Defence Force Retirement and Death Benefits Authority v House

The decision of the Authority 8 The decision of the Authority which Mr House sought reviewed in the Tribunal stemmed from a request by Mr House in a letter dated 19 November 2004 seeking a review of his invalidity classification. At that time Mr House's invalidity classification referred to "alcoholism and alcoholic liver disease". Mr House requested that the invalidity classification extend to personality disorder and injuries he had sustained in a car accident. On 14 March 2005 the delegate of the Authority rejected the request for a review because, in summary, the additional conditions to which Mr House referred were not causally connected to his accepted impairment. However, the delegate said that if Mr House considered that his accepted impairment had deteriorated since his last review he could request the Authority to conduct a review of his classification. 9 In letters to the Authority dated 18 March 2005 and 22 March 2005 Mr House requested reconsideration of the delegate's decision to decline his request for a review. The Authority accepted these letters as a request for reconsideration of the delegate's decision and for review of Mr House's invalidity classification under s 34 of the Act. 10 The Authority found in summary as follows: · On 8 May 2001 the Tribunal reduced Mr House's classification from 40% to 30% Class B. At a review conducted at Mr House's request on 3 July 2001 the delegate, noting the Tribunal's findings and other evidence, reclassified his level of invalidity as 20% Class C. This decision was confirmed by the Authority on reconsideration on 15 February 2002. · Mr House's subsequent request for a review, dated 19 November 2004, was therefore made two years and nine months after the Authority last reconsidered his invalidity classification, and confirmed that it was 20% Class C, on 15 February 2002. · Mr House had not provided any evidence that his capacity to undertake relevant kinds of employment had significantly diminished during that period. 11 In relation to Mr House's submission that the Authority had not previously considered whether · a personality disorder should be recognised as part of the physical or mental impairment which was the cause of the incapacity by reason of which he had been retired from the Defence Force (that is, alcoholism and alcoholic liver disease); or · whether a personality disorder was an impairment connected with such that impairment the Authority noted that it had extensively canvassed the question of a possible relationship between a personality disorder and alcoholism in Mr House's case in its decision dated 15 February 2002. In doing so, the Authority noted that it had considered and rejected the possibility that Mr House's personality disorder was causally connected with his alcoholism - rather, the Authority had found that the better view was that Mr House's alcoholism was best viewed as a manifestation of a personality disorder. 12 Accordingly, the Authority confirmed the decision of the delegate to refuse Mr House's request for a review of his classification.

The Tribunal's decision the subject of this appeal (House [2008] AATA 38) 13 A person who is affected by a decision of the Authority and who is dissatisfied with the decision may request the Authority to reconsider the decision (s 99(2) of the Act). An application may be made to the Tribunal to review a decision of the Authority, being a decision which has been confirmed or varied (s 99(6) of the Act). In this case Mr House sought review of the Authority's decision by the Tribunal. 14 The Tribunal considered in detail evidence given by Mr House, and by a psychologist, an occupational therapist, and a psychiatrist called as witnesses by Mr House. The Tribunal also considered in detail evidence given by a psychiatrist and an orthopaedic surgeon called as witnesses by the Authority. 15 The Tribunal found in summary as follows: 1. The Tribunal's task was to decide the appropriate invalidity classification of Mr House on 19 November 2004, which was the date Mr House sought a review of his invalidity classification by the Authority. 2. The Tribunal was required to determine, as at 19 November 2004, the percentage of Mr House's incapacity in relation to civil employment, and the appropriate classification in respect of that incapacity for the purposes of s 30 and s 34 of the Act. 3. The Tribunal was required to give consideration to the impairment for which Mr House was retired. The Tribunal found that the primary reason for Mr House's discharge was his alcoholism condition which was interrelated with his personality condition (at [90]). 4. Accordingly, alcoholism was the prescribed physical or mental impairment for the purposes of s 34 of the Act. The Tribunal was required to consider whether the personality disorder of Mr House should be accepted as being one of his prescribed physical or mental impairments which was a cause of the incapacity by reason of which he was retired. In so considering, the Tribunal found: a. It had long been recognised that Mr House had a personality disorder. There was considerable medical evidence that this disorder was part of Mr House's "constitution", and that the personality disorder was present at the time of his enlistment. However under the scheme of the Act a constitutional condition may itself constitute a prescribed physical or mental impairment (at [94]). This is recognised by s 28 of the Act. b. In order for the personality disorder of Mr House to constitute a prescribed impairment there must be some evidence that this condition rendered Mr House incapable of performing his duties (at [95]). Evidence that the personality disorder of Mr House could "impact" upon his employment was given by one of the psychiatrists, Dr Reddan. c. There was evidence before the Tribunal that the personality disorder of Mr House was a significant condition. The Tribunal interpreted evidence of Dr Reddan as meaning that Mr House's personality condition was as significant as the alcohol condition as an impairment, and that both conditions could impact on Mr House's employment (at [99)]. d. Accordingly, the Tribunal concluded that the personality disorder of Mr House was one cause of his retirement, and that for the purposes of s 34(1B)(a) of the Act, alcoholism and the personality disorder of Mr House were his prescribed physical and mental impairments (at [99]-[100]). 5. The Tribunal referred to s 34(1A) of the Act which provides that, in determining the percentage of incapacity in relation to civil employment of a recipient member, the Authority shall have regard to, inter alia, the kinds of civil employment which a person with skills, qualifications and experience referred to in s 34(1A)(a) of the Act might reasonably undertake. The Tribunal accepted as relevant the kinds of civil employment submitted by the Authority, but also accepted a number of categories nominated by Mr House. Specifically the Tribunal found that: …the kinds of civil employment which Mr House with skills, qualifications and experience referred to in section 34(1A)(a) of the Act might reasonably undertake would be as a driver, mobile plant operator, labourer, store person, mining and construction labourer, security officer, powder monkey, sub-contractor in mining and construction, and foreman in any of those fields. (at [113]) 6. The Tribunal was required to have regard to the degree to which any physical or mental impairment of Mr House had diminished his capacity to undertake the kinds of civil employment accepted by the Tribunal. In this case the Tribunal noted that it would ordinarily examine the degree to which each prescribed impairment diminished the capacity of Mr House to undertake each of the relevant kinds of employment, but that in the circumstances it would be artificial to endeavour to determine the effect of each prescribed impairment (at [116]-[117]). 7. In this case it would be inappropriate to simply perform a mathematical calculation by taking an average of various percentages of impairment for the kinds of employment listed. The Tribunal also noted that it was administering beneficial legislation. It was appropriate for the Tribunal to make a "value judgment" as described in McGovern and Defence Force Retirement and Death Benefits Authority (1988) 16 ALD 791. The Tribunal accepted that Mr House was able to drive, that the alcoholism condition of Mr House was in remission, and that Dr Reddan had given Mr House a 30% rating on two kinds of civil employment that Mr House could reasonably undertake. The Tribunal found that the percentage of incapacity in relation to the civil employment of Mr House for the purposes of s 34(1) was 30% (at [121]). 16 Accordingly, the Tribunal found that Mr House had a classification of Class B for the purposes of s 30 of the Act, such classification to take effect from 19 November 2004, and made the orders the subject of this appeal.

The Appeal 17 I have already set out the orders sought by the Authority in this case. The questions of law raised on the appeal are whether the Tribunal erred at law in: (1) failing to consider a serious submission. (2) failing to take into account a relevant consideration, ie that the applicant's condition had improved since 2001. (3) failing to take into account a relevant consideration, ie that a person with the applicant's skills, qualifications and experience would reasonably be expected to undertake a wider range of civil employment than security officer and foreman. (4) misdirecting itself as to the nature of the decision it was required to make, or misapplied s 34(1) of the Act; and (5) making a statement of reasons that was manifestly inadequate. I am satisfied that these are proper questions of law for consideration by this Court. 18 The grounds of appeal of the Authority are as follows: 1. The Tribunal erred in law in not considering a serious submission of the applicant that, adopting the principle that having regard to the dictates of fairness and expedition "previous Tribunal decisions should generally be regarded as establishing the matters actually decided and the grounds for determination unless there is reason not to do so": Re Quinn & Australian Postal Corporation (1992) 15 AAR 519 at 526, the question for the Tribunal is what has changed since the operative date for the previous Tribunal determination of the respondent's incapacity. 2. The Tribunal erred in law in failing to take into account a relevant consideration, ie that the respondent's condition had improved since 2001. The Tribunal was required to take into account this consideration by s 34(1) of the Act. 3. The Tribunal erred in law in failing to take into account a relevant consideration, ie that a person with the applicant's skills, qualifications and experience would reasonably be expected to undertake a wider range of civil employment than security officer and foreman. Under s 34(1)(c) of the Act the Tribunal made its assessment of the degree to which the prescribed impairment of the respondent had diminished his capacity to undertake the kinds of employment identified for the purposes of s 34(1)(b) of the Act by reference to only two of the nine identified employment kinds. 4. The Tribunal erred in law by misdirecting itself as to the nature of the decision it was required to make, or misapplied s 34(1) of the Act. The Tribunal said that it was "required to have regard to the width, quality and nature of the range in employment opportunities and make a 'value judgment'". But it then made its decision on the assessment of only two of nine identified employment types. 5. The Tribunal's statement of reasons was manifestly inadequate in that it: a. is impossible to glean from the statement the reasons what was the Tribunal's reasoning process that led to its decisions; and b. does not state reasons adequate to enable the court to determine whether or not any other error had occurred in the reasoning process.

Relevant legislative scheme 19 The governing law in these proceedings is Pt V of the Act. Part V provides invalidity benefits for members of the scheme established by the Act who have been retired on the ground of invalidity or physical or mental incapacity to perform their duties. The initial classification of a member is made under s 30, which provides as follows: 30 (1) Where a member of the scheme, not being a member of the scheme to whom section 36 applies, is, or is about to become, entitled to invalidity benefit, the Authority shall determine his percentage of incapacity in relation to civil employment and shall classify him according to the percentage of incapacity as follows: Percentage of incapacity Class 60% or more A 30% or more but less than 60% B Less than 30% C

20 In its Reasons for Decision the Tribunal also referred to s 34 of the Act, which so far as is relevant in these proceedings provides: 34 (1) The Authority may, from time to time, if it is satisfied that the percentage of incapacity in relation to civil employment of a recipient member in receipt of invalidity pay is such that the classification of the member should be altered, reclassify him in the appropriate classification set out in section 30 according to the percentage of his incapacity in relation to civil employment. … (1A) In determining: (aa)What is the percentage of incapacity in relation to civil employment of a recipient member;… (aab) The Authority shall have regard to the following matters only: (a) the vocational, trade and professional skills, qualifications and experience of the recipient member; (b) the kinds of civil employment which a person with skills, qualifications and experience referred to in paragraph (a) might reasonably undertake; (c) the degree to which any physical or mental impairment of the recipient member, being a prescribed physical or mental impairment, has or had diminished the capacity of the recipient member to undertake the kinds of civil employment referred to in paragraph (b); (d) such other matters (if any) as are prescribed for the purposes of this subsection (1B) In subsection (1A), prescribed physical or mental impairment, in relation to a recipient member or a deceased member who was immediately before his or her death a recipient member, means: (a) a physical or mental impairment of the member that was the cause, or one of the causes, of the invalidity or physical or mental incapacity by reason of which the member was retired, whether or not that impairment changed, for better or worse, since that retirement; or (b) any other physical or mental impairment of the member causally connected with a physical or mental impairment referred to in paragraph (a).

Submissions of the parties 21 Both oral and written submissions were made by the parties in these proceedings. 22 In summary, the Authority submitted as follows: · Although the Tribunal is not necessarily required to consider in its reasons each and every submission made by the parties, it commits an error of law if it fails to consider submissions of substance which, if accepted, are capable of affecting the outcome of the case. Before the Tribunal the Authority submitted that previous decisions of the Tribunal should be regarded as establishing the matters actually decided and the grounds for the determination, unless there is reason not to do so. The Authority referred the Tribunal to the 2004 decision of the Tribunal(House and Defence Force Retirement and Death Benefits Authority [2004] AATA 667) in which the Tribunal decided that that the level of incapacity of Mr House for relevant kinds of civil employment was 20 per cent (Class C), and that Mr House was to be so classified with effect from 10 August 2001. The Tribunal in these proceedings clearly did not address this submission in its statement of reasons, which was an error of law. · The Tribunal failed to take into account two relevant considerations, namely: o Evidence before the Tribunal that Mr House's condition had improved. The Tribunal did not analyse evidence of the changes in Mr House's functioning since the 2004 Tribunal decision in its statement of reasons. It is implicit from this that the Tribunal did not take this relevant consideration into account in making its decision. o Evidence before the Tribunal that a person with Mr House's skills would reasonably be expected to undertake a wider range of civil employment than security officer and foreman. The Tribunal clearly based its finding that Mr House had a 30% incapacity for civil employment on those two kinds of civil employment (out of the nine relevant employment kinds upon which the Tribunal made material findings of fact). The subject matter, scope and purpose of the Act indicate that the Tribunal was bound to take the incapacity for all relevant employment types into account. · In making its decision that Mr House's level of incapacity was 30% on the basis of a "value judgment", the Tribunal failed to have regard to the width, quality and range of the nature in employment opportunities available to Mr House, and therefore misdirected itself. · In making its decision that Mr House's level of incapacity was 30% on the basis of a "value judgment", the Tribunal failed to give reasons for its decision as required by s 43(2) AAT Act. 23 Mr Harding, appearing on behalf of Mr House, submitted in summary: · Principles relevant to appeals to this Court from Tribunal decisions were explained in Collector of Customs v Pozzolanic (1993) 43 FCR 280 at 286-287. These principles include the following: o a wrong finding of fact is not sufficient to demonstrate error of law; o only in exceptional circumstances should the decision of the Tribunal not be the final decision; o the Court will not be concerned with looseness in the language of the Tribunal nor with unhappy phrasing of the Tribunal's thoughts; o the reasons for the decision under review are not to be construed minutely and finely with an eye attuned to the perception of error. · In relation to the Authority's claim that the Tribunal erred by revisiting findings of fact already made by the Tribunal in House [2004] AATA 667 and by not taking that decision into account, in fact the Tribunal made key findings on critical issues which differed from those of the earlier Tribunal decision. Accordingly, the decision of the Tribunal in House [2004] AATA 667 was made redundant. Specifically: o in House [2004] AATA 667, the Tribunal had found that the incapacity by reason of which Mr House was retired was the effects of alcoholism and that Mr House's prescribed physical and mental impairments were alcoholism and alcoholic liver disease, and not his personality disorder; o in the decision the subject of this appeal, the Tribunal found that alcoholism and the personality disorder of Mr House were the prescribed physical and mental impairments; o the Tribunal in the decision the subject of this appeal recognised it faced different evidence and different issues as to the kinds of civil employment which a person with the applicant's skills, qualification and experience might reasonably undertake; o the fact that the 2004 decision of the Tribunal was upheld by the Federal Magistrates Court in House [2004] FMCA 833 is irrelevant - it simply means that, in the view of the Federal Magistrates Court, the earlier decision of the Tribunal was not infected by legal error. · In relation to the Authority's submission that the Tribunal had failed to take into account a relevant consideration, namely that Mr House's condition had improved, any comparison between Mr House's level of functioning at the effective date of the Tribunal's decision and earlier points in time must recognise that, until the Tribunal's decision, Mr House's personality disorder had not been considered to be one of his prescribed physical and mental impairments. · In relation to the Authority's submission that the Tribunal failed to take into account relevant considerations as to the kind of employment Mr House could undertake in determining Mr House's overall incapacity for civil employment, the Authority was inviting the Court to consider the Tribunal's reasons "minutely and finely with an eye keenly attuned to the perception of error". · In relation to the Authority's submission as to misdirection, that submission does not take the Authority's case any further than other grounds of appeal. · In relation to the Authority's submission as to the alleged failure of the Tribunal to give adequate reasons, in relation to the issues which the Authority raised the Tribunal was not required to expressly give an explanation. The Tribunal made findings with reasons in respect of each of the issues under s 34 of the Act in compliance with s 43(2B) AAT Act. The Tribunal was required to make a global assessment, such an assessment is not a mathematical exercise, and a precise identification of how the Tribunal arrived at 30% incapacity is not necessary. · Because the decision as to Mr House's degree of incapacity is a "value judgment", not a mathematical exercise, if the Court upholds the Authority's appeal the appropriate course is for the Court to remit the matter to the Tribunal as the arbiter of fact.

First ground of appeal 24 The first ground of appeal concerns the alleged error of the Tribunal in not taking into account a serious submission of the Authority. The "serious submission" of the Authority was, in summary, that the question whether Mr House's physical or mental impairment did or did not include a personality disorder had already been the subject of consideration and findings by both the Tribunal and the Federal Magistrates Court. 25 It is clear on reading the decision of Emmett FM in House [2004] FMCA 833 that the issue of Mr House's personality disorder had been raised in the proceedings both before the Tribunal in its 2004 proceedings and in the Federal Magistrates Court. In this context it is useful to set out comments by her Honour in House [2004] FMCA 833 with respect to this issue: "New grounds of Appeal 18. The Appellant argued orally that the Tribunal had further erred: a) in seeking to separate his personality disorder from his alcoholism and thereby discount by half the assessment of the Appellant's impairment in circumstances where that exercise had not been undertaken in any prior determination; b) in failing to find that the Appellant's personality disorder had been part of the reason for his discharge from the Armed Forces in May 1975 and therefore part of the physical or mental incapacity for which he was retired and therefore not able to be separated or discounted from his alcoholism; and c) in that the Tribunal's finding that the Appellant's alcoholism and personality disorder could be separated such that the percentage of the incapacity from impairment that was a cause of his retirement was halved was a finding so repugnant to the evidence as to amount to an error of law. 19. Leave was then sought by the Appellant to further amend his Amended Notice of Appeal to raise those further alleged errors of law. Leave was opposed by the Respondent on the basis that there had been ample time for the Appellant to seek leave prior to the hearing, that the Appellant had already amended his Notice of Appeal once and that in any event the grounds were so unlikely to succeed as to render leave futile. 20. In considering the question of leave, I have had regard to the submissions by the parties on the further grounds sought to be raised by the Appellant with a view to determining the likelihood of success of any of the further grounds raised. (a) Was it open to the Tribunal to discount the percentage of incapacity of alcoholism to take account of personality disorder 21. Before the Tribunal, the Appellant relied on the evidence of Dr J. Hargraves psychiatrist who had been treating the Appellant since January 1998. Dr Hargraves evidence was relied on in relation to the involvement of his personality disorder with the identified impairment of his alcoholism and the inability to distinguish the two impairments. 22. The Respondent relied on reports of Doctors Reddan and Stevenson as enabling the Tribunal to consider objectively the separation of the two conditions and to seek to deal with the personality disorder separately from the alcoholism by way of discounting the incapacity of the alcoholism by the personality disorder. The Tribunal had regard to Dr Hargraves opinion that the Appellant suffers from alcoholism and personality disorder (para 21). 23. It is common ground that personality disorder of the Appellant has been found by previous Tribunal decisions not to be a prescribed impairment. The Tribunal concluded that the prescribed physical or mental impairment in the Appellant's case is alcoholism and alcoholic liver disease. 24. The Tribunal found that "the respondent conceded that the impairment by reason of which the applicant was retired were alcoholism and alcoholic liver disease and this aspect is not in issue". (para 11) 25. The Tribunal concluded in paragraph 53 that: "Dr Hargraves has not opined that the cessation of work was entirely due to the effect of alcoholism. Consequently, whilst the applicant seeks to connect the cessation of work with the correlating escalation in the degree of his impairments, the Tribunal finds that this approach is misdirected and without foundation. It is clear from the reports of Dr Stevenson and Dr Reddan that an objective approach is warranted and this Tribunal agrees." In paragraph 34 the Tribunal said: "Dr Reddan acknowledges the artificiality of separating the symptoms produced by alcohol abuse and personality disorder." 26. On the other hand, Dr Hargraves report took into account both the Appellant's personality disorder and his alcoholism in assessing the incapacity of the Appellant to undertake to the Accepted Kinds of Employment. 27. Dr Reddan, in her report at page 815, states: "I think that people with personality disorder seem to be more prone to alcohol abuse." At AB 817 Dr Reddan was asked in chief: "If you were asked to look at Mr House and say, leaving aside the effect of his personality order, what effect does the alcohol abuse have on his capacity to undertake both kinds of employments we have identified? Is it possible can you make an assessment of just the effect of the alcohol abuse?" Answer: "Well, it is artificial and its difficult. As I said in that report things like attending work intoxicated or other sequelae of alcohol abuse I suppose we should say might have certain sequelae for some jobs but not for others. So the sort of percentages I was sort of estimating then were really when you kind of combine the two together and I think you'd really have to kind of almost if you assign a percentage you'd almost sort of have to harvest in each case in relation to personality or alcohol but it's a somewhat artificial kind of distinction that in real life isn't quite right." 28. Having regard to the finding of the Tribunal in respect of the separation of the personality disorder from alcoholism and the consequent halving of the impairment, the Tribunal clearly acknowledges the evidence of Dr Reddan that there is an artificiality in separating the symptoms. Whilst I may not necessarily have come to the same conclusion, it is clear that the Tribunal's finding was open to it on the evidence before it." [29] Further, in submissions before the Tribunal, the Respondent clearly invited the Tribunal to discount the incapacity arising from the Appellant's personality disorder although at the same time making it clear to the Tribunal that that was not an exercise that had been done before. [30] The Appellant did not seek to address that submission in any way at the hearing and states today that it was because neither he nor his representative had expected such a submission to be put and did not expect the Tribunal to make a finding in accordance with that submission. The Appellant stated today that the matter did not concern him at the time as he was of the view that it had not been possible on the medical evidence to date, and particularly in relation to Dr Hargraves evidence, to separate the alcoholism from the personality disorder. That is unfortunate and I have a deal of sympathy for the Appellant in perhaps failing to challenge those submissions when he had the opportunity. However, it cannot be said that opportunity was denied him. 26 I have set out these observations of her Honour in some detail to illustrate the point that the submission of the Authority before me has substance. It is unnecessary for me, in these proceedings, to look further into previous deliberations and decisions of the Tribunal. The submission of the Authority in relation to its submission before the Tribunal in these proceedings is that the issue whether Mr House has a personality disorder has previously been before the Tribunal. The excerpts from her Honour's judgment and the reasons for decision of the Tribunal in House and Defence Force Retirement and Death Benefits Authority [2004] AATA 667 support this submission. 27 In re Quinn & Australian Postal Corporation (1992) 15 AAR 519 at 526 the Tribunal stated: It would seem inappropriate and unreasonable to us for there to be relitigation without reason of the same issues before the Tribunal. It would be unjust to applicants to have to face a situation where a decision may be made today and relitigated tomorrow on the very same facts. The Tribunal should not generally allow relitigation of issues already decided and previous Tribunal decisions should be regarded as establishing the matters actually decided and of the grounds for the determination. 28 That this principle applies in relation to decisions of the Tribunal appears settled law: Comcare Australia v Grimes [1994] FCA 1054 at [24], Cheung v AAT [2009] FCA 241 at [49]. In affirming the principle, the Full Court in Morales v Minister for Immigration and Multicultural Affairs (1998) 82 FCR 374 said at 390: In our view, the essentially administrative nature of the Tribunal's function and the nature of its task in looking to the correct or preferable decision, in circumstances where it is to have regard amongst other things to the dictates of fairness, point to the conclusion that the Tribunal may, in appropriate circumstances, conclude that a previous decision should be applied again as the correct and preferable decision when it is sought to revisit the earlier decision at some later time. Of course, the circumstance that a Court has set aside an entire decision may mean that it is either impermissible, or quite inappropriate, to adopt such a course but that would not necessarily be the case where, as here, a particular determination had not itself been the subject of challenge. In the present case, we think it was open to Purvis J, having considered all the relevant circumstances, to regard the previous decision of Mr McMahon as determinative of the s 501(2) issue and to decide that this issue should not be reopened. Of course, his Honour might have concluded that this course was not appropriate in the circumstances; but it was a matter of discretion and his Honour's reasons lead us to conclude that he did not see himself as having such discretion. In this respect there was an error of law. 29 Clearly a failure by the Tribunal to advert to the content of submissions does not of itself necessarily mean that the matter was not considered (Tobacco Institute of Australia Ltd v National Health and Medical Research Council (1996) 71 FCR 265 at 279, Australian Postal Corporation v Sellick [2008] FCA 236 at [35]). However in this case, aside from a bare reference by the Tribunal to the existence of its 2004 decision (at [4]), there is no indication that it had taken into consideration the submission of the Authority concerning previous consideration by the Tribunal of issues relating to Mr House's personality disorder. This absence of reference to its earlier decision is particularly surprising where the Tribunal has found that Mr House had greater incapacity than that found by the Tribunal in 2004, notwithstanding the evidence before the Tribunal in these proceedings that, between August 2001 and November 2004, inter alia, Mr House had stopped drinking (House [2008] AATA 38 at [15]), was no longer an active alcoholic (House [2008] AATA 38 at [52]), and Mr House was maturing and less affected by his personality disorder (House [2008] AATA 38 at [60]). 30 In my view this is not a case where the Court can infer that the Tribunal has considered the issue raised by the submission without referring directly to it, or used loose language in addressing the submission made by the Authority. 31 The law is clear that failure to consider a submission of substance which, if accepted, would be capable of affecting the outcome of the case, constitutes an error of law (Applicant WAEE v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCAFC 184; Casarotto v Australian Postal Corporation (1989) 86 ALR 399 at 403; Dennis Willcox Pty Ltd v FCT (1988) 79 ALR 267 at 276; Sellick [2008] FCA 236 at [35]). Was the submission of the Authority in relation to previous consideration of the issue of Mr House's personality disorder a submission of substance? In my view it was. While the Tribunal was not necessarily bound by its early decision - indeed the decision of the Full Court in Morales (1998) 82 FCR 374 indicates that the issue was one of discretion - nevertheless the submission should have been considered by the Tribunal in reaching its decision. Failure by the Tribunal to do so in my view constitutes an error of law.

Second and third grounds of appeal 32 The second and third grounds of appeal concern the alleged error of the Tribunal in not taking into account two relevant considerations, namely that: · Mr House's condition had improved; and · a person with Mr House's skills would reasonably be expected to undertake a wider range of civil employment than security officer and foreman. 33 An administrative decision can be impugned on the basis of error if the decision-maker has failed to take into account a consideration which the subject matter, scope and purpose of a statute indicates was necessary to be considered: Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24 at 40. 34 In relation to the submission of the Authority that the Tribunal failed to take into account the improvement in Mr House's condition, I accept the contention that the Tribunal was required, in assessing the percentage of incapacity of Mr House, to take into consideration whether or not Mr House's incapacity for civil employment had changed since he or she was last classified. That this is a relevant consideration follows from a plain reading of s 34(1) of the Act: The Authority may, from time to time, if it is satisfied that the percentage of incapacity in relation to civil employment of a recipient member in receipt of invalidity pay is such that the classification of the member should be altered, reclassify him in the appropriate classification set out in section 30 according to the percentage of his incapacity in relation to civil employment. (emphasis added) 35 The weight the Tribunal gives to such an issue is for the Tribunal as arbiter of fact. Nonetheless improvement in the condition of Mr House was a relevant consideration, as defined in Peko-Wallsend (1986) 162 CLR 24. 36 In my view Mr Harding's submission in relation to this issue seeks merely to rationalise the failure by the Tribunal to take into account evidence of Mr House's improvement, and does not answer the claim of the Authority in relation to this aspect of the Tribunal's decision. 37 Further, in relation to the submission of the Authority as to the kinds of civil employment taken into account by the Tribunal, s 34(1A) of the Act provides that, in determining what is the percentage of incapacity in relation to civil employment, the Authority shall have regard to, inter alia, the following matters: (b) the kinds of civil employment which [such a person as Mr House, having his] skills, qualifications and experience might reasonably undertake; (c) the degree to which any physical or mental impairment of the recipient member, being a prescribed physical or mental impairment, has or had diminished the capacity of the recipient member to undertake the kinds of civil employment referred to in paragraph (b). 38 Accordingly, the Authority, and the Tribunal, are required to identify the kinds of civil employment that a person such as Mr House might reasonably undertake with his skills, qualifications and experience, and then to determine his level of incapacity for those kinds of employment. 39 In relation to the incapacity of Mr House for each kind of employment the Tribunal found as follows: I accept the evidence of Dr Reddan who gave an opinion of percentages of incapacity which are mentioned in the report of 1 June 2007. Dr Reddan took account of the alcohol condition as well as the personality disorder condition in providing her opinion. These percentages are driver, minimal, 5% (which Dr Reddan conceded could be increased to 10%); mobile plant operator, minimal, 5%; labourer, minimal, 5%; storeman, minimal, 5%; mining and construction labourer, small, 15%; security officer, moderate, 30%; powder monkey, small, 20%; sub-contractor in mining and construction, small, 20%; foreman in any of these fields, moderate, 30%. (House [2008] AATA 38 at [117]) 40 The Authority submitted that the conclusion of the Tribunal that therefore Mr House's level of incapacity for civil employment was 30% suggested that the Tribunal had only taken into consideration the levels of incapacity for security officer and foreman (evidence of Dr Reddan in relation to both kinds of employment indicating 30% incapacity). 41 In my view this submission raises a serious question as to whether the Tribunal actually did take into consideration evidence before it of the levels of incapacity of Mr House in relation to all kinds of employment listed, and not merely the levels of incapacity in relation to security officer and foreman. The fact that, in relation to the other seven kinds of civil employment listed, the evidence accepted by the Tribunal was that Mr House's incapacity ranged from 5% to 20%, means that the finding by the Tribunal of 30% incapacity warrants some explanation of the process of reasoning. Unfortunately, in my view such explanation as there is in the Tribunal's statement of reasons is inadequate. The Tribunal leaps directly to the conclusion on the basis of a "value judgment" that the percentage of incapacity in relation to the civil employment of Mr House for the purposes of s 34(1) of the Act is 30%. I reject the submission on behalf of Mr House that criticism of the Tribunal's reasoning in this context is examination "minutely and finely with an eye keenly attuned to the perception of error". With respect, the conclusion of the Tribunal supports the Authority's submission that a relevant consideration, namely the evidence as to the levels of incapacity in respect of kinds of employment other than security officer and foreman, was not considered. 42 Failure of the Tribunal to take into account the relevant considerations to which I have referred is an error of law.

Fourth ground of appeal 43 This ground of appeal adds very little to the Authority's submissions concerning the failure of the Tribunal to take into account relevant considerations. To the extent however that the Tribunal (after referring to McGovern and Defence Force Retirement and Death Benefits Authority (1988) 16 ALD 791 at 792) stated that it was required to have regard to the width, quality and nature of the range of employment opportunities and make a "value judgment", it appeared that the Tribunal actually did not have regard to the "width, quality and nature of the range in employment opportunities". As I have already noted, it appears that the Tribunal in making its decision as to the level of incapacity took into consideration only two of the nine employment types. 44 It follows therefore that the Tribunal did not follow the procedure it outlined for itself as necessary. In this respect the Tribunal appears to have made an error of law.

Fifth ground of appeal 45 Mr Harding on behalf of Mr House submitted that the Tribunal made findings in respect of each of the issues under s 34 of the Act, was required to make a global assessment which is not a mathematical exercise, and was not required to give detailed explanation of the manner in which it arrived at its conclusions. While this may be true as a general proposition, nonetheless in my view some explanation is required where the Tribunal appears to make decisions which appear contrary to the weight of evidence, as is the case in relation to the Tribunal's value judgment that Mr House's level of incapacity for civil employment was 30%. I note again that the only explanation given by the Tribunal was as follows: PERCENTAGE OF INCAPACITY OF CIVIL EMPLOYMENT 121. I consider that it would be inappropriate for me to simply perform a "mathematical calculation" by taking an average of the various percentages of impairment for the kinds of employment listed above. I am also conscious that I am administering beneficial legislation. I accept the fact that Mr House is able to drive as he regularly drives his partner to appointments. I also accept the evidence of Dr John Morris who has made a realistic assessment of the ability of Mr House to be a driver. I also accept that the alcohol condition of Mr House is now in remission and Mr House is to be commended for his responsible attitude. I have already mentioned that in McGovern Deputy President R D Nicholson has stated that I am required to have regard to the width, quality and nature of the range in employment opportunities and make a "value judgment". I have had regard to the fact that Dr Reddan, who has been called by the Authority has given Mr House a 30% rating on two kinds of civil employment that Mr House could reasonably undertake. Making a "value judgment" I find that the percentage of incapacity in relation to the civil employment of Mr House for the purposes of section 34(1) of the Act is 30%. 46 In my view, in the circumstances the Tribunal's statement of reasons were inadequate. I accept the Authority's submission that these reasons do not satisfy the test in Our Town FM Pty Ltd v Australian Broadcasting Tribunal (No 1) (1987) 77 ALR 577, namely that the unsuccessful party, having read the decision, must be in a position to say: Even though I may not agree with it, now I understand why the decision went against me. I am now in a position to decide whether that decision has involved an unwarranted finding of fact, or an error of law, which is worth challenging. (Our Town FM Pty Ltd (1987) 77 ALR 577 at 593) 47 With respect, I do not consider it possible to understand the reasoning process of the Tribunal in assessing Mr House's level of incapacity at 30% from the statement of reasons. Nor are the reasons adequate to enable the Court to determine whether or not any other error had occurred in the reasoning process (cf Doman v Riordan (1990) 21 ALD 255 at 256). The Tribunal has not given reasons for its decision as required by s 43(2) AAT Act. This fatally infects the Tribunal's decision.

Conclusion 48 The appeal should be allowed. However I accept the submission of Mr Harding that it is not appropriate for this Court to merely affirm the decision of the Authority. That would result in the Court, in effect, substituting its own decision on the matter under review by the Tribunal (cf Dixon v Commissioner of Taxation [2008] FCAFC 54 at [26]). The appropriate order is that the decision of the Tribunal be set aside and the matter remitted to the Tribunal for determination according to law. No order is made as to costs. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.

Associate: Dated: 1 April 2009 Counsel for the Applicant: Mr A Dillon