Orellana and Secretary, Department of Family and Community Services
[2002] AATA 368
•15 April 2002
DECISION AND REASONS FOR DECISION [2002] AATA 368
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2001/ 1028
GENERAL ADMINISTRATIVE DIVISION )
Re CARLOS ORELLANA
Applicant
And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Professor T Sourdin, Member
Date15 April 2002
PlaceSydney
Decision The Tribunal decides to set aside the reviewable decision and to substitute a decision that: Pursuant to subsection 184 (1) of the Social Security Act 1991 that 15 per cent of the relevant part of the compensation lump payment be taken as not having been made, The preclusion period will be proportionately reduced by 54 weeks.
[SGD] T Sourdin
Member
CATCHWORDS
SOCIAL SECURITY –receipt of lump sum payment of compensation- preclusion period – whether special circumstances exist to justify waiving preclusion period – financial hardship – medical condition of spouse – requirement to relocate
Social Security Act 1991, sections 17, 1165, 1184
Beadle v Director-General of Social Security (1985) 60 ALR 225
Beadle and Director-General of Social Security (1984) 6 ALD 1
Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690
Re Green and Secretary, Department of Social Security (1990) 21 ALD 772,
Secretary, Department of Social Security and Hill (1995) 2(1) SSR 9
Re Hajar and Secretary, Department of Social Security (1988) 16 ALD 716
Re Colaiacolo and Secretary, Department of Social Security (AAT 2109, 24 April 1985).
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Secretary, Department of Social Security v Hales (1998) 82 FCR 154
Secretary, Department of Social Security v Ellis (1997) 46 ALD 1
Secretary, Department of Social Security v Hulls (1991) 22 ALD 570
Re Ivovic & Director-General of Social Services (1981) 3 ALN N95
Secretary, Department of Social Security v Smith (1991) 23 ALD 277
Haidar v Secretary of Social Security (1998) 52 ALD 255
Secretary, Department of Social Security v Thompson (1994) 36 ALD 563
REASONS FOR DECISION
This is an application by Mr Carlos Orellana ("the Applicant") for review of a decision of a delegate of the Secretary, Department of Family and Community Services, ("the Respondent"), dated 9 January 1998, to impose a preclusion period preventing payment of Social Security benefits from 23 December 1997 and ending 7 February 2005 (T25). This decision was affirmed by an authorised review officer ("ARO") on 12 March 2001 (T39) and then by the Social Security Appeals Tribunal ("the SSAT") on 18 June 2001. An application was lodged with the Administrative Appeals Tribunal ("the Tribunal") on 17 July 2001.
The hearing of the application for review was held in Sydney on 21 December 2001 and 15 April 2002. The Applicant was self-represented and attended with an interpreter and the Respondent was represented by Cheryl Collis, an advocate from the Advocacy and Administrative Law Team at Centrelink.
The Applicant provided oral evidence. The following documentary material was also placed in evidence before the Tribunal:
Exhibit Document Date
TD1 Documents lodged under section 37 of the Administrative Appeals Tribunal Act 1975 being T1-T26
A1 Health Insurance 9 February 1996
A2 Health Insurance 11 July 1996
A3 Health Insurance 10 September 1996
A4 Transfield Payslips November 1994
A5 Series of Photographs, Dr McGrath Medical Report 20 June 1994
A6 RTA Medical Report 26 May 2001
A7 Group Certificate 16 July 1996
A8 Receipt Sale of Toyota Lexcen 14 February 1998
R1 Respondent's Statement of Issues
R2 Respondent's Statement of Facts and Contentions
R3 Computer Print Mr Orellana (Attached to SOFC)
R4 Computer Print Mrs Orellana (Attached to SOFC) 13 December 2001
R5 Computer Print (Attach to SOFC) 20 November 2001
R6 Archive Display Record 20 December 2001
ISSUES
4. The issues before the Tribunal are as follows:
whether the Applicant is precluded from receiving Social Security payments from 23 December 1997 and ending 7 February 2005; and if so
whether there are any special circumstances which would allow the receipt of the compensation to be disregarded in whole or in part.
LEGISLATION
5. The relevant legislation is the Social Security Act 1991 ("the Act") and in particular sections 17, 1165, and 1184.
"17(3) For the purposes of this Act, the compensation part of a lump sum compensation payment is:
(a) 50% of the payment if the following circumstances apply:(i) the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or condition; and
(ii) the claim was settled, either by consent judgement being entered in respect of the settlement or otherwise, on or after 9 February 1988; or
(ab) 50% of the payment if the following circumstances apply:
(i) the payment represents that part of a person's entitlement to periodic compensation payments that the person has chosen to receive in the form of a lump sum; and
(ii) the entitlement to periodic compensation payments arose from the settlement (either with or without admission of liability) of a claim that is, in whole or in part, related to a disease, injury or condition; andthe claim was settled, either by consent judgement being entered in respect of the settlement or otherwise, on or after 9 February 1988; or
if those circumstances do not apply – so much of the payment as is, in the Secretary's opinion, in respect of lost earnings or lost capacity to earn.
…
1165(1A) If:a person receives or claims a compensation affected payment; and
the person is not a member of a couple; and
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.
…
1165(5) If periodic compensation payments are made in respect of the lost earnings or lost earning capacity, the new lump sum preclusion period is the period that:(a) begins on the day after the last day of the periodic payment period; and
(b) ends after the number of weeks worked out under subsections (8) and (9).
…
1165(8) If a compensation lump sum is received on or after 20 March 1997, the number of weeks in the preclusion period is the number worked out under the following formula:
Compensation part of lump sum
Income cut-out amount
1165(9) If the number worked out under subsection…(8) is not a whole number, the number is to be rounded down to the nearest whole number.
…
1184(1) For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:not having been made; or
not liable to be made;
if the Secretary thinks it is appropriate to do so in the special circumstances of the case."
BACKGROUND
On 24 May 1994, the Applicant sustained a severe right shoulder injury at work after his clothing was caught in a machine. He was dismissed from work after a period of light duties when his pay was also reduced (from $650 per week to $425 per week). He then began to receive reduced weekly compensation payments from HIH Winterthur Workers Compensation (NSW) ($320 per week).
On 23 December 1997, the Applicant's worker's compensation claim was settled for an amount of $300,000 and his weekly compensation payments ceased.
On 9 January 1998, Centrelink wrote to the Applicant and advised him that he would be precluded from receiving Social Security payments for the period 23 December 1997 to 7 February 2005. (T25)
Following the receipt of compensation payment of $268,000 net (minus legal and other costs), the Applicant discharged a mortgage of $87,110.00 and purchased a new car (with automatic transmission and power steering as he was unable to drive an 'unmodified' car because of his continuing disabilities) for the sum of $48,000. He also repaid some monies that he had borrowed from his children since his work accident and sent some money to his father who was ill and later died. Mr Orellana then went on a holiday with his wife to the United States and to visit family and friends in Mexico and Chile.
Whilst on holiday Mr Orellana's wife was diagnosed with a brain tumour and Mr Orellana was required to pay approximately $3,000 in medical costs. Upon their return to Australia, Mrs Orellana had surgery and radiotherapy in respect of her cancer.
Mr Orellana made a decision to sell his house and purchase a smaller home that was on 'one' level. His former home was a two storey house and this decision was made partly because Mr Orellana' s wife could no longer ascend or descend stairs safely. He was also concerned that the two storey home would be 'too large' to maintain in view of his wife's condition. Mr Orellana expended monies on his former home before selling it and although the new house cost less - $235,000 (compared to the sale price of $280,000 for the larger house) there was no net gain as monies were expended on stamp duty, legal costs and the costs of 'fixing up' the former home for sale ($12,000) and equipping the new home ($40,000). In effect, Mr Orellana lost monies as a result of this transaction.
On 18 June 2000, the Applicant attended a Centrelink office to discuss a review of the preclusion period. On 30 October 2000 the applicant wrote to Centrelink and requested a review. (T29)
On 18 June 2001, the SSAT also decided to affirm the decision, stating that:"19. The tribunal accepts that the remainder of the lump sum money has been spent on living costs, and now there is nothing left. Presently, Mr and Mrs Orellana live on Mrs Orellana's disability support pension and some assistance from their children. Mr and Mrs Orellana have combined credit card debts of about $6600.
24. Mr Orellana's case tends to rest on the fact that he is in a difficult financial position because the lump sum money has been spent. He proposes that his wife's illness has contributed to that spending of the lump sum such as medical costs abroad, and changes in accommodation. As well, he provides care to her. Whilst the tribunal does recognise that Mr Orellana's difficult financial and domestic situation, it could not find that the case was so unusual such that it would be appropriate to disregard any part of the compensation. The tribunal noted that there is ongoing income received by Mrs Orellana, even though the amount received is not substantial."
ORAL EVIDENCE OF THE APPLICANT
The Applicant was born on 18 July 1942. Prior to his accident, he was employed at Transfield Pty Ltd for approximately 18 years.
The Applicant had an accident at work on 24 May 1994 when he was working on a lathe and his clothing became entangled in the machine. The Applicant was flung around the machine. According to Dr Lai this caused:
"partial asphyxiation and fractures of the right 5th and 6th ribs, spiral fracture of the right humorous, and left brachial plexus injury. This caused extensive muscle damage around the right shoulder with severe contracture. He has limited range of movements and weakness of the right shoulder. He also suffers daily pain. Because of the limitation of movements with weakness of the right shoulder, he has difficulty with daily living. He is unable to work and he could only drive a car with power steering and automatic transmission. He has been retrained to drive a car with only his left arm. To control the pain, he still has to take daily medication. As he gets older, he is likely to deteriorate. His wife has been diagnosed with a brain tumour in 1998 and since then he has been a carer as after her surgery she has difficulty caring for herself."
The Applicant has not returned to work since the date of his accident. He indicated at the hearing, was it not for his wife's condition he would in all probability have sought some work. Indeed, Mr Orellana indicated that when he expended much of the settlement funds he received, he had not anticipated that he would be required to care for his wife on a full- time basis.
Mrs Orellana also gave evidence at the hearing at this matter. In her evidence Mrs Orellana indicated that she has been diagnosed with a brain tumour that is still under management at Liverpool Hospital Oncology Department. A report of Dr Juan Sabag was handed to the tribunal (Exhibit A8) and in that report it was noted:"she (Mrs Orellana) needs her husband's constant day/night care by her husband." (sic)
Mrs Orellana indicated that in August or September of 1998 she felt ill, and whilst overseas she was diagnosed with a brain tumour. The tumour was partly removed in Australia and was reduced in size by radiotherapy treatment. Mr Orellana had indicated in his evidence that the tumour was not fully operable as it is adjacent to the optic nerve however the condition remained stable.
Mrs Orellana indicated that she had a number of continuing disabilities. Her medical condition involves seizures (grand and petit mal), headaches, dizziness, instability, difficulty bending, difficulty lifting, forgetfulness, anxiety as well as other symptoms. Mrs Orellana indicated that her condition worsened when she was anxious or stressed and, at times, her headaches become particularly severe and she needed to lie down. Mrs Orellana indicated that she was taking tegretol in relation to seizures. She indicated that she had not suffered many severe seizures, however, she had minor instances of instability on a regular and (at least) weekly basis.
Mrs Orellana indicated that her husband supports her by cooking, cleaning, mopping and looking after her when she is unwell. In addition, he needed to be present when she had episodes of instability. Mrs Orellana indicated that at least every week or so she is unwell to the extent that she is required to lie in bed until she feels better. Mrs Orellana said that she could not ascend or descend stairs without her husband being present and that she was prone to forgetfulness and could not remember to take her daily medication or turn off something that was placed on a stove.
Mrs Orellana indicated that she had continuing problems with walking and balance. She also indicated that these problems were also related to arthritic conditions in her knees and hands. Mrs Orellana said that was important that she and her husband lived close to their children who provided regular support to them. It was partly for that reason that they decided to build a home in an area close to the vicinity of their previous home.
Mrs Orellana said that in the previous two-storey home, following her brain surgery, she was unable to ascend stairs without some assistance and for that reason it was appropriate to sell the larger home. Mrs Orellana also indicated that as a result of her condition she was unable to look after a large home.
Mr Orellana indicated in evidence that at the time that he began to expend his settlement monies he considered that he was behaving in a prudent manner. His wife's illness had led to the loss of monies ($3000 in terms of direct medical costs) and indirect costs (for example the loss of monies expended on their holiday as well as the losses incurred by 'downsizing'). He indicated that he needed to buy a home in the area where his children lived as he and his wife required their support. He also indicated that his three-bedroom home in Hoxton Park was modest and that three bedrooms were necessary as it was often necessary for relatives to stay (especially since his wife's diagnosis).
The applicant indicated that he now had credit card debts in the sum of approximately $6000. He indicated that his decision to "downsize" to a small house could be regarded as a "little stupid". Mr Orellana said that the decision to sell his larger home and build a small home was decided under rapid and drastic circumstances. His wife was very ill and as a result he was inclined to spend more on furnishings and fittings than he may have otherwise. However, Mr Orellana considered that all of the purchases that were made in respect of the new home were necessary. For example, he indicated that it was necessary to have tiling, concreting, a dishwasher and a safety gate in the new home.
Mr Orellana also indicated that it was appropriate to have an alarm and intercom particularly as his wife was anxious and nervous. Mr Orellana agreed in evidence that he was less than circumspect in the way that he had spent his money however, he indicated that shortly after receiving the money the problems with his wife arose and in his words "took me by surprise".
At the time of spending the lump sum, the Applicant understood that he would not be entitled to a disability pension, due to his own ill health, until 2005.
SUBMISSIONS
The Applicant submitted special circumstances existed that included his financial hardship, the circumstances of his wife's illness and the circumstances surrounding the expenditure of his lump sum payment.
In written submissions, the Respondent contended that the preclusion period was correctly calculated pursuant to sections 17 and 1165 of the Act. Further, the Respondent conceded that the Act gives relief to the strict application of the compensation preclusion period by giving the Secretary a discretion to disregard the compensation payment in whole or part in 'special circumstances' in accordance with section 1184 of the Act. The authorities of Beadle v Director-General of Social Security (1985) 60 ALR 225, Beadle and Director-General of Social Security (1984) 6 ALD 1, Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690 and Re Green and Secretary, Department of Social Security (1990) 21 ALD 772, suggest that the discretion should not be exercised because the Applicant's circumstances could not be considered special, in the sense that they are not "unusual, uncommon or exceptional".
The Respondent submitted that financial hardship must go beyond straitened circumstances and be truly exceptional, relying on cases such as Secretary, Department of Social Security and Hill (1995) 2(1) SSR 9, Re Hajar and Secretary, Department of Social Security (1988) 16 ALD 716, Re Beadle (1984) (supra), Re Colaiacolo and Secretary, Department of Social Security (AAT 2109, 24 April 1985). It was further submitted that hardship is a relevant consideration but regard must be had to the way in which the hardship arose. The Respondent contended that the Applicant had made a significant contribution to his own financial hardship by making "extravagant" purchases and having unjustifiably high living expenses.
With regard to the Applicant's existing assets, namely his house, the Respondent argued that the Applicant showed little regard for the preclusion period and how he was going to support himself for it's duration. Further, it was suggested that the Applicant declined to ameliorate his situation by selling assets such as his car. The Respondent noted that the discretion in section 1184 of the Act was not enacted to maintain compensation recipients in private housing or to preserve other "nest eggs".
At the hearing, the Respondent noted that the Applicant had always understood that the preclusion period was to operate.
The Tribunal first turns to consider whether the calculation of the preclusion period was correct. The Applicant's payment falls within the definition of compensation in accordance with subsection 17(2) of the Social Security Act 1991, which defines compensation as a payment of damages or a payment under a scheme of insurance or a payment in settlement of a claim for damages. As the compensation payment was received by way of a settlement, subsection 17(3) applies. For the purposes of the Act, the compensation part of a lump sum compensation payment is 50 per cent of the payment where the payment is made in settlement of a claim that is, in whole or in part, related to a disease, injury or condition. It follows that the compensation part of the payment in this case is $150,000.
The preclusion period in relation to this amount is calculated in accordance with section 1165 of the Act. Subsection 1165(5) states that the preclusion period commences on the day after the cessation of the periodic compensation payments that the Applicant was receiving, that is 23 December 1997. The number of weeks in the preclusion period is calculated by the formula of subsection 1165(8); that is, by dividing the $150,000 by the income cut-out amount, which in accordance with subsection 17(1) of the Act is $403.20. Thus, the number of weeks of the preclusion period is 372.02, which is then rounded down to 372 as per subsection 1165(9).
The result is that a compensation affected payment is not payable to the Applicant for the duration of the 372 week period, pursuant to subsection 1165(1A) of the Act, unless special circumstances exist which would allow the Tribunal to exercise the discretion of section 1184 of the Act and treat the whole or part of the compensation payment as not having been made.
The Tribunal now turns to consider whether there are in fact any special circumstances, which exist in the Applicant's case. The case law on this issue is clear. In the leading case of Beadle (supra, 1985) the Full Federal Court held that it was not possible to lay down precise rules but rather, a consideration of special circumstances would depend upon the facts of the case. Further, even though the phrase 'special circumstances' lacks precision, it "is sufficiently understood in our view not to require judicial gloss". In Re Beadle (supra, 1984), the Tribunal held that the phrase 'special circumstances' is "incapable of precise or exhaustive definition" but said at ALD 3 that the circumstances:"…must have a particular quality of unusualness that permits them to be described as special…the qualifying adjective looks to circumstances that are unusual, uncommon or exceptional".
In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, at 545, Kiefel J stated that special circumstances would require something "to take it out of the usual or ordinary case". Further the court held that:
"Whilst we agree that hardship is a relevant consideration in the discretion conferred…we reject the submission…that we should ignore the circumstances out of which the alleged hardship is said to have arisen."
In the Federal Court decision in Secretary, Department of Social Security v Hales (1998) 82 FCR 154 at 162, French J said of the "concept" of special circumstances that the evident purpose:
"…is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness".
In considering whether the Applicant's circumstances are unusual or uncommon, the Tribunal turns to consider the facts in evidence. The Tribunal considers that the Applicant's claim of special circumstances can be divided into his current financial hardship, Mrs Orellana's condition, and factors leading to the Applicant's decision to purchase a smaller house.
The Applicant's current financial situation is undoubtedly difficult, but must be considered against the circumstances of others in a similar situation and be found to have an element which makes them exceptional, which sets them apart from the rest. Regard must be had to the fact that many claimants of social security benefits are in a similar situation to the Applicant, some without the benefit of a large unencumbered asset.
With regard to the Applicant's financial hardship, the decision in Re Hajar and Secretary, Department of Social Security (supra) at ALD 719-720 is relevant:"(44) Here the applicant could not be said to be suffering from any real financial hardship that could in any way be regarded as special. He is making no contribution to the maintenance or support of his wife or children…His day-to-day living needs are modest and are financed by small borrowings from friends and family. This is a continuation of the way of life he had in financial matters from the time of his resignation until the time of his settlement. His borrowings, however, are much smaller as he no longer has a liability to meet his house payments, nor does he support his family. With the possible exception of his Adelaide brother, who bowed to his wife's insistence, none of his creditors appear to have been pressing.
(45) On the question of hardship, I find it impossible to ignore the existence of the house, which is valued at approximately $175,000 and which is free of encumbrances……It is inequitable for the applicant to claim financial hardship when he owns such a valuable asset and does nothing to realise on it…"The Tribunal accepts the Applicant's comments about his expenditure. The Applicant was aware of the preclusion period when he began to dissipate his funds, including the purchase of a smaller house, in the knowledge that he would not be entitled to receive a social security benefit for at least eight years. However, while it is fair to say that much of the Applicant's expenditure was planned, the Applicant did not however anticipate the illness of his wife and their need to move.
The Tribunal does also not dispute the financial hardship with which the Applicant is now faced with regard to his liquid assets. The issue is - are these circumstances 'exceptional'? Do they possess the quality of unusualness which might justify the double advantage of receiving social security payments to supplement a compensation lump sum, the majority of which has been exhausted through the Applicant's own choices, namely, the purchase of an asset. The underlying principle of compensation which is to place the innocent party in the position that they would have occupied had the damage/ injury not occurred. Here, the applicant has not been placed in a 'superior' position and he has not obtained an 'advantage' as a result of his compensation payment.
The Tribunal finds that the Applicant's circumstances as detailed, do constitute special circumstances as at least some, although not all, of the Applicant's tightened financial circumstances relate to his wife's illness and the expenditure that was required to fashion appropriate living arrangements in response to that illness. In this regard, it is of note that in Re Beadle and Director-General of Social Security (supra) , where the Tribunal, comprising Toohey J, Presidential Member, Mr Wilkins and Dr Billings, Members, said, at ALD 3 :". . . 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".
As previously noted the requirement that the circumstances be unusual or out of the ordinary has been emphasised by the Federal Court in a number of later decisions. Justice Kiefel in Groth v Secretary, Department of Social Security (supra) at ALD 541 (said that a special circumstance for the purposes of section 1184 must be something that takes the matter "out of the usual or ordinary case". Her Honour said at ALD 545:
"...for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this 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. The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied."
Clearly, financial hardship may not be sufficient. Carr J in Secretary, Department of Social Security v Ellis (1997) 46 ALD 1 at 5 held that the Tribunal had not erred in finding that Mrs Ellis was suffering "extreme financial hardship". He then considered whether that amounted to "special circumstances". He said at ALD 6:
"In my opinion, the evidence to which the Tribunal referred which was before it, and had previously been led before the Social Security Appeals Tribunal, raised a strong prima facie case of circumstances which were so out of the ordinary as to amount to "special circumstances". If the truth of the matter is that these are ordinary circumstances to be found throughout Australia, then the applicant could quite easily have led that evidence by, for example, producing the statistics."
Another matter which must be considered when deciding whether it is appropriate to exercise the special circumstance discretion in section 1184 of the Act, is that the discretion must be exercised in conformity with the objects of the Act. However, as O'Loughlin J explained, in Secretary, Department of Social Security v Hulls (1991) 22 ALD 570, that does not mean that the discretion cannot be used to alleviate the strict enforcement of certain provisions of the Act if otherwise their operation "would be unjust, unreasonable or otherwise inappropriate", or in the words of the Full Court in Beadle "unfair or inappropriate". O'Loughlin J, at 581, quoted with approval the following passage from the reasons for decision of the AAT in Re Ivovic & Director-General of Social Services (1981) 3 ALN N95:
"The reference to special circumstances "by reason of which" a person liable "should be released" requires, in our view, that there must exist in the circumstances of the case, a factor or factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes. In the exercise of the discretion which s 115(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 Services Act 1947: cf Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505 per Dixon J. Thus whilst keeping the dominant principle of s 115 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."
Similarly in Secretary, Department of Social Security v Smith (1991) 23 ALD 277 Von Doussa J said at ALD 281:
"The appellant contends that the Tribunal exercised the discretion under s.156 in a way which is inconsistent with ss.152 and 153. The obligation to repay imposed on the respondent necessarily flowed from the terms of ss.152 and 153, and for this reason the result cannot be alleviated under s.156. It is argued that s.156 cannot have been intended to "re-write" the earlier provisions of Part XVII so as to permit an apparently unjust result reached under the earlier provisions to be overridden as the apparent injustice is the product of the legislation itself."
I am unable to accept this argument. The fallacy of the argument lies in its failure to read s.156 as part of the overall scheme enacted in Part XVII to provide for cases where a person becomes eligible to payments both under the Act and from an independent source by way of compensation that is in whole or in part in respect of an incapacity for work. The purpose of the scheme in Part XVII is discussed in Banks and HullsThe scheme was intended to avoid a person receiving double payments for an inability to exercise an earning capacity.To eliminate difficulties which had arisen under earlier enactments which required the Secretary to form an opinion about how the amount of a payment by way of compensation was made up (see Banks at ALR 610, AAR 43) an arbitrary formula was adopted in sub.para.152(2)(c)(i). This formula enables the compensation part of a lump sum payment made in settlement of a claim to be fixed with administrative ease. O'Loughlin J. observed in Hulls at 22-3: "This provision has the hallmarks of simplicity and certainty, leaving s.156 and its reference to 'special circumstances' to remedy those particular cases where the application of the arbitrary rule would create injustice.
I agree with that observation. (emphasis added)"
Von Doussa J, then went on to explain at ALD 282 that it is:
"in the very nature of an arbitrary provision that it can entail a degree of unfairness in a particular case……At the same time the legislature must have recognised that from time to time a case may arise where the degree of unfairness to a recipient of a payment by way of compensation would bring about an unreasonable or unjust result which was outside that which could be justified by the practical expediency of the arbitrary nature of the provisions in ss.152 and 153. Section 156 was enacted as part of the scheme under Part XVII before the "50% rule" was introduced by the Social Security Amendment Act 1988 (Cth), but this is no reason to construe s.156 as having no operation in respect of a case where the "50% rule" produces a clearly unjust result."
Here, the Tribunal finds that the circumstances were unusual. Mr Orellana has said that he would still have some residual capacity to earn money were it not for his wife's illness. He is required, on the evidence, to act as here carer and this would prevent him from engaging in any remunerative work. As a result of her condition she could not be left alone. It is also partly as a result of his wife's illness the lump sum was depleted (although I accept that there was some expenditure that was not related). In this regard the Tribunal accepts the oral evidence given by Mr Orellana and his wife about their expenditure.
Based on all of these circumstances the Tribunal finds that there are unusual circumstances that are "out of the usual case' sufficient to meet the requirements of the Beadle v Director of Social Security (supra) and Haidar v Secretary of Social Security (1998) 52 ALD 255 tests for the existence of "special circumstances".
The Tribunal is also satisfied that the particular circumstances have produced an outcome that is "unjust, unreasonable or otherwise inappropriate" in the sense expressed by the O'Loughlin J in Secretary, Department of Social Security v Hulls (1991) (supra) at ALD 277.
In determining the part of the compensation payment that should not be taken to have been made, the tribunal notes the view expressed in Haidar v Secretary of Social Security (supra) in respect to reasonableness required of the decision-maker using this discretion. In this regard the Tribunal considers that some of the expenditure made by Orellana could be regarded as "reckless". There are some payments that were made, in particular payments in relation to a relatively expensive motor vehicle and payments in relation to the weddings and holidays could be considered in this light.
CONCLUSION
The Tribunal will set aside the reviewable decision in respect to the application of a preclusion finding that there are special circumstances of this particular case which make it appropriate to invoke the discretion pursuant to section 1184 (1) of the Social Security Act 1991.
After due consideration of all of the particular facts of this case, as a result of the finding that some expenditure arose as a result of the applicant's special circumstances which could not be foreseen, the Tribunal will set the part of the compensation payment to be taken as not having been made, to 15 per cent of the sum of $150,000, being the amount used to calculate the compensation part of the lump sum payment pursuant to section 17(3) of the Act.
The amount of 15 per cent has been adopted after calculating the amounts expended by the Applicant that through no fault of his own were lost as a result of the special circumstances referred to previously as per Secretary, Department of Social Security v Thompson (1994) 36 ALD 563.
DECISION
Accordingly, the Tribunal decides to set aside the reviewable decision and to substitutes a decision that:
pursuant to subsection 184(1) of the Social Security Act 1991 that 15 per cent of the relevant part of the compensation lump payment be taken as not having been made; and
the preclusion period will be proportionately reduced by 54 weeks.
I certify that the 56 preceding paragraphs are a true copy of
he reasons for the decision hereinProfessor T Sourdin, Member
Signed: S.Swamy .....................................................................................
AssociateDates of Hearing 21 December 2001, 15 April 2002
Date of Decision 15 April 2002
Representative for Applicant Self- RepresentedAdvocate for the Respondent Ms Cheryl Collis
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