Jensen and Secretary, Department of Employment and Workplace Relations

[2007] AATA 1120

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1120

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2005/724

GENERAL ADMINISTRATIVE DIVISION		)
Re		JOHN JENSEN

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr SC Fisher, Member

Date12 March 2007

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

..................[Sgd]............................

Member

CATCHWORDS

SOCIAL SECURITY – disability support pension – payments received by the applicant from an insurance policy -  whether payments should be regarded as ‘ordinary income’ – whether special circumstances apply – decision affirmed

Social Security (Administration) Act (Cth) ss Part 4 Division 5, s 179

Social Security Act 1991 (Cth) ss 17, 17A

Administrative Appeals Tribunal Act 1975 (Cth) ss 37, 43

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) s 101

Federal Court Rules Order 52 r 15(2)

Secretary, Department of Social Security v Murphy, Federal Court, 29 June 1998, QG205/1997
Ajka Pty Ltd v Australian Fisheries Management Authority (2003) 74 ALD 21
Bantick and Secretary, Department of Family and Community Services [2003] AATA 472 Bramwell v Repatriation Commission (1998) 51 ALD 56

Collins v Minister for Immigration and Ethnic Affairs (1981) 36 ALR 598
Macri and Secretary, Department of Family and Community Services (2005) 83 ALD 301
Oprea and Secretary, Department of Family and Community Services (2005) 87 ALD 696
Read v The Commonwealth of Australia (1987) 167 CLR 57
Secretary, Department of Social Security v McLaughlin (1997) 48 ALD 536

Torv & Bond University Ltd and Secretary, Department of Family and Community Services (2004) 80 ALD 707
Secretary, Department of Employment and Workplace Relations v Homewood (2006) 91 ALD 103
Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Beadle v Director-General of Social Security (1985) 60 ALR 225

Green and Secretary, Department of Social Security (1990) 21 ALD 772
Re Ivovic v Director General of Social Services (1981) 3 ALN N95
Krzywak v Secretary, Department of Social Security (1988) 15 ALD 690

Trimboli v Secretary, Department of Social Security (1989) 86 ALR 64

Groth and Secretary, Department of Social Security (1995) 40 ALD 541
Dranichnikov v Centrelink (2003) 75 ALD 134
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866
Haider v Secretary, Department of Social Security (1998) 52 ALD 255
Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64
Secretary, Department of Family and Community Services and Danielsen-Jensen (2004) 86 ALD 790
Secretary, Department of Family and Community Services and SRKKKK (2005) 86 ALD 396
Ubachs v Secretary of the Department of Family and Community Services [2004] FCA 310 Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424
Secretary, Department of Employment and Workplace Relations and Carabott (2006) 89 ALD 316
McAliney and Secretary, Department of Family and Community Services (2005) 83 ALD 316
Strang and Secretary, Department of Employment and Workplace Relations [2006] AATA 51

REASONS FOR DECISION

12 March 2007    Mr SC Fisher, Member

Background

1.      The applicant, Mr Jensen, is in receipt of disability support pension and appeals from a decision of the Social Security Appeals Tribunal, which in turn affirmed earlier decisions inside Centrelink to the effect that receipt by Mr Jensen of regular payments of $204 per week from a Personal Sickness and Accident Insurance Policy provided by American Home Assurance Company over the period 8 May 2003 to 6 April 2005 should be treated as ordinary income.  The effect of this decision is to deny Mr Jensen entitlements to full payment of disability support pension over 8 May 2003 – 6 April 2005.

Decision Under Review

2.      The decision under review is a decision of the Social Security Appeals Tribunal made on 1 November 2005 which affirmed a decision made by Centrelink to treat payments received by Mr Jensen from an insurer as "ordinary income" spanning the period 8 May 2003 – 6 April 2005.

Jurisdiction

3. In a procedural sense, the Tribunal has jurisdiction in this appeal by virtue of Part 4, Division 5 of the Social Security (Administration) Act 1999 (“the Administration Act”). In a substantive sense, the merits of this appeal are governed by the Social Security Act 1991 (“the Act”).

The Role Of The Tribunal

4. The role of the Tribunal is to review the merits of the decision before it: section 43 of the Administrative Appeals Tribunal Act 1975 and Secretary, Department of Social Security v Murphy, Federal Court, 29 June 1998, QG205/1997 per Drummond J. The Tribunal is guided by the norm that it should reach the “correct and preferable decision on the basis of the material before it”: Ajka Pty Ltd v Australian Fisheries Management Authority (2003) 74 ALD 21 at 31. “The Tribunal is required to stand in the shoes of the original decision-maker and consider all evidence anew, bearing in mind statutory provisions and any significant legal precedent”: Bantick and Secretary, Department of Family and Community Services [2003] AATA 472 at [23]. The Tribunal proceeds de novo: Bramwell v Repatriation Commission (1998) 51 ALD 56 at 60 per Weinberg J. The Tribunal must base its decision upon the material that is logically probative of the existence of facts that emerge from the evidence before it: Collins v Minister for Immigration and Ethnic Affairs(1981) 36 ALR 598 at 601.

5.      This Tribunal is not vested with a general discretion to circumvent, override, sidestep or supplant the otherwise very clear terms of legislation that determines income support entitlements such as disability support pension.

Issues

6.      The principal issue for the Tribunal to determine is whether the receipt by Mr Jensen of regular payments of $204 per week from a Personal Sickness and Accident Insurance Policy provided by American Home Assurance Company over the period 8 May 2003 to 6 April 2005 should be treated as “ordinary income”.

7.      A subsidiary issue to determine is whether the Tribunal should exercise a discretion to treat the whole or part of the insurance payments as not having been made where there are "special circumstances" in this case.  The effect any favourable exercise of this discretion would be to reduce the length of any preclusion period in relation to the receipt of disability support pension.

8. The Tribunal is not reviewing any decision made by Centrelink to raise and recover a disability support pension debt in relation to the period 8 May 2003 – 1 April 2004, because this decision has not been reviewed by the Social Security Appeals Tribunal which is a precursor to review by this Tribunal, as required by section 179 of the Social Security (Administration) Act 1999.

The Material Before The Tribunal

9.      The following documentary evidence was before the Tribunal:

Exhibit 1 Documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 in relation to Q2005/724 (documents T1 – T34).

Exhibit 2Witness Statement of the Applicant (undated)

10.     The Applicant was self-represented. Exhibit 2 was lodged on behalf of the Applicant.

11. The Respondent lodged documents T1 to T34 under section 37 of the Administrative Appeals Tribunal Act 1975 in connection with the appeal. 

12.     The Respondent was represented by Ms S Oliver and later, Mr M Black, both departmental advocates.  The Respondent’s advocate provided a Statement of Facts and Contentions to the Tribunal, together with Further Submissions following a direction made by the Tribunal on 11 July 2006.

Evidence Of The Applicant

13.     The applicant gave evidence to the Tribunal on which he was briefly cross-examined.  A summary of what he said is set out next:

1. The Applicant said that the total amount of compensation he received from his motor vehicle accident on 5 May 2003 was $67,281.99.
2. The Applicant said that he was in good health before his motor vehicle accident.  The Applicant said that he was working in a qualified job before that accident.
3. The Applicant said that after deducting various amounts including medical expenses, statutory refunds, legal disbursements, legal expenses, he received $14,977.14 in hand.
4. The Applicant described his medical conditions, including a lumbar spine injury.  The applicant described how he needed a special apparatus for the management of his medical conditions (which include a quarter loss range of movement, injuries to the left side of his body, impaired memory and a cancerous brain tumour).
5. The Applicant said he was single, 58 years of age, without children.
6. The Applicant said that he receives $295 per month by way of a pension from Denmark.

Other Material Before The Tribunal

14.     The Tribunal also had regard to Exhibit 1.  Salient aspects from Exhibit 1 which the Tribunal took particular note of included the following:

• Information about the settlement of the common law claim instituted by the Applicant in respect of his personal injuries resulting from a motor vehicle accident.
• The submissions of the Applicant to the Social Security Appeals Tribunal dated 24 August 2005 (T 22, folio 66).

15.     The initial hearing of this appeal was adjourned indefinitely on 9 May 2006 when it became apparent that the Tribunal required further information about the nature of the compensation payments paid to the Applicant by his insurer.  The Tribunal made directions for the Respondent to exercise its information-gathering powers to ascertain further information and documentation relevant to the nature of the insurance payments received by the Applicant.  The Respondent did so.  The Respondent's Further Submissions included two attachments, Attachments A & B.  Attachment A was from AIG – American Home Assurance Company.  This document recorded that:

• The weekly or periodic payments paid to Mr Jensen were in respect of lost earnings.
• The Applicant did not make any contributions by way of insurance premiums to the accident policy in respect of which he was paid money.
• There were offsets under the insurance policy for any workers’ compensation or compulsory third-party payments made to the Applicant, but there were no reductions in such payments in this particular case.

Attachment B disclosed that:

• The Applicant paid a $3.00 levy over 9 shifts he worked as a taxi driver, which was applied towards an accident excess, comprehensive insurance and personal injury insurance for taxi drivers.
• Although no specific part of the $3.00 levy was attributed to AIG – American Home Assurance Company, levies were pooled and paid through the taxi industry brokerage scheme.
• The $3.00 levy did not fully indemnify the relevant taxi cooperative for which the Applicant drove, and that company paid the relevant shortfall or deficit.

Discussion Of The Evidence

16.     There were no issues of credit in this case.  The Tribunal was able to accept the evidence of the Applicant, which was not disputed by the Respondent.

Contentions Of The Applicant

17.     In a nutshell, the Applicant argued that:

1. Centrelink was wrong to classify his periodic compensation payments as "income" for social security purposes.
2. His personal, medical and financial circumstances (in effect) justified this Tribunal exercising its discretion under section 1184K of the Act to treat the whole or part of a compensation payment is not having been made.

Contentions Of The Respondent

18.     The  contentions of the Respondent are as follows:

1. The Applicant was in receipt of a disability support pension, which is a "compensation affected payment" within section 17(1) of the Act.
2. Whilst in receipt of disability support pension, the Applicant received $204 per week which were compensation payments within section 17(2) of the Act.
3. The exception to section 17(2)(d) of the Act, provided by section 17(2A) of the Act, was not triggered in favour of the Applicant because the "offset" clause in the relevant insurance policy fell within section 17(2A)(b)(i), which in turn led to the result that those payments were "other compensation payments" and were captured by the definition of "compensation" in section 17(2).
4. The insurance payments received by the Applicant were income under section 1173(4) of the Act.
5. Alternatively, the insurance payments were income within the meaning of "income" and "income amount" within section 8 of the Act.
6. The circumstances of the Applicant were not "special circumstances" within section 1184K of the Act.

Findings Of Fact

19.     On the basis of the evidence before it, the Tribunal made the following findings:

1. At all material times, Mr Jensen was in receipt of disability support pension.
2. Mr Jensen was injured in a motor vehicle accident on 5 May 2003.
3. Mr Jensen received a gross settlement amount of $67,281.99 and a net amount of $14,977.14 in hand following the resolution of his personal entries claim resulting from his motor vehicle accident.
4. Mr Jensen received $20,860.20 from AIG - American Home Assurance Company from 8 May 2003 to 6 April 2005.
5. Mr Jensen paid a $3.00 levy over 9 shifts he worked as a taxi driver, which was applied towards an accident excess, comprehensive insurance and personal injury insurance for taxi drivers.
6. Although no specific part of the $3.00 levy was attributed to AIG – American Home Assurance Company, levies were pooled and paid through the taxi industry brokerage scheme.
7. The $3.00 levy did not fully indemnify the relevant taxi cooperative for which the Applicant drove, and that company paid the relevant shortfall or deficit.

Applicable Legislation

20.     The legislation applicable to this appeal centres upon key provisions of the Social Security Act 1991.

21. The Tribunal notes that the rate of payment of disability support pension for the relevant period is governed by section 1064 of the Act, in particular Module A of the Rate Calculator. It is not necessary for the purposes of this appeal to set out the text of those provisions.

22. The Tribunal also had regard to section 17(1) of the Act, in particular the definitions of "compensation affected payment" (which includes as one of its integers disability support pension), as well as to section 17(2) concerning the meaning of compensation:

“17(2) Subject to subsection (2B), 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 and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.”

23. Section 17(2)(d) dovetails with section 17(2A), which reads:

“17(2A) Paragraph (2)(d) does not apply to a compensation payment if:

(a) the recipient has made contributions (for example, by way of insurance premiums) towards the payment; and

(b)        either:

(i) the agreement under which the contributions are made does not provide for the amounts that would otherwise be payable under the agreement being reduced or not payable because the recipient is eligible for or receives payments under this Act that are compensation affected payments; or

(ii)the agreement does so provide but the compensation payment has been calculated without reference to the provision.”

24. Section 1173(4) is also relevant:

“1173(4)  If:

(a)  a person receives periodic compensation payments; and

(b)  at the time of the event that gave rise to the entitlement of the person to compensation, the person was qualified for, and was receiving, a compensation affected payment; and

(c)  the person receives or claims a compensation affected payment in relation to a day or days in the periodic payments period;

the periodic compensation payments are to be treated as ordinary income of the person for the purposes of this Act.”

Secretary may disregard some payments

1184K(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.

1184K(2)  If:

(a)  a person or a person's partner receives or claims a compensation affected payment; and

(b)  the person receives compensation; and

(c)  the set of circumstances that gave rise to the claim for compensation is not related to the set of circumstances that gave rise to the person's or the person's partner's receipt of, or claim for, the compensation affected payment;

the fact that those 2 sets of circumstances are unrelated does not alone constitute special circumstances for the purposes of subsection (1).”

Consideration Of The Issue And Application Of The Law

25.     The first and major issue for the Tribunal to determine is whether the receipt by the applicant of regular payments of $204 per week from a Personal Sickness and Accident Insurance Policy provided by American Home Assurance Company over the period 8 May 2003 to 6 April 2005 should be treated as ordinary income.  The competing contentions of the parties have been summarised above.

26. The Respondent's argument proceeded as follows. The insurance payments received by the Applicant were "ordinary income" within section 1173(4) of the Act. This provision invoked section 17(2) in turn.

27. The evidence before the Tribunal establishes that the Applicant’s periodic insurance payments were made wholly or partly in respect of lost earnings resulting from personal injury (in particular Attachments A and B referred to earlier this Reasons for Decision). These payments also qualify as "any other compensation ... payment" within section 17(2)(d) of the Act because they compensate the Applicant or make good a loss suffered by the Applicant in respect of personal injury (compare Macri and Secretary, Department of Family and Community Services (2005) 83 ALD 301 at 306-307). It is also necessary to consider the "carve out" or exception to section 17(2)(d) presented by section 17(2A) (cited earlier). Section 17(2A) has two elements, paragraphs (a) and (b).

28.     In relation to section 17(2A)(a), the Respondent argued that the Applicant did not make contributions towards insurance payments that he received (citing Oprea and Secretary, Department of Family and Community Services (2005) 87 ALD 696 and Macri and Secretary, Department of Family and Community Services (2005) 83 ALD 301). The evidence before the Tribunal establishes that the Applicant did in fact make a modest contribution towards or as the quid pro quo for the insurance payment. This is sufficient to satisfy section 17(2A)(a). True it is that the $3.00 levy was not earmarked towards a particular policy, and also that the individual levies paid by taxi drivers were aggregated or pooled and then paid to brokers, who in turn placed insurance with a range of insurers, including the insurer who did in fact make compensation payments to the Applicant. Nevertheless, for the purposes of section 17(2A)(a) in the opinion of the Tribunal, there is no need for some kind of direct linear relationship between the contribution and the payment. The necessary linkage in section 17(2A)(a) is satisfied if there is a less direct relationship between an identifiable contribution and the ultimate compensation payment made. Accordingly, the Tribunal disagrees with the contention of the Respondent that the Applicant did not make a contribution towards the payment of compensation.

29. This then led the Tribunal to consider section 17(2A)(b), which has 2 limbs. The Respondent conceded that the first limb, section 17(2A)(b)(i) was satisfied. For itself, however, the Tribunal is satisfied that this concession was correctly made because the identifiable offsets on the evidence before the Tribunal were workers compensation or compulsory third party liability payments, not income support payments such as disability support pension. As section 17(2A)(b)(ii) is an alternative to section 17(2A)(b)(i), it was not necessary to consider the former provision further. Consequently the Tribunal concludes that the periodic insurance payments received by the Applicant do not qualify as a compensation or damages payment within section 17(2)(d).

30. The conclusion just expressed does not resolve this appeal in favour of the Applicant, however. It is necessary to have regard to section 1173(4) of the Act. This provision has been extracted earlier. Essentially, section 1173(4) provides three alternative cumulative criteria which, when satisfied, will operate to characterise "periodic compensation payments" as ordinary income for the purposes of the Act. It was (effectively) common ground of that sections 1173(4)(b) and (c) were satisfied, which left section 1173(4)(a). The focal point of section 1173(4)(a) is whether a person receives "periodic compensation payments". The Respondent argued that this is how the insurance payments should be characterised. The Applicant did not so much argue against this proposition in specific terms but this is the import of his opposition to the position taken by the Respondent to the overall treatment of his regular insurance payments. For example, and taking some licence, the Applicant might have argued that a "periodic compensation payment" would not include an insurance payment (which posits a dichotomy between insurance payments and compensation payments).

31. The Tribunal considered that there is no rigid dichotomy or boundary separating insurance payments from compensation payments. An insurance payment may have the character of compensation in the hands of the recipient, and the value of identifying it as an insurance payment is to identify its source (for example, some kind of insurance policy) as distinct from its role function in the hands of the recipient. If this analysis is correct, then the contention of the Respondent must be accepted. This would lead to the result that the insurance payments received by the Applicant to be treated as ordinary income within the scheme of the Act. If the Tribunal is, however, wrong in this conclusion then the insurance payments would not be treated as ordinary income.

32. The Respondent launched one last salvo in an effort to persuade the Tribunal that the regular insurance payments received by the Applicant were income, and so must be taken into account in determining the correct rate of disability support pension payable to the Applicant. This contention centred on the operation and interaction of the following definitions from section 8 of the Act, namely:

"income" , in relation to a person, means:

(a)  an income amount earned, derived or received by the person for the person's own use or benefit; or

(b)  a periodical payment by way of gift or allowance; or

(c)  a periodical benefit by way of gift or allowance;

but does not include an amount that is excluded under subsection (4), (5) or (8).

"income amount" means:

(a)  valuable consideration; or

(b)  personal earnings; or

(c)  moneys; or

(d)  profits;

(whether of a capital nature or not).

33. None of the section 8(8) exceptions applied on the facts of the case.

34. The section 8 general income argument was implicit in the issue as characterised by the Respondent in its letter to the Applicant dated 15 December 2005 where the central issue in the appeal was characterised as "[w]hether the regular payments made under your insurance policy should have been treated as income under the Social Security Act 1991." The Tribunal is satisfied that a copy of the Respondent's Further Submissions was served upon the Applicant on 25 July 2006. The Applicant did not make any further submissions in relation to the contentions in that document. The Applicant must be taken to rely upon information and submissions as presented. In all, the Tribunal is satisfied that the Applicant has received procedural fairness on the section 8 general income argument.

35.     The Tribunal considered what the High Court held in Read v The Commonwealth of Australia (1987) 167 CLR 57 when the Court said in interpreting an analogous statutory definition of "income" under the Social Security Act 1947 (Commonwealth), where the High Court said that “‘income’ means what it is defined to mean; it does not mean what "income" would be understood to mean if the definition were not in the Act” (at 69).

36.     In Secretary, Department of Social Security v McLaughlin (1997) 48 ALD 536 at 543 French J adopted a very broad approach to "income" in relation to the Act:

“The definition of “income” extends to income amounts “received” by a person. There is no requirement in the Act that such amounts are received in exchange for anything. They may therefore extend to gifts. This is reinforced by the extension of the definition of “income” to “a periodical payment by way of gift or allowance”.

There is no requirement in the definition for the payment received to constitute a net gain. Absent such a requirement a payment of money received by a person for that person’s own use or benefit is a payment of an income amount. No doubt examples may be generated and multiplied of apparently startling or unfair results of this construction. The receipt of the proceeds of the sale of a house or a lottery win may constitute “income” for the purposes of the Act. Such debates, however, are best reserved for the legislature. There is, in my opinion, no room in the language of the definitions of “income” and “income amount” for the kind of construction adopted by the Tribunal.”

37.     Based upon this reasoning (which has also been followed by other positions of this Tribunal, including Torv & Bond University Ltd and Secretary, Department of Family and Community Services (2004) 80 ALD 707 at [29]), the Tribunal is satisfied that the periodic insurance payments received by the Applicant from his insurer qualify as "income" for the purposes of section 8 of the Act. Hence, those payments are properly taken into account for the purposes of calculating the correct rate of disability support pension payable to the Applicant.

38. The second broad issue in this appeal is whether the Tribunal (standing in place of the Social Security Appeals Tribunal) should treat the whole or part of a compensation payment received by Mr Jensen as not having been made because of special circumstances within the meaning and operation of section 1184K of the Act justifying this course of action.

39. Section 1184K(1) of the Act reads:

“1184K(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”

40. It was not necessary to have regard to section 1184K(2) in the circumstances of this case.

41. The operation of section 1184K is the central issue in this appeal now that the first issue has been resolved in favour of the Respondent against the Applicant. The Respondent’s case was that Mr Jensen’s circumstances were not unusual, uncommon or exceptional within Re Beadle and Director-General of Social Security(1984) 6 ALD 1. The Applicant's case was to the opposite effect, which the Tribunal discerned from the reliance by the Applicant on his personal and medical circumstances.

42.     In Secretary, Department of Employment and Workplace Relations v Homewood (2006) 91 ALD 103 at 109-110, French J explained the methodology associated with the exercise of the special circumstances discretion contained in section 1184K of the Act in these terms:

1.Identify the circumstances of the case which it found to be ‘special’ and the reasons for which it arrived at that finding.

2.Explain why, in the special circumstances so found, it thought it appropriate to treat the whole or part of the compensation payment as not having been made.

3.Explain why it selected the particular quantum (that is the whole or part) of the compensation payment as not having been made.

43.     Whether any particular set of circumstances attracts the epithet "special" is a question of fact (see Homewood (2006) 91 ALD 103 at 110). "Special circumstances" is used within income support law at various points in which to cushion or temper the exercise of a discretion relating to a power or liability in order to signify or demarcate a particular threshold of circumstances particular to income support recipients where the adjudication of a decision must take place. Apart from section 1184K of the Act, "special circumstances" is also deployed in debt waiver provision such as section 1237AAD of the Act and section 101 of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (compare Order 52 r 15(2) the Federal Court Rules which uses the cognate expression “special reasons”).

44.     In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 3 it was said that "... ‘special circumstance’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional." In the appeal [(1985) 60 ALR 225 at 228], it was said that "...special circumstances must include events which would render [a happening or eventuality]... unfair or inappropriate... We do not think it is possible to lay down precise limits or precise rules... The phrase ’special circumstances’, although lacking precision, is sufficiently understood in our view not to require judicial gloss".

45.     In Green and Secretary, Department of Social Security (1990) 21 ALD 772, this Tribunal collected a series of factors that it thought provided guidance concerning the exercise of the discretion conditioned upon the predicate of "special circumstances" in what is now Section 1184K of the Act. The Tribunal said at 773:

“In Re Ivovic v Director General of Social Services (1981) 3 ALN N95 the Tribunal identified a number of principles which could be applied in deciding whether special circumstances existed to warrant the exercise of the discretion contained in s 156 of the Act.  In that decision, which concerned the liability of the Applicant to repay an amount of sickness benefit paid to him, the Tribunal commented at N97.

·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 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."

46.     The principles set out in Ivovic were approved by the Administrative Appeals Tribunal in Krzywak v Secretary Department of Social Security (1988) 15 ALD 690 which has been followed generally by the Tribunal.

47.     The Federal Court of Australia said in Trimboli v Secretary, Department of Social Security(1989) 86 ALR 64 at 73:

“[The] discretion [in provisions such as section 1184K of the Social Security Act 1991 and its previous equivalent provisions] is extremely broad and which is not to be confined, save in accordance with usual principles, namely, that it is to be exercised bona fide and for the purposes for which the discretion is conferred, such purposes being determined by reference to the policy and purpose of the Social Security Act: cf Giris Pty Ltd v FCT (1969) 119 CLR 365 at 384.”

48.     Later in Groth and Secretary, Department of Social Security (1995) 40 ALD 541 it was stated:

"...[Special circumstances] would require something to distinguish... [the] case from others, to take it out of the usual or ordinary case ... It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary".

49.     In Dranichnikov v Centrelink (2003) 75 ALD 134 at 148, the Federal Court held at 148 that for a finding of special circumstances to be made (or for “special reasons” to exist):

"...what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary..."

50.     In Dranichnikov v Centrelink (2003) 75 ALD 134, Hill J (Kiefel and Hely JJ concurring) said the following concerning the “unusual, uncommon or exceptional” gloss at 148:

“The Full Court in Beadle comprising Bowen CJ, Fisher and Lockhart JJ, however, was of the view that it was not possible to lay down precise rules as to what constituted special circumstances under the then s 102(1)(a) of the Social Security Act 1947 (Cth). Their Honours point out that the question whether there were special circumstances was one for the decision-maker (in that case the Director-General) bearing in mind the purpose for which the power was given. The reference to the first instance decision from which the words “unusual, uncommon or exceptional” come was not actually affirmed by the Full Court.”

51.     A similar observation was made by Branson J in Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 at [25]. The Dranichnikov approach seems to represent a retreat from the position Hill J took in Haidar v Secretary, Department of Social Security (1998) 52 ALD 255 (see also Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64).

52.     The explanation of the “unusual, uncommon or exceptional” trilogy made by the Full Court of the Federal Court in Dranichnikov v Centrelink does not appear to have affected or limited the use of this particular trilogy by this Tribunal (see for example, Secretary, Department of Family and Community Services and Danielsen-Jensen (2004) 86 ALD 790 and Secretary, Department of Family and Community Services and SRKKKK (2005) 86 ALD 396) and by the Federal Court (see Ubachs v Secretary of the Department of Family & Community Services [2004] FCA 310 and Jazazievska v Secretary Department of Family & Community Services (2000) 65 ALD 424). The Groth formula (which has also enjoyed wide citation in income support law: see Secretary, Department of Employment and Workplace Relations and Carabott (2006) 89 ALD 726; McAliney and Secretary, Department of Family and Community Services (2005) 83 ALD 316 and Strang and Secretary, Department of Employment and Workplace Relations [2006] AATA 51), with respect, should also be seen as an attempt to paraphrase "special circumstances". This Tribunal is of the view that these paraphrases cannot supplant the statutory language, while at the same time recognising that these paraphrases elucidate the meaning of the statutory language.

53.     The clear thrust of some of the authorities discussed above (see in particular Dranichnikov v Centrelink (2003) 75 ALD 134 and Ryde v Secretary, Department of Family and Community Services [2005] FCA 866) is that "special circumstances" should not be interpreted according to synonyms (and in particular not confined by these). The Tribunal considers that the clear and ordinary meaning of the words "special circumstances" is the meaning that should be assigned to them. The Tribunal also considers that it is important not to approach "special circumstances" against an a priori set of established factual circumstances or recurring factual patterns which have been recognised in the authorities as supporting or generating special circumstances, or which in fact exclude special circumstances (compare Dranichnikov v Centrelink (2003) 75 ALD 134 at 148 and Green and Secretary, Department of Social Security (1990) 21 ALD 772). Accordingly, for any adjudicator to state or conclude that special circumstances precludes the exercise of a power and discretion under section 1184K simply because the circumstances of an income support recipient are commonplace, is to misconceive and misapply the provision.

54. The Tribunal took into account that the “special circumstances” power in section 1184K of the Act was included to prevent injustice (see especially Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64 per Merkel J at 67).

55.     The Tribunal took into account the circumstances of the Applicant as disclosed in the material (including oral evidence) available to the Tribunal, including the following circumstances and factors:

A.The Applicant’s age (59) and his status as a disability support pensioner (demonstrating an inability to work).

B.The Applicant received a gross settlement amount of $67,281.99 and a net amount of $14,977.14 in hand following the resolution of his personal injury claim resulting from his motor vehicle accident.  Accordingly, the overall economic augmentation of the position of the Applicant was quite modest by compensation standards.

C.The Applicant received insurance payments of $20,860.20 on a periodic basis over a period of 23 months.  This sum had to be refunded because of the "offset" clause in the relevant policy.

D.The Applicant receives a pension of $295 per month from a pension fund based in Denmark.

56. The Applicant’s personal circumstances are difficult, and the Tribunal accepted this without demure. Nevertheless, the question is whether following the signposts concerning the proper meaning an application of "special circumstances" revealed in the authorities discussed earlier in this Reasons for Decision, can it be concluded that the circumstances of the Applicant take him outside of the ordinary run of case? The Tribunal considered and weighed the evidence before it very carefully. In the final analysis, the Tribunal is not satisfied that the circumstances of the applicant are special as to justify the favourable exercise of discretion under section 1184K.

57.     For these reasons, the Tribunal decided that there were no special circumstances justifying the treatment of the receipt of a compensation payment as not having been paid to the Applicant.  Accordingly, the Tribunal decided to affirm the decision under appeal.

Tribunal’s Conclusion

58.     Based upon the material before it, and for these Reasons, the Tribunal concludes that the correct or preferable decision is that the Applicant’s payments received from an insurer are income for the purposes of the Social Security Act 1991, and that there are no special circumstances that justify the favourable exercise of a discretion to treat the whole or part of the compensation payment as not having been made to the Applicant.

Tribunal’s Order

59.     The Tribunal decides to affirm the decision under review.

I certify that the 59 preceding paragraphs are a true copy of the reasons for the decision herein of Member SC Fisher

Signed:   ………………………….
               Legal Research Officer

Date/s of Hearing  9 May 2006; 11 July 2006
Last submission received         25 July 2006
Date of Decision  12 March 2007
For the Applicant  Self-represented

For the Respondent                  Ms S Oliver & Mr M Black, Departmental Advocates