ZZXM and CEO, National Disability Insurance Agency - [2024] ARTA 24

Applicant/s:  ZZXM
Respondent:  CEO, National Disability Insurance Agency
Tribunal Number:                2022/0163; 2024/1513

Tribunal:Senior Member K Bean
Place:Sydney
Date:21 November 2024

Decision:

In Application 2022/0163, the Tribunal affirms the decision under review.
In Application 2024/1513, the decision under review is varied such that, pursuant to s 116 of the National Disability Insurance Scheme Act 2013, part of the compensation payment received by the Applicant is to be treated as not having been fixed by the settlement. The amount which is to be treated as not having been fixed by the settlement is the amount which would result in the amount repayable to the Respondent being reduced from $449,540.71 to $150,000.
..............[SGD]...............................................
Senior Member K Bean
CATCHWORDS
NATIONAL DISABILITY INSURANCE SCHEME – past NDIS amounts recoverable from lump sum compensation received by participant – whether recoverable amount is correct – special circumstances – whether special circumstances exist – decision under review varied
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
National Disability Insurance Scheme Act 2013 (Cth)
National Disability Insurance Scheme (Supports for Participants - Accounting for Compensation) Rules 2013
CASES
Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9
Beadle and Director-General of Social Security [1984] AATA 176.
Department of Social Security v Smith [1991] 30 FDCR 56
Kirkbright v Department of Family and Community Services [2000] FCA 1876
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866
Secretary, Department of Family and Community Services v Chamberlain 68 ALD 357
Statement of Reasons
INTRODUCTION
The Applicant is a 34-year-old woman who suffered serious injuries after falling over 3 metres to the ground from a balcony when the railing of the balcony suddenly gave way in late 2011. As a result of this accident, she sustained “crush fractures to her C5 and C6 cervical vertebrae, injury to her right hip secondary to bone graft and psychiatric injury”.[1] Her spinal cord injuries were extremely serious and have resulted in quadriplegia. She became a participant in the National Disability Insurance Scheme (NDIS) on 13 March 2017.[2]
[1] T Documents at T3, 137 and T27, 255.
[2] T2, 133..
Given the circumstances of her injuries, the Applicant brought personal injury proceedings against those responsible and that action was ultimately settled for the sum of $3m in 2020.
Prior to that settlement, the Applicant had accessed supports under the NDIS to the value of $449,540.71 and that amount would ordinarily be recoverable from the settlement by the Respondent (the Agency) under the applicable provisions of the National Disability Insurance Scheme Act 2013 (the NDIS Act). The main issue before the Tribunal is whether that recoverable amount should be reduced due to the “special circumstances” of the Applicant’s case.
PROCEDURAL HISTORY
On 13 May 2021, the Agency issued a recovery notice to the relevant insurer requiring them to pay $449,540.71 of the overall settlement amount of $3m to the Agency, representing amounts paid by the Agency to the Applicant under the NDIS.[3] On 12 May 2021, the Agency also issued an invoice to the Applicant for the same amount.
[3] T1C, 125.
On 11 June 2021, the Applicant submitted a Special Circumstances Application to the Agency, contending that the amount repayable to the Agency should be reduced.[4] However, on 25 June 2021, the Agency advised the Applicant, through her lawyers, that the Special Circumstances Application had been unsuccessful.[5]
[4] T21, 188-191.
[5] T22, 198-202.
On 31 October 2021, the Applicant wrote to the Agency challenging the correctness of the figure reflected in the recovery notice and it appears the Agency construed this as a request for review of the decision to issue a recovery notice,[6] although it was sent in response to an inquiry about her special circumstances request. On 23 December 2021, the Agency notified the Applicant that a delegate had affirmed the decision to issue a recovery notice,[7] and the Applicant then applied to this Tribunal for review of that decision,[8] giving rise to Application 2022/0163.
[6] T1D, 128-129.
[7] T1A, 7-10.
[8] T1, 1-6.
Subsequently, the Applicant submitted a fresh application for special circumstances, ultimately resulting in an internal review decision of 7 August 2023 confirming the previous decision that special circumstances did not apply. However, no application to the Tribunal for review of that decision was made at that time.
Before continuing I should acknowledge a complication which arises in this matter with respect to the recovery notice issued to the insurer. Unusually, despite the issue of that notice requiring the recoverable amount to be withheld from the settlement proceeds and forwarded to the Agency, that did not occur. Strictly speaking therefore, requests for review directed to that recovery notice were somewhat moot. However, as noted above, the Agency also issued an invoice to the Applicant for the recoverable amount, and there is no doubt she is separately liable for that amount.[9] For abundant clarity, I consider it appropriate to construe the Applicant’s request for review and the resulting decision of 7 August 2023 as each relating to a decision not to reduce the recoverable amount payable by the Applicant herself by reason of special circumstances, pursuant to s 116 of the NDIS Act.
[9] See ss 107 & 108 of the NDIS Act.
This matter was first listed for hearing on 12 March 2024. However, at that hearing it became apparent that the decision the Applicant wished to challenge was the decision not to reduce the recoverable amount by reason of special circumstances, rather than the decision to issue the recovery notice. Accordingly, that hearing was adjourned to give the Applicant an opportunity to lodge an application for review of the decision of 7 August 2023, which she subsequently did. An extension of time was granted with respect to that application, which became Application 2024/1513.
A final hearing was ultimately held on 4 September this year. The Applicant was self-represented, and the Respondent was represented by Mr Mark Cleary of Counsel. At that hearing, it was agreed that the decision under review in Application 2022/0163 could appropriately be affirmed as, although the decision the subject of that application was a reviewable decision, the Applicant now conceded that the recoverable amount was correctly calculated and there were no other apparent grounds to challenge the decision to issue the recovery notice, which was not actioned by the insurer in any event. It was agreed the real issue between the parties was whether the amount sought to be recovered should be reduced by reason of special circumstances, being the issue dealt with in the reviewable decision of 7 August 2023, the subject of Application 2024/1513.
I will first explain the legal framework before identifying the issues with more precision.
STATUTORY FRAMEWORK
The term “compensation” as it applies in this context is defined in s 11 of the NDIS Act as follows:

Definition relating to compensation
(1) In this Act:
compensation means a payment (with or without admission of liability) in respect of:
(a) compensation or damages in respect of personal injury; or
(b) personal injury, under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or
(c) personal injury, in settlement of a claim for damages or a claim under such an insurance scheme;
that is wholly or partly in respect of the cost of supports that may be provided to a participant (whether or not specifically identified as such). It does not matter whether the payment is made directly to the person who sustained the personal injury or to another person in respect of that person.
Section 107 of the NDIS Act also provides that where an NDIS participant receives compensation under a consent settlement and, before the date of the consent settlement, the participant had received supports under the NDIS, then the total of those past NDIS amounts is recoverable by the Agency from the participant (unless this amount is reduced pursuant to s 107(3) or (4), neither of which are applicable here).
However, of particular relevance for this matter, s 116 of the NDIS Act provides that the CEO may treat the whole or part of a compensation payment as not having been fixed by a settlement, if the CEO considers it is “appropriate to do so in the special circumstances of the case”.
In practical terms therefore, past NDIS amounts will generally be recoverable from a personal injury settlement relating to an injury which caused or contributed to a participant’s impairment/s. However, the recoverable amount may be reduced pursuant to s 116 where the CEO, or the Tribunal standing in the CEO’s shoes, is satisfied there are special circumstances.
CALCULATION OF THE RECOVERABLE AMOUNT
As noted above, the correctness of the recoverable amount of $449,540.71 as calculated by the Agency is no longer in dispute. That amount represents the value of supports provided to the Applicant under the NDIS from when she became a participant on 13 March 2017 until the date she settled her personal injury action, being 13 August 2020.[10]
[10] T1B, 11-124.
I am satisfied this amount was correctly calculated and the decision of 23 December 2021 the subject of Application 2022/0163 should be affirmed (albeit it was not complied with by the insurer in any event).
That leaves the issue of whether the recoverable amount should be reduced by reason of “special circumstances” pursuant to s 116 of the NDIS Act.
SHOULD THE RECOVERABLE AMOUNT BE REDUCED BY REASON OF SPECIAL CIRCUMSTANCES?

What are “special circumstances”?
What constitutes special circumstances is explained further in the relevant Operational Guidelines, the Compensation Operational Guidelines – Special Circumstances, by reference in part to how this phrase has been construed in the context of administration of the social security law. I accept that to be “special”, the relevant circumstances must be “unusual, uncommon or exceptional”, and the financial circumstances of a participant alone will not necessarily be sufficient.[11] The Operational Guidelines also specify that neither a participant’s disability nor a decision to accept a lower amount due to the risks of litigation will necessarily constitute special circumstances in the relevant sense.[12]
[11] Beadle and Director-General of Social Security [1984] AATA 176.
[12] Compensation Operational Guidelines, 13.2.2.
In Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9, Besanko J referred to various authorities discussing an analogous provision. After referring to some observations of Branson J in Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, he commented (at [33]):
“I note her Honour’s reference to the Tribunal in the case before her probably overstating the test. I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word ‘exceptional’ is emphasised. It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.”
Although it is not possible to devise an exhaustive list, factors which may constitute or contribute to special circumstances include financial hardship, fraud, the circumstances of the compensable event, errors by others and incorrect or insufficient legal advice. It is also clear from the case law in the social security context that significant injustice or unfairness arising from the application of the statutory formula has been found to amount to a special circumstance such that a strict application of the statutory formula is inappropriate and should be ameliorated in the circumstances of a particular individual.[13]
[13] Department of Social Security v Smith [1991] 30 FDCR 56; Kirkbright v Department of Family and Community Services [2000] FCA 1876.
In Kirkbright & Secretary, Department of Family and Community Services [2000] FCA 1876, Mansfield J was reviewing a decision in which the Tribunal had concluded that unfairness in the operation of the applicable recovery provision did not give rise to “special circumstances” pursuant to s 1184 of the Social Security Act 1991, given the perceived legislative intent that a compensation recipient exhaust their available funds before claiming social security benefits. His Honour found this approach to be in error, relying in part on the earlier decision of Von Doussa J in Smith where his Honour considered the operation of similar provisions in the Social Security Act 1947 (at [22]):
“In my view, that misapprehension of the legislative policy has influenced the Tribunal into excluding from consideration unfairness in the strict application of the legislation as possibly demonstrating that special circumstances exist in the applicant's case. Indeed, in my view, s 1184 is designed specifically to enable the respondent, and on review the Tribunal, to ameliorate such unfairness or injustice when it appears by virtue of the strict application of the Act. That view was effectively expressed by von Doussa J in Smith at 61:
"The arbitrary nature of the provisions of s 152 would have been quite apparent to the legislature. The "50 per cent rule" in s 152(2)(c)(i), and the other provisions to which I have referred, are intended to operate together as a fair balance of the interests of the recipient of the payment with the competing interests of others in the community whose needs must be met as far as possible from a finite budget allocation for social security measures. As I observed in Banks (at 424) it is in the very nature of an arbitrary provision that it can entail a degree of unfairness in a particular case. The scheme of Pt XVII recognises that perfect matching of eligibilities by dollar amounts or by periods of time for pension and for payments by way of compensation in respect of an incapacity for work is impracticable. 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 Pt XVII before the "50 per cent 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 per cent rule" produces a clearly unjust result. Before the 1988 amendment there were other provisions in Pt XVII, the strict application of which could operate in an arbitrary way. By its terms the discretion given by s 156 may be exercised where the Secretary (or a body standing in the place of the Secretary on appeal) "considers it appropriate to do so in the special circumstances of the case". These are wide words intended, as the Tribunal in Ivovic pointed out, "to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case".
I note that his Honour's reference to ss 152 and 156 in the Social Security Act 1947 (Cth) can now be taken as applying to s 1165 and s 1184 of the Act respectively.”
I acknowledge that the circumstances of this matter can be distinguished from cases such as Kirkbright and Smith to the extent that the arbitrariness described in those cases is not present with respect to the amount derived under s 116. As discussed above, that amount reflects the actual amounts received by the Applicant under the NDIS rather than a deemed figure derived by application of a statutory formula. Nevertheless, consistently with observations made in these and other cases, the concept of “special circumstances” is intended to be broad. In my view it is wide enough to capture unfairness or injustice resulting to a particular participant from recovery of the total amount calculated under the legislation.
Indeed, as noted by Justice Mansfield in Kirkbright, the existence of a provision such as s 116 is an express acknowledgment that a strict application of the statutory formula will be inappropriate in some cases. It is also significant in my view that the discretion in s 116 will necessarily apply in circumstances where the amount sought to be recovered is the amount received by the participant for past NDIS supports. The existence of the discretion contained in s 116 is an acknowledgement that it will not always be appropriate to recover the full amount paid for past NDIS supports, notwithstanding the calculation of the recoverable amount is not arbitrary.
For completeness, I should also acknowledge that Von Doussa J’s decision in Smith was distinguished in Secretary, Department of Family and Community Services v Chamberlain 68 ALD 357. In that case her Honour Justice Kiefel held that the unfair application of the statutory formula could not “by itself” amount to a special circumstance, as this factor will be “present in most cases”.[14] However, she nevertheless acknowledged the correctness of the reasoning in Smith on the facts of that case.[15]
ARE THERE SPECIAL CIRCUMSTANCES HERE?

[14] At [33].
[15] At [32].
Circumstances relied upon
The Applicant has put forward a range of matters in support of her contention that her circumstances are “special” in the relevant sense. The facts and circumstances relied on include:
(a)For complex and unusual reasons, her personal injury matter was ultimately settled for much less than the full value of the claim. These factors included the impact of the action and negotiations on her family relationships and her own health, and the impact of the COVID pandemic on her action and the manner in which settlement negotiations were conducted;
(b)The legal advice she received with respect to her personal injury action was inadequate;
(c)The Applicant’s health is worsening, her ability to work is reducing and she was recently made redundant. Unless the amount to be recovered from her settlement is reduced, she is at grave risk of suffering financial hardship in the future;
(d)She needs to purchase a home which meets her disability-related needs. Unless the amount deducted from her settlement is reduced, the Applicant will not be able to afford to do this, and have sufficient funds remaining to support herself; and
(e)She faces additional costs related to living with a spinal cord injury that are not covered by the NDIS.
I also propose to address an additional issue I raised at the hearing, namely the potential impact on the Applicant of the likely application of a Compensation Reduction Amount to her future NDIS plans.
I will address each of the above matters in turn before considering whether any of them, individually or in combination, amount to special circumstances in the relevant sense.
The circumstances surrounding and leading to the settlement
The circumstances surrounding the Applicant’s personal injury action were complex and somewhat unusual.
The Applicant sustained her injury on Christmas Day 2011.[16] On that day she was at a property owned by her mother’s partner for a family gathering. She and two of her sisters were leaning on the handrail of a verandah of a house on the property when the handrail suddenly gave way and she fell about 3 metres to the ground, suffering catastrophic injuries as a result. The main reason the handrail gave way was that her mother’s partner (and the owner of the property) was wrestling with the Applicant’s brother, causing him to hit the handrail with some force.
[16] T21C, 192.

The Applicant’s personal injury action was commenced against her mother’s partner, who referred the claim to his insurers seeking indemnity from them for the claim. However, the claim for indemnity was denied and subsequently disputed by the insurer. The extent to which the insurer (and second defendant) was liable became a critical issue in the proceedings as the primary defendant had limited assets. He had apparently suffered significant losses in bushfires on his property in November 2019 and would not have been able to meet any judgement obtained by the Applicant.[17]
[17] T21C, 193.
The indemnity issue was complex as, for reasons unnecessary to explore here, the insurer contended the first defendant was not covered by domestic building cover.[18]
[18] T21C, 195.
The damages originally sought by the Applicant were particularised and totalled over $18m.[19] However, as alluded to above, the matter ultimately settled for a fraction of that sum, namely $3m inclusive of legal costs,[20] with no admission of liability.
[19] T7, 162.
[20] T27, 254.
In her oral evidence, the Applicant explained the intensely stressful circumstances in which this settlement was arrived at.
She explained that a conference in the nature of a mediation event was convened by the Court with herself, both defendants and the legal representatives of all parties being present. As this occurred during the relatively early days of the COVID pandemic, the conference was convened by telephone, although from her point of view this did not proceed smoothly, and it was apparent those participating were not accustomed to attending events of this kind by telephone.
The Applicant said that during the conference the convenor periodically separated the participants remotely into their respective groups and brought them back together as required, although there was not a great deal of discussion at any point during the conference. Based on what she had been told beforehand, she had expected the event to be quite lengthy with lots of discussion taking place before any decision was made, but this did not prove to be the case. She had the impression the event was truncated partly because it was taking place by phone.
The Applicant further explained that she was alone at her home during the conference. There was no-one with her to support her during the process or talk to during breaks. She found this conference intensely stressful and broke down while describing it during her evidence.
From the Applicant’s point of view, a point was reached very quickly during this process at which she was presented with an offer from the defendants of $3m and required to decide whether to accept this amount or proceed with the litigation. She was somewhat shocked by this as, prior to the conference her lawyers had advised her that she should not settle for less than $8-9m.
Aside from the difficulties associated with this process being conducted by telephone and having no-one present to support her, there were other factors which the Applicant said put her under immense emotional stress during this conference.
As I have already alluded to, the property owner and first defendant was her mother’s then partner, whom one of her sisters had grown up seeing as her father. Part of the background and context of this settlement conference was that the Applicant was aware this litigation was putting numerous family members and family relationships under intense stress. She explained she had been made aware by her sister that because of the litigation the first defendant was under a great deal of financial strain. She understood he was going into debt to pay his lawyers; his health was deteriorating, and it was likely he would not be able to continue paying his lawyers if the litigation continued. The Applicant’s sister who had grown up seeing the defendant as her father was very upset by this, and the Applicant understood the situation was also putting a great deal of stress on her mother, and strain on the relationship between her mother and the defendant (which did subsequently break down).
By this stage, the Applicant explained, the litigation had already been going on for 7 years and she was also finding it increasingly difficult having to constantly focus on and talk about the circumstances of the accident and its impact upon her for the purposes of the litigation. She said her lawyers did not really provide much guidance to her as to whether she should accept the offer of $3m. She clearly understood that if she did not accept this offer, she would have to proceed. There was apparently no discussion about making a counteroffer, presumably because the defendants had made it clear no higher amount would be offered or agreed to. She said her lawyers told her they wanted to keep going with the litigation, though they could not guarantee it would be successful. They said it was her decision whether she wanted to accept the offer or keep going and did not make any recommendation.
The Applicant explained it was in these circumstances that she ultimately made the decision to capitulate and accept the $3m offered, thus bringing the litigation and the ongoing stress on her and her family to an end. She acknowledged that when she settled the matter, she was aware there would be an amount repayable to the Agency, although she believed at the time that the amount would be about $50 000 less than it ultimately was.
In my view, not all the circumstances confronting the Applicant at the time of the settlement conference were typical or usual for those pursuing personal injury action. In particular, the impact of the COVID pandemic on the way the settlement conference was conducted, and the fact a close family member was a defendant in circumstances where the insurer disputed liability, were relatively unusual features. I accept the Applicant’s evidence that the extreme stress this situation placed on her mother’s partner, other family members and family relationships including that between the Applicant and her sister and mother in turn placed enormous stress on her and potentially contributed to the relatively low settlement she ultimately received.
I should add that in my view some of these features can be distinguished from circumstances in which a plaintiff makes a sober and calculated decision to accept a relatively low settlement amount because of the risk they may ultimately be unsuccessful. The risks entailed in continuing her case were definitely a contributing factor to the outcome the Applicant obtained. However, in my view the COVID-related impacts and particular emotional stresses I have referred to also made their own separate contribution and it is not clear in my view that the outcome would have been the same without these stresses.
I acknowledge that even if she had elected to proceed, there is no guarantee the Applicant’s litigation would have been successful, or that she would have received a higher offer. However, I accept that without the particular stresses I have referred to, there is a reasonable chance the Applicant would not have settled when she did. If she had declined to settle at that conference, I also consider there is some prospect she may have ultimately received a better outcome.
I will return to the question of whether these circumstances, alone or in combination with other factors either amount to or contribute to the existence of special circumstances in the relevant sense.
The Applicant’s health, earning capacity and risk of financial hardship
The Applicant explained in her oral evidence that unfortunately her health has recently deteriorated. At the time of the hearing, she was experiencing problems with the skin on her feet which made it difficult for her to wear shoes. In addition, she had developed autonomic dysreflexia related to her spinal cord injury, the cause for which was still under investigation. Until recently, the Applicant was working full-time with a business specialising in sourcing employment for disabled people. She was able to work from home in this position, which allowed her to work full-time. Unfortunately, this business collapsed, and she was made redundant on 9 August, receiving her leave entitlements and a small redundancy payment.[21]
[21] Applicant Statement – Change of Circumstances, provided on 3 September 2024.
Understandably, the Applicant said she is very worried about her prospects of gaining further employment. She explained that both the jobs she had had since her injury were secured through knowing people in the relevant business rather than through competing in the open market. In addition, having regard to the deterioration in her health, she no longer feels able to work full-time, and is concerned about her prospects of obtaining suitable part-time work which she can also do from home. She said she had applied for a couple of part-time positions since being made redundant, but at the time of the hearing had not been contacted in response to those applications. In any event, due to the significant health issues she was managing at the time of the hearing, she did not feel she was able to work at all at that time, at least until those issues were fully investigated and effectively managed.
With respect to management of the settlement sum, as I understand the evidence, the Applicant ultimately obtained access to the settlement proceeds in December 2020 and immediately engaged a specialist in financial planning for people with disabilities to assist her in managing these funds. Based on the advice she was given, she invested the vast bulk of the money she received into a pension account and as of 14 February 2023, “approximately 91% of the Applicant’s approximately $2.5m in assets” were held in this account.[22] The Statement of Facts and Contentions submitted on her behalf also stated that “Pension legislation requires that a minimum of 4% is drawn from pension accounts each month” and the Applicant uses this money to cover her living expenses, as a supplement to any income she receives from working.[23] Although this was not made clear, I infer that the 4% referred to is 4% per Annum, drawn monthly.
[22] Applicant’s SOFIC, [81].
[23] Applicant’s SOFIC, [82].
The Applicant’s understanding is that her financial adviser has budgeted for $650 000 to be directed toward the purchase of a suitable home, on the basis this was the maximum amount she could spend and still be able to support herself from the remaining funds.[24] Her financial adviser has also explained to her that her budget has been worked out on the assumption she will continue to work until retirement age, otherwise the funds in her pension account will not last and she is likely to face financial hardship.[25]
[24] Applicant’s Statement provided June 2024, p 1.
[25] Applicant’s Statement provided June 2024, p 1.
I note in a submission made on her behalf by a Legal Aid solicitor, it was noted that the Applicant’s financial adviser had calculated that if she stopped working in 2023 at 33, her funds would only last until she was 48. Accordingly, it was submitted that the amount in her pension account would last about 15 years if she had no other income.[26] It was not made clear whether this was on the basis that she retained the amount repayable to the Agency from her settlement funds or not.
[26] Submission from Legal Aid dated 8 June 2023, [16].
I accept that being rendered quadriplegic has had a dramatic impact on the Applicant’s earning capacity for which, in the event, she has not been adequately compensated. I note her solicitors calculated her economic loss resulting from her injuries at $850,473. Ultimately, however, as her claim settled for about 16% of its full value, she has only been compensated for a fraction of that amount, which carries a high risk that she will suffer financial hardship later in her life. Although she is likely to qualify for social security benefits, I also note her evidence that by reason of the compensation settlement she is precluded from social security benefits until age 49 (unless “special circumstances” are found to exist pursuant to s 1184K of the Social Security Act).
I will also return to the question of whether these factors, either by themselves or in combination with other matters, contribute to or amount to “special circumstances” in the relevant sense.
The Applicant’s accommodation needs
As with other aspects of the Applicant’s circumstances, the position she finds herself in with respect to accommodation is complex and somewhat unusual. Understandably, the Applicant would like to live in her own home, ideally one designed and built to meet her needs as a person living with quadriplegia. There is little doubt that if she had received compensation commensurate with the amounts particularised in her personal injury claim, this would have been easily achievable, noting that the Schedule of Damages prepared by her lawyers allowed over $7m for her accommodation costs.[27]
[27] T7, 161.
However, the compensation the Applicant actually received has left her in a much more precarious position with respect to accommodation. She explained in her evidence that she has at times been able to secure private rental accommodation which she was able to live in, however this has not been suitable for her. One issue she mentioned was water damage being caused to bathrooms which were not designed for her needs. Of course, the cost of rental accommodation is also a significant concern given this will erode her remaining funds even more quickly than predicted by her financial adviser.
At the hearing, the Applicant explained that she is currently renting Specialist Disability Accommodation (SDA), but only on a temporary or interim basis. The apartment she is in is not one specifically designed to meet her requirements and she has many difficulties living there including the height of the bench tops and stove in the kitchen, the fact that she has no natural light and that she has very limited access to outside areas or local facilities such as shops.
The Applicant indicated at the hearing that she had not actually been approved for SDA under the NDIS although she understood this may be considered further once this application to the Tribunal was resolved. After the hearing however, both parties provided additional information which shed further light on this issue.
As I understand the position, the Applicant’s current NDIS plan does in fact include funding for SDA of up to $60,574.28 per year (subject to a quote) calculated on the basis of a 2-bedroom apartment with 2 residents designed to accommodate someone with high physical support needs and located in the Eastern Suburbs of Sydney. Should she wish, I understand she could also use this funding to access alternative SDA categories within the funded amount.[28] In her written submissions provided after the hearing, the Applicant explained she had lived independently her whole adult life and did not wish to be forced to live with another person unknown to her, and potentially with incompatible needs.[29] Accordingly, she had not sought to access the form of SDA she was currently funded for.
[28] Respondent’s Supplementary Written Submissions, 18 September 2024, [24].
[29] Applicant Response, p 2.
The Applicant also explained at the hearing that if she could afford to do so, her intention was to move to the north coast of New South Wales where her family are, purchase some land and build a home suitable to her needs. Although she could not be precise as to the cost of this, based on her enquiries she anticipated this would cost somewhere in the region of $1.2m. She also noted that based on the SDA amount she was currently funded for, the cost to the NDIS of providing accommodation over her lifetime would be in the region of $3m.
Noting that she is currently living in SDA (albeit not suitable to her needs) and is funded for SDA on a flexible basis, I do not consider the Applicant’s accommodation challenges capable of amounting to special circumstances in themselves. However, I will return to this issue when considering whether different aspects of the Applicant’s situation in combination amount to special circumstances.
Additional Costs
The Applicant explained in her evidence that, while she was very grateful for the support provided by the NDIS, there were many costs resulting from her disability that were not covered by the NDIS. By way of example, she said she was hoping to travel to Uluru for her mother’s birthday. However, if she wished to do this, she understood she would have to personally fund flights, accommodation, and meals for the carer she would need to accompany her. Thus, the cost of the trip for her would be double what it would be for someone without her disability. She said the same situation applied whenever she needed a carer to accompany her outside her home, namely she was personally required to pay for their expenses. She also mentioned during the hearing that she does not generally visit her family on the north coast of New South Wales, and they do not generally visit her. I infer from her desire to move closer to where they live that it is difficult and costly for her to visit them from Sydney.
I accept the Applicant is required to fund some of the costs associated with her disability herself, and these costs must be met either from her income or amounts drawn from her compensation lump sum. Again, I do not consider these expenses in themselves capable of amounting to special circumstances, however I will consider whether they contribute to the existence of special circumstances in combination with other factors.
The CRA
While I don’t propose to delve into this issue in detail here, Mr Cleary for the Agency acknowledged it is relevant for me to take into account that, in addition to the amount the Agency seeks to recover from the Applicant’s compensation lump sum (the subject of this matter), because of the operation of the National Disability Insurance Scheme (Supports for Participants – Accounting for Compensation) Rules 2013 (the Compensation Rules), the Applicant will also be subject to a Compensation Reduction Amount (CRA) which will be applied to her future NDIS plans (unless this is reduced by reason of special circumstances).
The CRA is an amount calculated under the Rules by reference to a participant’s compensation lump sum and then amortised over the participant’s lifetime such that, because of the compensation they received, the relevant amount is taken from or ‘shaved off’ the funds otherwise available to them under their NDIS plans. For example, if a CRA amount was determined to be $100,000 and a participant was expected to live for a further 10 years, the funds available under their plans for their remaining 10 years would be reduced by $10,000 per year.
Based on the information supplied by the Agency, in my assessment the CRA amount applicable to the Applicant is likely to be in the region of $950 000 which, divided over a remaining life expectancy of say 40 years, would give rise to an amount of approximately $20 000 per Annum being shaved off each of the Applicant’s future plans.
I should also acknowledge that to the extent the recoverable amount the subject of this application is reduced, that will increase the CRA. For example, if the recoverable amount was reduced to nothing, the CRA would increase to approximately $1.4m, resulting in an annual CRA amount of approximately $35 000.
Of course, any shortfall in funding in the Applicant’s plans will have to be made up out of her remaining funds (unless the CRA for a particular plan is reduced by reason of special circumstances). Potentially needing to make up these shortfall amounts from her remaining funds will further erode her financial position and bring forward the point at which the Applicant is likely to experience financial hardship.
As with some of the other circumstances already discussed, I do not consider the operation of the Compensation Rules and likely application of a CRA in and of itself gives rise to special circumstances. However, I will consider below whether it contributes to the existence of special circumstances in combination with other matters.
Legal Advice

The Applicant’s recollection of the advice she received from her lawyers suggests she did not receive as much guidance from them as might have been expected. She does not recall clear advice being given as to whether it was in her interests to accept the offer given her prospects if the matter proceeded, or alternatively that the offer was too low, and she stood a good chance of doing better if she rejected the offer. However, the Applicant also acknowledged she was in an extremely stressed state at the time some of the most relevant communications took place, and it is possible more was said than she now recalls.
In any event, on the material before me there is little to suggest negligence or any other circumstance relating to the advice the Applicant received which could amount to or contribute to the existence of special circumstances in the relevant sense.
Discussion of the Applicant’s current and future financial position
There are many uncertainties surrounding the Applicant’s future and assessing her circumstances is far from straightforward. I understand she currently has a lump sum of approximately $2.5m in her pension account and is able to access 0.04% per Annum or about $8,000 each month for her expenses. Currently, the payback amount sought by the Agency is in this account. If the whole of the amount sought is paid to the Agency, this will reduce the lump sum to an amount closer to $2m, or about $6,500 per month for all her expenses, including those related to her disability which are not covered by the Agency.
Assuming a CRA in the vicinity of the amount canvassed above is also applied to her plan, that would reduce the funds available to the Applicant even further to an amount closer to $60,000 or $5,000 per month. Of course, she would have the option of withdrawing capital from her pension fund, however that will reduce the interest she receives and erode her financial situation even further over time.
As I understand it, the Applicant is currently paying rent for an apartment which is designed for someone with disabilities but is not suitable for her particular needs. It is very understandable she aspires to live in her own home, or a sole occupancy dwelling tailored for her needs and in a location of her choosing. To achieve this, it is clear she will need to draw down on her available funds, either to purchase or build a home, or perhaps to “top up” the funding provided by the Agency to a level which will allow her to obtain a suitable home. However, the difficulty with this latter option is that this is likely to be a recurring expense which will deplete her available funds further.
Even if the Applicant seeks to build or purchase a home within the budget originally allowed by her financial planner ($650 000), it appears clear this will not leave her with sufficient funds to live on unless she is also able to obtain employment to supplement her income. While she is hopeful of being able to do this, it is uncertain whether she will be able to obtain employment and, if so, what level of remuneration she will be able to obtain, noting it is unlikely she will be able to work full-time.
Even if the Applicant ultimately settles for accommodation within the budget provided in her NDIS plan, as canvassed above, it is unlikely she will be able to live adequately on the funds remaining, unless she is able to generate significant income through employment.
In my view, it is clear on the evidence that the settlement ultimately agreed to by the Applicant is not adequate to support her for the remainder of her life given her catastrophic injuries. This is not altogether surprising when regard is had to the fact the settlement was about 16% of the amount her solicitors calculated would be necessary to meet her needs.
If the whole of the proceeds of the $3m settlement amount was available to the Applicant, and she was also able to access social security and funding under the NDIS without reduction, the settlement may have been sufficient. However, once the social security preclusion period and the NDIS recovery and CRA amounts are taken into account, it is clear the Applicant is at significant risk of suffering financial hardship due to the very low settlement she ultimately accepted. That hardship will be greater and happen more quickly in the event she is unable to generate significant income through employment.
With respect to the CRA, as I have already acknowledged, this can potentially be reduced by reason of special circumstances in the context of any particular plan period. However, unlike the application of the CRA, which can be assessed in each plan period having regard to the Applicant’s then current circumstances, the decision falling to me is one which is required to be made once, on the evidence currently available. Unless that decision is set aside on appeal, it will not be revisited if the Applicant’s circumstances worsen, and I cannot assume the CRA applied to the Applicant will necessarily be reduced.
Analysis
Having carefully considered all the matters put forward by the Applicant, and those I have identified, I have ultimately concluded there are aspects of the Applicant’s circumstances which render them “special” in the relevant sense.
In particular, I consider there were unusual stresses and pressures placed on the Applicant in the context of the settlement negotiations which contributed to her ultimately accepting a very low settlement amount in the context of catastrophic and profoundly life-changing injuries. These pressures also operated in combination with the circumstances surrounding the first defendant’s insurance policy, which created real doubt as to whether the insurer was liable to compensate the Applicant at all. If the first defendant had not been a family member or the insurer had not contested liability, it is likely the applicant’s settlement would have been significantly higher.
One of the things I must take account of is that the amount required to truly compensate the Applicant for her injuries was calculated to be in the order of $18m. In the context of that amount, the recoverable amount would have represented about 2.5% of the settlement. However, in the context of the actual settlement, it represents 15% of the settlement.
The statutory assumption underlying the recovery provisions is that a participant has received an amount in their settlement attributable to their past NDIS support, and that component of the settlement should effectively be refunded to the taxpayer. The “true position” here is that the Applicant only received about 16% of the amount required to compensate her for her injuries, and therefore only about $72,000 of her settlement could properly be attributed to her past NDIS supports. Although the purpose and rationale of recovering the past NDIS amount is to “claw back” amounts paid by the NDIS that should have been paid by the defendants, the actual effect in the context of the Applicant’s settlement is to significantly reduce the very limited amounts available for her future support and care.
I accept it could be argued this will be a factor in any matter which is settled for less than the full value of the claim. However, this is only one of the factors I consider contributes to the Applicant’s overall circumstances being “special”.
In addition, I have also had regard to the very unusual circumstance of the relevant settlement conference being conducted by telephone in the early days of the COVID pandemic, which I accept placed additional stress on the Applicant, reduced the support available to her, and contributed to the outcome of the negotiations. While I accept there is no guarantee the Applicant would have done better if the litigation had continued, doing the best I can on the material available to me, it appears the settlement was very much at the lower end of the likely outcomes given the circumstances of the injury and that there were two defendants, one being an insurer and the other apparently with significant assets (albeit it appears he was also significantly in debt). In my view, these were additional factors which negatively influenced the amount the Applicant received, beyond the financial risk of proceeding and potentially ending up in a worse position.
I have also had regard to the recent deterioration in the Applicant’s health, which I accept has made her prospects of earning income more guarded, the complexity of her housing situation, and the likely application of a CRA. While none of these circumstances are especially unusual in themselves, in combination they magnify the impact on her of the very low settlement she received given her injuries and contribute to the significant risk of financial hardship and unfairness in her case and thus her overall circumstances being special in the relevant sense.
I have therefore ultimately concluded that by reason of the unusual circumstances surrounding the settlement, magnified by the other factors I have referred to, recovering the whole of the amount raised under s 116 would be unduly harsh and unfair to the Applicant. In effect, the Applicant has only been compensated for a relatively small fraction of the impacts of her accident. The intent behind the legislative provisions is of course to ensure the taxpayer is not required to bear costs which should be met by those responsible for the participant’s disability. However, there is a risk of those provisions operating harshly in circumstances where the assumption underlying them (that the participant has received adequate compensation) is not the reality. This is particularly the case where a participant has been dramatically under-compensated for catastrophic impacts and has very high support needs.
In my view, in the circumstances which have evolved, given the Applicant’s high support needs and extreme vulnerability, recovering the entire amount which is sought from her settlement would have a disproportionate impact on her which would be harsh and unfair in all the circumstances. I have concluded it is appropriate to reduce this amount to ameliorate this unfairness and reduce the risk that it will result in the Applicant ultimately suffering financial hardship in addition to her catastrophic injuries.
Although it would be a very difficult comparison to undertake, I note that with respect to someone such as the Applicant who receives compensation which represents only a fraction of their actual loss, the operation of Commonwealth recovery and preclusion provisions in combination raises at least a theoretical possibility of them being worse off than someone who received no compensation at all. In my view the Applicant is close enough to that situation to warrant departure from the strict operation of the recovery provisions.
As to the amount which should be recovered, there is little to guide me in determining an appropriate figure. I am not persuaded the amount to be recovered should be reduced to nothing. The Applicant was aware there was a NDIS payback amount. She did receive a significant sum, and in my view must bear some of the consequences of the decision to accept the settlement, albeit I accept that decision was made under significant duress.
I note prior to the settlement conference the Applicant was apparently advised she should not settle for less than $8-9m. I have also noted that in the event the recoverable amount represents about 15% of the settlement, and if she had received the maximum estimated amount of $18m, the NDIS payback amount would have represented about 2.5% of that amount.
Doing the best I can to balance the competing considerations and take appropriate account of the Applicant’s circumstances, I have ultimately concluded I should reduce the recoverable amount to 5% of the actual settlement amount, namely $150,000. I note the full recoverable amount would have been approximately 5% of her settlement if the Applicant had received $9m. In my view this amount strikes a fair and appropriate balance between the special circumstances of the Applicant on the one hand and the need to prevent double-dipping and protect the public revenue on the other.[30]
[30] This approach also finds some support in s 107(3) of the NDIS Act, which automatically reduces the recoverable amount by the proportion by which a settlement or judgment is reduced due to contributory negligence.
I have therefore decided to vary the decision under review such that by reason of special circumstances the amount recoverable pursuant to s 116 of the Act will be $150,000.
For the reasons explained above, I will affirm the decision the subject of Application 2022/0163.
DECISION
In Application 2022/0163, the Tribunal affirms the decision under review.
In Application 2024/1513, the decision under review is varied such that, pursuant to s 116 of the National Disability Insurance Scheme Act 2013, part of the compensation payment received by the Applicant is to be treated as not having been fixed by the settlement. The amount which is to be treated as not having been fixed by the settlement is the amount which would result in the amount repayable to the Respondent being reduced from $449,540.71 to $150,000.

Date(s) of hearing: 12 March & 4 September 2024

Date final submissions received: 25 September 2024

Applicant: In person

Counsel for the Respondent: Mr M Cleary

Solicitors for the Respondent: Mills Oakley Lawyers

Date(s) of hearing:	12 March & 4 September 2024
Date final submissions received:	25 September 2024
Applicant:	In person
Counsel for the Respondent:	Mr M Cleary
Solicitors for the Respondent:	Mills Oakley Lawyers