Angelakos v Secretary, Department of Employment and Workplace Relations

Administrative Appeals Tribunal Act 1975 (Cth)

Social Security Act 1991 (Cth)

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

Bruinger and Secretary, Department of Social Services [2017] AATA 1244

Davis and Secretary, Department of Family and Community Services [1999] AATA 84

Director General of Social Services v Hales [1983] FCA 81; (1983) 47 ALR 281

Gartside and Secretary, Department of Social Services [2017] AATA 45

Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541

Kertland v Secretary, Department of Family Services [1999] FCA 1596; (1999) 95 FCR 64

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

Re Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114; (2007) 94 ALD 693

Re Ivovic and Director-General of Social Services ([1981] AATA 57; 1981) 3 ALN N95

Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67; (2002) 116 FCR 348

Secretary, Department of Social Security v Banks (1990) 20 ALD 19

Secretary, Department of Social Security and Galea [1993] AATA 326; (1993) 35 ALD 749

Secretary, Department of Social Security v Smith [1991] FCA 280; (1991) 30 FCR 56

Secretary, Department of Social Security and Winterbotham [1990] AATA 808

1. Mr Graham Ward (the Applicant) seeks a review of a decision of the Social Services & Child Support Division of the Administrative Appeals Tribunal (AAT1) of 26 November 2019, which affirmed a decision of Services Australia (formerly the Department of Human Services - referred to hereafter as "the Agency") to recover a compensation charge of $30,341.10, due to a compensation preclusion period from 30 March 2014 to 4 February 2017.

2. On 30 March 2014, the Applicant sustained injuries at a shopping centre in Toowoomba. The Applicant filed proceedings in the Queensland District Court, and on 19 December 2018, the parties settled on the basis that the Applicant was paid $300,000, inclusive of costs and outlays - Exhibit 1 T12 p. 67-68. CGU Insurance Limited conducted legal proceedings on behalf of the shopping centre owner.

3. On 16 June 2015, the Applicant lodged a claim for Carer Payment (CAR) for care he was providing to his wife. The Applicant claimed that, from 18 December 2013, he was providing care seven days per week - Exhibit 2.1 Attachment A.

4. The Agency granted the Applicant's CAR claim, with effect from 12 June 2015 - Exhibit 1 T8 pp. 53 - 55.

5. On 15 January 2019, the legal representatives of CGU Insurance Limited wrote to the Agency informing it that the Applicant's legal proceedings were settled on 19 December 2018 for $300,000 and provided the relevant documentation. The Agency was informed that the settlement sum contained a component for economic loss - Exhibit 1 T12 p. 64.

6. The Agency wrote to the Applicant on 21 January 2019 as follows - Exhibit 1 T14 p. 74:

"We have been advised that you are entitled to a lump sum compensation payment of $300,000.

As a result, we have calculated that you have a preclusion period that starts on 30 March 2014 and ends on 4 February 2017. You have already received $30,341.10 in Centrelink payments in this period and it must be repaid.

We have asked CGU INSURANCE LTD, PUBLIC LIABILITY CLAIMS to repay $30,341.10 to us before they pay you the rest of your compensation payment. The authority to do this is contained in section 1184 of the Social Security Act 1991."

7. On the same day, the Agency gave notice to CGU Insurance Limited, through their legal representatives, that it was required to pay $30,341.10 to the Commonwealth - Exhibit 1 T15 pp. 77 - 78.

8. The Applicant sought, on 22 August 2019, a review of the Agency's decision - Exhibit 1 T23 p. 155.

9. The Agency's decision was reviewed by an Authorised Review Officer (ARO) who, on 17 September 2019, affirmed the decision to impose a compensation preclusion period and to recover $30,341.10 - Exhibit 1 T17 pp. 80 - 87.

10. The ARO also found that there were no "special circumstances" that would allow the Commonwealth to treat all or part of a compensation payment as not having been made. The ARO made the following observations - Exhibit 1 T17 p. 83:

"When I spoke to you on 16 September 2019, you said it is unfair and you had saved a lot of money for the government by taking care of your terminally ill wife. You did not get $300,000 in hand. After paying everything off, you had one third of that money. The majority of the money was paid for a failed knee operation and only $20,000 can be attributed to a loss of income. You made a choice to not continue working as you prefer to spend time with your terminally ill wife. You would rather have the department not recover $30,341.10 but preclude you from payment for a couple of years. You could have used that money to take your granddaughter to Disneyland....

No other evidence was presented to me for consideration under section 1184K of the Act. I found that there were no special circumstances which allow for any of the compensation to be treated as not having been made and therefore the decision to raise and recover a Carer Payment compensation charge of $30,341.10 is affirmed."

11. On 2 October 2019, the Applicant lodged an application for review with AAT1 - Exhibit 1 T18 pp. 88-92. AAT1 affirmed the decision under review on 26 November 2019 - Exhibit 1 T2 pp. 6 - 11.

12. Member McKelvey, who was the presiding member at AAT1, made the following findings regarding the issue of "special circumstances" - Exhibit 1 T2 pp. 10 - 11:

"22. In relation to Mr Ward's complaint as to the unfairness of the system and its '50% rule', I am not persuaded this can be considered a special circumstance. Its application results from legislative prescription. In any event, it is not necessarily the case that Mr Ward's damages for income loss would have been minimal. Relevant to any court award for economic loss is not the just weeks he was actually off work because of his injury but any loss of capacity for future employment because of the injury.

23. Mr Ward's further evidence is that after all expenses, including legal costs, medical reports and other expert reports, he received only $120,000 from the compensation settlement. Because of his wife's health, she receives disability support pension. He receives carer payment to assist with her care. They live in rented accommodation. His wife previously worked as a bank teller and prior to her illness had resigned her current position in favour of part-time employment with the Bank. This had resulted in a significant loss to her of income protection and superannuation payments when she became ill, being a reduction of entitlement from $140,000 to $20,000. His wife's serious illness, which is terminal, has had a devastating effect on their lives as well as their financial situation.

24. From the compensation funds received there is $23,000 left in their bank account. They paid out debts and updated their furniture and motor vehicle for the benefit of his wife. Their car was difficult for her to climb in and out of. He purchased a 4WD vehicle because of its additional height. They took their granddaughter on a three-week holiday to the USA in between his wife's cancer treatments. Their children, now 31, 30 and 27 are all independent. The stress and anxiety of his wife's illness has affected his own health....

25. Mr Ward and his wife's circumstances are most unfortunate and difficult. It is not the case, however, that the application of the compensation preclusion provisions of the Act has caused or added to their difficulties. Both Mr Ward and his wife continue in receipt of social security income support payments. Although Mr Ward has had to repay a compensation preclusion debt, he has had sufficient remaining funds to substantially improve his and his wife's assets to ensure her comfort as well as reducing debt. They have taken a no doubt much needed holiday and have retained savings of $23,000.

26. No doubt Mr Ward would have liked to have retained more of his compensation money but it cannot be said that his circumstances are so difficult and necessitous that it would be a real hardship and unfair to him for the Secretary to retain the recovered carer payment debt. In the absence of that being the case, I am not persuaded that there are any circumstances that are special within the meaning of the Act to allow for the preclusion period and the consequential debt to be waived or reduced."

13. The Applicant applied to the Tribunal, on 20 December 2019, for second-tier review - Exhibit 1 T1 pp. 1 - 5. The following reasons were provided by the Applicant for seeking a review of the reviewable decision - Exhibit 1 T1 p. 4:

"I am know [sic] left with no option than to go bankrupt because they took the 300 hundred thousand as what i [sic] received when actually i [sic] received one third of that. they [sic] didnt [sic] take my wifes [sic] illness into account and the amount of debt we are in.."

14. Part 3.14 of the Social Security Act 1991 (Cth) (the Act) contains provisions dealing, inter alia, where a person, the recipient of social security payments, receives a lump sum compensation payment. In these circumstances, the Act provides for recovery of social security payments paid to such a person. The principle underpinning this is that "double dipping" should not be allowed, and that a social security recipient should not simultaneously obtain the benefit of a compensation payment whilst receiving the benefit of a social security pension or allowance.

15. A key policy underpinning the Act is that a person receiving a compensation payment should draw on those funds for a reasonable period before benefitting from social security payments. The overriding objective was explained by Deputy President Burns in Secretary, Department of Social Security and Winterbotham [1990] AATA 808 at [19] as follows:

"This particular piece of legislation....was aimed specifically at preventing those people receiving compensation for loss of income because of incapacity for work, from being able also to receive benefit from the public purse...Primary responsibility for the payment of such compensation lies at the feet of those responsible for the compensable injury. Once that responsibility has been met, by way of a settlement sum agreed to by both parties, it is inequitable for the recipient to seek supplementary funds from the tax-payer."

16. Subsection 1169(1) of the Act provides that if a person receives a "compensation affected payment" and also receives a lump sum compensation payment, then the compensation affected payment is not payable to the person during the lump sum preclusion period. The term "compensation affected payment" is defined in s 17(1) to include, inter alia "(f) a carer payment".

17. Subsection 17(2) contains an extensive definition of "compensation", including a payment of damages, a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, a payment in settlement of a claim for damages or a claim under such a scheme, or any other compensation or damages payment.

18. The Tribunal is satisfied that the Applicant received compensation payments, as defined by s 17(2) of the Act.

19. The compensation component of a lump sum payment is defined by s 17(3) to be 50% of the payment if it is made in settlement of a claim related, inter alia, to any injury. The 50% rule was designed to avoid manipulation of the social security system by obscuring the economic loss component of the payout. The Commonwealth Parliament therefore deemed 50% to be in respect of economic loss - Secretary, Department of Social Security v Banks (1990) 20 ALD 19 at 24 per von Doussa J.

20. The calculation of the lump sum compensation preclusion period is made pursuant to s 1170. Subsection 1170(4) provides that the number of weeks in the lump sum compensation preclusion period is calculated by using the following formula:

21. If the number calculated by using the above formula is not a whole number, it is rounded down to the nearest whole number - s 1170(5).

22. At AAT1, the Applicant raised no objective ground for challenging the soundness of the calculation of the compensation preclusion period by the Agency. Rather, the case raised by the Applicant focused on the claimed unfairness of the imposition of the preclusion period. Member McKelvey, made the following observations - Exhibit 1 T2 p. 9 para 17:

"Part of Mr Ward's case to the Tribunal is that this system is unfair in that if his compensation claim was determined by court judgment rather than agreement, only a small amount would have been awarded for income loss. His evidence is that he slipped on wet tiles in a shopping centre sustaining a serious knee injury. The accident was not work related and therefore he received no workers' compensation. Following his injury, he returned to work as a bottle shop manager after a couple of weeks. He subsequently resigned this employment for reasons unrelated to his injuries but to care for his wife who had a diagnosis of stage 4 breast cancer."

23. Whilst the Tribunal is not unsympathetic to the predicament the Applicant has found himself in, his submissions do not, in any way, amount to a contention that the Agency has misapplied the law.

24. The Agency calculated, in this matter, the preclusion period applying to the Applicant from 30 March 2014 to 4 February 2017. The Tribunal is satisfied that this is the correct period.

25. The key issue to be addressed in this matter flows from the operation of s 1184K of the Act. This section vests, in the Respondent, the discretion to treat the whole or part of a lump sum compensation payment as not having been made or not liable to be made if the Respondent thinks it is appropriate to do so in the special circumstances of the case.

26. "Special circumstances" is not defined in the Act, but it has generally been accepted that "special circumstances" are "unusual, uncommon or exceptional" or "markedly different from the usual run of cases" - Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 per Toohey J.

27. In Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541, Kiefel J made the following observations (at 545):

"The phrase 'special circumstances', it has been said, although imprecise is sufficiently understood not to require judicial gloss..., and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case...It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied."

28. The Federal Court cases disclose that it is unhelpful and incorrect to limit the special circumstances to "exceptional" circumstances. This was explained by Besanko J in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 at [33] as follows:

"...The authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word 'exceptional' is emphasised. It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words 'unusual' or 'uncommon' are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case."

29. The discretionary nature of the "special circumstances" provision requires a consideration of the particular facts of each case. In undertaking this exercise, the Tribunal is required to factor in the scope and purpose of the compensation preclusion provisions so as to avoid making a determination that would frustrate the legislative intent - Re Ivovic and Director-General of Social Services ([1981] AATA 57; 1981) 3 ALN N95.

30. Section 34J of the Ad__ministrative Appeals Tribunal Act 1975 (Cth) provides for circumstances when a Hearing may be dispensed with.

31. Where it appears to the Tribunal that the issues for determination can be adequately dealt with in the absence of the parties and the parties consent to the review being determined without a Hearing, the Tribunal may review the decision by considering the material lodged without a Hearing.

32. In this matter, no issues of credit have been raised and the material provided to the Tribunal is adequate for a decision to be made.

33. On 1 September 2021, the legal representative of the Respondent consented to a Hearing on the papers, and on 9 September 2021 the Applicant also consented.

34. Having regard to the consent given by the parties, the material before the Tribunal, and the issues for determination, the Tribunal is satisfied that it is appropriate for this matter to be determined on the papers.

35. The material provided to the Tribunal has been marked and paginated by reference to Exhibit numbers. Even though a Hearing was not held, for ease of reference, the Tribunal refers to the documentation according to the Exhibit numbers agreed to.

36. The Applicant was born in May 1964 and, at the time of this determination, is 57 years of age - Exhibit 1 T5 p. 41.

37. The Applicant married in November 1985, but his wife is now deceased. At the time of the reviewable decision, she was suffering from breast cancer.

38. The Tribunal has been presented with two Statement of Financial Circumstances (Centrelink reviews) documents. The first is dated 25 November 2019 (Exhibit 1 T20 pp. 96 - 100) and the second is dated 5 September 2021 - Exhibit 4 pp. 1-5.

39. As at 5 September 2021, the Applicant was engaged as a Security Officer by Queensland Health at the Toowoomba Base Hospital.

40. According to the Applicant, on 25 November 2019, he was paid approximately $1000 per fortnight, and also received Centrelink payments of $768.50 per fortnight. The Applicant's wife, at that time, was also being paid $768.50 per fortnight by Centrelink - Exhibit 1 T20 p. 97.

41. However, by 5 September 2021, the Applicant's financial situation had ostensibly deteriorated. As his wife had passed away, she was no longer receiving Centrelink payments. Further, the Applicant claimed that his fortnightly pay had decreased to $300 per fortnight, and he was no longer in receipt of social security payments.

42. The Applicant disclosed on both Statements that he was paying rent and also had various transport and household expenses. It is unnecessary to set out in detail these expenses, except to note that the Applicant's income barely meets his necessary expenses. The financial information discloses that the Applicant lives a frugal lifestyle.

43. The 5 September 2021 Statement discloses that the Applicant has two personal loans with the Commonwealth Bank totalling $55,500, credit card debts totalling $4,800 and $8,800 owing to Heritage Funerals.

44. The major asset of the Applicant is "household property", which he valued at $50,000.

45. On 25 November 2019, the Applicant had a 50% share of $23,895 invested with the Commonwealth Bank - Exhibit 1 T20 p. 99; however, by 5 September 2021, this had reduced to $2795.

46. On 25 November 2019, in response to the Question, "Is there anything else that should be taken into account when looking at your financial situation?", the Applicant provided the following information - Exhibit 1 T20 pp. 100-101:

"Wife has excessive medical expenses due to stage 4 breast cancer.

Excessive legal costs as the claim went on for nearly 6 years.

Would like them to use what I actually received not what I settled for."

47. The Applicant's response to the same Question in 5 September 2021 was as follows:

"Since last time as my wife got sicker I was unable to work much and debts all got behind.

I now have a funeral to pay for.

Also the other side metioned [sic] that when I got my payout I got a second hand car. Yes I did because the car I had had $9000 worth of repairs, so I got a second hand ute as we live 10km out of town with no public transport and my wife had cancer."

48. A perusal of the many Federal Court judgments and Tribunal decisions discloses that special circumstances do not exist simply because an applicant is in straitened financial circumstances. As Sheppard J observed in Director General of Social Services v Hales [1983] FCA 81; (1983) 47 ALR 281 at 321:

"The legislation provides for the payment of a variety of benefits to different classes of people who will usually have one thing in common; they will be impecunious and in straitened circumstances. Very often their stories will be quite tragic."

49. It is axiomatic that a person who is the recipient of social security payments is in need of financial assistance from the Commonwealth. The social security system is designed to provide a safety net for persons who would otherwise be in severe financial strife. A person in difficult financial circumstances is not a person who automatically demonstrates that they satisfy the special circumstances requirement. Financial distress is an important, but not determinative, factor when assessing whether special circumstances exist because most social security recipients fall within this category.

50. Other factors which may outweigh straitened financial circumstances include the consideration of the general administration of the social security system (Re Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114; (2007) 94 ALD 693 at 715-716) and whether an applicant's disposition of their compensation payment has been reckless - Davis and Secretary, Department of Family and Community Services [1999] AATA 84 (Davis).

51. As noted above, the Applicant is now 57 years of age. His wife has recently passed away and none of his three adult children live with him. The Tribunal has not been presented with any information about what support the Applicant receives from his children.

52. The Applicant rents the premises he currently resides in. Apart from a motor vehicle, the Applicant's main assets are stated to comprise household items. The Tribunal has no information before it of any other significant assets which the Applicant owns or has an interest in.

53. The uncontested material before the Tribunal suggests that the Applicant's compensation payment and much of both his and his deceased wife's assets were expended in paying for her medical expenses and related costs due to her declining health brought about by breast cancer.

54. As at 5 September 2021, the Applicant had less than $3000 in his Commonwealth Bank account, and had debts in excess of $60,000. In short, his financial situation has deteriorated since his circumstances were considered by the ARO and at AAT1. The Applicant has gone from having financial assets far exceeding his debts and having the benefit of both himself and his wife receiving social security payments, to being in a position of considerable debt and relying on, what it would appear to be, part-time work.

55. As explained previously, the preclusion provisions are designed to prevent or discourage double dipping and ensure that social security recipients receiving a compensation payout do not arrange their affairs such that the community funds profligate spending or reckless behaviour.

56. A key task of a decision-maker, when determining if special circumstances exist, is to carefully weigh up both objective and subjective considerations. The objective considerations relate to questions such as the amount of funds an applicant has, what debts such a person owes, the level of support they receive from third parties, what capital assets they possess, their age, state of health and capacity to earn a living.

57. Subjective considerations relate to the conduct of an applicant, including their behaviour after receiving a compensation payout. This will be dealt with below.

58. Summing up, the material before the Tribunal suggests that the Applicant is suffering from financial hardship with debts owing exceeding assets.

59. There are numerous Tribunal determinations that have dealt with applicants who have squandered their compensation payments on drugs, alcohol or gambling. Where the Tribunal is presented with evidence of an applicant acting irresponsibly, which cannot be explained by underlying health or cognitive issues, this militates against a finding of special circumstances.

60. The Tribunal in Davis dealt with an applicant who had been "grossly irresponsible" and spent his compensation payout on smoking, drinking and gambling. The Tribunal observed:

"45. For most of his adult life the Applicant has been supported in a supplementary way by his sister, and his chronic smoking, drinking and gambling habits have cost her dearly. Even when he was in full-time employment he was not always paying board to her. His dependence on her increased significantly after he ceased work following his back injury, as his smoking, drinking and gambling habits increased. His spending on smoking, drinking and gambling apparently increased further since May 1997, and until all the money was gone. There is no evidence of addiction, and his behaviour can only be described as grossly irresponsible.

46. If the circumstances were different, and the Applicant had saved the money and carefully and safely invested it, then in addition to his house he would have had sufficient money to tide him over at a reasonable standard of living until the completion of his preclusion period. If the preclusion period is shortened or waived because of his reckless spending then that would be an invitation to others in similar circumstances to do likewise and then to become dependent on the public purse. One could anticipate the public outcry, and reasonably so."

61. Another example is Gartside and Secretary, Department of Social Services [2017] AATA 45.

62. Mr Gartside received approximately $40,000 in compensation payments, and in a period of four weeks, spent between $20,000 - $30,000 on illicit drugs, mostly "Ice". There was no evidence before the Tribunal that Mr Gartside's behaviour was caused, or contributed to, by either psychological imbalance and/or social and intellectual disadvantage.

63. The Tribunal made the following finding at [67]:

"I find on the evidence before the Tribunal, that the Applicant's conduct was grossly irresponsible and reckless. Clearly the Applicant was remorseful after the event, but that does not explain or excuse what transpired. Further, there is no medical and circumstantial basis for explaining away what occurred. Accordingly, the conduct of the Applicant in the period between his payout and August 2015 militates against an exercise of the discretion."

64. In contradistinction to the above Determinations, there is no material before the Tribunal that the Applicant has acted in a profligate, reckless or irresponsible manner in the use of his compensation payout.

65. The material before the Tribunal suggests that apart from day to day living expenses, the bulk of the compensation payout funds were expended on medical expenses, the purchase of a 4WD vehicle, furniture and a three-week holiday to the United States.

66. Member McKelvey explained that the motor vehicle was purchased for the benefit of the Applicant's wife - Exhibit 1 T2 p. 11 para 24. The purchase of a motor vehicle, which better suited his wife's medical condition, is not an unusual or irresponsible course of action. On the contrary, it demonstrates that the Applicant did all he could to assist in his wife in the final stages of terminal cancer. There are numerous Tribunal determinations which recognise that the utilisation of compensation payments on motor vehicles better suited to the medical circumstances of an applicant or other members of that person's family is a responsible expenditure of compensation payout funds - see, for example, Bruinger and Secretary, Department of Social Services [2017] AATA 1244 at [69].

67. The same approach can also be taken to the Applicant's expenditure of compensation payout funds on updating the Applicant and his wife's furniture to better suit the medical circumstances then confronting the Applicant's wife.

68. The final matter was three-week holiday to the United States taken between the Applicant's wife's cancer treatments. The Applicant and his wife took their granddaughter to the United States and Member McKelvey noted that it was "a much needed holiday", at a time when the "stress and anxiety of his wife's illness" deleteriously affected the Applicant's health - Exhibit 1 T2 p. 11 paras 24 - 25. Again, it could not be said that taking this holiday was reckless or irresponsible.

69. A further factor that has been taken into account is ill-health. Normally, the ill-health in question relates to an applicant; however, where another member of an applicant's family is suffering from bad health, and this has impacted on the utilisation of compensation payout funds, then it is a matter that has been factored in when assessing whether special circumstances exist - see, for example, Secretary, Department of Social Security and Galea [1993] AATA 326; (1993) 35 ALD 749.

70. In this instance, the Applicant was suffering from ill-health, following the shopping centre accident. It would appear that corrective surgery was not successful.

71. However, of much more significance was the ongoing trauma brought about by the terminal cancer situation of the Applicant's wife. It is tolerably clear that both the Applicant and his wife not only suffered financially, but much more critically, emotionally from the devastating impact of her medical problems.

72. As Member McKelvey observed at AAT1, the Applicant's wife's terminal medical condition with consequent need for ongoing medical intervention "had a devastating effect on their lives as well as their financial situation" - Exhibit 1 T2 p. 10 para 23.

73. The impact of Mrs Ward's terminal illness, not only emotionally, but also financially, has been significant.

74. I, therefore, find that the enforcement of the full preclusion period has resulted in severe stress for the Applicant and will continue to do so.

75. As Member McKelvey observed, the Applicant has complained throughout about the perceived unfairness of the 50% rule - Exhibit 1 T2 p. 10 para 22.

76. As in so many preclusion period matters, the Applicant has drawn to the attention of the respective decision-makers, the disparity between the gross payout figure, the deemed economic loss component and the actual amount of money he received after paying legal costs and other fees.

77. The Tribunal appreciates the Applicant's belief that this is an unfair situation; however, there is no discretion vested in the Tribunal to ignore this legislative deeming provision. Her Honour Justice Kiefel (as she then was) made the following observations in Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67; (2002) 116 FCR 348 at 353-354:

"Here the factual assumptions upon which the calculations are based, including that which treats 50 per cent of the total compensation payment as representing the economic loss component, could not have been intended to be subject to rebuttal in the process of applying the formulae. The statutory purpose is to overcome the need in each case to determine what part of a lump sum compensation payment in truth represents economic loss. Although the assumptions to be made and the result reached are necessarily arbitrary, it is a course which has been taken for administrative simplicity."

78. However, her Honour then went on to reject a submission from the Secretary that a decision-maker can never take into account what an applicant received by way of compensation for economic loss in considering the circumstances of a particular case.

79. Clearly, based on this decision, as well as Secretary, Department of Social Security v Smith [1991] FCA 280; (1991) 30 FCR 56 and Kertland v Secretary, Department of Family Services [1999] FCA 1596; (1999) 95 FCR 64, it is open and appropriate to consider what an applicant actually received by way of compensation when assessing if special circumstances exist. However, the fact that application of the 50% deeming provision may result in an applicant paying more to the Commonwealth than what they received does not, by itself, establish special circumstances. Other factors need to be in play before it could be said that special circumstances exist.

80. In this matter, the 50% deeming provision resulted in the lost earnings or lost capacity to earn component of the compensation payment being $150,000. The material before the Tribunal suggests that after all expenses, including legal costs, medical reports and other expert reports were deducted from the gross $300,000 compensation payout, the Applicant only received $120,000. In short, the deemed $150,000 was $30,000 more than the Applicant actually received.

81. This disparity does not, of itself, constitute special circumstances. However the minimal nature of the compensation payout that the Applicant actually received, is one of a number of matters that the Tribunal can appropriately consider when determining if special circumstances exist.

82. Having considered all of the material before the Tribunal, I conclude that special circumstances exist. Those circumstances are as follows:

(a) the Applicant is in straitened financial circumstances;

(b) the Applicant has not acted irresponsibly or spent the compensation payment in a profligate manner;

(c) throughout the preclusion period, the Applicant cared for his dying wife in difficult and stressful circumstances;

(d) the medical and related costs of the Applicant's wife's terminal condition resulted in both the Applicant and his wife expending the bulk of their savings;

(e) it would appear that the Applicant suffered a serious knee injury in March 2014, and subsequent surgery has not proved successful;

(f) the Applicant is in considerable debt;

(g) the Applicant is 57 years of age and, having regard to the totality of his circumstances, is in a grave financial situation;

(h) the Applicant only received $120,000 of the $300,000 payout and much of that money was spent on assisting his wife in the final stages of her terminal illness; and

(i) the net payout received was approximately $30,000 less than the deemed economic loss.

83. The preclusion period concluded on 4 February 2017. Accordingly, this is not a matter where the Tribunal can determine that the preclusion should cease to exist.

84. Subsection 1184K(1) allows the Secretary to treat the whole or part of a compensation payment as not having been made or not liable to be made if it is appropriate to do so in the special circumstances of the case.

85. In this matter, having regard to the special circumstances outlined above, it is appropriate to the treat the whole of the compensation payment as not having been made.

86. The decision under review is set aside and the matter is remitted to the Respondent for reconsideration in accordance with the direction that the whole of the compensation payment paid to the Applicant is deemed as not having been made.

I certify that the preceding 86 (eighty-six) paragraphs are a true copy of the reasons for the decision herein of Deputy President J Sosso

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