Case: Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67 ; (2002) 116 FCR 348
Outcome: followed
In Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67 ; (2002) 116 FCR 348 ( Chamberlain ), Kiefel J addressed at some length the question of the circumstances that might be "special" within s 1184K. In particular, her Honour reviewed earlier cases and noted (at [32]) that two of them, Kertland v Secretary, Department of Family and Community Services [1999] FCA 1596 ; (1999) 95 FCR 64 and Secretary, Department of Social Security v Smith (1991) 30 FCR 56, were "unusual" in that in them "it could be seen, objectively, that there could not have been a double payment", so that "it might be concluded that the statutory assumption operated unjustly". Her Honour thought that that situation would not often arise and set those cases apart from the usual. 69 In Chamberlain [2002] FCA 67 ; 116 FCR 348 itself, the effect of the statutory formula was that the applicant would have to pay back more than twice the amount that had been allocated to loss of earnings and of earning capacity in her lump sum settlement. Nonetheless, her Honour thought that such a factor would be present in many cases and was simply an aspect of the outworking of the formula. Her Honour considered that it could not, by itself, amount to "special circumstances". 70 Like Mr Clark, Mrs Chamberlain was elderly. She was aged 60 years when, on 13 January 1999, she suffered personal injury in a motor vehicle accident. At the time she was in receipt of an age pension and she had previously received a disability support pension. She claimed to have been able and entitled to earn up to $50 per week from teaching music, without her pension entitlement being affected. Her claim was settled for $35,000 plus $4,000 for costs. The parties to the settlement allocated $31,500 to pain and suffering and medical expenses, and $3,500 to loss of earnings and of earning capacity. 71 Mrs Chamberlain had continued to receive the age pension from the time of the accident. At that time, it was ss 1165 and 1166 of the SS Act that provided for the lump sum preclusion period and refund in Mrs Chamberlain's case, and s 1184 of the SS Act that provided for a discretion in the Secretary to treat the whole or part of a compensation payment as not having been made or not liable to be made if the Secretary should think it appropriate to do so "in the special circumstances of the case". Under s 17(3)(a) , the compensation part of the LSP was $17,500. The preclusion period was arrived at by dividing that sum by $422.90, giving a period of 41 weeks. The period ran from the date of the injury, 13 January 1999, to 26 October 1999. The statutory formula produced the result that in respect of that period, Mrs Chamberlain was liable to pay to the Commonwealth $7,643.36 more than twice the sum of $3,500 mentioned above. 72 Kiefel J stated (at [34] [35]): [34] The basis for the Tribunal's view [that "special circumstances" were established] was its acceptance of what the parties to the settlement said had been offered and accepted for the economic loss component. It was far less than the statute assumed to be the case in applying the formulae. Again, however, this will be so in many, if not most, cases to which the Act applies. Further, the extent of the difference from the basis upon which the parties acted could not provide the necessary "special circumstance". The statute has selected a figure which may operate in an arbitrary way. [35] The statutory objectives in utilising the formulae, referred to above, must also be borne in mind. It is not intended that a decision-maker be required to consider contentions about what part of the compensation reflected the economic loss component. That is so whether one has regard to the application of the formulae or the discretion under s 1184. The latter does not alter the objective and must be read in light of it. 73 Her Honour set aside the Tribunal's decision. 74 If Chamberlain [2002] FCA 67 ; 116 FCR 348 is to be followed, the present application must be dismissed. 75 I respectfully agree with the approach that was taken by Kiefel J. The expression "special circumstances" in s 1184K does not embrace the circumstance that the 50 percent rule will yield a preclusion period beginning on a certain date that will or may be excessive, even grossly excessive, having regard to the component included in a lump sum settlement for loss of earnings or of earning capacity, to the age of the injured person, and perhaps to other circumstances. 76 Once one embarks on an inquiry of the kind that would be required in such a case, one is defeating the legislative intention. The Parliament must be taken to have contemplated as "usual" or "ordinary" the circumstances of people placed as Mr Clark is. In effect, by adopting the rough and ready 50 percent rule, the legislature has faced such people with a choice: not sue at all and to rely, instead, on such other entitlements as may be available; litigate to trial so that the Court will identify a figure for loss of earnings and of earning capacity; or settle subject to the operation of the 50 percent rule. 77 In the present case, Mr Clark must be taken to have decided against the former two courses. I do not know why he did so. In one sense, it seems unfair that Mr Clark should suffer a preclusion period until 15 February 2008, but I do not think that this constitutes "special circumstances" in the light of the legislative intention. 78 If the position were otherwise, the r&eacute;gime that was introduced in 1988 would be defeated because it would be again open to parties to a settlement to attribute an artificially low figure to loss of earnings and earning capacity, and to the injured person, through s 1184K of the SS Act, to initiate the very kind of investigation that it was the intention of the 1988 amending Act to eliminate. 79 For the above reasons, I do not think that the AAT erred in law in failing to exercise the discretion given by s 1184K of the SS Act.