Kirkbright and Department of Family and Community Services

[2001] AATA 480

DECISION AND REASONS FOR DECISION [2001] AATA 480

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S2001/29

GENERAL ADMINISTRATIVE  DIVISION       )          
           Re      GRANT ANDREW KIRKBRIGHT           
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Respondent

DECISION

Tribunal       Senior Member W.H. Eyre            

Date4 June 2001

PlaceAdelaide

Decision      The Tribunal sets aside the decision under review and in substitution decides, pursuant to section 1184(1) of the Social Security Act 1991, that it is appropriate in the special circumstances of this case to treat $5,000 of the compensation payment as not having been made.
  Signed)
   W.H. Eyre
   (Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – Sole Parent Pension – lump sum preclusion period – special circumstances – unfairness of strict application of law – amount allowed for lost earning capacity would have not disqualified applicant from substantial SPP payments if the amount had been earned as income - compensation included future losses beyond Sole Parent Pension receipt termination – applicant Sole Parent pensioner at time of accident and for many years prior had been in receipt of SPP for all or part of those years
Social Security Act 1991, ss 17(1), (2), (3); 1163, 1165, 1166, 1184
Kirkbright v Secretary, Department of Family and Community Services (2000) 32 AAR 120
Kirkbright v State of South Australia [1998] SADC D18
Beadle v Director-General of Social Security (1985) 60 ALR 225
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Secretary, Department of Social Security v Hulls (1991) 13 AAR 414
Ivovic and Director-General of Social Services (1981) 3 ALN N95
Department of Social Security v Smith (1991) 30FCR 56
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Ellis v Secretary, Department of Social Security (1997) 46 ALD 1
Secretary, Department of Social Security v Thompson (1994) 20 AAR 435

REASONS FOR DECISION

4 June 2001  Senior Member W.H. Eyre

1. By order made on 21 December 2000, the Federal Court remitted this matter to the Tribunal for further consideration according to law (Kirkbright v Secretary, Department of Family and Community Services (2000) 32 AAR 120).

2. The AAT on 22 March 2000 had affirmed a decision of the Social Security Appeals Tribunal in respect of the recovery of an amount of Sole Parent Pension (SPP) due to the imposition of a lump sum preclusion period. Mr Kirkbright was legally represented at that hearing. The AAT observed at paragraph 3 of its reasons for decision ([2000] AATA 221):

   "The applicant was not challenging the method of calculation or necessary existence of the preclusion period.  The sole issue for the Tribunal is whether or not there are special circumstances which make it desirable to treat part or all of the compensation payment as not having been made."

3. Mansfield J determined that the AAT had instructed itself that, as a matter of law, unfairness by virtue of the operation of section 1165(1A), and other provisions of the Social Security Act 1991 referred to by His Honour, could not amount to special circumstances under section 1184 of that Act. Mansfield J held that the AAT had been in error in so doing.

4. At the hearing on 2 March 2001, Mr Kirkbright represented himself and gave sworn evidence to the Tribunal.  The respondent was represented by Ms Odgers.

5. The hearing was adjourned in order to give the respondent the opportunity to consider and to prepare a response to various submissions made by Mr Kirkbright for the first time at that hearing.  These submissions included arguments as to whether a preclusion period applied and, if it did, as to whether it, and the amount recovered, had been correctly calculated.  The respondent prepared written submissions and attachments (admitted as Exhibits R5-R7) that were provided to Mr Kirkbright in advance of the adjourned hearing.

6. At the adjourned hearing on 6 April 2001, the respondent presented an additional written submission (admitted as Exhibit R8).  Mr Kirkbright made further submissions, gave further evidence and tendered various documents in support of his case (admitted as Exhibits A6-A7).

7. The Tribunal, at the hearing on 2 March 2001, drew the parties' attention to paragraph 25 of the Federal Court decision and sought information from the respondent as to the extent to which independently arising benefit by way of pension under the Social Security Act 1991 ("the Act") would still have been payable in the face of deemed or implicit income from the compensation payment. That information was not available at the adjourned hearing but was provided to the Tribunal on 1 May 2001 and to Mr Kirkbright. Mr Kirkbright requested that the hearing be resumed. Although the Tribunal had given leave for Mr Kirkbright to lodge a written response within 7 days, the Tribunal considered it appropriate to allow Mr Kirkbright to respond orally and this occurred when the hearing resumed on 18 May 2001. The information provided by the respondent was admitted as Exhibit R9. As to other documentation, the Tribunal has before it the T documents and the exhibits tendered at the original AAT hearing (Exhibits A1-A5; Exhibits R1-R4).
   facts

8. Mr Kirkbright was born in 1960 and left school at the end of Year 10.  He married in 1982 but separated in 1985.  There are two children of that marriage.  The child born in 1982 lived with Mr Kirkbright from 1986 to about 1999.  The Tribunal finds that Mr Kirkbright first applied for SPP in 1986 (Exhibit A7; Exhibit A3).  The Tribunal accepts that Mr Kirkbright saw his responsibility as lying with the personal care of his child and would only take work, when it was available, that fitted in with his childcare responsibilities.

9. It appears from Mr Kirkbright's evidence to the Tribunal and from the findings of the District Court in Kirkbright v State of South Australia [1998] SADC D18 (Exhibit A3) that Mr Kirkbright worked from time to time in casual and seasonal employment.  From 1986 to September 1997 on the evidence, including Mr Kirkbright's, he received SPP off and on and in varying amounts depending on income from employment.  The Tribunal notes that the District Court found that from 1986 to his divorce in 1990, Mr Kirkbright worked in casual and seasonal employment for an average of about four months per year (Exhibit A3; paragraph 12).

10. The District Court stated at paragraph 12 of its judgment:

    "From May or June 1992 until he was retrenched in February 1993, he worked in casual work with Ausco as a labourer in the metal shop and roofing section.  At the time of the accident (sc. In July 1993), he had been hoping to obtain full time permanent work with Ausco.  But when Ausco offered him further casual work in September 1993 for at least three months, he was unable to obtain a medical clearance."

11. Mr Kirkbright's social security paper file cannot be located (Exhibit R6; paragraph 31).  It is not possible to determine from the information available, including Mr Kirkbright's evidence, exactly when Mr Kirkbright received no SPP at all, except that it is clear from Exhibit R7 that he was paid no SPP in the period 10 June 1992 to 25 January 1993.  Nor does the Tribunal have any information as to claim dates.

12. It is however apparent that Mr Kirkbright received substantial SPP payments in the financial years preceding and the financial year of his accident.  Exhibit R7 shows $9,878.20 gross ($7,567 taxable) pension paid between 1 July 1991 and 9 June 1992; $3,490.30 gross ($3,433.10 taxable) pension paid between 26 January 1993 and 30 June 1993 and $8,668.40 gross ($8,528 taxable) pension paid between 1 July 1993 and 30 June 1994.

13. The Tribunal is of the opinion that it is a fair description of Mr Kirkbright to say in ordinary parlance that from 1986 onwards he was a Sole Parent pensioner who was, from time to time, not eligible for SPP payments because of employment earnings.  This is of some importance because, as the respondent acknowledges at paragraph 30 of Exhibit R5, his SPP payment would not have been caught by the preclusion period if he had not claimed SPP on or after 20 March 1992

14. Section 1163(7) of the Act provides:

    "A sole parent pension or a pension PP (single) will only be affected under this Part if:

    (a) the compensation is received on or after 20 March 1992; and
    (b) the claim for the pension was made on or after 20 March 1992."

15. The Tribunal finds, and believes it must find, that "the claim for the pension was made on or after 20 March 1992" because Mr Kirkbright must have submitted a fresh claim after that date in order to have received some SPP payment from 26 January 1993.  SPP would have ceased to be payable before then.  His previous claims resulted in payment to 9 June 1992 but that payment is not within any possible preclusion period as the accident occurred in July 1993.

16. Mr Kirkbright received SPP between 26 January 1993 and 4 September 1997.  The Tribunal understands and finds he was receiving SPP when he had the accident on 27 July 1993.  The State of South Australia was found liable in negligence for the injury to Mr Kirkbright's knee and other consequences, mainly psychological, that followed.

17. The District Court judgment was given on 4 February 1999.  The judgment award of $121,463 plus interest and costs included $70,000 for past loss of earning capacity and $5,000 for future loss of earning capacity.

18. The Tribunal notes that it was not an easy task to assess damages for past loss of earning capacity and that the amount awarded for future loss was expressed to be "nominal".  Judge Lee described Mr Kirkbright's work history and concluded (Exhibit A3; paragraph 19):

    "Doing the best I can to weigh favourable and unfavourable contingencies, and given that a broad axe approach is called for, I consider that the sum of $70,000 should represent a fair assessment of the plaintiff's loss of earning capacity to the time of trial (sc. November 1998).  I allow the nominal sum of $5,000 for the future."

19. Mansfield J in the Federal Court observed at paragraph 3 ((2000) 32 AAR 120 at 121) of his decision:

    "The amount allowed for loss of earning capacity in the past averages about $14,000 per year for each of the years from July 1993 to the date of judgment, although of course the learned trial judge assessing the damages did not expressly proceed upon that basis and may have allowed in a rough way different amounts for various periods during that 5-51/2 year period."   

20. The Tribunal notes that on the appeal the parties were content to treat the award of damages for past loss of earning capacity in a very rough way as indicating an allowance of about $14,000 per year for the period from the date of the accident to the date of the District Court judgment.  The Tribunal considers it is only practicable for present purposes to treat the award as representing about $14,000 per year.
    the preclusion period

1. The Tribunal finds that the preclusion period of 181 weeks has been correctly calculated. The Tribunal has already found that section 1163(7) does not operate so as to prevent SPP being affected (see paragraphs 14 and 15 above).

2. Mr Kirkbright also argued that his payment should be treated as a periodic payment.  He says that because the District Court recognised that there were periods within which he could have worked, his payments are more akin to "periodic" payments.

3. The Tribunal agrees with the respondent's submission (Exhibit R5; paragraph 19):

   "As is made evident by section 1163 of the Act, how the receipt of "compensation" is treated for the purposes of the Act depends on whether the amount received is a "lump sum" or a periodic payment. Mr Kirkbright was in receipt of a lump sum payment of compensation. He did not receive any ongoing amounts of compensation during the progress of his claim; his claim was finalised by the receipt of one amount of compensation. The reference to "periodic payments" is to the manner in which the compensation is paid, not to the period or periods covered by the compensation, as submitted by Mr Kirkbright."

4. The Tribunal finds that Mr Kirkbright's compensation was not "in the form of a series of periodic payments" (the words used in section 1163(4)) but was clearly lump sum compensation.  Accordingly, the lump sum provisions are applicable to the calculation of the preclusion period.

5. The other argument raised by Mr Kirkbright was that section 1166(5) applied so that the amount recovered should be reduced by the notional Family Allowance supplement ("FAS") entitlement. It is apparent from Exhibit R6 that Mr Kirkbright was in fact paid FAS from 23 December 1993 to 19 December 1996. At the adjourned hearing on 6 April 2001 Mr Kirkbright conceded he had misread the provision in question.

6. Section 1166(5) provides:

   "If:

   (a) subsection (1) applies to payments of a compensation affected payment paid to a person for a particular period (in this section called the overpayment recovery period), and:

   (b) the Secretary is satisfied that family allowance supplement would have been payable to the person, or the person's partner, for some or all of the overpayment recovery period if:

   (i) the person or the person's partner had claimed family allowance supplement for that period; and

   (ii) neither the person nor the person's partner had been receiving a social security pension or benefit during that period;

   the amount specified in the notice under subsection (1) is to be reduced by the notional FAS entitlement."

7. The Tribunal has no information as to whether FAS was paid between 27 July 1993 and before 23 December 1993 or after 19 December 1996 to 13 January 1997 (the end date of the preclusion period). However, it is clear that Mr Kirkbright was paid SPP between 28 January 1993 and 4 September 1997 (T8). In these circumstances, section 1166(5)(b)(ii) would preclude notional FAS entitlement reduction.

8. The original AAT decision and the Federal Court decision both accept that the preclusion period of 181 weeks was calculated in accordance with the applicable legislative provisions. Indeed, until the hearing on 4 March 2001 that had not really been in issue; what had been in issue was whether special circumstances under section 1184(1) existed.

9. Nonetheless, before turning to a consideration of whether or not section 1184(1) is applicable so as to effectively reduce the preclusion period, the Tribunal should briefly set out its findings as to the applicability of the preclusion period and the calculation of the amount recoverable. It does so briefly.

10. The Tribunal finds that Mr Kirkbright received "compensation", an award of damages "made wholly or partly in respect of lost earnings or lost capacity to earn" (section 17(2)). The compensation was a lump sum compensation payment. Mr Kirkbright was in receipt of a "compensation affected payment" as defined in section 17(1): a "compensation affected payment" includes "parenting payment" and "sole parent pension under this Act as previously in force".

11. When Mr Kirkbright received his compensation payment he was not a member of a couple and accordingly section 1165(1A) applies. This provides:

    "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."

12. The "new lump sum preclusion period" is to be calculated in accordance with section 1165(8) which provides:

    "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." 

13. The "compensation part of the lump sum" is in this case "so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn" (section 17(3)(b)). The Tribunal finds that the sum of $75,000 awarded by the District Court is the "compensation part of the lump sum". As to the "income cut-out amount", this is defined by section 17(1) and the Tribunal accepts that at the time of the District Court decision, this was $412.70.

14. $75,000 divided by $412.70 produces a (rounded down) period of 181 weeks.  Under section 1165(7) that preclusion period commences on the date of the accident 27 July 1993 (when the loss of earning capacity began) and ends on 13 January 1997, 181 weeks later.

15. There is no dispute and the Tribunal finds that Mr Kirkbright received $30,327.30 SPP during the preclusion period (T11). Under section 1166 the recoverable amount is equal to the smaller of the lump sum compensation payment or the sum of the payments of the compensation affected payment made to the person for the new lump sum preclusion period. In this case, the recoverable amount, the "smaller amount", is the $30,327.30, the amount of SPP paid to Mr Kirkbright during the preclusion period.
    Special Circumstances

16. Section 1184(1) provides:

    "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."

17. In Beadle v Director-General of Social Security (1985) 60 ALR 225  at 228 the Full Federal Court commented:

    " … special circumstances must include events which would render the six months [sc the limitation period of 6 months under consideration there] unfair or inappropriate … We do not think it is possible to lay down precise limits or precise rules.  The matter is one for the Director-General bearing in mind the purpose for which the power is given.  The phrase 'special circumstances', although lacking in precision, is sufficiently understood in our view not to require judicial gloss."

18. The Full Federal Court approved the approach the Tribunal had taken but commented it "would place less emphasis on one dictionary definition of 'special'".  In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 the full Tribunal had said:

    "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 upon 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."

19. In Secretary, Department of Social Security v Hulls (1991) 13 AAR 414 at 427 O'Loughlin J referred with approval to re Ivovic and Director-General of Social Services (1981)  3 ALN N95 concerning similar provisions that:

    "In the exercise of the discretion which s115 (4A) confers the decision maker must have regard to whether, by exercising the discretion in a particular case, he will be achieving or frustrating ends or objects which are conformable with the scope and purpose of the Social Security Act 1947 … Thus whilst keeping the dominant principle of s115 in mind, he must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate."

20. It is clear from the Federal Court's decision in the current matter that section 1184 "is designed specifically to enable the respondent, and on review the Tribunal, to ameliorate such unfairness or injustice when it appears by virtue of the strict application of the Act" (p125 at paragraph 22). See also the passage quoted there from the judgment of von Doussa J in Department of Social Security v Smith (1991) 30 FCR 56 that " … [the] terms [of] the discretion … are wide words intended, as the Tribunal in Ivovic pointed out, 'to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case'".
    the particular circumstances of mr kirkbright's case

1. First, it should be said that, in the Tribunal's view, it is most unlikely that any two or more cases will be "the same".  There is no arithmetical answer the Tribunal can give to Mr Kirkbright's question how many people are in the same situation that he is in.  There is no statistical - nor can there likely be statistical information - before the Tribunal as to how rare Mr Kirkbright's situation is.  Mr Kirkbright believes his case to be unique.  In one sense every case is unique.  More relevantly, there may be numerous cases of a like kind where it would be appropriate in the special circumstances to treat the whole or part of payment as having not been made – notably cases of unintended consequences.  The decision maker must however look carefully at whether the purpose or objects of the legislation would be achieved or frustrated by such a conclusion and should not be quick to assume consequences are unintended.  The Tribunal understands the cautionary comments of the Full Federal Court in Beadle to be directed at over emphasising one meaning of "special" and as permitting unjust, unreasonable or inappropriate enforcement to be considered as special circumstances where relief might be appropriate. Clearly too, section 1184 does not apply so as to give relief just because a case is unusual or exceptional - there needs to be a factor or a combination of factors that make it "appropriate in the special circumstances" to treat the whole or part of the payment as not having been made before that course can be taken.

2. The Tribunal considers that the matters put forward and arising from the material before it as giving rise to possible special circumstances can appropriately be grouped under the headings of ill-health, financial circumstances and unfairness of the strict application of the Act. The Tribunal must also look at the totality of the situation, the combination of circumstances.

3. The Tribunal refers to paragraph 10 of the original AAT decision.  Mr Kirkbright gave evidence as to the continuing effect of the problems he has with neck, knee and back pain.  He told the Tribunal that he thought the physical problems were now stable though "discs had shown up recently".  He also told the Tribunal that his depression and drinking problems had worsened since the original AAT hearing.  Mr Kirkbright told the Tribunal he feels frustrated not to be a breadwinner and not to be able to engage in outdoor activities as he had before the accident, playing with his children and acting as a boundary umpire.

4. He worries.  He is worried about his present accommodation.  At the hearing on 2 March 2001 he thought he might have to move to larger premises with the second child of his current marriage expected soon.  At the adjourned hearing a month later he told the Tribunal that as his house was now of a good standard and an extension, for which he and his wife would need to borrow, was seeming a more sensible option.  As mentioned in paragraph 52 below, by the time of the hearing on 18 May 2001 Mrs Kirkbright had left home.  Whether that is permanent is not yet clear.

5. Mr Kirkbright is in receipt of Disability Support Pension "(DSP") and has been for some years.  Although he would like to resume employment, his physical condition precludes him from the sort of work he had done before the accident.  The respondent has pointed out that DSP entitlement does not prohibit paid employment nor does it require complete incapacity to work - a "continuing inability to work" is to engage in "work that is for at least 30 hours per week at award wages or above".

6. Mr Kirkbright told the Tribunal that the accident had affected him more than the District Court appreciated and that its effects are still greater than the District Court had allowed for in assessing damages for future economic loss.  Mr Kirkbright has not found work to date.  Nonetheless the Tribunal finds itself in agreement with the original AAT decision at paragraph 33 that:

   "Whilst the applicant's injuries have undoubtedly caused him problems during the past years, he has received compensation for these problems.  His future prospects are not dire, and on the balance of the evidence, one would expect that he would be able to return to some form of normal life, and undertake some form of employment in the future."

7. The Tribunal does not consider Mr Kirkbright's ill health to be a special circumstance.  The Tribunal does not think his health is so severe a problem that he warrants special consideration (in the context of the matter before the Tribunal) because of it.  Nor is this a case where extensive ongoing medical treatment poses such personal, family or financial burdens that they provide special circumstances.

8. As to Mr Kirkbright's financial circumstances, the combined fortnightly income is much the same as at the first AAT hearing.  The AAT noted at paragraph 11 of its decision "a fortnightly income of $308.60 (DSP), $294.70 Parenting Payment and $128.54 Family Payment (total $731.84)".  Mr Kirkbright told the Tribunal the amounts had increased slightly since then but were much the same.  He has paid off his mortgage.  The AAT previously found that after the expense of food, clothing, insurance, rates and medical treatments, Mr Kirkbright had about $120 per fortnight for other expenses, including for birthdays and home improvements.  The Tribunal infers that expenses are at about the same level.  Mr Kirkbright gave evidence to the effect that his wife would urge him to have physiotherapy but the cost was a deterrent; that he would like to try St John's Wort to assist with depression but cannot afford that (unsubsidised) herbal remedy and that he must replace C-Pap machine masks and filters at a cost of about $110-$170 per year.  Mrs Kirkbright, who is expecting their second child, "went through the private system for better treatment" when she had problems with her first pregnancy.  She is also to have dental treatment.

9. Their home is unmortgaged.  The Tribunal has referred above to Mr Kirkbright's worries about the size of their present house.  He told the Tribunal that the house is a three-bedroom house but is only 12 squares.  Mr Kirkbright referred to the fact that the house had fallen into disrepair due to the fact that he had not been in a financial position to maintain it while awaiting compensation.  His injuries prevented him from being able to do work on the house personally.  This had increased expenses.  He does not consider he was compensated for that sort of loss and pointed also to the fact that he had to bear the cost of his own rehabilitation increasing the financial strain he had experienced.

10. Mr Kirkbright said there had been a misunderstanding about the sum of $40,000 he has invested.  This amount is referred to at paragraphs 11 and 35 of the original AAT decision.  The AAT had understood that this investment account was set aside for emergencies and for his youngest son's private school education.  Mr Kirkbright explained to the Tribunal that about $20,000 of the amount of $40,000 came from his compensation payment, the balance coming from Mrs Kirkbright's pay out when she left her employment.  The Tribunal accepts Mr Kirkbright's evidence about this.

11. The Tribunal does not consider Mr Kirkbright's financial situation to be a special circumstance which would make it appropriate to treat all or part of the compensation as having not been paid. Mr Kirkbright has no mortgage. The house, although small, is in good repair now. He and his wife have $40,000 invested and live, no doubt frugally and carefully, within their income. As far as the Tribunal is aware there are no major debts that require servicing. It seems to the Tribunal that Mr Kirkbright has been sensible and cautious in the use of the money received as compensation. In dealing with Social Security matters, the Tribunal sees a large number of cases where people's financial circumstances are very much worse than Mr Kirkbright's. In the Tribunal's opinion it is appropriate to compare his circumstances with those of other persons who are or have been reliant on Social Security payments. In the context of the Act and in terms of looking at relief from the recovery provisions, Mr Kirkbright's financial situation is not "special".

12. At the final hearing on 18 May 2001 Mr Kirkbright gave evidence that Mrs Kirkbright has recently left home with their child and is presently living elsewhere.  Mr Kirkbright thought his medications and the ongoing stress of this matter were probably to blame.  He does not know if the separation is permanent.  Although Mrs Kirkbright's departure has reduced the financial contribution she makes, as the Tribunal commented at the hearing, this change in circumstances is not, in the Tribunal's view, relevant to the question before the Tribunal.  Mr Kirkbright did not press this recent change as amounting to "special circumstances".

13. As stated in paragraph 7 above, the Tribunal sought information from the respondent as to the amount of SPP Mr Kirkbright would have been entitled to if the amount awarded as compensation for lost earning capacity had been received as earned income.  Exhibit R9 proceeds on an assumed income of $13,331.76 per year (that sum approximating on an annual basis the compensation awarded by the District Court for lost earning capacity) from July 1993 to 4 September 1997. On that assumed income Mr Kirkbright would have received SPP in the sum of $15,425.80. The SPP he would have received in the preclusion period (had the amount received as compensation for lost earning capacity been received as earnings) amounts to about $12,540.  Exhibit R9 assumes a uniform spread of income over a year and also that all other relevant information relating to the calculation of the rate or payment remain unchanged.  There is no dispute about the accuracy of Exhibit R9 and the Tribunal finds it shows – albeit it is based on various assumptions – Mr Kirkbright would have been very much better off had the amount received as compensation for lost earning capacity been received as earnings.

14. The respondent submits it is irrelevant that had Mr Kirkbright actually received income from work he may still have been entitled to receive some SPP.  It submits (Exhibit R8) that:

    "the effect of the operation of section 1165 is to deem an income stream for the preclusion period determined in accordance with that section.  Given that an income stream is deemed to be available for that period, it is inappropriate for the customer to source income from the social security purse as well.  This is what is meant by the concept of 'double-dipping'".

The respondent refers to Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at p. 543 as approving the following passage from the AAT decision there under appeal:

"The purpose of the provisions of Pt 3.14 is not to put Mr Groth in the best possible financial position but to ensure that he receives financial support and does not receive it from two sources in respect of the same period of time.  Hence, the practical effect of Pt 3.14 in relation to periodic payments of compensation is to "top-up" the compensation payment to a pre-determined standard be it a disability support pension, sole parent pension or other pension, benefit or allowance nominated by Parliament".

1. The respondent submits (Exhibit R8):

   "These comments are equally apt to the present case.  The legislation is directed at ensuring that he does not receive from two sources at the same time; it is not directed at ensuring that his payments are maximised.  There is nothing inherently unfair in the way in which the legislation operated in this case.  The Respondent contends it is not appropriate to match economic loss amounts with the periods to which they relate, because the compensation provisions make no attempt to do so."

2. Mr Kirkbright, unlike Mr Groth, never received periodic compensation payments but the Tribunal does not see this as a relevant basis for distinguishing between the cases. Clearly the compensation recovery provisions of the Act treat moneys received in respect of lost earnings or lost earning capacity as moneys to be set off against described pensions and benefits, according to formulae and qualifications set out in the compensation recovery provisions. Clearly too, income within this category is treated differently. Whether there is a logical policy basis for this legislative distinction, treating income in respect of lost earnings or lost earning capacity as income other than earned income, is not a matter for the Tribunal. The Tribunal notes however that the authors of Annotations to the Social Security Act 1991, The Federation Press, 4th edition at p.555 query the usually accepted rationale and comment:

   "Neither the Tribunal nor the Court [in Groth] directly considered the comparison between Mr Groth and a person in the identical situation save that the $14,000 was income from part-time employment or investments. Such a comparison highlights the way the Act treats people with accident-related disabilities less favourably than those without such disabilities".

3. The Tribunal does not agree with the respondent's description of "double-dipping" in paragraph 54 above, thinking it to be overstated.  For example, in Ellis v Secretary, Department of Social Security (1997) 46 ALD 1 at 7 Carr J referred to the need to look at the factual matrix and said:

   "One such circumstance was the fact that her entitlement to SPP arose independently of the work-caused injury which resulted in her entitlement to workers' compensation payments.  When that factor is taken into account, it can be seen that the respondent cannot be described as 'double dipping'".

The Tribunal has considered the fact that Mr Kirkbright was in receipt of SPP at the time of the accident that gave rise to compensation and had been for some 6 months.  The Tribunal is also mindful that Mr Kirkbright had been in receipt of SPP payments off and on since 1986.  However, Mr Kirkbright had also worked over the years and in so far as he would likely have gained some employment had it not been for the compensable accident, there would be some "double-dipping" in his case if the compensation payment were to be entirely disregarded.  The District Court proceeded on the basis he had been working for about 4 months a year and had expected to be able to increase time spent in employment.  The absence of SPP between June 1992 and the end of January 1993 supports Mr Kirkbright's expectation.

1. Although limitations on the amount that is recoverable have been enacted, the Tribunal agrees that the recovery provisions do not look at maximising the payments available to the individual and it would be wrong for the Tribunal generally to pursue that approach in the face of the scheme.  However, as Mansfield J pointed out in Mr Kirkbright's appeal, it is appropriate, if faced with alleged unfairness of the strict application of the law, to look at the extent to which the individual is financially worse off than he or she would have been had more general principles applied.  That exercise is part of testing whether there may be special circumstances such that it is appropriate to disregard some or all of the compensation payment – that is, in testing whether the particular case discloses something unfair, unjust or inappropriate about the law's strict application such that relief is appropriate.  Mr Kirkbright would have been about $15,425 better off if the amount received as compensation had been earned by him over the years as income.  That is a sizeable amount especially when compared to Mr Kirkbright's lost earning capacity, as decided by the District Court, equating to less than $14,000 per year.

2. Mr Kirkbright submitted that his situation was similar to that of Ms Ellis in Ellis v Secretary, Department of Social Security.  Ms Ellis had been receiving periodic payments of compensation.  She was found ineligible for SPP because of her compensation payments.  It was common ground there that had she been receiving the same amount as earnings, as opposed to compensation payments, she would have been eligible for SPP payment in the sum of about $61 per fortnight.  The AAT found "special circumstances".  The Tribunal notes that Ms Ellis was found to be suffering extreme financial hardship with several substantial debts to pay, was solely financially responsible for her four children all under the age of 10 and had mortgage payments to meet.  The Tribunal has already indicated that it does not consider Mr Kirkbright's financial situation to be especially poor.

3. Mr Kirkbright at the final hearing referred to the fact that GST reduced the real value of any amount he might receive as a result of this application.  It is now some 21/2 years since the District Court award.  He submitted that he has been denied the opportunity to earn interest on the recovered moneys.  The Tribunal does not consider that these factors can be relevant to whether or not special circumstances exist as they presuppose that the amount recovered should not have been recovered because of the existence of special circumstances.

4. As stated above, the Tribunal accepts that the compensation recovery provisions clearly do not adopt the approach of maximising payments available to a person injured in compensable circumstances.  Nor does the Tribunal consider that special circumstances will exist just because there is a significant difference between the amount of benefit payable where an amount is an earned amount as compared to a compensation amount.  Where, however there is a large variation between the two, the Tribunal can see that there may be resultant injustice or unfairness in the circumstances of a particular case such as to make relief appropriate.

5. The $5,000, described by the District Court as "nominal", allowed for future loss of earning capacity is clearly part of the lump sum compensation.  As things have turned out, accepting Mr Kirkbright's evidence that his injuries preclude him from the sort of work he did before the accident and that he appreciates he will have to retrain in order to find suitable employment, the amount awarded can be seen, in hindsight, as inadequate compensation on this head.  The Tribunal observes that this "future loss" runs from a date, namely from November 1998, after the recovery period (pension days 29 July 1993 to 9 January 1997).  The Tribunal also notes that the compensation awarded for past loss of earning capacity extended to November 1998, over 12 months from the date on which SPP payments ceased (September 1997).

6. The Tribunal appreciates that future loss of earning capacity is sensibly and understandably part of the compensation which the compensation recovery provisions attract and that section 1166 of the Act limits the amount recoverable. The Tribunal appreciates too that the compensation recovery provisions, sensibly enough from a practical perspective, do not match or limit the preclusion period to the periods in which Social Security benefits were paid.

7. The Tribunal has given this matter a good deal of thought and thanks both parties for their careful and detailed submissions which obviously entailed a considerable amount of work.

8. The Tribunal has reached the conclusion that special circumstances do exist in this matter and that it is appropriate that part of the compensation payment be treated as not having been made. The Tribunal does not consider that special circumstances exist by reason of Mr Kirkbright's ill health nor by virtue of Mr Kirkbright's financial situation. The Tribunal considers that special circumstances exist by virtue of the unfairness of the strict application of the law to Mr Kirkbright's circumstances. While, in the Tribunal's view, none of the factors referred to below standing alone would amount to special circumstances within the meaning of section 1184 of the Act, taken in combination they do.

9. The Tribunal considers that the amount awarded by the District Court as compensation for lost earning capacity is small (though does not question in any way the appropriateness of the District Court's assessment) and equates to a low deemed income of less than $14,000 per year, (or, using the Exhibit R9 calculation, $13,331.66 per year). Notwithstanding that small annual deemed income, Mr Kirkbright – as a consequence of the Act treating compensation payment quite differently from earned income of the same amount - has "lost" the comparatively large sum of about $15,425 in SPP entitlement over the period from July 1993 to September 1997 or about $12,540 in the preclusion period. By way of putting this figure into perspective, it is to be borne in mind that his receipt of SPP in the preclusion period was $30,321.30. It is the Tribunal's conclusion and finding that the benefit "lost" is so large that it shows such unfairness in the strict application of the law as to go a long way towards the existence of "special circumstances". In addition, the compensation awarded included compensation for a period over 12 months from the date SPP ceased. The same comment applies also to the future loss of earning capacity. In addition the $5,000 allowed for this appears, in hindsight, to have been inadequate compensation for lost earning capacity. These components of the compensation amount albeit "future" to the SPP payments received have been included in calculating the preclusion period. The Tribunal also takes into account that as Mr Kirkbright was in receipt of SPP at the time of the compensable accident, his entitlement was independent of the injury that gave rise to entitlement to compensation, but gives this little weight as – projecting his past work history to the date of his compensable injury and beyond – it considers there was likely some element of double dipping involved for part of the preclusion period.

1. The Tribunal considers it appropriate to treat the sum of $5,000 as not having been paid.  This is the amount allowed by the District Court for future lost earning capacity.  The Tribunal has already expressed the view that the element of future lost earning capacity is but one of the factors that, in combination with others, amount to special circumstances in this case.  Nonetheless, it is a sum which the Tribunal considers appropriate to treat as not having been paid.  The Tribunal understands that in some cases attention will necessarily focus on a particular portion of the compensation sum but that this is not always possible, nor required (Secretary, Department of Social Security v Thompson (1994) 20 AAR 435).

2. For the reasons given above, the Tribunal sets aside the decision under review and in substitution decides, pursuant to section 1184(1) of the Social Security Act 1991, that it is appropriate in the special circumstances of this case to treat $5,000 of the compensation payment as not having been made.

   I certify that the 68 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member W.H. Eyre

   Signed:         .....................................................................................
     Personal Assistant

   Date/s of Hearing  2 March 2001, 6 April 2001 & 18 May 2001
   Date of Decision  4 June 2001
   Counsel for the Applicant        In person
   Solicitor for the Applicant         -
   Counsel for the Respondent    Ms Lee-Anne Odgers
   Solicitor for the Respondent    Centrelink