Hill v Repatriation Commission

The present application 8 On 25 March 1996, Mr Hill applied for a Special Rate pension, pursuant to s24 of the Veterans' Entitlements Act. That section provides: "(1) This section applies to a veteran if: (aa) the veteran has made a claim under section 14 for a pension, or an application under section 15 for an increase in the rate of the pension that he or she is receiving; and (aab) the veteran had not yet turned 65 when the claim or application was made; and (a) either: (i) the degree of incapacity of the veteran from war-caused injury or war-caused disease, or both, is determined under section 21A to be at least 70% or has been so determined by a determination that is in force; or (ii) the veteran is, because he or she has suffered or is suffering from pulmonary tuberculosis, receiving or entitled to receive a pension at the general rate; and (b) the veteran is totally and permanently incapacitated, that is to say, the veteran's incapacity from war-caused injury or war-caused disease, or both, is of such a nature as, of itself alone, to render the veteran incapable of undertaking remunerative work for periods aggregating more than 8 hours per week; and (c) the veteran is, by reason of incapacity from that war-caused injury or war-caused disease, or both, alone, prevented from continuing to undertake remunerative work that the veteran was undertaking and is, by reason thereof, suffering a loss of salary or wages, or of earnings on his or her own account, that the veteran would not be suffering if the veteran were free of that incapacity; and (d) section 25 does not apply to the veteran. (2) For the purpose of paragraph (1)(c): (a) a veteran who is incapacitated from that war-caused injury or war-caused disease, or both, shall not be taken to be suffering a loss of salary or wages, or of earnings on his or her own account, by reason of that incapacity if: (i) the veteran has ceased to engage in remunerative work for reasons other than his or her incapacity from that war-caused injury or war-caused disease, or both; or (ii) the veteran is incapacitated, or prevented, from engaging in remunerative work for some other reason; and (b) where a veteran, not being a veteran who has attained the age of 65 years, who has not been engaged in remunerative work satisfies the Commission that he or she has been genuinely seeking to engage in remunerative work, that he or she would, but for that incapacity, be continuing so to seek to engage in remunerative work and that that incapacity is the substantial cause of his or her inability to obtain remunerative work in which to engage, the veteran shall be treated as having been prevented by reason of that incapacity from continuing to undertake remunerative work that the veteran was undertaking." 9 The earlier claim made by Mr Hill satisfied para (aa) of subsection (1). At the time of his application, Mr Hill was aged 60 years, so he satisfied para (aab). The Repatriation Commission conceded that his degree of incapacity from war-caused disabilities was at least 70%, so satisfying para (a)(i). However, a delegate of the Commission did not accept that Mr Hill was able to satisfy paras (b) and (c) of s24(1). 10 The delegate's decision was affirmed by the Veterans' Review Board in September 1997. Mr Hill sought review of the Board's decision by the Administrative Appeals Tribunaland the matter came on for hearing on 16 June 1999. There was placed before the hearing a considerable volume of medical evidence and Mr Hill gave oral evidence. 11 On 3 February 2000 the Tribunal published a decision in which it found that s24(1)(b) was satisfied in Mr Hill's case. No question arises in this proceeding about that finding; so I need not refer to the medical evidence on which it was based. 12 However, the Tribunal held s24(1)(c) was not satisfied, with the result that Mr Hill failed to make out a case for the award to him of a Special Rate pension. Accordingly, the Tribunal affirmed the decision under review.

The Tribunal's reasoning 13 The complaint made by Mr Hill in this proceeding relates to the way in which the Tribunal dealt with the s24(1)(c) issue. In order to put the argument into perspective, I must refer to some passages in the Tribunal's reasons for decision. 14 The Tribunal's reasons included four paragraphs in which the Tribunal summarised the submissions put to it on behalf of Mr Hill. Those paragraphs included the following: "It was submitted there has been deterioration in the Applicant's condition since he was awarded pension at the Intermediate Rate in 1993. The Applicants' oral evidence and the findings of medical experts who examined him in the last 12 months support this contention. The Applicant's anxiety condition has worsened over the past three to five years. He gave up his work with the dogs because of his back condition. It was submitted that whether the public service position or the dog breeding business was seen as the Applicant's last remunerative work was immaterial, because he gave up each activity for the same reasons. It was submitted that the question of whether an activity was 'remunerative' related to whether there were earnings from that activity. The earnings of a business are derived from its revenue. Whether or not the business generated a profit is not a relevant consideration. It was submitted that the dog breeding business could not properly be characterised as a hobby, as the Applicant had registered a business name and lodged tax returns in respect of it." 15 The Tribunal's summary of the Commission's submission to it included this paragraph: "It was submitted that in respect of s24(1)(c) the Tribunal must also assess what has changed since the Applicant was granted Intermediate Rate pension. The Applicant's evidence was that both his back and anxiety conditions might have been a little worse, but he did not mention that his anxiety condition was a problem in relation to the dog breeding business. It was submitted that although the Applicant registered a business name and treated dog breeding as a business, it never generated a profit. The Applicant gave evidence that he sold about ten dogs for between $100 and $150 each. It was submitted that this amount be considered an insubstantial income and should not be considered remunerative work: Starcevich v Repatriation Commission ((1987) 18 FCR 221. Even if it was remunerative work, the Applicant was not suffering a loss of salary, wages or earnings because the dog breeding business had never generated a profit." 16 It seems the Tribunal accepted the submission that its task was simply to "assess what has changed since the Applicant was granted Intermediate Rate pension". In its consideration of preliminary issues, in its reasons, the Tribunal said: "The Applicant was granted Intermediate Rate pension by the Tribunal on 16 April 1993. The specific findings of the Tribunal are not available and in any event it is not open to this Tribunal to review that decision. Even if those findings were available, they would not be binding on this Tribunal. Unless the Tribunal was to find that the Applicant's war-caused conditions have improved since the time of that decision, and that as a consequence he no longer meets the criteria for Intermediate Rate pension, the Tribunal cannot otherwise find that the Applicant does not continue to be entitled to payment of pension at the Intermediate Rate. There is no such evidence before the Tribunal, and indeed the uncontroverted evidence of the Applicant at the hearing was that his conditions have deteriorated since the Tribunal made its decision in 1993." 17 After dealing with the s24(1)(b) issue, and resolving it in Mr Hill's favour, the Tribunal turned to s24(1)(c). It stated - correctly, both the present parties agree - that it must consider whether Mr Hill met the provisions of this paragraph as at the application date, 25 March 1996. The Tribunal then stated that the first issue it had to consider was "whether the Applicant's work as a dog breeder was remunerative work for the purpose of s24(1)(c)". The Tribunal said: "The issue is whether the Applicant's dog breeding after he moved to northern New South Wales was remunerative work or a hobby". After reviewing the evidence germane to that issue, the Tribunal said: "47. On the totality of the evidence the Tribunal finds the Applicant's plan to running breeding kennels after he moved to northern New South Wales did not properly commence operation, and therefore the Tribunal cannot find that at any time this was his remunerative work. It was merely a hobby that produced some very limited income for him." 18 The Tribunal then set out two paragraphs that are critical to the argument in this case: "48. On this basis the Tribunal finds that the Applicant has not been engaged in remunerative work of any sort since he left his public service position in 1989. Therefore, the remunerative work which the Tribunal must consider, and which apparently the Tribunal previously considered in 1993, was his work as a public servant that he ceased in 1989. Having been granted the Intermediate Rate pension in 1993, the Tribunal must now consider whether the Applicant has suffered a loss of salary or wages, or earnings on his own account since 1993. 49. On the evidence of Dr Henke, the Applicant was fit for clerical work for up to twenty hours a week. However, since the Applicant did not perform any such work and did not continue to seek such work, he cannot show that as at the application date, 15 March 1996, he has suffered a loss of earnings from his inability to engage in remunerative work which he was undertaking, as a result of his accepted disabilities alone. This is the turning point for the Applicant - on the basis that the Tribunal finds that his work as a dog breeder was not remunerative work, he cannot show loss of earnings. On the basis of Dr Henke's evidence, the Tribunal finds the Applicant still had some work capacity when he left the public service. Dr Prakash questioned the Applicant's motivation to work. The Tribunal finds on all the evidence available, that at least since the Applicant commenced receipt of Intermediate Rate pension, he has not sought work nor had he any intention of working." 19 The Tribunal then said: "50. In coming to this position on the evidence the Tribunal is required to apply the decision of the Federal Court in Repatriation Commission v Sheehy (1995) 39 ALD 286. In that decision Sackville J held that economic loss or loss of remunerative work referred to in s24(1)(c) must be a real loss in the sense that the work, including new work, must have continued for more than a very short period." 20 After some concluding observations, the Tribunal affirmed the decision under review.

Contentions of counsel 21 Mr M Vincent, counsel for Mr Hill, submitted the Tribunal fell into two errors of law in its treatment of the s24(1)(c) issue. First, he said, the Tribunal erred in confining itself to the question whether Mr Hill had suffered a loss of salary or wages, or earnings on his own account, since 1993. Mr Vincent argued that the task of the Tribunal was to determine whether Mr Hill met the requirements of s24 of the Act as at 25 March 1996. The case put to the Tribunal in respect of loss of remuneration from war-caused disabilities had two bases: the 1989 loss of the public service job, being "remunerative work that the veteran was undertaking", and loss of earnings from the dog breeding activity. Mr Vincent argued that, for the Tribunal to confine itself to post-1993 changes, was to ignore the case made by Mr Hill in respect of loss of his public service position; and this without any consideration of the evidence relating to his departure from that position. Mr Vincent pointed out that, in 1993, Mr Muller must have accepted that Mr Hill satisfied s23(1)(c) of the Act, which is in substantially identical terms to s24(1)(c); presumably the only reason Mr Hill did not receive a Special Rate pension at that time was that he could not then satisfy the requirements of s24(1)(b) as to degree of disability, a situation that has changed as his physical condition has deteriorated. In his Outline of Submissions, Mr Vincent said: "19. It is to be noted that the Tribunal's approach would mean that a veteran whose work capacity slowly deteriorated from his war caused conditions could not shift from Intermediate Rate to Special Rate - unless the veteran undertook further part time work in the interim. Such an approach would also penalise veterans whose work capacity fluctuated. The error of the Tribunal in basing its decision upon the earlier Tribunal decision in 1993 is further evidenced by the capacity of the Administrative Appeals Tribunal in a single application for above General Rate pension to properly make award of Intermediate Rate up to a certain date followed by Special Rate thereafter, if a veteran's work capacity moves during the assessment period between the bands of 8 to 20 hours per week and less than 8 hours per week." 22 Mr Vincent's second contention related to the Tribunal's treatment of the evidence concerning Mr Hill's dog breeding activity. He said the Tribunal "did not apply the correct test of whether the Applicant's dog breeding activities amounted to 'remunerative work'" within the meaning of s24(1)(c) of the Act. Mr Vincent referred to para 50 of the Tribunal's reasons, set out above, and pointed out that Sheehy had gone on appeal to a Full Court: see Sheehy v Repatriation Commission (1996) 137 ALR 223. The Full Court, at 229, deprecated concentration on the length of the period of work and said: "we would prefer to say that the 'remunerative work that the veteran was undertaking' must have been 'performed' or 'successfully undertaken' or 'effectively undertaken'". Mr Vincent contended the Tribunal did not apply that test. 23 In her Outline of Submissions, dealing with Mr Vincent's first point, Ms R Henderson, counsel for the Commission, said that paras 48 and 49 of the Tribunal's reasons "are not felicitously expressed". However, she contended they do not indicate "that the Tribunal's conclusions were tainted by error". Ms Henderson said the Tribunal acknowledged, in para 48, that, in the light of its finding that Mr Hill's dog breeding activities were not remunerative work, the "remunerative work that the veteran was undertaking", for the purposes of s24(1)(c), was the work as a public servant which he ceased in 1989. Ms Henderson pointed out that the Tribunal noted, in para 48, that it was required to consider whether Mr Hill suffered a loss of salary or wages, or earnings on his own account, since 1993. She went on: "Given that a differently constituted Tribunal determined in 1993 that the applicant satisfied an equivalent provision, namely s.23(1)(c), the respondent submits that it was appropriate that the Tribunal not purport to reconsider a previous Tribunal decision." 24 Ms Henderson submitted that para 49 of the Tribunal's reasons "dispose of a range of issues which the legislative scheme required the Tribunal to consider and determine". She listed those issues as follows: ". whether the applicant was prevented from continuing to undertake remunerative work that he was undertaking - the answer was no, since he undertook no remunerative work after 1989; . whether the applicant could be deemed to have satisfied s.24(1)(c) because he had met the requirements of s.24(2)(b) - the answer again was no, since he had not sought work; . whether the applicant's economic loss was attributable to his incapacity 'alone' - the answer again was no, since the Tribunal found he was not motivated to work." 25 In relation to the dog breeding activity, Ms Henderson submitted it was open to the Tribunal , on the evidence, to regard this activity as a mere hobby and not "remunerative work" within the meaning of s24(1)(c) of the Act. She contended that it is inaccurate to see Sheehy, either at first instance or on appeal, as laying down a "test" for determination of what constitutes remunerative work. In any event, Ms Henderson said, adoption of the words used in the Full Court in Sheehy would have produced the same conclusion as that reached by the Tribunal.

Conclusions: the dog breeding activities 26 It is convenient to deal first with the contentions regarding the Tribunal's treatment of the evidence about Mr Hill's dog breeding activities. It is unfortunate that the Tribunal was apparently unaware that the decision of Sackville J in Sheehy had been considered by a Full Court and the Full Court had expressed itself in somewhat different language. However, I agree with Ms Henderson that neither Sackville J nor the Full Court intended to lay down an immutable "test" as to what might constitute "remunerative work" within the meaning of s24(1)(c) of the Act. I also agree with her that, even if the Full Court did prescribe a test that must be applied to this case (namely, the formula "the 'remunerative work …' must have been 'performed' or 'successfully undertaken' or 'effectively undertaken'"), the Tribunal's findings dispose of the notion that the dog breeding activity undertaken by Mr Hill passed that test, and was "remunerative work" within the meaning of s24(1)(c). The Tribunal found the dog breeding plan "did not properly commence operation" and was "merely a hobby that produced some very limited income for him". On the evidence, it was clearly open to the Tribunal to make these findings. If the finding were affected by any error, it was that they stated the effect of the evidence in a manner unduly favourable to Mr Hill; although the dog breeding brought in some income, this was outweighed by the attendant costs. Far from being remunerative, the activity was costly to Mr Hill. 27 There may be cases where an activity in which a veteran engaged failed to return a net profit to the veteran, but may nonetheless be regarded as "remunerative work" for the purposes of s24(1)(c). One example may be a case where the veteran attempted to establish himself or herself in a particular activity, being a continuation of remunerative work previously undertaken by the veteran, but was denied success by his or her war-caused disability. If the decision maker was satisfied that the attempt would have been successful, in the sense of providing "earnings on his or her own account" - that is, net earnings after deduction of expenses - but for the war-caused disability, I see no difficulty about concluding that the veteran has been prevented, by the war-caused disability, "from continuing to undertake remunerative work that the veteran was undertaking" and, by reason thereof, has suffered a loss of earnings on his or her own account. 28 However, that is not the present case. Although the Tribunal found that his war-caused disabilities were the catalyst for Mr Hill's decision to give up dog breeding, there is no basis in the evidence for a conclusion that, absent those disabilities, the dog breeding activity would have yielded Mr Hill a profit, either immediately or in the longer term. On the contrary, Mr Hill made clear that his fundamental problem was that the price he could obtain for the puppies was inadequate to cover his costs. As it was not suggested that his costs were inflated by his disabilities, this problem obviously had nothing to do with his war-caused disabilities. 29 In my opinion, the Tribunal was correct in concluding that Mr Hill's dog breeding activity did not constitute "remunerative work" within the meaning of s24(1)(c) of the Act.

Conclusions: the public service position 30 Broadly, I agree with Mr Vincent's submissions on this issue. There appears to be no doubt that Mr Hill relied, as one of two bases of his s24(1)(c) claim, on the loss of his public service position in 1989. It was therefore incumbent on the Tribunal to deal with that matter. I agree with Mr Vincent that it was erroneous for the Tribunal to limit its task to determination of the extent to which Mr Hill's position had changed since 1993. It was required to determine whether Mr Hill satisfied the criteria set out in s24 of the Act. As the Tribunal itself remarked, it was not bound by the conclusions of the 1993 Tribunal. In any event, in relation to s24(1)(c), the conclusions of the 1993 Tribunal favoured Mr Hill. As is accepted by both parties, Mr Muller must have been satisfied that Mr Hill had lost earnings from remunerative work because of his war-caused disabilities. Mr Muller could only have been so satisfied on the basis that Mr Hill was unable, at the date of the earlier application, to continue his public service work. It is ironic that Ms Lewis and Dr Vallentine failed to consider that loss because of the decision of the 1993 Tribunal, yet determined the issue to which it had relevance in the opposite manner to the 1993 Tribunal. 31 During oral argument, Ms Henderson submitted the Tribunal was correct not to consider the loss of Mr Hill's public service work. She said that, for para (c) to apply to this work, Mr Hill would need to show that the work continued as at the application date; or, at least, at a point shortly before that date. He could not do this because he had left the public service seven years earlier. 32 Ms Henderson made it clear that she put this as a proposition of law, not as a comment on the appropriate factual finding. Ms Henderson contended the word "continued" in s24(1)(c) mandated consideration of the particular position previously occupied by the veteran and required that it have been occupied only shortly before application day. She was unwilling to define what she meant by "shortly before". 33 With respect to Ms Henderson, it seems to me this approach repeats the heresy scotched in Starcevich v Repatriation Commission. The applicant in that case was a Second World War veteran. For most of the period between his return from the war and 1971, he had worked as a farmer, albeit with difficulty because of a war-caused disability. In June 1971, he started work with the Postmaster-General's Department ("PMG") but lost that job in 1974 when its location was moved. Because of his injury, he could not travel to the new site. He tried a job in a furniture factory but had to give it up after one day because of his injury. He had not worked since that time. 34 The Tribunal found that Starcevich's preferred occupation was farming and that, but for his injury, he "would still be farming". The Tribunal also found that he suffered a loss of income from his inability to farm. However, it refused Starcevich's application for a Special Rate pension because he had passed the age (65) by which he would have been forced to retire from his PMG position. 35 By majority (Fox and Jenkinson JJ, Neaves J dissenting), the Full Court held the Tribunal had erred. At 224 Fox J said: "Where a veteran has undertaken different types of work, the meaning of 'remunerative work' in par (c) is ambiguous. The use of the phrase 'prevented from continuing to undertake' in relation to 'remunerative work' does suggest the last remunerative work undertaken, but this is not necessarily so. The use of the indefinite 'remunerative work' simpliciter, rather than 'the remunerative work', tends against this construction, and 'continuing' can also mean resuming after a suspension or interruption. Furthermore, both paragraphs of subs (2) look to a wider concept of 'remunerative work': this is especially so of par (b)". [Original emphasis] At 225-226 his Honour set out his view of s24(1)(c): "It seems to me that the intention of s24(1)(c) is that the applicant must have suffered substantial loss of remuneration consequent alone upon the incapacity referred to in s24(1)(a) and (b). The loss must be real, in the sense that the applicant cannot rely upon any remunerative work that he has undertaken in the past, but it would be unnecessarily restrictive to assess the loss by reference only to the last remunerative work undertaken before the applicant's inability to work became complete. In my opinion, a veteran's entitlement to a pension under s24 may be based on his being prevented from continuing to undertake substantial remunerative work that he has undertaken in the past, even if that work was followed by work of a different type before the veteran ceased work altogether. In such circumstances, the passage of time from the cessation of the work upon which reliance is placed to the veteran's complete retirement may mean that the other requirement of s24(1)(c), namely that the veteran's war-caused injury or disease alone prevents him from undertaking the remunerative work upon which his claim is based, is not satisfied, but this is a different matter, and one which does not arise here." Jenkinson J expressed views to similar effect. 36 Starcevich establishes that consideration of the question whether the veteran was, at application day, "prevented from continuing to undertake remunerative work that the veteran was undertaking", and thereby lost income, is not confined to consideration of the question whether the veteran would then have been working in his or her most recent employment. That was the mistake made by the Tribunal in Starcevich, when it confined its attention to the continuing availability of Starcevich's PMG job. Nor is it fatal to a claim of prevention from continuing to undertake remunerative work in some sphere, that the veteran has worked at something else in the meantime, or that there is a substantial temporal gap between the cessation of work in that sphere and the date of the application. Those factors may make it difficult for the veteran to obtain a favourable factual finding, but they do not mean the previous work is to be excluded from consideration. 37 The case put to the Tribunal by Mr Hill is that he accepted the offer of redundancy made to him by the Department of Defence only because his war-caused disabilities made it increasingly difficult for him to cope with the requirements of the position. He said in a written statement, which he affirmed in oral evidence: "There were no other reasons other than my war-caused disabilities why I stopped work". 38 The Tribunal was not bound to accept this statement at face value. It was entitled to consider for itself whether this was, indeed, the reason why Mr Hill accepted the redundancy package. If it did accept Mr Hill's assertion, the Tribunal was required to consider whether it was probable that Mr Hill, absent the war-caused disabilities, would still have been engaged in this type of work at the date of his Special Rate pension application seven years later. The Tribunal might have concluded he would, in any event, have retired from this type of work by that date; even if he did not have war-caused disabilities, and notwithstanding that he had not yet reached 65 years of age. I intend to indicate no view about the factual conclusions the Tribunal ought to have reached. But it is clear to me that the Tribunal needed to consider these matters. It was not correct to ignore them, simply because of the 1993 determination. 39 The deficiencies of paras 48 and 49 of the Tribunal's reasons are not mere infelicities of expression, which would be immaterial for present purposes. These paragraphs disclose a serious defect in the Tribunal's reasoning process. The second sentence of para 48 is correct; that is, "the remunerative work which the Tribunal must consider … was his work as a public servant that he ceased in 1989". [Emphasis added]. A reader might have expected the Tribunal would proceed to do so. But it did not. The Tribunal did not consider Mr Hill's work as a public servant, apparently only because the 1993 Tribunal had done so. This approach would be logical, although legally erroneous, if the 1993 Tribunal had reached a conclusion on that matter adverse to Mr Hill and the recent Tribunal regarded itself as bound by the view of the earlier Tribunal. But neither of these things happened. 40 The Tribunal, in para 49, noted the view of Dr Henke that Mr Hill was fit for clerical work for up to 20 hours a week and commented he had not performed, or continued to seek, any such work. Two points may be made about that. First, reliance on Dr Henke's opinion fits uncomfortably with the Tribunal's finding, for the purposes of s24(1)(b), that Mr Hill was incapable of undertaking remunerative work for periods aggregating more than eight hours per week. Second, the fact that a person with serious war-caused disabilities has not chosen to seek a 20 hour per week job says nothing about whether, absent his disabilities, he would have been likely to continue in his previous full-time job until the usual retirement age.

Disposition 41 The application for review must be granted, the decision of the Tribunal set aside and the matter remitted to the Tribunal for further hearing and redetermination according to law. The Commission must pay the costs incurred by Mr Hill in connection with the proceeding. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox.

Associate: Dated: 11 July 2000 Counsel for the Applicant: M Vincent

Solicitor for the Applicant: R L Whyburn & Associates

Solicitor for the Respondent: Australian Government Solicitor