Gillard; Department of Family and Community Services - [2002] AATA 156

DECISION AND REASONS FOR DECISION [2002] AATA 156

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2001/636

GENERAL ADMINISTRATIVE DIVISION       )
           Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Applicant
           And    KAREN GILLARD
  Respondent

DECISION

Tribunal Ms G Ettinger, Senior Member

Date11 March 2002
PlaceSydney

Decision        The Administrative Appeals Tribunal sets aside the decision of the Social Security Appeals Tribunal dated 2 April 2001, and in substitution therefor affirms the decision of the Secretary, Department of Family and Community Services, Centrelink delegate, dated 6 January 2000, and 17 February 2000 which was affirmed by the decision of the Authorised Review Officer of the Secretary, Department of Family and Community Services dated 15 April 2000 holding that the compensation period as calculated applying section 17(3) of the Social Security Act 1991 ("the Act"), to Ms Karen Gillard, was correct, and that special circumstances pursuant to section 1184 of the Act did not exist to reduce or otherwise alter the preclusion period imposed on her.
  ..............................................
   Ms G Ettinger
  Senior Member
CATCHWORDS
Social Security - Preclusion Period - compensation for injury - whether calculation correct - whether special circumstances pursuant to section 1184 of the Social Security Act 1991 – calculation of preclusion period correct – no special circumstances found - decision affirmed

LEGISLATION

Social Security Act 1991 ss 17(3), 1165, 1184
Social Security Amendment Act 1988

CASE LAW

Secretary, Department of Social Security v Banks (1990) 20 ALD 19
Re Secretary, Department of Social Security and Smallacombe (1991) 23 ALD 141
Re Secretary, Department of Family & Community Services and Woolrich (2000) AATA 943
Re Keighley and Secretary, Department of Family & Community Services (2001) AATA 231
Secretary, Department of Social Securities v Hulls & Others (1991) 22 ALD 570
Secretary, Department of Social Security v a' Beckett (1990) 26 FCR 349
Kertland v Secretary, Department of Family and Community Services (1999) 57 ALD 600
Secretary, Department of Social Security and Smith (1991) 23 ALD 277
Lintern and Secretary, Department of Social Security (1993) 72 SSR 1041
Re Fowles and Secretary, Department of Social Security (1995) 38 ALD 152
Re Secretary, Department of Social Security and Beel (1995) 38 ALD 736
Re Caruso and Secretary, Department of Social Security (1996) AAT 11243
Secretary, Department of Social Security v Cunneen (1997) 48 ALD 251
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Ivovic and Director-General of Social Services (1981) 3 ALN N95
Re Green and Secretary, Department of Social Security (1990) 21 ALD 772
Re Secretary Department of Social Security and Bunge (1990) 20 ALD 488
Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464
Re Krzywak and Secretary, Department of Social Security (1998) 15 ALD 690
Secretary, Department of Social Security and Winterbotham (AAT 6499, 11 December 1990)
Re Secretary, Department of Social Security and VYS (1996) 40 ALD 745
Re Hajar and Secretary, Department of Social Security (1988) 16 ALD 716
Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67

REASONS FOR DECISION

11 March 2002 Ms G Ettinger - Senior Member

The decision under review before the Administrative Appeals Tribunal ("the Tribunal") was the application of the Secretary, Department of Family and Community Services ("the Department") for review of the decision of the Social Security Appeals Tribunal ("SSAT"), of 2 April 2001 (T2), which set aside the decision of the Authorised Review Officer of the Department (T17) dated 15 April 2000, the latter having affirmed the decision of the Team Leader, Compensation Recovery Team, Centrelink dated 17 February 2000 (T13). The findings made were that the preclusion period for Ms Karen Gillard the ("Respondent") in these proceedings, as calculated applying section 17(3) of the Social Security Act 1991 ("the Act"), was correct, and that special circumstances pursuant to section 1184 of the Act did not exist to reduce or otherwise alter her preclusion period.
The SSAT set aside the decision of the Department and remitted it with directions that the discretion under section 1184(1) of the Act be exercised to disregard part of the lump sum compensation settlement received by Ms Karen Gillard, the Respondent in the proceedings before this Tribunal, so that the compensation part of the lump sum payment was taken to be $25,000. It directed that accordingly, the preclusion period and the charge be recalculated, and that the difference between the amount repaid to Centrelink from Ms Gillard's compensation payout, and the charge as recalculated be paid to Ms Gillard. The preclusion period calculated by the Department had been 29 July 1993 to 10 April 1996.
The Applicant, Department was represented by its advocate Mr G Lozynsky, and the Respondent, Ms Karen Gillard, by Ms S Clark, Solicitor of the Welfare Rights Centre.
Ms Gillard gave oral evidence before the Tribunal.
BACKGROUND
The parties did not dispute, and I accepted, that Ms Gillard had been injured in a motor vehicle accident on 7 April 1987, and again on 29 July 1993. Ms Gillard's evidence was that she had last been employed in 1992, and had been receiving sickness benefits in the period before the 1993 accident, and Disability Support Pension ("DSP") from 1995.
As a result of the 1993 accident, Ms Gillard's case had been before an arbitrator. She was initially awarded $74,770 plus costs on 13 August 1999. After an appeal by her, and a consent agreement negotiated by her legal representatives, the award was changed to $119,224.91, rounded to $120,000 (inclusive of costs), on 15 December 1999 (T9).
In both cases, the usual heads of agreement were covered. However the particular issue to be noted in this case is that future economic loss was assessed at $25,000 on both occasions, that is, also in the settlement made on the second occasion.
I noted that on 14 June 2001, there had been hearing of a Stay on the application of the Department, and the decision of this Tribunal constituted by Senior Member M D Allen handed down as follows:
"Upon hearing the advocate for the Applicant and the Respondent, the Tribunal DIRECTS that upon the payment of $5000.00 by the Applicant to the Respondent, pursuant to section 41(2) Administrative Appeals Act (sic) 1975, the decision of the Social Security Tribunal (sic) made 2nd day of April 2001 be STAYED pending the decision of the Tribunal. …"

ISSUE BEFORE THE TRIBUNAL

The issues before the Tribunal were:

whether the calculation of the preclusion period 29 July 1993 to 10 April 1996 was correct;
whether there were special circumstances pursuant to section 1184 of the Social Security Act 1991 which could be applied in order to treat the whole or part of the compensation payment as not having been made .

LEGISLATION

The relevant legislation in this matter was the Social Security Act 1991, in particular:
"Compensation recovery definitions
17(3) For the purposes of this Act, the compensation part of a lump sum compensation payment is:
(a) 50% of the payment if the following circumstances apply:
(i) the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or condition; and
(ii) the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise, on or after 9 February 1988; or
(ab) 50% of the payment if the following circumstances apply:
(i) the payment represents that part of a person's entitlement to periodic compensation payments that the person has chosen to receive in the form of a lump sum; and
(ii) the entitlement to periodic compensation payments arose from the settlement (either with or without admission of liability) of a claim that is, in whole or in part, related to a disease, injury or condition; and
(iii) the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise, on or after 9 February 1988; or
(b) if those circumstances do not apply—so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn.
Secretary may disregard some payments
1184(1) For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:
(a) not having been made; or
(b) not liable to be made;
if the Secretary thinks it is appropriate to do so in the special circumstances of the case.
1184(2) If:
(a) a person receives or claims a compensation affected payment; and
(b) the person's partner receives compensation; and
(c) the set of circumstances giving rise to the compensation are not related to the set of circumstances that give rise to the person's receipt of or claim for the compensation affected payment;
the fact that those 2 sets of circumstances are unrelated does not in itself constitute special circumstances for the purposes of subsection (1).
Note: Subsection (2) is in response to comments made in the decision of the Administrative Appeals Tribunal in Re Secretary, Department of Social Security and Lee (S92/155) to the effect that the Social Security Act is aimed at reducing pensions in situations where a social security recipient's entitlement is somehow connected with the fact that the recipient's partner is in receipt of compensation payments and not wages.
Compensation affected payment not payable during lump sum
preclusion period
Person not member of a couple—payment received before 20 March 1997
1165(1) Where:
(a) a person receives or claims a compensation affected payment; and
(b) the person is not a member of a couple; and
(c) the person receives a lump sum compensation payment (whether before or after the person receives or claims the compensation affected payment) before 20 March 1997;
a compensation affected payment referred to in paragraph (a) is not payable to the person for the old lump sum preclusion period.
Note 1: For old lump sum preclusion period see subsections (3) to (4).
Note 2: A series of lump sum payments can be taken to be one lump sum compensation payment under subsection 17(2B).
Person not member of a couple—payment received on or after 20 March 1997
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.
Note 1: For new lump sum preclusion period see subsections (5) to (8).
Note 2: A series of lump sum payments can be taken to be one lump sum compensation payment under subsection 17(2B).
New lump sum preclusion period
1165(5) If periodic compensation payments are made in respect of the lost earnings or lost earning capacity, the new lump sum preclusion period is the period that:
(a) begins on the day after the last day of the periodic payment period; and
(b) ends after the number of weeks worked out under subsections (8) and (9).
Note: For periodic payments period see section 17.
1165(7) If neither subsection (5) nor (6) applies, the new lump sum preclusion period is the period that:
(a) begins on the day on which the loss of earnings or loss of earning capacity began; and
(b) ends after the number of weeks worked out under subsections (8) and (9).
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."

EVIDENCE BEFORE THE TRIBUNAL

Documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, ("the T-documents") were before the Tribunal as Exhibit A1, and a bundle of documents of the Respondent as Exhibit R1.
EVIDENCE OF MS GILLARD
Ms Gillard gave oral evidence before the Tribunal. She told the Tribunal about the accidents she had sustained on 7 April 1987 and 29 July 1993, and the compensation settlement which she had received.
Ms Gillard said that after the 1987 accident from which she said she incurred muscular injuries, she had pain in her back, neck and shoulder and had suffered from depression.
Ms Gillard said that she had last been employed in 1992, and had ceased work due to gynaecological problems. She said that she had previously worked with her mother in a hairdressing business which they were not able to sell.
Ms Gillard said that since 1993 she suffered a number of complaints, including occasional migraine, which was getting worse, and gynaecological problems. She said she had had migraine for 10 years. Ms Gillard said she suffered with a cyst on the pituitary gland and sinusitis, and said that her nails were infected from hairdressing. She also said that she had sciatica which caused a burning pain.
When asked at the hearing, which of her complaints were now worst, Ms Gillard said that her lower back pain and migraine came into that category
Ms Gillard said that she had been on sickness and disability allowances between 1992 and 2000. She had been awarded Disability Support Pension ("DSP") in 1995.
When asked how she managed with her daily tasks, Ms Gillard said she did things without bending and was able to keep the house clean.
When questioned about what advice she received with regard to her compensation settlement, Ms Gillard said she did not receive much advice, but knew that she had to pay back some money out of an award. She said that most of the advice she received was wrong. Ms Gillard said she was told she would receive $63,000 in her pocket after expenses had been paid, and had received only $24,000 as a settlement with $12,000 from the Health Insurance Commission.
Referring to a letter at T23/96 which was dated 14 March 2001 and written by Mr Maxwell, of counsel to the Law Society of New South Wales, Ms Gillard told me that the information therein was incorrect. I noted he had written as follows:
"I do have a recollection of speaking personally to Miss Gillard on an occasion well prior to the settlement where I advised her that the Department of Social Security would more than likely take a significant sum of money either from a settlement or from judgment, in view of her claim for past economic loss."
Ms Gillard gave evidence regarding how she used her settlement monies in payment of personal debts, removalist's costs, and rent arrears. She gave evidence regarding the lease of a house at the cost of $350 a week which she commenced sharing with another person in June 2000. She said that her flatmate had left after some 6 - 8 weeks, and that she now owed $5,900 in rent. Ms Gillard said that she wanted to find somewhere more affordable, but found that difficult because of accommodation for her dog (which she loves), and her furniture. Other expenses for which she is responsible, include payment of water bills, personal debts, insurance for her 14 year old car, house insurance and medication. Ms Gillard said that she did not contact welfare agencies for assistance because she considered it was wrong to do that.
When questioned, she said that she had no social life.
When asked whether she was proceeding with establishment of a nursery, Ms Gillard said that plants had been a hobby all her life, but that with her health problems, she could no longer contemplate such a venture. She said that if she had surgery to assist with her back, and her migraine was controlled, she would like to recommence part-time work, but thought that she would need training. Ms Gillard was unable to say what particular work she would do. She said that the problem with her pituitary gland affected her ability to think fast and clearly. Ms Gillard said that the depression affected her occasionally, but that she tried not to take medication because it made her worse.
SUBMISSIONS AND CONCLUSIONS
In coming to a decision, I had to take into account all the evidence, case law, legislation and submissions to decide whether the preclusion period associated with a compensation payout to Ms Gillard had been calculated correctly, and whether special circumstances pursuant to section 1184 of the Act applied to treat the whole or part of the compensation payment as not having been made.
In considering these issues, I was mindful of section 17(1) of the Act which defines particular payments as "compensation affected" payments, and sections 17(2) and (3) which relevantly state:
"Compensation
17(2) For the purposes of this Act, compensation means:
(a) a payment of damages; or
(b) 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
(c) a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or
(d) 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:
(e) made wholly or partly in respect of lost earnings or lost capacity to earn; and
(f) made either within or outside Australia.
17(3) For the purposes of this Act, the compensation part of a lump sum compensation payment is:
(a) 50% of the payment if the following circumstances apply:
(i) the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or condition; and
(ii) the claim w as settled, either by consent judgment being entered in respect of the settlement or otherwise, on or after 9 February 1988; or …"
I noted that Ms Gillard had been receiving sickness benefit and DSP before her accident in 1993, and the subsequent compensation award, and that these were compensation affected payments pursuant to section 17(1) of the Act. These were taken into account in the calculation of her compensation payout. I was also mindful that in calculating Ms Gillard's preclusion period, section 17(3) of the Act was applied.
I further noted the applicable sections 1165(1A), 1165(7), 1165(8) and 1179 of the Act:

(a) section 1165(1A) of the Act provides that if a person receives a compensation lump sum after 20 March 1997, they are precluded from receiving a compensation affected payment for the duration of the "new" lump sum preclusion period;

(b) section 1165(7) of the Act states that the preclusion period commences on the day the loss of earnings commenced;

Compensation part of lump sum
Income cut-out amount

(d) section 1179 of the Act provides for the repayment to the Commonwealth of any compensation affected payments paid to a person during a lump sum preclusion period upon the issue of a written notice.

I have noted earlier in these Reasons that Ms Gillard was involved in two accidents, that is in 1987 and 1993, and received a compensation payment after the second accident. I noted further at T7, that the Arbitrator, in his Reasons For Award discounted certain items claimed due to Ms Gillard's previous accident in 1987, noting also that the symptoms associated with the previous accident had been sufficient to incapacitate her for full-time work as a hairdresser. I noted from Ms Gillard's evidence that due to ill health as detailed in her oral evidence, she had not worked in paid employment since 1992.

I noted that the Arbitrator's award of $74,770 made on 13 August 1999 was comprised as follows:

non-economic loss $40,570
out-of-pocket expenses $ 2,200
future medication $ 2,000
future economic loss $ 25,000
future physiotherapy and medication $5,000
costs to be assessed

I noted also that Ms Gillard had been dissatisfied with the award and appealed. The matter was settled out of court on 15 December 1999 to the amount of $119,224.91, rounded to $120,000 including costs (T9). The settlement was as follows:

non-economic loss $40,570
out-of-pocket expenses $ 23, 654.91
future economic loss $ 25,000
future out-of-pocket expenses $ 10,000
costs $ 20,000

I was mindful of Ms Gillard's evidence that, although she was represented, due to ill health she had not been present for the latter negotiations which resulted in the $120,000 settlement. Ms Gillard also gave evidence that she had been assured of receiving far more after deductions than she in fact did.
There was no disagreement between the parties that the Applicant was receiving a compensation affected payment at the time of her injury (section 17(1) of the Act), and that she received a lump sum payment of compensation of $120,000 in a settlement. I noted that Ms Gillard was legally represented at the time of that settlement. Pursuant to section 17(3) of the Act, and in the normal course of events, the compensation part of the lump sum payment is 50 percent of that amount, or $60,000.
I was mindful also that the "50 percent rule" was introduced by the Social Security Amendment Act 1988. The 1988 amendments were considered by von Doussa J in Secretary, Department of Social Security v Banks (1990) 20 ALD 19 to have been inserted to overcome the administrative difficulties which confronted the Secretary under the earlier provisions where he had been required to form an opinion about economic loss in each case. His Honour, having regard to the Second Reading Speech on the Bill considered that the mischief identified was "the abuse of the earlier provisions which had come about through settlements being manipulated to obscure the economic loss component in the compensation payment."
Mr Lozynsky submitted that based on the amount of compensation paid to Ms Gillard, the preclusion period of 29 July 1993 to 10 April 1996 as calculated pursuant to section 17(3) of the Act, was correct. He submitted that this complied precisely with the 50 percent rule in section 17(3) of the Act. He submitted that the SSAT had interpreted section 17(3) and section 1184 of the Act incorrectly.
However, Ms Clark argued for Ms Gillard that the compensation part of the lump sum compensation should only amount to $25,000, that being the amount awarded for future economic loss. She submitted that the amount of $25,000 awarded for economic loss was itself unfair. She suggested that the Arbitrator had decided that Ms Gillard did not have the capacity to undertake work and therefore did not compensate her for the lack of income between 1993 and 10 April 1996. Ms Clark drew to my attention also, that the future economic loss was calculated at $25,000 on both occasions (the Arbitrator's award as well as at the subsequent settlement), and that this figure was not manipulated to defeat the purpose of the Act. Accordingly, the application of the 50 percent rule, according to Ms Clark, did not produce a fair reflection of the compensation Ms Gillard actually received.
Mr Lozynsky submitted that a statutory framework had been implemented for particular purposes and had to be followed notwithstanding that it might appear harsh or unjust. (Re Secretary, Department of Social Security and Smallacombe (1991) 23 ALD 141). He referred also to the cases of Re Secretary, Department of Family & Community Services and Woolrich (2000) AATA 943 and Re Keighley and Secretary, Department of Family & Community Services (2001) AATA 231. He submitted that in Keighley (supra), Member, Dr J Campbell, had stated that strict adherence to statutory mandatory rules could create no unfairness. Mr Lozynsky referred the Tribunal also to the well known cases of Secretary, Department of Social Security v Banks (1990) 20 ALD 19 Secretary, Department of Social Securities v Hulls & Others (1991) 22 ALD 570, Secretary, Department of Social Security v a' Beckett (1990) 26 FCR 349 with regard to the 50 percent rule.
Ms Clark submitted that strict application of the 50 percent rule pursuant to Kertland v Secretary, Department of Family and Community Services (1999) 57 ALD 600 would produce an unjust result.
Ms Clark submitted, relying also on Secretary, Department of Social Security and Smith (1991) 23 ALD 277, that where a statutory scheme produced an unfair result, that could be regarded as a special circumstance.The Tribunal noted that von Doussa J in Smith (supra), referred to the 50 percent rule as an "arbitrary formula" which arose as a result of the wish to eliminate difficulties which had arisen under earlier enactments where the Respondent was required to form an opinion about how the amount of a payment by way of compensation was made up. His Honour agreed in the judgment at page 282, that the Tribunal hearing Mr Smith, had not fallen into error by taking into account an relevant consideration when it said:
"To continue to deprive (the respondent) of that which was paid to him by virtue of his rightful entitlement to sickness benefit on the basis that he is to be taken to have been compensated for it when in actual fact he was not, would not in my view be unjust."
Mr Lozynsky submitted, referring to paragraph 12 of the Applicant's Statement of Facts and Contentions:
"In Glass and Secretary, Department of Social Security (AAT Decision 13512 delivered 7 December 1998), the Tribunal noted that it was unnecessary to determine the actual quantum of any component of the compensation payment referable to economic loss. In addition, the Tribunal in Glass and in Eggleton v Secretary, Department of Social Security (AAT decision 1025 delivered 13 March 1998) both held that a repayment to the Department, notwithstanding that economic loss might have been suffered, did not of itself produce an unfair or unjust result. In Fowles and Secretary, Department of Social Security (1995) 38 ALD 152, the Tribunal was not satisfied that a low component for economic loss amounted to special circumstances because this would lend support to the approach the amending legislation sought to prevent that is the dissection of the lump sum into components. Therefore, the applicant submits that in accordance with section 17 (3) of the Act, the decision to regard 50% of the $120,000 lump sum as the component for economic loss and diminished earning capacity was correct."
Mr Lozynsky referred also to Lintern and Secretary, Department of Social Security (1993) 72 SSR 1041, submitting that the Tribunal in that case noted that public money should not be used to improve or give gain to social security recipients. He emphasised that the Department had an obligation to the taxpayer, citing the case of Re Fowles and Secretary, Department of Social Security (1995) 38 ALD 152.
Ms Clark argued that in this matter a strict adherence to the statutory requirements resulted in an unfair and inequitable outcome for Ms Gillard, as it was clear that the intent of both parties in the compensation matter was that the Applicant's non-economic loss was $40,570 and that future economic loss was $25,000.
In considering the above submissions I turned to a number of cases which have dealt with the issue. I was mindful that Von Doussa J in Secretary, Department of Social Security v Banks (1990) 20 ALD 19, in discussing an equivalent provision, namely section 152 of the Social Security Act 1947 ("the 1947 Act"), stated at 26:
"The prescribed percentage (50 per cent) of the lump sum payment made in settlement of a claim which by s 152(2)(c)(i) is deemed to be the "compensation part of a lump sum payment by way of compensation" should be viewed as a broad attempt to balance the interests of the recipient of the payment with the competing interests of others in the community whose needs must be met as far as possible from a finite budget allocation for social security measures. The paragraph seeks to eliminate double dipping in a practical way which operates effectively in a straight forward manner. In the very nature of an arbitrary provision, sub para (i) could possibly entail a degree of unfairness in a particular case, but the present case is not an example. Here, by the terms of the order, almost all of the lump sum was paid in respect of incapacity for work, actual or potential, yet only 50 per cent of the lump sum is treated as the compensation part of the lump sum for the purposes of calculating the exclusion period."

In Secretary, Department of Social Security v Hulls (1991) 22 ALD 570, O'Loughlin J was concerned with the findings in Banks (supra) and further indicated that the 50% rule was introduced to prevent any dissection of the lump sum.
Such decisions were followed by the Tribunal in relation to section 17(3) of the Act in Re Fowles and Secretary, Department of Social Security (1995) 38 ALD 152, where the excision of certain amounts from the compensation lump sum as not being payments in respect of an incapacity for work were declined.
In Re Secretary, Department of Social Security and Beel (1995) 38 ALD 736, and Re Caruso and Secretary, Department of Social Security (1996) AAT 11243, the Tribunal did find that the compensation part was 50 percent of the lump sum compensation payment, in accordance with section 17(3) of the Act. The Tribunal there, however, disregarded a quantum of the lump sum compensation payment pursuant to section 1184 of the Act, due to "special circumstances".
In Secretary, Department of Social Security v Cunneen (1997) 48 ALD 251, the Federal Court concluded that regardless of the identified heads of damage, a lump sum is indivisible for the purposes of part 3.14 of the Act. I find myself bound by that view, noting that it may be that the statutory approach in section 17(3) of the Act produces an unfair and inequitable outcome in an occasional case. I must however be mindful that this Tribunal cannot jeopardise the integrity of a statutory process which balances both individual social need and a community's responsibility to ensure equity and probity of resource distribution to meet those needs.
On the basis of the above decided cases, the intent of the legislation, and taking into account the facts of Ms Gillard's case and the circumstances of her settlement, I was unable to exercise any discretion to depart from the statutory scheme which was the application of the 50 percent rule.
I therefore decided that the preclusion period had been correctly calculated.
APPLICATION OF SECTION 1184 OF THE SOCIAL SECURITY ACT 1991
I moved therefore to consider Ms Gillard's situation pursuant to section 1184 of the Act. Notwithstanding my finding that the 50 percent rule was correct as applied to Ms Gillard to determine the preclusion period, that preclusion period could still be shortened if I was able to find that there were "special circumstances" within the terms of section 1184 of the Act. As relevant section 1184 of the Act provides:
"1184(1) For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:
(a) not having been made; or
(b) not liable to be made;
if the Secretary thinks it is appropriate to do so in the special circumstances of the case."
The phrase "special circumstances" is very well known and has been the subject of much judicial examination and expression. Perhaps the most well known case is in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 where Toohey J stated:
"An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend on the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special."
In relation to compensation recovery pursuant to section 115 of the 1947 Act (the equivalent of section 1184 of the 1991 Act), the Tribunal in the case of Re Ivovic and Director-General of Social Services (1981) 3 ALN N95 considered that the "…plain intention of section 115 of the Act" is that the person is subject to the liability created by section 115(4) "unless… this Tribunal) is satisfied that special circumstances exist by reason of which the person should be released in whole or in part from that liability…"
I noted that in Re Green and Secretary, Department of Social Security (1990) 21 ALD 772 at 773, the Tribunal nominated a framework against which claims for special circumstances could be considered: -

""The use of the word "special" is "intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case".
"Hardship is a relevant consideration" but regard must be had to the way in which the hardship arose.
There must exist "factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes".
The decision-maker must have regard to whether, by exercising the discretion in a particular case he/she will be "achieving or frustrating the ends or objects which are comfortable with the scope and purpose of the Social Security Act";
"The decision maker must be prepared to respond to 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"."

I noted that Mr Lozynsky, in addressing section 1184 of the Act, submitted that Ms Gillard's circumstances were in no way unusual or uncommon. He said her circumstances should be looked at in their entirety. Ms Clark submitted that "special circumstances" meant something "out of the ordinary" but that they need not the "extreme or unique."
In considering whether special circumstances existed pursuant to section 1184 of the Act, I had to consider the constellation of circumstances affecting Ms Gillard's situation, including her health, financial circumstances, legal advice, and the application of the 50 percent rule. I moved then to consider the submissions of the parties with regard to these issues.
health
Mr Lozynsky submitted that Ms Gillard's ill health consisting of her back, neck, shoulder and leg problems, as well as the migraine and depression predated the 1993 accident, and that there had been no evidence of it worsening since the compensation award was made. He therefore submitted that ill health was not a special circumstance to be taken into account in this case. Mr Lozynsky cited Re Secretary Department of Social Security and Bunge (1990) 20 ALD 488, in support of his argument that if a person's health made her eligible to receive DSP, health would then not itself constitute a "special circumstance" within the context of section 1184 of the Act. He submitted that Ms Gillard's health could not therefore be held to be a "special circumstance" pursuant to section 1184 of the Act.
Ms Clark disagreed, submitting that Ms Gillard continued to suffer ill health, unrelated to the compensation payment. She drew to my attention that Ms Gillard had believed at the time of the settlement that she could commence a small nursery business, but that she had had to abandon the plan due to her health problems, and that health could be considered a "special circumstance" in this case.
In considering the issue of the Applicant's various medical conditions, I noted Ms Gillard's evidence that her lower back pain and migraine were the worst of her health problems, but I did not have medical evidence which convinced me to the requisite standard, on the balance of probabilities, that there had been a deterioration of her health since the compensation award had been made. Having then considered all elements of the Applicant's health conditions, I preferred the submissions of the Applicant and concluded that Ms Gillard's health did not constitute a "special circumstance" in this case (Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464).
financial circumstances
Mr Lozynsky then moved to make submissions about Ms Gillard's financial circumstances, which he said were not more straitened than those of other recipients of social security. In this connection he cited the cases of Re Krzywak and Secretary, Department of Social Security (1998) 15 ALD 690 and Secretary, Department of Social Security and Winterbotham (AAT 6499, 11 December 1990).
Mr Lozynsky referring to Ms Gillard's financial situation, submitted that there was nothing unusual in her finances in that she owed her mother a small amount of money, that her evidence was that she had no personal loans or credit cards to pay off, that she was in receipt of DSP, that she had used the $12,000 from the HIC with regard to her accommodation costs. He suggested that notwithstanding the high rent Ms Gillard paid for her house, she had not either moved to cheaper accommodation or taken in boarders.
Ms Clark, on the other hand, submitted that her client was in financial hardship, but that she could not move from the house because of her dog and because she had unfinished business to attend to in Sydney.
Mr Lozynsky submitted also that Ms Gillard's evidence was that she had not sought assistance from charities, saying that this was an option for her. Ms Clark on the other hand, submitted that the assistance of charities was minimal, in the way of assistance with an occasional bill or a hamper, and that it was unrealistic to expect Ms Gillard to consult charities.
In considering Ms Gillard's circumstances, I was mindful that her situation does not differ substantially from those of others in her position. She has some medical problems and I accepted that she felt she could not pursue the idea of setting up a nursery, but she did not appear to have spent her compensation monies appropriately, let alone wisely. I accept that Ms Gillard loves her dog, but in her position, the addition of a flatmate immediately after the loss of the first one would have alleviated her financial position. A mobile telephone, which rang during the hearing, is not exactly a necessary item, and is no doubt also a drain on one's resources.
I was not prepared on the basis of the evidence and submissions before me to consider that Ms Gillard's financial position could be classified a "special circumstance" within the terms of the legislation.
legal advice
I moved then to consider the situation with regard to Ms Gillard's legal representation in connection with her compensation settlement. Mr Lozynsky submitted that Ms Gillard had been represented at all times when negotiating her compensation payout. Mr Lozynsky submitted also that the ongoing dispute with her legal representatives should not be considered a "special circumstance" by the Tribunal. He also indicated that the letter at T23/96, dated 14 March 2001 written by Mr Maxwell of counsel indicated that Ms Gillard had known about the implications of the preclusion period prior to the compensation settlement.
Ms Clark on the other hand citing Re Secretary, Department of Social Security and VYS (1996) 40 ALD 745 submitted that the "fuzzy advice – not clear" advice from a legal representative could be held to be a "special circumstance". In VYS (supra), Senior Member J R Dwyer said at paragraph 38 of the judgement:
"…it would seem that incorrect advice from a solicitor may, in an appropriate matter, constitute an acceptable special circumstance within the meaning of that term in s 1184 of the Act."

Ms Clark submitted that Ms Gillard's letter at T12, was a clear indication that she had no knowledge of the amounts to be repaid. She added that Ms Gillard was now represented by legal aid and that she was trying to settle the dispute with her legal representatives.

I was mindful that incorrect legal advice was held to be a "special circumstance" in VYS (supra). However inRe Hajar and Secretary, Department of Social Security (1988) 16 ALD 716, it was held at 718 that if the applicant's present position was due to poor legal advice, the applicant should take legal proceedings against his legal advisers.
I was not convinced to the requisite standard from the evidence and submissions in this case, that Ms Gillard did receive incorrect advice in relation to her compensation settlement. Whilst I do not have details of her instructions regarding the appeal process, no submissions regarding any wrongdoing were made in that regard. The settlement was for an amount substantially more than the Arbitrator's award, and Ms Clark informed me that Ms Gillard's dispute with her lawyers regarding legal fees is being funded by Legal Aid. On the basis of the submissions and evidence before me, I was unable to find that incorrect legal advice was a "special circumstance" in this case.
application of the 50 percent rule
I also considered whether strict adherence to the statutory process in this matter, could be considered a "special circumstance" in Ms Gillard's case. In considering Ms Gillard's arguments, I considered it of no merit to find that in the ordinary course of events adherence to the statutory process is a "special circumstance". In evaluating the outcome of adherence to the statutory process, I noted that there is nothing unfair or unjust in the process of implementation and of outcome experienced by the Applicant, in that she has been treated as would others in such circumstances, and the outcome is as others would experience it in similar circumstances.
I was mindful of Kiefel J in Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67 in which her Honour at paragraph 33 stated:
"In the present case the Tribunal considered that the application of the formulae was unfair to the applicant because she would have to pay more than she had received by way of compensation for economic loss, indeed twice as much. That factor will however be present in most cases and is an aspect of the application of the formulae. In my view it cannot, by itself, amount to a special circumstance, one out of the ordinary."
Further I noted that strict enforcement of the liability is neither unjust, unreasonable or otherwise inappropriate, for indeed the liability is to repay compensation affected payments received. Finally I noted that there is nothing identified in the process undertaken and the outcome arrived at which would not occur to another in similar circumstances. Therefore, I concluded that in relation to the circumstances of strict adherence in this matter, both the process and the outcome upon Ms Gillard cannot be considered to be unusual, uncommon and exceptional and as such do not constitute "special circumstances".
In summary I found that the circumstances nominated and considered, whether single or together did not constitute "special circumstances". In considering all the circumstances nominated as a whole, I concluded that they did not constitute "special circumstances", for in effect they are not exceptional, uncommon or unusual.
Therefore I was not in a position to exercise any discretion as nominated in section 1184 of the Act, and my decision is that the decision of the SSAT be set aside and the decisions of the Department be reinstated.
DECISION
The Administrative Appeals Tribunal sets aside the decision of the Social Security Appeals Tribunal dated 2 April 2001, and in substitution therefor affirms the decision of the Secretary, Department of Family and Community Services, Centrelink delegate, dated 6 January 2000, and 17 February 2000 which was affirmed by the decision of the Authorised Review Officer of the Secretary, Department of Family and Community Services dated 15 April 2000 holding that the compensation period as calculated applying section 17(3) of the Social Security Act 1991 ("the Act"), to Ms Karen Gillard, was correct, and that special circumstances pursuant to section 1184 of the Act did not exist to reduce or otherwise alter the preclusion period imposed on her.
I certify that the 73 preceding paragraphs are a true copy of the reasons for the decision herein of Ms G Ettinger Senior Member
Signed:         .....................................................................................
  Associate
Date/s of Hearing  19 September 2001
Date of Decision  11 March 2002
Advocate for the Applicant      Ms G Lozynsky
Solicitor for the Respondent MsS Clark