Gordon; Department of Family and Community Services

DECISION AND REASONS FOR DECISION [2002] AATA 545

ADMINISTRATIVE APPEALS TRIBUNAL )

) No S2001/264

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

DECISION

Tribunal Senior Member J.A. Kiosoglous MBE

Date4 July 2002
PlaceAdelaide

Decision      The Tribunal sets aside the decision of the Social Security Appeals Tribunal dated 13 June 2001 and in its place affirms the decision of Authorised Review Officer dated 1 May 2001.
  (Signed)
  J.A. KIOSOGLOUS

(Senior Member)

CATCHWORDS
SOCIAL SECURITY - pensions, benefits and allowances - preclusion period - lump sum compensation – no legal advice at time of settlement - family circumstances - financial circumstances - special circumstances considered.

Social Security Act 1991 ss.1184,
Secretary, Department of Social Security v Banks (1990) 20 ALD 19
Secretary, Department of Social Security v Hulls & Ors (1991) 22 ALD 570
Re Fowles and Secretary, Department of Social Security (1995) 38 ALD 152
Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67
Secretary, Department of Social Security & McFetrish [1998] AATA 367
Secretary, Department of Social Security & Beel (1995) 38 ALD 736
Haidar v Secretary, Department of Social Security (1998) 157 ALR 359
Harmat & Secretary, Department of Family and Community Services [2000] AATA661
Kirkbright v Secretary, Department of Family and Community Services [2000] FCA 1876
Secretary, Department of Social Security v Smith (1991) 30 FCR 56
Kirtland v Secretary, Department of Family and Community Services [1999] FCA 1596
Beadle v Director-General of Social Security (1985) 60 ALR 225
Re Knight & Secretary, Department of Social Security [1985] 8 ALN N201
Re Ivovic & Director-General of Social Services [1981] 3 ALN N95

REASONS FOR DECISION

4 July 2002 Senior Member J.A. Kiosoglous MBE

This is an application for review of a decision of the Social Security Appeals Tribunal, made on 13 June 2001 (T2), which set aside the decision of an Authorised Review Officer dated 1 May 2001 (T12) and substituted a new decision that under the special circumstances of the case the whole of the compensation payment received by the respondent, Ms Jill Gordon, was to be treated as not having been made, under section 1184 of the Social Security Act 1991 ("the Act") and that the sum of $999.25 recovered by the applicant was to be repaid to the respondent.
The applicant was represented by Mr James Underwood, a departmental advocate, whilst the respondent was represented by Mr Christian Goldsworthy of Welfare Rights Centre. In addition to materials filed in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (T1-T15) six documents were accepted into evidence, two exhibits tendered by the applicant (Exhibit A1 and A2) and four exhibits tendered by the respondent (Exhibits R1-R4). Oral evidence was provided by the respondent, Ms Jill Gordon.
The issue before this Tribunal, as agreed between the parties is whether or not there are sufficient special circumstances which would allow for the compensation, or part of it, to be treated as not having been made.
history of the application
The respondent was born on 12 July 1966, and is thirty-five years of age. As a result of living in a marriage-like relationship with Mr Andrew Christie a daughter, Melissa, was born on 21 April 1992. The relationship ceased in December 1998. Melissa is now ten years of age. Unfortunately, Melissa has an intellectual disability and suffers from chronic asthma. After separating from her partner the respondent claimed Parenting Payment. Currently, the respondent remains a sole parent working casually at Auto Assemblies at Underdale assembling automotive parts, earning about $516.00 gross per week. She receives both a parenting payment of $386 and a family/carer allowance of $230 per fortnight.
The Tribunal was told and it accepts that the respondent's former partner has been declared bankrupt and left her with responsibility for payment of accounts associated with the household, including house and car repayments. As a result she herself was forced into voluntary bankruptcy on 12 January 1999 but as a result of the money received by way of compensation she was able to repay many of the debts resulting in the bankruptcy being discharged on 13 January 2002.
On 3 November 2000 the respondent was involved in a chain motor vehicle accident and sustained neck and spinal injuries. She made a claim for compensation for the injuries sustained in the accident. At the time of the accident she was working part-time as a cleaner earning $30 per week. As a result of the injuries sustained from the accident a settlement was reached fairly quickly with SGIC. In reaching such settlement she did not see a lawyer nor obtain legal advice. The respondent told the Tribunal that at no time did she see a lawyer nor obtain any legal advice as to settlement.
The respondent settled her common law damages claim by consent on 13 March 2001 for the sum of $6,300 of which the amount of $3,150 was for economic loss and being 50% of the total settlement sum. However, after Centrelink received what it considered was due to it, the respondent received in her hand the amount of $5,300. It was this money that she used to repay many of her debts and discharge her bankruptcy.
Upon being advised of the settlement figure Centrelink calculated a preclusion period of five weeks from 3 November 2000 to 7 December 2000 inclusive. As the relevant period was in the past during a period in which the respondent had received parenting payment, a compensation charge of $999.25 was imposed (T7/27). The reason for Centrelink recovering this amount was based on its having paid parenting payments of that amount during the preclusion period and hence recovered this amount from SGIC from the compensation payable to the respondent.
A delegate of the applicant, as previously stated, made a decision on 20 March 2001 (T7) to impose a preclusion period and recover the parenting payments made during that period. The respondent sought a review of this decision and on 1 May 2001 an Authorised Review Officer (ARO) affirmed the original decision (T12). An application was then lodged by the respondent to the Social Security Appeals Tribunal (SSAT) on 18 May 2001 (T15). On 13 June 2001 the SSAT decided to set aside the decision and substituted a new decision that under the special circumstances of the case the whole of the compensation payment was to be treated as not having been made and the sum of $999.25 was re-payable to the respondent. The applicant made application to the Administrative Appeals Tribunal (AAT) on 19 July 2001 (T1) seeking a review of the decision of the SSAT.
issue
In issue before this Tribunal is whether or not there are sufficiently special circumstances which would allow for all or part of the compensation payment as not having been made, and hence the sum of $999.25 recovered from SGIC being part of the compensation settlement money be repaid to the respondent.
legislation
The legislation applicable in considering the issue of special circumstances is sub-section 1184(1) of the Act which provides as follows:
"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."
Mr Goldsworthy in his submissions stated that the respondent before this Tribunal is not disputing how the lump sum preclusion period was calculated nor its actual calculation. The respondent also does not dispute the application of the fifty per cent rule. He further submitted that the respondent fully understands and accepts the need to prevent double-dipping. What is alleged is that economic pressures and outstanding debts led the respondent to take a hurried settlement offered to her by SGIC. She is reliant on the fact that she had never before been engaged in this sort of negotiation and that she did not receive any independent legal advice as to the quantum of damages.
evidence of the respondent
In her oral evidence, Ms Gordon repeated the factual evidence previously referred to above. She also referred to her circumstances which are summarised briefly. She stated that whilst living in a de facto relationship with Mr Christie they had purchased a home in joint names. Two significant factors are that they separated and he was declared bankrupt, forcing the sale of the home by the Bank, after which no money was left for her. she stated that as a result she was forced to give up work to care for Melissa and apply for what she described as single parent pension but in actual fact was the parenting payment. Left with outstanding debts she had herself declared bankrupt. She also together with Melissa moved into her parents' home with only the little furniture she possessed.
The respondent stated that at the time of the separation she and Mr Christie had two cars, an XE Fairmont station wagon and a Holden sedan of which the total value of the two vehicles was estimated at about $8,000. However, both vehicles were repossessed. The respondent was through selling some of her possessions to Cash Converters able to purchase a Datsun sedan motor vehicle for about $600. Unfortunately, she suffered neck and back injuries as a result of the accident on 3 November 2000 and her car was written off. In fact SGIC forwarded to her a cheque for $900 for the car and with this money she purchased another car.
The respondent stated in her evidence that the value of her car is about $1,000, her furniture about $15,000 and she has approximately $200 in her bank account. Ms Gordon also stated that she is currently employed at Auto Assemblies working casual full-time hence her job not being secure. She further stated that she is paid $14.14 per hour causing her wages to vary from week to week and she does not receive any sick nor holiday pay and her average weekly payment to date for this year is $356. Added to this are the parenting payment and the family allowance totalling approximately $586 per fortnight.
As to expenses and debts concerning her bankruptcy, these are comprehensively set out in Exhibit R2 but in addition Ms Gordon in her oral evidence stated that she had moved from the parental home to a residence at Marion, together with Melissa, for which she pays rental of $140 per week. She also pays $14 per month insurance for home contents. Other expenses included being some $600 behind in rental payments, electricity $250, gas $120, Telstra $150, mobile phone $150, owed brother $1,500 (for purchase of TV), owed parents $400, bed for Melissa $400, birthday present for Melissa $150, a small birthday party for Melissa $120, rental bond money $560, school uniform for Melissa $200. She also stated that she has regular expenses for food and clothing.
In addition to outlining the above expenses and debts, Ms Gordon also told the Tribunal of Melissa's suffering with a learning disability and although private tutoring is required she was unable to afford $45 tuition fees for each lesson. She stated that Melissa required at least three tuition lessons per week. The Tribunal was referred to a Guidance Report on Melissa by a Guidance Officer of the Department of Education and Children's Services (Exhibit R3). In the report it states that results from tests indicate Melissa's intellectual functioning as being within the mildly intellectually disabled range and that her adaptive behaviour is well below average for her age. The respondent did say that Melissa was receiving tuition and assistance at her school but notwithstanding this she preferred to provide Melissa with private tuition. The school is currently providing Melissa with two lessons per week privately but for this she is taken out of her maths class with which it coincides and hence her maths suffers. The purpose of the tuition lessons currently provided by the school is to assist Melissa with spelling and reading. The respondent also stated that Melissa has an asthmatic condition for which a carer allowance is provided.
Ms Gordon reiterated in her evidence that she did not consult a lawyer as to her compensation claim as she did not think she had a need to do so. She stated that SGIC made her a couple of offers the last being for $6,300 which she accepted due to her condition and financial hardship at the time. She felt it unfair of Centrelink to receive $995.25 out of the settlement sum as well as a further $660 for Medicare. However, she stated that the $660 Medicare amount was reimbursed to her. The respondent feels that the retention of the $995.25 should not have occurred given her circumstances.
submissions of the applicant
In his submissions, Mr Underwood stated that in presenting the case for the applicant, the accident and everything that stemmed from it including the litigation through to the financial hardship inclusion period and the respondent's personal circumstances at the time, are all taken into account. In addressing each of the issues raised to show special circumstances he first stated that of financial hardship. He submitted that the respondent settled her claim for $6,300 and because she had no legal representation she did not have to pay any legal fees hence she benefited the whole amount although in fact after Centrelink deducted what it considered due to it she received $5,300. He also submitted that at the time Ms Gordon was heavily in debt and to pull herself out of that financial hardship she utilised the compensation money to pay off her debts and to discharge her bankruptcy.
Added to her having received the compensation money, Mr Underwood further submitted that the respondent was in receipt of social security payments in the vicinity of about $500-$600 per fortnight by way of parenting payment of $386 per fortnight and family/carer allowance of $230 per fortnight. This in fact totals about $616 per fortnight.
As to the motor vehicle accident itself, Mr Underwood submitted that the respondent had previously purchased her car for about $600 but that as a result of its being written off received about $900 from the insurance company. Ms Gordon utilised this money to purchase another car. Mr Underwood stated that this amount recovered was not known prior to this hearing.
Mr Underwood submitted that on her own admission the respondent is able to work and she was in fact working. He also submitted that the respondent did not suffer any long-term significant impact upon her work capacity stemming from the accident. He compared the respondent's situation with other cases where people as a result of an accident have never been able to work again and/or end up receiving disability support pension. Mr Underwood did not broach the matter of her assets, submitting that she is in no worse position than most other social security recipients and that she pays rent but owns her furniture.
In respect of Melissa, the respondent's daughter, Mr Underwood accepted that the child suffered from asthma and had a learning disability. He stated that for the learning disability the respondent receives a carer allowance and that that disability is being managed by the school although the respondent preferred private tuition for the child. He further stated that the carer allowance received by the respondent is the maximum payable which is inclusive also of the asthma complaint.
Mr Underwood submitted that it was the respondent's own choosing not to seek legal advice nor have legal representation in relation to the litigation and assessment. He stated that she decided to accept a settlement for whatever reasons at the time. He also submitted that the respondent spoke with officers of Centrelink on at least two occasions prior to final settlement and her signing the release and indemnity agreement. In fact she had also spoken to a Ms Jenny Egel of SGIC who in turn rang and spoke to an officer of Centrelink about monies likely to be recovered. Despite advice given her, the respondent proceeded to settle the compensation payment very quickly. Mr Underwood submitted that the respondent did this of her own choosing and that taxpayers should not be responsible for the consequences of the respondent's actions.
Mr Underwood submitted that the legislation imposes the fifty per cent rule by which fifty per cent of all compensation is deemed for a loss of earning capacity or lost earnings. This was inserted in the legislation as an arbitrary figure in order to avoid manipulation of that particular component. He referred the Tribunal to Secretary, Department of Social Security v Banks (1990) 20 ALD 19 in response to Ms Gordon saying in her evidence that she had been advised by SGIC that if she dropped the loss of chance claim then there would be no recovery of the compensation. He submitted that this action of Ms Gordon was a small example of how at the time economic loss components were being obscured.
In referring to Banks, Mr Underwood referred to von Doussa J at page 24, namely:
"'Settlements of lump sum compensation particularly in the workers compensation jurisdiction are being manipulated to obscure the economic loss component and to avoid recovery of social security payments. To prevent this abuse the Minister announced on 8 February 1988 that, for future personal injury settlements made by agreement or by consent order, 50% of lump sum compensation will be deemed to be in respect of economic loss. This Bill gives effect to that proposal. Where, on the other hand, a court has made an order after a contested hearing specifying the economic loss component, the secretary to the department will continue to have regard to the characterisation given to the award by the court.'
The mischief is clearly identified as the abuse of the earlier provisions which had come about through settlements being manipulated to obscure the economic loss component in the compensation payment.
It is clear from the language of s152(2)(c) that the amendment seeks to resolve the mischief by applying markedly different means of determining 'the compensation part of a lump sum payment by way of compensation' according to whether, on the one hand, the lump sum payment is made 'in settlement of a claim that is, in whole or in part, related to disease or injury' or, on the other hand, is a lump sum payment made 'in any other case'."
Mr Underwood made such submissions because the SSAT in reaching its decision looked at the components of the lump sum payment that was in relation to economic loss and found that the very low amount of economic loss constituted a special circumstance. In Secretary, Department of Social Security v Hulls and Others (1991) 22 ALD 570 at 578, O'Loughlin J traced the decision of Banks and went on to say:
"Once the mischief at which the amending legislation was aimed has been so clearly identified, it becomes apparent that the legislation prevents any dissection of the 'lump sum'. Although those words are not identified, I respectfully agree with what von Doussa J said of them in Bank's Case: 'They are not words of art. In the Macquarie Dictionary a "lump sum" is defined as a sum "including a number of items taken together or in the lump". In my opinion the words bear that meaning in the section.'"
Mr Underwood also went on to also consider the matters of Re Fowles and Secretary, Department of Social Security (1995) 38 ALD 152 and Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67. In Re Fowles, Bully J at 162 stated:
"(58) In the final analysis the only matter relied on by the applicant through her solicitor is the fact as alleged, that Ms Fowles received a significantly lower component for economic loss in the lump sum settlement than that calculated by the department pursuant to the relevant sections of the Act. In any event I am not satisfied that any other matter in Ms Fowles's case amounts or could be regarded as amounting to 'special circumstances'."

and further at paragraph 60, Bully J stated:

"Further if one acceded to Mr Jeffery's argument on 'special circumstances' as set out in the initial part of Cl 58 of these reasons, one would in a back door fashion be giving credence to the sort of approach the amending legislation sought to prevent. That approach of seeking to dissect the lump sum into components by disguising it under the phrase 'special circumstances' pursuant to s1184 should not be countenanced in the circumstances."

Mr Underwood also submitted that in Chamberlain at paragraphs 33 to 35, Kiefel J stated:
"33 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.
34 The basis for the Tribunal's view was its acceptance of what the parties to the settlement said had been offered and accepted for the economic loss component. It was far less than the statute assumed to be the case in applying the formulae. Again, however, this will be so in many, if not most, cases to which the Act applies. Further, the extent of the difference from the basis upon which the parties acted could not provide the necessary 'special circumstance'. The statute has selected a figure which may operate in an arbitrary way.
35 The statutory objectives in utilising the formulae, referred to above, must also be borne in mind. It is not intended that a decision-maker be required to consider contentions about what part of the compensation reflected the economic loss component. That is so whether one has regard to the application of the formulae or the discretion under s1184. The latter does not alter the objective and must be read in light of it."
In referring to these cases, Mr Underwood submitted that O'Loughlin J in Hulls concluded that a lump sum compensation payment cannot be dissected to allow for separate treatment of any component. He further submitted that Bully J in Re Fowles looked at whether the fact that the economic loss component was very low was actually a special circumstance. Bully J concluded that it would be giving back-door credence to that dissection which had been specifically precluded by von Doussa J in Banks and O'Loughlin J in Hulls and referred to by Kiefel J in Chamberlain, who intimated that the legislation will act in an arbitrary way in almost every case.
He further submitted that the fifty per cent outlined in the formula was simply a trigger to calculate a preclusion period and has no other relevance. He also submitted that it is rare for the economic loss component to equal the statutory formula, namely, the fifty per cent as it will usually be either above that or below and that it would be an extraordinary thing for it to equal exactly the fifty per cent. On these factors Mr Underwood stated that in the current matter the applicant argues that such is hence not a special circumstance and is not a factor that can be taken into account to alleviate the effect of the preclusion period. It was submitted that in the current matter the fact that the economic loss component is so small is not relevant - whether or not it was $1.00 or $6,299 has no impact but rather it is the same effect irrespective of what amount is for economic loss.
Mr Underwood also referred to Secretary, Department of Social Security and Jan McFetrish [1998] AATA 367 which he likened as being close to Ms Gordon's situation. In particular, in McFetrish, the respondent was also in receipt of Child Disability Allowance at the time of her compensation claim settlement. In this case the Tribunal was also asked to consider financial hardship or the financial disadvantage by the application of the legislation. In arriving at its decision the Tribunal at paragraph 15 stated:
"The respondent has been financially disadvantaged by the application of the legislation, and she has had the care of a disabled child. She was in receipt of disabled child allowance, but I do not consider that these circumstances are special circumstances which would warrant the exercise of discretion in the respondent's favour, in accordance with section 1184(1) of the Act."

submissions of the respondent

Mr Goldsworthy in his submissions on behalf of the respondent referred to the respondent's involvement in a chain motor vehicle accident on 3 November 2000 in which she sustained neck and spinal injuries. At the time of the accident she worked part-time as a cleaner earning only $30 per week. On 13 March 2001 the respondent settled her common law damages claim for $6,300 of which "the heads of settlement included a component of $480 for past economic loss based on sixteen weeks at $30 per week, $500 loss of chance". Mr Goldsworthy stated that Centrelink calculated a preclusion period of 5 weeks from 3 November 2000 to 7 December 2000 using a divisor amount of $552.88 and an economic loss amount calculated to be $3,150. He further stated that "Centrelink had determined that Ms Gordon had been paid Parenting Payment Single of $999.25 during the preclusion period" and that it had recovered this amount directly from SGIC.
Mr Goldsworthy submitted that Ms Gordon is a sole parent with the care of a ten year old disabled child who requires special education classes. The respondent used to pay for private tuition over the past two years but she presently cannot afford such private tuition which she believes is important for her child's development. He further submitted that the respondent "would truly love the extra money so that she could pay the $42 per lesson to complement the special education lessons provided by the school.
On the issue of the arbitrary calculation, Mr Goldsworthy submitted that the basis of the arbitrary calculation of the lump sum preclusion period in this instance was unfair against the respondent. He also submitted that the arbitrary formula used to calculate the preclusion period for Social Security purposes has calculated her economic loss to be $3,150 when in fact the heads of damages shows it only to be $480.
Mr Goldsworthy referred to a number of authorities, including Secretary, Department of Social Security and Beel (1995) 38 ALD 736; Haidar v Secretary, Department of Social Security (1998) 157 ALR 359; Harmat and Department of Family and Community Services [2000] AATA 661; Kirkbright v Secretary, Department of Family and Community Services [2000] FCA 1876; Secretary, Department of Social Security v Smith (1991) 30 FCR 56; and Kirtland v Secretary, Department of Family and Community Services [1999] FCA 1596.
In reference to the authorities cited, Mr Goldsworthy stated that in Re Harmat the Tribunal examined the component parts of the compensation payments to assist it in determining whether it was preferable to use the discretion of section 1184 to ameliorate the harshness of the arbitrary statutory formula. He further submitted that in both Re Harmat and in Re Beel the component parts of the compensation payments were held to be a factor open to consideration when assessing the special circumstances of the case.
Mr Goldsworthy further submitted that Heale J in Haidar (at 367) stated:
"However, the legislature was conscious of the possible harshness of a rule structured in an arbitrary way. Section 1184, therefore, provided the means whereby the Secretary or, in the event ultimately of an appeal to the Administrative Appeals Tribunal, that Tribunal, could alleviate the harshness of the statutory provision in an appropriate case but only where there were special circumstances."
Mr Goldsworthy also submitted that Re Haidar also raised the point of when the Tribunal should look to the special circumstances and asked the question of whether or not it is the special circumstances at the date of the Administrative Appeals Tribunal determination or is it at the time that the preclusion period occurred. In the matter of Ms Gordon, he submitted that the Tribunal should be looking at the time of the preclusion period. In support of this he submitted that her circumstances since then have improved through her own efforts, including the discharge of her own bankruptcy. Her circumstances at the time of her preclusion period were much worse and this Tribunal standing in the shoes of the original decision-maker should not look at Ms Gordon's circumstances as of today but as of her circumstances at the time of the preclusion period. By her own efforts she has been able to obtain a casual job, even though it causes her physical discomfort and she currently has no significant debts.
Mr Goldsworthy submitted that in Haidar the Federal Court found that the Tribunal in reaching its decision "took into account an irrelevant consideration", namely, that it placed too much weight on Mr Haidar's present circumstances at the date of hearing and not his circumstances when the preclusion period took place.
Mr Goldsworthy emphasised that the respondent does not dispute how the lump sum preclusion period was calculated or the application of the fifty per cent rule. What the respondent does seek from the Tribunal is the exercise of its discretion pursuant to section 1184 of the Act and the affirmation of the decision of the SSAT. Mr Goldsworthy stated that it was economic pressure and outstanding debt that led Ms Gordon to take a hurried settlement offered to her by SGIC. It was submitted and the Tribunal accepts that she had never been engaged in this sort of negotiation before and hence she did not receive any independent advice as to the quantum of damages. He further submitted and the Tribunal accepts that the compensation amount received by Ms Gordon was particularly small and certainly smaller than in any of the authorities cited to this Tribunal.
In reference to the authorities cited, Mr Goldsworthy submitted that in these consideration was given to situations where the heads of settlement may have been manipulated to frustrate the general intention of the Act which is a fair and equitable outcome for the taxpayer. He submitted that such was not the situation in Ms Gordon's case as she "received only a very very modest compensation payment, an extremely low component for incumbent loss".
the applicant's submissions in reply
Mr Underwood, for the applicant, submitted that in considering all the factors Ms Gordon although experiencing financial hardship she did survive and have sufficient money to live on from what she had received by way of compensation and that she still had the benefit of her social security payments. As to the manner and the early settlement of the litigation, Mr Underwood submitted that these issues do not come into consideration as the decisions made were the choices of the respondent and such could not be expressed as being extraordinary. He also submitted that she receives a carer allowance, formerly called the child disability allowance, and that that is the only other factor evident in Re McFetrish beyond the arbitrary nature of the formula which cannot be said to be a special circumstance.
discussion and findings
The Tribunal in considering whether or not it is able to exercise its discretion pursuant to section 1184 of the Act first needs to determine the period to be looked at. In his submissions, Mr Goldsworthy, as previously stated, submitted to the Tribunal that at the time of this hearing the respondent had discharged herself from bankruptcy, found a casual job and currently has no significant debts, as a result of which the application of the provisions of section 1184 may not be applicable. He submitted that the Tribunal should not look at Ms Gordon's circumstances as at the date of this hearing but rather look at her circumstances as at the time of the preclusion period. The Tribunal notes with interest that Mr Underwood stated that he was not disputing this submission.
At the time of the preclusion period, in summary, the circumstances of the respondent were that she was an undischarged bankrupt, she had a number of debts and she received only a very modest compensation payment as a result of the motor vehicle accident of which a compensation settlement was reached without her receiving any independent legal advice as to the quantum of damages. She had at the time a casual job as a cleaner hence receiving only a low wage and having no job security whilst caring for her intellectually disabled child. Whilst in evidence considerable attention was given to the child's requirement for appropriate tuition the Tribunal finds itself in agreement with the applicant and so finds that it ignored any comparisons on the tuition being provided to the child because the child's private tuition had ceased in March 2000, being several months prior to the events of the period in question.
Having been confronted with the need to decide at which period of time the Tribunal will consider, the Tribunal is satisfied on the evidence before it that the respondent's position was far worse at the time of the preclusion period in comparison with at the time of the hearing. Certainly her situation has improved over that period of time. Notwithstanding such improvement the Tribunal deems it appropriate in this case to exercise its discretion and consider the respondent's situation at the time of the preclusion period.
The Tribunal in being satisfied that the period to be considered is that at the time of the preclusion period proceeds to consider the issue of "special circumstances". The authority of Beadle v Director-General of Social Security (1985) 60 ALR 225, highlighted that "special circumstances" are circumstances which are "unusual, uncommon or exceptional", by reason of which "strict enforcement of the liability created by the section would be unjust or otherwise inappropriate" (Re Knight and Secretary, Department of Social Security [1985] 8 ALN N201). Also, in Re Ivovic and Director-General of Social Services [1981] 3 ALN N95, that Tribunal stated that the use of the word "special" is intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case whilst at the same time keeping the dominant principle of section 1184 in mind and must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate.
The question of what constitutes special circumstances has been considered in a number of decisions of this Tribunal as well as by the Federal Court. A number of such authorities have been referred to previously in this decision. It suffices here to say no more than that something is required which would take the matter out of the usual ordinary range of cases. In fact the Full Court in Beadle said that special circumstances will be those matters which render circumstances unfair or inappropriate.
The SSAT in arriving at its decision looked at a number of matters including the compensation settlement sum; the quickness with which the respondent agreed to settlement without obtaining any legal advice; that she had not worked since the accident; the care given to her disabled child and expenses incurred; and the use of her compensation settlement monies towards paying outstanding debts. It also took into account as one of the factors the matter of financial hardship. The SSAT reached its decision because it felt that the discretion under section 1184 should be exercised particularly considering the arbitrary nature of the section and manner and way in which it has worked to cause a disproportionate effect in the respondent's case. However, as previously stated, Mr Goldsworthy submitted that this is not an issue before this Tribunal. The issue is that of whether or not the respondent experienced hardship which can be determined to comply with the established criteria for 'special circumstances'.
The Tribunal in considering the various matters upon which the SSAT made its determination, including the smallness of the compensation settlement sum and the quickness with which Mrs Gordon agreed to it without seeking any legal advice as well as the fact that she had not worked since the accident, the care given to her child and appreciated expenses together with financial hardship as a result of using the compensation settlement monies towards paying outstanding debts, has taken the evidence as a whole into account. The Tribunal has also taken into account the relevant legislation and the authorities which clearly set out the requirements for special circumstances to be present. The respondent contended that the Tribunal should find special circumstances within the meaning of section 1184 on the basis of the factors previously stated and found by the SSAT.
The applicant contended that the SSAT had erred in its consideration of each of those matters. This Tribunal in arriving at its decision has considered each of them individually and collectively. The Tribunal takes into account that the respondent has been unable to work since the accident and continues to suffer from the effects of the injuries sustained. The respondent has submitted that the Tribunal consider her circumstances when the preclusion period took place and not at present. The respondent at that time was in receipt of benefit monies from the Department as well as having had part-time employment. Also her condition could not be considered as sufficient to take her outside the normal range or hardship one sees in other pension recipients. It was her decision to seek the compensation payment as quickly as possible without seeking any legal advice. The Tribunal was satisfied that the respondent is a very competent person who should have realised the effects of a quick settlement.
In relation to the respondent's financial circumstances and after considering the nature of her financial position and expenditure, the Tribunal finds that she was not in any position different to others who have difficulty in meeting the expenses associated with family. Whilst the Tribunal is satisfied that the factors provided by the respondent could be described as circumstances, the Tribunal is satisfied that on the established criteria these, including her financial circumstances, could not be deemed as "special" as they could not be said to be "unusual, uncommon and exceptional", thus not satisfying the requirements of section 1184 of the Act.
Accordingly, the Tribunal sets aside the decision of the Social Security Appeals Tribunal dated 13 June 2001 and in its place affirms the decision of the Authorised Review Officer dated 1 May 2001.
I certify that the 53 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member J.A. Kiosoglous MBE.
Signed:   (Signed)
  Barbara Armstrong, Associate
Date/s of Hearing  23 April 2002
Date of Decision  4 July 2002
Counsel for the Applicant        Mr James Underwood
Solicitor for the Applicant         Centrelink
Counsel for the Respondent    Mr Christian Goldsworthy
Solicitor for the Respondent    Welfare Rights Centre

[2002] AATA 545

4 July 2002

Key Legal Topics

Areas of Law

Social Security Law

Legal Concepts

Social Security Act 1991 ss.1184

Preclusion Period

Lump Sum Compensation

Financial Circumstances

Special Circumstances Considered