Krpan and Secretary, Department of Family and Community Services [1999] AATA 709 (20 September 1999)

Last Updated: 23 September 1999

DECISION AND REASONS FOR DECISION [1999] AATA 709

ADMINISTRATIVE APPEALS TRIBUNAL )

) No W1998/222

GENERAL ADMINISTRATIVE DIVISION )

Re ANTON KRPAN

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Associate Professor S D Hotop, Senior Member Dr D Weerasooriya, Member

Date 20 September 1999

Place Perth

Decision The Tribunal sets aside the decision under review and remits the matter to the respondent for reconsideration in accordance with the following directions: that the amount of $23,200.10, being the total amount of Disability Support Pension received by the applicant during the "new lump sum preclusion period" from 1 April 1993 to 24 July 1996, was, pursuant to s1165(2AA) of the Social Security Act 1991("the Act"), not payable to him; that the recovery of that amount by the respondent from SGIO Insurance Limited, purportedly under s1179 of the Act, was not authorised by s1179 and was invalid; but that that amount may lawfully and properly be recovered by the respondent from the applicant pursuant to ss1166(1), 1225(1) and 1230C(1) of the Act.

...................................

Senior Member

CATCHWORDS

SOCIAL SECURITY - disability support pension - periodic payments of compensation - lump sum payment of compensation - preclusion period - recovery notice given to insurer - whether notice valid - whether special circumstances - whether appropriate to treat whole or part of compensation payment as not having been made.

STATUTES - interpretation - apparent drafting error - purposive approach to interpretation - meaning of statutory language clear and unambiguous and no alternative construction reasonably open - whether appropriate to rewrite statutory provision to give effect to purpose of legislature.

Acts Interpretation Act 1901 ss15AA(1), 15AB(1)

Social Security Act 1991 ss17(1), (2), (3), 1165, 1166, 1179, 1184(1), 1225(1), 1230C(1)

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

Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297

Federal Commissioner of Taxation v Trustees of the Lisa Marie Walsh Trust (1983) 48 ALR 253

Haidar v Secretary, Department of Social Security (1998) 28 AAR 288

Re Ivovic and Director-General of Social Services (1981) 3 ALN No 61

Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404

Re Lawrie and Secretary, Department of Family and Community Services (1998) 54 ALD 483

Mills v Meeking (1990) 169 CLR 214

Secretary, Department of Social Security v a'Beckett (1990) 26 FCR 349

Secretary, Department of Social Security v Smith (1991) 30 FCR 56

Trevisan v Commissioner of Taxation (1991) 29 FCR 157

REASONS FOR DECISION

20 September 1999 Associate Professor S D Hotop, Senior Member Dr D Weerasooriya, Member

1. This is an application by Anton Krpan ("the applicant") for review of a decision of the Social Security Appeals Tribunal ("SSAT"), dated 26 May 1998. In that decision the SSAT affirmed a decision of an Authorised Review Officer ("ARO") of Centrelink, dated 20 March 1998, to recover, from a lump sum payable to the applicant by way of compensation, the amount of $23,200.10, being the total amount of social security (comprising Sickness Allowance and Disability Support Pension) paid to the applicant during the period from 1 April 1993 to 24 July 1996.

2. At the hearing the applicant was represented by Mr D Price, solicitor, and the Secretary to the Department of Family and Community Services ("the respondent") was represented by Ms A Henderson, an officer of the Administrative Law Section of Centrelink. The Tribunal had before it the documents ("T documents") furnished by the respondent pursuant to s37(1) of the Administrative Appeals Tribunal Act 1975 and the following documentary exhibits tendered by the parties:

* Statement of Assets, Income and Liabilities of the applicant and his partner (A1)

* report of Dr P Skerritt, dated 23 November 1998 (A2)

* market appraisal of the residence of the applicant and his partner by Ray White Craigie, Real Estate Agents, dated 27 November 1998 (A3)

* statement of the balance of the applicant's account at the ANZ Bank as at 20 November 1998 (A4)

* Authority signed by the applicant and dated 20 November 1997 (A5)

* letter from S C Nigam & Co, dated 23 October 1998, to D O D Price & Associates (A6)

* letter from D O D Price & Associates, dated 7 October 1998, to S C Nigam & Co (A7)

* letter from D O D Price & Associates, dated 19 October 1998, to S C Nigam & Co (A8)

* report of Dr D Richards, dated 17 October 1990 (R1)

* decision and reasons for decision of the SSAT, dated 22 July 1993, regarding the applicant's entitlement to Disability Support Pension (R2)

* Statement to Department of Social Security, signed by the applicant and dated 23 August 1993 (R3).

The applicant gave oral evidence. There were no other witnesses.

The Factual Background

3. The background facts, about which there is no dispute between the parties and as found by the Tribunal on the basis of the T documents and exhibits, are as follows.

4. On 18 July 1990 the applicant, who was employed by Western Mining Corporation ("WMC"), contracted an employment-related illness which was diagnosed on that date by Dr D Richards as "acute anxiety/panic attack". (R1) From that date he received periodic payments of workers' compensation until 31 March 1993. He then applied for social security benefits and was initially granted Sickness Allowance ("SA"), commencing on 19 April 1993, and subsequently, as a result of a favourable decision of the SSAT on 22 July 1993, he was granted Disability Support Pension ("DSP") with effect from 19 April 1993. (T4, R2)

5. On 19 April 1993 the applicant lodged with the Department of Social Security ("DSS") a completed "Compensation and Damages" form in which he confirmed that he had received weekly payments of workers' compensation, in respect of the work-related illness he contracted on 18 July 1990, until 31 March 1993 and stated that he was currently pursuing a lump sum payment of compensation. (T4)

6. On 23 April 1993 an officer of the DSS wrote to the applicant regarding his compensation claim and informed him that, if he received weekly payments of compensation or a lump sum compensation payment, certain social security payments (including SA and DSP) made to him may have to be repaid to the DSS. The letter went on to state:

"This means that before you agree to settle your compensation claim, you should contact this office to find out if you will have to pay back any money you get from us...". (T5)

A similar letter was also sent at the same time to the applicant's solicitors advising them of, inter alia, the effect of a compensation settlement as regards recovery of social security payments already made to the applicant. (T6)

7. On 23 April 1993 an officer of the DSS issued a preliminary notice under s1177 of the Social Security Act 1991 ("the Act") to the relevant workers' compensation insurer, SGIO Insurance Limited ("SGIO"), regarding possible recovery by the DSS of an amount from the total amount SGIO may become liable to pay by way of indemnifying the insured employer. (T7)

8. On 19 November 1997 the applicant's solicitors requested the DSS to provide an estimate of the duration of the social security preclusion period and of the recoverable amount in the event of the applicant's receiving a lump sum compensation payment of $300,000.00. The DSS responded on the same date that the duration of the preclusion period would be 372 weeks, commencing on 1 April 1993 and ending on 17 May 2000. (T11)

9. On 25 November 1997 the applicant's solicitors notified the DSS that the applicant's compensation claim had been settled on 20 November 1997 and that the relevant lump sum compensation amount would be $140,000.00 (T12, p32)

10. By letter dated 20 November 1997 SGIO's solicitors confirmed that the applicant's compensation claim had been settled on 20 November 1997 in the amount of $140,000.00 and that the claim had been settled "on commercial grounds only" and that "no allowance was made for economic loss in the judgment". (T12, p33)

11. By facsimile transmission on 26 November 1997 SGIO notified the DSS of the date and the amount of the settlement of the applicant's compensation claim and requested the DSS to advise the amount sought by it "by way of reimbursement". (T13)

12. On 26 November 1997 an officer of the DSS calculated, on the basis of the abovementioned lump sum compensation amount of $140,000.00, that the duration of the relevant preclusion period was 173 weeks commencing on 1 April 1993 and ending on 24 July 1996, and decided that the amount of $23,200.10, representing the total amount of social security paid to the applicant by way of SA and DSP during that period, should be recovered from SGIO. (T14)

13. By letter dated 26 November 1997 an officer of Centrelink informed the applicant of the calculation of the preclusion period and of the recoverable amount of social security payments made to him during that period and notified him that she had, pursuant to s1179 of the Act, requested SGIO to repay the amount of $23,200.10 to Centrelink before it paid to him the rest of his compensation payment. On 27 November 1997 a copy of that letter was sent by facsimile transmission to the applicant's solicitors. (T16)

14. On 28 November 1997 the abovementioned Centrelink officer sent to SGIO, by facsimile transmission, a recovery notice purportedly under s1179 of the Act, dated 26 November 1997, to the effect that it was proposed to recover from SGIO an amount of $23,200.10, being the amount of social security payments received by the applicant from 1 April 1993 to 24 July 1996. (T17)

15. A file note by the abovementioned Centrelink officer, dated 28 November 1997, is in the following terms:

"[Mr Krpan] rang to say his settlement included no allowance for economic loss and was made on commercial grounds only. He referred to letter from SGIO solicitors to his solicitor ... stating such. I rang [the officer] at SGIO to query as we had not been advised of this. [The officer] advised me that was correct & said there was no admission of liability & it was settled without prejudice & on commercial grounds with no allowance for economic loss, the reason being to avoid a costly trial as a 5-day trial was expected ([Mr Krpan] was asking for $800,000.00).

I initially advised both [Mr Krpan] and [the officer] at SGIO that we would have no recovery if there was no allowance for economic loss, but after discussion in the CMS section & a look at s17(2) & s17(3) I decided that it was appropriate to apply the 50% rule & deem 50% to be for economic loss as [Mr Krpan] was working in 1990 when he had the accident and received workers comp up to 31/3/93 and then claimed Sickness Allowance & Disability Support Pension. Just because it was settled for convenience as a commercial payment with no allowance for economic loss should not determine whether Centrelink consider there to be economic loss in the settlement.

(Advised SGIO & [Mr Krpan's solicitor] our recovery stands)". (T18)

16. By letter dated 27 January 1998 to Centrelink, the applicant's solicitors requested a review of the decision to recover the amount of $23,200.10 as follows:

"Our client has handed to us your letter dated the 26^th November 1997 and requested us to reply to same.

Our client's action for damages for his personal injury sustained on the 18^th July 1990 in the course of his employment with Western Mining Corporation Limited was settled for the sum of $140,000.00 on the 20^th November 1997.

Our client is 53 years old having been born on the 15^th February 1944 and has a potential working life of 12 years.

At the time of the accident our client was employed by Western Mining Corporation Limited as a Shift Supervisor and was in receipt of an income of estimated $32,096.00 nett per annum.

Our client suffers with permanent disabilities and requires medication on a daily basis and is unlikely to return to any form of employment for the rest of his working life.

Our client has instructed us to request you to have your decision reviewed in respect of your determination for requiring our client to refund the sum of $23,200.10 in relation to disability pension that he received as a result of the said accident on the grounds of undue financial hardship to him." (T 23)

17. By letter dated 28 January 1998 an officer of Centrelink requested the applicant's solicitors to provide information regarding the composition of the applicant's compensation claim. On 5 February 1998 the applicant's solicitors provided to Centrelink the following details of the composition of the compensation claim:

"GENERAL DAMAGES E$50,000.00

PAST ECONOMIC LOSS E$144,432.00

INTEREST ON PAST ECONOMIC LOSS E$26,000.00

PAST LOSS OF SUPERANNUATION BENEFITS E$13,478.40

INTEREST ON PAST LOSS OF SUPERANNUATION

BENEFITS E$1,698.28

FUTURE ECONOMIC LOSS E$250,000.00

FUTURE LOSS OF SUPERANNUATION BENEFITS E$18,164.16

FUTURE MEDICAL EXPENSES $E13,515.00

PAST GRATUITOUS SERVICES E$91,980.00

INTEREST ON PAST GRATUITOUS SERVICES E$25,754.40

FUTURE GRATUITOUS SERVICES E$156,000.00

____________

TOTAL E$791,022.24 ". (T25)

18. By letter dated 11 February 1998 the Centrelink officer who made the recovery decision of 26 November 1997 wrote to the applicant as follows:

"You recently asked me to review my decision about your payment of Disability Support Pension.

After careful consideration I have decided that the decision was correct under Section 17(3) & 1165 of the Social Security Act.

This is because your compensation settlement was deemed to include an amount for economic loss for the following reasons: Your case was settled out-of-court on commercial grounds only purely for expediency as the insurer wished to avoid a lengthy court case. Your accident occurred at work in 1990 following which you received Workers Compensation for nearly three years and then you were granted Sickness Allowance and then Disability Support Pension. Your solicitor's claim on your behalf included a considerable component for past and future economic loss and as your solicitor stated you have a potential working life of 12 years.

This means 50% of your gross settlement is the compensation part of your settlement and this is divided by the current lump sum divisor of $403.20 to give the preclusion period for claiming compensation affected payments.

...". (T27)

19. On 20 March 1998 an ARO of Centrelink affirmed the decision to recover the amount of $23,200.10 being the total amount of SA and DSP paid to the applicant during the preclusion period from 1 April 1993 to 24 July 1996. (T30)

20. On 26 May 1998 the SSAT affirmed the abovementioned decision of the ARO. (T2)

21. On 12 June 1998 the applicant lodged with the Tribunal an application for review of the abovementioned decision of the SSAT. (T1)

The Applicant's Evidence

22. The applicant told the Tribunal about the circumstances leading up to the onset of his work-related illness in July 1990. He said that he was employed by WMC in mining operations at Kambalda as an underground shift supervisor and he worked under the mine manager and the foreman. In February 1990, however, the foreman passed away and the applicant was then directed by the manager to act as both shift supervisor and foreman. He told the Tribunal that he was thereby put in a position of general decision-making responsibility for the mine which he did not want and for which he was not qualified or otherwise equipped. He said that being put in that position, where he was responsible for the safety of the miners and for the making of important decisions regarding the mining operations and involving the expenditure of large sums of money for equipment and the like, caused him to worry greatly and it also affected his productivity. He said that he was working 6 - sometimes 7 - days per week and was constantly thinking about his work responsibilities and that he started drinking and was unable to sleep well.

23. The applicant told the Tribunal that his feelings of being unable to cope had been going on for some time when, while underground during the morning of 18 July 1990, he felt that he was losing his mind, going mad, "just totally losing control". He said that he dropped to his knees and one miner asked him whether he was having a heart attack. He told the miner that it was not his heart but that he felt panicky and scared. He was then driven to the surface and taken by ambulance to Kambalda Nursing Post where he was examined by Dr Richards who referred him to a psychiatrist in West Perth, Dr Farrelly. He said that the diagnosis of his condition was described as severe anxiety, panic attacks, work-related stress and burn-out.

24. The applicant said that he has not worked since 18 July 1990 and that he was in receipt of workers' compensation payments until 1993. He said that in 1992 he consulted a solicitor about seeking compensation from WMC and that that solicitor acted for him until his compensation claim was eventually settled in November 1997.

25. The applicant was asked whether he recalled receiving a letter from the DSS in 1993 advising him to contact the DSS before agreeing to settle his compensation claim in order to find out whether he would have to repay any social security moneys to the DSS. After being shown a copy of the DSS letter, addressed to him, dated 23 April 1993, (T5) referred to in paragraph 6 above, he responded "No" to the above question and proceeded to explain the circumstances surrounding his claiming social security in 1993. He said that, on advice from his solicitor, he applied for invalid pension but that his application was initially rejected and he instead started to receive sickness benefit. He said that he was told by the staff at the Joondalup office of the DSS in 1993 that if he settled his compensation claim he would have to repay the amount of sickness benefit paid to him. He added that he received a total of approximately $5,800.00 by way of sickness benefit before it was eventually decided that he was qualified for invalid pension, and that he was always aware that the total amount he received by way of sickness benefit would be deducted from his compensation settlement amount and repaid to the DSS. He said, however, that he was not aware that any other kind of social security benefit - other than sickness benefit - received by him would be deducted from his compensation settlement amount and repaid to the DSS.

26. Asked by the Tribunal why, given that he was aware that sickness benefit (or SA) received by him would have to be repaid to the DSS, he was unaware that invalid pension (or DSP) received by him would likewise have to be repaid to the DSS, he explained that he did not regard invalid pension as a benefit but rather as a payment for a person to live on if they were unable to work; whereas sickness benefits can be "just for (a) certain period of time". (Transcript, p45)

27. The applicant was asked whether his solicitor ever discussed with him the requirement for him to repay money to Centrelink in the event of a settlement of his compensation claim. He said that his solicitor asked him, when SGIO had made an offer of $95,000.00, whether he would have to repay any money to Centrelink. He said that he replied that he would have to repay about $5,000.00 received in sickness benefits. He said that the solicitor then asked him about repayment of amounts received by way of invalid pension and he replied that he did not know anything about that. He said that the solicitor suggested he make inquiries about that and he said that he would.

28. The applicant told the Tribunal that, after the abovementioned discussion with his solicitor, he went home and telephoned Centrelink and spoke to an officer named "Margaret". He said that the officer told him that if his compensation settlement amount did not involve any lost income or economic loss he would not have to repay any money to Centrelink and that Centrelink would not be entitled to touch any of his compensation money. The Tribunal asked the applicant when that telephone conversation took place. The applicant then inquired as to the date on which his compensation claim was settled and, on being informed that that date was 20 November 1997, he said that the telephone conversation took place in late October or very early November 1997. He said that he then passed that information on to his solicitor. He added that he had since been told that "Margaret" no longer works at Centrelink and that Centrelink apparently has no record of that telephone conversation.

29. The applicant told the Tribunal that he did not accept the abovementioned settlement offer of $95,000.00 by SGIO and his solicitor then arranged another conference with SGIO and its solicitors which was scheduled to take place on 20 November 1997. The applicant said that, prior to that conference, he discussed with his solicitor the alternative of going to trial. He said that he told his solicitor that he had never been in court and that his psychiatrist had advised him against subjecting himself to the ordeal of a trial, which could last up to 5 days, saying that he could even finish up in a psychiatric hospital as a result. The applicant added that he himself felt "terrified" about the prospect of confronting WMC's staff and undergoing the trauma of a trial.

30. The applicant said that his solicitor negotiated with SGIO's solicitors at the conference on 20 November 1997 and subsequently informed him that SGIO's final settlement offer was $140,000.00 and that, if he did not accept it, the matter would go to trial. The applicant added that his solicitor told him that he had tried to get the other side to agree to $170,000.00 but they "wouldn't budge", whereupon the applicant said that he was sick of the whole thing and could not cope with it anymore.

31. The applicant said that before he accepted the offer of $140,000.00, he discussed with his solicitor the nett amount he would receive after deduction of expenses. He said that his solicitor told him that his fees would be $12,000.00 and that 10% of the settlement amount would have to be repaid to Medicare. The applicant said that he was also aware that he would have to repay up to $6,000.00 to Centrelink. He therefore expected to receive "a bit more than $100,000.00" nett as a result of the settlement. He later told the Tribunal, however, that he in fact received only $84,000.00 nett. (Transcript, p31)

32. The applicant said that his solicitor told him that the $140,000.00 settlement offer by SGIO was "just for ... suffering and ... medication" and the like, and did not involve lost earnings. He said that his solicitor did not discuss with him any deduction from that settlement amount of moneys received by him by way of DSP. He added that he had since found out from Centrelink that his solicitor had made inquiries of them about this and that the solicitor knew all along that the amount of DSP would be deducted, but that he (the applicant) never knew about that. He also added that, had he known that the full amount of his DSP would be deducted from his settlement, he would have negotiated further with SGIO for them to "pay some amount of that money". (Transcript, p22)

33. The applicant was referred to a form of "Authority" signed by him and dated 20 November 1997. (Exhibit A5) That authority was in the following terms:

"1. I Anton Krpan ... HEREBY AUTHORISE my Solicitors ... to settle my claim for damages for personal injury sustained by me on the 18^th July 1990 in the course of my employment with Western Mining Corporation Limited for the sum of $140,000 - in addition to weekly payments of workers compensation and statutory allowances paid to date and the Defendant's contribution towards my legal costs.

2. I understand that the Department of Social Security may require me to refund any benefits which I might have received from it as a result of the said accident.

3. I understand that once my claim is settled on the above basis, I will have no further claim of any kind.

4. I understand that all future medical expenses as a result of the said accident will be my responsibility and I understand that if any further medical accounts should later come to light then I will be liable for those.

5. I understand that I will have to make a contribution to my legal costs which my Solicitors are authorised to deduct from my settlement.

6. I confirm that my Solicitors have explained the provisions relating to recovery by the Department of Social Security and also the provisions relating to preclusion periods used by the Department of Social Security to calculate the time from which a benefit is payable.

7. I understand that 10% of the Judgment sum will be paid directly to the Health Insurance Commission by the Defendant and I will deal with the Commission directly in relation to any refund the Commission may require from myself towards any medicare services that I may have received in relation to my accident.

8. I confirm that I have read the within authority before signing it and agree to settle my claim on the above terms."

The applicant said that when he went to his solicitor's office to sign that document, his solicitor said that he was in a rush and only had 5 minutes and asked him whether he would first like to read the document. The applicant said that he replied that he trusted him and that there was no need for him to read the document, and he then signed it.

34. The applicant confirmed that when he accepted the SGIO settlement offer of $140,000.00 on 20 November 1997 he did so on the understanding that that amount did not include economic loss or loss of earnings and that the only amount that would be deducted for social security payments was an amount of about $6,000.00 which he had received by way of SA.

35. The applicant said that he first became aware that there was to be a much greater deduction for social security payments about a week after the settlement date when he received a letter to that effect from Centrelink.

36. The applicant concluded his evidence-in-chief by outlining his present financial circumstances. His and his wife's major assets comprise a house (which is unencumbered) valued at approximately $102,000.00, the sum of $17,000.00 in the bank, and 2 motor vehicles. Their fortnightly income from social security payments is about $604.00. According to a financial statement tendered in evidence (Exhibit A1), their fortnightly expenses total $651.00.

37. In cross-examination the applicant stated that when his employment with WMC terminated in 1993 he received a superannuation payment of approximately $156,000.00, of which he "rolled over" $100,000.00 with the AMP Society and spent the balance on paying off his mortgage, purchasing a motor vehicle, paying for improvements to his house and for household items, and paying outstanding bills. (See also Exhibit R3.) He later said that the $100,000.00 originally "rolled over" with the AMP Society had since been spent (over the period 1993-1996) on further improvements to his house, purchasing a second motor vehicle, supporting his parents in Europe, buying clothes, electrical goods and tools, and general living expenses.

38. The applicant also acknowledged that, when he spoke to a Centrelink officer prior to his compensation settlement in relation to his obligation to repay social security payments to Centrelink upon settlement, the officer advised him that his repayment obligation depended on the circumstances of the settlement and she so informed him in relation to various possible circumstances.

39. The Tribunal questioned the applicant in relation to his psychiatric treatment since 18 July 1990 when he was first diagnosed as having acute anxiety and panic attacks. He told the Tribunal that, since that date, he has seen numerous psychiatrists, commencing with Dr Farrelly in July 1990 and culminating with Dr Skerritt whom he commenced seeing in 1993. A brief handwritten report by Dr Skerrit, dated 23 November 1998, tendered in evidence by the applicant, states as follows:

"This is to certify that Mr Anton Krpan ... was seen on the above date, and previously between 27 Apr 93 & 7 Apr 97. I have treated him for anxiety & depression complications of an industrial injury. I discharged him from my care believing him to be totally and permanently disabled and not responsive to quite thorough treatment. That is still my opinion. More detailed report may be obtained ...". (Exhibit A2)

40. The applicant told the Tribunal that the reason he saw so many psychiatrists was that each of them "gave up" and told him that his condition was not improving and that they were unable to help him. He also confirmed that the reason he accepted SGIO's offer of $140,000.00 in full settlement of his compensation claim was that, although he regarded that offer as very inadequate, he wanted to avoid the stress of a lengthy trial because he had been advised by Dr Farrelly and Dr Skerritt that such a stressful experience could greatly aggravate his mental condition.

The Legislation

41. The relevant provisions of the Act are as follows:

"17(2) For the purposes of this Act, compensation means:

(a) a payment of damages; or

(b) a payment 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) a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or

(d) any other compensation or damages payment;

(whether the payment is in the form of a lump sum or in the form of a series of periodic payments) that is:

(e) made wholly or partly in respect of lost earnings or lost capacity to earn; and

(f) made within or outside Australia.

...

17(3) For the purposes of this Act, the compensation part of a lump sum compensation payment is:

(a) 50% of the payment if the following circumstances apply:

(i) the payment is made (either with or without admission of liability) in settlement of a claim that is, in whole or in part, related to a disease, injury or condition; and

(ii) the claim was settled, either by consent judgment being entered in respect of the settlement or otherwise, on or after 9 February 1988; ...

...

1165(2AA) Subject to subsection (2B), if:

(a) a person receives or claims a compensation affected payment; and

(b) the person is a member of a couple; and

(c) the person receives a lump sum compensation payment (whether before or after the person receives or claims the compensation affected payment) on or after 20 March 1997;

no compensation affected payment is payable to the person for the new lump sum preclusion period.

...

1165(5) If periodic compensation payments are made in respect of the lost earnings or lost earning capacity, the new lump sum preclusion period is the period that:

(a) begins on the day after the last day of the periodic payment (sic) period; and

(b) ends after the number of weeks worked out under subsections (8) and (9).

...

1165(8) If a compensation lump sum is received on or after 20 March 1997, the number of weeks in the preclusion period is the number worked out under the following formula:

Compensation part of lump sum

Income cut-out amount

Note 1: For compensation part of lump sum, see section 17.

Note 2: For income cut-out amount, see section 17.

1165(9) If the number worked out under subsection (4) or (8) is not a whole number, the number is to be rounded down to the nearest whole number.

...

1166(1) If:

(a) a person receives a lump sum compensation payment; and

(b) the person receives payments of a compensation affected payment for the lump sum preclusion period;

the Secretary may, by written notice to the person, determine that the person is liable to pay to the Commonwealth the amount specified in the notice.

Note 2: A series of lump sum payments can be taken to be one lump sum compensation payment under subsection 17(2B).

1166(2) Subject to subsection (5), the amount specified in the notice is the recoverable amount and is worked out under subsections 5 (sic) (3), (4), (4A), (4B) and (4C).

...

1166(4) If:

(a) the person is a member of a couple; and

(b) the person's partner does not receive a compensation affected payment, or a compensation affected pension under the Veterans' Entitlements Act, for the old lump sum preclusion period;

the recoverable amount is equal to the smaller of the following amounts:

(c) the compensation part of the lump sum compensation payment;

(d) the sum of the payments of the compensation affected payment made to the person for:

(i) if the lump sum compensation payment is received before 20 March 1997 - the old lump sum preclusion period; or

(ii) if the lump sum compensation payment is received on or after 20 March 1997 - the new lump sum preclusion period.

...

1166(4C) If:

(a) the person is a member of a couple; and

(b) the person receives a lump sum compensation payment on or after 20 March 1997;

the recoverable amount is equal to the smaller of the following amounts:

(c) the compensation part of the lump sum compensation payment;

(d) the sum of the payments of the compensation affected payment made to the person for the new lump sum preclusion period.

...

1179(1) If:

(a) an insurer is liable, under a contract of insurance, to indemnify a compensation payer against any liability arising from a person's claim for compensation wholly or partly in respect of the person's lost earnings or lost capacity to earn; and

(b) the person receives or claims a compensation affected payment for the periodic payments period or the lump sum preclusion period;

the Secretary may give written notice to the insurer that the Secretary proposes to recover the amount specified in the notice from the insurer.

1179(2) If an insurer is given notice under subsection (1), the insurer is liable to pay to the Commonwealth the amount specified in the notice.

1179(3) Subject to subsection (6A), the amount specified in the notice is the recoverable amount and is worked out under subsections (4), (5) and (6).

...

1179(5) If:

(a) the person claiming compensation is a member of a couple; and

(b) the person's partner neither receives nor claims a compensation affected payment for the periodic payments period or the lump sum preclusion period;

the recoverable amount is equal to the smallest of the following amounts:

(c) the sum of the payments of the compensation affected payment payable to the person for:

(i) the periodic payments period; or

(ii) if a lump sum compensation payment is received before 20 March 1997 - the old lump sum preclusion period; or

(iii) if a lump sum compensation affected payment (sic) is received before (sic) 20 March 1997 - the new lump sum preclusion period;

(d) the compensation part of the lump sum payment or the sum of the amounts of the periodic compensation payments;

(e) the maximum amount for which the insurer is liable to indemnify the compensation payer in relation to the matter at any time after receiving:

(i) a preliminary notice under section 1177 in relation to the matter; or

(ii) if the insurer has not received a preliminary notice - the recovery notice under this section in relation to the matter.

...

1184(1) For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:

(a) not having been made; or

(b) not liable to be made;

if the Secretary thinks it is appropriate to do so in the special circumstances of the case."

42. Section 17(1) of the Act contains definitions, for the purpose of the "compensation recovery" provisions of the Act (including the abovementioned provisions), of certain phrases including the following:

"compensation affected payment" is defined to mean, amongst other things, "a disability support pension" or "a social security benefit" (which, by virtue of s23(1) of the Act, includes "sickness allowance");

"lump sum preclusion period" is defined to mean, "either an old lump sum preclusion period within the meaning given by subsections 1165(3) to (4) (inclusive) or a new lump sum preclusion period within the meaning given by subsections 1165(5) to (8) (inclusive), as the case requires".

There is also, in s17(1) of the Act, a definition of the phrase "income cut-out amount" (see s1165(8) above) but it is not necessary to set out that definition in full for present purposes.

The Issues

43. The fundamental issue in this case is whether the lump sum of $140,000.00 paid in settlement of the applicant's compensation claim constitutes "compensation" as defined in s17(2) of the Act. If it does, the following matters will arise for determination:

* What is the commencement date and duration of the "new lump sum preclusion period" pursuant to subss 1165(5), (8) and (9) of the Act?

* What is the "recoverable amount" for the purposes and within the meaning of ss1166 and 1179 of the Act?

* Are there "special circumstances" by reason of which it is appropriate to exercise the discretionary power, conferred by s1184(1) of the Act, to treat the whole or part of the relevant compensation payment as not having been made?

Findings on Material Questions of Fact and Consideration of Issues

Does the lump sum of $140,000.00 paid in settlement of the applicant's compensation claim constitute "compensation" as defined in s17(2) of the Act?

44. There is no dispute that the lump sum of $140,000.00 constitutes a "payment ... in settlement of a claim for damages", within the meaning of s17(2)(c) of the Act. The only matter about which there might be some dispute is whether that lump sum payment was "made wholly or partly in respect of lost earnings or lost capacity to earn", within the meaning of s17(2)(e) of the Act. In Secretary, Department of Social Security v a'Beckett (1990) 26 FCR 349 the Federal Court of Australia (von Doussa J) said (at p361) that the task of the Tribunal, in determining whether a lump sum payment constitutes "compensation" (as statutorily defined) in a case like the present, is "to apply in a sensible way the words of the definition to the primary facts as found, drawing such inferences as fairly (arise) from those facts".

45. In the present case SGIO's solicitors, in their letter dated 20 November 1997 to the applicant's (then) solicitors confirming the settlement agreed upon between the parties on that date, stated that SGIO settled the applicant's claim "on commercial grounds only" and that "no allowance was made for economic loss in the judgment" (T12, p33; see paragraph 10 above). The applicant, in his oral evidence, confirmed that, when he agreed to accept SGIO's settlement offer of $140,000.000, he did so on the understanding that that amount did not include economic loss or loss of earnings (see paragraphs 32 and 34 above).

46. Statements by parties or their solicitors regarding the basis on which the amount of a payment in settlement of a claim for damages is agreed upon between them are, however, not conclusive as regards the matter of whether such a payment is "made wholly or partly in respect of lost earnings or lost capacity to earn", within the meaning of s17(2)(e) of the Act. As von Doussa J said in a'Beckett (above) (at pp361-362):

"Usually the more objective evidence available about the nature and extent of the injury, and the events which followed it, for example the duration of absences from work, actual loss of wages, changes in work activity and the like, will provide a more reliable guide than the asserted beliefs of the claimant as to how the settlement sum was arrived at. Ordinarily, statements made by the claimant asserting a loss resulting from an impaired capacity for work made in circumstances where those statements can reasonably be regarded as having been made to influence a defendant to pay will be entitled to substantial weight. Foremost amongst such statements will be formal particulars of claim. The formal particulars of claim identify the subject matter of the claim presented by the pensioner."

47. In the present case the applicant received periodic payments of workers' compensation from the date of onset of his work-related illness (namely, 18 July 1990) until 31 March 1993 and he thereafter applied for, and was ultimately granted, DSP. As regards the formal particulars of his claim for damages against WMC in respect of his work-related illness (set out in paragraph 17 above), the Tribunal notes that, in a claim for damages totalling $791,022.24, only the sum of $50,000.00 is claimed for "general damages" (that is, non-economic loss), the sum of $13,515.00 is claimed for "future medical expenses", and the balance is claimed for various heads of past and future economic loss (including lost earnings and earning capacity).

48. Having regard to the whole of the evidence on this matter, the Tribunal is not satisfied that the lump sum of $140,000.00 paid in settlement of the applicant's claim for damages against WMC did not contain any component in respect of lost earnings or lost capacity to earn. The Tribunal attaches particular significance to the fact that the formal particulars of the applicant's claim indicate that, in a claim for damages totalling $791,022.24, he claimed a total of only $50,000.00 in respect of "general damages", that is, not in respect of lost earnings or lost capacity to earn. Accordingly, the Tribunal finds that the abovementioned lump sum payment of $140,000.00 was made "partly in respect of lost earnings or lost capacity to earn", within the meaning of s17(2)(e) of the Act, and it therefore constitutes "compensation" as defined in s17(2) of the Act.

The "new lump sum preclusion period"

49. Because the applicant received the relevant lump sum compensation payment after 20 March 1997, by virtue of s1165(2AA) of the Act no "compensation affected payment" (including SA and DSP) was payable to him for the "new lump sum preclusion period". The duration of that period is worked out under the formula specified in s1165(8) whereby the "compensation part of lump sum" is divided by the "income cut-out amount". By s17(3) of the Act, the "compensation part of lump sum" in the present case is 50% of $140,000.00 - namely, $70,000.00. It is common ground that the "income cut-out amount" in the present case, as defined in relation to a formula specified in s17(1) of the Act, is $403.20. Accordingly, the duration of the "new lump sum preclusion period" in the present case is 173.6 weeks which, by virtue of s1165(9) of the Act, is rounded down to 173 weeks. By s1165(5) of the Act, that period begins on the day after the last day of the periodic payments period. In the present case, periodic payments of workers' compensation were made to the applicant until 31 March 1993.

50. Accordingly, the "new lump sum preclusion period", for the purposes of the present case, began on 1 April 1993 and continued for 173 weeks, ending on 24 July 1996, and by virtue of s1165(2AA) of the Act, SA and DSP (and any other "compensation affected payment") were not payable to the applicant for that period.

The "recoverable amount"

51. Section 1166 of the Act provides for recovery by the respondent of moneys from a person who has received a lump sum compensation payment and has also received payments of a "compensation affected payment" for a lump sum preclusion period. Section 1166(1) authorises the respondent, by written notice to the person concerned, to determine that that person is liable to pay to the Commonwealth the amount specified in the notice. By s1166(2), that amount so specified is the "recoverable amount" and is worked out under whichever of subss (3), (4), (4A), (4B) and (4C) is applicable.

52. In the present case, both subs (4) and subs (4C) of s1166 of the Act appear to be applicable. According to both subsections, the "recoverable amount" in the present case is equal to the smaller of the following amounts:

"the compensation part of the lump sum compensation payment"; or

"the sum of the payments of the compensation affected payment" made to the applicant for "the new lump sum preclusion period".

In the present case, the "compensation part of the lump sum compensation payment" was the amount of $70,000.00, and it was common ground that "the sum of the payments of the compensation affected payment" (namely SA and DSP) made to the applicant for "the new lump sum preclusion period" (namely, the period from 1 April 1993 of 24 July 1996) was the amount of $23,200.10.

53. Accordingly, the "recoverable amount" which the respondent is authorised by s1166(1) of the Act, by written notice to the applicant, to determine that the applicant is liable to pay to the Commonwealth is the amount of $23,200.10.

54. The Tribunal notes that if a notice is validly given by the respondent to a person, pursuant to s1166(1), the amount specified in that notice (the "recoverable amount") is a "compensation debt", as defined in s23(1) of the Act, and that "compensation debt" is, by virtue of s1225(1) of the Act, a debt due to the Commonwealth.

55. The respondent, however, has not given a written notice under s1166(1) of the Act to the applicant. Instead, a delegate of the respondent gave a written notice, dated 26 November 1997, to the relevant insurer (SGIO) under s1179(1) of the Act (see paragraph 14 above). Section 1179(1) authorises the respondent to give written notice to a relevant insurer that the respondent proposes to recover the amount specified in the notice from the insurer. By s1179(3), the amount so specified is the "recoverable amount" and is worked out under whichever of subss (4), (5) and (6) is applicable. Subsections (4) and (6) of s1179 are clearly inapplicable on the facts of the present case. Subsection (5) of s1179 is the applicable provision in the present case.

56. Paragraphs (a) and (b) of s1179(5) of the Act are satisfied in this case, in which event, according to the literal terms of that subsection:

"the recoverable amount is equal to the smallest of the following amounts:

(c) the sum of the payments of the compensation affected payment payable to the person for:

(i) the periodic payments period; or

(ii) if a lump sum compensation payment is received before 20 March 1997 - the old lump sum preclusion period; or

(iii) if a lump sum compensation affected payment is received before 20 March 1997 - the new lump sum preclusion period;

(d) the compensation part of the lump sum payment or the sum of the amounts of the periodic compensation payments;

(e) the maximum amount for which the insurer is liable to indemnify the compensation payer in relation to the matter at any time after receiving:

(i) a preliminary notice under s1177 in relation to the matter; or

(ii) if the insurer has not received a preliminary notice - the recovery notice under this section in relation to the matter."

There are, it seems to the Tribunal, obvious drafting errors in subpara (iii) of para (c) of s1179(5) (the Tribunal notes that the same apparent errors occur in subpara (iii) of para (a) of s1179(4)). The phrase "lump sum compensation affected payment" presumably should read, so as to complement subpara (ii) of s1179(5)(c) and so as to be consistent with the relevant provisions of ss1165, 1166 and 1174, "lump sum compensation payment." Furthermore, since subpara (iii) of s1179(5)(c) refers to the "new lump sum preclusion period", it presumably should refer, consistently with the relevant provisions of ss1165, 1166 and 1174, to a "lump sum compensation payment" which is received "on or after 20 March 1997", not (as is stated) "before 20 March 1997". (emphasis added) Section 1179(5) of the Act, as it presently stands, does not specifically refer to a circumstance in which (as in the present case) a lump sum compensation payment was received on or after 20 March 1997.

57. The question of course arises whether it is appropriate for the Tribunal, in effect, to rewrite subpara (iii) of para (c) of s1179(5) of the Act so that it reads in the way suggested in the preceding paragraph - that is, as follows:

"(iii) if a lump sum compensation payment is received on or after 20 March 1997 - the new lump sum preclusion period;".

58. At common law, the traditional approach to statutory interpretation is the literal approach whereby the words used in the relevant statutory provision are given their plain and ordinary grammatical meaning having regard to the statutory context in which they appear. An alternative, more contemporary, approach, at common law, to statutory interpretation is the purposive approach whereby the relevant statutory words are interpreted in such a way as will accord with or promote the purpose or object for which they were enacted. See, generally, Pearce and Geddes, Statutory Interpretation in Australia (4^th ed, 1996), pp22-26. The latter approach is required to be adopted in the interpretation of Commonwealth statutory provisions by reason of s15AA(1) of the Acts Interpretation Act 1901 which provides:

"In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object".

Section 15AB(1) of that Act provides that, in the interpretation of a provision of an Act, if any extrinsic material is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:

"(a) to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; or

(b) to determine the meaning of the provision when:

(i) the provision is ambiguous or obscure; or

(ii) the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable".

59. The Tribunal has no real doubt that subpara (iii) of para (c) of s1179(5) of the Act, as it presently stands, involves two specific drafting errors and that it was, instead, intended by the legislature to be expressed in the terms set out in paragraph 57 above. That, in the Tribunal's opinion, is clear from a consideration of the context of the amending legislation whereby the abovementioned provisions in their present form were introduced into the Act with effect from 20 March 1997. The scheme of the relevant amending legislation - namely, Part 2 of Schedule 12 to the Social Security Legislation Amendment (Budget and Other Measures) Act 1996 - as confirmed in the Minister's Second Reading Speech and the Explanatory Memorandum in relation to the Bill for that Amendment Act - was that lump sum compensation payments received on or after 20 March 1997 were to be treated differently from such payments received before 20 March 1997, as regards the period for which payment of various forms of social security ("compensation affected payments") would thereby be precluded. For lump sum compensation payments received on or after 20 March 1997 the relevant social security preclusion period (the "new lump sum preclusion period") was to be calculated according to a different formula from that used to calculate the preclusion period applicable to lump sum compensation payments received before 20 March 1997 (the "old lump sum preclusion period").

60. Accordingly, having regard to the considerations referred to in the preceding paragraph, the two specific drafting errors which the Tribunal considers to be present in s1179(5)(c)(iii) of the Act are (as suggested in paragraph 56 above):

* the phrase "lump sum compensation affected payment should read "lump sum compensation payment";

* the phrase "before 20 March 1997" should read "on or after 20 march 1997".

In each case, however, the meaning of the existing words is clear and there is no ambiguity or obscurity. As regards the phrase "lump sum compensation affected payment", the expression "compensation affected payment" is itself exhaustively defined in s17(1) of the Act (see paragraph 42 above) and, accordingly, the clear and unambiguous meaning of that phrase is: a "compensation affected payment" (as statutorily defined) in the form of a lump sum. As regards the phrase "before 20 march 1997", its clear and unambiguous meaning is: earlier in time than, or prior to, 20 March 1997.

61. In those circumstances, would it be appropriate for the Tribunal, in effect, to rewrite subpara (iii) of para (c) of s1179(5) of the Act so that it reads in the way set out in paragraph 57 above? In the Tribunal's opinion, it would not. Although it may be appropriate for the Tribunal, when called upon to interpret and apply a statutory provision which is open to more than one construction, to give that provision a strained construction or read words into it or otherwise clarify or modify the ordinary, grammatical meaning of the statutory language, in order to give effect to the intention or purpose of the legislature, it is not appropriate for the Tribunal to substitute words for the words that appear in the relevant statutory provision when the meaning of the latter words is "intractable" and no construction, other than their ordinary, grammatical meaning, is reasonably open: Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320. For the Tribunal to engage in such an exercise would be for it to engage in rewriting the relevant statutory provision - that is, to engage in the function of legislation rather than in the function of interpretation or construction. As McHugh JA said in Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 423:

"But first and last the function of the court remains one of construction and not legislation".

Section 15AA(1) of the Acts Interpretation Act 1901 in no way derogates from that proposition. In Mills v Meeking (1990) 169 CLR 214 Dawson J, referring to s35(a) of the Interpretation of Legislation Act 1984 (Vict) (which is in similar terms to s15AA(1) of the Acts Interpretation Act ), said (at p235) that that section:

"requires a court to construe an Act, not to rewrite it, in the light of its purposes".

Similarly, Burchett J in Trevisan v Commissioner of Taxation (1991) 29 FCR 157 said (at p162):

"Section 15AA [of the Acts Interpretation Act] requires a court to prefer one construction to another. Such a requirement can only have meaning where two constructions are otherwise open. The section is not a warrant for redrafting legislation nearer to an assumed desire of the legislature. It is not for the courts to legislate; a meaning, though illuminated by the statutory injunction to promote the purpose or object underlying the Act, must be found in the words of Parliament."

As regards the use of extrinsic material in statutory interpretation, which is authorised by s15AB of the Acts Interpretation Act 1901, Fitzgerald J said in Federal Commissioner of Taxation v Trustees of the Lisa Marie Walsh Trust (1983) 48 ALR 253 at 278:

"... even if the extrinsic material does reveal the legislative purpose, there will continue to be boundaries beyond which the words used will not stretch even where it is known that they were intended to do so".

62. Accordingly, the Tribunal will not depart from the literal words of s1179(5)(c)(iii) of the Act and will apply those words, in accordance with their plain and ordinary grammatical meaning and in accordance with any relevant statutory definition of those words, to the facts of the present case. Before doing so, the Tribunal notes that there is a decision of the Tribunal to the contrary effect - Re Lawrie and Secretary, Department of Family and Community Services (1998) 54 ALD 483 - in which s1179(4)(a)(iii) of the Act (which is in identical terms to, and contains the same apparent drafting errors as, s1179(5)(c)(iii) of the Act) was applied as though it read in the way set out in paragraph 57 above. For the reasons expressed above, however, the Tribunal respectfully declines to take that approach in the present case. In the Tribunal's opinion it is the responsibility of the legislature to correct drafting errors in its legislation by the process of statutory amendment and, in relation to subparas 1179(4)(a)(iii) and 1179(5)(c)(iii) of the Act, the relevant drafting errors are such that they can very easily be corrected by this means. It is not appropriate for the Tribunal in the present case in effect to usurp the function of the legislature by effectively rewriting the relevant statutory provision.

63. Under s1179(5) of the Act, the "recoverable amount" is equal to the smallest of the amounts described in each of paras (c), (d) and (e) of that subsection. The Tribunal will now consider the application of each of those paragraphs to the facts of the present case.

64. The amount described in para (c) of s1179(5) of the Act is "the sum of the payments of the compensation affected payment payable to" the applicant for each of 3 alternative periods referred to in subparas (i), (ii) and (iii), respectively. As regards the period referred to in subpara (i) - namely, the "periodic payments period" from 18 July 1990 to 31 March 1993 - the applicant did not apply for SA or DSP until 19 April 1993 and no "compensation affected payment" (including, relevantly, SA and DSP) was payable to the applicant for that abovementioned period. The period referred to in subpara (ii) - namely, the "old lump sum preclusion period" - is inapplicable in this case because that period is only applicable if a "lump sum compensation payment" was received before 20 March 1997 and that condition was not satisfied in this case. The period referred to in subpara (iii) - namely, the "new lump sum preclusion period" - is applicable "if a lump sum compensation affected payment is received before 20 March 1997". That condition was also not satisfied in the present case. Accordingly, the only subparagraph of para (c) of s1179(5) that can apply in the present case is subpara (i) and the sum of the payments of the "compensation affected payment" payable to the applicant for the period referred to in that subparagraph - namely the "periodic payments period" from 18 July 1990 to 31 March 1993 - was $0.00.

65. The amount described in para (d) of s1179(5) of the Act is "the compensation part of the lump sum payment or the sum of the amounts of the periodic compensation payments". The "compensation part of the lump sum payment" in the present case is the amount of $70,000.00. The Tribunal has not been informed of "the sum of the amounts of the periodic compensation payments" made to the applicant for the relevant periodic payments period from 18 July 1990 to 31 March 1993 but it is likely, having regard to the level of the applicant's income immediately prior to 18 July 1990 (see paragraph 16 above) , that that sum would be in excess of $70,000.00.

66. Finally, the amount described in para (e) of s1179(5) of the Act is "the maximum amount for which the insurer is liable to indemnify the compensation payer in relation to the matter at any time after receiving", relevantly, a preliminary notice under s1177 of the Act. In the present case that amount is $140,000.00.

67. Accordingly, the Tribunal finds that, by virtue of s1179(5) of the Act, the "recoverable amount", in respect of which the respondent is authorised by s1179(1) of the Act to give written notice to the relevant insurer that it is proposed to recover that amount from the insurer, is the amount described in s1179(5)(c)(i), which in the present case is $0.00.

68. It follows that the recovery notice given by the respondent, purportedly under s1179 of the Act, to SGIO on 28 November 1997 was defective because the "recoverable amount" specified therein - namely, $23,200.10 - was not in accordance with subss (3) and (5) of s1179. Accordingly, that notice was invalid and ineffectual. The amount of $23,200.10 recovered by the respondent from SGIO by means of that invalid notice should be refunded to SGIO for ultimate payment to the applicant.

69. There is, however, an alternative course of action - other than the legally flawed s1179 course of action - open to the respondent for the recovery of payments of DSP made to the applicant for the "new lump sum preclusion period" in this case (namely, the period from 1 April 1993 to 24 July 1996). The respondent may, pursuant to s1166(1) of the Act, by written notice to the applicant, "determine that [the applicant] is liable to pay to the Commonwealth the amount specified in the notice". By s1166(2), that amount is the "recoverable amount" and is worked out under whichever of subss (3), (4), (4A), (4B) and (4C) is applicable. On the facts of the present case, subss (4) and (4C) are each applicable and, under each subsection, the "recoverable amount", in a case (such as the present) where a lump sum compensation payment is received by a person on or after 20 March 1997, is equal to the smaller of the following amounts:

* the compensation part of the lump sum compensation payment;

* the sum of the payments of the compensation affected payment made to the person for the new lump sum preclusion period.

In the present case, the former amount is, by virtue of s17(3) of the Act, $70,000.00 and it is common ground that the latter amount is $23,200.10. Accordingly, the respondent is authorised under s1166(1) of the Act by written notice to the applicant to determine that the applicant is liable to pay to the Commonwealth the amount of $23,200.10. If the respondent gives such a notice to the applicant, the abovementioned amount would be a "compensation debt" (as defined in s23(1) of the Act) and would, by virtue of s1225(1) of the Act, be a debt due to the Commonwealth and recoverable by the Commonwealth by the means specified in s1230C(1) and Part 5.3 of the Act.

70. The determination of the "recoverable amount" ultimately specified in a notice under ss1166, 1174 or 1179 (as the case may be) of the Act will, however, be affected by a favourable exercise of the discretion conferred by s1184(1) of the Act because that subsection authorises the respondent (and, on review, the Tribunal) to treat the whole or part of a compensation payment as either not having been made or not liable to be made (as the case may be) if it is appropriate to do so in the "special circumstances" of the case. It is to that issue that the Tribunal now turns.

Are there "special circumstances" for the purposes of s1184(1) of the Act?

71. Mr Price (for the applicant) submitted that the Tribunal should have regard to the following factors as collectively amounting to "special circumstances" for the purposes of s1184(1) of the Act:

* the applicant's present and future financial position;

* the applicant's past, present and future health;

* the circumstances in which the settlement of the applicant's compensation claim was effected - in particular, his inability, by reason of his suffering from anxiety and depression, to withstand the rigours of a trial;

* the conduct of the applicant's solicitor in effecting the settlement "without seeking and providing precise details as to all deductions" from the settlement moneys;

* the applicant's relatively poor comprehension of English and, in particular, his lack of a clear understanding of the authority to settle document prepared by his solicitor and of the full import of signing that document; and

* the applicant's inability to fund an action against his former solicitor for negligence, having regard to that solicitor's intention vigorously to defend such an action.

72. Mr Price also submitted that the Tribunal should have regard to the fact that the applicant agreed to settle his compensation claim on the basis that the settlement amount did not include a component for economic loss and that there would be no deduction from the settlement amount of any payments of DSP that he had received. He conceded, however, on the basis of the applicant's oral evidence, that the applicant had always understood that he would have to repay the amount of SA originally received by him (approximately, $5,800.00) prior to the decision of the SSAT on 22 July 1993 that he was qualified for DSP with effect from 19 April 1993. Accordingly, he submitted that the Tribunal should exercise the discretion conferred by s1184(1) of the Act so that the preclusion period in the present case is reduced to such an extent that the recoverable amount is reduced from $23,200.10 to $5,800.00.

73. The "special circumstances" discretion, conferred by s1184(1) of the Act and its statutory predecessors, has been considered in numerous decisions of the Federal Court of Australia and of the Tribunal. The tenor of those decisions is that, before it may become appropriate to exercise that discretion, the circumstances of the particular case must be special, in the sense of unusual, uncommon or exceptional, such that the application of the relevant "compensation recovery" provisions in Pt 3.14 of the Act (incorporating the "compensation recovery definitions" in s17 of the Act, including the arbitrary so-called "50% rule" in s17(3)) would produce a result that was, in relation to the compensation/social security recipient, unjust, unreasonable or otherwise inappropriate: see, for example, Re Ivovic and Director-General of Social Services (1981) 3 ALN No 61 at pp N96-N97; Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3; Secretary, Department of Social Security v Smith (1991) 30 FCR 56 at 59-61; Haidar v Secretary, Department of Social Security (1998) 28 AAR 288 at 296-7. The effect of an exercise of the discretion conferred by s1184(1) will be to alleviate such injustice or unfairness by treating the whole or a part of the relevant compensation payment as either not having been made or not liable to be made, as the case may be. The effect of treating part of the compensation payment as not having been made or liable to be made is that the preclusion period, during which certain categories of social security are not payable to the recipient, is correspondingly reduced; whereas, the effect of treating the whole of the compensation payment as not having been made or liable to be made is that there is no such preclusion period.

74. The Tribunal now turns to consider the circumstances of the applicant's case.

75. As regards the applicant's financial circumstances (see paragraphs 36 and 37 above), these do not amount to exceptional financial hardship and cannot relevantly be regarded as constituting special circumstances within the meaning of s1184(1) of the Act. Likewise, the applicant's mental and emotional condition, whereby he has been qualified for DSP since 19 April 1993, cannot reasonably be regarded as so grave as, in itself, to constitute a special circumstance for present purposes.

76. As regards the applicant's claim that he received incorrect or misleading advice from DSS officers regarding the effect of his receiving a compensation payment on his social security entitlements, the Tribunal is not satisfied that there are any special circumstances that would warrant the exercise of the discretion conferred by s1184(1) of the Act. The applicant's mistaken belief that only the amount of SA, but not DSP, received by him would be deducted from his compensation payment was, in the Tribunal's opinion, due to his own misunderstanding of advice given to him by DSS staff, rather than to such advice itself being incorrect or misleading. Furthermore, even if, as the applicant claims, he was wrongly advised by a Centrelink officer in a telephone conversation shortly before his compensation claim was settled that Centrelink would not be entitled to recover any money from him if his compensation payment did not include any amount for economic loss or loss of earnings, the Tribunal is not satisfied that such advice had any effect on the amount of the compensation payment he ultimately agreed to accept. According to the applicant's own evidence, that amount of $140,00.00 was the highest amount the applicant's solicitor was able to negotiate on his behalf with SGIO's solicitors and the applicant decided to accept that amount on medical advice and to spare himself the rigours and stress of a lengthy trial. The Tribunal notes that there is a Centrelink file note, dated 28 November 1997, which records a telephone conversation with the applicant in which it is stated that a Centrelink officer "initially advised" the applicant that Centrelink "would have no recovery if there was no allowance for economic loss", but that that (incorrect) advice was corrected later the same day in a telephone call to the applicant's solicitor (see paragraph 15 above). In any event, the telephone conversation in which such incorrect advice was initially given took place after the applicant's compensation claim was settled on 20 November 1997 and, obviously, could not have had any effect on the amount of the settlement.

77. The applicant also claimed that he had been incorrectly or inadequately advised by his solicitor regarding the impact of his compensation payment on his social security entitlements. He acknowledged that he had signed an authority to settle prepared by his solicitor whereby he confirmed that his solicitor had explained to him the provisions regarding preclusion periods in relation to social security benefits and the provisions relating to recovery by the DSS. He also acknowledged that his solicitor had given him the opportunity to read that document before signing it but that, because he trusted his solicitor, he signed the document without having read it. The Tribunal notes, however, that the applicant's former solicitor has stated that the applicant was advised by him, prior to the compensation settlement on 20 November 1997, regarding the recovery of social security benefits by the DSS and the possible operation of a preclusion period, and that any claim by the applicant against him for negligence will be "vigorously defended". (Exhibit A6) On the evidence before it, the Tribunal is not able to make a finding that, prior to the settlement of his compensation claim on 20 November 1997, the applicant received incorrect or inadequate advice from his solicitor regarding the impact of the compensation payment on his social security entitlements. Furthermore, the Tribunal is not satisfied that, even if such incorrect or inadequate advice was given, it had any effect on the amount of that compensation payment given that that amount of $140,000.00 was, according to the applicant's evidence, described by his solicitor as SGIO's final offer and that, notwithstanding his solicitor's attempt to negotiate a higher amount, SGIO "wouldn't budge" (see paragraph 30 above).

Conclusion

78. Having regard to the circumstances of the applicant's case, the Tribunal, while it acknowledges that the applicant's quality of life has been very adversely affected by the work-related illness which he contracted in July 1990 and which effectively curtailed his working life at the age of 45 years, is not satisfied that those circumstances constitute "special circumstances" within the meaning and for the purposes of s1184(1) of the Act. In the Tribunal's opinion there are no special circumstances in the applicant's case that render the normal application of the relevant "compensation recovery" provisions in Pt 3.14 of the Act unfair, unjust, unreasonable or otherwise inappropriate. It is, therefore, not appropriate to exercise the discretion, conferred by s1184(1) of the Act, in the present case.

79. Accordingly, the Tribunal concludes that

* the amount of $23,200.10, being the total amount of DSP received by the applicant during "the new lump sum preclusion period" from 1 April 1993 to 24 July 1996, was, pursuant to s1165(2AA) of the Act, not payable to him;

* the respondent is authorised by s1166(1) of the Act, by written notice to the applicant, to determine that the applicant is liable to pay that amount to the Commonwealth; and

* in the event that the respondent gives such a written notice to the applicant and makes such a determination under s1166(1) of the Act, that amount will be a compensation debt due to the Commonwealth pursuant to s1125(1) of the Act and will be recoverable by the Commonwealth by the means specified in s1230C(1) and Part 5.3 of the Act.

Decision

80. For the above reasons, the Tribunal sets aside the decision under review and remits the matter to the respondent for reconsideration in accordance with the following directions:

* that the amount of $23,200.10, being the total amount of DSP received by the applicant during the "new lump sum preclusion period" from 1 April 1993 to 24 July 1996, was, pursuant to s1165(2AA) of the Act, not payable to him;

* that the recovery of that amount by the respondent from SGIO, purportedly under s1179 of the Act, was not authorised by s1179 and was invalid; but

* that that amount may lawfully and properly be recovered by the respondent from the applicant pursuant to ss1166(1), 1225(1) and 1230C(1) of the Act.

I certify that the 80 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor S D Hotop, Senior Member

Dr D Weerasooriya, Member

Signed: Catherine Osborn .....................................................................................

Associate

Date/s of Hearing 7 May 1999

Date of Decision 20 September 1999

Counsel for the Applicant Mr D Price

Solicitor for Applicant D O D Price & Associates

Counsel for the Respondent Ms A Henderson and Mr S Ellis

Solicitor for the Respondent Administrative Law Section, Centrelink