Arnaout and Department of Family and Community Services [1999] AATA 424 (17 June 1999)

Last Updated: 7 July 1999

DECISION AND REASONS FOR DECISION [1999] AATA 424

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N1998/1585

GENERAL DIVISION )

Re JAMAL ARNAOUT

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal B A Barbour, Senior Member

Date 17 June 1999

Place Sydney

Decision The decision under review is affirmed.

(Sgd) B A Barbour

..............................................

Senior Member

CATCHWORDS

SOCIAL SECURITY - recovery of periodic payments of workers compensation - whether recovery action appropriate - whether special circumstances exist: applicant's son's drug problem, marital and family difficulties, financial hardship and incorrect legal advice.

Social Security Act 1991 - ss 1168, 1170,1184

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

Re Hajar and Secretary, Department of Social Security (1989) 16 ALD 716

Re Secretary, Department of Social Security and Haughey (1994) 36 ALD 653

Re Groth and Secretary, Department of Social Security (1995) 37 ALD 797

Re Secretary, Department of Social Security and VXY (1993) 30 ALD 681

Re Mosarevski and Secretary, Department of Social Security (AAT 10714, 2 February 1996)

REASONS FOR DECISION

17 June 1999 B A Barbour, Senior Member

1. This is an application by Jamal Arnaout (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 2 October 1998, which affirmed a decision of a delegate of the Department of Social Security, now known as the Department of Family and Community Services (the Department) to recover part of the applicant's workers compensation award in the sum of $23,708.38. This amount represents arrears of weekly payments of compensation for the period 9 October 1996 to 8 July 1998. The Department declined to exercise the discretion to waive all or any part of the compensation payments made pursuant to section 1184 of the Social Security Act 1991, as no special circumstances were found to exist. This decision was affirmed by an authorised review officer on 24 August 1998.

2. A hearing was held before the Administrative Appeals Tribunal on 2 June 1999. The applicant represented himself and gave oral evidence to the Tribunal with the assistance of an interpreter in the Arabic language. The Department was represented by Ms Collis, Departmental Advocate. The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the T- documents) as well as the following exhibits:

Exhibit 1- Respondent's Statement of Facts and Contentions, including Departmental computer printout and letter to Mark Brown & Associates from the Department dated 20 April 1998;

Exhibit A - Applicant's Statement of Financial Circumstances.

issues and legislation

3. The parties confirmed at the outset that the recovery of the debt itself was not so much in issue, but rather, whether it is appropriate to disregard any or all of the compensation payments made to the applicant if special circumstances are found to exist.

4. Section 1168 of the Social Security Act 1991 (the Act) allows for the recovery of periodic compensation payments made to a person, on a dollar for dollar basis as against any social security payment a person may have received for the same period. In relation to social security payments made to a person for a past period, section 1170 of the Act operates retrospectively, whereby any such payments made would become a recoverable debt under that section.

5. Section 1184 of the Act provides for a discretion to disregard some compensation payments as follows:

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.

background

6. On 2 June 1995 the applicant lodged a Module C Compensation and Damages form (T3). Accordingly, on 6 June 1995 the Department forwarded a preliminary notice to FAI Workers Compensation (NSW) Ltd (FAI) advising them of their obligations regarding indemnity requirements under section 1178 of the Act. On the same date, a letter was also forwarded to Mark Brown & Associates, the applicant's solicitors, advising that some or all of the social security payments made to their client or his partner may have to be recovered upon settlement of his claim (T5). A letter in the same terms was also forwarded to the applicant on the same date (T6).

7. On 17 March 1997 the applicant's solicitor completed a Lump Sum Compensation and Damages form indicating that the proposed gross settlement figure for the applicant's claim would be $80,000.00. The Departmental officer estimated that the charge on this sum would be $6,150.60 (T10). On 24 March 1997, the applicant's solicitor requested that the Department provide details of any payback figure and the length of any preclusion period on the basis that the applicant's claim had settled for $60,000.00 inclusive of costs and disbursements on 18 March 1997 (T12). In response, the Department provided an interim advice to FAI that the social security charge would be $6,669.90 (T14). The applicant's solicitor later advised the Department that the case had not yet been finalised and the applicant's settlement had not yet been approved by Workcover. On 4 April 1997 the Departmental officer also confirmed that the charge could only be calculated upon approval of the settlement by Workcover (T18). A letter in the same terms was sent to FAI who were further advised to disregard the previous charge notice issued on 1 April 1997.

8. On 20 April 1998 the Department advised the applicant's solicitor that the estimates that had been provided were not applicable to arrears of payments of periodic compensation and that a formal notice of recovery would be issued when an actual award of compensation was known. The Workers Compensation Court on 21 April 1998, made an order awarding the applicant weekly payments of compensation at the rate of $305.00 on and from 9 October 1996. The applicant also received an award of $12,000.00 pursuant to section 66 of the Workers Compensation Act 1987 which was not subject to the compensation recovery provisions.

9. Following the applicant's award of compensation on 11 June 1998, the applicant's solicitor wrote to the Department requesting that the waiver provisions under the Act should be considered in light of the fact that the applicant was in impecunious circumstances. On 8 July 1998 and 24 July 1998 both the insurance company and the applicant's solicitors were advised that the amount to be repaid to the Department was $23,708.38. The applicant's solicitor requested a review of the Department's decision on 29 July 1998.

10. As a result, the original decision-maker (ODM) conducted a review with the applicant in relation to the existence of special circumstances. The ODM's file notes of his interview with the applicant indicate that the applicant paid off the remainder of his mortgage with the lump sum payment of $12,000.00; that the applicant sends $100.00 per week in cash to his son living in Lebanon, which he was unable to substantiate with documentary proof; that the applicant had stated during the interview "...that if his wife lost her Parenting Payment Partnered they would say that they are separated like everyone else does."

11. On 24 August 1998 the Authorised Review Officer affirmed the decision under review.

applicant's evidence

12. The applicant gave evidence that he is currently separated from his wife with whom he has six children, one of which is currently living in Lebanon and undergoing "treatment" for a drug problem. The applicant confirmed that he is currently in receipt of $305.00 per week in workers compensation payments and that he paid off the remainder of his mortgage on his home with the $12,000.00 he received from his compensation settlement. The home is now unencumbered.

13. The applicant stated that he understood that he had to repay a certain amount of his compensation payments to the Department, and he did not deny that his solicitor had provided him with such advice, however he was adamant that he was told that the repayment would be somewhere in the order of $6,000.00 and that he was shocked to learn that the figure was in fact some $23,000.00. Ms Collis, for the Department, referred the applicant to a letter forwarded directly to him advising him to contact the Department before he agreed to settle his claim, however the applicant claims to have never received such a letter and that any correspondence went through his solicitor. The applicant was referred to various other documents sent to both the insurer and his solicitor in relation to charge notices, however he reiterated that his solicitor had told him that the payback figure was approximately $6,000.00. The applicant believed that the Department had simply changed its mind about the payback figure, however after explanation the applicant understood how different sorts of compensation payments were treated and that the initial advice to the Department was of a lump sum figure, whereas in actual fact, the matter resolved by way of periodic payments of compensation, which accounted for the different estimates provided by the Department.

14. Ms Collis also questioned the applicant in relation to his current living arrangements, and put to the applicant that he and his wife only separated when they became aware that they would have to repay money to the Department. Ms Collis referred the applicant to a statement that he had allegedly made to a Departmental officer, with words to the effect of, I'll just say that we're separated like everyone else does. The applicant replied that if that was the case, they would have separated as soon as he started receiving compensation payments. He also reiterated that he and his wife had separated due to problems caused by their financial circumstances, largely because of their social security payments having been cancelled. Ms Collis also drew attention to the fact that while the applicant stated that he resided three days a week with his mother in Kingsgrove and three days a week with his brother in Woodbine, he was unable to provide the Tribunal with either of these addresses.

15. The applicant then apprised the Tribunal of what he believed were his particular special circumstances. The applicant stated that the main reason that his circumstances are special are because of the problems associated with his son in Lebanon. He stated that his son had given him a lot of trouble, particularly with his drug taking, and that he was in a bad state emotionally, so much so that he gathered his whole family together and took up a collection of $12,000.00 which he used to send his son to Lebanon. This occurred almost two years ago. The applicant said that he is always sending his son money. At present he is being treated for his drug problem and is being looked after by the applicant's brother and his wife's family. The applicant also pointed out that he could have left his son in Australia to receive social security payments but instead he chose to send him to Lebanon and continue to support him with his own funds. The applicant was unable to provide the Tribunal with any documentary proof that he sends $100.00 per week to his son, and explained that he regularly sends cash as there is always someone going to Lebanon, and that because money is usually sent with friends or family members he does not ask for a receipt. The Tribunal questioned why when the SSAT made an issue of the fact that the applicant was unable to substantiate these transactions, he did not begin to keep records. However, the applicant indicated that he thought it was too late and that it wouldn't look good if he started to keep records.

16. The applicant spoke of the effect that his financial problems have had on his relationship with his wife. He reiterated that he was advised by his solicitor that he would have to repay $6,000.00 and after the case finalised this grew to $23,000.00. In the mean time he had to leave his home and his family as his wife was "fed up" with their financial problems. The applicant currently resides with his mother and brother, however he sometimes goes home to see his daughters, the younger ones are not aware that their parents live apart, they think that their father is at work when he is not at home. The applicant spoke of the close relationship that he has with his children and that he is still the head of the household and feels that it is his duty to continue to provide for his family, this is the case irrespective of the fact that his wife receives Parenting Payment at the single rate and Family Payment for six children. The applicant feels that it is his duty to give money to his children and to pay household bills so that the family feels bound to him.

17. The applicant confirmed that there is enough money between himself and his wife so that his children never go hungry. When asked if there was anything he was unable to provide for his children, the applicant stated that "my children have everything. It is my son that is the special circumstance, my children are taken care of by the government."

respondent's submissions

18. It is the Department's contention that the intention of section 1168 of the Act is clear, and that the decision to recover $23,708.38 of arrears of weekly payments of compensation for the period 9 October 1996 to 8 July 1998 was correct, as the applicant was in receipt of social security payments for the same period. Further, that there are no special circumstances in this case to warrant the exercise of the discretion contained in section 1184 of the Act.

19. Ms Collis referred the Tribunal to the decision of Re Secretary, Department of Social Security and Haughey (1994) 36 ALD 653 in relation to the proposition that any argument put by the applicant that the compensation recovery provisions relative to the ordinary income test being unfair could not be sustained, as the Tribunal in Re Haughey (supra) found that there were no special circumstances, as the recovery provisions are a deliberate expression of Parliamentary intent. Further, that it is the intention of the legislation that where a person is being compensated by an insurer one can not also "double dip" from the public purse (see Re Groth and Secretary, Department of Social Security (1995) 37 ALD 797).

20. Ms Collis contrasted the applicant's circumstances with those of a person who receives a lump sum compensation payment, whereby such a person (who receives a lump sum payment) does not continue to receive monies into the future, unlike the applicant who receives payments of compensation in the amount of $610.00 per fortnight, which she submitted represented a far greater subsistence than the current single rate for disability support pension, which is $361.40 per fortnight.

21. In relation to the applicant's arguments as to incorrect legal advice, Ms Collis referred the Tribunal to the decisions of Re Secretary, Department of Social Security and VXY (1993) 30 ALD 681 and Re Mosarevski and Secretary, Department of Social Security (AAT 10714, 2 February 1996). She submitted that both indicate that incorrect legal advice does not constitute special circumstances as the client has recourse to an action against his solicitor. In any event, Ms Collis referred the Tribunal to correspondence between the Department and both the insurer and the solicitor, where it was made clear that charge notices were based on the particular figures provided at the time, and that such notices did not apply to payment of arrears of periodic compensation but to lump sum payments. Further, that Centrelink would prepare a formal recovery notice when the amount of compensation to be paid was known.

22. Ms Collis discounted the difficulties experienced by the applicant with his marriage and said that such difficulties are experienced by many couples and families and are not uncommon, exceptional or unusual. It was also the view of the Department that the applicant had not adequately explained his current living arrangements and that Centrelink's records indicate that both himself and his wife live at the same address. It was the Department's view that the applicant had "orchestrated" his family affairs to maximise his income and therefore called into question the applicant's credit. Ms Collis also disputed the applicant's claims that he needed to support his six children, when his wife continues to receive payments of Parenting Payment at the single rate, being $362.70 per fortnight, and Family Allowance at the current rate for six children at $560.70 per fortnight (Exhibit 1). Ms Collis further submitted that the family home is unencumbered and the family's financial position remains far superior to many other families receiving social security payments.

23. Finally, Ms Collis questioned the loans that the applicant has taken out with friends and family members to support his son in Lebanon. In particular, the fact that there has been no documentary evidence produced to substantiate the method of payment. Further, that it is not the responsibility of the Commonwealth to assist in the repayment of the applicant's debts.

findings

24. There is no dispute that the applicant received the sum of $27,816.00 as part of a compensation settlement which represented arrears of weekly payments of compensation for the period 9 October 1996 to 8 July 1998. It is also undisputed that the applicant received a lump sum payment pursuant to section 66 of the Workers Compensation Act 1987 in the amount of $12,000.00. As a result the Department recovered the amount of $23,708.38 which represented the amount of social security payments the applicant received for the same period. The applicant has asked the Tribunal to consider the waiver provisions contained in section 1184 of the Act.

25. Section 1168 of the Act provides that when a person receives weekly payments of workers compensation, the amount of social security benefits received for the same period will be reduced by one dollar for each dollar of compensation received. If however a person receives arrears of weekly workers compensation payments for a period and this exceeds the amount of social security benefits that are paid, then a figure representing the total amount of benefits paid is recovered. As the applicant received arrears of workers compensation payments in the amount of $27,816.00 and $23,708.38 in social security payments the Tribunal finds that the Department's decision to recover this amount was correct. However, the primary issue before the Tribunal is whether or not the discretion contained in section 1184 of the Act should be exercised, whereby some or all of the compensation payments made to the applicant should be disregarded if special circumstances are found to exist.

26. There are four factors upon which the applicant seeks to rely as constituting special circumstances. They are: his son's drug problem; marital and family difficulties; incorrect legal advice and financial hardship.

applicant's son's drug problem

27. The applicant has submitted that the main reason that his circumstances amount to being special are because of the difficulties associated with his son's drug problem. The applicant has obviously undergone a difficult and distressing period as a result, which ultimately led him to his decision to send his son to Lebanon approximately two years ago. The applicant gave evidence that he had to borrow from friends and relatives a total of $12,000.00 to send his son to Lebanon, which he hoped to repay out of any settlement monies. The Department has submitted that the applicant's family arrangements are not the responsibility of the Commonwealth nor should the Commonwealth have to repay the applicant's debts.

28. The Tribunal is sympathetic to the applicant's situation and accepts that his son's predicament may cause him frustration, however many families are forced to deal with difficulties caused by their children and or problems that their children may suffer from. It appears from the evidence that the applicant's son is in fact doing better in Lebanon than he was in Australia, where he is learning a trade and is being taken care of by relatives and that the main burden of his son's drug problem is a financial one. This being the case, it is difficult to find that the applicant's son's drug problem and its inherent difficulties are such that it should come within the meaning of special circumstances as discussed by Toohey J in Re Beadle and Director General of Social Services (1984) 6 ALD 1, where the Tribunal looked to circumstances that were, "unusual, uncommon or exceptional."

marital and family difficulties

29. The applicant also referred to the difficulties he was experiencing with his marriage, which he believes came about as a direct result of his financial difficulties. The applicant gave evidence that he is separated from his wife and that he now lives with both his mother and brother. While the applicant's older children are aware that their parents have separated, the applicant has not explained to his youngest children that he no longer lives in the family home and makes excuses for his absence. The applicant spoke of the close relationship he has with his children and of the importance of maintaining his position within the family, which he does by continuing to provide for his family and by giving his children money. While the Tribunal is mindful of the difficulties associated with a marital separation, it would appear that the applicant maintains a close and healthy relationship with his family, with whom he visits at least once a week. It is the view of the Tribunal that a marital separation is unfortunately a common occurrence and while difficult, there is nothing unusual, uncommon or exceptional about the applicant's situation in order for it to constitute a special circumstance.

Financial hardship

30. The applicant has outstanding debts to friends and family members in relation to the $12,000.00 he borrowed in order to send his son to Lebanon. The applicant did not discuss whether there are any arrangements in place for repayment of these debts.

31. The applicant further stated that he continues to send $100.00 per week to his son with friends and relatives who frequently travel to Lebanon. While the Tribunal accepts the applicant as a credible witness, the difficulty it has in accepting this assertion is that the applicant failed to produce records of any kind, nor did he begin keeping records after the SSAT noted in their decision that the applicant provided no documentary evidence to substantiate any of these transactions.

32. In any case, the Department has submitted that it should not be responsible for repaying the applicant's debts. The Tribunal concurs with this view. The applicant made a decision to send his son to Lebanon. While he may have believed that this was the right decision to make under the circumstances, the financial consequences are a responsibility that the applicant must meet. Sending approximately $100.00 each week for his son's upkeep and care does not in the Tribunal's view constitute an unreasonable burden.

33. The applicant also submitted that he continues to support his children and to pay the household bills. The applicant is in receipt of weekly payments of compensation in the amount of $305.00, which is significantly more than the current maximum rate for Disability Support Pension, which the Department has submitted is $361.40 per fortnight (Exhibit 1). Further, the applicant's wife receives Parenting Payment at the single rate of $362.70 per fortnight and Family Allowance at the current rate for six children at $560.70 per fortnight (Exhibit 1). The applicant admitted to the Tribunal that there is always enough money for food for his children, that in fact his children "have everything", it is his son in Lebanon that is the special circumstance, as his children are taken care of by the government.

34. In relation to the applicant's personal finances, he did not speak of any rent or money for food that he was required to pay to either his brother or mother as a result of his alternative accommodation. Further, the applicant used the $12,000.00 he received from his compensation settlement to pay off his mortgage so the family home is now unencumbered. While he gave evidence that he continues to pay for household bills and gives money to his children, this is clearly a personal decision rather than a necessity as his children are clearly well provided for by the social security payments received by his wife.

35. Although the applicant receives a greater level of income than most social security recipients, the Tribunal accepts that the applicant may be in some financial hardship, however much of it is largely of his own making. It was the submission of the Department that the applicant and his wife had structured their living arrangements in order to maximise their financial situation. While the Tribunal does not believe that there is sufficient evidence to accept this assertion, it is clear that sensible restructuring of the family's finances would improve the applicant's current financial situation, bearing in mind the applicant's wife alone receives $923.40 per fortnight for the benefit of herself and of their six children, as well as the fact that the applicant is the owner of an unencumbered property. Therefore, the Tribunal finds that while the applicant's circumstances may be limited they are by no means straitened and do not come within the concept of special circumstances as envisaged in Re Beadle (supra).

incorrect legal advice

36. The Department referred the Tribunal to the decisions of Re VXY (supra) and Re Mosarevski (supra) in this regard. In Re VXY (supra) the Tribunal noted at paragraph 53:

"We consider that the problem of inadequate advice from barristers and solicitors as to the effects of the settlement of a compensation or damages claim arises far too frequently. The Tribunal has concluded in a number of decisions such as Re Hajar at 720, that incorrect advice from a solicitor is not to be treated as a special circumstance in a matter such as this because the person has a claim in negligence against his or her solicitor."

37. The decision of Re Mosarevski (supra) also applies the reasoning in Re Hajar and Secretary, Department of Social Security (1989) 16 ALD 716, in particular at paragraph 46:

"Misleading legal advice has been considered as a possible factor in special circumstances in other decisions. It seems to me however that if this misleading advice has lead to a pecuniary loss then recovery of this loss is a matter within the applicant's power. There was no evidence that he had taken any necessary steps against his solicitor asserting any right to damages for breach of contract or negligence. Hardship that can be resolved by actions of the complainant is not hardship at all."

38. It does not appear from the evidence that the applicant has taken any steps to action a claim for damages against his solicitor, if indeed such an action is appropriate. Regardless, the Tribunal does not believe that it is the role of the Commonwealth to remedy a situation where a private action potentially exists. In any event, while the applicant stated that he was unaware that the recovery amount was in fact as high as $23,000.00, at no stage did he indicate that this would have affected his decision to accept the settlement that had been offered, nor does it necessarily follow that the applicant would have secured a larger settlement had he been aware of the actual recovery figure. Accordingly, the Tribunal finds that any incorrect legal advice which may have been given to the applicant does not amount to a special circumstance either of itself or in combination with other circumstances.

39. It is clear that the purpose of the recovery provisions under the Act is to ensure that a person does not receive monies from two separate sources for the same period of time. Therefore in order for there to be a finding of special circumstances, a person's circumstances must be considered against this backdrop. The Tribunal has considered the applicant's circumstances in their entirety and for the reasons given above cannot be satisfied that the applicant's circumstances are such that the whole or part of the compensation payments should be treated as not having been made.

40. Accordingly, the Tribunal finds that the applicant's circumstances are not sufficiently special to warrant the exercise of the discretion in section 1184 of the Act and that the Department's decision to recover the amount of $23,708.38 was correct.

41. The decision under review is affirmed.

I certify that the 41 preceding paragraphs are a true copy of the reasons for the decision herein of B A Barbour, Senior Member

Signed: J Demetrius .....................................................................................

Associate

Date/s of Hearing 2 June 1999

Date of Decision 17 June 1999

Representative for the Applicant self represented

Representative for the Respondent Cheryl Collis, Departmental Advocate