Manocchio; Secretary, Department of Family and Community Services [2003] AATA 86 (31 January 2003)

Last Updated: 25 February 2003

DECISION AND REASONS FOR DECISION [2003] AATA 86

ADMINISTRATIVE APPEALS TRIBUNAL )

) No S2002/246

GENERAL ADMINISTRATIVE DIVISION	)
	Re	SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And

ANTONIO MANOCCHIO

Respondent

DECISION

Tribunal

Mr S P Estcourt QC., (Deputy President)

Date 31 January 2003

Place Adelaide

Decision

The Tribunal sets aside the decision of the Social Security Appeals Tribunal of 12 June 2002 as amended on 27 June 2002 and reinstates the primary decision of the applicant.

[Sgd S P Estcourt QC]

Deputy President

CATCHWORDS

Social Security - compensation payment - preclusion period - conversion of periodic payments to a lump sum entitlement under a State Act - statutory formulae - interpretation - whether "special circumstances" apply.

Social Security Act 1991 - ss1164, 1170, 1184K

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Reid v Secretary, Department of Family and Community Services [2001] FCA 794

Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67

REASONS FOR DECISION

31 January 2003

Mr S P Estcourt QC., (Deputy President)

1. Section 1164 of the Social Security Act 1991 ("the Act") provides that periodic compensation payments payable under a law of a State which are converted into an entitlement to a lump sum are to be treated as though they were received as periodic compensation payments during a period calculated by dividing the lump sum amount by the number of fortnights in the period by reference to which the lump sum was calculated.

2. Section 1170 of the Act provides that if a person receives both periodic compensation payments and a lump sum compensation payment, a "lump sum preclusion period" for benefits under the Act begins on the day following the last day of the periodic payments period.

3. Mr Manocchio received a loss of earning capacity payment under s42A of the Workers' Rehabilitation and Compensation Act 1986 (SA) amounting to $6,368.00. On the evidence me, which is not in dispute, that payment was calculated by reference to the twelve month period 1 October 1999 to 30 September 2000.

4. Such a loss of earning capacity payment is a periodic compensation payment converted under a law of a State to an entitlement to a lump sum within the contemplation of s1164 of the Act (c.f. Reid v Secretary, Department of Family and Community Services [2001] FCA 794).

5. Mr Manocchio also received a lump sum compensation payment of $105,000.00 in respect of which the "lump sum preclusion period" under the Act is 124 weeks.

6. Applying s1170 of the Act, the respondent's delegate calculated that 124 week period to commence on 1 October 2000, that is, the day following the last day of the periodic payments period calculated under s1164.

7. Mr Manocchio appealed to the Social Security Appeals Tribunal ("the SSAT") which held on 12 June 2002 that this result was unfair because the Act operated to postpone the commencement of the 124 week "lump sum preclusion period" for 12 months when the converted periodic payments entitlement did not truly reflect 12 months loss of income to Mr Manocchio, rather the SSAT estimated, only about 11 weeks.

8. The SSAT found that such a result raised the issue of "special circumstances" under s1184K of the Act.

9. Section 1184K provides that the whole or part of a compensation payment may be treated as not having been made if it is thought appropriate to do so in the special circumstances of the case.

10. The SSAT decided on 12 and 27 June 2002 that it was appropriate to treat $5,021.00 of the total converted periodic payments entitlement of $6,368.00 as not having been made and it purported to decide that this resulted in the "lump sum preclusion period" of 124 weeks commencing on 17 December 1999.

11. The parties are agreed that Mr Manocchio cannot demonstrate financial hardship and that his claim to upset the original decision of the applicant's delegate relies solely on the validity of the approach taken by the SSAT in its application of s1184K.

12. It should first be observed that the SSAT's reduction of the converted periodic payments entitlement from $636.00 to $1,347.00 does not have the effect of backdating the last day of the periodic payments period calculated under s1164 of the Act. Only the amount of the converted entitlement to a lump sum is thus altered, not the period by reference to which it was calculated. That period remains 1 October 1999 to 30 September 2000 [See s1164(c) and (e)]. Thus, the commencement date of the "lump sum preclusion period" remains the day following that day, i.e. 1 October 2000.

13. Having so observed however, I can see no basis for a finding of "special circumstances" which might justify that reduction or, more to the point, a reduction of the converted entitlement to a lump sum to the extent of the whole amount of that compensation payment.

14. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 Kiefel J at paragraph 12 said:

"The phrase "special circumstances", it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle's case [sic, Beadle v Director-General of Social Security (1985) 60 ALR 225 @ 228] - and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary."

15. Mr Manocchio was at the time of receiving his compensation payment represented by solicitors, and there is no suggestion that the converted periodic payments entitlement amounted to other than his correct entitlement to compensation in that form pursuant to the State legislation.

16. The Act clearly intends that such entitlement be brought into account in the manner provided by s1170 namely that any "lump sum preclusion period" follow the notional last day of the periodic payments period as arrived at by the application of s1164.

17. It is not for me to question, of themselves, the size or adequacy of the amount of the converted periodic payments entitlement, although they could be factors which might combine with other matters giving rise, at any time, to hardship sufficient to amount to "special circumstances".

18. Nor, in my view am I entitled to find "special circumstances" simply because the receipt of the converted periodic payments entitlement postponed the operation of the "lump sum preclusion period". That appears to be the intended result of the legislation and as was pointed out by Kiefel J in Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67, at [35] "the statutory objectives in utilising the formulae referred to above, [s1165 and 1166 of the Act], must also be borne in mind".

19. In the present case, to borrow from another decision of her Honour, namely Groth v Secretary, Department of Social Security (supra) I am unable to conclude that something unfair, unintended or unjust has occurred and I decline to exercise my discretion under s1184K of the Act.

20. It follows that in my view the decision of the SSAT must be set aside and that of the applicant's delegate restored.

21. I order accordingly.

I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S P Estcourt QC., (Deputy President)

Signed: .......................................................................................

Administrative Assistant

Date/s of Hearing 28 January 2003

Date of Decision 31 January 2003

Counsel for the Applicant Ms Adele Pugsley

Solicitor for the Applicant Centrelink

Representative for the Respondent Mr W Molenaar (Financial Adviser)