Re Secretary, Department of Social Security v Paul Raymond Hulls; Stephaine Ann Forgie and John Antoine Kiosoglous [1991] FCA 58; 22 ALD 570/13 Aar 414 (28 February 1991)

FEDERAL COURT OF AUSTRALIA

Re: SECRETARY, DEPARTMENT OF SOCIAL SECURITY
And: PAUL RAYMOND HULLS; STEPHAINE ANN FORGIE and JOHN ANTOINE KIOSOGLOUS
Nos. G113 and 114 of 1990
FED No. 121
Social Security Act [1991] FCA 58; 1947
22 ALD 570/13 AAR 414

COURT

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIAN DISTRICT REGISTRY
GENERAL DIVISION
O'Loughlin J.(1)

CATCHWORDS

Social Security Act 1947 - Part XVII "Payments by way of Compensation" - person in receipt of unemployment benefits precluded from receiving benefits during the "lump sum payment period" - meaning of that term and how it is calculated - identification of "lump sum" and determination that legal costs are not to be deducted before arriving at amount of lump sum - error of law on part of Tribunal in holding that legal expenses when quantified are to be deducted from moneys paid in order to determine the lump sum and are to be deducted as "special circumstances" under s.156 when not identified.

HEARING

ADELAIDE
28:2:1991

Counsel for the Applicant : Ms. C. Branson

Solicitors for the Applicant : Australian Government Solicit or

Counsel for the first Respondent : Mr M. Gray Q.C. and

Mr M. deRohan

Solicitors for the first Respondent : Legal Services Commission of

South Australia

Counsel for the second Respondents : Mr M. Reglar

Solicitors for the second : Australian Government

Respondents Solicitor

ORDER

No. G113 of 1990
1. That the appeal be allowed.

2. That the decision of the Administrative Appeals Tribunal be quashed.

3. That the decision of the delegate of the applicant made on 24 August 1988 to affirm a decision of another delegate of the applicant, inter alia, that pursuant to section 153 of the Social Security Act 1947 the respondent was precluded from receiving a benefit or pension for the period from 9 April 1988 to 24 February 1989 and, as a result, the respondent was liable to refund to the Department of Social Security the amount of $3,615.30 paid by way of unemployment benefit be affirmed.

4. That the respondent pay to the applicant its costs of and incidental to this appeal.
No. G114 of 1990

The application be dismissed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

Paul Raymond Hulls was working for Australia Post as a driver on 27 December 1984; on that day he was injured in a motor vehicle accident in circumstances that entitled him to worker's compensation. After an initial absence, he returned to work on 1 February 1985. But as from 24 June 1986 his injuries forced him to absent himself from work for various periods. An attempt was made by Australia Post in late 1987 to overcome his problems by offering him clerical work, but this was unsuccessful. Ultimately, he resigned on 2 March 1988. Subsequent to his resignation, Mr Hulls applied for and, as from 21 April 1988, received unemployment benefits from the Department of Social Security.

2. During the period (subsequent to the accident) in which he remained in the employ of Australia Post, Mr Hulls received from his employer certain payments that were described as "Incapacity Payments"; they totalled $20,608.44 and covered various periods from 28 December 1984 to 8 April 1988. In addition, Australia Post paid certain medical, hospital and other like expenses. The agreed total of all amounts so paid by the employer to or on behalf of Mr Hulls was $25,191.44.

3. In addition to his claim for worker's compensation, Mr Hulls also made a common law claim for damages against the driver of the motor vehicle that had been involved in the relevant accident. That claim, which was settled on 5 July 1988 for $70,000, was not apportioned between Mr Hulls and the driver (or the driver's insurer). On the other hand, it has been accepted that before Mr Hulls received any part of the $70,000, the abovementioned sum of $25,191.44 was repaid to Australia Post and his solicitors retained, in payment of legal costs and disbursements, sums totalling $11,966.12. Mr Hulls received the balance of the $70,000 - $33,000 or thereabouts on 17 August 1988.

4. Based on his interpretation of the relevant provisions of the Social Security Act 1947 (Cth) ("the Act"), the delegate of the Secretary to the Department, being aware of the settlement of the third party claim, decided that the Department should cease paying unemployment benefits to Mr Hulls as from 4 August 1988; it was part of the decision that Mr Hulls was precluded from receiving benefits from 9 April 1988 to 24 February 1989. This period, which is known colloquially as "the preclusion period", was identified by the delegate as "the lump sum payment period", a technical term which is used in the legislation and which will be referred to in detail at a later stage of these reasons. The delegate's decision led, in due course, to the Department further advising Mr Hulls that an amount of $3,615.30, previously paid to him by way of unemployment benefits from April to 3 August 1988 was refundable to the Department.

5. In arriving at the figure of $3,615.30, the delegate had regard to the fact that Mr Hulls was bound to repay to Australia Post the incapacity payments and medical expenses of $25,191.44; this had a beneficial result for Mr Hulls; it meant that the preclusion period was shorter than it otherwise would have been. However the delegate was not minded to treat the legal expenses of $11,966.12 in the same manner - and that is the primary point of contention in these proceedings.

6. As a result of an appeal by Mr Hulls to the Social Security Appeals Tribunal, that Tribunal recommended that the Department treat the legal expenses in the same way as the incapacity payments and medical expenses. Although that recommendation would not have relieved Mr Hulls from the obligation to repay the amount of $3,615.30 to the Department, it would have had the effect, if accepted, of shortening the preclusion period from 24 February 1989 to 3 December 1988. However the Department, as was then its right, declined to accept the recommendation.

7. Mr Hulls thereafter applied to the Administrative Appeals Tribunal ("the Tribunal") seeking a review of the decision of the delegate. That application was successful. The Tribunal came to the conclusion that the delegate had erred in not taking account of the fact that Mr Hulls was required to pay, and had in fact paid, legal costs totalling $11,966.12. The Tribunal concluded that the ameliorating provisions of s.156 of the Act should have been invoked for the benefit of Mr Hulls. It will be necessary, in due course, to have consideration to the role that is played by s.156 in the scheme of the legislation; at this stage, it is sufficient to quote its provisions:-

"s.156. The Secretary may, for the purposes of this Part,
treat the whole or a part of a payment by way of
compensation that has been, or that will be, made as not
having been made or as not likely to become
liable to be made if the Secretary considers it appropriate
to do so in the special circumstances of the case."

8. Having concluded that the delegate had erred in his treatment of the legal costs, the Tribunal set aside the decision under review and substituted its decision that the preclusion period expired on 3 December 1988 - the date that had been recommended by the Social Security Appeals Tribunal. But the Tribunal then proceeded to adjourn its deliberations, stating that it needed to give further consideration to the amount that the Department would be entitled to recover from Mr Hulls. I assume that the Tribunal's difficulty was brought about by the fact that when it published its decision on 24 August 1990, it did not have before it details of the pension that it considered Mr Hulls should have received in the period 3 December 1988 to 24 February 1989. Presumably it was intending to set off that amount from the sum of $3,615.30.

9. Following upon the publication of the Tribunal's reasons, the Department instituted two sets of proceedings in this Court. The first, action No. G113 of 1990, is by way of appeal: it is said that those proceedings are an appeal pursuant to the provisions of s.44 of the Administrative Appeals Tribunal Act, 1975 on a question of law from a decision of the Tribunal. The second set of proceedings, action No. G114 of 1990, is an application under s.5 of the Administrative Decisions (Judicial Review) Act, 1977 to review the decision of the Tribunal. As I understand the position, the Department was concerned that the action of the Tribunal in adjourning the matter for further consideration may have meant that there was not then a final decision that was appealable under s.44 of the Administrative Appeals Tribunal Act (c.f. Director-General of Social Services v Chaney [1980] FCA 87; (1980) 31 ALR 571). The second respondents, through their counsel, informed the Court that they would abide the orders of the Court; their counsel was therefore given leave to withdraw and the second respondents took no further part in the proceedings. As events transpired, Mr Gray Q.C., counsel for Mr Hulls, argued that no question of law had been raised by the Department in either of the proceedings but otherwise joined with it in seeking a final determination of the matter in the first mentioned action. I believe that this was an appropriate concession by Mr Gray. I regard the conclusions that were reached by the Tribunal as final. As I am therefore prepared to accede to the parties' request that I determine the Department's appeal in Action No. G113 of 1990, there will be an order dismissing the application for an order of review in action No. G114 of 1990.

10. Before embarking on a discussion of the various sums of money and the calculations that are of significance to this appeal, it is first necessary to consider the relevant legislation and the object of that legislation. The starting point is Part XIII of the Act which is entitled "Unemployment and Sickness Benefits". Section 116 (which is within that Part) lays down the qualifications for unemployment benefits: shortly expressed, an Australian resident, aged between 16 and 65, will receive unemployment benefits if he was, in the relevant period, capable of and willing to undertake suitable employment and took reasonable steps to obtain such work. It may be accepted that at all material times Mr Hulls met those qualifications.

11. In Part XVII, entitled "Payments by way of Compensation", the Act addresses those situations where a person who is in receipt of a "pension" (and unemployment benefits are included in the definition of "pension") receives a lump sum payment or periodical payments by way of compensation that is or are, in whole or in part, in respect of an incapacity for work. The primary provision of Part XVII is s.153. It allows for the reduction of the pension that is otherwise payable to a person and the ascertainment of a person's liability to repay some part of a pension that has earlier been paid to that person. Section 153 is concerned both with "a payment forming part of a series of periodical payments by way of compensation" and with "a lump sum payment by way of compensation"; its purpose is obvious and simply stated: there is to be no "double-dipping" - a person is not to receive unemployment benefits for a period in respect of which he or she receives a compensatory payment that is related, in whole or in part, to an incapacity for work. Contrary to an argument that was advanced by Mr Gray, the incapacity payments that Australia Post had made to Mr Hulls over a period of some years were, in my view, payments "forming part of a series of periodical payments by way of compensation"; but it is not necessary to give further consideration to the amounts of those payments for the reason that the last of them was paid to Mr Hulls before his unemployment benefits commenced. A pension will only be reduced because of periodical payments when the periodical payments are concurrently payable (para 153(1)(c)); and a person will only be liable to repay any part of a pension because of periodical payments if it was received "during the period during which payments in the series of periodical payments were made" (para 153(3)(b)). It will however be necessary to return to Mr Gray's argument about the classification of those payments when considering the commencement date of the preclusion period - i.e., the lump sum payment period.

12. The provisions of s.153 that are relevant for the purposes of these proceedings are therefore those that relate to a lump sum payment. Those provisions are as follows:-

"s.153... (1) Where a person... who is qualified to receive
a pension receives or has received (whether before or after
becoming so qualified) -
(a) ...
(b) a lump sum payment by way of compensation,
then -
(c) ...
(d) in a case to which paragraph (b) applies - a
pension is not payable to the person... at any
time during the lump sum payment period.
(2) Where -
(a) a person has received a lump sum payment by way
of compensation;
(b) the person received payments of pension during
the lump sum payment period; and
(c) sub-section (1) did not apply to the lump sum
payment,
the Secretary may, by notice in writing given to the person,
determine that the person is liable to pay to the
Commonwealth an amount specified in the notice, being an
amount equal to the amount of pension paid to the person
during the lump sum payment period... or the compensation
part of the lump sum payment whichever is the lesser.
(3) ...
(4) ..."

13. It would seem to be common ground that the provisions of sub-s.(l) do not apply to the payment of $70,000 or any component part of that sum. Sub-section (l) deals with payments that have been received by a person prior to the receipt of the pension; it does not matter whether the person received the payment or the payments prior to him or her qualifying for the requisite pension or subsequent to the attainment of those qualifications. In those cases the future pension payments abate during the lump sum payment period. Sub-section (2) is accepted as being the provision with which this appeal is concerned; that sub- section is directed towards a person, such as Mr Hulls, who receives a lump sum payment by way of compensation and has also received payments of pension during the lump sum payment period.

14. It is now necessary to identify the meaning of the term "the lump sum payment period" that appears in sub-s.153(2) and elsewhere in the legislation; the answer is found by first referring to paragraph 152(2)(e) which provides:-

"(e) a reference to the lump sum payment period, in
relation to a lump sum payment by way of
compensation, is a reference to the number of
weeks, beginning on the first day of the period
in respect of which the payment was or is to be
made, ascertained by dividing the compensation
part of the lump sum payment by the estimate
last published by the Australian Statistician
before the lump sum became payable of the
average total weekly earnings of all male
employees in Australia for a particular month."

15. This passage of the legislation is further expanded and explained in sub-s.152(3) which deals with the reference, in para.152(2)(e), to "the first day of the period in respect of which the payment was or is to be made...". The "first day" means, in a case where periodical payments by way of compensation were made in respect of an incapacity, "the day after the day on which the last of those payments was made" or, if there were no such payments, "the day on which the relevant incapacity for work commenced". As I have earlier mentioned the last of the incapacity payments was for a period expiring on 8 April 1988. Hence, the delegate used 9 April as "the first day of the period". If, as Mr Gray argued, the incapacity payments were not periodical payments by way of compensation then "the first day" would be the date of the accident, 27 December 1984 - it being "the day on which the relevant incapacity for work commenced". Should that be the case, the lump sum payment period would have long expired before Mr Hulls received any unemployment benefits: he would not be precluded from receiving any part of his pension and he would not have to refund any pension payments to the Department. This argument, which was not advanced before the Tribunal, has its genesis in a decision of von Doussa J. in Secretary to the Department of Social Security v a'Beckett (unreported: judgment delivered 31 August 1990). In that case a pensioner who was involved in an accident in 1983 and who received an invalid pension as from 4 February 1988, settled his common law claim for damages for $60,000 on 22 July 1988. However prior to achieving that settlement, the Transport Accident Commission had made two payments to him of $3,250 on 10 April 1987 and $17,550 on 3 August 1987. These payments, totalling $20,800, represented the maximum sum payable under the Transport Accident Act (Vic) for deprivation or impairment of earning capacity. Von Doussa J. concluded that neither of those payments were periodical payments by way of compensation even though they represented aggregations of weekly benefits calculated at the rate of $250 per week; his Honour said:-

"I consider each payment is properly to be described as 'a
lump sum payment by way of compensation' made in respect of
the same incapacity for work as the later payment made in
settlement of the common law claim." (p 31)

16. However, the facts in this case are far removed from those in a'Beckett's case. The details of the incapacity payments are contained in a letter dated 27 April 1989 from Australia Post to the Legal Services Commission. They were:-

(DETAILS OF INCAPACITY PAYMENTS OMITTED)

17. Mr Gray also argued that the incapacity payments should not be classified as "periodical payments by way of compensation" because they were, so he said, a different category of payment by way of compensation; his argument was that the legislation, when it referred to "periodical payments" was directed towards regular payments at fixed intervals of time. I can see no reason for so restricting the legislation. It is true that in this particular case the relevant payments were irregular: they followed no discernible pattern. Nevertheless each of them was paid in respect of a defined period of time and that information is clearly set out in the letter from Australia Post. That, in my opinion, is a sufficient answer to Mr Gray's argument. Being satisfied that Mr Hulls had been in receipt of periodical payments by way of compensation, I therefore conclude that the delegate correctly decided that the lump sum payment period commenced on 9 April 1988.

18. The next step in determining the meaning and duration of "the lump sum payment period" necessitates an understanding of the term "compensation part" when used in para.152(2)(e) in relation to a "lump sum payment". Simply expressed "the compensation part" is, in most cases, 50% of the lump sum payment and in the remaining cases it is "so much of the lump sum payment as is, in the opinion of the Secretary, in respect of an incapacity for work". The full text from which that quotation was taken appears in para.152(2)(c):-

"(c) a reference to the compensation part of a lump
sum payment by way of compensation is a
reference to:
(i) if the lump sum payment was made
(whether with or without admission
of liability) in settlement of a
claim that is, in whole or in part,
related to disease or injury and:
(A) in a case where a
judgment by consent was
entered in respect of
the settlement - the
judgment was entered on
or after 9 February
1988; or
(B) in any other case - the
settlement was made or
entered into on or after
9 February 1988;
50% of the lump sum payment; or
(ii) in any other case - so much of the
lump sum payment as is, in the
opinion of the Secretary, in respect
of an incapacity for work."

It being a fact that Mr Hull's settlement of his claim was made or entered into after 9 February 1988, and it being accepted that there was a lump sum payment that was paid in settlement of a claim that was "in whole or in part, related to... injury" (para.152(2)(c)), the result is that the compensation part of the lump sum payment is 50% of the lump sum payment. The exact amount of "the lump sum payment" is a subject to which I will return.

19. Paragraph 152(2)(a) is directed towards the use, in Part XVII of the Act, of the phrase "a payment by way of compensation". As I have earlier stated, such a payment could be one that forms "part of a series of periodical payments" (paras. 153(1)(a) and 153(3)(a)) or it could be "a lump sum payment" (paras. 153(1)(b) and 153(3)(b)). In either case, it is my view that a reference to "a payment by way of compensation" can be a reference to one or it can be a reference to two or more of the four types of payments that are listed in para.152(2)(a): viz:-

"(a) a reference to a payment by way of compensation is a
reference to -
(i) a payment by way of damages;
(ii) a payment under a scheme of
insurance or compensation provided
for by a law of the Commonwealth or
of a State or Territory, including a
payment under a contract entered
into pursuant to such a scheme;
(iii) a payment, whether with or without
admission of liability, in
settlement of a claim under such a
scheme or of a claim for damages; or
(iv) any other payment in the nature of
compensation or damages, other than
a payment for which the recipient
has made contributions,
whether made within or outside Australia, being
a payment received on or after 1 May 1987 that
is, in whole or in part, in respect of an
incapacity for work."

20. Although it is not a matter of great significance I am of the opinion that the Tribunal was in error when it said:-

"There was no dispute that Mr Hulls had received a
'payment by way of damages' within the meaning of
subparagraph 152(2)(a)(i) and we have come to the same
conclusion." (p 16)

21. Leaving to one side for the moment, the quantification of the relevant payment, the view that I have formed is that the correct classification of the payment was that contemplated by sub-para.(iii); it was a payment "in settlement of... a claim for damages". The type of payment contemplated in sub-para.(i), that is, "a payment by way of damages" is one which would be made on account of or, perhaps, in partial satisfaction of a claim.

22. Mr Gray suggested that each of the four enumerated sub-paragraphs in para.152(2)(c) was mutually exclusive: he pointed to the existence of the disjunctive "or" appearing at the end of sub-para 152(2)(a)(iii) to support that interpretation. I do not believe that to be the correct interpretation but little, if anything, turns on it. It would seem to me that the appropriate and practical way of having regard to the contents of para.152(2)(a) is to consider a reference to a payment by way of compensation as being a reference to one or more of the four types of payment.

23. It is appropriate at this stage to make an attempt to draw the many threads of sub-s.153(2) together. First, it is acknowledged that Mr Hulls received a lump sum payment by way of compensation: whether the lump sum was $70,000 or a lesser figure is yet to be determined. Secondly, the lump sum payment period commenced on 9 April 1988. Thirdly, there was evidence before the Tribunal that the divider, that is, the estimate of the relevant average weekly earnings, was $477. The duration of the lump sum payment period is fixed by applying the divider to "the compensation part of the lump sum payment", which, in this case, was 50% of the lump sum payment. What then was the "lump sum payment"? Was it the figure of $70,000 or was it $44,808.56? That figure is arrived at by deducting from $70,000, the incapacity and other payments of $25,191.44 that were repaid to Australia Post. Then again could it be that the lump sum payment should be regarded as $32,842.44, a figure that is struck by further deducting the legal costs of $11,966.12?

24. It seems clear to me that the Department's view was, initially at least, that the correct classification of the lump sum payment was $44,808.56. The actual decision of the delegate that gave rise to these proceedings was as follows:-

"(a) the amount of $70,000 awarded to the applicant for
damages in the Supreme Court was compensation within
the meaning of section 152 of the Social Security Act
1947;
(b) of the $70,000 awarded to the applicant, $22,404.28
was for an incapacity, and pursuant to section 153 of
the Social Security Act 1947 the applicant was
precluded from receiving a benefit or pension for the
period 9 April 1988 to 24 February 1989;
(c) as a result, the applicant was liable to refund an
amount of $3,615.30 paid by way of unemployment
benefit; and
(d) as there was no special circumstances the exercise of
the discretion to waive all or part of the lump
payment contained in section 156 of the Social
Security Act 1947 was not warranted."

25. In paragraph (b) of that decision there is a reference to $22,404.28; that figure is 50% of $44,808.56 and was obviously treated by the delegate as the "compensation part". By applying the divider of $477 to $22,404.28 the delegate thereby determined the lump sum payment period as 47 weeks commencing on 9 April 1988 and expiring on 24 February 1989.

26. The reasoning of the Social Security Appeals Tribunal was based on what its members thought was "a fair and reasonable approach". This led them to conclude that the compensation part was 50% of $32,842.44. But it is not clear whether they were thereby treating the reference to "a lump sum payment by way of compensation" as a reference to the sum of money that was actually and finally received by Mr Hulls or whether they were applying the provisions of s.156. The absence of any reference in their reasons to the latter section may suggest that the former was the approach adopted by them.

27. The Administrative Appeals Tribunal quite clearly stated that it regarded both payments as falling within the ambit of s.156. Expressed another way, the Tribunal regarded the sum of $70,000 as the amount that was the "lump sum payment by way of compensation". But for the application of the provisions of s.156, the consequence of the Tribunal's decision would have been that "the compensation part" of the "lump sum payment by way of compensation" would have been $35,000. Such a conclusion, would have had the effect of lengthening the lump sum payment period beyond 24 February 1989.

28. The specific issue that must be resolved in this appeal is limited to the decision of the Tribunal that s.156 applied to the amount of the legal expenses. That is the limit of the Department's appeal. However it is necessary for me to state my views about the composition of the lump sum for I have concluded that those views are in conflict with the reasoning of the Tribunal. I agree with the actual decision of the Tribunal that the correct amount of the lump sum in this case was $70,000 but I cannot agree with the Tribunal that this figure would have been reduced if the parties to the settlement of the common law claim for damages had agreed upon an amount for costs.

29. The history of this legislation and, in particular, the reasons for using an arbitrary formula of 50% were traced in detail by von Doussa J. in Secretary to the Department of Social Security v Banks (1990) 23 FCR 416. His Honour referred to the Minister's second reading speech when the "50% rule" was introduced into the legislation. The relevant passage from that speech is (p 422):-

"Settlements of lump sum compensation particularly in the
workers compensation jurisdiction are being manipulated to
obscure the economic loss component and to avoid recovery of
social security payments. To prevent this abuse the
Minister announced on 8 February 1988 that, for future
personal injury settlements made by agreement or by consent
order, 50 per cent of lump sum compensation will be deemed
to be in respect of economic loss. This Bill gives effect
to that proposal." (Hansard, 13 April 1988, p 1497)

30. Once the mischief at which the amending legislation was aimed has been so clearly identified, it becomes apparent that the legislation prevents any dissection of "the lump sum". Although those words are not defined, I respectfully agree with what von Doussa J. said of them in Banks' case:-

"They are not words of art. In the Macquarie Dictionary a
'lump sum' is defined as a sum 'including a number of items
taken together or in the lump'. In my opinion the words
bear that meaning in the section."

31. I have come to the conclusion that, in this case, the amount of the lump sum was $70,000 and hence, subject only to the possible application of s.156, the "compensation part" was $35,000. Although the Tribunal also came to this conclusion it did so only because it concluded that "there was no separate allowance" made for legal costs in the figure of $70,000. The Tribunal correctly noted that "costs" are to be distinguished from "damages" but, in my opinion, incorrectly concluded that if an amount for costs had been identified by the parties to the settlement then the amount so identified would have been deducted from the $70,000 in order to arrive at the amount of the lump sum.

32. This settlement was in respect of a common law claim for damages; it is a fact that the overwhelming number of such settlements contain an element of legal costs just as it is a fact that many such settlements are negotiated by arriving at a global figure which is said to be "inclusive of costs". It is as commonplace for any such settlement to contain an element for costs as it is to contain elements for special damages, for general damages for pain and suffering and for economic loss. The legislation would have been fully aware of all such components when the "50% rule" was introduced. It is my opinion that the Tribunal concluded that there were special circumstances warranting the application of s.156 to the legal costs predominantly - if not only - because of the perceived failure of the parties to the settlement to identify and quantify the costs. The Tribunal said:-

"If they had been awarded as a separate item from the lump
sum payment of damages, they would not have been included in
the lump sum payment figure used pursuant to paragraph
152(2)(c). It is certainly not (unusual) for costs to be
included in a lump sum but it is more usual for them to have
some separate character. It seems to us, therefore, that
his is a proper case in which there are special
circumstances which make it appropriate to treat that part
of the settlement moneys spent on legal fees to be treated
as not having been made as part of the payment by way of
compensation i.e. $11,966.12." (p 24)

33. In a'Beckett's case (supra) the Social Security Appeals Tribunal was of the opinion that the pensioner's legal costs of $6,000 should have been excised from the settlement sum of $60,000 for the purpose of applying the '50% rule'. Von Doussa J. said:-

"If any part of the sum of $60,000 received by the
respondent were a payment of the kind described in
para.152(2)(a), being a payment in whole or in part in
respect of an incapacity for work, the component in that sum
representing legal costs should properly be treated as part
of the 'lump sum payment by way of compensation'."

34. I respectfully agree with these remarks.

35. Mr Gray separately submitted that the legal expenses should be excluded from all calculations, either because of "special circumstances" and s.156 or upon the premise that the amount paid out for legal expenses was not received by Mr Hulls in respect of any past, present or future incapacity to work. Mr Gray claimed that this argument gained support because of the voluntary exclusion by the Department of the incapacity payments - to have done otherwise, said Mr Gray, would have been unjust as it would have had the effect of "double- counting" against Mr Hulls. There are, in my opinion, two answers to these claims. The first is that they overlook the "50% rule"; that is, they overlook the fact that the legislature has endeavoured, albeit arbitrarily, to avoid "double-counting" by stipulating that the preclusion period is ascertained by having regard to 50% only of the lump sum payment. This provision has the hallmarks of simplicity and certainty, leaving s.156 and its reference to "special circumstances" to remedy those particular cases where the application of the arbitrary rule would create injustice. Secondly, it is not to the point, in my opinion, to say that legal expenses do not relate to an incapacity for work. Even though such a statement may be literally true, it cannot assist Mr Hulls. A "payment by way of compensation" is, according to para.152(2)(a) a reference to one or more of the four nominated types of payment that is or are "in whole or in part, in respect of an incapacity for work" (emphasis added). Thus, so long as the payment of $70,000 contained an element that was in respect of an incapacity for work - and it is common ground that there was such an element in this case - the payment of $70,000 must be classified, in its entirety as "a payment by way of compensation". Support for this view can be found in Banks' case. In that case, the issue related to an amount of $1,000 which had been paid to the pensioner as "a redemption of the employer's liability" pursuant to s.72 of the Workers' Compensation Act 1971 (S.A.). It was argued that this sum, relating as it did to future medical expenses, could not be classified as a "payment by way of compensation". Von Doussa J. rejected the argument. He emphasised at p 423 that the provisions of sub-para.152(2)(c)(i) (the 50% rule) apply where a lump sum payment was made in settlement of a claim "that is, in whole or in part related to disease or injury...", adding:-

"This will be so even though the lump sum also clearly
includes amounts for heads of loss which are unrelated to
incapacity for work, for example for pain and suffering, for
disfigurement, or for future medical expenses in relation to
disease or injury. This will also be the case where the
lump sum payment is in settlement of a claim which includes
a head of loss that is unrelated either to incapacity for
work or to disease or injury, for example, a component for
property damage." (p 424)

36. Sub-section 44(1) of the Administrative Appeals Tribunal Act 1975 states:-

"A party to a proceeding before the Tribunal may appeal to
the Federal Court of Australia, on a question of law, from
any decision of the Tribunal in that proceeding."

37. If there is no question of law for determination then the Court has no jurisdiction: Federal Commissioner of Taxation v Brixius 87 ATC 4963. In my opinion there was, in the hearing below, an identifiable failure on the part of the Tribunal to take into account a material consideration - and such a failure is an error of law: Steed v Minister for Immigration and Ethnic Affairs (1981) 37 ALR 620. I have concluded that the Tribunal failed to address the significant fact that the "compensation part" of a lump sum payment was only 50% of the lump sum. In my opinion, it failed to appreciate the reason why there was an arbitary formula in the legislation. I further believe that the Tribunal erred in law, when it concluded that it could make use of s.156 with respect to legal costs because those costs, if they had been identified by the parties to the settlement, would have been excised before arriving at the lump sum. It was wrong to conclude that s.156 could be invoked, as a matter of course, when the parties to a settlement had failed to give a separate identification to legal costs. That is not to say that s.156 will never be available with respect to legal costs. The particular facts of a case might make them - or the amount of them - a special circumstance. This therefore is not a case where this Court is being asked, as a matter of fact, to consider whether the Tribunal was correct in determining that there were special circumstances attaching to the legal costs.

38. Having concluded that the Tribunal made an error of law, it means that its decision is reviewable by this Court. The issue that therefore remains for consideration is whether, on the facts of this case, and in terms of s.156, the amount of $11,966.12, being part of payment of the $70,000 by way of compensation should have been treated by the Secretary "as not having been made" because the Secretary should have considered it "appropriate to do so in the special circumstances of the case".

39. The expression "special circumstances" is one that appears from time to time in various pieces of legislation and in other provisions of this Act. The decision of the Full Court in Beadle v Director General of Social Security [1984] AATA 176; (1985) 7 ALD 670 related to the former sub-s.102(1) of the Act; that provision was concerned with the period between the date when a claimant became eligible for a family allowance and the time when the claim for the allowance was lodged. As the Full Court explained at pp 673-4:-

"The legislature has indicated that six months latitude is
sufficient in the normal case. The Director-General has
power to fix a longer period in special circumstances.
Presumably in this context special circumstances must
include events which would render the six months unfair or
inappropriate.... We do not think it is possible to lay
down precise limits or precise rules. The matter is one for
the Director-General bearing in mind the purpose for which
the power is given. The phrase 'special circumstances',
although lacking precision is sufficiently understood in our
view not to require judicial gloss."

40. The former s.115 of the Act provided, amongst other things, that if a person received compensation for injuries, then he or she might be liable to repay all or part of any benefit that had been paid under the Act in respect of those injuries. Sub-section 115(4A), as then enacted, invested the Director-General with a discretion to release a person from liability should "special circumstances" exist. That provision was considered in Re Ivovic and Director-General of Social Services [1981] AATA 57; 3 ALN N95 where the Tribunal is reported as saying:-

"It is, in our view, the plain intention of s.115 of the Act
that in cases such as the present the amount of the
liability properly determined in accordance with sub-s (4)
of that section must be paid unless the Director-General (or
on review this Tribunal) is satisfied that special
circumstances exist by reason of which the person should be
released in whole or in part from that liability (s
115(4A)). Whilst it would be unwise, if not impossible, to
attempt to lay down any precise delineation of what may
amount to 'special circumstances' for the purpose of s
115(4A) (cf, Re Norman (1886) 16 QBD 673 at 677 per Lopes
L.J.), the use of the word 'special' is, we think, intended to
allow the decision-maker the fullest opportunity to consider
the particular circumstances of each case (cf Ex parte
Bucknell [1936] HCA 67; (1936) 56 CLR 221 at 224). Whilst we agree that
hardship is a relevant consideration in the discretion
conferred by s 115(4A), we reject the submission by Mr
Watkins (for the applicant) that we should ignore the
circumstances out of which the alleged hardship is said to
have arisen. The reference to special circumstances 'by
reason of which' a person liable 'should be released'
requires, in our view, that there must exist in the
circumstances of the case, a factor or factors which justify
the making of an exception in whole or in part to the
principle of liability which the Act otherwise establishes.
In the exercise of the discretion which s 115(4A) confers,
the decision-maker must have regard to whether, by
exercising the discretion in a particular case, he will be
achieving or frustrating ends or objects which are
conformable with the scope and purpose of the Social
Services Act 1947: cf Water Conservation and Irrigation
Commission (NSW) v Browning [1947] HCA 21; (1947) 74 CLR 492 at 505 per
Dixon J. Thus whilst keeping the dominant principle of s
115 in mind, he must nevertheless be prepared to respond to
the special circumstances of any particular case by reason
of which strict enforcement of the liability created by the
section would be unjust, unreasonable or otherwise
inappropriate."

41. I consider that the remarks in Beadle's case and Ivovic's case apply with equal force and effect to the present legislation. Armed with these comments, I am of the clear view that there were no special circumstances warranting the application of s.156 in Mr Hull's favour. It would seem that his common law claim for damages was a routine claim; there was nothing to suggest that any circumstance was present that was "special". It is commonplace for such claims to be settled on the basis of a global sum with the plaintiff meeting his liability for his legal costs.

42. The Tribunal found as a fact that Mr Hulls was aware at some unspecified time - but at about the time when he received his money - that he might have to make some repayment to the Department. If therefore he does not now have the money to meet the Department's claim, it is not through any fault of the Department. I do not consider that any element of hardship that will be suffered in this case is sufficient to constitute a special circumstance.

43. For the reasons that I have set out, I have come to the conclusion that this appeal must be allowed and the decision of the Tribunal must be quashed. It is my view that the delegate was correct when he decided that the preclusion period (or lump sum payment period) was in respect of the period commencing 9 April 1988 and expiring on 24 February 1989. The conclusion that I have reached means, additionally, that the delegate was also correct in determining that Mr Hulls was liable to refund to the Department the sum of $3,615.30.

44. Because the issue was not raised on the appeal I have not disturbed that part of the delegate's decision whereby he excised the incapacity and other payments totalling $25,191.44 before identifying the relevant lump sum. That is Mr Hull's good fortune. The presence of the "50% rule" and the extended meaning given to the word "receipt" in para 152(2)(b) (so that payments received by a person extend to payments to third parties on his behalf or at his direction) have led me to the conclusion that such payments should not have been excised and would not automatically constitute "special circumstances".

45. The Department should have its costs of the appeal.