As the applicant seeks to rely on factors which occurred both before and after the date of the workers compensation settlement in support of his argument that special circumstances exist it is necessary to set out the factual background in some detail.

The applicant is married and has three children aged twelve, eleven and three, all of whom live with the applicant and his wife. At the time of his injury which occurred at work on the 29 December 1987 he owned his house, which was subject to a mortgage of $28,000 which he was repaying at the rate $381 a month. He had also accumulated substantial debts by obtaining credit from various organisations and he was paying these off at the rate of about $900 per month. He was holding his precarious financial position together by working considerable periods of overtime and his average fortnightly wage at the time of his injury was about $1,100. Although his wife had previously worked occasionally as a cleaner she had fallen at work some time before and was now employed only in looking after the children. She has no educational qualifications to obtain a non-manual job. The injury which the applicant suffered has been described in layman's terms as severe lower back pain and he incurred the injury by lifting heavy bags of pigment at his place of employment. Liability to pay workers compensation was accepted by his employer who commenced making periodic payments of $790 gross a fortnight. His employment was compulsorily terminated on 18 October 1989. During this time he and his family were placed under very considerable financial stress. While negotiations for the final settlement of his workers compensation claim proceeded he was in considerable pain from his injury and on daily medication for that pain. He feels he was also being harassed by investigators hired by the insurance company involved in his claim.

After a lengthy delay caused by not being aware of his entitlements he finally applied for sickness benefit and invalid pension on 19 October 1989. His workers compensation payments and family allowance supplement entitlement amounted to about $700 nett a fortnight and on this amount he was just able to manage his financial affairs and to maintain his family. He was entitled to family allowance supplement at that stage because his income averaged out over the preceding three months was below the threshold of the means test. However the Act as it relates to family allowances was amended by Act No 133 of 1988 with effect from 1 December 1988 after which time a claimant's eligibility was tested against his income over the preceding twelve months. This took into account the period when the applicant's earnings were inflated by the amount of overtime which he was working, with the consequence that the applicant was subsequently advised that family allowance had been cancelled because he had failed the means test. Without the benefit of family allowance the applicant found himself unable to balance his finances and after the required debt repayments had been deducted from his income there was insufficient left to maintain his family. He was forced to commence borrowing from friends and relatives. In these circumstances he felt obliged to sell his house and did so. The equity remaining after the sale and repayment of the mortgage enabled him to pay off all his debts and left enough over for him to buy a new refrigerator and washing machine and to buy a better quality second hand car which he needed for driving from Bunbury to Perth on matters relating to his workers compensation claim.

Having sold his house the applicant was obliged to rent premises and did rent a four bedroom house for $300 a fortnight. He also applied to, and was being favourably considered by, Homes West for subsidised housing. A long period of hardship then followed for the applicant and his family. After deducting the rent of $300 from his nett fortnightly workers compensation payments of $600, the balance remaining was insufficient to buy the necessary food, clothing and petrol for his household. He and his wife also felt very seriously harassed by the insurance company's surveillance officers who, he said, used to lie in wait to secretly take video films of him in order to test whether or not he was genuinely incapacitated. The workers compensation claim was not preceding towards settlement and the tension of these matters was putting very severe strain on his family.

As no settlement was agreed for the workers compensation claim the applicant attended the court on the date of the hearing on the 12 October 1989. He gave evidence that as he went to the court he felt that his family was under such pressure that he was prepared to accept an offer as low as $50,000 if it were made, that being the amount which his lawyer had advised would be the minimum which he would be likely to receive. At the door of the court his lawyer informed him that an offer to settle the whole claim for $83,500 inclusive of costs had been made. The lawyer also told him at that stage, for the first time, that acceptance of such a lump sum payment would result in him losing his pension entitlements for a period of about twelve months. The lawyer did not advise him, nor did he seek advice, on how receipt of the settlement would affect his application to Homes West for subsidised housing. The applicant described how the judge, the lawyers and the witnesses were all waiting for him to make up his mind and so he signed hastily and without a great deal of thought.

The applicant notified the respondent of the settlement at the time of claiming pension and was immediately told that there would be a 70 week period during which he would be preculded from receiving his pension. That period would expire on the 20th day of February 1991. The applicant also advised Homes West that he had received a settlement payment and to his surprise he was told that he was no longer entitled to subsidised housing. The applicant held a family conference to discuss their dilemma. They had sold their previous home, they were now paying substantial rent and this was not going towards gaining them an asset. The applicant feared that once the settlement money had been spent they would be left with no assets. He decided to buy land and to build a house. In making this decision the applicant said that he was aware that the cost of building would eat severely into the monies of the settlement and that by the end of the 70 week "lump sum payment period" they could be running short. Nevertheless he decided to proceed with the building project and to cut costs by acting as owner-builder and sub contracting out the work. He then bought land for $13,000 and commenced to build a house, the estimated cost of which was $45-50,000. He said that he believed that if the worse came to the worst the Government would not leave he and his family with nothing.

At the date of the hearing the worse had almost become the worst and his financial situation was rapidly deteriorating. The house was not yet finished and there was only about $10,000 of the settlement money remaining, he was still paying rent at $300 a fortnight and the pension entitlements would not revive until 20 February 1991. The applicant was receiving only the family allowance supplement which at the time of the hearing was $250.70 per fortnight.

The applicant submits that these factors amount to special circumstances within the meaning of s156 which would justify the Tribunal in deciding to take action which would reduce the lump sum payment period.

The meaning of the term "special circumstances" was considered by the Full Court of the Federal Court in Beadle v Director General of Social Security [1984] AATA 176; 7 ALD 670, at 674

"The phrase "special circumstances" although lacking precision, is sufficiently understood in our view not to require judicial gloss."

In Ivovic v Director General of Social Services [1981] AATA 57; 3 ALN N95 the Tribunal identified a number of principles which could be applied in deciding whether special circumstances existed to warrant the exercise of the discretion contained in s156 of the Act. In that decision, which concerned the liability of the applicant to repay an amount of sickness benefit paid to him, the Tribunal commented at N97.

. the use of the word "special" is "intended to allow the decision maker the fullest opportunity to consider the particular circumstances of each case"; . "hardship is a relevant consideration" but regard must be had to the way in which the hardship arose; . there must exist "factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes"; . the decision maker must have regard to whether, by exercising the discretion in a particular case he/she will be "achieving or frustrating ends or objects which are comformable with the scope and purpose of the Social Security Act"; and . "the decision maker must be prepared to respond to special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate."

The principles set out in Ivovic were approved by the Tribunal in Kryzywak v Secretary Department of Social Security 15 ALD 690 which has been followed generally by the Tribunal.

In this application the issue of the applicant's hardship is a relevant factor. His financial problems commenced when he injured himself at work and his income was drastically reduced, forcing him to sell his family home and to take up rented accommodation. His problem was further exacerbated by the amending legislation which resulted in the cancellation of the family allowance supplement which the family had been receiving. The compensation settlement appears to have been completed in some haste and without the applicant being made fully aware of the alternatives which were available to him. The applicant's evidence was that he felt considerably pressured to accept the amount which was offered to him and was not advised that it would preclude him from receiving assistance from Homes West. As a consequence of accepting the compensation settlement he lost eligibility to subsidised housing provided by Homes West. The decision to invest the compensation payment in building a home for his family was a reasonable and responsible one made on the basis that the applicant would never again have the means to provide his young family with their own home. The applicant's evidence was that he was reducing the cost of building the house by acting as owner/builder.

The Tribunal is satisfied that the applicant is permanently incapcitated for work to the extent that he would be qualified to receive an invalid pension but for the application of s152 of the Act. The Tribunal is also satisfied that the applicant's wife is also unable to return to the workforce at present.

At the time of the hearing the applicant had about $10,000 left out of the compensation settlement he had received in October 1989. The family's only source of income was the family allowance supplement of $255.70 per fortnight.

The purpose of Part XVII of the Act is to ensure that persons who are compensated for their incapacity to work are not doubly compensated by also receiving payments under the Act. However the legislators did contemplate that there would be situations arising from time to time where there would be a need to exercise a discretion to waive the application of s152 of the Act in whole or in part.

The Tribunal is of the view that the particular circumstances of the applicant, who has three young children to support, is such a situation, and that it is appropriate to exercise the discretion contained in s156 of the Act. In calculating the amount of the compensation payment to be disregarded, the Tribunal has taken into consideration the fact that at the hearing on the 24 April 1990 the applicant indicated that the remaining balance of compensation payment was about $10,000. As a rough guide that amount would be the equivalent of about 15 payments of the invalid pension at the current rate applicable to the applicant's situation and if paid out fortnightly at the pension rate the sum would be exhausted by the 8 November 1990. This would leave a gap of 10.8 weeks to the end of the present lump sum payment period on 20 February 1991 during which the applicant's family would be in a very desperate financial situation. This gap would be eliminated by treating the lump sum compensation payment as being reduced by the sum of $5,606.28 as such a reduction would reduce the preclusion period by 10.8 weeks if the formula set out in s152(e) of the Act is applied.

The decision of the Social Security Appeals Tribunal is set aside and the following decision is substituted. 1. The amount of $5,606.28 of the compensation payment of $73,500 is treated as not having been made. 2. Payment of invalid pension is precluded until the 9 November 1990.