Zreika; Secretary, Department of Family and Community Services an D
[2003] AATA 642
•7 July 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 642
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2001/1668
GENERAL ADMINISTRATIVE DIVISION ) N2002/779 Re SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES Applicant
And
MOHAMAD ZREIKA
Respondent
DECISION
Tribunal Ms G Ettinger, Senior Member Date 7 July 2003
Place Sydney
Decision The Administrative Appeals Tribunal decides that the correct and preferable decision in matters N2001/1668 and N2002/779, is to set aside the decision of the Social Security Appeals Tribunal in which the SSAT held that “so much of Mr Zreika’s compensation settlement be disregarded so that the charge amount is reduced by $23,200.” In substitution therefor, the Tribunal affirms the decision of the Authorised Review Officer of 14 March 2000.
[SGD] Ms G Ettinger
Senior Member
CATCHWORDS
Social Security – lump sum settlement – preclusion period – whether special circumstances – decisions under review affirmed
LEGISLATION
Social Security Act 1991 ss 17(1), 17(3), 1165, 1184
CASE LAW
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Beadle and Director‑General of Social Security (1985) 7 ALD 670
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re Secretary Department of Social Security and Norman [1998] AATA 444
Secretary, Department of Social Security v Hill (1995) 2(1) SSR 9
Director-General of Social Services v Hales (1983) 47 ALR 281
Haidar v Secretary of Social Security (1998) 52 ALD 255
Kertland v Secretary Department of Family and Community Services (1999) 95 FCR 64
Secretary Department of Social Security v Smith (1991) 23 ALD 277
Re Ivovic and Director-General of Social Services (1981) 3 ALN N95 at N96-97
Secretary, Department of Social Security v Ellis (1997) 46 ALD 1
REASONS FOR DECISION
7 July 2003 Ms G Ettinger – Senior Member 1. The decision under review was the decision of the Social Security Appeals Tribunal (“the SSAT”), dated 18 September 2001 (T2) which decided to set aside the decision of the Authorised Review Officer (“ARO”) of Centrelink (T13) dated 14 March 2000, which had found that the preclusion period imposed on Mr Mohamad Zreika, the Respondent in these proceedings was 3 July 1990 to 25 March 1996 (T10). The ARO had decided that the amount of $41,784.86 was the correct charge to recover, as it represented social security payments made to Mr Zreika during the preclusion period. I noted that this amount had been varied from the original calculation of $43,658.32.
2. The SSAT decided that “so much of Mr Zreika’s compensation settlement be disregarded so that charge amount is reduced by $23,200.” The Secretary appealed (Matter N2001/1668). Mr Zreika also appealed (Matter N2002/779), stating in his claim form that: “In the special circumstances of the Applicant [Mr Zreika], he has a proper claim for the whole amount refundable to the Department, $41,784.86.”
3. The Applicant, Secretary, Department of Family and Community Services, (”the Department”, also referred to as the “Applicant”) was represented by its advocate Ms S Mantaring, and Mr Zreika by Mr C Colborne of counsel, instructed by Malouf Solicitors.
ISSUE BEFORE THE TRIBUNAL
4. The issue before the Tribunal was whether there were “special circumstances” which warranted the exercise of the discretion conferred by section 1184 of the Social Security Act 1991, (“the Act”), to treat the whole or part of Mr Zreika’s compensation payment as not having been made.
RELEVANT LEGISLATION
5. The relevant legislation is the Social Security Act 1991, in particular sections 17(1), 17(3), 1165 and 1184. As relevant these sections follow:
6. Section 17(1) of the Act explains what is meant by a “compensation affected payment”.
“Section 17 Compensation Recovery definitions
17(1) In this Act, unless the contrary intention appears:
…
compensation affected payment means:
(aa) an age pension; or
(a) a disability support pension; or
(b) a parenting payment; or
(c) a social security benefit; or
(e) a disability support wife pension; or
(f) a carer payment; or
(g) a special needs disability support pension; or
(h) a special needs disability support wife pension; or
(i) mature age allowance; or
(j) mature age partner allowance; or
(k) a former payment type.”
7. Section 17(3) of the Act explains the 50% rule regarding compensation payments.
“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 judgment 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 of 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 judgment 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.”
8. Section 1165 deals with the fact that social security payments are not payable during a lump sum preclusion period which is calculated according to a formula set out in that section.
“Section 1165 Compensation affected payment not payable during lump sum preclusion period
Person not member of a couple—payment received before 20 March 1997
1165(1) Where:
(a)a person receives or claims a compensation affected payment; and
(b) the person is not 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) before 20 March 1997;
a compensation affected payment referred to in paragraph (a) is not payable to the person for the old lump sum preclusion period.
Note 1: For old lump sum preclusion period see subsections (3) to (4).
Note 2: A series of lump sum payments can be taken to be one lump sum compensation payment under subsection 17(2B).
…
Person member of a couple—payment received before 20 March 1997
1165(2) 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, or the person's partner, receives a lump sum compensation payment (whether before or after the person receives or claims the compensation affected payment) before 20 March 1997;
the following provisions have effect:
(d)no compensation affected payment is payable to the person for the old lump sum preclusion period;
(e)no compensation affected payment is payable to the person's partner for the old lump sum preclusion period.
Note 1: For old lump sum preclusion period see subsections (3) to (4).
Note 2: A series of lump sum payments can be taken to be one lump sum compensation payment under subsection 17(2B).
…
Old lump sum preclusion period
1165(3)If periodic compensation payments are made in respect of the lost earnings or lost earning capacity, the old lump sum preclusion period is the period that:
(a)begins on the day after the last day of the periodic payments period; and
(b) ends after the number of weeks specified in subsection (4).
Note: for periodic payments period see section 17.
…
1165(3C) If neither subsection (3) nor (3A) applies, the old lump sum preclusion period is the period that:
(a)begins on the day on which the loss of earnings or loss of earning capacity began; and
(b) ends after the number of weeks specified in subsection (4).
1165(4)The number of weeks in the old lump sum preclusion period is the number worked out under the following formula:
Compensation part of lump sum
------------------------------------------------Average weekly earnings
Note 1: for compensation part of lump sum see section 17.
Note 2: for average weekly earnings see section 17.
New lump sum preclusion period
1165(5)If periodic compensation payments are made in respect of the lost earnings or lost earning capacity, the new lump sum preclusion period is the period that:
(a)begins on the day after the last day of the periodic payment period; and
(b)ends after the number of weeks worked out under subsections (8) and (9).
Note: For periodic payments period see section 17.
1165(6)If a person chooses to receive part of an entitlement to periodic compensation payments in the form of a lump sum, the new lump sum preclusion period is the period that:
(a)begins on the first day on which the person's periodic compensation payment is a reduced payment because of that choice; and
(b)ends after the number of weeks worked out under subsections (8) and (9).
1165(7)If neither subsection (5) nor (6) applies, the new lump sum preclusion period is the period that:
(a)begins on the day on which the loss of earnings or loss of earning capacity began; and
(b)ends after the number of weeks worked out under subsections (8) and (9).
…”
9. Section 1184 of the Act deals with the situation of “special circumstances” and the discretion to treat the whole of part of a compensation payment as not having been made, or not liable to be made where appropriate, taking into account the particular circumstances of the case. It was this section which occupied my attention in relation to the application before me.
“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.
(2) If:
(a)a person or a person's partner receives or claims a compensation affected payment; and
(b) the person receives compensation; and
(c)the set of circumstances that gave rise to the claim for compensation is not related to the set of circumstances that gave rise to the person's or the person's partner's receipt of, or claim for, the compensation affected payment;
the fact that those 2 sets of circumstances are unrelated does not alone constitute special circumstances for the purposes of subsection (1).”
EVIDENCE
10. The Tribunal had before it documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 and the following other documents:
ITEM
DATE
EXHIBIT NUMBER
Documents prepared for the Tribunal pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (T1 – T29)
4 July 2002
Exhibit A1
Applicant’s Statement of Facts and Contentions
18 April 2002
Exhibit A2
Applicant’s Additional Submissions
10 February 2003
Exhibit A3
Report - Dr Vijay Maniam
19 January 1993
Exhibit R1
Report - W John Taylor
4 February 1993
Exhibit R2
Letter to Mr Craig Colborne from Malouf Solicitors
11 November 2002
Exhibit R3
Respondent’s Statement of Facts and Contentions
5 December 2002
Exhibit R4
11. Additional documents received after the Hearing and taken into account in making a decision included:
· Medical Reports and Documents relating Mr Zreika and his son Ahmed
· Letter of Malouf Solicitors dated 13 March 2003 regarding Ahmed’s District Court action
· The Applicant’s Final Submissions dated 21 March 2003
· The Respondent’s Submissions dated 31 March 2003
· The Secretary’s Further Submissions dated 8 April 2003
· The Respondent’s Further Submissions dated 11 April 2003
EVIDENCE OF MR MOHAMAD ZREIKA
12. Mr Zreika whose date of birth is 3 July 1945, and whose Statutory Declaration dated 8 August 2001 was at T14, was the only witness. He gave oral evidence before the Tribunal. His. Mr Zreika was involved in a serious motor vehicle accident on 3 July 1990 in which he, his wife and son were injured. He has not worked since, and said that he now receives Disability Support Pension (“DSP”).
13. The Applicant said in his statement that after the accident, he observed substantial changes in Ahmed, his son (who was ten years old at the time of the accident). He wrote that Ahmed wet his bed, did not attend school, had a general fear of cars, and experienced nightmares. He also wrote that from the age of 11 or 12, Ahmed developed friendships he considered undesirable, and began taking drugs.
14. The oral evidence centred on Mr Zreika’s son and Mr Zreika’s support of him, as this was the basis of the claim for the discretion to be exercised pursuant to section 1184 of the Act. In that regard Mr Zreika was asked why he supported the boy. Mr Zreika told the Tribunal that his son was involved in the motor vehicle accident in which Mr Zreika was injured, that it was a serious accident, and that the boy was rendered unconscious and spent two to three months in St George Hospital. Mr Zreika himself was also in hospital for an extended period and underwent surgery.
15. Mr Zreika said that he had lost everything, sacrificed everything for his boy who had schizophrenia, and was now hospitalised in a psychiatric hospital. He said that he ended up without his wife and children, a victim of the accident, visiting his son daily. Mr Zreika said that he did not know much about his son’s court case, but nothing had happened about it recently.
16. Mr Zreika explained that his son Ahmed, whose birthdate is 6 February 1980, commenced playing poker machines in the years which followed the accident. Mr Zreika said that he required $300 - $400 per day for these activities, and up to $500 a day for drugs at various times. He said that he was aware of Ahmed’s drug addiction from approximately 1991/92 (Ahmed then aged 12). Mr Zreika said that he supplied the money out of his settlement moneys in a bid to keep his son away from crime, and incarceration. He said that his son first asked for money in the guise of buying clothes and restaurant meals. I noted that these issues were detailed in Mr Zreika’s Statutory Declaration of 8 August 2001 (T14).
17. Mr Zreika was asked about what treatment he had sought for his son, the earliest record before the Tribunal being 1998. His reply was that Ahmed was not having treatment in 1996. Mr Zreika was also vague about other dates in connection with dates, when he bought and sold his residences, and his son’s addiction. Mr Zreika’s recollection regarding the amounts of money given to Ahmed was also vague; however he emphasised that he did whatever he could to protect Ahmed, and said it was for his safety.
18. When asked about his financial status, Mr Zreika said that his bank account had a nil balance, and he had a lot of debts. He said that he was not sure of the exact amount, but thought he owed his legal advisors some $13,000. He also said that he owed his brother and mother money, and his friend Kanaan, $500. He said he could not remember how much he owed his friend Zouheir, but said that he had presented documentation to the SSAT in that regard. He told the Tribunal that he was unable to repay his debts, they were all still outstanding, and there was pressure to repay.
19. Mr Zreika replied in cross-examination regarding the $91,716.85 which he had received in June 1998 for the sale of the Prospect home, and which he had invested with the Arab Bank, that it been spent on drugs and poker machine activity by his son.
20. Ms Mantaring took Mr Zreika through his current income and expenditure:
· Income: Approximately $435.20 per fortnight including pharmaceutical benefits (net: $336.50); Disability Support Pension
· Expenditure:
·Rent – Government, $98.70 per fortnight
·Telephone - $30 per month
·Gas - $30 per month
·Electricity - $75 - $100 every two months
21. Mr Zreika told the Tribunal that he had frontal lobe damage and problems with his memory. He said that his health was approximately the same as it had been after the compensation payment in 1994/5. He said that he was mentally exhausted from his life events.
SUBMISSIONS AND CONCLUSIONS
22. In coming to the correct and preferable decision regarding whether the discretion conferred by section 1184 of the Act to treat the whole or part of Mr Zreika’s compensation payment as not having been made should be exercised, I have taken into account all the evidence, written and oral, the case law and the legislation.
23. I have considered the Applicant’s and Respondent’s closing submissions which were made to the Tribunal in writing.
SUBMISSIONS OF THE APPLICANT
24. Ms Mantaring for the Applicant submitted as follows:
· That “special circumstances” look to circumstances which are unusual, uncommon or exceptional (Re Beadle and Director-General of Social Security (1984) 6 ALD 1)
· That “special circumstances” require something to distinguish Mr Zreika’s case from others, to take it out of the usual or ordinary case. (Groth vSecretary, Department of Social Security (1995) 40 ALD 541)
· That if all or part of the preclusion period were disregarded or reduced, the intention of the Act which is to prevent double dipping would be frustrated. (Groth (supra).
· That if “special circumstances” were found in Mr Zreika’s case, the decision would effectively be seen as affirming a pattern of funding Ahmed’s drug and gambling problems. In that regard Ms Mantaring submitted Mr Zreika had been receiving social security payments for a period during which he had received a compensation payment. Ms Mantaring disagreed with the argument of the Respondent that Mr Zreika’s expenditure of the funds was reasonable (Re Secretary Department of Social Security and Norman [1998] AATA 444). She referred to Mr Zreika’s “wilful blindness” in not recognising Ahmed’s drug problems.
· That in order to qualify for special circumstances, financial hardship had to be go beyond “straitened” circumstances and be truly exceptional (Secretary, Department of Social Security v Hill (1995) 2(1) SSR 9), and hardship alone did not amount to “special circumstances” (Director-General of Social Services v Hales (1983) 47 ALR 281)
· That Mr Zreika’s ill health was not a “special circumstance” in that he was a DSP recipient after compensation for injuries, and could be expected to continue to suffer ill health.
· That certain events relating to Ahmed had taken place after the end of the preclusion period, and that “special circumstances” could only occur if sufficient nexus could be found, Ms Mantaring submitting that there was no nexus between Mr Zreika’s recent hardship and his circumstances during the preclusion period. (Haidar v Secretary of Social Security (1998) 52 ALD 255).
· Further, that Mr Zreika had not made Centrelink aware of Ahmed’s problems in his earlier appeal in 1995, and that the Applicant disagreed with the finding of the SSAT that Ahmed’s addiction and problems were directly attributable to the motor vehicle accident in 1990.
· The Applicant disagreed with the submissions put on behalf of Mr Zreika as related to Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64 and Secretary, Department of Social Security v Smith (1991) 23 ALD 277, cases which Ms Mantaring submitted could be distinguished
· Ms Mantaring submitted that the additional information provided by Mr Zreika’s representatives did not change the Applicant’s view that “special circumstances” not be found in this case. Ms Mantaring submitted that the medical reports of Drs Ali and Sharah did not provide independent corroborative evidence of any practitioner who treated Ahmed at the onset of his drug problems.
· The letter of Malouf Solicitors dated 13 March 2003 did not assist to resolve the issue of whether the causal link between Ahmed’s problems was canvassed in his own compensation claim.
SUBMISSIONS OF THE RESPONDENT, MR ZREIKA
25. Mr Colborne referred me to Kertland (supra), Smith (supra), Beadle (supra) and Re Ivovic and Director-General of Social Services (1981) 3 ALN N95, submitting that in Re Ivovic (supra), the Tribunal stated that use of the word “special” was intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case. In citing Beadle (supra), Mr Colborne referred to the Full Court in that case, observing that the phrase “special circumstances” although lacking precision, was sufficiently understood so as “not to require judicial gloss”, and further that the Full Court had noted that “special circumstances” would include events that rendered the operation of the statute in a particular case “unfair or inappropriate”.
26. Mr Colborne also relied on two points made in Smith (supra), firstly that van Doussa J rejected a contention put on behalf of the Secretary that “the circumstances of the case” should be confined to matters which were external to the operation of the statutory scheme. In that connection he quoted from Smith (supra) as follows:
“The facts peculiar to a particular person cannot be considered in isolation from the operation of the provisions of ss 151 and 153 [Social Security Act 1947]. The operation of those sections in the light of the facts surrounding the person concerned is part of the circumstances of the case. The circumstances of a particular case will give rise relevantly to an unreasonable or unjust result only if the operation of Pt XVII, apart from the ameliorating provisions of s 156, produces that result.”
27. Mr Colborne also submitted that in Smith (supra) van Doussa J rejected an argument that section 156 does not empower an exercise of the discretion that defeats the operation of the 50% rule in sections 152 and 153. He argued that Mr Zreika’s position was analogous, and by using his compensation moneys to assist Ahmed, his situation qualified as “special circumstances”.
28. Mr Colborne referred to Haidar (supra), where he submitted Hill J was referring to the situation where a claimant was entitled to social security and compensation benefits, and the operation of the discretion in section 1184 of the Act. He also argued that as to Ms Mantaring’s submission that the events claimed to be a “special circumstance” were outside the relevant time frame, in Haidar (supra), the Court stated that:
“It seems to me that events after the expiration of the ordained preclusion period could only have relevance as factors to be considered in the exercise of discretion if those facts in some way related to the events occurring during the preclusion period.”
29. In that regard Mr Colborne submitted that Mr Zreika’s financial hardship had its genesis in the motor vehicle accident and his son’s related medical condition and addictions, with Ahmed’s addiction commencing during the preclusion period. He argued that Haidar (supra) was not authority for an artificial and technical approach that quarantined later events from the circumstances that gave rise to them.
30. Mr Colborne also made a submission in reply to Ms Mantaring, refuting her assumption on behalf of the Applicant, that because Ahmed’s civil action against the insurers was struck out on 10 May 2000, the Tribunal could infer that he had failed to establish the causal link between his addiction and behavioural problems, and the motor vehicle accident of 1990.
THE TRIBUNAL
31. In coming to a decision I have considered the above evidence and submissions and noted that the term “special circumstances” is not defined in the Act, but that it has been interpreted many times in the case law, both in the context of section 1184 of the 1991 Act, and its predecessor in the Social Security Act 1947.
32. I have noted that in Re Ivovic and Director-General of Social Services (1981) 3 ALN N95 at N96-97 the Tribunal held that:
“Whilst it would be unwise, if not impossible, to attempt to lay down any precise delineation of what may amount of ‘special circumstances’ … the use of the word ‘special’ is, we think, intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case … The reference to special circumstances 'by reason of which' a person liable 'should be released' requires, in our view, that there must exist in the circumstances of the case, a factor or factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes.”
33. Similarly, in Re Beadle and the Director-General of Social Security (1984) 6 ALD 1 at 3, the Tribunal held that:
“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.”
34. This approach was approved by the Federal Court on appeal in Re Beadle and Director‑General of Social Security (1985) 7 ALD 670. The Court did note, however, that they would place less emphasis on the dictionary definition of special.
35. As to Mr Zreika, I was satisfied that:
· Mr Zreika, who was born on 3 July 1945, and told me he had a tertiary education obtained in Lebanon, emigrated to Australia in 1987, and was involved in a serious motor vehicle accident on 3 July 1990 in which he, his wife and son were injured. I accepted that Mr Zreika was, and continues to be, a devoted father, currently visiting his son in hospital daily, and taking care of him.
· The first report before the Tribunal regarding Ahmed’s problems was that of Dr Osman Ali (T17), consultant rehabilitation psychiatrist, dated 1 September 1998, who opined that:
“This patient suffered a state of nervous shock at the scene of an accident which affected both his parents in the manner explained above. He has had subsequent bedwetting and loss of concentration as well as insecurity at a critical part of his growing up. ... These have culminated in this patient developing a drug habit which has become entrenched.”
· Dr Thomas Clark, consultant forensic psychiatrist, in a report (T19), dated 29 July 1999, opined: “This man [Ahmed Zreika] developed a behavioural disorder and drug addiction following a dissociative bout when involved in a motor car accident.”
· Mr Zreika himself was hospitalised for some months after the accident, and underwent surgery. In a report dated 4 February 1993, (Exhibit R2), Mr W John Taylor, psychologist opined that Mr Zreika suffered:
“diffuse brain injury ... Neuropsychological test results certainly point to the fact that he has suffered from brain damage and a number of the cognitive functions assessed were seen as being impaired. ... His concentration is also somewhat erratic. ... It also appears that he is experiencing quite significant symptoms of anxiety and depression.”
· Dr Maniam (Exhibit R1), corroborated the findings regarding the effects of Mr Zreika’s injuries.
· Mr Zreika’s wife developed depression, and they subsequently divorced in 1993. I noted that Mr Zreika blamed his divorce on consequences of the motor vehicle accident, and it may well be at least part of the complex reasons which lead to marriage breakup. However I did not have sufficient evidence before me to draw reliable conclusions.
· By way of a consent order in the Supreme Court of New South Wales, a verdict for Mr Zreika was entered into on 12 October 1993, which amounted to gross settlement moneys of $366,505.20. The net amount Mr Zreika received was $262,668.81. A preclusion period was calculated by the then Department of Social Security for the period 3 July 1990 to 25 March 1996. A compensation charge of $43,658.32 was calculated for the period 3 July 1990 to 4 November 1993, and recovered from the settlement moneys. This was subsequently reduced to $41,784.86.
· Mr Zreika submitted a previous appeal to have his preclusion period altered. It was refused. He did not appeal to this Tribunal.
· I did not have reliable information regarding any action which may have been taken on behalf of Ahmed, and asked Mr Zreika’s representatives to better inform me. A letter dated 13 March 2003 was sent to the Tribunal by Malouf Solicitors which stated as follows:
“On the 10 May 2000 his proceeding was struck out and discontinued. The Plaintiff i.e. Mr Zreika [Ahmed] was ordered to pay the Defendant’s costs.
Because the issues of liability and the causal link between the accident and Ahmed’s subsequent difficulties were never properly ventilated between the parties, the Respondent is unable to assist the Tribunal further on this point. The medical reports tendered by Mr Colborne constitute the only evidence upon this point which the Respondent can adduce.”
36. Mr Colborne, in his written submissions dated 31 March 2003 and 11 April 2003, as I have summarised in the paragraphs above, argued that Mr Zreika’s circumstances were “special circumstances”.. He referred to Mr Zreika and his family’s injuries in the motor vehicle accident of 3 July 1990, and the consequences of these, particularly in relation to Ahmed. He submitted on behalf of the Respondent that Mr Zreika furnished funds from the settlement moneys for Ahmed’s drug addiction and for legal costs to assist in keeping him out of jail. Mr Zreika’s evidence was that he purchased sold the house at Condell Park in March 1994, and sold it in October 1995 in order to get Ahmed away from undesirable friends, and indeed spent the majority of the settlement moneys for that purpose.
37. I noted that at Exhibit R3, Mr Zreika’s solicitors stated that Mr Zreika then purchased a house at Prospect in July 1996 which he sold in June 1998 and invested the net proceeds of $91,716.85 with the Arab Bank. Mr Zreika’s statement at Exhibit T14 deals with these events, particularly at paragraphs 19 and 20 which Mr Watts of Malouf Solicitors states in his letter of 11 November 2002 (Exhibit R3) needed revision.
38. I was not satisfied with the evidence before me how all the moneys had indeed been expended, and if indeed they were handed to Ahmed for the purpose of buying drugs, then I cannot be satisfied that it was a reasonable use of moneys received for a personal injury claim where Mr Zreika now claims that he is entitled on that basis to have his preclusion period shortened (Re Secretary Department of Social Security v Norman (supra)).
39. Ms Mantaring’s main argument which I preferred, was that expending funds on Ahmed’s gambling and drug addictions was contrary to the intent of the legislation. She also submitted that preclusion periods were settled by application of the legislation in order to avoid double dipping, and that the first medical report related to Ahmed’s condition was dated 1998, well outside the preclusion period. Given her argument, Ms Mantaring correctly drew the case of Haidar (supra) to my attention. However, in that regard, notwithstanding the first medical report regarding Ahmed only being available in 1998, it is likely from the medical evidence, which was not rebutted, that Ahmed’s problems arose at least in part as a result of the trauma which he suffered during the accident (Dr Ali, T17 and Dr Clark, T19). The nexus commented on in Haidar (supra) was therefore present, notwithstanding treatment appears not to have commenced until 1998, some two years after the preclusion period ended. I was mindful however that the main expenditure of moneys said to have been supplied to Ahmed for his addictions was well after the preclusion period rather than during that time. In that regard, I noted that the proceeds of the sale of the house at Prospect were only available in 1998. However relevant events existing at the time of the Tribunal Hearing can be taken into account. In Haidar (supra), it was noted that the Federal Court stated:
“In the case such as the present where the preclusion period required by the statutory formula in the absence of discretion had finished, it cannot be said that events at the time of hearing would necessarily be irrelevant. It is clear enough that the Tribunal sitting on appeal from a decision maker, be it the Minister or another Tribunal, must take into account the facts as they exist at the time the matter is heard by the Administrative Appeals Tribunal, to the extent those facts are relevant to the decision. It is not limited to taking into account events which occurred at the time the original decision was made, nor for that matter facts as they were known at that time, notwithstanding that later knowledge would lead to a revision of the earlier factual assessment. However, the fact that the Tribunal can consider facts after the date the initial decision was made does not mean that every fact after that date is necessarily relevant....”
40. I was mindful also that Ahmed may well have been eligible for a personal injuries claim himself, but the only available evidence regarding that, was the letter of Malouf Solicitors indicating that his proceedings had been struck out on 10 May 200.
41. I was mindful that in Smith (supra), van Doussa J recognised there was a discretion to ignore the 50% rule, where “special circumstances” were held to exist to alter the preclusion period. However, the main circumstances submitted to being “special circumstances” in this case were the expenditure of funds on Ahmed’s addictions, and Mr Zreika’s health. My view is that expenditure on Ahmed’s addictions, rather than on seeking to have him treated and the addictions dealt with, was unreasonable and contrary to public policy. Those actions should not be vested on the general public. The settlement moneys were paid to Mr Zreika because of the damage to his health caused to him in the accident, and there were no indications before the Tribunal that Mr Zreika’s health has deteriorated over the period since 1990. Accordingly neither Mr Zreika’s health nor the expenditure of settlement moneys unreasonably in a quest to protect Ahmed can be held to be “special circumstances”.
42. I have considered the evidence given and the documents available regarding Mr Zreika’s financial commitments, including his debts, and concluded that Mr Zreika may well be in straitened circumstances, as are the majority of recipients of social security. I could not however find that there was the unusual, uncommon or exceptional quality of his circumstances which would make them “special” in terms of the Act. (Re Beadle (supra), Groth (supra) and Secretary, Department of Social Security v Ellis (1997) 46 ALD 1). I noted further that in Hales (supra), the Tribunal concluded that financial hardship alone would not amount to “special circumstances” pursuant to section 1184 of the Act.
43. In coming to this decision, I distinguished Smith (supra), where the worker had contracted hepatitis, an illness which was not work-related, and where the discretion pursuant to section 156 of the then Social Security Act 1947 was exercised in his favour. I cannot equate spending funds on Ahmed’s addictions to the situation in Smith (supra). In Mr Zreika’s case it would be “double dipping”, defeating the purpose of the Act.
44. Accordingly the application must fail, the decision of the SSAT be set aside, and the decision of the ARO be reinstated.
DECISION
45. The Administrative Appeals Tribunal decides that the correct and preferable decision in matters N2001/1668 and N2002/7779, is to set aside the decision of the Social Security Appeals Tribunal in which the SSAT held that “so much of Mr Zreika’s compensation settlement be disregarded so that the charge amount is reduced by $23,200.” In substitution therefor, the Tribunal affirms the decision of the Authorised Review Officer of 14 March 2000.
I certify that the 45 preceding paragraphs are a true copy of the reasons for the decision herein of Ms G Ettinger, Senior Member
Signed: L. Bonouvrie .......................................................................................
AssociateDate of Hearing Hearing 10 February 2003
Final Closing Submissions 11 April 2003
Date of Decision 7 July 2003
Advocate for the Applicant Ms S Mantaring
Counsel for the Respondent Mr C Colborne
Solicitor for the Respondent Malouf Solicitors
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