Dr I Alexander
Member

CATCHWORDS

SOCIAL SECURITY – compensation affected payments – repayment where both periodic compensation payments and compensation affected payments have been received – special circumstances – Secretary may disregard the whole or part of a compensation payment – the decision under review is affirmed.

Social Security Act 1991 – ss 17, 1173, 1174, 1184K

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

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

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

Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531

REASONS FOR DECISION

30 September 2008 Dr I Alexander, Member

INTRODUCTION

The applicants, a married couple, sought review of a decision of the Social Security Appeals Tribunal (SSAT) to affirm two prior determinations made by Centrelink, on 29 August 2007, to raise and recover a debt of $30,083.26 from Mr Zakout, in relation to carer payment and a debt of $9,702.49 from Ms Aiash, in relation to carer payment and newstart allowance, following the settlement of a compensation claim in favour of Mr Zakout.
On 13 August 2008 Mr Zakout attended the hearing. He was unrepresented but gave oral evidence. Ms Aiash did not attend the hearing and relied on submissions made by Mr Zakout.
It was not disputed that Mr Zakout and Ms Aiash had received compensation affected payments as determined by s 17(1) of the Social Security Act 1991 (“the Act”) and that the amount to be repaid had been correctly calculated.
Mr Zakout conceded that he knew that some of the payments that had been received would be recovered, but stated that he and his wife had expected only a small portion and not the whole amount. He submitted that their circumstances were such that they should not be expected to pay back the full amount.
Section 1184K(1) of the Act allows the Secretary to treat the whole or part of any compensation payment as not having been made “if the Secretary thinks it is appropriate to do so in the special circumstances of the case”.
Therefore the only issue to be decided is whether the circumstances in this case are ”special circumstances” within the meaning s 1184K of the Act so that it is appropriate to apply the Secretary’s discretion to treat the whole or part of Mr Zakout’s periodic compensation payments as not having been made.

Preliminary Facts (not disputed)

On 18 November 2004 Mr Zakout injured his back at work.
In May 2005 Mr Zakout and Ms Aiash were married.
In May 2007 Mr Zakout settled a claim for compensation and was paid, in arrears, weekly compensation of $56,785.60 covering the period from 7 February 2005 to 1 May 2007. Thereafter Mr Zakout has continued to be paid at the maximum statutory rate which is currently at about $650 per week before tax.
Mr Zakout was granted carer payment in relation to his mother and was paid at the single rate from 14 March 2005 until 5 May 2005 and at the partnered rate from 6 May 2005 until 23 August 2007.
Ms Aiash was paid newstart allowance from 6 May 2005 to 26 May 2005 and carer payment in relation to Mr Zakout’s father from 27 May 2005 to 23 August 2007 at the partnered rate.
On 29 August 2007 Centrelink decided to raise and recover a charge of $39,785.75 arising from payments made for the period 14 March 2005 to 23 August 2007. This included the following charges:
·$29,744.53 against Mr Zakout in relation to carer payments;
·$338.73 against Mr Zakout in relation to pensioner education supplement payments;
·$9,162.04 against Ms Aiash in relation to carer payments; and
·$540.45 against Ms Aiash in relation to newstart allowance.
The amount recovered from Mr Zakout reflects the reduction of his compensation affected payment by the daily rate of his periodic compensation payment as determined by s 1173 of the Act.
The amount recovered from Ms Aiash reflects the excess amount between Mr Zakout’s daily rate of periodic compensation payment and the daily rate of compensation affected payment that had been paid to Ms Aiash as determined by s 1174 of the Act.

Mr Zakout’s Evidence

Mr Zakout claimed that when the carer payment started he had received a letter from Centerlink explaining that he would need to notify them following finalisation of his compensation claim, but that the letter did not mention repayment. After having received the letter Mr Zakout claimed that he spoke to a Centrelink officer, on the telephone, who told him that he would have to repay only a small amount. He did concede, however, that he may have misunderstood the conversation.
Mr Zakout claimed that the matter of repayment was not brought to his attention again until he received the letter from Centrelink, in August 2007, informing him that $39,785.75 had been recovered from his compensation settlement. He agreed, however, that apart from the initial phone call he had had made no effort to discuss this issue with Centrelink until he had received this letter.
Mr Zakout stated that if he and his wife had known that they would be required to repay the full amount they would have applied for alternative but lesser social security payments so that they would not have accumulated such a large potential debt.
I note that in a letter dated 18 March 2005 Centrelink had informed Mr Zakout that if he received “any payment of weekly compensation or a lump sum compensation payment, some or all of the Centrelink payment paid to you since the date of injury may have to be paid back to us.”
The letter also advised Mr Zakout before agreeing to settle his compensation claim, he or his solicitor should contact Centrelink with reference to the requirements for any repayment.
A similar letter dated 18 March 2005 stating that “some or all of [the] Centrelink payments … made to your client may be recovered by us from your client’s compensation payment”, was sent to the solicitor managing Mr Zakout’s compensation claim.
Mr Zakout claimed that the issue of repayment was never discussed with his solicitor.
Mr Zakout claimed that he and his family were suffering significant financial hardship and that this should have been taken into consideration before recovering the whole amount.
In support of his claim Mr Zakout referred to significant debts including about $21,000 for Austudy (supplement loan). It appears this debt is not recoverable until his taxable income exceeds $39,000, but does accumulate at the rate of 4 per cent per year. I note, however, that Mr Zakout’s tax assessment for the year ending 30 June 2008 included a recovery payment of $1,481.22 based on a debt of $21,735. This occurred because the lump sum compensation payment received by Mr Zakout resulted in a taxable income of $49,374 for that year.
Mr Zakout indicated that although the debt is currently not recoverable he is significantly distressed by the thought of the ongoing yearly increase of the debt.
Mr Zakout also stated that he had a debt of approximately $6,000 with State Debt Recovery, which he claimed was required to be repaid in full immediately. However, he was unable to provide any document to support his claim for immediate repayment.
Furthermore, his claim was not consistent with a letter from the State Debt Recovery Office, dated 1 July 2008, which stated that Mr Zakout owed $5,971 for outstanding fines but that he had entered into a time to pay arrangement for $25 per fortnight until 2014.
Mr Zakout claimed that as a result of wedding expenses he owed a debt of approximately $27,000 to his mother and brother, but was unable to provide any supporting documentation. He stated that, he kept all the records “in the head”.
Mr Zakout stated that he had no other outstanding debts including no credit card debt. In cross examination, however, he agreed that there was an additional debt with Centrelink of approximately $4,000 that was being recovered at approximately $50 per month.
As noted above, Mr Zakout was married in May 2005 and now has two sons aged 3 months and 18 months. His wife does not work.
The evidence with regard to the gross family income was not entirely clear as some of the payments varied from time. The best estimate would be somewhere between $900 and $950 per week. This consisted of a weekly compensation payment of $650 pre-tax, approximately $42 per fortnight for Parenting Payment and between $480 and $557 per fortnight for Family Tax Benefit payment which included a rent subsidy. Mr Zakout’s compensation related medical expenses are fully covered and at present the family had no other major medical expenses.
I note that in April 2007 Mr Zakout applied for release of superannuation benefits due to financial hardship and in May 2007 was granted a payment of $7,625.30.
Mr Zakout had not provided a detailed statement of financial circumstances despite at least two requests by Centrelink. At the hearing his evidence was that fixed expenses included $240 per week in rent and $40 per week for child care and that he spent $100 per week on cigarettes and up to $60 per week in sourcing marijuana.
Although his wife does not work Mr Zakout claimed that the child care for two days per week was necessary so that his 18 month old son could “get communicated with people and with children”.
At the hearing, the Secretary provided copies of certificates from Arab Bank Australia dated January 2008 that showed term deposits of USD 25,560.48 and AUD 3,033.99. Mr Zakout claimed that this money represented the residual of his compensation payments and that the amount has been significantly reduced since he had purchased a car for $9,000 and furniture and whitegoods after moving house and the balance currently stands at approximately $8,000.
Mr Zakout explained that in October 2007 his brother initiated proceedings in Blacktown Local Court that resulted in $5,000 being garnished from his account. This was because Mr Zakout had accessed his brother’s keycard account while caring for his brother’s children when he was overseas for several months. Mr Zakout claimed that his brother refused to return the money until he had settled his debts with his mother.
I note that in a letter dated 3 September 2007 in which Mr Zakout requested a review of the amount of repayment, he stated that he was expecting to repay a specific percentage but not the amount that had been recovered. In the letter he itemised his wedding expenses which totalled $22,500 and included $6,000 for gold that was given to his wife. In cross examination, Mr Zakout stated that he had subsequently sold the gold at a significant loss but was unable to provide any supporting documents.

Medical Evidence

In a report dated 19 April 2008, Mr Metry, Consultant Psychologist, noted that since his back injury at work in November 2004, Mr Zakout has suffered from pain in various parts of his body as well as other symptoms. Mr Metry diagnosed an adjustment disorder with anxiety and depressed mood and noted that Mr Zakout “has developed a significant emotional and behavioural symptomatology in response to his loss of control over his life due to his physical pain and loss of many things, which he previously enjoyed such as work ”, and is receiving cognitive behavioural therapy.
This medical report clearly attributes Mr Zakout’s problems to his compensable work-related injury and makes no mention of any issue with respect to Centrelink.

Consideration

The term “special circumstances” is not defined in the legislation but has been considered on a number of occasions by the Administrative Appeals Tribunal (“the AAT”) and the Federal Court.
In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal (Toohey J presiding) said:
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 on 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 have a particular quality of unusualness that permits them to be described as special.
In Beadle v Director-General of Social Security (1985) 7 ALD 670 the Full Federal Court in considering the earlier decision said:
… It would depend upon the circumstances of the particular case whether these constituted special circumstances. We do not think it is possible to lay down precise limits or precise rules. The matter is one for the Director-General bearing in mind the purpose for which the power is given. The phrase “special circumstances”, although lacking precision, is sufficiently understood in our view not to require judicial gloss.
In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 Kiefel J considered an appeal from a decision of the AAT in which the essential point was whether there were “special circumstances” in that case that rendered it appropriate to disregard the whole or part of compensation payments in the assessment of a pension entitlement as per the former s 1184 of the Act.
After an extensive review of cases the AAT had concluded “that a consideration of whether or not there are special circumstances must be undertaken in the context in which the discretion is given… It seems to me that the purpose of the provisions is to ensure that a person is not paid from two sources in respect of the same period of time. What are special circumstances must be considered against that background.”
Kiefel J approved the approach of the AAT and after referring to the decision of the Full Federal Court in Beadle said:
… 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. The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied.
Later Kiefel J approved the AAT’s reasoning in finding that “his circumstances and those of his family although difficult did not constitute hardship and they could not be said to be different from other pension recipients.”
In Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531 at 536 French J said:
The core of the requirement for “special circumstances” or “special reasons” is that there be something unusual or different to take the matter the subject of the discretion out of the ordinary course... But that does not require the case be extremely unusual, uncommon or exceptional…
It is clear from the above authorities, that the question, I must consider is whether there is something unusual or different about Mr Zakout’s and Ms Aiash’s circumstances when compared to other cases so that it would be appropriate to disregard some or all of Mr Zakout’s compensation payments as allowed by s 1184K(1) of the Act.
In the course of the hearing, it became clear that Mr Zakout had been expecting a financial windfall and that the amount of money recovered by Centerlink had adversely affected some of his life aspirations such as purchasing his own home. He made various assertions as to why it was unfair that he and his wife should be expected to pay back the full amount claimed by Centrelink, particularly as neither of them had been made aware of the extent of the payment recovery.
Mr Zakout agreed that he had received a letter from Centrelink in March 2005 informing him about the possibility of repayment and apart from his claim that in a subsequent telephone call to a Centrelink office he had been told that only a small part of the payments would be recovered there is no evidence to suggest that Centrelink would have done anything but seek full recovery as determined by the Act. There is no supported evidence that Mr Zakout was misled or given incorrect information.
Furthermore, the solicitor representing Mr Zakout in his compensation case was also informed of the possible repayment liability and should have advised his client appropriately. Mr Zakout could also have raised the issue with his solicitor but apparently did not do so.
Mr Zakout claimed that his wife was never informed by Centrelink that she may have to repay some of her carer payments and, furthermore, that it was unfair to expect her to repay money that she had received for providing care to Mr Zakout’s father, particularly as this was unrelated to his compensation claim.
In a letter dated 5 March 2006, Centrelink, amongst other matters, notified Ms Aiash that she was required to inform Centrelink within seven days “if you or your partner become aware that you will receive or have received compensation”. Whether she was aware or understood the contents of this letter is unclear, particularly as Mr Zakout indicated, during the hearing, that he reads all her letters because of her poor English. I see no reason why he could not have discussed the contents of such a letter with his wife and/or his solicitor.
At the hearing the Secretary’s representative, explained that the reason Ms Aiash did not receive a letter detailing her repayment obligations was because she had not notified Centrelink about her husband’s compensation payment. The notification would have served as a trigger to write to her. Furthermore, it was explained that Centrelink is unable to provide exact details of any repayment until the details of the compensation payment are provided to them.
In fact, the letter to Mr Zakout of 29 August 2007, detailing the repayment requirements, was in response to a notice from Symbion Health, dated 22 August 2007, informing Centrelink of the details of the settlement of the compensation claim.
The Secretary’s representative also pointed out that only a portion of Ms Aiash’s carer payments had been recovered. This was confirmed by Centrelink documents which demonstrated that Ms Aisha had received $28,487.38 net in carer payments between May 2005 and August 2007.
On the matter of the lack of relationship between Ms Aiash’s carer payment and Mr Zakout’s compensation s 1184K(2) of the Act clearly states that the fact that there are two sets of unrelated circumstances associated with a person’s partner receiving compensation affected payments and the person receiving compensation does not constitute special circumstances.

Conclusion

Although Mr Zakout and Ms Aiash feel that they have been treated unfairly because they were required to repay such a significant proportion of the compensation settlement there is no evidence to suggest they were treated differently from any other couple in similar circumstances. Also there is no evidence that they were actually treated unfairly or misled in any way.
Although they probably did not understand the requirements of the legislation they made no real effort to clarify their repayment obligations with either Centrelink or their solicitor.

Mr Zakout claimed that his personal and financial circumstances were difficult and causing significant problems for his wife and family. He submitted that although he was receiving periodic compensation payments his income has been significantly reduced because he was unable to work and felt that as the size of his repayment had contributed to his financial difficulties he deserved special consideration.
The exact state of Mr Zakout’s financial situation with regard to his debts and assets was somewhat unclear. The gross family income was at least $900 per week with significant Family Tax Benefit payments, and despite his claimed difficulties Mr Zakout admitted to significant discretionary spending on such items as cigarettes.
While I accept that Mr Zakout believes that his circumstances and those of his family warrant special consideration, in my view, the evidence before me does not support a conclusion that the circumstances in this case are unusual or exceptional when compared to other couples in similar circumstances.

DECISION

For the reasons above, I find that:
(i)The requirements of s 1184K of the Social Security Act 1991 have not been satisfied in that there are no special circumstances in this case that would make it appropriate to disregard the whole or part of Mr Zakout’s compensation payment.
(ii) The decision under review is affirmed.

I certify that the 62 preceding paragraphs are a true copy of the reasons for the decision herein of Dr I Alexander, Member.

Signed: ....................[SGD]..............................................
Associate

Date of Hearing:  13 August 2008
Date of Decision:  30 September 2008
Appearance for the Applicant: Self-Represented
Solicitor for the Respondent:     Ms J Maclean, Legal Services Branch,          Centrelink