Latham and Secretary, Department of Employment and Workplace Relations

[2006] AATA 847

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 847

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2005/842

GENERAL ADMINISTRATIVE DIVISION		)
Re		RALPH LATHAM

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Dr EK Christie, Member

Date4 October 2006 

PlaceBrisbane

Decision The Tribunal sets aside the decision under review and in substitution thereto decides that the length of the preclusion period should be reduced because of “special circumstances”.  The length of the preclusion period is 23 May 2003 to 1 August 2006.

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

EK Christie

Member

CATCHWORDS

SOCIAL SECURITY – compensation – preclusion period –– lump sum payment – “special circumstances” – financial issues and preclusion period – legal advice and preclusion period – health issues and preclusion period – business investments – medical condition and capacity to make rational decisions - whether appropriate to treat part of compensation payment as not having been made

Social Security Act 1991 s184

Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Australian Tea Tree Oil Research Institute v Industry Research and Development Board (2002) 124 FCR 316
Kertland v Secretary, Department of Family and Community Services [1999] FCA 1596
Secretary, Department of Social Security v Banks (1990) 23 FCR 416
Secretary, Department of Social Security v Smith (1991) 30 FCR 56
Riddell v Secretary, Department of Social Security(1993) 42 FCR 443
Dranichnikov v Centrelink [2003] FCAFC 133
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Boscolo v Secretary, Department of Social Security (1999) 53 ALD 277
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re Ivovic and Director-General of Social Services (1980) 3 ALN 95
Secretary, Department of Social Security and Norman (AAT 13005, 22 June 1998)

Re Martin and Secretary Department of Social Security (AAT 6482, 14 November 1990)

Secretary, Department of Social Security v Hulls (1990-1991) 20 ALD 570
Re Secretary, Department of Social Security and Haining (AAT 7982, 16 April 1992)
QX99C and Secretary, Department of Family and Community Services [1999] AATA 310
Re Dean and  Secretary, Department of Education, Science and Training [2005] AATA 586
Woodward and Department of Family and Community Services [2001] AATA 818

Secretary, Department of Family and Community Services and Temesgean [2002] AATA 1290

Hill and Secretary, Department of Family and Community Services [1999] AATA 909

Secretary, Department of Social Security and Winters (AAT 12518, 23 December 1997)
Reuben and Secretary, Department of Social Security (AAT 11879, 20 May 1997)
Barrington and Secretary, Department of Employment and Workplace Relations [2005] AATA 1050
Secretary Department of Employment and Workplace Relations v Barrington [2006] FCA 527
Secretary, Department of Social Security v Thompson (1994) 53 FCR 580

REASONS FOR DECISION

4 October 2006 Dr EK Christie, Member

1.      This is an application for review of the decision made by the Social Security Appeals Tribunal (the “SSAT”) made on 30 November 2005 to impose a lump sum preclusion period from 23 May 2003 to 1 February 2007.

2. The evidence before the Tribunal comprised the documents filed pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the “T” documents) [Exhibit 1] and the various exhibits lodged by the parties.

3.      The applicant was represented at the hearing by Ms R Wilkinson of the Legal Aid Office, Queensland. The respondent was represented by Ms S Dole, a Departmental Advocate.

Issues before the Tribunal

4.      There was only one issue for the Tribunal to decide: whether the length of the preclusion period could be reduced in part or in full, because of “special circumstances”.

5.      The Original Decision Maker considered that the closure of the convenience store was an “unforeseen and unexpected circumstance” (T67 folio 166). It is not in dispute that an Authorised Review Officer has already considered the collapse of the convenience store as a “special circumstance” (T73, folio 178) and agreed to allow the $50,000 used to purchase this business to reduce the length of the preclusion period so as to end on 1 February 2007 rather than on 25 October 2007.  The SSAT concluded that “Mr Latham’s investment in a business to be run by Mr Ormond was unsound and ill-considered” (T2 folio 10).

6.      During the hearing, the evidence before the Tribunal revealed that Mr Latham had been treated for a psychiatric condition around October 2004, the time that he received the lump sum compensation payment.  At the end the hearing, and with the consent of the parties, the Tribunal issued a Direction that a psychiatrist, Dr Andrew Byth provide an expert opinion in terms of the impacts of the psychiatric condition(s) that he had diagnosed for Mr Latham – including the medication regime at the relevant time, on his capacity to manage his day to day affairs as well as his ability to make rational decisions to mange his personal and business affairs.  Dr Byth had prepared a medico-legal report in relation to Mr Latham’s claim for his compensation claim which was tendered in evidence at the Tribunal hearing,

7.      Dr Byth filed his report with the Tribunal on 24 August 2006.

GENERAL FACTS

8.Mr Latham is now aged 50.

9.      On the basis of the evidence before it, the SSAT made the following findings of fact (T2, Folios 7,8):

(i)“Mr Latham was injured in a workplace accident on 1 November 2001.

(ii)His claim for compensation was settled for an amount of $358,757.90 inclusive of refunds to WorkCover, Centrelink, Health Insurance Commission and the like.

(iii)After payment of all expenses, including a loan of $50,000 and a charge amount to Centrelink of $11,195.99, Mr Latham received an amount of $109,738.

(iv)Mr Latham spent $50,000 on a failed business venture.

(v)Mr Latham has no money left in his bank account.

(vi)Mr Latham owns a motorcycle worth approximately $5,000 and lives in a caravan at the rear of his parent’s property and received approximately $10 per day from his parents by way of support.

(vii)Mr Latham is unable to work because of his injuries and is undergoing further medical treatment.”

10.     The length of the preclusion period was calculated on the total of $303,525.93 consisting of $47,387.25 (first lump sum payment) plus $220,000 (second lump sum payment) plus $36,138.68 (for hospital, medical physiotherapy and rehabilitation costs).

Statutory Requirements And Case Law

·The Tribunal’s Decision Making Powers

11.     There is only one decision possible in this application for review: whether the “special circumstances” provisions of the Social Security Act 1991 (“the Act”) apply, which would justify a reduction in length of the preclusion period.  Accordingly, the question for the determination of the Tribunal is whether the decision under review is the correct one: see Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 68.

12.     Administrative decision-makers are generally required to address the evidence before them and not confine themselves to evidence before a prior decision-maker whose decision is being reviewed unless the relevant legislation requires a decision to be based upon the circumstances at a particular point of time: see Australian Tea Tree Oil Research Institute v Industry Research and Development Board (2002) 124 FCR 316 at 324-326.

13.     In this application for review, the Tribunal considers all the evidence and information before the Tribunal as at the date of the hearing, and supplementary submissions following the hearing in relation to the expert medical opinion provided by Dr Andrew Byth in response to the Tribunal’s direction.

·The Statutory Scheme for the Preclusion Period under the Social Security Act

14.     The statutory scheme is complex. In the factual circumstances of this application for review, the legislative requirements may be summarized as follows: see Kertland v Secretary, Department of Family and Community Services [1999] FCA 159.

15.     Section 17(2) of the Act, relevantly, defines "compensation" as a payment of damages made wholly or partly in respect of lost earnings or lost capacity to earn. Section 17(3)(a) of the Act, which in substance relates to claims that are settled rather than contested,  defines the "compensation part of lump sum compensation payment" to be 50% of the lump sum compensation payment.

16.     The adjustment of 50% was arbitrarily prescribed by Parliament to prevent parties adjusting their settlement calculations to understate the amount of the settlement sum attributable to loss of earning capacity and thereby minimising the loss of a claimant's social security benefits: see Secretary, Department of Social Security v Banks (1990) 23 FCR 416 at 420-422 and Secretary, Department of Social Security v Smith (1991) 30 FCR 56 at 61-62.

17. Section 1169(1) of the Act, relevantly, provides that if a person receives or claims a compensation affected payment and the person receives a lump sum compensation payment (whether before or after the person receives or claims the compensation affected payment) no “compensation affected payment” [i.e. a social security benefit received after the date of incapacity] is payable to the person for the preclusion period.

18. Section 1184k of the Act provides the Department with discretion to decrease the length of the preclusion period:

“Section 1184k – Secretary May Disregard Some Payments

1184k(1)        [Special circumstances]

For all 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.”

19.     The Tribunal had given due regard to the following legal principle as to the breadth of the discretion in relation to “special circumstances”. The Full Federal Court, in Riddell v Secretary, Department of Social Security(1993) 42 FCR 443 at 450, commented:

“Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.”

20.     The Tribunal has had to consider the common law meaning and application of the expression “special circumstances” on many occasions. 

21.     Analysis of case law provides the following legal principles that can be applied to (a) the exercise of discretion; and (b) the meaning of the term “special circumstances” in the Social Security Act:

(a)      The Exercise of Discretion

· “A broad discretion to meet the great variety of circumstances which must occur, raising considerations including individual hardship, need, fairness and reasonable…keeping in mind the scope and purposes of the Act.”

[The Full Federal Court, in Riddell v Secretary, Department of Social Security (1993) 42 FCR 443 at 450].

·     The decision-maker must consider how the error occurred; the circumstances which gave rise to the overpayment .

[The Full Federal Court in Dranichnikov v Centrelink [2003] FCAFC 133].

(b)      The meaning of “Special Circumstances”

§  A term incapable of precise definition.  Circumstances that are unusual, uncommon or exceptional.

[Re Beadle and Director-General of Social Security (1984) 6 ALD 1].

§  “Something unusual or different to take the matter the subject of the discretion out of the ordinary…[But] the case need not be extremely unusual, uncommon or exceptional.”

[Boscolo v Secretary, Department of Social Security (1999) 53 ALD 277 at 277].

§  Something to take it out of the usual or ordinary case.  “I 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.”

[Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545].

§  “There will be a requirement that the circumstances are such that takes the case out of the ordinary.”

[The Full Federal Court in Dranichnikov’s case at 148, referring to Jess v Scott (1986) 70 ALR 185].

22. Analysis of cases decided by the Tribunal, with respect to the Social Security Act where "special circumstances" have been considered as the basis for varying the length of the preclusion period and which are relevant to the facts of Mr Latham’s application for review, reveal the following considerations:

(a)Financial issues;

(b)Legal costs; and

(c)Health issues.

(a)      Financial Issues and the Preclusion Period

23.     Analysis of cases decided by the Tribunal, in relation to “special circumstances” and financial issues, indicates that relevant matters for the Tribunal to consider are:

·     whether any hardship was primarily of the social security recipients own making due to a decision to proceed with the purchase of a home and modifications to  a home.

(see Re Ivovic and Director-General of Social Services (1980) 3 ALN 95)

·     Whether the funds received may have been applied in a way which was unwise given that the money was there to provide a person with income, not capital for, investment.  In addition, whether it was inequitable to claim financial hardship when compensation moneys have been diverted to the purchase of, and modifications to, a home.

“18.     It is not an unusual circumstance that a person to whom a preclusion period is applied spends their funds in a way which is unwise.  That is frequently the impetus for them seeking relief through sec.1184.  Financial hardship alone will not of itself constitute special circumstances under this section (See Director-General of Social Service v Hales (1993) 47 ALR 281). The provisions in the Act are there to ensure that money received in place of income as part of the Workers' Compensation system is not also paid by way of Social Security benefits…. This prevention of double dipping reflects the idea that the money is there to provide a person with income, not capital for investment."  [Emphasis added]

(see Secretary, Department of Social Security and Norman AAT 4092)

24.Later, in Norman’s case, Deputy President Barnett stated:

"The respondent was aware, before he purchased the unit, that he would have to use the funds for his day-to-day living expenses, and to allow such an issue to constitute special circumstances would be clearly counter to the spirit of the Act."

25.     This statement needs to be considered in the context of the following conclusion in which the reasonableness of the applicant's action needs to be considered:  

"In considering the question of financial hardship it is relevant to consider the reasonableness of the applicant's action in disposing of his compensation monies.  Re Wilson and Director-General of Social Services 4 ALN 94.  While the Tribunal does not consider the applicant's actions in disposing of the compensation monies to be sufficiently extravagant or unwise as to be unreasonable it has not been such as to warrant special consideration and therefore to constitute special circumstances."

(see Re Martin and Secretary, Department of Social Security (AAT 6482, 14 November 1990)

(b)      Legal Advice and Costs and the Preclusion Period

26.Incorrect legal advice is not in issue in this application for review.

27.     However, the Tribunal is mindful that other decisions in the past have determined that failure by a legal adviser to properly advise does not establish "special circumstances". It has been considered that decisions associated with incorrect legal advice do not constitute "special circumstances" because the person had a claim in negligence against a solicitor i.e. the best view was that this matter is one, if at all, as between solicitor and client. (see Re Martin and Secretary Department of Social Security (1989) AAT 6482)

28.     The Federal Court concluded (at 578-579) that legal costs are properly regarded as part of the lump sum to which the 50% formula is applied and made the following observations on legal costs, special circumstances and the preclusion period:

“This is not to say that s.156 [the equivalent of the present Section 1184] will never be available for legal costs.  The particular facts of a case might make them – or the amount of them – a special circumstance” (at 580); and later: “It would seem that his common law claim for damages was a routine claim….It is commonplace for such claims to be settled on the basis of a global sum with the plaintiff meeting his liability for his legal costs” (at 581).  (see Secretary, Department of Social Security v Hulls (1990-1991) 20 ALD 570).

29.     In Secretary, Department of Social Security and Haining (AAT Decision 7892 16 April 1992), the Tribunal (Bulley J) concluded:

“One could perhaps have more sympathy in relation to finding special circumstances where a very very large portion of the only lump sum involved went or was to go in the payment of legal costs.” (at paragraph 41).

30.     The Tribunal found in QX99C and Secretary, Department of Family and Community Services [1999] AATA 310 that the applicant had incurred $70,200 legal costs which were twice the allocation of $35,000 for legal costs in his settlement monies. His legal costs represent 52% of the only lump sum received as settlement and so came within the legal principles as a “special circumstance” as legal costs represented a “very very large portion of the only lump sum involved” .

(c)      Health Issues and the Preclusion Period

31.     In the context of Riddell’s case, the Tribunal in Re Dean and  Secretary, Department of Education, Science and Training [2005] AATA 586 reviewed the following cases as to the circumstances which came within the meaning of “special circumstances” because of the impacts of the medical condition on the social security recipient. The Tribunal in Dean’s case concluded that the application of “special circumstances” involved a consideration of the impacts of the medical condition on the Social Security recipient’s capacity to make rational decisions in managing their day to day affairs.

32.     In Reuben and Secretary, Department of Social Security [AAT Decision 11879,1997] the Tribunal concluded that the burden of family health needs that contributed to ongoing financial problems and “perhaps even more importantly, to a diminution in the emotional and psychological well being of the family” should be considered as “special circumstances”.

EXAMINATION OF THE EVIDENCE: ISSUE 1

Issue 1: Knowledge of Preclusion Period

33.     Mr Latham’s personal injury claim was settled for $220,000 including costs.  After deductions of $840.80 for HIC, $11,195.99 to Centrelink, $48,000 for legal costs, repayment of loan of $50,225.21 he received $109,738.

34.     He does not remember his solicitors talking to him about the preclusion period and does not remember getting a letter from Centrelink informing him of the preclusion period.  At the time he was taking 400mg of Tramadol daily and had difficulty with concentration and thinking.  He was also in great pain and often could not get out of bed. 

Issue 2:  Financial Issues and Special Circumstances

35.     Mr Latham stated that he had no background in financial management or had any business experience.  His education ended at Grade 9.  He had never had to deal with large sums of money before receiving the lump sum payment.

36.     His “best recollection” was that he estimated spending about “$120,000” on items – mainly on expenditure relating to future business investments, legal costs and some items for personal use.  However, many of the receipts and statements that would verify this expenditure had been stolen.

37.     Included in the total amount of $120,000 spent, was the sum of $34,000 for the business and lease of a shop at Kirby Road, Aspley on January 2005.  The shop had been bought as a business investment, on the advice of his former brother-in-law, Ian Ormand.  Mr Latham provided all of the capital and Mr Ormand, the labour for the business.

38.     He had also discussed with Mr Ormond about buying a truck when Mr Ormand suggested buying the shop at Kirby Road.  He had told Mr Ormand that he knew nothing about convenience shops but Mr Ormand assured him that he knew about the business and would be able to generate sufficient income.

39.     Around 9 May 2005, Mr Ormand assaulted him and broke his glasses.  The next day he applied for a Domestic Violence Order (DVO) against Mr Latham.  The police attended and made him leave the premises immediately.  He was homeless and lived on the streets for a short time.  He was given a copy of the interim order but, without any glasses, he could not find or read the date for the court hearing.  He contacted the police to find out the date but by the time they responded to him, the date had passed and the final order was made. 

40.     At  this time his belongings were still at the Kirby Road shop.  He called the police requesting assistance to recover his belongings.  The police agreed to provide him with a police escort to recover his goods.  He was subsequently given a date by Police when he could return to collect his belongings.  However, when he attended, he found that the motor vehicles were damaged (windows smashed, gear stick broken) and was unable to take anything that day.  When he attended a second time, he found all his belongings had disappeared.  The shop was “trashed”.  He recovered what documents he could find.  He then supplied all relevant documents to Centrelink. 

41.     He is now totally dependent on his parents to survive and leads a “hand to mouth” existence reliant upon them notwithstanding that his parents are Social Security recipients and not in a position to support him.

42.     He has considerable debts of around $13,500 that remain outstanding and which he cannot repay.

43.     When asked by the Tribunal about his problems with concentration, Mr Latham said that he did not appreciate the future consequences of decisions he had made when making major purchases (such as the shop) with his compensation moneys.  He was “not well” at the time and, when presented with a form, he signed on the dotted line as he had trusted others i.e. his brother-in-law and solicitor to protect and safeguard him. 

Issue 3: Health Status

44.     Mr Latham was involved in a workplace accident in 2002 when he was crushed by a log that fell on an excavator he was operating.  He had to be cut out of the wreck, by an oxy welder receiving 20% burns to his back.  He was in a coma for several days and in hospital for approximately 2-3 months.  He suffered fractured vertebrae, fractured ribs, fractured fibula, ligament injury to his right knee and severe burns to his arms, back and thigh.  Two weeks after his first release from hospital he was readmitted with a psoas abscess.  He was confined to hospital for about 3 months, confined to bed for about 12 months and from then had to “re-learn to walk” again. 

45.     He was in great pain after regaining consciousness after the accident.  His health problems continued for four years.  He still experiences significant pain.  He also experiences severe fatigue and considerable difficulty with concentration.  He takes Tramadol for the pain.

46.     He has suffered from depression since the accident.  His treating general practitioner, Dr Yau, prescribed antidepressant medication in June and July 2004.  The medication was not effective.

47.     He suffers from continuing physical disabilities relating to his spinal injuries.  He cannot sit, stand or walk for long periods.

Issue 4:  Legal Costs

48.     It is not in dispute that Mr Latham incurred legal costs of $48,000 associated with his compensation claim.

Supplementary Report of Dr Andrew Byth (Psychiatrist)

49.     The report of Dr Byth contained the following expert opinion in relation to the psychiatric conditions (moderate to severe depression and chronic adjustment disorder) of Mr Latham:

“(i)In my assessment in January 2004, I found that he had been suffering from a chronic Adjustment Disorder since his injury at work in November 2001.  this condition was a chronic moderately severe depressive illness which involved recurrent suicidal thoughts, social withdrawal and psychomotor retardation as a response to his ongoing lower back pain from the injury.  There were no psychotic features i.e. no hallucinations or delusions.

(ii)My assumption would be that his Adjustment Disorder in October 2004 was probably of equal intensity as when I assessed him in January 2004, as he had not had any effective antidepressant treatment, and had not previously improved much with counselling with his GP.

(iii)Although this depressive illness would have involved some negative thinking, reduced energy and interest, and some difficulty concentrating, the condition was only of moderate severity, and would not have significantly affected his judgment or his ability to make rational thoughts, or his capacity to manage his day-to-day affairs in October 2004, in my opinion.

(iv)His depressive illness around October 2004 was not severe enough to affect his reality-testing or his orientation, his capacity to understand financial statements and legal documents, and his capacity to instruct his representatives.”

Consideration of the Issues

50. The question for the Tribunal to consider is the factual evidence relating to whether the length of the preclusion period could be varied under the “special circumstances provisions” of the Act.  On reviewing the submissions by each party, the Tribunal concludes that in the applicant’s fact situation, the correct approach to adopt is to consider the applicant’s circumstances in their totality, i.e. by considering not only his financial situation and investment decisions, but also his health status and social and behavioural functioning.  Such an approach was adopted by this Tribunal in Reuben and Secretary, Department of Social Security (AAT Decision 11879 20 May 1997). 

51.The Tribunal makes the following conclusions:

(a)That it is significant that the SSAT concluded that Mr Latham’s  investment decision to spend $50,000 to purchase a convenience store was an “unsound and ill considered decision”. The ARO decided that this investment decision warranted the description of “special circumstances”.  In the context of Martin’s case, such a decision to dispose of compensation moneys by Mr Lathan would be considered as “sufficiently extravagant or unwise as to be unreasonable”, and so constitute special circumstances.

(b)Furthermore, Mr Latham’s own evidence indicates spending “about $120,000” on future business investments, legal costs and some items for personal use.  However, receipts for the future business investments (and items for personal use) were destroyed (“trashed”) in what could only be described as unusual circumstances, when Mr Latham was evicted from the convenience store he had purchased following a DVO against him initiated by his former brother-in-law (see paras 39, 40).  The Tribunal accepts Mr Latham’s evidence in this regard and considers that had the receipts and documentary proof of the “future business investments” made by Mr Latham not been destroyed in this forced absence off his premises, there would have been scope for further reducing the length of the preclusion period as an “ill considered”, “unsound” or “unreasonable” investment decision – given his past history in this regard.  The destruction of these documentary records – by someone other than Mr Latham, has resulted in the loss of a legal right to Mr Latham, in relation to the Social Security Act 1991. 

(c)Notwithstanding that Mr Latham, in the opinion of Dr Byth, has the capacity to make rational decisions in managing his day to day and business affairs, in spite of his moderate – severe depression and chronic adjustment disorder, the reality of his situation in that both these psychiatric conditions have not improved over time.  Moreover, the practical reality is that he has “recurrent suicidal thoughts”, “social withdrawal” and “psychomotor retardation” associated with his chronic adjustment disorder.  His depressive illness creates “concentration difficulties”, “some negative thinking” as well as “reduced energy and interest”.  The effect of these symptoms - together with problems associated with his poor financial management skills, resulting in all of his available funds and assets being reduced to zero around October 2005, can only contribute to a situation in which his emotional and psychiatric well-being will have limited, if any, scope for improvement:  See Reuben’s case.

(d)Given the above characteristics reflect Mr Latham’s emotional and psychiatric well-being, and the trend for no improvement in his psychiatric conditions over time, together with his background and poor financial management skills, the Tribunal accepts his evidence as to his reliance on others to effectively protect and to safeguard his interests when financial decisions were made for moneys he invested (see para 43).

(e)The legal costs of $48,000 incurred represent 16% of the total lump sum payment.  Whilst one perspective might be to apply Haining’s case literally and to conclude that this figure (16%) does not represent a “very, very large portion of the lump sum involved”.  However, the preferred approach of the Tribunal is to consider, the totality of Mr Latham’s factual situation and that the legal costs incurred represented a “significant portion” (See Barrington and Secretary, Department of Employment and Workplace Relations [2005] AATA 1050) and need to be considered with other findings of fact by the Tribunal that relate to a consideration of “special circumstances”. In is also relevant to note the observations of Heerey J in Secretary Department of Employment and Workplace Relations v Barrington [2006] FCA 527 that legal costs of $46,500 (in this case) were not for far short of a year’s income for someone on average weekly earnings (currently $53,500).

52.     The Tribunal has considered all of the above conclusions with respect to the principles in Riddell’s case and the following statement by Einfield J in Secretary, Department of Social Security v Thompson (1994) 53 FCR at 586:

“The width of the discretion under the section clearly extends to all the circumstances of the case, including circumstances not specifically related to a particular portion of the compensation payment.  It is not therefore outside the section for the tribunal to consider the general factors such as the mental health and social conditioning of the individual in concluding that the preclusion period should be shortened.”

53.     Accordingly, the Tribunal finds that consideration of all of the above conclusions, in their totality, represent a factual situation in which “special circumstances” are justified to warrant a reduction in the length of the preclusion period. That is, the facts represent circumstances that are unusual, some even uncommon, to take the matter out of the ordinary.

54.     Given this finding that discretion should be exercised in Mr Latham’s case, the next question is how such a discretion should be exercised.  The Tribunal concludes that the discretion should be exercised from the time that the totality of Mr Latham’s factual situation was considered in the administrative decision-making process in terms of established legal principles that consider “special circumstances” and the preclusion period with respect to (a) financial issues; (b) legal costs; and (c) health issues i.e. behavioural and psychological functioning in relation to diagnosed medical conditions.

55.     In Mr Latham’s case, this situation occurred for the first time at the hearing before the Tribunal on 1 August 2006. 

56.     For all of the above reasons, the Tribunal sets aside the decision under review and a substitution thereto decides that the length of the preclusion period be reduced because of “special circumstances”.  The length of the preclusion period is 23 May 2003 to 1 August 2006.

I certify that the 56 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member

Signed:         Michelle Brazier       

Legal Research Officer

Dates of Hearing  1 August 2006; 19 September 2006
Date of Decision  4 October 2006

For the Applicant  Ms R Wilkinson, Legal Aid Office, Queensland

For the Respondent                  Ms S Dole, Departmental Advocate