1. This application for review involves a claim by Mr Predrag (Peter) Ivovic that the Tribunal, exercising the powers of the Director-General of Social Services pursuant to s.115(4A) of the Social Services Act 1947 ("the Act") should release him from the whole of his liability to repay to the Director-General of Social Services an amount equal to the sum of $6,607.64 which he received by way of sickness benefit between 1 June 1978 and 7 November 1979. The sickness benefit had been paid to the applicant by way of income support during a period of temporary incapacity for work by reason of injuries he had sustained as a passenger in a motor vehicle involved in an accident on 4 October 1974.

2. It will be necessary later to refer to the provisions of s.115 of the Act in greater detail. For the moment it need only be noted that the applicant did not dispute that the lump sum payment which he subsequently received in settlement of a claim for damages included compensation in respect of the period of incapacity during which he was qualified to receive and in fact received sickness benefit. His liability for payment was not, therefore, in issue. Essentially, his case was that the payment of the money would impose severe financial hardship upon him and his family and that in exercising the discretion conferred by s.115(4A) of the Act he should be released from his liability.

3. The injuries which the applicant sustained in the accident included a fracture of the left tenth rib, abrasions and bruising to his arms, left thigh, right shoulder, some damage to his teeth, a whiplash injury to the cervical spine, a fracture of the left epicondyle of the right humerus in the region of the elbow joint and contusion of the right knee.

4. The applicant, who had been employed throughout his working life as a toolmaker, was off work for some seven to eight weeks after the accident. When he resumed work he found difficulty in doing the precision work required in toolmaking because he developed headaches which made him feel sick. Accordingly in March or April 1975 he changed his job and went to work for another company where initially he was engaged in light duties. In August or September 1976 he was given the sack after he had applied for one month's sick leave because of deterioration in his health as a result of the injuries. It appears that he has not worked since.

5. In May 1977 he was referred by the Motor Accidents Board of Victoria to the Coonac Rehabilitation Centre for physiotherapy and rehabilitation training. Until mid 1978 he was receiving compensation payments from the Board in the sum of $115.04 per week. He was then told that no further payments would be made by the Board and that he would need to apply for sickness benefit pursuant to the Social Services Act 1947. This he did on 13 June 1978.

6. Payment of sickness benefit was approved with effect from 1 June 1978 and continued to be paid until 7 November 1979. In all he received a total of $6,607.64 in sickness benefits during that period. He was then accepted as being permanently incapacitated for work and thus qualified to receive an invalid pension. That pension was granted with effect from 8 November 1979 and is still being paid. The applicant says he has no other income.

7. By an action instituted in the Supreme Court of Victoria in 1979 against Stefan Spehar and Dennis McNamara, who are shown in the documents before us as the owners of the two motor vehicles involved in the car accident (see Exhibit T5), Mr Ivovic claimed damages in respect of his personal injuries. Both vehicles were evidently covered for third party insurance with the R.A.C.V. Insurance Co. Ltd in Melbourne.

8. On 11 June 1979 whilst the applicant was still in receipt of sickness benefit, the Director of Social Services in Melbourne wrote him as follows (Exhibit T6):

'Reference is made to your recent claim for Sickness Benefit and in particular to your claim for Damages at Common Law and/or Workmen's Compensation.

You are advised that upon settlement of your claim you may become liable to repay to this Department, the amount of Sickness Benefit paid to you in respect of the same disability for which you were paid *compensation/damages.

Usually this will be done by the workmen's compensation authorities, the insurance company or your solicitors but you should ask if provision has been made for it before you agree to the settlement.

Your future entitlement to benefit from this Department may also be affected by a settlement, and it is strongly urged that you contact this Department as soon as a settlement has been reached, and particularly before you make any commitment to spend the money. It will then be possible to advise you in regard to your future eligibility for benefit and for you to arrange your financial affairs accordingly.' (emphasis added)

9. Shortly thereafter, on 25 June 1979, the following letter (Exhibit T7) was sent by the Director to Messrs Alfred L. Abrahams & Co who were the solicitors in Melbourne acting for the applicant in his action for damages:

'The abovenamed has advised that you are acting for him in a claim for damages in respect of injuries received in an accident on or about 4/10/74.

Would you please note that Sickness Benefit has been granted to him at the rate of $85.80 per week from 1/6/78 in respect of the injuries received in the accident.

You are advised that, under Section 115 of the Social Services Act, the whole or any part of Sickness Benefit is recoverable out of any Damages or Compensation which may be awarded.

In the event of any award of Damages or Worker's Compensation, please advise this Department so that the necessary adjustment may be made.'

10. On 14 December 1979, two notices headed 'Social Services Act' in identical terms were sent under the signature of a delegate of the Director-General of the Department of Social Services to the Manager, R.A.C.V. Insurance, 94 Queen Street, Melbourne, 3000 (see Exhibits T8 and T9). These notices were served on the third party insurer pursuant to sub-sections (5) and (12) of s.115 of the Act (see paragraph 24 below) and were the first step in a statutory procedure designed to impose on any compensation moneys payable to the applicant a charge to the extent of his liability (in effect) to repay sickness benefit. The first notice referred to 'Your ins: Stefan Spehar, 72 Keonga Street, Clayton, Veh. No. JLC859' and the second to 'Your Ins: Dennis McNamara; NAGAMBIE, Veh. No. LUC456'. The form of each notice was as follows:

'TAKE NOTICE THAT I, D. MORGAN the delegate of the Director-General Department of Social Security acting in pursuance of sub-section (5.) of section 115 of the Social Services Act hereby inform you, being a 'person liable to pay compensation' within the meaning of the said section to or on behalf

(hereinafter referred to as the 'beneficiary'), a 'person entitled to receive compensation' within the meaning of the section, that I propose to recover from you the whole or some part of the amount of the sickness benefit paid under the said Act to the beneficiary.

For your information, the beneficiary was granted sickness benefit at the rate of $85.80 per week, commencing from 1/6/78, in respect of incapacity incurred on approximately 4/10/74 by reason of which he became a 'person entitled to receive compensation' within the meaning of section 115.

I will in due course serve a further notice on you under sub-section (6.) of section 115 specifying the amount payment of which is claimed by the Director-General. That amount will represent such amount of the sickness benefit paid as would not have been paid if the rate of benefit had been reduced in accordance with sub-section (1.) of the said section. Until you receive that notification you must not pay any amount of compensation or damages to or on behalf of the beneficiary. In this regard your attention is drawn to sub-section (8.) of section 115. Your attention is also drawn to sub-section (9.) of the section which protects a person liable to pay compensation by providing that payment of an amount to the Director-General under sub-section (6.) of the section shall, to the extent of the payment, operate as a discharge to the person liable to pay compensation as against the person entitled to receive compensation. For your information a copy of section 115 is printed on the back hereof."

So far as we are aware, the further notice specified in the last paragraph above was not served on the third party insurer.

11. On 7 January 1980, following termination of the applicant's sickness benefit, a further letter (Exhibit T11) was sent by the Director to Messrs Alfred L. Abrahams & Co as solicitors for the applicant in the following terms:

'The abovenamed received Sickness Benefit for the period 1/6/78 to 8/11/79 amounting to $6607.64.

In the event of any award or settlement in his/her favour, prior to the disbursement of any compensation monies you should notify this department of the full particulars of the judgement entered or the terms of any settlement so that the department's charge under Section 115 of the Social Services Act may be calculated.

Should the case be submitted for determination at court, you are requested to draw the court's attention to this department's interest in any verdict handed down in the beneficiary's favour.'

12. On 21 March 1980 Messrs Alfred L. Abrahams & Co wrote to the Director requesting 'an up-to-date statement of the amount for sickness benefit which the Department proposes to claim pursuant to s.115 of the Act in the event of Mr Ivovic's claim being settled' (see Exhibit T12). The reply from the Director dated 1 April 1980, so far as relevant, was as follows (see Exhibit T13):

The abovenamed was paid sickness benefit from 1/6/78 to 7/11/79, totalling $6,607.64. The whole or portion of that amount may be repayable pursuant to Section 115 of the Social Services Act.'

On the same date, the Director forwarded to the solicitors a questionnaire on a standard form headed 'General Report' (see Exhibit T14) seeking information regarding the damages claim.

13. It was shortly after this letter and questionnaire were sent to Messrs Alfred L. Abrahams & Co that, on 11 April 1980, the applicant's action for damages was settled out of court for $75,000 plus costs. It was not until 19 May 1980 that the solicitors returned the questionnaire to the Department notifying the settlement on 11 April 1980, enclosing a copy of the terms of settlement and advising that as at that date no payment had been made under the claim.

14. The terms of settlement were reduced to writing and signed by Counsel for the plaintiff and Counsel for the defendant (see Exhibit T15). Paragraphs 1 to 3 inclusive confirmed the settlement for $75,000 plus costs. Paragraphs 4 and 5 were as follows:

'4. The plaintiff's solicitors undertake to pay out of the said sum of $75,000 all sums for which the defendants or their insurers are or may be liable in respect of the plaintiff's accident and injuries the subject of the action under the provisions of the Motor Car Act 1958, the Workers' Compensation Act 1958, the Hospital and Charities Act 1958 and the Commonwealth Social Services Act 1947 and of which they have notice prior to payment of the said settlement sum or the balance thereof to the plaintiff, and thereafter the plaintiff undertakes to pay all such sums as shall remain unpaid and to indemnify the defendants against payment of any such sums.

5. The plaintiff agrees to execute a release(s) embodying the above terms if and when called upon to do so, such release(s) to be prepared by and at the expense of the defendants.'

15. On 21 April 1980, a formal Deed of Release was in fact executed by the applicant (see Exhibit 1). Omitting the recitals which identified the parties, the circumstances out of which the claim for damages arose and the terms of settlement for $75,000 plus costs, the operative part of the Deed was as follows:

'NOW THESE PRESENTS WITNESS: That in consideration of the sum of $75,000.00 so paid to the Claimant (the receipt whereof the Claimant hereby acknowledges) the Claimant HEREBY RELEASES AND FOREVER DISCHARGES the Defendant and agrees to indemnify the Defendant absolutely against any claims arising out of the said loss and damage suffered by the Claimant including all sums payable for medical, hospital and other expenses pursuant to the provisions of the Motor Car Act the Workers Compensation Act and Commonwealth Social Service Legislation.'

16. On 25 June 1980, the following letter was sent by the Director to Mr Ivovic (see Exhibit T16):

'Under the provisions of the Social Services Act, Sickness Benefit paid in respect of an illness or injury must be recovered if the claimant is granted damages in respect of that disability.

Advice has been received that you have received damages and the amount recoverable under the Social Services Act has not been refunded to this Department.

You have received a total payment of $6,607.64 which must be recovered.

The receipt of a cheque at your earliest convenience would be appreciated.

Remittances payable to the Department of Social Security, should be forwarded to G.P.O. Box 1797Q, Melbourne 3001. Cheques should be endorsed 'Not Negotiable" and postal orders crossed. If cash is sent, it should be posted by registered mail. Quoting on all correspondence reference number UB.862."

17. We take it that it was the receipt of this letter by the applicant which provoked the following somewhat puzzling letter dated 4 July 1980 to the Director from his solicitors (see Exhibit T17):

'We should be pleased to receive your favourable response to our recent application that in all the circumstances and having regard to the nature of our client's common law recovery, you will exercise your discretion not to require reimbursement of amounts paid for or on behalf of our client.' (emphasis added)

18. The documents before us contain a concise record of a telephone conversation on 18 July 1980 between an officer of the Department and the applicant's solicitors (see Exhibit T18). The accuracy of this record was not challenged and we accept it therefore as correct:

Phoned sols for the a/n to find out when app'n for waiver was sent. They had not formally applied for a waiver. They had assumed that we would automatically give consideration to waiver. Asked that I send a letter setting out what details are required for waiver. They are still holding all the money in a trust account.' (emphasis added)

19. On or about 22 July 1980, the Director wrote to Messrs Alfred L. Abrahams & Co as follows (see Exhibit T19):

Reference is made to the above-named's Sickness Benefit and settlement of his third party claim.

If you wish to proceed with an application for waiver of the Department's charge please forward the following items:

1.Complete details of Mr. & Mrs. Ivovic's current income assets and liabilities.

2. Advise as to whether M.A.B. payments were refunded or retained by Mr Ivovic.

3. Medical evidence as to the extent of Mr Ivovic's continuing liability.

Upon receipt of the above, consideration will be given to the application for waiver.'

20. We assume that this letter must have crossed in the mail with the following letter dated 23 July 1980 from the applicant's solicitors to the Director (see Exhibit T21):

We act on behalf of Mr. Peter (Predrag) Ivovic of 16 Victoria Avenue Mitcham and have been instructed by him, to make application to you to exercise your discretion not to require reimbursement by him of his Sickness Benefit from 1/6/78 to 7/11/79 totalling $6,607.64 and the further sum of $2,211.00 representing the cost of rehabilitation treatment whilst he was at Coonac.

The basis of Mr. Ivovic's application is that as a result of the significant injuries which he sustained arising from a motor car accident which occured on the 4th October, 1974, save for a short period, he has not resumed employment since the 16th August 1976. He is now in receipt of an 85% total disability Invalid Pension.

As indicated to you on the 19th May 1980, Mr. Ivovic's Supreme Court claim for damages was settled for payment of $75,000.00 by way of lump sum, plus costs. This settlement was based on a compromise having regard to conflicting evidence of medical witnesses and whether or not he was capable of finding employment.

We point out that your Doctor has satisfied himself that Mr. Ivovic is incapacitated to such an extent so as entitles him to an Invalid Pension.

Mr. Ivovic has a fully dependant wife who is now receiving medical treatment for depression. She has not been able to work since August 1976 in view of the need to care for her husband. There is also a young child at primary school.

In all the circumstances therefore we earnestly request that consideration be given by you to withdrawing your Notice requiring reimbursement of the aforesaid amounts."

It should be noted in passing that the sum of $2,211 with respect to the cost of rehabilitation treatment was not in issue in the proceedings before the Tribunal.

21. A further letter from Messrs Alfred L. Abrahams & Co dated 20 (sic _ 30) July 1980 (see Exhibit T20) was shown as having been received in the Department on 31 July 1980. The letter was as follows:

In response to your letter of the 22nd July 1980, we are instructed to supply the following information.

We are instructed that no claim was made nor have amounts been received by Mr. Ivovic, in respect of amounts paid for and on his behalf by the Motor Accidents Board.

We are obtaining a further medical report as to Mr. Ivovic's continuing disability.'

It will be noted that at the time when this letter was written, the applicant had $40,000 in a deposit account and that the balance of the settlement moneys was presumably held in the trust account of the applicant's solicitors (see paragraph 18).

22. On or about 28 August 1980, the Director wrote to Messrs Alfred L. Abrahams & Co advising that 'the circumstances of the case are not considered to be such that a waiver is warranted' (Exhibit T23). On 4 September 1980 the solicitors wrote to the Director advising that they had been instructed by their client to lodge an appeal and requesting, in purported pursuance of s.28 of the Administrative Appeals Tribunal Act 1975, a statement in writing setting out the findings on material questions of fact and the reasons for the decision refusing to waive the charge under s.115 of the Act.

23. The Director replied by letter dated 15 September 1980 (see Exhibit T25) in the following terms: 'Reference is made to your letter of 4/9/80 regarding the abovenamed's application for waiver of the department's charge under Section 115.

Before the Director-General exercises his discretionary power to waive a charge under Section 115 he must be satisfied that 'special circumstances' exist in the case in question.

Special circumstances are usually considered to exist where the person concerned is a person with little or no means and considerable hardship would result if the charge was recovered. On the information available it was decided that Mr. Ivovic's case did not come into this category.

If Mr. Ivovic wishes to lodge an appeal with the Social Security Appeals Tribunal he should forward a statement setting out the reasons for his dissatisfaction and enclosing any evidence in support of his claim. Upon receipt of these items the file papers will be forwarded to the tribunal.

The Administrative Appeals Tribunal's jurisdiction in Social Security matters only arises after an appeal has been to the Social Security Appeals Tribunal. A person is therefore only permitted to appeal to the Administrative Appeals Tribunal if he is dissatisfied with the result he has received from the Social Security Appeals Tribunal."

24. What purported to be an appeal to this Tribunal was lodged by the applicant's solicitors with the Department on or about 22 October 1980. By arrangement with the solicitors this was treated as an appeal to a Social Security Appeals Tribunal and on 3 February 1981 the appeal was dismissed by that Tribunal. Subsequently, the Director-General of Social Services, through a delegate, formally notified the applicant that he had affirmed the decision refusing to release the applicant from his liability. On 4 March 1981, an application for review of the Director-General's decision was lodged with this Tribunal. The reasons given for the application were that:

'The Appellant's financial and physical circumstances warrant exercise of waiver of recovery by the Director.'

25. It will be convenient if, at this stage, we set out the provisions of s.115 of the Act so far as relevant to these proceedings. Unfortunately the section is very long and complex:

'115. (1) Where a person has received, is receiving or is qualified or entitled to receive, in respect of any period during which he is qualified to receive a sickness benefit, a payment by way of compensation in respect of the incapacity by reason of which he is qualified to receive that sickness benefit, the rate of the sickness benefit to which that person would otherwise be entitled shall be reduced by the amount per week of that payment.

(2) Where a person is or has been qualified to receive a sickness benefit in respect of an incapacity and the Director-General is of opinion that the whole or a part of a payment by way of a lump sum that that person has received, or is qualified or entitled to receive, can reasonably be regarded for the purposes of this section as being a payment that _

(a) is by way of compensation in respect of the incapacity; and

(b) is in respect of a period during which that person is or was qualified to receive that sickness benefit,

the payment, or that part of the payment, as the case may be, shall, for the purposes of this section, be deemed to be such a payment.

(a) a person has received, in respect of an incapacity by reason of which he became qualified to receive a sickness benefit, a payment of the kind referred to in sub-section (1); and

(b) the whole or portion of that payment is in respect of a period in respect of which sickness benefit has been paid to him without reduction in accordance with sub-section (1),

that person shall be liable to pay to the Director-General an amount equal to so much of the benefit as would not have been paid if the rate of the benefit had been so reduced.

(4A) Where the Director-General is satisfied that special circumstances exist by reasons of which a person liable by virtue of the last preceding sub-section to pay an amount to the Director-General should be released in whole or in part from the liability, the Director-General may release the person accordingly.

(5) The Director-General may, by notice in writing served on a person (including the Commonwealth or an authority of the Commonwealth or a State or an authority of a State, and in this section referred to as 'the person liable to pay compensation') who is liable to make a payment of the kind referred to in sub-section (1) to or on behalf of another person (in this section referred to as 'the person entitled to receive compensation') in respect of an incapacity by reason of which he became qualified to receive a sickness benefit, inform the person liable to pay compensation that the Director-General proposes to recover from him the whole or some part of the amount of the benefit paid to the person entitled to receive compensation.

(6) The Director-General may, by the same notice or by a subsequent notice in writing served on the person liable to pay compensation, specify an amount payment of which is claimed by the Director-General, and thereupon the person liable to pay compensation shall become liable to pay to the Director-General the amount so specified and, in default of payment, the Director-General may recover that amount in any court of competent jurisdiction from the person liable to pay compensation.

(7) The amount which may be specified by the Director-General under the last preceding sub-section shall be an amount equal to so much of the benefit paid to the person entitled to receive compensation as would not have been paid if the rate of the benefit had, during the period in respect of which the compensation is payable, been reduced in accordance with sub-section (1).

(8) After the service on a person of a notice under sub-section (5), that person shall not pay to or on behalf of the person entitled to receive compensation any amount of compensation until the Director-General has specified the amount which the person liable to pay compensation is liable to pay to the Director-General.

(9) Payment of an amount to the Director-General under sub-section (6) shall, to the extent of the payment, operate as a discharge to the person liable to pay compensation as against the person entitled to receive compensation.

(11) The reference in sub-section (1) to a payment by way of compensation shall be read as including a reference to _

(b) a payment that, in the opinion of the Director-General, is in the nature of compensation or damages,

but shall not be read as including a reference to a payment for which the person who has received, is receiving or is qualified or entitled to receive the payment has made contributions.

(12) The reference in sub-section (5) to a person who is liable to make a payment of the kind referred to in sub-section (1) to or on behalf of another person shall be read as including a reference to an insurer who, under a contract of insurance, is liable to indemnify the person liable to make the payment against his liability.

26. The applicant, who was represented by Counsel, did not dispute that he was liable in accordance with s.115(4) of the Act to pay to the Director-General an amount equal to the whole of the sickness benefit which he had received, namely $6,607.64. It was conceded, therefore, that the Director-General had been entitled to form the opinion pursuant to s.115(2) that part of the lump sum payment which the applicant was entitled to receive in settlement of his damages claim could reasonably be regarded, for the purposes of s.115, as being a payment by way of compensation in respect of the same incapacity and covering the same period as the sickness benefit. As this is a concession of a fact peculiarly within the knowledge of the applicant, there would appear to be no objection to the Tribunal accepting the concession without further inquiry (see Kuswardana v The Minister for Immigration and Ethnic Affairs (N.S.W. No. G113 of 1980) _ as yet unreported _ per Bowen CJ at p.17). On the information before the Tribunal with respect to the basis of settlement (see paragraph 20 above), we do not see any reason to doubt the correctness of that concession. In any event, there has been no application made for review of the decision by the Director-General with respect to the applicant's liability which was notified to him by the letter dated 25 June 1980 (see paragraph 16 above).

27. The importance of that concession, for present purposes, is that the applicant acknowledged that he has been doubly compensated for his loss of income during his period of incapacity from 1 June 1978 to 7 November 1979, firstly out of the public purse by way of sickness benefit and, secondly, out of the funds of the defendants' third party insurer.

28. What then are the special circumstances which the applicant claimed would justify the exercise of the discretion in his favour? In the course of the evidence which he gave on oath in support of his application he said that he did not have the financial resources to meet his acknowledged liability. All the moneys which he had received out of the settlement had been committed to the construction of a dwelling-house on land at 187 Torwood Drive, Vermont South which he purchased in October 1980. The applicant said that, due to rising building costs, he had run out of money to complete the construction of the house. In this regard we were told by the applicant's Counsel that Messrs Alfred L. Abrahams & Co had now accounted to the applicant for the whole of the settlement moneys without retaining an amount sufficient to meet the liability to the Director-General. The applicant had therefore had access to the whole of the settlement moneys subject to payment of his solicitor's costs and disbursements. The applicant claimed that he would face a crippling loss if he were obliged to sell the premises in their present incomplete state.

29. The steps by which the applicant has managed to place himself in this financially impossible position need to be briefly traced. The premises in which he and his wife lived at Mitcham, the title to which was in the name of his wife and his mother-in-law, Mrs S. Milutinovic, were evidently in very poor condition (see paragraph 21 above). On the face of it, it was not unreasonable therefore that he should use some at least of his settlement moneys to improve his family's living conditions. There was evidence before us in the form of a psychiatric report from Dr Barry Kenny of Carlton, Victoria, dated 9 December 1980 (see Exhibit B) which indicated that the applicant's present marriage, which is his third marriage, was under considerable stress. The report indicated that the applicant's wife was also sick; that she suffered from migraine and depression and that she and the applicant fought a lot. The applicant acknowledged in his evidence that he had been difficult to live with because of his injuries and that he had planned the home at Vermont South as a 'dream home' for his wife.

30. The applicant told us that he had spent some $3,000 on repairs to the Mitcham premises and had then sold them for $36,000. There is no evidence before us as to when this sale occurred. After allowing for the discharge of a mortgage (including penalty interest for late payment) to the Commonwealth Savings Bank ($23,000) and the repayment of a personal loan of $1,800 to his mother-in-law, the net equity available from the sale of the property could not have exceeded $8,000. In fact, even this amount may be illusory because the applicant's financial statement tendered at the hearing (Exhibit A) showed that he had incurred accounts totalling $3,000 whilst awaiting the settlement. In evidence he said that these included accounts for rates, gas, telephone and electricity. The applicant's financial statement also discloses that following receipt of the settlement moneys, he sent $500 each to his mother and to his son by a former marriage, both of whom live in Yugoslavia.

31. In October 1980 the applicant purchased the land at Vermont South for $22,000. At that stage, it will be recalled, the applicant was aware that the Director-General had refused his application for waiver of his liability and he had instructed his solicitors to lodge an appeal to a Social Security Appeals Tribunal (see paragraph 22 above). We were not told the exact amount which the applicant received after payment of his solicitor/client costs, but on the evidence before us it appears unlikely that he would have received more than $70,000 net. Adding $5,000 as the funds available from the sale of the Mitcham property after payment of the accrued accounts, the applicant could not, on our calculations have had more than $75,000 available in cash. After allowing for the purchase of the land ($22,000) together with legal costs and disbursements, and the gift of $1,000 to his mother and son in Yugoslavia, the funds actually available for the construction of a house would appear at best to have been approximately $51,000. Those funds included the sum of $6,607.64 which the applicant knew at that stage he was still liable to pay to the Director-General. Nevertheless, the applicant embarked upon the construction of a home, the estimated cost of which is $80,000.

32. The applicant said that he had borrowed $15,000 on first mortgage from a personal friend, repayable on 30 September 1981 and carrying interest in the meantime at the rate of 12% per annum payable quarterly. This amount plus his own cash resources (approximately $66,000 in all) had been expended on the construction of the premises at Vermont South. However, he said that he still needed at least a further $15,000 to finish the premises and probably more if he could not get money quickly.

33. Mr Ivovic described the premises as a split level construction comprising some 28-29 squares including patios and garages. He denied that the house could be described as 'big'. The living area was big, but there were only three bedrooms. It would be sufficient for his wife and small son plus his son in Yugoslavia and his wife whom he hoped would come to live in Australia.

34. The applicant said that he and his family had been living with friends since the beginning of April 1981 and that they were about to move into the premises at Vermont South notwithstanding that they were incomplete. The external walls and the roof had been erected and the windows were installed, but with respect to the internal finishing, Mr Ivovic said that apart from the sitting room, there were no ceilings or internal plaster walls. There was no access to the upstairs portion of the premises except for some stairs into the kitchen. Friends were helping with the cost of installing a hot water service, on the basis that he would pay them when he had the money. For electricity, he would have to tap into the builder's supply pole. It appeared that the water supply was not connected to the premises and there was no heating. Furnishings were very old and minimal and there were no floor coverings.

35. It appears that Mr Ivovic has been sub-contracting the construction work for the premises. So far as we can gather from his evidence, he did not have any clear understanding at the outset what his total costs would be. Whilst we do not doubt that inflation in building costs may have had some effect, we are not satisfied without more expert evidence on the point that in the few months since he purchased the land in October 1980, building costs have escalated to the extent which Mr Ivovic suggested. On the face of it, the project to which he has committed himself was never within his financial competence. But for the assistance of friends and the release to him by his solicitors of the whole of the settlement proceeds except for legal costs and disbursements, he would not have got as far as he has with the construction of the house. Whether he will be able to finance its completion is entirely problematical. As an invalid pensioner, of course, he has no borrowing capacity.

36. How the applicant proposes to repay or refinance the mortgage for $15,000 is not at all clear. He said that he had been unable to meet the quarterly interest payments as his pension was fully committed to basic living costs. Although his wife had some capacity for employment her health prevented her from going to work at this stage. Accordingly, neither he nor his wife had a sufficient income to enable them to meet the repayments on a mortgage. His friend, he said, had agreed to wait for his money.

37. The only prospect which the applicant appeared to have of obtaining further capital was if he was successful in a pending Supreme Court action against an insurance company on a disputed claim for $18,000 in superannuation benefits. But even this amount, should he succeed in the action, would do little more than clear his existing mortgage debt.

38. The applicant appeared to hold out some hope that his son in Yugoslavia, now aged 25 years, who had just completed a degree in foreign economics might come to Australia to live. But the evidence indicates that the son has been partially dependent on the applicant and that he would be unlikely to be of any immediate financial assistance to the applicant if he came to live here.

39. It only remains to refer to the applicant's evidence regarding the settlement for $75,000 plus costs. The applicant told us that he had at first been advised that he might be entitled to $200,000 damages; then someone mentioned $120,000; and later again $100,000 or $80,000 depending on medical opinion. Finally he had been told $75,000 plus costs.

40. In his evidence in chief Mr Ivovic acknowledged that he had been advised by his solicitor, prior to accepting the offered settlement, regarding repayment of the sickness benefit. He said: 'He mentioned about the sickness benefit and I agreed that. My wife _ later she said, why you say _ why you said yes on the court, why you agree? I did not know even after court _ I did not know for that I say yes _ know I say, yes, yes. I was so tired. I was ready for hospital and just going was quick like this. I agree, I know, for that; I agreed to give money back.' (see Transcript p17)

41. Later in his evidence, the applicant was questioned by Mr B. Corney who appeared for the Director-General, about the circumstances in which he signed the Deed of Release dated 21 April 1980 (see paragraph 15 above). He said that he had signed the deed in the presence of his solicitor's secretary and that before doing so he had asked her what '$75,000 plus costs' meant. The secretary had allegedly replied _ 'It is for you'. He said that he understood her to mean $75,000 clear apart from the solicitor/client costs.

42. In the light of his earlier evidence in reply to his own Counsel, however, we think it is clear that, despite his obvious difficulties with the English language, the applicant understood at the time of settlement what the terms of settlement involved. We believe that his conversation with the secretary was interpreted by him to mean what he and his wife in retrospect wished that the terms of settlement had meant.

43. Mr Watkins, who appeared for the applicant, submitted that on this evidence the Tribunal should find that the hardship which the applicant would face if he was forced to sell his home in order to meet the liability to the Director-General constituted special circumstances warranting the release of the whole of the liability. He conceded that the applicant had notice of the Director-General's demand; that he had probably acted very stupidly; that he should probably never have become involved with a house of this magnitude; and that he should certainly not have tied up all his money in it. The fact was, however, that the applicant had done so and it was not proper in his submission for the Director-General or the Tribunal to consider the rights or wrongs of his action. He did not dispute that the applicant had a significant capital asset. But in his submission the applicant should not be forced to sell the home which was his castle in order to pay his acknowledged debt.

44. Mr Corney, on the other hand, submitted that the applicant should not be released from his debt simply because he had chosen to spend the money on a project from which he could not conveniently retrieve any part of his funds. If, on the evidence before it in this case, the Tribunal were to exercise the discretion to release the applicant from his liability, it was difficult to conceive of any case in which an applicant could not seek the favourable exercise of the discretion in s.115(4A). In Mr Corney's submission there was nothing in the circumstances of the present case to take it out of the ordinary run of cases and there were no special circumstances which justified the Tribunal exercising its discretion to release the applicant from the whole or part of his liability.

45. It is, in our view, the plain intention of s.115 of the Act that in cases such as the present the amount of the liability properly determined in accordance with sub-section (4) of that section must be paid unless the Director-General (or on review this Tribunal) is satisfied that special circumstances exist by reason of which the person should be released in whole or in part from that liability (s.115(4A)). 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 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.

46. On the evidence to which we have referred, we make the following findings of fact:

(i) At all material times before the settlement of his action for damages on 11 April 1980, the applicant and his solicitors were aware of his potential liability pursuant to s.115(4) of the Act to repay out of any settlement moneys an amount equal to the total amount of sickness benefits paid to the applicant between 1 June 1978 and 7 November 1979, namely $6,607.64.

(ii) Prior to agreeing to accept the settlement of $75,000 plus costs, the applicant was advised by his solicitor that he would be obliged to repay to the Director-General of Social Services the said sum of $6,607.64.

(iii)That it was on the instructions of the applicant that the undertakings referred to in paragraph 14 above were given by his Counsel.

(iv) That after the settlement the applicant was advised by the Director of Social Services in Melbourne by letter dated 25 June 1980 that his potential liability had crystallised into an actual liability to pay to the Director-General $6,607.64.

(v) That the applicant did not dispute that liability.

(vi) That the applicant, through his solicitors, was on notice prior to 4 September 1980 that the application which his solicitors had made on his behalf for release from that liability had been refused (see paragraph 22 above) and that the applicant had instructed his solicitors to lodge an appeal.

(vii)That in October 1980 the applicant purchased the land at Vermont South for $22,000.

(viii)That thereafter the applicant proceeded with the construction of the premises on the land the estimated cost of which is approximately $80,000.

(ix) That it should have been apparent to the applicant before he embarked on the construction of the dwelling-house that the cost of construction would exceed the total financial resources which were available to him out of the settlement moneys and the proceeds of sale of the Mitcham property and that by proceeding with the proposed construction it would place it beyond his capacity to pay the sum of $6,607.64.

47. Although we have no expert evidence before us as to the present market value of the applicant's land and premises, nor as to their likely value when complete, we accept that it may well impose hardship on the applicant and his family if he is obliged to sell the premises in their present incomplete state in order to pay the moneys claimed by the Director-General. But any hardship which may thereby ensue is primarily of the applicant's own making due to his decision to proceed with the construction of a residence which was beyond his financial resources and to utilise for that purpose the whole of the moneys made available by his solicitors without making any provision for payment of his acknowledged debt.

48. It was suggested by Mr Watkins that the Tribunal should view the matter differently from the Director-General because the applicant's financial position had changed between the date when waiver was first applied for in July 1980 (see paragraph 20 above) and the present time. But, in our view, the change in circumstances, far from helping the applicant's case, only makes it worse.

49. When his solicitors first applied for waiver, the information which they supplied showed that the applicant had $40,000 in a building society account from which he could readily have met his liability. The changed circumstances appear to us to be no more than that, having since used the money without setting aside sufficient to cover his acknowledged debt, he says that he should now be released from his liability.

50. We are not satisfied therefore that there exist any special circumstances in this case, by reason of which the Tribunal should release the applicant from any part of his liability to pay to the Director-General the sum of $6,607.64. We see no reason consistent with the scope and object of the Act why the applicant should be allowed to retain the double advantage of sickness benefit and damages in respect of the same period of incapacity. On the contrary, the evidence suggests that the applicant has either deliberately or recklessly embarked on a course of conduct which has created the circumstances of hardship on which he now relies. He has chosen to use the money due to the Director-General rather than set it aside pending the outcome of his appeal. To acknowledge those circumstances as 'special circumstances' for the purposes of s.115(4A) would place in jeopardy the consistent application of s.115 of the Act.

51. Whilst the applicant's present financial difficulties are primarily of his own making, we feel obliged to say that in our view the applicant's solicitors have contributed to the problem. Notwithstanding the undertaking which they gave through Counsel at the time of settlement (see paragraph 14 above) and notwithstanding their knowledge after the settlement that the Director-General was not prepared to release the claim for payment of $6,607.64 (see paragraph 22) they nevertheless accounted to their client for the whole of the settlement moneys. There was no suggestion that they had been released from their undertaking and why, in those circumstances they did not retain sufficient moneys in their trust account to enable them to meet the liability in accordance with their undertaking in the event that their client's appeal should prove unsuccessful, we do not know. Mr Watkins submitted that the undertaking was simply a matter between the plaintiff's solicitor and the defendants and that it was irrelevant to our considerations. But had the solicitors retained sufficient funds in their trust account the applicant may well have been made to realise at an earlier stage that his dream home was beyond his resources; funds would have been available to meet his liability in the event that the appeal failed; and much of the applicant's present hardship might thereby have been avoided.

52. It was suggested to us by Mr Watkins that we should take into consideration the possibility of the Director-General serving a further notice on the R.A.C.V. Insurance Co in pursuance of s.115(6) of the Act (see paragraph 10), and thereby recovering from that company the amount now claimed from the applicant. It will be recalled that where a notice is properly served in accordance with sub-section (5) of that section, sub-section (8) precludes any payment to or on behalf of the person entitled to receive compensation until the Director-General has specified the amount which the person liable to pay compensation is liable to pay to the Director-General. In making this submission, Mr Watkins acknowledged that if the R.A.C.V. Insurance Co was obliged to make payment to the Director-General, it may well seek indemnity pursuant to the undertaking or deed of release.

53. If, in truth that alternative is still available to the Director-General, it is a matter which he may wish to consider as an alternative to pursuing recovery action against the applicant. However, we do not see how the existence of an alternative remedy for the recovery of the applicant's liability under s.115(4) can be a ground for releasing the liability. The question was not argued before us, but on the face of it, if the applicant's liability is released pursuant to s.115(4A), there is nothing to recover from the R.A.C.V.

54. We therefore decide to affirm the Director-General's decision under review. However, in recognition of the hardship which the applicant and his family may suffer if he were forced immediately to sell his home in order to pay the debt, we would recommend that, consistently with whatever time limits may apply with respect to proceedings for recovery of the outstanding debt, the Director-General should allow the applicant every opportunity to re-organise his affairs as best he may so as to enable him meet his liability without undue hardship.