Veness and Secretary, Department of Family and Community Services [2000] AATA 6 (12 January 2000)

Last Updated: 14 January 2000

DECISION AND REASONS FOR DECISION [2000] AATA 6

ADMINISTRATIVE APPEALS TRIBUNAL )

) No W1999/64

GENERAL ADMINISTRATIVE DIVISION )

Re RODNEY JOSE VENESS

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Associate Professor S D Hotop, Senior Member

Date 12 January 2000

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 $15,777.56, being the total amount of Sickness Allowance and Newstart Allowance received by the applicant during the period from 2 January 1997 to 18 November 1998, was, by reason of s.1165(1A) of the Social Security Act 1991 ("the Act"), not payable to him; that the Recovery Notice issued by the respondent on 19 November 1998, whereby the respondent recovered the amount of $15,777.56 from the Insurance Commission of WA, was not in accordance with s.1179 of the Act and was invalid and ineffectual; but that the amount of $15,777.56 may lawfully and properly be recovered by the respondent pursuant to ss. 1166(1), 1225(1) and 1230C(1) of the Act.

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

Senior Member

CATCHWORDS

SOCIAL SECURITY - sickness allowance - disability support pension - lump sum payment of compensation - preclusion period - recovery notice given to insurer - whether special circumstances - whether whole or part of compensation payment should be treated as not having been made - whether recovery notice valid

STATUTES - statutory interpretation - apparent drafting error - purposive approach to interpretation - meaning of statutory language clear and unambiguous - 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), 17(2), 17(3), 17(6), 1165, 1166, 1179, 1184(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 Krpan and Secretary, Department of Family and Community Services [1999] AATA 709

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 Smith (1991) 30 FCR 56

Trevisan v Commissioner of Taxation (1991) 29 FCR 157

REASONS FOR DECISION

12 January 2000 Associate Professor S D Hotop, Senior Member

1. This is an application by Rodney Jose Veness ("the applicant") for review of a decision of the Social Security Appeals Tribunal ("SSAT"), dated 22 January 1999. In that decision the SSAT affirmed a decision of an Authorised Review Officer ("ARO") within Centrelink, dated 7 December 1998, that no "compensation affected payment" is payable to the applicant for the period from 20 December 1996 to 12 October 2000 ("the new lump sum preclusion period"), and that the amount of $15,777.56, being the total amount of payments of Sickness Allowance ("SA") and Newstart Allowance ("NSA") received by the applicant during the period from 2 January 1997 to 18 November 1998, is recoverable by the Secretary to the Department of Family and Community Services ("the respondent").

2. At the hearing the applicant appeared in person without representation and the respondent was represented by Mr A Jones of the Advocacy and Administrative Law Team, Perth within Centrelink. The Tribunal had before it the documents ("T documents") furnished by the respondent pursuant to s.37(1) of the Administrative Appeals Tribunal Act 1975 and the following documentary exhibits tendered by the parties:

* report of Dr M Dougall, dated 20 October 1999 (A1)

* letter from Dr M Mears, dated 21 October 1999 (A2)

* letter from Ms L A Hill, dated 21 October 1999, and enclosures (A3)

* letter from Mr J M Lambert, dated 2 December 1999 (A4)

* letter from Mr R Pitman, dated 8 December 1999 (A5)

* Consent to Judgment being entered for the applicant in the District Court of Western Australia for $165,000.00 and costs fixed at $4,765.20, dated 16 November 1998(R1)

* letter from a delegate of the respondent to Moss & Co, Solicitors, dated 14 March 1997 (R2)

* Preliminary Notice under s.1177 of the Social Security Act 1991, issued by a delegate of the respondent to SGIC, dated 14 March 1997 (R3)

* letter from a delegate of the respondent to the applicant, dated 19 November 1998 (R4)

* "address history" held by Centrelink regarding the applicant for the period from 24 June 1991 to 20 May 1999 (R5)

* "activity management history" held by Centrelink regarding the applicant for the period from 1 February 1998 to 13 May 1998 (R6)

* e-mail from Ms D Garrigan to Records Management, Centrelink, dated 23 November 1999 (R7)

* NSA application form lodged by the applicant with the Kwinana office of Centrelink on 7 October 1998 (R8)

* NSA application form sent to the applicant in Brooks Street, Esperance and lodged by him with Centrelink on 4 November 1998 (R9)

* NSA application form lodged by the applicant with the Kwinana office of Centrelink on 18 November 1998 (R10)

* NSA application form lodged by the applicant with the Spearwood office of Centrelink on 12 August 1998 (R11)

* NSA application form sent to the applicant in Brooks Street, Esperance and lodged by him with the Spearwood office of Centrelink on 29 July 1998 (R12)

* Recovery Notice under s.1179 of the Social Security Act 1991 from Centrelink to the Insurance Commission of WA, dated 19 November 1998 (R13).

Oral evidence was given by the applicant and, on behalf of the respondent, by Ms D Garrigan.

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 20 December 1996 the applicant was injured in a motor vehicle accident, following which he received SA and NSA.

5. By letter dated 14 March 1997 addressed to the applicant in Lapage Street, Esperance, a delegate of the respondent advised the applicant regarding the implications, in the event of his receiving a lump sum compensation payment, in relation to any social security payments already received by him and his entitlement to receive social security payments in the future. (T11-11A)

6. By letter dated 14 March 1997 to the applicant's solicitors, a delegate of the respondent referred to the application of Pt 3.14 of the Social Security Act 1991 ("the Act") in the event of settlement of the applicant's claim for damages arising out of his motor vehicle accident. (Exhibit R2)

7. On 14 March 1997 a delegate of the respondent issued a Preliminary Notice under s.1177 of the Act to the relevant third party insurer, SGIC, regarding possible recovery of an amount (comprising social security payments received by the applicant) from the total amount SGIC may become liable to pay by way of indemnifying the insured against liability to pay damages to the applicant. (Exhibit R3)

8. On 16 November 1998 the applicant's claim for damages arising out of his motor vehicle accident was settled by consent judgment being entered for the applicant in the amount of $165,000.00 plus costs fixed at $4,765.20. (Exhibit R1)

9. On 19 November 1998 a delegate of the respondent issued a Recovery Notice, purportedly under s.1179 of the Act, to the Insurance Commission of WA (formerly SGIC) to the effect that the respondent proposed to recover from the Commission the amount of $15,777.56, being the amount of social security payments received by the applicant for the period from 2 January 1997 to 18 November 1998. (Exhibit R13)

10. In a letter dated 19 November 1998 addressed to the applicant in Brooks Street, Esperance a delegate of the respondent stated that, under Pt 3.14 of the Act, the applicant was not eligible to receive social security payments for the period from 20 December 1996 to 12 October 2000 by reason of his entitlement to a lump sum compensation payment in the amount of $165,000.00, and that the amount of social security payments already received by the applicant since the commencement of that period - namely, $15,777.56 - was to be paid by the Insurance Commission of WA to Centrelink before payment to the applicant of the balance of the compensation amount payable to him. (Exhibit R4)

11. On 7 December 1998 an ARO affirmed the delegate's decision of 19 November 1998. (T13)

12. On 22 January 1999 the SSAT affirmed the ARO's decision of 7 December 1998. (T2)

The Applicant's Evidence

13. The applicant informed the Tribunal generally of his financial circumstances. He told the Tribunal that the net amount he received from his settlement was $127,000 and that he spent part of those settlement moneys on the purchase of a house for $67,000 (which is mortgaged for $50,000) in January 1999 and on the purchase of a "Jeep Cherokee" motor vehicle for $58,000 in December 1998. He said that his other major assets comprised a "Commodore" motor vehicle worth about $6,000, a caravan worth about $4,000 and furniture worth about $2,000. He added that he has about $19,000 left in the bank, from which he draws $1,000 per fortnight to cover his mortgage repayments and his general living expenses. In addition he said that he pays about $280 per week for chiropractic treatment, physiotherapy and medication. He also told the Tribunal that he is presently unable to work and earn an income as a result of his motor vehicle accident but that, since February/March 1999, he has been receiving an income from renting out his house for $125 per week while he has been living in his caravan. He added that he has no substantial credit card, or other, debts.

14. The applicant also told the Tribunal about other circumstances that he wished to be taken into account in this matter. He said that in a number of visits and telephone calls to the Department of Social Security ("DSS") offices in mid-to -late 1997 he was informed by various officers that, in the event of his receiving a compensation settlement, he would have to repay the amount of SA, but not NSA, that he had received. He acknowledged, however, that one officer had said that the total amount of both SA and NSA received by him would have to be repaid. He referred to the letter dated 14 March 1997 from the delegate of the respondent addressed to him in Lapage Street, Esperance (T11-11A - see paragraph 5 above) and said that at that time he was living with his mother in Perth and did not receive that letter.

15. The applicant said that the solicitor who was acting for him at the time told him that he would have to repay some of the social security payments he had received, but that, when he informed the solicitor that he had been advised by DSS officers that he would have to repay only SA payments, the solicitor appeared to accept that advice.

16. The applicant told the Tribunal that, on the basis of his solicitor's advice that he should end up with $148,000 - $150,000 and the advice of DSS officers that he would not have to repay NSA payments received by him, he bought the "Jeep Cherokee" motor vehicle in December 1998 and bought the house in January 1999.

17. Mr Jones (for the respondent) referred the applicant to the letter dated 19 November 1998 from the delegate of the respondent addressed to him in Brooks Street, Esperance (Exhibit R4 - see paragraph 10 above). The applicant said that he was not sure that he had received that letter. He later said that, after receiving his compensation settlement, he moved to Perth and lived at his parents-in-law's house in Leach Highway, Wilson. He added that he notified Centrelink of that change of address.

18. The applicant tendered in evidence some medical and other reports and requested that they be taken into account by the Tribunal. In a report dated 20 October 1999 (Exhibit A1), Dr M Dougall noted that the applicant had been a patient of his since 8 October 1997 and that, as a result of his motor vehicle accident in December 1996, he continues to suffer left hip and shoulder/neck/scapula pain and he also suffers from depression and has problems with alcoholism and impulse/temper control. Dr Dougall's report noted in conclusion that the applicant, owing to his injuries, depression and alcoholism, has been unable to continue to work and that he has "impaired judgment and ability to look after both himself and his financial affairs". In a letter dated 21 October 1999 (Exhibit A2), Dr M Mears noted that the applicant, following his motor vehicle accident in December 1996, has "ongoing problems with a painful left ankle and knee ... and significant problems with alcohol". In a letter dated 21 October 1999 (Exhibit A3), Ms L Hill of the Colin Street Centre confirmed that the applicant had attended that clinic on a regular basis for "chiropractic adjustments" and "occupational treatment" from 17 November 1997 to 13 November 1998. In a letter dated 2 December 1999 (Exhibit A4), Mr J M Lambert, a rural counsellor with Esperance Districts Agcare Inc, noted that he first interviewed the applicant on 1 April 1999 and went on to refer to the applicant's alcohol problem. Finally, in a letter dated 8 December 1999 (Exhibit A5), Mr R Pitman from Family and Children's Services, Western Australia noted that the applicant had seen him on a number of occasions over the previous 2 years for counselling in relation to "alcohol abuse" and the resulting "breakdown in his marriage relationship".

The Evidence of donna Ann Garrigan

19. Ms D Garrigan, a system support contact officer with Centrelink, gave evidence regarding the applicant's address history as recorded by Centrelink. Mr. Jones (for the respondent) tendered in evidence a Centrelink computer printout of the applicant's address history (Exhibit R5) which Ms Garrigan confirmed contained a summary of every address, both postal and residential, in chronological order, held by Centrelink in relation to the applicant. Ms Garrigan told the Tribunal that Centrelink's practice is to record a customer's address for correspondence, and the date from which such address is to be operative, on advice from the customer. Ms Garrigan confirmed that, in March 1997, the applicant's current address as recorded by Centrelink was in Lapage Street, Esperance, and that, in November 1998, his current address as recorded by Centrelink was in Brooks Street, Esperance. Ms Garrigan also confirmed that the applicant's Centrelink address history indicated that, for the period from 13 August 1997 to 12 May 1998 only, the applicant's recorded postal address, to which all Centrelink correspondence would have been sent, was in Leach Highway, Wilson.

20. Mr Jones also tendered in evidence copies of 5 NSA application forms lodged by the applicant with Centrelink during 1998, including those forms lodged on 4 November 1998 and 18 November 1998 (Exhibits R8 - R12). Ms Garrigan confirmed that in November 1998 NSA application forms were sent to the applicant at his recorded address in Brooks Street, Esperance but that, on 4 and 18 November 1998, the relevant forms were lodged by the applicant with the Kwinana office of Centrelink.

21. The applicant did not query Ms Garrigan's evidence and acknowledged that the address history held by Centrelink in relation to himself, as recorded in Exhibit R5, was accurate.

The Legislation

22. Part 3.14 of the Act contains the substantive "compensation recovery" provisions of the Act including (relevantly):

"1165(1A) If:

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

(b) the person is not 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(7) If neither subsection (5) nor (6) applies, the new lump sum preclusion period is the period that:

(a) begins on the day on which the loss of earnings or loss of earning capacity began; 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 out worked out under subsections 5 [sic] (3), (4), (4A), (4B) and (4C).

1166(3) If the person is not a member of a couple, the recoverable amount is equal to the smaller of the following amounts:

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

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

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

(ii) if the lump sum compensation payment is received on or after 20 March 1997 - 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(4) If the person claiming compensation is not a member of a couple, the recoverable amount is equal to the smallest of the following amounts:

(a) the sum of the payments of the compensation affected payments 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[sic] payment is received before[sic] 20 March 1997 - the new lump sum preclusion period;

(b) the compensation part of the lump sum payment [sic] or the sum of the amounts of the periodic compensation payments;

(c) 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."

23. Section 17 of the Act contains definitions of various words and phrases for the purposes of the compensation recovery provisions of the Act. Subsections (2) and (3) relevantly provide:

"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 either 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; ...

...".

Section 17 (6) provides:

"17(6) A reference in Part 3.14 to an insurer who is, under a contract of insurance, liable to indemnify a compensation payer or a potential compensation payer against a liability arising from a claim for compensation includes a reference to:

(a) an authority of a State or Territory that is liable to indemnify a compensation payer against such a liability, whether the authority is so liable under a contract, a law or otherwise; or

(b) an authority of a State or Territory that determines to make a payment to indemnify a compensation payer against such a liability, whether or not the authority is liable to do so."

By s.17(1):

"compensation affected payment" is defined to mean, amongst other things, "a social security benefit" (which, by virtue of s.23(1) of the Act, includes SA and NSA); and "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".

Section 17(1) also contains a definition of the phrase "income cut-out amount" (see s.1165(8) above) which it is unnecessary to set out for present purposes.

The Issues

24. There is no dispute that the lump sum of $165,000.00 that was payable to the applicant pursuant to the consent judgment, dated 16 November 1998, referred to in paragraph 8 above falls within the meaning of "compensation" as defined in s.17(2) of the Act. There is also no dispute that, pursuant to s.17(3)(a) of the Act, 50% of that payment - namely, $82,500.00 - is the "compensation part of (that) lump sum compensation payment". Furthermore, there is no dispute that, pursuant to s.1165 of the Act, the duration of the "new lump sum preclusion period" is 199 weeks commencing on 20 December 1996 and ending on 12 October 2000 and that no "compensation affected payment" (as defined in s.17(1) of the Act) is payable to the applicant for that period.

25. The only issue raised by the parties is whether there are "special circumstances" in the present case by reason of which it is appropriate to exercise the discretionary power, conferred by s.1184(1) of the Act, to treat the whole or part of the relevant compensation payment as not having been made. On the first day of the hearing, however, the Tribunal raised a further issue - namely, whether the Recovery Notice issued on 19 November 1998 to the Insurance Commission of WA by a delegate of the respondent, purportedly under s.1179 of the Act, was valid and effective - and the parties were afforded the opportunity to make submissions in relation to that issue at a resumed hearing.

Consideration of Issues

Are there "special circumstances" in the present case for the purposes of s.1184(1) of the Act?

26. The "special circumstances" discretionary power conferred by s.1184(1) of the Act and its statutory predecessors has been considered in numerous decisions of the Federal Court and of the Tribunal. The tenor of those decisions is that, before it may become appropriate to exercise that discretionary power, 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 will produce a result that is, in relation to the person concerned, unjust, unfair, unreasonable or otherwise inappropriate, having regard to the purpose or object of Pt 3.14 of the Act, namely, to ensure that a person is not entitled to receive both compensation payments and social security payments in relation to the same incapacity for work: 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 58-63; Haidar v Secretary, Department of Social Security (1998) 28 AAR 288 at 296-297. The effect of an exercise of the discretionary power conferred by s.1184(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 not liable to be made is that the preclusion period, during which certain categories of social security are not payable to the recipient pursuant to s.1165 of the Act, is correspondingly reduced; whereas, the effect of treating the whole of the compensation payment as not having made or not liable to be made is that s.1165 of the Act is rendered inapplicable and, accordingly, there is no such preclusion period: Haidar (above), at p290.

27. In the present case the applicant submitted that the Tribunal should exercise the discretionary power conferred by s.1184(1) of the Act having regard to the following matters, namely, Centrelink's failure correctly to advise him of the effect of his compensation payment on his entitlement to social security payments (including his obligation to repay an amount of social security payments already received by him), and his personal and financial circumstances.

28. As regards the first abovementioned matter, the applicant's evidence was that he received conflicting information from Centrelink officers in relation to the amount of social security payments made to him which would have to be repaid by him in the event of his receiving a compensation lump sum. On the other hand, the applicant was represented by a solicitor in connection with his claim for damages and, according to the evidence, that solicitor was referred to the compensation recovery provisions of the Act by a letter dated 14 March 1997 from a delegate of the respondent (see Exhibit R2). Furthermore, a letter dated 19 November 1998 from the delegate was sent to the applicant at the address in Brooks Street, Esperance notified by him to Centrelink, advising him of the precise duration of the preclusion period and of the exact amount of social security payments already received by him that was to be recovered by the respondent (see Exhibit R4). Although the applicant's evidence was that he was unsure whether he had received that letter because he was living in Perth at that time, the Tribunal notes and accepts the evidence of Ms Garrigan that the applicant did not notify Centrelink that, as from November 1998, correspondence should be sent to him at a Perth address instead of an Esperance address. Having regard to the abovementioned considerations, the Tribunal is not satisfied that the applicant was prejudiced or disadvantaged by incorrect advice, or lack of advice, by Centrelink officers in such a way as to render the application of the relevant "compensation recovery" provisions in Pt 3.14 of the Act unjust, unfair, unreasonable or otherwise inappropriate in the applicant's case.

29. As regards the applicant's personal circumstances, the Tribunal accepts that he continues to suffer from left hip and left shoulder pain as a result of his motor vehicle accident in December 1996 and that those injuries prevent him from undertaking his former occupation as a shearer or other heavy physical work. The Tribunal also accepts that he suffers from depression and has problems with alcoholism and impulse/temper control. The Tribunal, however, does not regard those circumstances as so grave or sufficiently unusual, uncommon or exceptional as to warrant an exercise of the discretionary power conferred by s.1184(1) of the Act.

30. Likewise, as regards the applicant's financial circumstances, given that he owns a house (albeit subject to a mortgage), 2 motor vehicles (one of which is an expensive late-model 4-wheel drive vehicle) and a caravan, and has a relatively substantial credit bank balance and no substantial debts (other than the mortgage on his house), it cannot reasonably be said that his financial circumstances are so dire as to constitute "special circumstances" warranting a compassionate exercise of the discretionary power conferred by s.1184(1) of the Act.

31. Accordingly, the Tribunal finds that there are no special circumstances in the applicant's case that make it appropriate to exercise the discretionary power conferred by s.1184(1) of the Act.

Was the Recovery Notice, which was issued on 19 November 1998 purportedly under s.1179 of the Act, valid and effective?

32. In the event that an insurer is liable to indemnify a compensation payer against any liability arising from a person's claim for "compensation" (as defined in s.17(2) of the Act), and the person receives a "compensation affected payment" (as defined in s.17(1) of the Act) for the "lump sum preclusion period" (as also defined in s.17(1)), s.1179(1) of the Act authorises the respondent to give written notice to the insurer that the respondent proposes to recover from the insurer the amount specified in the notice. By s.1179(3), the amount so specified is the "recoverable amount" is worked out under whichever of subss (4), (5) and (6) is applicable. In the present case it is common ground that subs (4) of s.1179 is the applicable provision.

33. According to the literal terms of s.1179(4) of the Act:

"If the person claiming compensation is not a member of a couple, the recoverable amount is equal to the smallest of the following amounts:

(a) the sum of the payments of the compensation affected payments 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;

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

(c) 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."

There are, it seems to the Tribunal, two drafting errors in subpara (iii) of para (a) of s.1179(4). The phrase "lump sum compensation affected payment" presumably should read "lump sum compensation payment", and the phrase "before 20 March 1997" presumably should read "on or after 20 March 1997", consistently with the corresponding provisions of ss.1165, 1166 and 1174 of the Act. The question arises in the present case whether the Tribunal should apply s.1179(4)(a)(iii) of the Act in accordance with its literal terms, or, alternatively, whether it would be appropriate for the Tribunal to apply s.1179(4)(a)(iii) of the Act as if the abovementioned apparent drafting errors had not been made and it read as follows:

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

34. In Re Lawrie and Secretary, Department of Family and Community Services (1998) 54 ALD 483 the Tribunal applied s.1179(4)(a)(iii) of the Act as if it read in the way set out in paragraph 33 above rather than in accordance with its literal terms. In Re Krpan and Secretary, Department of Family and Community Services [1999] AATA 709, however, a differently-constituted Tribunal considered the application of s.1179(5)(c)(iii) of the Act (which is in identical terms to, and contains the same apparent drafting errors as, s.1179(4)(a)(iii) of the Act) and declined to follow the approach taken in Re Lawrie, deciding instead that s.1179(5)(c)(iii) of the Act should be applied in accordance with its literal terms. In the present case, the Tribunal proposes to follow the approach taken in Re Krpan rather than that taken in Re Lawrie and adopts, mutatis mutandis, the following paragraphs in the Tribunal's Reasons for Decision in Re Krpan:

"57. The question of course arises whether it is appropriate for the Tribunal, in effect, to rewrite subpara (iii) of para(c) of s.1179(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 s.15AA(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 s.1179(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 s.1179(5)(c)(iii) of the Act are ...:

* 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 s.17(1) of the Act ... 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 s.1179(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 s.35(a) of the Interpretation of Legislation Act 1984 (Vict) (which is in similar terms to s.15AA(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 of 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 s.15AB 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. ... 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."

35. Accordingly, the Tribunal, for the purposes of applying s.1179(4) of the Act in the present case, will apply the literal words of s.1179(4)(a)(iii) in accordance with their plain and ordinary grammatical meaning and in accordance with relevant statutory definitions.

36. According to s.1179(4) of the Act, the "recoverable amount" - that is, the amount specified in a Recovery Notice issued pursuant to s.1179(1) - is equal to the smallest of the amounts described in each of paras (a), (b) and (c) of that subsection. The Tribunal will now consider the application of each of those paragraphs to the facts of the present case.

37. The amount described in para (a) of s.1179(4) of the Act is "the sum of the payments of the compensation affected payments payable to" the applicant for each of 3 alternative periods referred to in subparas (i), (ii) and (iii), respectively. It is common ground that neither subpara (i) nor subpara (ii) is applicable in the present case. As regards subpara (iii), the specified period - namely, "the new lump sum preclusion period" - applies if, according to the terms of that subparagraph, "a lump sum compensation affected payment is received before 20 March 1997". Although it is common ground that "compensation affected payments" - namely, payments of SA and NSA - were received by the applicant before 20 March 1997, there is no evidence before the Tribunal that such payments were made to him in the form of a "lump sum" rather than in the usual form of periodic payments. Accordingly, the Tribunal finds that subpara (iii) is also inapplicable in the present case.

38. The amount described in para (b) of s.1179(4) of the Act is "the compensation part of the lump sum payment [sic] or the sum of the amounts of the periodic compensation payments". The phrase "the compensation part of the lump sum payment" should read "the compensation part of the lump sum compensation payment" - see s.17(3) and compare s.1166(3)(a) of the Act - and, in accordance with the principles of statutory interpretation referred to in paragraph 34 above, the Tribunal is prepared to read it that way. Accordingly, the "compensation part of the lump sum payment" in the present case is, in accordance with the definition in s.17(3) of the Act, the amount of $82,500.00. There having been no "periodic compensation payments" made to the applicant, the amount referred to in para (b) of s.1179(4) of the Act for the purposes of the present case is $82,500.00.

39. Finally, the amount described in para (c) of s.1179(4) 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 s.1177 of the Act. In the present case that amount is $165,000.00.

40. Accordingly, the Tribunal finds that, by virtue of s.1179(4) of the Act, the "recoverable amount", in respect of which the respondent is authorised by s.1179(1) of the Act to issue a Recovery Notice to the relevant insurer, is the amount described in s.1179(4)(b) which, in the present case, is $82,500.00.

41. It follows that the Recovery Notice issued by the respondent, purportedly under s.1179 of the Act, to the Insurance Commission of WA on 19 November 1998 was defective because the "recoverable amount" specified therein - namely, $15,777.56 - was not in accordance with subss (3) and (4) of s.1179. Accordingly, the Tribunal finds that that Recovery Notice was invalid and ineffectual.

42. Although the Tribunal has found that the "recoverable amount" in respect of which the respondent is authorised by s.1179(1) of the Act to issue a Recovery Notice to the Insurance Commission of WA in the present case is $82,500.00, that result has been produced solely by reason of the apparent drafting errors in s.1179(4)(a)(iii) of the Act (see paragraph 33 above) and is clearly not in accordance with the scheme or purpose of Pt 3.14 of the Act. It would, accordingly, be inappropriate for the respondent now to issue such a Recovery Notice in the present case.

43. There is, however, an alternative course of action open to the respondent whereby the respondent may lawfully and properly recover the appropriate amount of $15,777.56, being the total amount of SA and NSA paid to the appropriate during the period from 2 January 1997 to 18 November 1998, which was the subject of the abovementioned invalid Recovery Notice. First, the respondent should refund the amount of $15,777.56, recovered pursuant to that invalid Recovery Notice, to the Insurance Commission of WA for payment to the applicant. Next, the respondent may, pursuant to s.1166(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 s.1166(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, subs (3) is applicable and, pursuant to that 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 s.17(3) of the Act, $82,500.00, and it is common ground that the latter amount is $15,777.56. Accordingly, the respondent would be authorised under s.1166(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 $15,777.56. Upon the respondent's giving such a notice to the applicant, the abovementioned amount would be a "compensation debt" (as defined in s.23(1) of the Act) and would, by virtue of s.1225(1) of the Act, be a debt due to the Commonwealth and would be recoverable by the means specified in s.1230C(1) and Pt 5.3 of the Act.

Decision

44. 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 $15,777.56, being the total amount of SA and NSA received by the applicant during the period from 2 January 1997 to 18 November 1998, was, by reason of s.1165(1A) of the Act, not payable to him;

* that the Recovery Notice issued by the respondent on 19 November 1998, whereby the respondent recovered the amount of $15,777.56 from the Insurance Commission of WA, was not in accordance with s.1179 of the Act and was invalid and ineffectual; but

* that the amount of $15,777.56 may lawfully and properly be recovered by the respondent pursuant to ss.1166(1), 1225(1) and 1230C(1) of the Act.

I certify that the 44 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor S D Hotop, Senior Member

Signed: .........(Sgd) C O'Hara...........................

Associate

Date/s of Hearing 2 August, 22 October and 9 December 1999

Date of Decision 12 January 2000

Counsel for the Applicant In person

Solicitor for Applicant

Counsel for the Respondent Mr A Jones

Solicitor for the Respondent Advocacy and Administrative Law Team, Perth Centrelink