C A T C H W O R D S SOCIAL WELFARE - Social Security entitlements - workers' compensation received for injuries sustained while nursing - husband subsequently deserted applicant and their four children under ten years of age - substantial family debts - applicant found to be frugal in management of family finances but obliged to use credit card to buy food - Administrative Appeals Tribunal found her to be suffering "extreme financial hardship" and children suffering "unacceptable hardship" - formula for calculating Sole Parents Pension - if formula applied strictly, applicant would receive lower pension than if same amount of workers' compensation had been received as wages - whether Tribunal erred in law when it found "special circumstances" existed and exercised statutory discretion to treat part of workers' compensation as not having been made. Social Security Act 1991 (Cth) s.1168, 1184(1) Beadle v. Director-General of Social Security (1985) 60 ALR 225 Groth v. Secretary, Department of Social Security (1995) 40 ALD 541 Secretary, Department of Social Security v. Smith (1991) 30 FCR 56 SECRETARY, DEPARTMENT OF SOCIAL SECURITY v. ELIZABETH ELLIS No. WAG 120 of 1996 CARR J PERTH 8 APRIL 1997 IN THE FEDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WAG 120 of 1996 GENERAL DIVISION ) On appeal from the Administrative Appeals Tribunal B E T W E E N : SECRETARY, DEPARTMENT OF SOCIAL SECURITY Applicant and ELIZABETH ELLIS Respondent CORAM: CARR J. PLACE: PERTH DATE: 8 APRIL 1997 MINUTE OF ORDERS THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The matter of the costs of the appeal be reserved, with liberty to the respondent to apply within 42 days for an order that the applicant pay her costs. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT ) OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) No. WAG 120 of 1996 GENERAL DIVISION ) On appeal from the Administrative Appeals Tribunal B E T W E E N : SECRETARY, DEPARTMENT OF SOCIAL SECURITY Applicant and ELIZABETH ELLIS Respondent CORAM: CARR J. PLACE: PERTH DATE: 8 APRIL 1997 REASONS FOR JUDGMENT Introduction This is an appeal, under s.44 of the Administrative Appeals Tribunal Act 1975 (Cth), from a decision of the Administrative Appeals Tribunal (constituted by Deputy President T.E.Barnett) given on 18 July 1996. The Tribunal affirmed the decision of the Social Security Appeals Tribunal, made on 15 November 1995, to set aside a decision of a delegate of the applicant made on 8 May 1995 and affirmed by an authorised review officer on 17 May 1995. That decision was not to pay the respondent an amount by way of sole parent pension ("SPP"). The Social Security Appeals Tribunal substituted a decision that "special circumstances" existed within the meaning of that expression in s.1184 of the Social Security Act 1991 (Cth) ("the Act"). In practical terms, the substituted decision meant that part of certain weekly workers' compensation payments, then being received by the respondent, would be disregarded for the purposes of calculating whether she was entitled to SPP. The respondent would thus be treated in the same manner as she would have been treated had she received the weekly compensation payments as a result of paid employment i.e. in the form of wages or salary. The case is said to raise questions about the meaning of the expression "special circumstances" in s.1184(1) of the Act. Factual Background The facts are not in dispute. The following summary is taken mainly from the Tribunal's reasons for decision. The respondent was employed as a nurse. In early November 1994 she sustained a work-caused injury to her knee. As a result of that injury she received workers' compensation payments of $729 per fortnight. On 1 May 1995 the respondent lodged a claim for SPP. Section 1168 of the Act provided (via a formula) that in the above circumstances the respondent was not entitled to any SPP. It was common ground that if the respondent had been earning the same amount of $729 per fortnight by way of wages, a different formula would have applied so that she would have been entitled to an additional amount of SPP of about $61 per fortnight. The Social Security Appeals Tribunal exercised a discretion provided by s.1184 of the Act to enable her to receive that additional payment. I will return below to the statutory provisions but, in the meantime, I continue the narrative of the factual background. Save as expressly mentioned below, it was common ground between the parties (and the Tribunal so found) that at the relevant time: (a) the respondent was suffering extreme financial hardship. The Social Security Appeals Tribunal so found, and the Tribunal expressly accepted those findings; (b) the respondent had four children all under the age of ten, had been receiving no maintenance or other support, financial or otherwise, from her husband or from any other source [as will be seen below, the applicant contends that in making the finding which I have expressed in italics, the Tribunal erred in law]; (c) the marriage breakdown which gave rise to her pension claim was contributed to by the hardship caused by the abovementioned injury; (d) the marriage breakdown left the respondent in a situation where she had to meet the combined debts of herself and her husband. These included payments falling due in respect of two cars (until she was able to sell her husband's car for less than the amount owing), a mortgage on a Homeswest house which was the family home, credit cards, HBF and other lesser debts; (e) the respondent was required, pursuant to a rehabilitation scheme, to attend daily at her workplace and to work without pay on administrative tasks to whatever extent she was able. As a result, she incurred exactly the same expenses for such things as day care and transport as if she were working for a wage; (f) the respondent suffered pain and suffering resulting from the injury to her knee, but was driven by the circumstances of her family's need, to overuse her knee during the recuperation period, causing lasting damage. The pain, suffering and inconvenience seriously added to the stress upon the respondent and her family; (g) payments of SPP were not related to the payments for workers' compensation or the work-caused injury and arose independently of that situation; (h) the respondent had virtually no assets except some equity in her Homeswest house; (i) the respondent's debt situation had been magnified because she had been obliged to use her credit card to buy the necessaries of life such as food for herself and her children. This imposed a severe interest "penalty". In consequence, the debt which had built up and the need to service and pay interest on that debt, still contributed to her hardship; (j) the respondent's knee injury still caused considerable difficulty to her when doing housework and other activities related to normal life. It had also precluded her from continuing with her profession as a nurse. She was endeavouring to make her way as a clerical assistant. The Statutory Framework Section 1168 of the Act relevantly provides the following formula for the calculation of the respondent's SPP entitlement: PBA - PC = SPP [where "PBA" means a person's fortnightly rate of pension, benefit or allowance - in this case $326.10, and "PC" means the fortnightly rate of periodic compensation of $729.00]. It can be seen that the application of this formula would result in the respondent having no entitlement to SPP. As mentioned above, if the respondent had been receiving $729 per fortnight by way of salary or wages, another formula would have been applied and she would have been entitled to SPP of about $61 per fortnight. Section 1184(1) of the Act confers a discretion upon the applicant to treat the whole or part of a compensation payment as not having been made ".. if [the applicant] thinks it is appropriate to do so in the special circumstances of the case." The applicant claims that in deciding to exercise that discretion in a manner whereby the respondent would receive SPP of $61 per fortnight, the Tribunal committed an error of law. The Tribunal's Decision After setting out the agreed facts, referring to the legislation and analysing the respective submissions of the respondent and the applicant, the Tribunal referred to some decisions in this Court and in the Tribunal itself. Those decisions were concerned with the expression "special circumstances". The Tribunal then concluded its reasons for decision in the following terms: "10. In this application the Tribunal finds that there are special circumstances within the meaning of s.1184 of the Act. The respondent's work injury not only left her incapacitated for work with a damaged and very painful knee, but it also incapacitated her from doing most of her normal household duties and many of the tasks required of the mother of four young children. This situation and the distress which it caused her led directly to the breakdown of her marriage and to her being left with the sole responsibility of maintaining and raising the four young children and also to her being left with the sole responsibility of paying off family debts, which had been incurred when they were a two income family. 11. On the evidence the respondent's family financial circumstances during the period under review (and even now) are quite desperate. The Tribunal is satisfied that the respondent is an independent-minded and practical person who has utilised the weekly amounts available to her in a most practical and careful way for the benefit of her children. Despite this, and through no fault of her own, the four young children are suffering unacceptable hardship, which the SPP was designed to alleviate. The strict application of the s.1168 of the Act formula to preclude her from receiving any portion of her SPP entitlement will result in a degree of hardship which was contrary to the purpose of the legislature which provided the family safety net of the SPP in the Act. 12. The combination of circumstances, outlined above, which would lead to this unintended and unfair result, are "special" within the meaning of s.1184 of the Act, a section which, as the Tribunal in Re Ivovic and Director-General of Social Services (1981) 3 ALN N95 pointed out, was specifically designed: "... to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case." The Tribunal considers that the words of the decision made by the SSAT in this case provides practical justice in these circumstances and is content to adopt them." The Applicant's Contentions In essence, the applicant contends that the Tribunal erred in law in finding that the respondent's circumstances constituted "special circumstances" within the meaning of s.1184(1) of the Act. The applicant's contentions fall into three broad categories. I shall deal with those categories in sequence. 1. Construction of s.1184 The applicant contends that the Tribunal misconstrued and misapplied s.1184(1) of the Act. The applicant says that the Tribunal, in making its decision, referred specifically to the matters referred to in paragraphs 10 and 11, which I have set out above. Those matters, so it was put, are neither in themselves, nor cumulatively, sufficiently unique or unusual to constitute "special circumstances". Alternatively, if they were capable of being "special", the respondent submits that they are not sufficiently distinctive, extreme, unique, unusual or unfair, when considered in the context of other persons (with children) who receive periodic compensation payments, to have made it "appropriate" to treat the whole or part of the workers' compensation payments as not having been, or liable to be, made. Next the applicant submitted that the Tribunal erred by including in the "combination of circumstances ... which would lead to [the] unintended and unfair result", the fact that "the strict application of s.1168 of the Act formula ... will result in a degree of hardship which was contrary to the purpose of the legislature which provided the family safety net of the SPP in the Act". In so doing, it was submitted, the Tribunal failed to advert to and have regard to the legislative policy behind s.1168 of the Act. That policy was said to be to conserve public monies by reducing the amount of pension payable by way of SPP where the recipient is entitled to payments of compensation from other sources. The applicant contended that by such failure, the Tribunal erred in law. The Tribunal, so it was argued, had effectively treated the fact that the amount of compensation payments was not adequate for the respondent's needs as the basis for concluding that the strict operation of s.1168 should be negated by application of the discretion available under s.1184(1) of the Act to supplement the respondent's income. The applicant contended that in so doing the Tribunal misunderstood the operation and intentions of the SPP provisions of the Act. The applicant submitted that the strict application of s.1168 was neither unintended nor unfair in the respondent's circumstances. The Tribunal had, so it was put, ignored the fact that the normal and intended operation of that section was to leave the respondent dependent on workers' compensation payments and Family Payments. In Beadle v. Director-General of Social Security (1985) 60 ALR 225, a Full Court of this Court had to consider whether the Administrative Appeals Tribunal had erred in its interpretation of s.102(1)(a) of the Act which provided for an extension of time in which to claim a family allowance "... in special circumstances ...". At p.228 the Full Court said: "Presumably in this context special circumstances must include events which would render the six months unfair or inappropriate. ... It would depend upon the circumstances of the particular case whether these constituted special circumstances. We do not think it is possible to lay down precise limits or precise rules. The matter is one for the Director-General bearing in mind the purpose for which the power is given. The phrase "special circumstances", although lacking precision, is sufficiently understood in our view not to require judicial gloss." In Groth v. Secretary, Department of Social Security (1995) 40 ALD 541 at p.545, Kiefel J, after referring to Beadle, said: "... 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." Later (on the same page) Kiefel J expressly approved the Tribunal's reasoning in holding that Mr Groth's circumstances were not out of the ordinary when Part 3.14 of the Act (in which ss.1168 and 1184 are to be found) had the same effect on him as it did on other persons qualified to receive a disability support pension. Her Honour added: "It [the Tribunal] 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." I have read and re-read the Tribunal's reasons in this matter. I reject the applicant's contentions, summarised above, that the Tribunal erred in law. The Tribunal was well aware that it had to give effect to s.1168 (and whatever policy lies behind that section) unless it found that there were "special circumstances". It recognised that special circumstances meant, on the authorities, circumstances which were out of the ordinary. Once it got to that stage, the Tribunal can be seen to have been engaged in a purely factual exercise. For example, (at paragraph 6 of its reasons) the Tribunal referred to the submission made by the applicant's representative Mr Harris, in the following terms: "6. Mr Harris, for the applicant, submitted that "special circumstances" should be treated as extremely unusual and that financial hardship (which he conceded did exist) was not sufficient to amount to special circumstances: Groth and Secretary, Department of Social Security (1995) 40 ALD 541 and Re Secretary, Department of Social Security and Haughey (1993) 36 ALD 653." The Tribunal had earlier in its reasons [see paragraph 4(a)] expressly accepted the factual findings of the Social Security Appeals Tribunal and found that the respondent was suffering extreme financial hardship. It confirmed those findings in paragraphs 10 to 12 of its reasons, which I have set out above. In particular I refer to the finding in paragraph 11 that the four young children are suffering unacceptable hardship. The Tribunal had earlier referred to the fact that the respondent (whom the Tribunal found to be using the funds available to her in a most practical and careful way for the benefit of her children) had been obliged to use a credit card to buy the necessaries of life such as food for herself and her children. The Tribunal also referred to the family financial circumstances as being "quite desperate". In my view, it was quite clearly open to the Tribunal to find that the circumstances of this case were sufficiently out of the ordinary to amount to "special circumstances". If it be permissible to distinguish cases when considering a purely factual exercise, then Groth's case is clearly distinguishable (although I am in complete and respectful agreement with her Honour's decision). In that case the Tribunal found that although the family circumstances were difficult, they did not constitute hardship. Furthermore, the Tribunal found that the Groth family circumstances could not be said to be different from other pension recipients. At the hearing of the appeal in this matter, I asked counsel for the applicant (who had not appeared for the applicant before the Tribunal) whether his client had called any evidence before the Tribunal to show that the respondent's circumstances were no different from any other SPP pension claimant. I was told that there was no such evidence. In those circumstances, I find it surprising, to say the least, to find the applicant complaining that the Tribunal erred in law in its fact-finding process. In my opinion, the evidence to which the Tribunal referred which was before it, and had previously been led before the Social Security Appeals Tribunal, raised a strong prima facie case of circumstances which were so out of the ordinary as to amount to "special circumstances". If the truth of the matter is that these are ordinary circumstances to be found throughout Australia, then the applicant could quite easily have led that evidence by, for example, producing the statistics. Nor do I consider, as was submitted by the applicant, that the Tribunal failed to have regard to the legislative policy behind s.1168 of the Act. That policy was said to be one of conserving public monies by reducing the amount of SPP where the recipient is entitled to payments of compensation from other sources. The Tribunal quite clearly recognised that s.1168 was to operate in accordance with its terms unless it found as a matter of fact that "special circumstances" existed. As an alternative argument, the respondent submits that before it is "appropriate" to treat part of the workers' compensation payments as not having been made, the circumstances have to be "sufficiently distinctive, extreme, unique, unusual or unfair, when considered in the context of other persons with children receiving periodic compensation payments". In my view, to attempt further to fetter the statutory discretion conferred by s.1184(1) in the manner proposed would be to add an unwarranted gloss to the words of that subsection. Once special circumstances have been found, in my opinion, it is up to the decision-maker to decide whether it is appropriate to exercise the discretion conferred by the subsection. The Tribunal quite clearly felt, for the reasons which it expressed, that it was appropriate to exercise the discretion. In so doing, in my opinion, it did not err in law. 2. Taking into account an irrelevant consideration The applicant complained about the finding by the Tribunal that payments of SPP are not related to the payments for workers' compensation or the work-caused injury, and arose independently of that situation. The applicant submitted that the fact that there was no relationship between the payment of SPP and the deriving of income by reason of a work-caused injury was not intended by Parliament to be deemed an "unfair" circumstance calling for the application of the discretion in s.1184 of the Act. In essence, the applicant says that the Tribunal should not have taken that factor into account because it was irrelevant. By taking that factor into account, the Tribunal is said to have erred in law. It is not entirely clear from the Tribunal's reasons that, in reaching its conclusion that special circumstances existed, it took this matter into account. On one reading of those reasons it is possible that the circumstances which it took into account were those referred to in paragraphs 10 and 11. However, at paragraph 4(g) it certainly made a finding that payments of SPP are not related to payments for workers' compensation or the work-caused injury, and arose independently. I shall work on the assumption that the Tribunal took this factor into account. In my opinion, this was not an irrelevant factor. As the applicant conceded in his written submissions, the discretion vested in the Secretary under s.1184 is wide. The applicant's submission was that the essential legislative purpose in cases such as Groth and Secretary, Department of Social Security v. Smith (1991) 30 FCR 56 is to prevent "double dipping" whereby a recipient of a pension would also have the advantage of a second source of income through compensation payments. The applicant acknowledged that in relation to preclusion periods involved in such cases, the legislative policy itself, if unmitigated, would on occasions operate in an arbitrary manner. The applicant argued: "In the case of receipt of periodic payments of compensation, the principle is the same, but may admit of a more stringent application." In my view, the Tribunal was entitled to take into account a whole host of facts in the factual matrix of considering whether it was appropriate in the special circumstances of the respondent's case, to exercise the discretion conferred by s.1184(1). One such circumstance was the fact that her entitlement to SPP arose independently of the work-caused injury which resulted in her entitlement to workers' compensation payments. When that factor is taken into account, it can be seen that the respondent cannot be described as "double dipping". It is also relevant to the decision of how much, if any, of the workers' compensation payments are to be disregarded. The Social Security Appeals Tribunal and the Tribunal decided that it would be appropriate to disregard so much of the workers' compensation payments as would put the respondent in the same position as if she had earned those payments by way of wages. The Tribunal cannot be said to have focused on that factor to the exclusion of all others. Its primary findings were that there was "unacceptable hardship" and "quite desperate" financial circumstances. The Tribunal was, in my opinion, quite entitled to take into account the absence of any relationship between the entitlement to SPP and the work-caused injury as part of an overall assessment whether there were special circumstances. I do not consider that the Tribunal erred in law in the manner contended. 3. Family Payments The applicant referred to the Tribunal's finding that the respondent was receiving no other support from any other source. The applicant says, that on the uncontradicted evidence of the respondent, she was in fact receiving Family Payments under the Act. The Tribunal erred in law, so the applicant submitted, by failing to take into account this "relevant evidence". In particular, the applicant contended that by failing to take into account the respondent's receipt of Family Payments, when assessing her financial circumstances for the purposes of deciding whether to exercise the discretion under s.1184(1) of the Act, the Tribunal erred in law. I do not consider that this submission is made out on the facts. It is true that at paragraph 4(b) of its reasons the Tribunal found that the respondent has been receiving no maintenance or other support, financial or otherwise, from her husband or from any other source. However, this observation has to be read in context. First the reference to "any other source" appears immediately after a reference to the absence of any financial or other support from her husband. The Tribunal could well be understood as referring to support from other family members or from charities. It was common ground that Family Payments are irrelevant in the calculations required by the formula provided in s.1168 of the Act. This is not to deny the relevance of Family Payments when assessing the respondent's financial circumstances for the purposes of deciding whether to exercise the discretion under s.1184(1) of the Act. However, there is a more compelling reason why the applicant's contention should be rejected. In paragraph 4(a) of its reasons the Tribunal expressly accepted the findings of the Social Security Appeals Tribunal as illustrating that the respondent was suffering extreme financial hardship. At p.5 of the Social Security Appeals Tribunal's reasons there appears the following passage: "Ms Ellis told the Tribunal that she is struggling to survive financially. She confirmed that her own income came from the workers compensation payments and her family payment from Social Security. Ms Ellis said that she receives no child support as her ex husband is currently unemployed. Additionally, she has had to take on herself a number of joint debts." [Emphasis added. The SSAT then proceeded to set out particulars of the respondent's financial commitments]. It can thus be seen that the Social Security Appeals Tribunal took into account the respondent's receipt of Family Payments by way of Social Security when it reached its conclusion that she was "... in severe financial hardship ...". The Tribunal expressly accepted that conclusion and the findings upon which it was based. The Tribunal had before it, as part of the respondent's evidence, her calculations of monthly income and expenditure reflecting the financial circumstances of the family. Each of those monthly calculations showed the receipt of Family Payments. There was no need, in those circumstances, for it to set out its own detailed calculations by way of a statement of account of the respondent's income and expenditure. In my view, no error of law has been demonstrated in the Tribunal's failure to refer specifically to the receipt of Family Payments or the manner in which it expressed its finding in paragraph 4(b). Conclusions For the foregoing reasons, I do not consider that it has been demonstrated that the Tribunal erred in law in reaching its decision in its matter. Accordingly, the appeal will be dismissed with costs. I certify that this and the preceding fourteen (14) pages are a true copy of the Reasons for Judgment of Justice Carr. Associate: Date: 8 April, 1997 Counsel for the Applicant: Mr P.W. Johnston with Ms P.D.Parentich Solicitors for the Applicant: Australian Government Solicitor Counsel for the Respondent: Mr T.J.Malone Solicitor for the Respondent: Terence J Malone & Associates Date of Hearing: 26 March 1997 Date of Judgment: 8 April 1997