Rice and Secretary, Department of Employment and Workplace Relations
[2006] AATA 757
•6 September 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 757
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2006/113
GENERAL ADMINISTRATIVE DIVISION ) Re GILLIAN RICE Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Mr SC Fisher, Member Date6 September 2006
PlaceBrisbane
Decision
The Tribunal sets aside the decision under review and in substitution for that decision determines that pursuant to section 1184K(1) of the Social Security Act 1991:
(1) special circumstances exist in this matter; and
(2) the whole of the compensation payment is to be treated as not having been made; and
(3) in the absence of any compensation payment having been made, a preclusion period does not exist; and as such
(4) compensation affected payments cannot be recovered by the Respondent, and in the event that such payments have been recovered they are to be repaid to the Applicant;
(5) the Respondent is entitled to its compensation recovery charge of $1,616.62.
..........[Sgd]..........
SC Fisher
Member
Decision No. [2006] AATA
Administrative
Appeals
Tribunal
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2006/113
GENERAL ADMINISTRATIVE DIVISION )
Re GILLIAN RICE Applicant And
SECRETARY, DEPARTMENT OF EMPLOYMENT and WORKPLACE RELATIONS
Respondent
CORRIGENDUM [2006] AATA 757
Tribunal
Mr SC Fisher, Member
Date
11 September 2006
PlaceBrisbane
I DIRECT THAT paragraph (5) of the Tribunal’s Decision should read:
“(5) the Respondent is not entitled to its compensation recovery charge of $1,616.62;”
I DIRECT THAT paragraph 44(5) of the Tribunal’s Decision and Reasons for Decision should read:
“(5) the Respondent is not entitled to its compensation recovery charge of $1,616.62.”
………[Sgd]………
SC Fisher
CATCHWORDS
SOCIAL SECURITY - pensions, benefits and allowances - disability support pension - applicant injured in a work related accident - compensation affected payment - preclusion period - special circumstances exist to exercise discretion to disregard all of the settlement monies
Social Security (Administration) Act 1999 s234
Social Security Act 1991 s568, 569
A New Tax System (Family Assistance) (Administration) Act 1999 s101Secretary, Department of Social Security v Murphy [1998] FCA 809
Ajka Pty Ltd v Australian Fisheries Management Authority [2003] FCA 248
Bantick and Secretary, Department of Family and Community Services [2003] AATA 472
Bramwell v Repatriation Commission (1998) 51 ALD 56
Collins v Minister for Immigration and Ethnic Affairs (1981) 36 ALR 598
Beadle v Director-General of Social Security (1985) 60 ALR 225
Secretary Department of Social Security and VHS (1995) 50 ALD 745
Secretary, Department of Security and Hickman
Department of Social Security v Thompson at 586
Barrington and Secretary, Department of Employment and Workplace Relations
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Secretary Department of Social Security and Winterbotham (unreported, DP Burns, 11 December 1990)
Re Secretary, Department of Family and Community Services and Zugul [2005] AATA 425
Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690
Re Zaccardi and Secretary, Department of Social Security (1995) 40 ALD 760.
Re Guerrero and Secretary, Department of Social Security (unreported, AAT No 9603, 29 June 1994)
Secretary, Department of Employment & Workplace Relations v Homewood [2006] FCA 779
Secretary, Department of Employment and Workplace Relations and Carabott [2006] AATA 79
Green and Secretary, Department of Social Security (1990) 21 ALD 772,
Ivovic v Director General of Social Services 3 ALN N95
Kryzywak v Secretary Department of Social Security 15 ALD 690
Trimboli v Secretary, Department of Social Security (1989) 86 ALR 64
Groth & Department of Social Security (1995) 37 ALD 797
Dranichnikov v Centrelink [2003] FCAFC 133
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866
Haidar v Secretary, Department of Social Security (1998) 28 AAR 288
Kertland v SDFaCS (1999) 95 FCR 64
Secretary, Department of Family and Community Services and Danielsen-Jensen [2004] AATA 1319
Secretary, Department of Family and Community Services and SRKKKK [2005] AATA 480 Ubachs v Secretary of the Department of Family & Community Services [2004] FCA 310 Jazazievska v Secretary Department of Family & Community Services [2000] FCA 1484. Secretary, Department of Employment and Workplace Relations and Carabott [2006] AATA 79
McAliney and Secretary, Department of Family and Community Services [2005] AATA 96 Strang and Secretary, Department of Employment and Workplace Relations [2006] AATA 51),
Dranichnikov v Centrelink [2003] FCAFC 133 and Ryde v Secretary, Department of Family and Community Services)
Kertland v SDFaCS (1999) 95 FCR 64
Thomas and Secretary, Department of Family and Community Services [2003] AATA 842REASONS FOR DECISION
6 September 2006 Mr SC Fisher, Member Introduction and background
1. Mrs Gillian Rice (“the Applicant”) has been in receipt of disability support pension paid to her on behalf of the Respondent.
2.In outline form, the background to this appeal is as follows:
A.The Applicant was injured in a work-related accident on 8 December 2004 and received a compensation payment of $15,590.10 on 30 September 2005.
B.Centrelink advised both the Applicant's lawyers as well as to the Applicant herself on 31 January 2005 informing them that any receipt of a compensation payment by the Applicant may affect her future and past Social Security entitlements.
C.On 16 September 2005 (in response to a request made on 15 September 2005), Centrelink advised the Applicant and her lawyers 2 estimates of preclusion periods (which varied according to the settlement amounts advised on behalf of the Applicant).
D.The Applicant settled her claim for compensation, and was awarded a lump sum amount of $15,590.10.
E.Centrelink imposed a compensation period of 11 weeks running from 8 December 2004 to 22 February 2005 and a compensation recovery charge of $1,616.62. Centrelink advised the Applicant and her lawyers about these decisions on the 11 October 2005.
F.The Applicant requested a review of this decision.
G.On 23 November 2005 the original decision-maker reviewed her decision and affirmed it.
H.On 29 November 2005 an Authorised Review Officer affirmed the previous decisions.
I.The Applicant appealed to the Social Security Appeals Tribunal on 8 December 2005.
J.On 23 January 2006 the Social Security Appeals Tribunal affirmed the Centrelink decisions below.
K.On 16 February 2006, the Applicant appealed to this Tribunal.
Jurisdiction
3. In a procedural sense, the Tribunal has jurisdiction in this appeal by virtue of Part 4, Division 5 of the Social Security (Administration) Act 1999 (“the Administration Act”). In a substantive sense, the merits of this appeal are governed by the Social Security Act 1991 (“the Act”).
The Decisions under Review
4. The decisions under review are decisions made by the Social Security Appeals Tribunal on 23 January 2006 that the Applicant is subject to a preclusion period spanning 8 December 2004 – 22 February 2005 and was liable to pay a compensation recovery charge of $1,616.62.
The Role of the Tribunal
5. The role of the Tribunal is to review the merits of the decision before it: section 43 of the Administrative Appeals Tribunal Act 1975 and Secretary, Department of Social Security v Murphy [1998] FCA 809. The Tribunal is guided by the norm that it should reach the correct and preferable decision on the basis of the material before it: Ajka Pty Ltd v Australian Fisheries Management Authority [2003] FCA 248 at [33]. The Tribunal is required to stand in the shoes of the original decision-maker and consider all evidence anew, bearing in mind statutory provisions and any significant legal precedent: Bantick and Secretary, Department of Family and Community Services [2003] AATA 472 at [23]. The Tribunal proceeds de novo: Bramwell v Repatriation Commission (1998) 51 ALD 56 at 60 per Weinberg J. The Tribunal must base its decision upon the material that is logically probative of the existence of facts that emerge from the evidence before it: Collins v Minister for Immigration and Ethnic Affairs(1981) 36 ALR 598 at 601.
The Material Before the Tribunal
6.The following documentary evidence was before the Tribunal:
Exhibit 1 Documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (documents T1 – T33).
7. The Applicant was self-represented, but had the benefit of written submissions prepared on her behalf.
8. The Respondent lodged documents T1 to T33 under section 37 of the Administrative Appeals Tribunal Act 1975. These documents were taken into evidence and the Tribunal ascribed “Exhibit 1” to these documents for the purposes of these Reasons for Decision.
9. The Respondent was represented by Ms Suzy Dole a departmental advocate. The Respondent’s advocate provided a Statement of Facts and Contentions to the Tribunal.
10. The Tribunal considered carefully all of the documentary and oral evidence before it.
Evidence
11.The Respondent did not call any evidence.
12. The evidence in chief of the Applicant was to the following effect (taken from the written submissions provided on her behalf):
A.The Applicant was born on 14 September 1942 and is currently 63 years of age.
B.The Applicant moved to Australia in 2001.
C.The Applicant was injured in an accident on 8 December 2004 and received a compensation payment of $15,590.10 on 30 September 2005.
D.Centrelink imposed a compensation period of 11 weeks running from 8 December 2004 to 22 February 2005 and a charge of $1,616.62.
E.The Applicant was represented by a solicitor in her compensation claim and was informed that she could expect to receive about $40,000.00 to $60,000.00.
F.The Applicant requested an advance of $5,000.00 from her solicitors to pay rent of $1,000.00 and to move.
G.The Applicant suffered a small stroke in September 2005 and decided to accept the settlement offer of $15,000.00.
H.The Applicant received less than she had expected after payment of costs and repayment of the advance.
I.The Applicant expected to receive a greater amount of around $2,000.00 and had been hoping to return to her country of birth for Christmas but was unable to do so.
J.The Applicant suffers from several health problems. The Applicant has a long history of suffering from Bi-polar Affective Disorder, Diverticulitis and obesity.
K.Due to the Bipolar Affective Disorder she is unable to cope and to manage financially. The Applicant is unable to afford medication for her condition.
13.In her oral evidence in chief, the Applicant said:
A.Her fortnightly income was $319 (disability support pension) and $158 (United Kingdom pension).
B.Her sons had been paying her $40 per fortnight, but this had ceased.
C.Her fortnightly expenses amounted to rent ($117); electricity ($10); Centrelink debt repayments ($20); medication ($30); phone expenses ($50); transportation costs ($15) and food ($100 estimate).
D.The Applicant said that she owed debts to private creditors of approximately between $2,500 – $3,000.
E.The Applicant described her circumstances as very difficult, saying that she had been sick for 20 years, that she had had to pledge her jewellery to raise money in order to repay other debts (and that the collateral pledged had been lost because she had not been able to repay the debt).
14. In cross examination, it emerged that the Applicant had borrowed $5,000 as an advance on her expected compensation recoveries (on which she paid $760 interest). Of this $5,000, the Applicant paid private debts of $1,150, bought some essential whitegoods, bought some jewellery for $300, and spent $1000 on food. The Applicant said that after she settled her compensation claim against her former employer, she only ended up with $6,000 in hand (after deducting legal expenses).
15. The Tribunal accepted that the Applicant was a witness of truth. The Respondent did not challenge her credibility in cross-examination.
Issues
16.The issue in this case are:
A.Whether the Applicant is subject to a lump sum compensation preclusion period and consequential compensation recovery charge; and if so
B.Whether the preclusion period and compensation recovery charge have been correctly calculated; and if so
C.Whether the circumstances of the Applicant are special such as to require the secretary to take part or her lump sum compensation payment is not having been paid.
17. There was no contest between the parties that the first and second issues had been properly determined by the Respondent. For itself, the Tribunal was satisfied that this was a proper way of proceeding in the present case. This left the Tribunal free to concentrate on the third issue (compare Tuite v Allen (1993) 29 ALD 647 at 651).
Applicant’s Submissions
18.The submissions of the Applicant were as follows.
·Special Circumstances
In determining whether “special circumstances” exist there is a very broad discretion to consider the circumstances of the case.
The Full Court of the Federal Court considered the meaning of “special circumstances” in Beadle v Director-General of Social Security (1985) 60 ALR 225 at 228.
It is submitted that special circumstances exist in the Applicant’s case due to several factors relating to:
(a)ill health of the Applicant;
(b)financial hardship of the Applicant;
(c)the social condition and mental health of the Applicant.
·Ill-health
The Applicant suffers from debilitating conditions and requires medical treatment which she is unable to afford and access. Due to her medical and psychiatric conditions, the Applicant is unable to work in paid employment.
In Barrington and Secretary, Department of Employment and Workplace Relations [2005] AATA 1050, the Tribunal stated:
“It has been held in a large number of applications that ill health resulting in an incapacity to engage in paid employment is relevant to a finding of special circumstances.”
(See: Evergreen and Secretary, Department of Social Security (1983) 16 SSR 161; Re Kulacou and Secretary, Department of Social Security (1991) 63 SSR 879; Reuben and Secretary, Department of Social Security [1997] AATA 11879; Dean and Secretary and Department of Social Security (1997) 3 SSR 16
·Financial Hardship
The Tribunal stated in Re Allen and Secretary, Department of Family and Community Services (2000) 59 ALD 289 at 296:
“(32) Section 1184 of the Act simply refers to “the special circumstances of the case”. This can be contrasted to s 1237AAD of the Act which refers to the power to waive debts where “there are special circumstances (other than financial hardship alone) that make it desirable to waive”. Of s 1237AAD two points can be made, the first being that financial hardship can be taken into account along with other factors in assessing whether it is desirable to waive and, the second being that the difference in wording to s 1184 implied that financial hardship is itself a special circumstance for the purposes of s 1184.”
The Tribunal has stated that it is inappropriate for a system of social security to require people, through misfortune, to take “a one way ticket to poverty” (Secretary Department of Social Security and VHS (1995) 50 ALD 745; noted at paragraph 18 in Secretary, Department of Security and Hickman).
It is submitted the Applicant is in financial hardship that goes beyond mere “straitened”.
Although the Applicant receives social security benefits, she has many debts, lacks basic items of furniture and has necessary medical expenses which she cannot afford.
Due to her condition of Bipolar Affective Disorder, the Applicant is unable to manage financially. Her expenditure also needs to be viewed in the context of the Applicant’s mental health and social conditioning.
In Thomas and Secretary, Department of Family and Community Services [2003] AATA 842, the Tribunal considered the expenditure by the Applicant of his settlement monies, including financing a spray painting business.
The Tribunal accepted considered the Applicant had been “reckless” and in “a mess of his own making” but then stated at paragraph 16:
“That is not the end of the matter, however. Even the foolish and the profligate must be protected in appropriate circumstances.”
Mental health and social conditioning
As was stated by Einfield J in Secretary of the Department of Social Security v Thompson 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.”
The Applicant suffers from a debilitating psychiatric condition that greatly affects her ability to cope.
The Applicant submits that the factors in her case amount to special circumstances and that strict enforcement of the sections of the Social Security Act 1991 would be unjust, unreasonable or otherwise inappropriate.
In Secretary, Department of Social Security v Thompson, Einfield J said in calculating the appropriate reduction under the Act:
“Intuitive justice will often be as fair a criterion and as faithful to the legislative intention as any other approach.”
In determining the appropriate adjustment to be made, it is not necessary to precisely calculate a figure, but to consider all of the relevant facts and circumstances: (see Barrington and Secretary, Department of Employment and Workplace Relations).
Respondent’s Submissions
19.The submissions of the Respondent were these:
The relevant provisions are contained in the Social Security Act 1991 (‘the Act”).
As Ms Rice’s personal injuries settlement included a component for economic loss, it is a lump sum to which subsection 17(2) and Part 3.14 of the Act applies. Under subsection 17(3) of the Act, 50% of the total lump sum received by Ms Rice is deemed to be the “compensation part of the lump sum” payment. In this case, that amount is $7,795.05.
Under Part 3.14 of the Act, where a person received a lump sum compensation payment, they will be subject to a lump sum preclusion period. The length of the preclusion period is calculated as follows (see section 1170(4)):
Compensation Part of the Lump Sum ÷ Income Cut-Out Amount
In this case, the income cut-out amount (or divisor) which applies is $680.38 (see T16, folio 50). When the compensation part of Ms Rice’s lump sum payment $7,795.05) is divided by $680.38, a preclusion period of 11 weeks results (see section 1170(5)). Under section 1170(3), this preclusion period is taken to begin on the day on which the loss of earnings or loss of capacity to earn began – that is, on the date of the accident. Therefore, the preclusion period in this case commences on 8 December 2004 and ends on 22 February 2005.
The Secretary contends that the preclusion period in this case has been properly calculated under Part 3.14 of the Act.
Under section 1169(1) of the Act, a person is not entitled to receive a “compensation affected payment” on any day or days in the lump sum preclusion period.
During the period 8 December 2004 to 22 February 2005, Ms Rice received social security payments in the form of a Disability Support Pension (“DSP”). DSP is a “compensation affected payment” under section 17(1) of the Act. The amount of DSP paid to Ms Rice during the preclusion period is a recoverable amount by virtue of sections 1178 and 1179 of the Act.
The Secretary therefore contends that Centrelink has correctly calculated the amount of the compensation charge in this case – that is $1,616.62, which represents the amount of DSP paid to Ms Rice between 13 December 2004 to 22 February 2005.
The main issue in this case is whether there are “special circumstances” which warrant the preclusion period being shortened. Where there are “special circumstances” in a particular case, section 1184K(1) allows the Secretary to treat part or all of the compensation monies has having not been made, thereby reducing the length of the preclusion period.
The Act does not define ‘special circumstances’ however it has generally been accepted as being circumstances which are “unusual, uncommon or exceptional” which make the case “markedly different from the usual run of cases” (see Re Beadle and Director-General of Social Security(1984) 6 ALD 1).
The Secretary contends that the discretion to treat all or part of the compensation monies has having not been received, under section 1184K, should be considered in the context of the scope and purpose of the compensation provisions of the Act, and ought not be exercised in a manner calculated to frustrate legislative intent: Re Ivovic (1981) 3 ALN N95.
The intent underpinning the relevant compensation provisions in the Act is that those who receive a lump sum compensation payment are expected to support themselves from their own available resources for a period before seeking support from the taxpayer. In Re Secretary Department of Social Security and Winterbotham (unreported, DP Burns, 11 December 1990), the Tribunal observed:
“This particular piece of legislation…. was aimed specifically at preventing those people receiving compensation for loss of income because of incapacity for work, from being able also to receive benefit from the public purse….. Primary responsibility for the payment of such compensation lies at the feet of those responsible for the compensable injury. Once that responsibility has been met, by way of a settlement sum agreed to by both parties, it is inequitable for the recipient to seek supplementary funds from the tax-payment.”
The Secretary submits that Ms Rice’s circumstances are not “unusual, uncommon or exceptional” for the following reasons:
Ms Rice and her lawyers were notified by Centrelink of the likely imposition of a preclusion period and compensation charge prior to her accepting the settlement in this case;
Ms Rice’s lawyers were provided with estimates of the preclusion period and charge amount prior to reaching a settlement in the personal injuries claim.
It has long been accepted that the component in a lump sum representing legal costs should properly be treated as part of the lump sum when applying the 50% rule in section 17(3) of the Act, rather than calculating the compensation part of the lump sum on the basis of the monies actually received by the claimant after all costs have been paid.
Whilst ill health can constitute a “special circumstance”, the condition for which a person was compensation is not a relevant factor which can be considered a special circumstance (see, Re Secretary, Department of Family and Community Services and Zugul[2005] AATA 425 at par 16);
To qualify as “special circumstances”, financial hardship must go beyond straitened circumstances to be truly exceptional: see Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690 and Re Zaccardi and Secretary, Department of Social Security (1995) 40 ALD 760. This is because social security recipients will usually have one thing in common – they will be impecunious and in straitened circumstances. The Secretary contends that Ms Rice’s financial circumstances are not sufficiently exceptional such as to amount to ‘special circumstances’;
As stated in Re Guerrero and Secretary, Department of Social Security (unreported, AAT No 9603, 29 June 1994) (at par 21):
“…. An award of damages is not a windfall but is, to put the Applicant in the same place he would have been had the injuries not been received.”
The Secretary, therefore, contends that this is not a case in which the discretion to disregard part or all of the compensation monies received should be exercised.
Findings of Fact
20. Based upon the evidence before it, the Tribunal makes the following findings of fact:
A.The Applicant was born on 14 September 1942 and is currently 63 years of age.
B.The Applicant moved to Australia in 2001.
C.The Applicant was injured in a work-related accident on 8 December 2004 and received a compensation payment of $15,590.10 on 30 September 2005.
D.Centrelink advised both the Applicant's lawyers as well as to the Applicant herself on 31 January 2005 informing them that any receipt of a compensation payment by the Applicant may affect her future and passed Social Security entitlements.
E.On 16 September 2005 (in response to a request made on 15 September 2005), Centrelink advised the Applicant and her lawyers 2 estimates of preclusion periods (which varied according to the settlement amounts advised on behalf of the Applicant).
F.The Applicant made a claim for compensation, and was awarded a lump sum amount of $15,590.10.
G.The Applicant suffered a small stroke in September 2005 and decided to accept the settlement offer of $15,000.00.
H.The Applicant received less than she had expected after payment of costs and repayment of the advance.
I.Centrelink imposed a compensation period of 11 weeks running from 8 December 2004 to 22 February 2005 and a compensation recovery charge of $1,616.62. Centrelink advised the Applicant and her lawyers about these decisions on the 11 October 2005.
J.The Applicant requested an advance of $5,000.00 from her solicitors to pay rent of $1,000.00 and to move.
K.The Applicant suffered a small stroke in September 2005 and decided to accept the settlement offer of $15,000.00.
L.The Applicant received less than she had expected after payment of costs and repayment of the advance.
M.The Applicant requested a review of this decision.
N.On 23 November 2005 the original decision-maker reviewed her decision and affirmed it.
O.On 29 November 2005 an Authorised Review Officer affirmed the previous decisions.
P.The Applicant appealed to the Social Security Appeals Tribunal on 8 December 2005.
Q.On 23 January 2006 the Social Security Appeals Tribunal affirmed the Centrelink decisions below.
R.On 16 February 2006, the Applicant appealed to this Tribunal.
The Legislation
21. According to Secretary, Department of Employment & Workplace Relations v Homewood [2006] FCA 779 at [29], section 17(1) of the Act defines the term a “compensation affected payment” to include a disability support pension. Section 1169(1) of the Act provides that a compensation affected payment is not payable during a lump sum preclusion period. This preclusion period is calculated in accordance with section 1170 of the Act (see also Secretary, Department of Employment and Workplace Relations and Carabott [2006] AATA 79 at [5]).
22.The salient provision of the Act on which this appeal turns is section 1184K;
“1184K (1) For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:
(a) not having been made; or
(b) not liable to be made;
if the Secretary thinks it is appropriate to do so in the special circumstances of the case.”
23.Section 1184K(2) was not relevant to the circumstances of this appeal.
24. The machinery for the operation of preclusion periods was identified and summarised by
Tribunal’s Reasons
25. The relevant legislation is contained in the Social Security Act 1991, the material portions of which have been extracted above.
26. In Secretary, Department of Employment & Workplace Relations v Homewood [2006] FCA 779 at [34], French J explained the methodology associated with the exercise of the special circumstances discretion contained in section 1184K of the Act in these terms:
1.Identify the circumstances of the case which it found to be ‘special’ and the reasons for which it arrived at that finding.
2.Explain why, in the special circumstances so found, it thought it appropriate to treat the whole or part of the compensation payment as not having been made.
3.Explain why it selected the particular quantum (ie the whole or part) of the compensation payment as not having been made.
27. Whether any particular set of circumstances attracts the epithet "special" is a question of fact (see Homewood [2006] FCA 779 at [35]). "Special circumstances" is used within income support law at various points in which to cushion or temper the exercise of a discretion relating to a power or liability in order to signify or demarcate a particular threshold of circumstances particular to income support recipients where the adjudication of a decision must take place. Apart from section 1184K of the Act, "special circumstances" is also deployed in debt waiver provision such as section1237AAD of the Act and section 101 of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (compare Order 52 r 15(2) the Federal Court Rules which uses the cognate expression “special reasons”).
28. In Re Beadle and the Director-General of Social Security (1984) 6 ALD 1 it was said that "... ‘special circumstance’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional." In the appeal [(1985) 60 ALR 225], it was said that "...special circumstances must include events which would render [a happening or eventuality]... unfair or inappropriate... We did not think it is possible to lay down precise limits or precise rules... The phrase ’special circumstances’ although lacking precision, is sufficiently understood in our view not to require judicial gloss".
29. In Green and Secretary, Department of Social Security (1990) 21 ALD 772, this Tribunal collected a series of factors that it thought provided guidance concerning the exercise of the discretion conditioned upon the predicate of "special circumstances" in what is now Section 1184 of the Act. The Tribunal said:
“In Ivovic v Director General of Social Services 3 ALN N95 the Tribunal identified a number of principles which could be applied in deciding whether special circumstances existed to warrant the exercise of the discretion contained in s156 of the Act. In that decision, which concerned the liability of the Applicant to repay an amount of sickness benefit paid to him, the Tribunal commented at N97.
·the use of the word "special" is "intended to allow the decision maker the fullest opportunity to consider the particular circumstances of each case";
·"hardship is a relevant consideration" but regard must be had to the way in which the hardship arose;
·there must exist "factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes";
·the decision maker must have regard to whether, by exercising the discretion in a particular case he/she will be "achieving or frustrating ends or objects which are conformable with the scope and purpose of the Social Security Act"; and
·"the decision maker must be prepared to respond to special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate."
30. The principles set out in Ivovic were approved by the Administrative Appeals Tribunal in Kryzywak v Secretary Department of Social Security 15 ALD 690 which has been followed generally by the Tribunal.
31. The Federal Court of Australia said in Trimboli v Secretary, Department of Social Security(1989) 86 ALR 64:
“The discretion [in provisions such as section 1184K of the Social Security Act 1991 and its previous equivalent provisions] is extremely broad and which is not to be confined, save in accordance with usual principles, namely, that it is to be exercised bona fide and for the purposes for which the discretion is conferred, such purposes being determined by reference to the policy and purpose of the Social Security Act: cf Giris Pty Ltd v FCT (1969) 119 CLR 365 at 384.”
32. Later in Groth & Department of Social Security (1995) 37 ALD 797 it was stated:
"...[Special circumstances] would require something to distinguish... [the] case from others, to take it out of the usual or ordinary case ... it would of course follow that if one were to conclude that something unfair, unintended, or unjust had occurred that there must be some feature out of the ordinary".
33. In Dranichnikov v Centrelink [2003] FCAFC 133, the Federal Court held at [66] that for a finding of special circumstances to be made (or for “special reasons” to exist):
"...what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary..."
34. In Dranichnikov v Centrelink [2003] FCAFC 133, Hill J (Kiefel & Hely JJ concurring) said the following concerning the “unusual, uncommon or exceptional” gloss:
“[65] The Full Court in Beadle comprising Bowen CJ, Fisher and Lockhart JJ, however, was of the view that it was not possible to lay down precise rules as to what constituted special circumstances under the then s 102(1)(a) of the Social Security Act 1947 (Cth). Their Honours point out that the question whether there were special circumstances was one for the decision maker (in that case the Director-General) bearing in mind the purpose for which the power was given. The reference to the first instance decision from which the words “unusual, uncommon or exceptional” come was not actually affirmed by the Full Court.”
35. A similar observation was made by Branson J in Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 at [25]. The Dranichnikov approach seems to represent a retreat from the position Hill J took in Haidar v Secretary, Department of Social Security (1998) 28 AAR 288 (see also Kertland v SDFaCS (1999) 95 FCR 64).
36. The explanation of the “unusual, uncommon or exceptional” trilogy made by the Full Court of the Federal Court in Dranichnikov v Centrelink does not appear to have affected or limited the use of this particular trilogy by this Tribunal (see for example, Secretary, Department of Family and Community Services and Danielsen-Jensen [2004] AATA 1319 and Secretary, Department of Family and Community Services and SRKKKK [2005] AATA 480) and by the Federal Court (see Ubachs v Secretary of the Department of Family & Community Services [2004] FCA 310 and Jazazievska v Secretary Department of Family & Community Services [2000] FCA 1484). The Groth formula (which has also enjoyed wide citation in income support law: see Secretary, Department of Employment and Workplace Relations and Carabott [2006] AATA 79; McAliney and Secretary, Department of Family and Community Services [2005] AATA 96 and Strang and Secretary, Department of Employment and Workplace Relations [2006] AATA 51), with respect, should also be seen as an attempt to paraphrase "special circumstances". This Tribunal is of the view that these paraphrases cannot supplant the statutory language, while at the same time recognising that these paraphrases elucidate the meaning of the statutory language.
37. The clear thrust of some of the authorities discussed above (see in particular Dranichnikov v Centrelink [2003] FCAFC 133 and Ryde v Secretary, Department of Family and Community Services) is that "special circumstances" should not be interpreted according to synonyms (and in particular not confined by these). The Tribunal considers that the clear and ordinary meaning of the words "special circumstances" is the meaning that should be assigned to them. The Tribunal also considered that it is important not to approach "special circumstances" against an a priori set of established factual circumstances or recurring factual patterns which have been recognised in the authorities as supporting or generating special circumstances, or which in fact exclude special circumstances (compare Dranichnikov v Centrelink [2003] FCAFC 133 at [67] and Green and Secretary, Department of Social Security (1990) 21 ALD 772). Accordingly, for any adjudicator to state or conclude that special circumstances precludes the exercise of a power and discretion under section 1184K simply because the circumstances of an income support recipient are commonplace is to misconceive and misapply the provision.
38. The Tribunal took into account that the “special circumstances” power in section 1184K of the Act was included to prevent injustice flowing from the imposition of an arbitrary 50% rule concerning the calculation of the length of the preclusion period stemming from economic loss (see especially Kertland v SDFaCS (1999) 95 FCR 64 per Merkel J at [15]).
39.The Tribunal took into account the following circumstances and factors:
A.The Applicant received a relatively low amount in settlement of her workers compensation claim, namely $15,590.10;
B.The Applicant needed to borrow money from her solicitors as an advance against her expected workers compensation settlement sum to pay some of her private expenses;
C.The Applicant received a much lower than expected workers compensation settlement sum;
D.The mental health of the Applicant and the fact that she cannot afford all of the medication she requires to manage her mental health;
E.The level of her private debts ($2,500 – $3,000);
F.The fact that the Applicant did not waste her net amount of the workers compensation settlement sum (estimated at $6,000). The Applicant has not been foolish or profligate (people exhibiting these traits are in some cases deserving of protection: compare Thomas and Secretary, Department of Family and Community Services [2003] AATA 842).
40. In the opinion of this Tribunal, the circumstances of the Applicant disclose that she is in financial distress, that she suffers from medical and mental health problems which qualify her for disability support pension and also which affect her financial management skills, and pension is subject to a relatively small preclusion period (11 weeks). The circumstances of the Applicant take her outside of the ordinary run of cases. Accordingly, the circumstances of the Applicant are "special circumstances" within the meaning of section 1184K.
41. The next step for this Tribunal is to determine whether it is the whole or part of the compensation payment which should be treated as not having been made. The Tribunal proceeded as follows. First, the preclusion period is relatively small (11 weeks) and so the impact on the public purse is also relatively small. Secondly, the Applicant received only approximately $6,000 net in the hand from the amount of her workers compensation settlement sum, hardly an extravagant amount for a personal injury claim. Thirdly, the Applicant’s expenditure of her $6,000 went on personal expenditure that cannot be considered foolish, extravagant or prolifigate. Fourthly, the Applicant is in financial distress. Accordingly, for these reasons the Tribunal considers that the whole of the compensation payment should be treated as not having been made.
42. The third step (and for the sake of clarity) requires the Tribunal to explain why it selected the whole of the compensation payment is not having been made instead of just part. The Tribunal considers that a combination of the financial circumstances of the Applicant and the relatively small preclusion period (11 weeks) make it undesirable to dissect the preclusion period into operable and non-operable components.
Tribunal’s Conclusion
43. Based upon the material before it, and for these Reasons, the Tribunal concludes that the correct or preferable decision is that the decision under review should be set aside and substituted with a decision that there is no preclusion period.
Tribunal’s Order
44. The Tribunal sets aside the decision under review and in substitution for that decision determines that pursuant to section 1184K(1) of the Social Security Act 1991:
(1)special circumstances exist in this matter; and
(2)the whole of the compensation payment is to be treated as not having been made; and
(3)in the absence of any compensation payment having been made, a preclusion period does not exist; and as such
(4)compensation affected payments cannot be recovered by the Respondent, and in the event that such payments have been recovered they are to be repaid to the Applicant;
(5)the Respondent is entitled to its compensation recovery charge of $1,616.62.
I certify that the 44 preceding paragraphs are a true copy of the reasons for the decision herein of Member SC Fisher, Member
Signed: Ben Christoffel
Legal Research Officer
Date/s of Hearing 3 August 2006
Date of Decision 6 September 2006
The Applicant was self-represented
For the Respondent Ms S Dole, Departmental Advocate
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