Social Security Act 1991 - ss 17(1), 17(3), 1165(1), 1165(3), 1165(4), 1184(1)

Secretary, Department of Social Security v Ellis (1997) 46 ALD 1

Secretary, Department of Social Security v Thompson [1994] FCA 1477; (1994) 53 FCR 580

Re Groth and Secretary, Department of Social Security [1995] AATA 121; (1995) 37 ALD 797

Secretary, Department of Social Security and Hulls [1990] AATA 198; (1990) 21 ALD 322

Secretary, Department of Social Security v Smith (1991) 30 FCR 56

Director General of Social Services v Hales [1983] FCA 81; (1983) 47 ALR 281

Re Colaiacolo and Secretary, Department of Social Security (AAT 2109, 24 April 1985)

Re Secretary, Department of Social Security and Barry (AAT 10320, 28 July 1995)

Re Martin and the Secretary, Department of Social Security (AAT 6482, 14 November 1990)

Re Green and Secretary, Department of Social Security [1990] AATA 550; (1990) 21 ALD 772

Re Testa and Secretary, Department of Social Security (1989) 17 ALD 702

Re Black and Secretary, Department of Social Security (1994) 83 SSR 1219

Re Ivovic and Director General of Social Security [1981] AATA 57; (1981) 3 ALN N95

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

Beadle v Director General of So_cial Security [1984] AATA 176; (1985) 60 ALR 225_

Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541

1. This is an application by Mr Naim Haidar to review a decision of the Social Security Appeals Tribunal (SSAT) of 14 February 1997. That decision affirmed an earlier decision of a delegate of the Department of Social Security (the Department) made on 16 February 1996, which precluded Mr Haidar from receiving any social security payments until 12 February 1997 due to his receipt of a lump sum compensation payment. This decision was affirmed by an authorised review officer on 21 August 1996.

2. A hearing was held before the Administrative Appeals Tribunal (the Tribunal) on 16 December 1997. The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (T documents). Mr Haidar was represented by Mr Whitelaw of counsel and the Department was represented by Ms Hay, departmental advocate. Oral evidence was provided by the applicant, Mr Naim Haidar, and his brother, Mr Fawzi Haidar. The Tribunal admitted into evidence the following exhibits:

Letter from Ms Biviano to the Department of Housing

Exhibit 3 New South Wales School Education Assessment

Exhibit 4 Bundle of documents relating to applicant's workers compensation claim

Exhibit 5 Bank account statements of David and Dalida Haidar

Exhibit 6 Letter from the Welfare Rights Centre to Mr Whitelaw

Exhibit A Bank account statements of Naim, David and Dalida Haidar

3. Whether on the facts of this case, the discretion contained in subsection 1184(1) of the Social Security Act 1991 (the Act) should be exercised in order for all or part of the applicant's lump sum payment of compensation to be treated as not having been made for the purposes of reducing the preclusion period, thus affecting the applicant's eligibility to receive a Sole Parent's Pension. The applicant does not dispute that the preclusion period was correctly calculated by the Department at 63 weeks.

4. Subsection 1165(1) of the Act provides that a person who receives a lump sum compensation payment is not entitled to social security benefits for a period of time, which is referred to as the preclusion period. Subsection 17(1) of the Act defines a "compensation affected payment" to include a Sole Parent's Pension. Subsection 17(3) of the Act states that a preclusion period is calculated by reference to the "compensation part of a lump sum compensation payment" and this amount is usually 50% of the compensation payment. The object behind the preclusion period is to prevent a person receiving compensation and social security benefits for the same period of time. The relevant provisions of the Act relating to the calculation of the lump sum preclusion period are contained in subsections 1165(3) and 1165(4).

5. Subsection 1184(1) of the Act allows the Secretary to exercise a discretion in the appropriate special circumstances of a case as follows:

1184.(1) For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:

if the Secretary thinks it is appropriate to do so in the special circumstances of the case.

6. There was no objection by the Department to allow Mr Haidar's signed statement (Exhibit 1) to be tendered as his testimony. Mr Haidar was cross examined by the Department on the contents of his statement. The following is a summary of the written and oral evidence provided by Mr Haidar.

7. Prior to coming to Australia as a visitor in 1988, Mr Haidar sadly lost both his wife and one of their children in separate war-related incidents. The purpose of Mr Haidar's visit was to ascertain whether or not he and his remaining family would be able to live in Australia permanently. Mr Haidar was however, unable to return to Lebanon due to difficulties associated with the war and was only able to get as far as Cyprus. He decided to return to Australia, leaving his three children in the care of relatives in Lebanon. Mr Haidar was able to obtain a work permit and soon after met his second wife, Heather Haidar. The couple had two children, David born 11/11/90 and Dalida born 1/2/92. Both children now live with Mr Haidar.

8. On or about 28 December 1991, Mr Haidar sustained a work-related injury and commenced receiving workers compensation payments of approximately $163 per week which later increased to around $180 per week. At that time Mr Haidar's wife was employed so he did not receive any additional payments for his dependants. Due to the injuries Mr Haidar sustained he has been unable to return to work since his accident.

9. In late 1991, Mr and Mrs Haidar began experiencing marriage difficulties. Mrs Haidar had become an alcoholic and was suffering from serious depression. During this time, Mrs Haidar became pregnant with their daughter Dalida, which caused Mr Haidar to fear that his wife's heavy drinking would damage the health of their unborn child. When Dalida was born she suffered serious medical problems. Dalida's first 31/2 years were spent in hospital for various conditions which included a horse shoe kidney, pneumonia, urinary tract infection and eye problems. Mr Haidar stated that he blamed his wife for his daughter's health problems and this led to their eventual separation in November 1992.

10. As a result of her illness Mrs Haidar eventually lost her job and went onto the invalid pension. It was at this time that Mr Haidar assumed full responsibility for his two children and took them to live with his relatives. Mr Haidar was unaware that he could apply to have his workers compensation payments increased to provide for his two children in the absence of any other income. Mr Haidar was also unaware of his rights in relation to payment of Family Allowance or Child Disability Allowance, however he was later informed that he would be eligible to apply for both when he became a permanent resident of Australia.

11. Under cross examination, it was put to Mr Haidar that the Department's records indicated that he and his wife were together between January 1993 to February 1994. Mr Haidar stated that in 1993, his wife attempted suicide and he visited her in hospital, however after that he merely communicated with her, and when he did see her it was for a day at a time only, but he did not live with her. The Department stated that Mrs Haidar was receiving the Sole Parent's Pension between May 1992 and February 1993. Mr Haidar was adamant that he knew nothing of this. Several forms were shown to Mr Haidar by the Department that indicated inconsistencies in the date of separation from his wife, and while Mr Haidar acknowledged his signature on these forms, he could not recall completing them. He stated that his brother, Fawzi, usually completed forms on his behalf and he sometimes signed forms when he was asked to by his ex-wife Heather.

12. Mr Haidar found that he could not properly support his family on his workers compensation payments and was unable to obtain public housing as he was not a permanent resident. This situation necessitated the move to a Catholic Refuge in Waitara with his son David, while Dalida spent most of her time in hospital. In 1994, Mr Haidar applied for and was awarded full custody of his children.

13. It was during this time that Mr Haidar incurred significant debts as he began borrowing money from relatives and friends for their living expenses. Mr Haidar also needed to send money to Lebanon for his son Carlo, 16 years, who had broken his shoulder and ankle in school sporting accidents. Both injuries required operative treatment. Mr Haidar stated that he applied for a Child Disability Allowance for Dalida as well as Family Allowance, but this was refused on the basis that he was not a permanent resident. Mr Haidar eventually became a permanent resident in late 1994, seven months after he first sought assistance from the Department.

14. In order to get his friends and relatives to lend him money, Mr Haidar promised to immediately repay them once he received a lump sum payment of compensation. Mr Haidar's solicitor had told him that he had a good claim in respect of his injuries and that he could receive an award of up to $200,000. Mr Haidar believed his solicitor and was confident that he could repay his debts. Mr Haidar stated that his matter was listed for hearing in the Workers Compensation Court on 30 November 1995, however, the GIO stopped his weekly payments on 22 November 1995. This meant that Mr Haidar was without any form of income until 21 December 1995, at which time the Department approved his claim for a Sole Parent's Pension. Mr Haidar's brother, Fawzi, accompanied him to his hearing and took part in the settlement negotiations on his behalf. Eventually a settlement was negotiated for $70,000. At this stage Mr Haidar believed that this amount was for his injuries alone and did not include any economic loss component, he also believed that he would be able to continue receiving a Sole Parent's Pension. It was on this basis that Mr Haidar agreed to the settlement. After signing the agreement, Mr Haidar was told that it had to be approved by the Workcover Authority and then by the Court before he would receive any payment.

15. Mr Haidar recalled that his solicitor had advised the Department prior to the hearing that he may receive a lump sum payment of compensation. Mr Haidar remembered receiving a letter from the Department in late November 1995, but as he could not read English he passed it on to his solicitor, however his solicitor did not explain the contents of the letter. It was not until the day after he received his settlement that he realised that he would be unable to receive benefits for 12 months. Mr Haidar stated that he was advised by his solicitor that he may have to repay any benefits received up to that time, but he was not told that he would be unable to receive any benefits for 12 months. Mr Haidar stated that his solicitor did not explain the meaning of the preclusion period, nor did he understand any of the Department's communications. Mr Haidar stated that if he was aware of this at the relevant time he would not have agreed to settle all of his rights for the sum of $70,000. Mr Haidar stated that he would have proceeded to hearing and taken his chances with the result as he knew that this amount would not be enough to repay all of his debts, set up a home with his two children and take them on a holiday that he had promised them.

16. After deductions had been made Mr Haidar received a lump sum of $67,000 on 17 April 1996. The day after receiving this payment, Mr Haidar applied for the Sole Parent's Pension. It was only then that he understood the meaning of the preclusion period when it was explained to him by the Department. Mr Haidar stated that he was shocked at this news as he had been counting on receiving this pension. Mr Haidar later recalled another letter he had received from the Department in February 1996, which he had given to his solicitor. This letter discussed the preclusion period however, his solicitor did not explain the contents of the letter at the time.

17. Mr Haidar immediately made an appointment with his solicitor to obtain an explanation. It was then that he advised Mr Haidar that he should use $35,000 of this money to replace the pension until 17 February 1997. The Department queried why Mr Haidar had not sought assistance from the Department in explaining their correspondence, to which he replied that he was unaware at that time of the availability of interpreters. The Department then enquired why he did not seek assistance from his brother, Fawzi, and he stated that he had health and financial problems at that time and he was not always able to see him.

18. Mr Haidar stated that because he was unable to get the pension he was forced to borrow additional money from friends and family to buy food and pay monthly bills and that he has been attempting to repay these debts at the rate of $50.00 per fortnight. Mr Haidar stated that as he was unable to receive the pension he was also ineligible to receive allowances for his electricity, travel and pharmaceutical expenses. He stated that this all added to his extreme hardship.

19. Mr Haidar provided a list of his creditors and the amounts borrowed, as well as a list of his expenditure (Exhibit 5). A total of $39,400 was lent to Mr Haidar.

Refurnishing house after separation from wife $8,000

Family Court expense associated with separation $600

son Carlo's injuries and subsequent operation $1,200

20. The Department queried why, when Mr Haidar found out that he would not be entitled to a pension for 12 months, he did not ask some of his creditors if he could pay them back in instalments. Mr Haidar replied that once he had received his lump sum he began repaying some of his creditors, but then when others discovered this they too wanted to be repaid and refused to accept instalments.

21. The Department also queried Mr Haidar's admission to the SSAT that he purchased some $10,000 worth of furniture and asked why he did not wait until the end of the preclusion period, before he made such purchases. Mr Haidar stated that his children had been living in "atrocious" conditions for a long time and had been surviving only by assistance from charity organisations. Mr Haidar said that he had purchased both children a bedroom suite each as well as other essential items. He said that this was necessary because he was left with nothing after he and his wife separated.

22. Mr Haidar stated that the amounts listed add up to $63,000 and that it is untrue, as stated by the SSAT, that he had $18,000 left over to cover general living expenses during the 12 month preclusion period. Mr Haidar asserted that apart from the holiday which he had promised his children, all of the expenses were necessities and he lavished none of this money on himself.

23. The Tribunal then queried Mr Haidar in some detail about his current financial circumstances. He stated that he was now receiving $175 a week in Sole Parent Pension and a further $159 a week for Child Disability Allowance. Mr Haidar also indicated that the weekly compensation payments he had been receiving at $180 per week were far below his previous salary of between $450 to $600 a week. Mr Haidar listed his living expenses as follows:

24. The Tribunal asked Mr Haidar if he was managing financially and he stated that he was being very careful, he restricted all social activities, particularly those involving his children. Mr Haidar said that he needs to buy a new car, as his current car is not roadworthy and he needs to take his daughter to two different schools. Mr Haidar sometimes drives Dalida and other times he takes a taxi. Mr Haidar stated that he also needs to be able to provide medication for any sudden illnesses. Mr Haidar indicated that his current financial circumstances meant that he could not afford to provide any real entertainment for his children.

25. There was no objection by the Department to allow Mr Fawzi Haidar's signed statement (Exhibit 7) to be tendered as his testimony. Mr Haidar was cross examined by the Department on the contents of his statement. The following is a summary of the written and oral evidence provided by Mr Haidar.

26. Mr Haidar confirmed that after his brother separated from his wife in November 1992 and until he obtained custody of his children in April 1994, his brother and his nephew David stayed with either him or other family members. Mr Haidar stated that his brother travelled to Camden Hospital almost daily to see Dalida, who he described as "very ill and undersized". Mr Haidar stated that his brother would travel by taxi to Camden from either Cabramatta, Fairfield or Bankstown. He stated that his brother would become lost if he travelled by public transport, due to his poor English skills.

27. Mr Haidar stated that his brother remained in the refuge for three months because he could not afford to keep his children otherwise. He accompanied his brother to the office of the Department of Social Security at Cabramatta, where he attempted to obtain benefits for his children, however they refused him any payment of Family Allowance, because he was not a permanent resident. Mr Haidar stated that his brother then tried the Fairfield Community Centre, who gave him a one-off emergency payment of $258. Mr Haidar stated that his brother's destitute financial circumstances were what forced him and his family to both live in a refuge and into borrowing a lot of money to survive.

28. In relation to his brother's injuries, Mr Haidar stated that when his brother came to Australia he was in good health and always had a good temper and attitude to life. He enjoyed his job as a cleaner with Kleenco and his role as a father. Mr Haidar said that he witnessed this all disappear when his wife became an alcoholic and his marriage fell apart. Then came his work injury and the birth of Dalida who was very sick and disabled. His whole life had changed, he became very depressed and moody. He said that his brother hated not being able to work and desperately wanted to return, however his doctor told him he could only work for a couple of hours a day and his employer did not have such a position available.

29. In relation to Dalida, Mr Haidar stated that his brother devoted three years to looking after his daughter, she could not walk or talk during this whole time. His brother persisted and attempted to teach her to walk and talk. Eventually she was able to do both, which amazed doctors. He also taught her to swallow her own food. He stated that Westmead Hospital gave him a certificate recognising his excellent efforts and honoured him with a party.

30. In relation to his nephew Carlo, in Lebanon, Mr Haidar stated that when his brother came to Australia, Carlo was 8 years old. However, his brother was unable to return to Lebanon because of the war, so returned to Australia. He continued to support Carlo and his two other children Carroll and Marcelle. After his injury he could not afford to support them as before and began to borrow money from relatives. More than $10,000 was sent to Lebanon for this purpose, but some people would not lend money unless he promised to repay them. Carlo injured his leg at school in a sporting accident and required treatment and an operation. Mr Haidar stated that "Abdullah" lent him the money for this operation which cost $3,600. This was repaid out of his brother's compensation settlement. Carlo was injured again in 1996, this time his left shoulder. This involved another operation which cost $1,300.

31. Mr Haidar stated that his brother had informed all of his creditors that he was going to get $70,000 and would be able to pay them all back. He stated that some people had become impatient and his brother did not wish to break his oath to them. Mr Haidar accompanied his brother to court and said that no mention was made to his brother that he would not be able to receive the pension for 12 months. Mr Haidar stated that he was involved in all discussions and a preclusion period was not mentioned. He stated that he thought the offer of $70,000 was poor, as they had been told by his solicitor he could get up to $200,000 and his barrister estimated up to $125,000. Mr Haidar stated that they were not informed that the amount was for loss of wages as well as for his injuries. He said that if they had known, there was no chance that his brother would have accepted the amount.

32. Mr Haidar gave evidence that he sometimes assisted his brother with completing documents. He further stated that he helped his brother financially by lending him $5,000, which was sent to Lebanon. Mr Haidar stated that he did not ask his brother to repay him, however after he went bankrupt and became unemployed, he needed the money. Mr Haidar stressed that he did not insist on being repaid but when things got bad he asked for the money to be repaid.

33. The Tribunal asked Mr Haidar if he had much to do with his brother when he became injured. Mr Haidar stated that he was mostly busy working, but he did visit his brother in hospital and at the refuge at Waitara. The Tribunal asked where his brother lived after he left hospital and he stated that he lived with his son until he obtained a house through the Department of Housing. Mr Haidar stated that there was hardly anything inside the house. The Tribunal asked what his brother's circumstances were like now and he stated that they were "good" and had improved since receiving the Sole Parent's Pension. The term "good" was later expanded upon by Mr Haidar to mean that at least he now had a bed, a fridge and furniture.

34. Mr Whitelaw, counsel for the applicant, submitted that the discretion in subsection 1184(1) of the Act should be applied to Mr Haidar as special circumstances exist. At the outset, Mr Whitelaw indicated that he did not dispute the Department's calculation of the preclusion period at 63 weeks, however he did dispute the Department's decision to terminate Mr Haidar's Sole Parent's Pension immediately following the court's approval of his settlement, which was in fact 48 days before he received payment. He submitted that this decision was a harsh and insensitive action, which added to the hardship already being experienced by Mr Haidar and his family, as he was left without any kind of income support for that period. Mr Whitelaw further submitted that the Department's decision to refuse payment of both Family Allowance and Child Disability Allowance until February 1995 was also incorrect, based on the fact that both of Mr Haidar's children were born in Australia and were born to a mother that was an Australian citizen. Mr Whitelaw stated that this decision greatly contributed to the overall hardship of Mr Haidar causing him to borrow extensively over a number of years.

35. Mr Whitelaw submitted that Mr Haidar's work injury in December 1991 should also be considered a special circumstance, as it reduced his earning capacity and his ability to support himself and his children from the time of his injury until he received his lump sum of compensation in April 1996. Mr Whitelaw stated that the effects of the injuries that Mr Haidar suffered continue to persist. Exacerbating this situation was Mr Haidar's inability to speak English and the fact that his injury occurred just three years after his arrival in Australia, which meant that he was unable to properly understand his rights to social security benefits.

36. Mr Whitelaw submitted that the deterioration of Mr and Mrs Haidar's marriage, due to Mrs Haidar's alcoholism and her eventual inability to contribute financially to the support of her children, is another contributing factor to create special circumstances. Mr Haidar became the sole carer of his two children, however he remained unaware that he could apply for an increase in his weekly compensation payments to include his dependants. This meant that Mr Haidar had to support his family on $160 per week which later increased to $180 per week by November 1995, without any social security assistance until February 1995, when he became a permanent resident.

37. Mr Whitelaw further submitted that the ill health of Mr Haidar's daughter Dalida, was yet another contributing factor to create special circumstances. Dalida was seriously ill for the first three years following her birth, and although her medical treatment did not require any personal expenditure, Mr Haidar visited his daughter daily in hospital for that period. Mr Haidar travelled long distances to be with his daughter in hospital, using taxis to travel this distance which added to his financial burden. Mr Haidar did not receive a Child Disability Allowance in relation to Dalida until February 1995. In addition to Dalida's ill health, Mr Haidar's other son Carlo required two separate operations, which caused Mr Haidar to borrow money from relatives in order to be able to pay for both of his son's operations and medical treatment.

38. Mr Whitelaw submitted that the misleading legal advice given to Mr Haidar by his solicitor regarding his workers compensation claim and the implications of agreeing to settle all of his rights for the amount of $70,000, took on a huge magnitude in this case, and that consequently it was a contributing factor toward deciding whether special circumstances exist. Mr Haidar was told that the figure of $70,000 was in relation to his injuries only and no mention was made of that figure including a component for economic loss. Mr Haidar's solicitor never explained to him that he would lose his right to claim a pension until February 1997 and as a result of this misunderstanding he accepted the settlement. If Mr Haidar had known about the implications it was asserted that he would not have agreed to accept the settlement. Mr Haidar was informed by his solicitor only of the possibility that he would have to repay monies to the Department that he received while he awaited receipt of his settlement. This is evidenced at T34, in a letter from Mr Haidar's solicitor to the Department.

39. Mr Whitelaw asserted that Mr Haidar lacks the financial means to make any claim against his solicitor for negligence or deceptive conduct and that the costs and logistics of such an action would make it totally unviable to be pursued. Mr Haidar at most, could refer the matter to the Legal Services Commissioner. Mr Whitelaw argued that the actions of Mr Haidar's solicitor resulted in a "loss of chance" to have achieved a better financial outcome.

40. Mr Whitelaw argued that the operation of the "50% rule", on the facts of this case, produces an unjust result and therefore the internal operation of the scheme contained in the Act itself constitutes a special circumstance. This is because there is a strong indication present in this matter that the settlement did not include an economic loss component. Hence, the "double dipping" avoidance policy inherent in the scheme has no application and the 50% rule should not be applied in the present case.

41. In relation to Mr Haidar's financial circumstances, Mr Whitelaw submitted that Mr Haidar had to solely support his two children, as well as lending financial support to his other three children in Lebanon. After Mr Haidar suffered his injury he was unable to continue supporting his children in Lebanon without the help of friends and relatives, particularly in relation to his son Carlo, who required a significant amount of money to pay for his medical and hospital treatment.

42. Mr Haidar had to set up a home for his two children after he obtained custody. He did not receive government housing until March 1995 and he had to wait until he received his compensation monies before he could afford to set up a home. During this time, Mr Haidar and his family were virtually homeless until mid 1994. Mr Whitelaw stated that Mr Haidar cannot afford to provide any real entertainment for his children and while he appears to be meeting his living expenses, he is surviving at a most basic level. Mr Haidar is and was completely without assets.

43. In relation to the manner in which Mr Haidar expended his compensation monies, Mr Whitelaw submitted that Mr Haidar had committed himself to the immediate repayment of accrued debts and the remaining funds were used to meet other living expenses or essential expenses of a capital nature, and were therefore not available for Mr Haidar to meet his everyday living expenses during the preclusion period. It was unreasonable of the Department to suggest that Mr Haidar should refrain from repaying his debts or from purchasing essential items in order to escape the hardship of the operation of the preclusion period. Mr Haidar made commitments and promises to both his family and his creditors. In the end his decision to spend his money in the manner he did was done as a matter of his own conscience and principles. The monies were able to be accounted for and were not squandered or lavished upon himself.

44. In concluding, Mr Whitelaw submitted that the strict application of section 1165 would produce not only an unfair and unjust result but also an unintended result. The present case is not "ordinary or usual" but sufficiently out of the ordinary so as to amount to special circumstances. Mr Whitelaw stated that if special circumstances were found, then the onus is on the Department to adduce evidence that shows that Mr Haidar's circumstances are no different from other cases where section 1165 was applied without successful challenge. Mr Whitlelaw referred specifically to the decision of Carr J in Secretary, Department of Social Security v Ellis (1997) 46 ALD 1 and Secretary, Department of Social Security v Thompson [1994] FCA 1477; (1994) 53 FCR 580. Mr Whitelaw argued that the facts in these cases resembled those in the present case, rather than the facts in Re Groth and Secretary, Department of Social Security [1995] AATA 121; (1995) 37 ALD 797, where the discretion was not exercised in the applicant's favour. Mr Whitelaw further submitted that the reasoning in both Secretary, Department of Social Security and Hulls [1990] AATA 198; (1990) 21 ALD 322 and Secretary, Department of Social Security v Smith (1991) 30 FCR 56, has application to the facts in the present case. Finally Mr Whitelaw argued that simply because Mr Haidar had served the preclusion period and was currently receiving benefits, this should not be given more weight than the fact that he previously endured extreme circumstances, and in the absence of any legal authority which might state that emphasis should be placed upon the time that the delegate's decision was made, the Tribunal should find that the strict application of the policy behind the legislative scheme should not apply to the facts of this case.

45. Ms Hay submitted that Mr Haidar's circumstances are not sufficiently unusual, uncommon or exceptional to warrant the exercise of the discretion contained in subsection 1184(1) of the Act, particularly as Mr Haidar had served his preclusion period and is now in receipt of a Sole Parent's Pension.

46. In relation to misleading advice given by Mr Haidar's solicitor, Ms Hay submitted that if Mr Haidar was misled in any way by his solicitor, any available remedy would also lie with his solicitor. Ms Hay further submitted that there was extensive case law to the effect that the failure by a person's legal representative to advise of the existence of a preclusion period following a lump sum payment of compensation is not a persuasive factor in establishing special circumstances. Ms Hay referred the Tribunal to a number of decisions of this Tribunal and the SSAT on this point. Ms Hay submitted that both Mr Haidar and his solicitor were informed of the preclusion period before he received and dispersed his compensation monies, therefore he could not be said to have been prejudiced by any alleged failure on the part of his legal adviser.

47. In relation to the financial hardship of Mr Haidar, Ms Hay submitted that to qualify for special circumstances, financial hardship must go beyond "straitened" circumstances and be truly exceptional. Ms Hay referred to the decision of Sheppard J in Director General of Social Services v Hales [1983] FCA 81; (1983) 47 ALR 281 at 321, stated:

"The legislation provides for the payment of a variety of benefits to different classes of people who will usually have one thing in common; they will be impecunious and in straitened circumstances."

48. Ms Hay also referred the Tribunal to a number of other decisions that discussed the meaning of straitened circumstances. It was submitted that as Mr Haidar has been receiving Sole Parent's Pension since the end of the preclusion period and has lived in government housing since 17 March 1995, it could not be said that his financial circumstances were any worse than many other social security recipients, particularly those who pay private rent. Ms Hay submitted that although Mr Haidar's financial circumstances may be straitened they are certainly not exceptional.

49. It was submitted that Mr Haidar should not be rewarded for choosing to expend his compensation payment when he knew that he would not be receiving a pension for 12 months. Ms Hay asserted that there is significant support for this submission in the case law and referred to the decision of the Tribunal in Re Colaiacolo and Secretary, Department of Social Security (AAT 2109, 24 April 1985). In this decision the Tribunal reasoned that while it was understandable that a person of the applicant's background may choose to use most of the monies to reimburse creditors, it was not, in the Tribunal's view, a good enough reason to regard such debts as having priority over what his solicitors had warned was a liability to the Commonwealth.

50. In Re Secretary, Department of Social Security and Barry (AAT 10320, 28 July 1995), the Tribunal found that the exercise of the discretion in shortening the preclusion period was unjustified, because it would condone a spending pattern which took little or no account of planning for financial maintenance during the preclusion period. In Re Martin and the Secretary, Department of Social Security (AAT 6482, 14 November 1990), the Tribunal stated that while it did not consider the applicant's actions in disposing of the compensation monies to be sufficiently extravagant or unwise as to be unreasonable, it had not been such as to warrant special consideration and therefore to constitute special circumstances. Ms Hay also referred to the decisions of Re Green and Secretary, Department of Social Security [1990] AATA 550; (1990) 21 ALD 772 and Re Testa and Secretary, Department of Social Security (1989) 17 ALD 702. In Re Black and Secretary, Department of Social Security (1994) 83 SSR 1219, the Tribunal stated that although the applicant's financial situation was indeed serious, the Tribunal was required to look at the entirety of the case, and in doing so could not ignore the fact that the applicant spent his compensation monies as he desired and not due to circumstances beyond his control and could not warrant disregarding all or part of the lump sum compensation payment.

51. In relation to the ill health of Mr Haidar's family, Ms Hay submitted that although Mr Haidar's daughter is unwell and may require further operations, he was aware of this fact before he spent his compensation monies. Ms Hay further stated that the public health system provides for the needs of his daughter and that Mr Haidar has a pension concession card giving him access to pharmaceutical benefits and discounted public transport.

52. Ms Hay referred the Tribunal to the decision of Re Ivovic and Director General of Social Security [1981] AATA 57; (1981) 3 ALN N95, where it was held that when exercising the discretion in the Act, consideration should be given to whether by doing so it would frustrate the ends or object of the Act and whether strict enforcement of the liability would be unjust, unreasonable or otherwise inappropriate.

53. It was Ms Hay's submission that strict enforcement of the liability created by the section would be neither unjust, unreasonable or otherwise inappropriate and moreover, would frustrate the ends or objects which conform with the scope and purpose of the Act. Ms Hay then referred the Tribunal to the decision of Re Groth (supra), where the Tribunal noted that as difficult as a person's circumstances are, they are not special when considered in light of others in a similar situation and in light of the Act.

54. In relation to Mr Haidar's current circumstances, Ms Hay stated that on the evidence of his brother he is "well set up", he pays only $50 per week in rent, he has only $3,500 in debts outstanding and his daughter's health care is paid for by the public health system. It is therefore the view of the Department that Mr Haidar is "managing" and that the fact that he has served his preclusion period was a significant factor. Ms Hay further stated that the purpose behind the preclusion period was to prevent "double dipping." It is the Department's position that to disregard the whole or any part of the compensation lump sum would frustrate the intention of the Act.

55. The issue that the Tribunal must decide is whether or not to exercise the discretion contained in subsection 1184(1) of the Act, by treating the whole or part of Mr Haidar's compensation payment as not having been made, if special circumstances are found to exist. A complicating factor in this case is that Mr Haidar has already served the preclusion period and is currently in receipt of both the Sole Parent's Pension and Child Disability Allowance in respect of his daughter, Dalida. This would mean that if the discretion is exercised and the preclusion period is reduced, Mr Haidar would be eligible to be repaid a sum of money by the Department, depending on the number of weeks in which the preclusion period was reduced.

56. Counsel for Mr Haidar submitted that special circumstances do exist, such that either the whole or part of Mr Haidar's compensation payment should be disregarded. The factors contributing to special circumstances can be broken into the following categories:

* The Department's refusal to pay benefits in relation to Mr Haidar's children before he became a permanent resident;

* Mr Haidar's language difficulties and consequently his inability to comprehend his entitlements to social security benefits;

* The breakdown of Mr Haidar's marriage and the difficulties associated with becoming a sole parent;

* Mr Haidar's ill health and the resulting lifestyle limitations on both himself and his family;

* The ill health of Mr Haidar's daughter, Dalida, and his son Carlo;

* Misleading legal advice given by Mr Haidar's solicitor in relation to his workers compensation claim;

57. There are a significant number of decisions that consider and explain the meaning of "special circumstances" in the context of both subsection 1184(1) of the Act and the now repealed section which also dealt with the term. Both the representatives for the applicant and the respondent have referred the Tribunal to a number of these decisions, which the Tribunal has considered.

58. The often cited decision of the Tribunal in Re Beadle and Director General of Social Security (1984) 6 ALD 1, provides authority for the interpretation of the term "special circumstances". The Tribunal at 1 stated:

"An expression such as `special circumstances' is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances which 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 must have a particular quality of unusualness that permits them to be described as special.

But it is not helpful to focus too closely on each particular circumstance of the applicant and ask whether it is special. Of it self it is unlikely to be special for there would be many in a similar situation. The question is whether, when the relevant circumstances of the applicant are looked at in their entirety, they may fairly be described as unusual, uncommon or exceptional so as to warrant payment of the allowance earlier than the date from which it would ordinarily be paid."

This passage was approved in the Federal Court decision of Beadle v Director General of Social Security [1984] AATA 176; (1985) 60 ALR 225.

59. In Re Ivovic (supra), the Tribunal at N97 stated:

"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.....Thus while keeping the dominant principle of s 115 in mind, he must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate."

60. Counsel for the applicant submitted that the facts in this case are more akin to the decisions of Thompson (supra) and Ellis (supra), rather than those in the decision of the Tribunal in Re Groth (supra) to which the respondent referred, where the discretion was not exercised in the applicant's favour. The decision of Re Groth (supra) was affirmed by the Federal Court in the decision of Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541.

61. In the decision of Thompson (supra) at 568, Enfield J stated:

"The width of the discretion under the section extends to all the circumstances of the case, including circumstances not specifically related to a particular portion of the compensation payment. It is not therefore outside the section for the Tribunal to consider the general factors such as the mental health and social conditioning of the individual in concluding that the preclusion period should be shortened."

62. In the decision of Ellis (supra), Carr J at 540 stated:

"....the respondent submits that before it is `appropriate' to treat part of the workers' compensation payments as not having been made, the circumstances have to be "sufficiently distinctive, extreme, unique, unusual or unfair, when considered in the context of other persons with children receiving periodic compensation payments". In my view, to attempt to fetter the statutory discretion conferred by s1184(1) in the manner proposed would be to add unwarranted gloss to the words of that section. Once special circumstances have been found, in my opinion, it is up to the decision-maker to decide whether it is appropriate to exercise the discretion conferred by the section."

63. In Groth's case (supra), Kiefel J at 545 stated:

"......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 inquiry 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 inquiry 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...........

The Tribunal held that Mr Groth's circumstances `are not out of the ordinary when regard is had to those subject to the provisions of Part 3.14' which, as I have said, means simply that the section can be seen to have the same effect on him as it does to other persons qualified to receive such a pension. It went on to find 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. There is, I consider, no error disclosed in the reasoning to this conclusion."

64. The Department also referred the Tribunal to the decision in Hales' case (supra) where Sheppard J stated at 321:

"The legislation provides for the payment of a variety of benefits to different classes of people who will usually have one thing in common; they will be impecunious and in straitened circumstances."

65. It therefore follows that Mr Haidar's circumstances should be considered in accordance with the existing authorities. However, in doing so, the Tribunal should be mindful of the particular circumstances present in this case. It is clear from these authorities that in deciding whether to exercise the discretion, it is essential to not look at each circumstance in isolation, but rather, consideration should be given to a person's circumstances as a whole. In this instance, the applicant's circumstances both past and present are particularly relevant, as the preclusion period has already been served. Such consideration should encompass more than just the applicant's financial circumstances, but should extend to matters such as health and social issues.

66. The Tribunal does not accept the applicant's submission that the operation of the 50% rule, in this case, constitutes a special circumstance in itself and therefore should not be applied. The Tribunal is satisfied on the evidence before it that subsection 17(3) of the Act has been correctly applied. The question for the Tribunal is whether its effect should be ameliorated by the exercise of the discretion in subsection 1184(1) of the Act.

67. The Tribunal accepts that Mr Haidar endured several difficult periods in his life. Firstly, the loss of his first wife and his child in separate war-related incidents in Lebanon was undoubtedly a traumatic experience. Adding to that experience was the breakdown of his second marriage which he attributed to his wife's alcoholism, which in turn affected the health of their daughter, Dalida, who was born with a condition known as "foetal alcohol syndrome and developmental delay". This is evidenced at Exhibit 3, in a diagnosis summary provided by the records of Campbelltown Hospital. Dalida's condition necessitated hospitalisation for the first three years of her life. Mr Haidar visited his daughter in hospital on a daily basis, thus expending a significant sum of money in travelling expenses to and from the hospital. The Tribunal also accepts the possible emotional and social effects that Dalida's condition could have on Mr Haidar and his son. In particular, the added pressure of coping with the situation as a sole parent, while himself still suffering from the effects of his own injuries, which limited both his own lifestyle and that of his family's. During this time Mr Haidar was responsible in part, for the financial welfare of his three children in Lebanon, particularly his son Carlo, who required two operations and medical treatment for which Mr Haidar borrowed sums of money to pay for the resulting hospital fees. The Tribunal finds that the combined effects of Mr Haidar's ill health, the ill health of his family, the breakdown of his marriage and the resulting emotional strain do constitute a special circumstance to which the Tribunal should have regard in considering whether to exercise the discretion.

68. During most of this period, Mr Haidar survived on an amount of money that was far below that which he was used to receiving in his previous employment (Exhibit 4). Mr Haidar was also unaware that he could have his compensation payments increased as a result of becoming a sole parent. The Tribunal also accepts that while it is not possible for it to determine whether Mr Haidar should have received Family Allowance or Child Disability Allowance before he became a permanent resident, as this is not a reviewable decision before the Tribunal, it does however acknowledge the impact of Mr Haidar's limited understanding of the English language, and how this may have affected his ability to fully comprehend his rights to both compensation and social security benefits.

69. The Tribunal finds that during this period Mr Haidar and his family's basic needs exceeded his income, and indeed there was a period of 48 days where Mr Haidar did not receive income from any source whatsoever. The Tribunal accepts that his circumstances were not only very difficult, but were beyond that of the ordinary person on social security benefits, in that Mr Haidar was left with no furnishings or household goods and only limited clothing for his children after the separation from his wife. This meant that Mr Haidar had to completely set up a home for his family from the beginning. The Tribunal accepts that this situation necessitated Mr Haidar's borrowings from his friends and family. The Tribunal also appreciates that cultural issues may have played a role in Mr Haidar's decision to immediately repay his creditors and understands his decision to honour his word. The Tribunal notes that apart from the holiday Mr Haidar promised to take his children on, his other purchases were by no means extravagant and were necessary to maintain a household with two children at a basic level. At the same time, the Tribunal is mindful of the Department's submission that Mr Haidar had the advantage of government housing, however the Tribunal also acknowledges that this housing was not provided until March 1995 (T36) and that the majority of social security recipients would usually have a range of household items that are considered necessities, where Mr Haidar was without any such items. While the Tribunal generally accepts the way in which Mr Haidar expended his funds, the Tribunal is also mindful of the fact that Mr Haidar could certainly have managed his money in a more sensible manner. In balancing the competing issues of Mr Haidar's somewhat dire financial circumstances with the manner in which he chose to expend his monies, the Tribunal finds that prior to receiving his settlement monies, Mr Haidar was in straitened and impecunious circumstances, which necessitated a pattern of borrowing that occurred due to his mistaken belief that his settlement would cover his debts and that he could also survive on his pension.

70. In relation to the alleged misleading legal advice given to Mr Haidar by his solicitor, the Tribunal accepts that Mr Haidar may not have been informed by his solicitor of the implications of the preclusion period or that his settlement of $70,000 was in full and final settlement of his rights to compensation, rather than for his injuries alone. However, Mr Haidar did become aware immediately after he received his settlement monies that he would not be able to apply for a pension until February 1997. Therefore, once Mr Haidar became aware of the effects of the preclusion period, he did not adjust his expenditure accordingly. The Tribunal finds that this advice of itself does not create special circumstances, however when considered in conjunction with other circumstances, it too contributes to an overall finding that special circumstances do exist.

71. In relation to certain documents that were put before the Tribunal by the Department, which cast some doubt on the actual date of separation of Mr and Mrs Haidar and whether or not Mrs Haidar was in fact receiving a Sole Parent's Pension while the children were in the care of her husband, the Tribunal finds that there is insufficient evidence to contradict Mr Haidar's evidence that he separated from his wife in late 1992 or early 1993 and that he was unaware of his wife receiving any benefits. Mr Haidar maintained that he had the sole care of his children from the time of his separation, apart from a few aborted attempts at reconciliation that lasted no more than a few days. The Tribunal accepts Mr Haidar as an honest and credible witness. The Tribunal also accepts the evidence given by Mr Haidar's brother which was largely corroborative on this point and in relation to his brother's financial and emotional circumstances. The Tribunal is also mindful of the fact that Mr Haidar was awarded full custody of his two children in 1994.

72. For the above reasons, the Tribunal finds that the totality of the evidence suggests that Mr Haidar's circumstances are sufficiently "unusual, uncommon or exceptional" such as to constitute special circumstances and to exercise the discretion contained in subsection 1184(1) of the Act.

73. Once special circumstances have been found to exist, it remains to be determined how that discretion should be exercised. Mr Haidar is in a position that differs from many other applicants, in that he has served his preclusion period and is currently receiving benefits. Hence the effect of exercising the discretion would be that the Department would be required to repay a sum of money to Mr Haidar.

74. In the decision of Thompson (supra) Enfield J held that a decision maker does not have to engage in a theoretical mathematical exercise when exercising the discretion under section 1184, in a way that would distort the true nature of and reasons for the decision. He held that the Tribunal could reduce the preclusion period in a number of ways including, by deducting an amount of money from the lump sum which the respondent had invested inefficiently and by reducing the preclusion period by a 12 month period on consideration of Mr Thompson's "background, psychological state and poor management skills".

75. The Tribunal has therefore decided that in exercising the discretion under subsection 1184(1) of the Act, the preclusion period should be reduced from 63 to 47 weeks, and that the appropriate sum of money should be calculated and on that basis, should be repaid to Mr Haidar. It is the view of the Tribunal that this amount reflects the hardship and difficulties experienced by Mr Haidar and his family, in the period before, during and after the preclusion period. In particular it takes into account Mr Haidar's present circumstances which, while they remain straitened, have improved considerably since the end of the preclusion period. It is on this basis that the Tribunal has decided not to reduce the preclusion period in its entirety, as Mr Haidar is currently meeting his living expenses and has reduced his debts to $3,500, which he is currently repaying at the rate of $50.00 a fortnight. In all of the circumstances the Tribunal is of the opinion that this is the most reasonable and appropriate decision.

76. Accordingly, for the reasons given above, the Tribunal sets aside the decision under review and finds that it is appropriate in the circumstances to exercise the discretion in accordance with subsection 1184(1) of the Social Security Act 1991 , by treating part of the applicant's compensation payment as not having been made given the special circumstances of the case. The matter is therefore remitted to the Secretary to determine the appropriate sum to be repaid to Mr Haidar, which is to be calculated in accordance with this decision.

I certify that this and the 27 preceding pages are a true copy of the decision and reasons for decision herein of Mr B A Barbour, Senior Member.

Signed: (Sgd) J Demetrius .....................................................................................