Re Beadle & Director-General of Social Security (1984) 6 ALD 1 - considered.

That the decision the subject of review is affirmed.

This is an application for review of a decision to recover an amount of $9,724 paid by way of sickness benefit between 13 February, 1978 and 4 February, 1983.

2. The amount originally calculated as recoverable was $12,725-68. After appeal to the Social Security Appeals Tribunal ("the SSAT"), this was reduced to $9,724 by application of the "Edwards" principle.

3. The Tribunal received into evidence the documentation prepared pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 (Exhibits T1 to T95). The following documentation was also lodged:-

(a) A report of 10 April, 1984 by Dr. C. A. Sochan of

the Auburn Community Health Centre upon Mrs.

Colaiacolo (Exhibit A);

(b) A report of 7 December, 1984 by Ms.

D'Aviero-Marcello, Ethnic Health Worker, Fairfield

Area Health Centre (Exhibit B);

(c) Reports 1982-1984 by Dr. R. R. Godsall,

psychiatrist (Exhibits C and D);

(d) A report of 1 July, 1982 by Mr. W. A. Bubb,

psyhcologist (Exhibit E);

(e) A letter of 20 December, 1983 from the N.S.W.

Housing Commission to the applicant (Exhibit F).

4. The Tribunal heard oral evidence from the applicant and Mr. Luigi Colaiacolo, his brother.

5. The basic background facts are as follows. The applicant injured his back at work on 5 June, 1977. He received periodical payments of workers' compensation from 6 July, 1977 to 10 February, 1978. On 24 February, 1978, he sought sickness benefit which was granted on 17 March, 1978 as from 13 February, 1978. At the same time as he applied for sickness benefit, Mr. Colaiacolo informed the respondent that he intended to file suit for a workers' compensation settlement.

6. When the respondent learned the name of the insurance company involved in the claim for workers' compensation (NEMGIAL) and of the applicant's solicitors (Pelosi, Marshan & Co.), each was duly advised of the respondent's interest in the matter pursuant to the relevant provisions of the Social Security Act 1947 ("the Act").

7. On 10 November, 1982, the applicant's workers' compensation claim was settled by a redemption in the N.S.W. Workers' Compensation Commission in the sum of $38,000. About the same time, a N.S.W. Supreme Court action was settled for the sum of $2,000 plus costs. On 18 January, 1983, the applicant's solicitors applied for an abatement of the refund of sickness benefit paid, on the grounds of financial hardship. Subsequently, the solicitors provided medical evidence of the applicant's physical and mental conditions, but on 7 July, 1983, the solicitors paid the respondent $12,725-68 in settlement of the respondent's charge. Meanwhile, the respondent had decided that there should not be any abatement of the charge. The appeal to the SSAT and the reduction of the charge to $9,724 followed.

8. The above is only a resume of the numerous background facts for there is only one issue in this matter, namely, whether there are "special circumstances" within the meaning of the Act to warrant a decision by the respondent not to recover the amount of $9,724 paid by way of sickness benefit.

9. The relevant provision of the Act is s.115E which says:-

"For the purposes of this Division, the Director-General

may treat the whole or a part of a payment by way of

compensation that has been, or that will be, made in

respect of an incapacity as not having been made or as

not being, or as not likely to become liable to be made,

if the Director-General considers that, in the special

circumstances of the case, it is appropriate to do so."

10. On behalf of the applciant, it was submitted that "special circumstances" existed because:-

(a) the applicant was misled by his solicitors; and

(b) the respondent's action in recovering monies paid

by way of sickness benefit added to the hardship

the applicant had experienced and continued to

experience.

11. The evidence to support the first part of the submission runs as follows. Mr. Colaiacolo does not have a good understanding of English. He is a man who places trust in lawyers. He was told by the solicitors not to worry about repaying the sums he had received as sickness benefit, that the solicitors would "fix" it and that he would only have to repay 20% (Exhibit T91). In his evidence, Mr. Luigi Colaiacolo testified that the applicant believed, on the advice of his solicitors, that he would only have to repay $1,000 or $2,000.

12. I accept that Mr. Colaiacolo was misled by the advice he believes he received from his solicitors. However, I am unable to find that this is a "special circumstance" within the meaning of the Act. As Senior Member B. J. McMahon said in Re Farthing and Director-General of Social Security (1984) N82/319:-

"Whatever the situation, ... the relationship between

the applicant and his solicitor can hardly have anything

to do with the respondent or with the applicant's

obligation vis-a-vis the respondent to refund the amount

claimed pursuant to section 115."

13. Turning to the second part of the submission made on behalf of the applicant, I believe that the time at which his position is to be considered is that of the present day, that is, how is he now placed? Leaving aside the financial aspect for the moment, the evidence shows that Mr. Colaiacolo is not a fortunate man in that:-

(a) he has a wife so ill from chronic schizophrenia

that he has to tend to her and the household duties

full-time;

(b) one of Mr. Colaiacolo's daughters (15 years of age)

has an unspecified disability and attends a special

school;

(c) the applicant himself is under the care of an

orthopaedic surgeon (Dr. J. Bannister) and a

psychiatrist (Dr. Godsall).

14. The question which follows is whether circumstances of this kind can be deemed to be "special circumstances" within the meaning of s.115E of the Act? In coming to an answer to this question, help is to be found in the latest decision of this Tribunal upon the matter, Re Fulcomer and The Secretary to the Department of Social Security (1985) No. V84/58. In her reasons for decision, Mrs. J. R. Dwyer, Senior Member, said:

"Miss Fulcomer in regard to this aspect of her argument"

(that is, "special circumstances") "relied on Re Ivovic and

Director General of Social Services, a decision of Mr. Hall,

Senior Member, as he then was, Dr. Billings and Mr. Tickle,

Members. This decision is regarded as an authoritative

statement of the application of the discretionary provisions

in regard to refund of sickness benefit although it is a

decision on the legislation prior to Division 3A and the

relevant provision has changed since that case was decided.

The old ss. 115(4A) gave the Director General power to

release a person liable to refund an amount of sickness

benefit in whole or in part from that liability if the

Director General was satisfied that special circumstances

existed by reason of which the person should be released.

The new section 115E gives the Director General power to

treat the whole or part of a payment by way of compensation

as not having been made if he considers that in the special

circumstances of the case it is appropriate to do so.

But the effect of both sections is similar in that they look

to special circumstances in which it is appropriate that a

person should not have to make a refund of sickness benefit

received. The Tribunal in Re Ivovic said:

'Whilst it would be unwise, if not impossible, to

attempt to lay down any precise delineation of what may

amount to 'special circumstances' for the purposes of

s.115(4A) (cf. Re Norman (1886) 16 QBD 673 at 677 per

Lopes LJ), the use of the word 'special' is, we think,

intended to allow the decision-maker the fullest

opportunity to consider the particular circumstances of

each case (cf. Ex parte Bucknell [1936] HCA 67; (1936) 56 CLR 221 at

224). Whilst we agree that hardship is a relevant

consideration in the exercise of the discretion

conferred by s.115(4A), we reject the submission by Mr

Watkins that we should ignore the circumstances out of

which the alleged hardship is said to have arisen. The

reference to special circumstances 'by reason of which'

a person is liable 'should be released' requires, in our

view, that there must exist in the circumstances of the

case, a factor or factors which justify the making of an

exception in whole or in part to the principle of

liability which the Act otherwise establishes. In the

exercise of the discretion which s.115(4A) confers, the

decision-maker must have regard to whether, by

exercising the discretion in a particular case, he will

be achieving or frustrating ends or objects which are

conformable with the scope and purpose of the Social

Services Act 1947: cf. Water conservation and Irrigation

Commission (NSW) v. Browning [1947] HCA 21; (1947) 74 CLR 492 at 505

per Dixon J. Thus whilst keeping the dominant

principle of s.115 in mind, he must nevertheless be

prepared to respond to the 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 phrase special circumstances is also used in other parts

of the Act. In Re Beadle and Director General of Social

Security delivered 28 May 1984 the Tribunal was concerned to

decide whether there were special circumstances under ss.

102(1)(b) such that the Secretary should exercise his

discretion to allow an applicant for handicapped child

allowance to receive arrears notwithstanding that her claim

was not lodged within six months of eligibility. The

Tribunal said:

'An expression such as 'special circumstances' is by its

very nature incapable of precise or exhaustive

definition. The qualifying adjective looks to

circumstances that are unusual, uncommon or exceptional.

Whether circumstances answer any of these descriptions

must depend upon the context in which they occur. For

it is the context which allows one to say that the

circumstances in one case are markedly different from

the usual run of cases. This is not to say that the

circumstances must be unique but they must have a

particular quality of unusualness that permits them to

be described as special.'

Although these comments were made in a different context,

they are still helpful in this matter. Applying the

principles set out I ask whether there are unusual

circumstances such that it would be unjust, unreasonable or

otherwise inappropriate for the Director General to require

the whole of the sickness benefit received by Miss Fulcomer

to be repaid?"

15. There can be no doubt that the circumstances of the applicant in this case are "unusual" and I so find. However, the point is rather whether those circumstances are so unusual that it would be "unjust, unreasonable or otherwise inappropriate" to uphold the recovery decision made by the respondent?

16. In my opinion, the circumstances considered up to this point are not as unusual as should be required, that there would be no lack of justice or of reasonableness in recovery, because the Act is designed to ensure that a person should not be compensated from public monies as well as otherwise for an identical incapacity (the identity of the incapacity is not in dispute). Accordingly, it remains to be decided whether to uphold the recovery action would be "otherwise inappropriate". This is a very general criterion but some light is thrown upon it by the remarks made in Re Ivovic (supra) - namely, whether by exercising the discretion in a particular way, ends or objectives conformable with the scope and purpose of the Act will be achieved or frustrated?

17. On this score, I think that I have to rule against the applicant. I say this for two reasons. Firstly, the evidence shows that in the period when the applicant was most deprived of income, he incurred debts to the extent of some $25,000 to relatives and friends. When he received the workers' compensation and Supreme Court settlements, he chose to use most of the monies, after legal costs were deducted, to repay these debts, reckoning that he would not have to reimburse monies or most of them paid to him by way of sickness benefit. While such a course, for a person of his background, may be understandable, this was not, in my view, a good enough reason for, in effect, regarding such debts as having priority over what his solicitors had been warned was a liability to the Commonwealth. Like the applicant in Re Ivovic, Mr. Colaiacolo exercised an option but his exercise of the option in one way should not, by itself, be allowed to wipe out the obligation represented by the other course in the option.

18. The second reason lies in the applicant's response to a question put to him in cross-examination. The question was what Mr. Colaiacolo would now do with the $9,724 in issue if it were paid to him? His answer was that he would put it in the bank to the credit of his children which subsequently was narrowed down to the daughter who goes to a special school. While this response has something to commend it, it does not suggest, in my mind, that recovery would be "inappropriate".

19. It is necessary to turn at this point to consider the question of financial hardship as a "special circumstance". The evidence establishes that the current income of Mr. Colaiacolo and his wife is $378-88 per fortnight, made up by Mr. Colaiacolo's spouse-carer's pension, his wife's invalid pension and child allowance. Out of this total sum, the applicant has to pay rent, including refunding over-payment, of $100 per fortnight to the N.S.W. Housing Commission and $10 per fortnight as the consequence of an automobile accident. There are now two children living at home (there were originally five) who have to be supported, although one of them has very recently gone to work on a trial basis. The family assets comprise only a limited amount of household furniture and personal chattels ($3,000).

20. It is surely correct, on the basis of the evidence, that the applicant and those members of his family still dependent on the combined incomes are by no means well off financially. However, I cannot escape the conclusion that straitened as the financial circumstances are, they are not exceptional. Even if they were, the Tribunal has previously ruled that the financial position of an applicant would not ordinarily constitute a "special circumstance" (See Re Beadle and Director-General of Social Security (1984) 6 ALD 1 which, while addressing a different context - handicapped child's allowance, is useful as an interpretative aid).

21. In my opinion, the plea of financial hardship boils down to the contention that what the applicant and his wife receive by way of benefits under the Act is insufficient, although they receive everything to which they have established eligibility. This is not a plea of which this Tribunal can take account. Besides, it runs counter to the answer which the applicant gave in cross-examination to which reference has already been made (para. 17 above).

22. It was submitted for the applicant that even if each of the various arguments made out to show "special circumstances" do not amount individually to such, they, taken collectively, do so.

23. I cannot agree to this submission. The circumstances are unusual and inspire sympathy in that the applicant himself is not a well man, has a sick wife for whom he has to tend as well as a daughter with a disability and his finances are minimal. Nevertheless, Mr. Colaiacolo and his wife are already receiving all the benefits under the Act for which they are eligible and the sum assessed as recoverable has been reduced in accordance with the Edward formula. Taken as a whole, his circumstances are not, I find, such as to warrant a conclusion that the respondent's decision to recover the residue of monies paid by way of sickness benefit is unjust, unreasonable or otherwise inappropriate.

24. For these reasons, the decision under review is affirmed.