Social Security Act 1991 ss1168(1), 1184

Workers Compensation Act 1987 (NSW)

Beadle v Director-General of Social Security [1984] AATA 176; (1985) 60 ALR 225 Refd

Secretary, Department of Social Security v Hulls (1991) 22 ALD 570 Refd

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

Trimboli v Secretary, Department of Social Security (1989) 86 ALR 64 Refd

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

Giris Pty Ltd v Commissioner of Taxation (Cth) [1969] HCA 5; (1969) 119 CLR 365 Refd

Solicitors for the applicant : Goodfellow and Scott

Solicitors for the respondents : Australian Government

Solicitor

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. The applicant pay the respondents' costs.

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

KIEFEL J Mr Groth appeals from the decision of the Administrative Appeals Tribunal constituted by a Deputy President which affirmed the decision of the Social Securities Appeals Tribunal which had affirmed an earlier decision of the delegate of the Secretary of the Department of Social Security that compensation payments received by Mr Groth under the Workers' Compensation Act 1926 (NSW) be treated as direct deductions in calculating the amount of disability support pension payable to Mr Groth. The essential point in the appeal is whether there are "special circumstances" in his case which render it appropriate to disregard the whole or part of the compensation payments in assessment of his pension entitlement (s.1184 Social Security Act 1991).

2. There was no issue taken with the Tribunal's finding that Mr Groth and his family's circumstances are difficult and that they are just able to make ends meet. It seems to me, despite an assertion to the contrary, that the Tribunal took into account every relevant factor personal to Mr Groth and his family. Mr Groth last worked in 1992 and then on a part-time basis. The family's income is comprised of Mr Groth's compensation payments of $7,540 per annum and his disability support pension of $6,466 per annum together with an additional amount of $60.00 per fortnight payable in respect of his daughter who also receives Austudy payments. Their only asset is their home which is not however encumbered. They have no savings. The limited income which they now receive results from Mr Groth's inability to work which was brought about by a series of accidents which affected his knees and neck. Mrs Groth's health does not permit her to work.

3. The second of the accidents in which Mr Groth was involved and in which he suffered injury, resulted in an entitlement to compensation of $145 per week with respect to wages lost as a result of that injury. That entitlement arose and was assessed under the then Workers' Compensation Act 1926 (NSW). Mr Groth's injury occurred in 1986. On 1 May 1987 however the Workers' Compensation Act 1987 (NSW) came into force and if Mr Groth's compensation had been assessed under it he would have received significantly more than he now does.

4. By the time Mr Groth's entitlement to a disability support pension arose and was assessed, amendments had been made to the Commonwealth legislation. Where previously compensation was regarded as ordinary income it was now required to be taken into account in reduction of the rate of pension for the period during which compensation payments were received. Section 1168(1) provided:

"(1) If:

(a) a person or the person's partner, receives a series

of periodic compensation payments; and

(b) the person is qualified for:

(i) disability support pension; or

(ii) sole parent pension; or

(iii) social security benefit; or

(iv) rehabilitation allowance payable in place

of one of those; or

(iva) carer pension; or

(v) special needs disability support pension;

for the periodic payments period; and

(c) the person was not, at the time of the event that

gave rise to the entitlement of the person, or the

person's partner to the compensation, qualified for a

pension, benefit or allowance referred to in paragraph

(b);

the rate of the person's pension, benefit or allowance

is to be reduced, under subsection (3), for the periodic

payments period".

5. A discretion with respect to the treatment of a compensation payment was however provided by s.1184 which provided:

"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."

6. It was submitted for Mr Groth that the Tribunal was wrong in the meaning it gave to the words "special circumstances" in that provision and also in failing to hold that his circumstances and those of his family were special. In this respect however the submissions for Mr Groth were not confined to the effect upon him and his family of the limitation on the amount of pension to be received by applying s.1168. It was also submitted that when one considered how the State and Federal legislative schemes had combined to affect Mr Groth's compensation and pension entitlements it ought be concluded that his circumstances were "special". On the one hand he was, by dent of timing, denied greater compensation. Then, he came to be assessed to pension entitlements, not by taking the compensation payments he did receive into account simply as other income received, but by deducting them so as to reduce his entitlement. In support of the approach which, it was submitted, ought to be taken to the question whether particular circumstances were "special", considerable reliance was placed upon s.1184 operating as a remedial section. This, it was argued, ought influence the construction to be placed upon it.

7. The Tribunal, after an extensive review of cases concerned with provisions to the same effect as s.1184 including Beadle v. Director-General of Social Security [1984] AATA 176; (1985) 60 ALR 225; Secretary, Department of Social Security v. Hulls (1991) 22 ALD 570 (applying Re Ivovic and Director-General of Social Services (1981) 3 ALN No 61) Trimboli v. Secretary, Department of Social Security (1989) 86 ALR 64 and Secretary, Department of Social Security v. Smith (1991) 30 FCR 56 said:

"41. The essence of the cases I have set out is

that a consideration of whether or not there are

special circumstances must be undertaken in the

context in which the discretion is given. That

context is Part 3.14 of the Act. I was a member

of the Tribunal that looked at the structure of

the Part in some detail and I will not repeat it

(Re Department of Social Security and Lane

(unreported, Decision No. 8894, 5 August 1993,

Deputy President Forgie, Brigadier Brumfield and

Mr Horrigan, Members). It is clear from the

provisions of Part 3.14 that its emphasis Part

is upon the period when the loss of earning

capacity or loss of earnings occurred. It seems

to me that the purpose of the provisions is to

ensure that a person is not paid from two

sources in respect of the same period of time.

What are special circumstances must be

considered against that background. Therefore,

there will be special circumstances if the

circumstances are such that it is unreasonable,

unjust or inappropriate not to treat whole or

part of a compensation payment as not having

been made bearing in mind that the provisions

are intended to ensure that a person is not paid

from two sources in respect of the same period

of time. As Von Doussa J said in Secretary,

Department of Social Security v Smith, "the

circumstances of a particular case will give

rise relevantly to an unreasonable or unjust

result only if the operation of ...(the relevant

provisions), apart from the ameliorating

provisions ..., produces that result" (at page

460).

42. Once the purpose of Part 3.14 becomes

clearer, the reason why the direct deduction of

the compensation cannot be regarded as a special

circumstance also becomes clearer. If any

amount less than the full amount of the

compensation were deducted then it could be said

that a person is paid from two sources (the

compensation authority and the Department) in

respect of the same period, however small that

period may be. That would be the result if the

compensation payment were treated as income for

a lesser amount would be deducted from the

pension payable to Mr Groth. The purpose of the

provisions of Part 3.14 is not to put Mr Groth

in the best possible financial position but to

ensure that he receives financial support and

does not receive it from two sources in respect

of the same period of time. Hence, the

practical effect of Part 3.14 in relation to

periodic payments of compensation is to "top up"

the compensation payment to a pre-determined

standard be it a disability support pension,

sole parent pension or other pension, benefit or

allowance nominated by Parliament."

8. After dealing with the two factors which formed the bases for the submission that what had occurred to Mr Groth was extraordinary or special, namely the later amendments in both legislative schemes, the Tribunal stated its conclusions in these terms:

"48. Mr Groth and his family are in a situation

in which they have very little flexibility with

their finances and it is difficult for them to

meet unexpected expenses. Despite that they are

just managing to make ends meet. In doing so,

they must be very careful and there is little,

if any, opportunity for special outings.

Although the family's financial circumstances

are not easy, I do not regard them as so

difficult as to constitute hardship of the type

required to justify a finding of special

circumstances.

49. The same conclusion must be reached in

relation to ill health of Mr and Mrs Groth and

their daughter. Certainly, Mr Groth is unable

to work and requires treatment. Mrs Groth has

difficulties too as does Shilo. Looking at all

of those health difficulties, they are not such

that the operation of the provisions of Part

3.14 becomes unjust or unreasonable.

50. Looking at the situation overall, Mr Groth

is receiving a disability support pension

reduced by his compensation payments in

accordance with the operation of the legislative

scheme. There is nothing in Mr Groth's

circumstances that mean that the operation of

section 1168, without the implementation of the

ameliorating provisions of section 1184,

produces an unjust or unreasonable result when

the purpose and operation of that scheme is

taken into account. Unfortunately, his

circumstances are not out of the ordinary when

regard is had to those subject to the provisions

of Part 3.14. He must be very careful

financially and the choices he and his family

have are severely curtailed both by their

limited finances and their poor heath.

Difficult as their circumstances are, however,

they are not special when considered in light of

others in a similar situation and in light of

the object of the Act. The application of the

provisions of section 1168 does not lead to an

unreasonable result. Therefore, I am unable to

find that there are special circumstances

justifying the exercise of the discretion in

section 1184."

It will be seen that the Tribunal considered the correct approach, in determining whether Mr Groth's circumstances were special, to be to enquire what would be the effect if s.1184 was not applied, that is to say if s.1168 was to operate so as to limit the level of pension. The Tribunal had earlier in its determination rejected an approach which permitted adjustment simply to secure to Mr Groth a more advantageous financial position. The submissions with respect to the remedial nature or operation of s.1184 did tend to suggest this as a proper exercise to be undertaken by the decision-maker. It clearly is not. Before determining to ignore all or part of the compensation payments the decision-maker must have come to a conclusion that the circumstances pertaining to the person otherwise qualified for receipt of pension payments were special.

9. With respect to the applicant's argument outlined above, the Tribunal did not accept that regard could be had, in the absence of specific provisions, to any law save that in force and applying at the time of assessment of the rate of pension. So far as it goes this is clearly correct. There remains however the question of its relevance as a background factor, a matter to which I shall later refer. The Tribunal also concluded that the consequences for the applicant which flowed from his compensation being determined under the earlier New South Wales compensation scheme were not directly relevant and went on:

"... they only become relevant if they are part

of the circumstances which, when s.1168 is

applied to them and the discretion in s.1184 is

not exercised, give an unreasonable or unjust

result. They do not come within that

description. Any unjust or unreasonable result

arising as a result of legislative changes do

not arise from the application of provisions of

the Act (or changes in those provisions) but

from the provisions of New South Wales

legislation."

10. It would seem to follow from the last observation that the only causal connection with which s.1184 is concerned is as between s.1168 and what it produces, at least in this case. Confined in that way it means that what had occurred as a result of the application of the then State compensation scheme conveys nothing of meaning or relevance to the decision-maker. It cannot then itself amount to a special circumstance. For reasons which follow I consider that conclusion to be correct. What the Tribunal however was principally concerned to point out in this passage, in the earlier reference to Smith's case and in a later statement appearing in the conclusions, was that the answer as to the question whether there were special circumstances in Mr Groth's case was to be found only from a consideration of what effect would be had by applying the provisions of s.1168. In a passage in its concluding paragraphs set out above the Tribunal explained what had been considered by it:

".. there is nothing in Mr Groth's circumstances

that mean that the operation of s.1168, without

the implementation of the ameliorating

provisions of s.1184, produces an unjust or

unreasonable result when the purpose and

operation of that scheme is taken into account."

11. The applicant submitted that the Tribunal's references to the purposes and objects of s.1168 and the Part within which it was contained and the weight given to the legislative intention so found, namely to prevent receipt from two sources in the same period (or as von Doussa J described it in Smith (60) to avoid a person receiving double payments for an inability to exercise an earning capacity) showed that it approached the discretion in s.1184 narrowly and in effect so as to deny its operation altogether. I do not consider however that the Tribunal was saying that in any case where there were two sources of income that no relief could be given from the deduction of the compensation payments because to do so would defeat the purposes of Part 3.16 of the Act. An understanding of the provision, the application of which is sought to be relieved against, is obviously necessary. That latter purpose, that for which the discretion is conferred, is to be ascertained and understood in the context of the Act and the particular provision to which it refers: Giris Pty Ltd v. Commissioner of Taxation (Cth) [1969] HCA 5; (1969) 119 CLR 365, 384 (referred to in Trimboli 73). It would follow that, since an unintended consequence may amount to a special circumstance, it is necessary to understand the results it was intended to have. The emphasis upon the purpose of the provision in this case may be thought unnecessary, for what followed from the application of s.1168 to Mr Groth, in the view of the Tribunal, was only what was intended. That is to say, there was no other feature present beyond the fact that s.1168 applied to Mr Groth, and nothing which produced any effect different from that which would be felt by others qualified for the pension, namely that the amount received would be adjusted to permit only the receipt of the pre-determined level.

12. The phrase "special circumstances", it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle's case (229), 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. That was, I consider, the only enquiry to be undertaken in this 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. That question arose in Smith and in Ivovic's case. That may not be the only question which will arise in determining, in a particular case, whether special circumstances exist. In the context of some discretionary provisions, for example one which provides for a longer period of time to be fixed in "special circumstances" as in Beadle's case, it may be relevant to look to how a person comes to require the exercise of the discretion and therefore to the events preceding the arbitrary provision coming into effect. This is not such a case, for all that the background facts tell us is that the Act applies to Mr Groth. In that sense the Tribunal was correct in concluding that what here has taken place under the two legislative schemes was irrelevant. Whilst the means by which persons become qualified to compensation payments, the amount they receive and the legislation pursuant to which they become so entitled will vary, what they will all have in common is that s.1168 will then apply to them. Absent some other feature, the only question which can be said to arise in this case is that posed by the Tribunal namely: what then would be the effect of applying s.1168 to a person in Mr Groth's position?

13. The Tribunal held that Mr Groth's circumstances "are not out of the ordinary when regard is had to those subject to the provisions of Part 3.14" which, as I have said, means simply that the section can be seen to have the same effect on him as it does to other persons qualified to receive such a pension. It went on to find that his circumstances and those of his family although difficult, did not constitute hardship and they could not be said to be different from other pension recipients. There is, I consider, no error disclosed in the reasoning to this conclusion. In reality, as the Deputy President noted, the difficulty in which Mr Groth is placed results from the level of pension set by the legislation and not because it has special consequences for him.