Dujmovic; Secretary, Department of Family and Community Services
[2000] AATA 208
•17 March 2000
DECISION AND REASONS FOR DECISION [2000] AATA 208
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W1999/327
GENERAL ADMINiSTRATIVE DIVISION )
Re SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Applicant
And JOE DUJMOVIC
Respondent
DECISION
Tribunal Associate Professor S D Hotop, Senior Member
Date17 March 2000
PlacePerth
Decision The Tribunal sets aside the decision under review and remits the matter to the applicant for reconsideration in accordance with the following directions: that the amount of $4,292.80 (being the total amount of Disability Support Pension received by the respondent for the period from 23 January 1998 to 16 July 1998) was, by reason of s1165(1) of the Social Security Act 1991 ("the Act"), not payable to him; that the Recovery Notice issued by the applicant on 18 June 1999, whereby the applicant recovered the abovementioned amount of $4,292.80 from the Insurance Commission of Western Australia, was not in accordance with s1179 of the Act and was invalid and ineffectual; but that the abovementioned amount of $4,292.80 may lawfully and properly be recovered by the applicant pursuant to ss1166(1), 1225(1) and 1230C(1) of the Act.
...........(sgd S D Hotop)..........
Senior Member
CATCHWORDS
SOCIAL SECURITY– disability support pension –respondent awarded lump sum amount in settlement of claim for damages – preclusion period imposed – recovery notice given to insurer – whether lump sum amount constitutes "compensation" – whether payment made wholly or partly in respect of lost earnings or lost capacity to earn -- whether recovery notice valid - whether special circumstances – whether appropriate to treat whole or part of compensation payment as not having been made
STATUTES – statutory interpretation – apparent drafting error – purposive approach to interpretation – meaning of statutory language clear and unambiguous – no alternative construction reasonably open – whether appropriate to rewrite statutory provision to give effect to purpose of legislature
Acts Interpretation Act 1901 ss15AA(1), 15AB(1)
Social Security Act 1991 ss17(1), 17(2), 17(3), 17(6), 1165, 1166, 1179, 1184(1)
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297
Federal Commissioner of Taxation v Trustees of the Lisa Marie Walsh Trust (1983) 48 ALR 253
Haidar v Secretary, Department of Social Security (1998) 28 AAR 288
Re Ivovic and Director – General of Social Services (1981) 3 ALN No 61
Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404
Re Krpan and Secretary, Department of Family and Community Services [1999] AATA 709
Re Lawrie and Secretary, Department of Family and Community Services (1998) 54 ALD 483
Mills v Meeking (1990) 169 CLR 214
Secretary, Department of Social Security v a'Beckett (1990) 26 FCR 349
Secretary, Department of Social Security v Smith (1991) 30 FCR 56
Trevisan v Commissioner of Taxation (1991) 29 FCR 157
Re Veness and Secretary, Department of Family and Community Services [2000] AATA 6
REASONS FOR DECISION
17 March 2000 Associate Professor S D Hotop, Senior Member
This is an application by the Secretary to the Department of Family and Community Services ("the applicant") for review of a decision of the Social Security Appeals Tribunal ("SSAT") dated 17 September 1999. In that decision the SSAT set aside a decision of an Authorised Review Officer ("ARO") within Centrelink, dated 10 August 1999, that Disability Support Pension ("DSP") was not payable to Joe Dujmovic ("the respondent") for the period from 23 January 1998 to 16 July 1998 ("the new lump sum preclusion period") and that the amount of $4,292.80 (being the sum of the payments of DSP made to the respondent for the new lump sum preclusion period) be recovered from the Insurance Commission of Western Australia ("ICWA"). The SSAT substituted a new decision that no preclusion period was applicable to the respondent and that the amount of $4,292.80 recovered by the applicant from the ICWA be paid to the respondent.
At the hearing the applicant was represented by Mr C G de Hoog, Manager of the Advocacy and Administrative Law Team, Centrelink, and the respondent appeared in person without representation. The Tribunal had before it the documents ("T documents, numbered T1 – T21) lodged by the applicant pursuant to s37 of the Administrative Appeals Tribunal Act 1975 and various documentary exhibits (numbered A1 – A11) tendered by the applicant. Oral evidence was given by Ms R Howes and Mr D Wong, on behalf of the applicant, and by the respondent.
Subsequent to the hearing the applicant lodged with the Tribunal 2 additional documents, namely, a copy of a letter dated 11 February 1998 from Frichot & Frichot, Barristers and Solicitors, to the Insurance Commission of Western Australia (Exhibit A12), and a copy of a Discharge signed by the respondent, dated 3 June 1999 (Exhibit A13). The applicant and the respondent were given the opportunity to make written submissions in relation to those additional documents and such submissions were received by the Tribunal on, respectively, 24 February 2000 and 29 February 2000.
The Factual Background
The background facts, which are not in dispute and as found by the Tribunal on the basis of the T documents and exhibits, are as follows.
On 23 January 1998 the respondent was injured in a motor vehicle accident. He subsequently claimed, through his solicitors, third party damages from the ICWA in respect of that accident.
The respondent had been seriously injured in a work-related accident in 1989 following which he received workers' compensation and, later, Job Search Allowance and Newstart Allowance. He subsequently lodged with Centrelink a claim for DSP and he was informed, by letter dated 19 February 1998 (Exhibit A1), that he would be paid DSP with effect from 23 January 1997. On the back of that letter appeared a notice requiring the applicant to inform Centrelink, within 14 days, if any of various specified events "happen or may happen", including:
"if you claim or receive compensation".
By letter dated 23 April 1999 (T21) the respondent's solicitors wrote to the ICWA in relation to his claim for third party damages in respect of the motor vehicle accident on 23 January 1998. That letter relevantly stated:
"Following the first accident he could not return to his employment as a panel beater.
At the time of the second accident forming the subject matter of the present claim he was still on a disability pension but he was hoping to be able to return if not exactly to the same occupation, at least to some other work.
Unfortunately the second accident has caused injuries to the right shoulder and aggravated the other injuries. Our client is suffering on a permanent basis.
He is presently on a disability support pension receiving $363.00 a fortnight. He has no other source of income.
It is quite clear that he will not be able to join the workforce again as he does not have the necessary qualifications to engage in work not involving physical activity.
…
Notwithstanding the fact that our client sustained serious injuries in the first accident he would have been able to return to the workforce be it on a lower salary and he could at least have earned something in the region of $300.00 to $350.00 per week net whereas, at the moment, he is only earning that sum every fortnight.
Consequently as he is only 36 years of age, a sum will have to be allowed in respect of future loss of earning.
As far as pain and suffering etc is concerned our client states that a combination of pain in the back, the elbow and the leg and pelvic area makes life unbearable. In the circumstances we feel that a sum of $30,000.00 and $35,000.00 could only be described as minimum by way of general damages.
...".
On 25 May 1999 the respondent lodged with Centrelink a "Module C – Compensation and damages" form indicating, among other things, that, on 30 January 1998, he claimed compensation by way of third party damages in respect of the abovementioned motor vehicle accident of 23 January 1998. (Exhibit A2)
By letter dated 1 June 1999 (T8) an officer of Centrelink wrote to the respondent as follows:
"I am writing about your claim for compensation.
If you receive a back payment of weekly compensation or a lump sum compensation payment, some or all of the social security payment paid to you since the date of injury may have to be paid back to us.
Any compensation you receive may also stop you from receiving social security payments in the future.
Before you agree to settle your compensation claim, you or your solicitor should contact us to find out if you will have to pay back any money and if your future payments will be affected.
...".
A Preliminary Notice under s1177 of the Social Security Act 1991 ("the Act"), dated 1 June 1999, was issued by a delegate of the applicant to the ICWA. (Exhibit A6)
By letter dated 2 June 1999 (Exhibit A7) an officer of Centrelink wrote to the respondent's solicitors regarding the general effect of the compensation recovery provisions in Pt 3.14 of the Act in relation to the respondent's claim for damages.
The respondent settled his claim for third party damages against the ICWA by executing a form of Discharge, dated 3 June 1999, in consideration of payment of the sum of $21,500.00 (inclusive of $1,500.00 for legal costs). (Exhibit A13) An officer of the ICWA notified Centrelink of that settlement.
A Recovery Notice under s1179 of the Act, dated 18 June 1999, was issued by a delegate of the applicant to the ICWA notifying it that the applicant proposed to recover from it the amount of $4,292.80, "being the amount of social security payments received by (the respondent) from 5 February 1998 to 9 July 1998". (Exhibit A8)
By letter dated 18 June 1999 (T10) an officer of Centrelink notified the respondent's solicitors regarding the issuing of the abovementioned Recovery notice under s1179 of the Act.
Following a request by the respondent the decision to recover the amount of $4,292.80 was reconsidered by the original decision maker who, on 24 June 1999, affirmed that decision. (T14)
On 10 August 1999 an ARO also affirmed that decision. (T15)
On 17 September 1999, however, the SSAT set aside that decision and substituted a new decision that no preclusion period was applicable to the respondent and that the amount of $4,292.80 recovered by the applicant from the ICWA be paid to the respondent. (T2)
A facsimile dated 29 September 1999 (T20) from an officer of the ICWA to Mr de Hoog of Centrelink, regarding the respondent's third party damages claim, stated:
"We confirm this matter settled for $20,000.00 plus $1,500.00 costs. The $20,000.00 was made up of:
Loss of amenities $10,000.00
Future medical treatments $2,000.00
Past loss of earning capacity $3,000.00
Future loss of earnings $5,000.00".
On 18 October 1999 the applicant lodged with the Tribunal an application for review of the SSAT's decision. (T1)
The Evidence Of Ms Howes And Mr Wong
Ms R Howes told the Tribunal that she has been employed, formerly by the Department of Social Security ("DSS") and now Centrelink, since March 1992 assessing entitlements to pensions. She confirmed that in May 1999 she was employed in the Joondalup office of Centrelink.
Ms Howes was asked to explain the meaning of a Centrelink computer record entered by her on 20 May 1999 (T5). Ms Howes explained that document T5 recorded that she had attended the respondent at the counter at the Joondalup office of Centrelink on 20 May 1999 and had given him a "Module C" form, regarding a claim by him for compensation, for completion and return within 14 days.
Ms Howes said that she had no specific recollection of seeing the respondent on 20 May 1999 but she said that she would not have given him any advice regarding how the receipt of compensation would affect his social security entitlements. She specifically denied advising the respondent that the receipt of a compensation payment of up to $75,000.00 or $85,000.00 would not affect his entitlement to DSP. She added that such matters are handled by the specialist compensation section within Centrelink and that the "Module C" form would, in accordance with standard procedure, be referred to that section for consideration and assessment when returned by the respondent.
Mr D Wong told the Tribunal that he has been employed, formerly by the DSS and now Centrelink, since April 1993 assessing rates of DSP and Age Pension. He confirmed that in May 1999 he was employed in the Joondalup office of Centrelink.
Mr Wong was asked to explain the meaning of a Centrelink computer record entered by him on 25 May 1999 (T6). Mr Wong explained that document T6 recorded that a "Module C" form had been received from the respondent and had been referred to the Compensation Management Section ("CMS") within Centrelink. Mr Wong was able to confirm that Exhibit A2 was the "Module C" form in question because he recognised his own handwriting at Q.6 on the form.
Mr Wong told the Tribunal that he did not recall interviewing the respondent in May 1999. Asked whether he would have advised the respondent that he could receive up to $75,000.00 in compensation without affecting his DSP, Mr Wong responded that he never gives advice to customers with respect to compensation matters because he is not trained in that area and does not know how it works. He said that his standard practice is to ask customers to fill out a "Module C" form and he then sends the form to the CMS in the city office for attention. He added that the CMS are specifically trained in the area of how compensation payments affect social security entitlements.
The Respondent's Evidence
The respondent told the Tribunal that, following his motor vehicle accident on 23 January 1998, his solicitor advised him that, if he agreed to settle his third party damages claim against the ICWA, he would receive $19,500.00 clear but that he should first visit Centrelink and inquire whether they would recover any moneys from his settlement amount. He said that he went into Centrelink in May 1999 and spoke to a woman (Ms Howes) at the counter who gave him a form ("Module C" – Exhibit A2) to fill in. He said that he told her about the payment he expected to receive as a result of his motor vehicle accident and asked her how much money he could receive without his DSP being affected, and she told him "$85,000.00". The respondent said that he returned to Centrelink a few days later with the "Module C" form and saw Mr Wong. He said that he asked Mr Wong the same question and received the same answer, namely, "$85,000.00".
The respondent said that, on the basis of the information given to him by Ms Howes and Mr Wong, he decided to settle his claim for damages for the amount of $21,500.00 in the belief that his receiving that amount would not affect his DSP entitlements. He added that, when he settled his claim on 3 June 1999, he was unaware that a preclusion period would be imposed upon him and that, had he known that this would occur, he would not have signed the settlement document on that date and would instead have gone to court.
As regards the settlement amount of $21,500.00, the respondent told the Tribunal that his solicitor had advised him that that amount did not include any amount for lost earnings, past or future, and that the ICWA's view was that, because he had been seriously injured and was receiving DSP, he had no future earning capacity. The respondent was referred by the Tribunal to the letter from his solicitors to the ICWA, dated 23 April 1999 (T21 – see paragraph 7 above), in which it was stated that, despite his injuries, he "would have been able to return to the workforce" and that "a sum will have to be allowed in respect of future loss of earnings". He was also referred to the facsimile from the ICWA to Centrelink, dated 29 September 1999 (T20 – see paragraph 18 above) in which it was stated that the settlement amount included $3,000.00 for "past loss of earning capacity" and $5,000.00 for "future loss of earnings". The respondent reiterated that his solicitor had told him that there was no component for past or future loss of earnings in the settlement amount and that the ICWA's position was that he had no future earning capacity.
As regards his present financial circumstances, the respondent told the Tribunal that his assets comprise a motor cycle (which he is gradually assembling) worth about $20,000.00, a panel van motor vehicle worth about $2,500.00 and clothing worth about $2,000.00. He said that he has no liabilities. He also told the Tribunal that his sole income is his DSP of $363.00 per fortnight and that he is struggling to make ends meet financially. He said that he lives with his parents and, although he does not pay them any rent, he does pay for his food, when possible. He added that he has a flexible financial arrangement with his parents and he does not pay them a set amount each week.
The respondent was questioned by Mr de Hoog (for the applicant) about the letter to him from Centrelink, dated 19 February 1998 (Exhibit A1 – see paragraph 6 above), which contained a notice requiring him to inform Centrelink, within 14 days, if, amongst other things, he claimed or received compensation. The respondent said that he probably only "skimmed" that letter and did not "take in" the 14 day notification period. The respondent was also referred to the letter to him from Centrelink, dated 1 June 1999 (T8 – see paragraph 9 above), advising of the effect of receiving compensation on social security entitlements. The respondent said that he was not sure whether he had received that letter. In relation to his discussions with Ms Howes and Mr Wong on, respectively, 20 and 25 May 1999, the respondent was asked whether it was possible that he had misunderstood the information he was given – specifically, whether it was possible that he was given information about the amount of income he could earn, rather than the amount of compensation he could receive, without his DSP being affected. The respondent rejected that suggestion. He said that he inquired on 2 occasions about receiving compensation in order to ensure that he obtained the correct information. He acknowledged, however, that he had made inquiries about both earnings and compensation but was adamant that he had been informed by both Ms Howes and Mr Wong that he could receive up to $85,000.00 compensation without affecting his DSP entitlements.
The Legislation
Part 3.14 of the Act contains the substantive "compensation recovery" provisions of the Act including (relevantly):
"1165(1A) If:
(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) on or after 20 March 1997;
no compensation affected payment is payable to the person for the new lump sum preclusion period.
…
1165(7) If neither subsection (5) nor (6) applies, the new lump sum preclusion period is the period that:
begins on the day on which the loss of earnings or loss of earning capacity began; and
ends after the number of weeks worked out under subsections (8) and (9).
1165(8) If a compensation lump sum is received on or after 20 March 1997, the number of weeks in the preclusion period is the number worked out under the following formula:
Compensation part of lump sum
Income cut-out amount
Note 1:For compensation part of lump sum, see section 17.
Note 2:For income cut-out amount, see section 17.
1165(9) If the number worked out under subsection (4) or (8) is not a whole number, the number is to be rounded down to the nearest whole number.
1166(1) If:
a person receives a lump sum compensation payment; and
the person receives payments of a compensation affected payment for the lump sum preclusion period;
the Secretary may, by written notice to the person, determine that the person is liable to pay to the Commonwealth the amount specified in the notice.
Note 2:A series of lump sum payments can be taken to be one lump sum compensation payment under subsection 17(2B).
1166(2) Subject to subsection (5), the amount specified in the notice is the recoverable amount and is out worked out under subsections 5 [sic] (3), (4), (4A), (4B) and (4C).
1166(3) If the person is not a member of a couple, the recoverable amount is equal to the smaller of the following amounts:
the compensation part of the lump sum compensation payment;
the sum of the payments of the compensation affected payment made to the person:
(i)if the lump sum compensation payment is received before 20 March 1997 – for the old lump sum preclusion period; or
(ii)if the lump sum compensation payment is received on or after 20 March 1997 – for the new lump sum preclusion period.
…
1179(1) If:
an insureris liable, under a contract of insurance, to indemnify a compensation payer against any liability arising from a person's claim for compensation wholly or partly in respect of the person's lost earnings or lost capacity to earn; and
the person receives or claims a compensation affected payment for the periodic payments period or the lump sum preclusion period;
the Secretary may give written notice to the insurer that the Secretary proposes to recover the amount specified in the notice from the insurer.
1179(2) If an insurer is given notice under subsection (1), the insurer is liable to pay to the Commonwealth the amount specified in the notice.
1179(3) Subject to subsection (6A), the amount specified in the notice is the recoverable amount and is worked out under subsections (4), (5) and (6).
1179(4) If the person claiming compensation is not a member of a couple, the recoverable amount is equal to the smallest of the following amounts:
the sum of the payments of the compensation affected payments payable to the person for:
the periodic payments period; or
if a lump sum compensation payment is received before 20 March 1997 – the old lump sum preclusion period; or
if a lump sum compensation affected[sic] payment is received before[sic] 20 March 1997 – the new lump sum preclusion period;
(b)the compensation part of the lump sum payment [sic] or the sum of the amounts of the periodic compensation payments;
the maximum amount for which the insurer is liable to indemnify the compensation payer in relation to the matter at any time after receiving:
a preliminary notice under section 1177 in relation to the matter; or
if the insurer has not received a preliminary notice – the recovery notice under this section in relation to the matter.
…
1184(1) For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:
not having been made; or
not liable to be made;
if the Secretary thinks it is appropriate to do so in the special circumstances of the case."
Section 17 of the Act contains definitions of various words and phrases for the purposes of the compensation recovery provisions of the Act. Subsections (2) and (3) relevantly provide:
"17(2) For the purposes of this Act, compensation means:
a payment of damages; or
a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or
a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or
any other compensation or damages payment;
(whether the payment is in the form of a lump sum or in the form of a series of periodic payments) that is:
made wholly or partly in respect of lost earnings or lost capacity to earn; and
made either within or outside Australia."
"17(3) For the purposes of this Act, the compensation part of a lump sum compensation payment is:
50% of the payment if the following circumstances apply:
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
the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise, on or after 9 February 1988; …
…".
Section 17 (6) provides:
"17(6) A reference in Part 3.14 to an insurer who is, under a contract of insurance, liable to indemnify a compensation payer or a potential compensation payer against a liability arising from a claim for compensation includes a reference to:
an authority of a State or Territory that is liable to indemnify a compensation payer against such a liability, whether the authority is so liable under a contract, a law or otherwise; or
an authority of a State or Territory that determines to make a payment to indemnify a compensation payer against such a liability, whether or not the authority is liable to do so."
By s.17(1):
"compensation affected payment" is defined to mean, amongst other things, "a disability support pension"; and "lump sum preclusion period" is defined to mean "either an old lump sum preclusion period within the meaning given by subsections 1165(3) to (4) (inclusive) or a new lump sum preclusion period within the meaning given by subsections 1165(5) to (8) (inclusive), as the case requires".
Section 17(1) also contains a definition of the phrase "income cut-out amount" (see s.1165(8) above) which it is unnecessary to set out for present purposes.
The Issues
The fundamental issue in this case is whether the lump sum of $21,500.00 paid in settlement of the respondent's claim for third party damages constitutes "compensation" as defined in s17(2) of the Act. If it does, the following matters will arise for determination:
What is the commencement date and duration of the "new lump sum preclusion period" pursuant to subss 1165(5), (8) and (9) of the Act?
What is the "recoverable amount" within the meaning, and for the purposes, of s1179 of the Act?
Are there "special circumstances" by reason of which it is appropriate to exercise the discretionary power, conferred by s1184(1) of the Act, to treat the whole or part of the relevant compensation payment as not having been made?
Findings on Material Questions of Fact and Consideration of Issues
Does the lump sum of $21,500.00 paid in settlement of the respondent's claim for third party damages constitute "compensation" as defined in s17(2) of the Act?
The only matter in dispute regarding this question is whether the lump sum payment of $21,500.00 was "made wholly or partly in respect of lost earnings or lost capacity to earn", within the meaning of para (e) of s17(2) of the Act. In Secretary, Department of Social Security v a'Beckett (1990) 26 FCR 349 the Federal Court of Australia (von Doussa J) said (at p 361) that the task of the Tribunal, in determining whether a lump sum payment constitutes "compensation" (as statutorily defined) in a case like the present, is "to apply in a sensible way the words of the definition to the primary facts as found, drawing such inferences as fairly (arise) from those facts". The Court went on to say (at pp 361-362):
"In the present case the evidence of the respondent and his solicitor could throw little light on the defendant's reasons for making the payment. There is no reason arising from the objects of Pt XVII (see, now, Pt 3.14) of the Social Security Act which would make the views of the pensioner and his solicitor any more significant than those of the party making the payment in settlement of the claim. On the contrary, in many cases there may be reason to suspect that the pensioner's evidence could be less than objective about the component parts of a settlement…
This is not to say that the evidence of the parties as to the course of negotiations is irrelevant. It is not, but it is only a part of the total picture, and often it will be of little assistance in determining if any part of a payment made in settlement of a claim is in part a payment in respect of an incapacity for work.
Usually the more objective evidence available about the nature and extent of the injury, and the events which followed it, for example, the duration of absences from work; actual loss of wages; changes in work activity and the like, will provide a more reliable guide than the asserted beliefs of the claimant as to how the settlement sum was arrived at. Ordinarily, statements by the claimant asserting a loss resulting from an impaired capacity for work made in circumstances where those statements can reasonably be regarded as having been made to influence a defendant to pay will be entitled to substantial weight. Foremost amongst such statements will be formal particulars of claim. The formal particulars of claim identify the subject matter of the claim presented by the pensioner."
In the present case there were no formal particulars of claim but the respondent's solicitors' letter to the ICWA, dated 23 April 1999 (T21), referred to the respondent's probable future earnings and stated that "a sum will have to be allowed in respect of future loss of earning". That letter went on to state that a sum of at least $30,000.00 - $35,000.00 should also be allowed by way of general damages. In addition, the facsimile from the ICWA to Centrelink, dated 29 September 1999 (T20), stated precisely how the relevant settlement amount was made up and that it included components for "past loss of earning capacity" ($3,000.00) and "future loss of earnings" ($5,000.00).
The Tribunal accepts that the respondent's understanding was that there was no component in his settlement amount in respect of lost earnings or lost capacity to earn. It may also be the fact that his solicitor had the same understanding (the Tribunal notes that, in the SSAT's reasons for the decision under review, it is stated that the solicitor informed the SSAT "that the settlement ultimately related to general damages only and that there was no economic loss component contained within it either for past or future earnings" – T2, p 7). On the other hand, there is objective evidence before the Tribunal – namely, the abovementioned facsimile from the ICWA, dated 29 September 1999 (T20) – that the relevant settlement amount did in fact include components in respect of "past loss of earning capacity" and "future loss of earnings". That evidence is consistent with the fact that the respondent's solicitors had, in their letter of 23 April 1999 (T21) to the ICWA, included a claim for "future loss of earning". It is also consistent with information provided by the respondent's solicitor to the SSAT (T2, p 7) that, at the time of his motor vehicle accident on 23 January 1998, the respondent was employed on a trial basis for 5 hours per week and that his employer had advised the solicitor that, had the respondent not been prevented from continuing with that employment by reason of that accident, he would have offered him employment for 10 hours per fortnight at $10 per hour.
Having regard to the whole of the evidence before it on this matter, the Tribunal is satisfied that the lump sum payment of $21,500.00 made by the ICWA in settlement of the respondent's claim for third party damages was made "partly in respect of lost earnings" and "lost capacity to earn" within the meaning of para (e) of s17(2) of the Act. There being no dispute that the other paragraphs of s17(2) of the Act are also satisfied in this case, the Tribunal therefore finds that the abovementioned lump sum payment constitutes "compensation" as defined in s17(2) of the Act.
The "new lump sum preclusion period" in the present caseBecause the respondent received the relevant lump sum compensation payment after 20 March 1997, by virtue of s1165(1A) of the Act no "compensation affected payment" (including DSP) was payable to him for the "new lump sum preclusion period". The duration of that period is worked out under the formula specified in s1165(8) whereby the "compensation part of lump sum" is divided by the "income cut-out amount". By s17(3) of the Act, the "compensation part of lump sum" in the present case is 50% of $21,500.00 – namely, $10,750.00. It is common ground that the "income cut-out amount" in the present case, as defined in relation to a formula specified in s17(1) of the Act, is $416.80. Accordingly, the duration of the "new lump sum preclusion period" in the present case is 25.8 weeks which, by virtue of s1165(9) of the Act, is rounded down to 25 weeks. By virtue of s1165(5) of the Act, that period began on 23 January 1998 (the date on which the loss of earnings or loss or earning capacity began) and ended on 16 July 1998.
The "recoverable amount" in the present caseIn the event that an insurer is liable to indemnify a compensation payer against any liability arising from a person's claim for "compensation" (as defined in s17(2) of the Act), and the person receives a "compensation affected payment" (as defined in s17(1) of the Act) for the "lump sum preclusion period" (as also defined in s17(1)), s1179(1) of the Act authorises the applicant to give written notice to the insurer that the applicant proposes to recover from the insurer the amount specified in the notice. By s1179(3), the amount so specified is the "recoverable amount" is worked out under whichever of subss (4), (5) and (6) is applicable. In the present case it is common ground that subs (4) of s1179 is the applicable provision.
According to the literal terms of s1179(4) of the Act:
"If the person claiming compensation is not a member of a couple, the recoverable amount is equal to the smallest of the following amounts:
the sum of the payments of the compensation affected payments payable to the person for:
the periodic payments period; or
if a lump sum compensation payment is received before 20 March 1997 – the old lump sum preclusion period; or
if a lump sum compensation affected payment is received before 20 March 1997 – the new lump sum preclusion period;
the compensation part of the lump sum payment or the sum of the amounts of the periodic compensation payments;
the maximum amount for which the insurer is liable to indemnify the compensation payer in relation to the matter at any time after receiving:
a preliminary notice under section 1177 in relation to the matter; or
if the insurer has not received a preliminary notice – the recovery notice under this section in relation to the matter."
There are, it seems to the Tribunal, two drafting errors in subpara (iii) of para (a) of s1179(4). The phrase "lump sum compensation affected payment" presumably should read "lump sum compensation payment", and the phrase "before 20 March 1997" presumably should read "on or after 20 March 1997", consistently with the corresponding provisions of ss1165, 1166 and 1174 of the Act. The question arises in the present case whether the Tribunal should apply s1179(4)(a)(iii) of the Act in accordance with its literal terms, or, alternatively, whether it would be appropriate for the Tribunal to apply s1179(4)(a)(iii) of the Act as if the abovementioned apparent drafting errors had not been made and it read as follows:
"(iii)if a lump sum compensation payment is received on or after 20 March 1997 – the new lump sum preclusion period;".
In Re Lawrie and Secretary, Department of Family and Community Services (1998) 54 ALD 483 the Tribunal applied s1179(4)(a)(iii) of the Act as if it read in the way set out in paragraph 33 above rather than in accordance with its literal terms. In Re Krpan and Secretary, Department of Family and Community Services [1999] AATA 709, however, a differently-constituted Tribunal considered the application of s1179(5)(c)(iii) of the Act (which is in identical terms to, and contains the same apparent drafting errors as, s1179(4)(a)(iii) of the Act) and declined to follow the approach taken in Re Lawrie, deciding instead that s1179(5)(c)(iii) of the Act should be applied in accordance with its literal terms. Likewise, in Re Veness and Secretary, Department of Family and Community Services [2000] AATA 6, the Tribunal followed, in relation to the application of s1179(4)(a)(iii) of the Act, the approach taken in Re Krpan in preference to that taken in Re Lawrie. In the present case, the Tribunal proposes to follow the approach taken in Re Krpan and Re Veness rather than that taken in Re Lawrie and, like the Tribunal in Re Veness, adopts, mutatis mutandis, the following paragraphs in the Tribunal's Reasons for Decision in Re Krpan:
"57. The question of course arises whether it is appropriate for the Tribunal, in effect, to rewrite subpara (iii) of para(c) of s1179(5) of the Act so that it reads in the way suggested in the preceding paragraph – that is, as follows:
'(iii) if a lump sum compensation payment is received on or after 20 March 1997 – the new lump sum preclusion period;'.
58.At common law, the traditional approach to statutory interpretation is the literal approach whereby the words used in the relevant statutory provision are given their plain and ordinary grammatical meaning having regard to the statutory context in which they appear. An alternative, more contemporary, approach, at common law, to statutory interpretation is the purposive approach whereby the relevant statutory words are interpreted in such a way as will accord with or promote the purpose or object for which they were enacted. See, generally, Pearce and Geddes, Statutory Interpretation in Australia (4th ed, 1996), pp22-26. The latter approach is required to be adopted in the interpretation of Commonwealth statutory provisions by reason of s15AA(1) of the Acts Interpretation Act 1901 which provides:
'In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object'.
Section 15AB(1) of that Act provides that, in the interpretation of a provision of an Act, if any extrinsic material is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:
'(a)to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; or
(b)to determine the meaning of the provision when:
the provision is ambiguous or obscure; or
the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable'.
59. The Tribunal has no real doubt that subpara (iii) of para (c) of s1179(5) of the Act, as it presently stands, involves two specific drafting errors and that it was, instead, intended by the legislature to be expressed in the terms set out in paragraph 57 above. That, in the Tribunal's opinion, is clear from a consideration of the context of the amending legislation whereby the abovementioned provisions in their present form were introduced into the Act with effect from 20 March 1997. The scheme of the relevant amending legislation – namely, Part 2 of Schedule 12 to the Social Security Legislation Amendment (Budget and Other Measures) Act 1996 – as confirmed in the Minister's Second Reading Speech and the Explanatory Memorandum in relation to the Bill for that Amendment Act -–was that lump sum compensation payments received on or after 20 March 1997 were to be treated differently from such payments received before 20 March 1997, as regards the period for which payment of various forms of social security ('compensation affected payments') would thereby be precluded. For lump sum compensation payments received on or after 20 March 1997 the relevant social security preclusion period (the 'new lump sum preclusion period') was to be calculated according to a different formula from that used to calculate the preclusion period applicable to lump sum compensation payments received before 20 March 1997 (the 'old lump sum preclusion period').
60. Accordingly, having regard to the considerations referred to in the preceding paragraph, the two specific drafting errors which the Tribunal considers to be present in s1179(5)(c)(iii) of the Act are …:
the phrase 'lump sum compensation affected payment' should read 'lump sum compensation payment';
the phrase 'before 20 March 1997' should read 'on or after 20 March 1997'.
In each case, however, the meaning of the existing words is clear and there is no ambiguity or obscurity. As regards the phrase 'lump sum compensation affected payment', the expression 'compensation affected payment' is itself exhaustively defined in s17(1) of the Act … and, accordingly, the clear and unambiguous meaning of that phrase is: a 'compensation affected payment' (as statutorily defined) in the form of a lump sum. As regards the phrase 'before 20 March 1997', its clear and unambiguous meaning is: earlier in time than, or prior to, 20 March 1997.
61.In those circumstances, would it be appropriate for the Tribunal, in effect, to rewrite subpara (iii) of para (c) of s1179(5) of the Act so that it reads in the way set out in paragraph 57 above? In the Tribunal's opinion, it would not. Although it may be appropriate for the Tribunal, when called upon to interpret and apply a statutory provision which is open to more than one construction, to give that provision a strained construction or read words into it or otherwise clarify or modify the ordinary, grammatical meaning of the statutory language, in order to give effect to the intention or purpose of the legislature, it is not appropriate for the Tribunal to substitute words for the words that appear in the relevant statutory provision when the meaning of the latter words is 'intractable' and no construction, other than their ordinary grammatical meaning, is reasonably open: Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320. For the Tribunal to engage in such an exercise would be for it to engage in rewriting the relevant statutory provision – that is, to engage in the function of legislation rather than in the function of interpretation or construction. As McHugh JA said in Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 423:
'But first and last the function of the court remains one of construction and not legislation'.
Section 15AA(1) of the Acts Interpretation Act 1901 in no way derogates from that proposition. In Mills v Meeking (1990) 169 CLR 214 Dawson J, referring to s35(a) of the Interpretation of Legislation Act 1984 (Vict) (which is in similar terms to s15AA(1) of the Acts Interpretation Act), said (at p235) that that section:
'requires a court to construe an Act, not to rewrite it, in the light of its purposes'.
Similarly, Burchett J in Trevisan v Commissioner of Taxation (1991) 29 FCR 157 said (at p162):
'Section 15AA [of the Acts Interpretation Act] requires a court to prefer one construction to another. Such a requirement can only have meaning where two constructions are otherwise open. The section is not a warrant for redrafting legislation nearer to an assumed desire of the legislature. It is not for the courts to legislate; a meaning, though illuminated by the statutory injunction to promote the purpose or object of underlying the Act, must be found in the words of Parliament.'
As regards the use of extrinsic material in statutory interpretation, which is authorised by s.15AB of the Acts Interpretation Act 1901, Fitzgerald J said in Federal Commissioner of Taxation v Trustees of the Lisa Marie Walsh Trust (1983) 48 ALR 253 at 278:
'… even if the extrinsic material does reveal the legislative purpose, there will continue to be boundaries beyond which the words used will not stretch even where it is known that they were intended to do so'.
62.… In the Tribunal's opinion it is the responsibility of the legislature to correct drafting errors in its legislation by the process of statutory amendment and, in relation to subparas 1179(4)(a)(iii) and 1179(5)(c)(iii) of the Act, the relevant drafting errors are such that they can very easily be corrected by this means. It is not appropriate for the Tribunal in the present case in effect to usurp the function of the legislature by effectively rewriting the relevant statutory provision."
Accordingly, the Tribunal, for the purposes of applying s1179(4) of the Act in the present case, will apply the literal words of s1179(4)(a)(iii) in accordance with their plain and ordinary grammatical meaning and in accordance with relevant statutory definitions.
According to s1179(4) of the Act, the "recoverable amount" - that is, the amount specified in a Recovery Notice issued pursuant to s1179(1) - is equal to the smallest of the amounts described in each of paras (a), (b) and (c) of that subsection. The Tribunal will now consider the application of each of those paragraphs to the facts of the present case.
The amount described in para (a) of s1179(4) of the Act is "the sum of the payments of the compensation affected payments payable to" the respondent for each of 3 alternative periods referred to in subparas (i), (ii) and (iii), respectively. It is common ground that neither subpara (i) nor subpara (ii) is applicable in the present case. As regards subpara (iii), the specified period - namely, "the new lump sum preclusion period" - applies if, according to the terms of that subparagraph, "a lump sum compensation affected payment is received before 20 March 1997". There being no evidence before the Tribunal that any lump sum "compensation affected payment" (as defined in s17(1) of the Act) was received by the respondent before 20 March 1997, the Tribunal finds that subpara (iii) is also inapplicable in the present case.
The amount described in para (b) of s1179(4) of the Act is "the compensation part of the lump sum payment [sic] or the sum of the amounts of the periodic compensation payments". The phrase "the compensation part of the lump sum payment" should read "the compensation part of the lump sum compensation payment" - see s17(3) and compare s1166(3)(a) of the Act - and, in accordance with the principles of statutory interpretation referred to in paragraph 41 above, the Tribunal is prepared to read it that way. Accordingly, the "compensation part of the lump sum payment" in the present case is, in accordance with the definition in s17(3) of the Act, the amount of $10,750.00. There having been no relevant "periodic compensation payments" made to the respondent, the amount referred to in para (b) of s1179(4) of the Act for the purposes of the present case is $10,750.00.
Finally, the amount described in para (c) of s1179(4) of the Act is "the maximum amount for which the insurer is liable to indemnify the compensation payer in relation to the matter at any time after receiving", relevantly, a preliminary notice under s.1177 of the Act. In the present case that amount is $21,500.00.
Accordingly, the Tribunal finds that, by virtue of s1179(4) of the Act, the "recoverable amount", in respect of which the applicant is authorised by s1179(1) of the Act to issue a Recovery Notice to the relevant insurer, is the amount described in s1179(4)(b) which, in the present case, is $10,750.00.
It follows that the Recovery Notice issued by the applicant, purportedly under s1179 of the Act, to the ICWA on 18 June 1999 was defective because the "recoverable amount" specified therein - namely, $4,292.80 - was not in accordance with subss (3) and (4) of s1179. Accordingly, the Tribunal finds that that Recovery Notice was invalid and ineffectual.
Although the Tribunal has found that the "recoverable amount" in respect of which the applicant is authorised by s1179(1) of the Act to issue a Recovery Notice to the ICWA in the present case is $10,750.00, that result has been produced solely by reason of the apparent drafting errors in s1179(4)(a)(iii) of the Act (see paragraph 40 above) and is clearly not in accordance with the scheme or purpose of Pt 3.14 of the Act. It would, accordingly, be inappropriate for the applicant now to issue such a Recovery Notice in the present case.
There is, however, an alternative course of action open to the applicant whereby the applicant may lawfully and properly recover the appropriate amount of $4,292.80, being the total amount of DSP paid to the respondent during the period from 5 February 1998 to 9 July 1998, which was the subject of the abovementioned invalid Recovery Notice. First, the applicant should refund the amount of $4,292.80, recovered pursuant to that invalid Recovery Notice, to the ICWA for payment to the respondent. Next, the applicant may, pursuant to s1166(1) of the Act, by written notice to the respondent, "determine that [the respondent] is liable to pay to the Commonwealth the amount specified in the notice". By s1166(2), that amount is the "recoverable amount" and is worked out under whichever of subss (3), (4), (4A), (4B) and (4C) is applicable. On the facts of the present case, subs (3) is applicable and, pursuant to that subsection, the "recoverable amount", in a case (such as the present) where a lump sum compensation payment is received by a person on or after 20 March 1997, is equal to the smaller of the following amounts:
the "compensation part of the lump sum compensation payment";
the "sum of the payments of the compensation affected payment made to the person … for the new lump sum preclusion period".
In the present case the former amount is, by virtue of s17(3) of the Act, $10,750.00, and it is common ground that the latter amount is $4,292.80. Accordingly, the applicant would then be authorised under s1166(1) of the Act, by written notice to the respondent, to determine that the respondent is liable to pay to the Commonwealth the amount of $4,292.80. Upon the applicant's giving such a notice to the respondent, the abovementioned amount would be a "compensation debt" (as defined in s23(1) of the Act) and would, by virtue of s1225(1) of the Act, be a debt due to the Commonwealth and would be recoverable by the means specified in s1230C(1) and Pt 5.3 of the Act.
The determination of the "recoverable amount" ultimately specified in a notice under ss1166 or 1179 (as the case may be) of the Act will, however, be affected by a favourable exercise of the discretionary power conferred by s1184(1) of the Act because that subsection authorises the applicant (and, on review, the Tribunal) to treat the whole or part of a compensation payment as either not having been made or not liable to be made (as the case may be) if it is appropriate to do so in the "special circumstances" of the case. It is to that issue that the Tribunal now turns.
Are there "special circumstances" in the present case for the purposes of s1184(1) of the Act?The "special circumstances" discretionary power conferred by s1184(1) of the Act and its statutory predecessors has been considered in numerous decisions of the Federal Court and of the Tribunal. The tenor of those decisions is that, before it may become appropriate to exercise that discretionary power, the circumstances of the particular case must be special, in the sense of unusual, uncommon or exceptional, such that the application of the relevant "compensation recovery" provisions in Pt 3.14 of the Act will produce a result that is, in relation to the person concerned, unjust, unfair, unreasonable or otherwise inappropriate, having regard to the purpose or object of Pt 3.14 of the Act, namely, to ensure that a person is not entitled to receive both compensation payments and social security payments in relation to the same incapacity for work: see, for example Re Ivovic and Director-General of Social Services (1981) 3 ALN No. 61 at pp.N96-N97; Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3; Secretary, Department of Social Security v Smith (1991) 30 FCR 56 at 58-63; Haidar v Secretary, Department of Social Security (1998) 28 AAR 288 at 296-297. The effect of an exercise of the discretionary power conferred by s.1184(1) will be to alleviate such injustice or unfairness by treating the whole or a part of the relevant compensation payment as either not having been made or not liable to be made, as the case may be. The effect of treating part of the compensation payment as not having been made or not liable to be made is that the preclusion period, during which certain categories of social security are not payable to the recipient pursuant to s1165 of the Act, is correspondingly reduced; whereas, the effect of treating the whole of the compensation payment as not having made or not liable to be made is that s1165 of the Act is rendered inapplicable and, accordingly, there is no such preclusion period: Haidar (above), at p290.
The respondent submitted that he had been given incorrect information by the Centrelink officers, Ms Howes and Mr Wong, on (respectively) 20 and 25 May 1999 to the effect that he could receive a lump sum compensation amount of up to $85,000.00 without affecting his DSP entitlements and that, in reliance on that information, he agreed to settle his claim for damages for the amount of $21,500.00. He submitted that he had suffered financially as a result and that that should be regarded as a special circumstance for the purposes of s1184(1) of the Act.
On the evidence before it, the Tribunal is not satisfied that Ms Howes or Mr Wong gave incorrect information to the respondent. The Tribunal accepts the evidence of Ms Howes and Mr Wong that they did not advise the respondent regarding the effect of his receiving a lump sum compensation amount on his DSP entitlements because that was not a matter within their responsibility or expertise. The Tribunal, on the other hand, also accepts that the respondent genuinely believed, following his discussions with Ms Howes and Mr Wong, that he could receive a lump sum compensation amount of up to $85,000.00 without affecting his DSP entitlements. In the Tribunal's opinion, however, that genuine, but mistaken, belief was the result of the respondent's own misunderstanding – a misunderstanding that was in no way the fault of either Ms Howes or Mr Wong. The Tribunal finds that no special circumstances, for the purposes of s1184(1) of the Act, arise out of the respondent's discussions with Ms Howes and Mr Wong.
Nor, in the Tribunal's opinion, can it be reasonably said that Centrelink was guilty of undue delay in advising the respondent of the possible effect of his receiving a lump sum compensation amount on his DSP entitlements. It was not until 25 May 1999 that the respondent lodged with Centrelink a "Module C – Compensation and damages" form notifying Centrelink that, on 30 January 1998, he had claimed compensation by way of third party damages. A week later, on 1 June 1999, an officer of Centrelink wrote to the respondent regarding the possible effect of his receiving a lump sum compensation amount on his social security entitlements and advising that he or his solicitor should contact Centrelink further before agreeing to settle his compensation claim (see paragraph 9 above). On 2 June 1999 an officer of Centrelink also wrote to the respondent's solicitors regarding that matter. It may be that those letters were not received before the respondent settled his claim for third party damages on 3 June 1999, but, if so, that was not because of undue delay on the part of Centrelink. Instead, the reason that the respondent did not receive earlier advice from Centrelink was his own failure to notify Centrelink, earlier than 25 May 1999, that he had made a claim for compensation on 30 January 1998. The Tribunal notes, in this connection, that, on 19 February 1998, a notice was sent to the respondent by Centrelink requiring him to notify Centrelink, within 14 days, if he, amongst other things, claimed compensation (see paragraph 6 above).
The Tribunal has also had regard to the respondent's evidence that he believed, on the advice of his solicitor, that the settlement amount of $21,500.00 did not include any amount for lost earnings, past or future. The Tribunal has no reason to doubt the respondent's evidence and accepts that he genuinely believed that the abovementioned settlement amount related solely to general damages for pain and suffering and did not include any component for economic loss. The Tribunal, however, has already found (see paragraphs 36 – 37 above), on the basis of the objective evidence before it, that that belief was mistaken. While the cause of that mistaken belief may be a matter between the respondent and his solicitor, it is not, in the Tribunal's opinion, a relevant special circumstance for the purposes of s1184(1) of the Act.
Finally, the Tribunal has also had regard to the respondent's financial circumstances. Although he has no major assets (apart from a motor cycle worth about $20,000.00), he also has no liabilities. Although his sole income is his DSP of $363.00 per fortnight, he does not have substantial fortnightly living expenses and he is just able to make ends meet financially because he lives with his parents and does not have any accommodation expenses. In those circumstances it cannot be said that the respondent's financial circumstances are so dire as to warrant a compassionate exercise of the discretionary power conferred by s1184(1) of the Act.
Accordingly, the Tribunal finds that there are no special circumstances in the present case that render the normal application of the relevant "compensation recovery" provisions in Pt 3.14 of the Act unfair, unjust, unreasonable or otherwise inappropriate, having regard to the purpose or object of those provisions. It is, therefore, not appropriate to exercise the discretionary power conferred by s1184(1) of the Act in this case.
Conclusion
The Tribunal concludes, therefore, that:
the amount of $4,292.80 (being the total amount of DSP received by the respondent for the "new lump sum preclusion period" from 23 January 1998 to 16 July 1998) was, by reason of s1165(1) of the Act, not payable to him;
the Recovery Notice issued by the applicant on 18 June 1999, whereby the applicant recovered the abovementioned amount of $4,292.80 from the ICWA, was not in accordance with s1179 of the Act and was invalid and ineffectual;
the abovementioned amount of $4,292.80 may lawfully and properly be recovered by the applicant pursuant to ss1166(1), 1225(1) and 1230C(1) of the Act.
Decision
For the above reasons the Tribunal sets aside the decision under review and remits the matter to the applicant for reconsideration in accordance with the following directions:
that the amount of $4,292.80 (being the total amount of DSP received by the respondent for the period from 23 January 1998 to 16 July 1998) was, by reason of s1165(1) of the Act, not payable to him;
that the Recovery Notice issued by the applicant on 18 June 1999, whereby the applicant recovered the abovementioned amount of $4,292.80 from the ICWA, was not in accordance with s1179 of the Act and was invalid and ineffectual; but
that the abovementioned amount of $4,292.80 may lawfully and properly be recovered by the applicant pursuant to ss1166(1), 1225(1) and 1230C(1) of the Act.
I certify that the 60 preceding paragraphs are a true copy of the reasons for the decision herein of
Signed: S Railton
.............(sgd S Railton)..............
AssociateDate of Hearing 17 February 2000
Date of Decision 17 March 2000
Counsel for the Applicant Mr C G de HoogSolicitor for Applicant Advocacy and Administrative Law Team, Centrelink
Counsel for the Respondent In person
Solicitor for the Respondent
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