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[2016] FCA 372
Federal Court of Australia
2016-04-15
Mr P, Logan J
Original judgment source is linked above.
LOGAN J: 1 Mr William McDermid, the applicant in this proceeding, was a member of the Royal Australian Navy for two decades, from 26 November 1965 to 25 November 1985. 2 For the purposes of the Veterans' Entitlements Act 1986 (Cth) (the VEA), Mr McDermid's naval service fell into the following categories established under that Act: (a) operational service - on HMAS Supply from 24 March 1966 to 11 May 1966 and from 26 May 1966 to 26 June 1966; (b) further operational service - in Vietnam from 19 September 1968 to 12 April 1969, and (c) eligible defence service from 7 December 1972 to 25 November 1985. 3 At common law, members of the Defence Force are not employees of the Commonwealth: Commonwealth of Australia v Quince (1944) 68 CLR 227. Nonetheless, by virtue of statutory deeming or definitional provisions, the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the SRC Act) or, as the case may be, predecessor Federal workers' compensation legislation also applied to Mr McDermid, in respect of his naval service, save for the periods of his operational service. 4 Mr McDermid had the misfortune to suffer a number of injuries over the course of his naval service, which have had sequels to his health, detailed below. Latterly, he has also had what he doubtless sees as the added misfortune of becoming enmeshed in the complexity of the provision made from time to time by Parliament in the VEA in an endeavour to prevent any duplication of benefits in respect of like injuries or incapacity as between those payable under the SRC Act or its predecessors and those otherwise payable under the VEA. In turn, that complexity is but one pathway in the labyrinth that is the VEA, an Act which has been amended no less than 127 times over the 30 years since its enactment in 1986. 5 Mr McDermid is a member of a class of Australian ex-servicemen and women subject to this complexity. Both for the members of that class and for the respondent Repatriation Commission (the Commission) and those of its delegates within the Department of Veterans' Affairs (DVA) who must administer it, that complexity, to say nothing of the wider labyrinth, presents considerable challenges of comprehension as to its application. Even with the able assistance of counsel for Mr McDermid and for the Commission, for whose helpful and candid submissions I am truly grateful, I have found that those same challenges remain. 6 With the commencement of the Military Rehabilitation and Compensation Act 2004 (Cth), the affected class is now closed but the number of persons within it is large. Because of this, though the resolution of the issues in this case is of particular personal interest to Mr McDermid, the outcome will serve a wider, public interest. 7 The provision of interest in the VEA is s 74. The form of that provision and others with which it interacts did not remain static over the period with which the events of this case are concerned. 8 Mr McDermid initially sought the resolution of his differences with the Commission as to the construction and application of s 74 by way of a review proceeding in the Administrative Appeals Tribunal (the Tribunal). Prompted by a view which the Commission held at the time as to the nature of the operation of that provision, the Tribunal concluded that it was, in effect, self-executing and entailed no reviewable decision such that it had no jurisdiction: McDermid v Repatriation Commission [2011] AATA 834. 9 In this proceeding and upon reflection about what s 74 in its particular forms entailed in administration, the Commission expressly reserved its position as to whether, indeed, the view which had previously been taken of the nature of the operation of the provision was correct. With the fairness which the Australian community and its serving and former Defence Force members are entitled to expect from it, the Commission conceded that Mr McDermid had invoked this Court's jurisdiction under s 39B of the Judiciary Act 1903 (Cth) and deliberately raised no issue that relief ought to be refused as a matter of discretion, because an adequate alternative remedy namely, review by the Tribunal, existed. In keeping with this stance by the Commission, I expressly refrain from considering whether or not s 74 entails the making of a decision reviewable by the Tribunal. 10 For the purposes of this proceeding, a number of facts have been agreed. What follows is taken from the statement of those agreed facts. 11 Mr McDermid has the following accepted defence caused injuries, as defined in the VEA: (a) Lumbar disc degeneration (accepted with effect from 12 May 1982, by decision of the Commission dated 5 June 1984); (b) Left rotator cuff syndrome (accepted with effect from 3 July 1983, by decision of the Commission dated 5 June 1984); (c) Osteoarthritis of the left knee (accepted with effect from 26 March 1998, by decision of the Commission dated 10 March 1999); (d) Osteoarthritis of the right knee (accepted with effect from 20 February 1997, by decision of the Veterans' Review Board (VRB) dated 3 June 1998); (e) Inguinal hernia on the right side (accepted with effect from 20 February 1997, by decision of the VRB dated 3 June 1998); and (f) Cervical spondylosis and thoracic spondylosis (accepted with effect from 21 January 1999, by decision of the Commission dated 29 June 1999). 12 The following injuries have been accepted as founding liability to pay compensation to Mr McDermid under s 14 of the SRC Act: (a) Aggravation of pre-existing injury resulting in degeneration of the 2nd/3rd lumbar intervertebral disc (accepted on 25 June 1984) - the lumbar spine condition; and (b) Sprain left supraspinatus ligament (left shoulder) (accepted on 28 February 1986) - the left shoulder condition. 13 The incapacity from the injury, "lumbar disc degeneration", as originally accepted under the predecessor to the VEA and taken to have been accepted under the VEA, is the same incapacity as the incapacity from the lumbar spine condition, an injury accepted under the Compensation (Commonwealth Government Employees) Act 1971 (Cth) (the 1971 Act), a predecessor to the SRC Act, which remained compensable under the SRC Act. 14 On 2 March 1986, a delegate of the Commissioner for Employee's Compensation decided to admit liability to pay compensation to Mr McDermid under the 1971 Act in respect of the left shoulder condition. 15 On 9 June 1987, a delegate of the Commissioner for Employee's Compensation decided to pay Mr McDermid lump sum compensation of $4,369.60 under s 39 of the 1971 Act by reason of a "10% loss of efficient use of the left arm at or above the elbow". 16 ln late 1993 or early 1994, Mr McDermid ceased remunerative work. With effect from 1 January 1994, he was paid compensation under s 19 of the SRC Act as a result of his incapacity for work caused by his lumbar spine condition. He continued to receive those payments of compensation until 27 May 2013 when he turned 65 years of age. 17 On 3 November 1994, the Commission took steps to limit Mr McDermid's disability pension paid under the VEA for his lumbar disc degeneration, in accordance with its view as to the operation of s 74 of the VEA. Those steps were taken by identifying a notional assessment of the disability pension paid for the same incapacity as the incapacity caused by the lumbar spine condition, namely, the incapacity caused by the lumbar disc degeneration, and reducing Mr McDermid's disability pension to the extent of that notional assessment. 18 On 24 May 1995, Mr McDermid's disability pension under the VEA was increased to 90% of the general rate with effect from 7 March 1995. 19 On 23 April 1997, Mr McDermid's rehabilitation programme conducted in accordance with the requirements of the SRC Act was closed on the basis that he was unable to work more than six hours per week as a result of his lumbar spine condition. 20 On 2 July 1997, the Commission decided to reduce Mr McDermid's disability pension under the VEA from 90% of the general rate to 50% of the general rate. 21 On 3 June 1998, the VRB decided that Mr McDermid's claims for "osteoarthritis of the right knee" and "inguinal hernia on the right side" should be accepted under the VEA with effect from 20 February 1997. The assessment of his pension under that Act was remitted to the Commission. 22 On 13 August 1998, the Commission decided to increase Mr McDermid's disability pension under the VEA to 70% of the general rate with effect from 20 February 1997 as a result of the VRB's decision dated 3 June 1998. 23 On 10 March 1999, the Commission accepted Mr McDermid's claim under s 14 of the VEA for "osteoarthritis of the left knee" with effect from 26 March 1998, and increased his disability pension to 100% of the general rate with effect from 26 March 1998. 24 On 24 May 1999, the VRB decided that Mr McDermid was entitled to a disability pension at 90% of the general rate from 20 February 1997, and at 100% of the general rate from 26 March 1998. 25 On 29 June 1999, the Commission accepted Mr McDermid's claim under s 14 of the VEA for "cervical spondylosis and thoracic spondylosis" with effect from 21 January 1999, and determined that Mr McDermid was entitled to a disability pension at the special rate from 21 January 1999. 26 Also on 29 June 1999, the Respondent decided, for the purposes of s 74 of the VEA, that: (a) Mr McDermid would not qualify for disability pension at the special rate if the lumbar spine condition was not accepted because the requirements of the "alone" test in s 24(1)(c) of the VEA would not be satisfied; (b) the notional assessment of the rate of pension payable for the lumbar spine condition was therefore the difference between disability pension at the special (referred to as "T&PI") rate and disability pension at 100% of the general rate; and (c) Mr McDermid was entitled to disability pension at 100% of the general rate for his other accepted conditions. 27 The Commission also concluded at that time that the notional assessment of the pension for the left rotator cuff syndrome was nil, consequent on Mr McDermid's receipt on 9 June 1987 of lump sum compensation of $4,369.60 under s 39 of the 1971 Act. 28 On 19 July 1999, the Commission reconsidered the determination dated 29 June 1999, identified in para 25 above, and decided that Mr McDermid was entitled to a disability pension at the special rate from 20 February 1997. 29 On 3 August 1999, the Commission advised Mr McDermid that the limitation on his disability pension (being the limitation for which the Commission considered that s 74 of the VEA provided by reason of Mr McDermid's continuing receipt of compensation under s 19 of the SRC Act) had been incorrectly processed, and outlined what it saw as the correct calculation of the limitation. Mr McDermid's disability pension was reduced by the difference between the special rate and 100% of the general rate. 30 In his communications with the Commission via the DVA, Mr McDermid has contended over time that he meets the requirements of the VEA for payment of the special rate of pension by reason of the incapacity resulting from his other defence caused conditions if his lumbar spine condition is not taken into account. Whether that contention is correct depends on the meaning and application of s 74 in the circumstances of his case. 31 On 27 May 2013, Mr McDermid's payments of compensation by reason of incapacity for work under s 19 of the SRC Act ceased automatically when he turned 65, pursuant to s 23(1) of the SRC Act. 32 The limitation that applied to Mr McDermid's disability pension pursuant to s 74 of the VEA to the extent of the pension paid for the lumbar spine condition also ceased at this time, because he had ceased to receive payments of compensation in respect of incapacity from the lumbar spine condition, being the same incapacity in respect of which pension was payable to him under the VEA for his lumbar disc degeneration. However, consequent upon his receipt of a lump sum payment of compensation of $4,369.60 under s 24 of the SRC Act for permanent impairment resulting from the left shoulder condition, the Commission reduced Mr McDermid's pension under the VEA by $10.36 a fortnight from 27 May 2013. 33 The statement of agreed facts also contains a number of attachments detailing an agreed position as to payments made to Mr McDermid under the VEA and the SRC Act, related offset calculations made from time to time by the Commission on the basis of its understanding as to the operation of s 74 as that section has been amended over the relevant period and a graphic representation of the actuarial calculation which the Commission understood was required by s 74(3) of the VEA as a consequence of the payment of lump sum compensation to Mr McDermid under s 39 of the 1971 Act on 9 June 1987. It is not necessary to reproduce these in order to resolve the statutory construction issues in relation to s 74 of the VEA. 34 It is now necessary to turn to the meaning and effect of s 74 of the VEA over time.
Former s 74 35 In June 1999, when a delegate of the Commission concluded that Mr McDermid did not, by reason of the operation of s 74 of the VEA, qualify for a special rate pension, that section was in these terms: 74 Payments by way of compensation or damages (1) In this section, compensation includes: (a) any payment in the nature of compensation; and (b) any damages recoverable at law (including any amount paid under a compromise or settlement of a claim for damages at law), whether from the Commonwealth, a State, a Territory or any other person (whether within or outside Australia), in respect of injury to, or the death of, a person; but does not include any amount that represents expenses incurred in medical or hospital treatment. (2) This section applies in relation to a member of the Forces, or a member of a Peacekeeping Force, in respect of the death of the member that was defence-caused, or the incapacity of the member from a defence-caused injury or a defence-caused disease if: (a) a person is entitled, or 2 or more persons are each entitled, to receive payments by way of compensation in respect of the death of the member or of the incapacity of the member from that injury or disease; and (b) subject to this section, pension under this Part is being paid or is payable to a person, or to each of 2 or more persons, in respect of the death of the member or to the member in respect of the incapacity of the member from that injury or disease. (3) For the purposes of this section, where: (a) a lump sum payment by way of compensation (other than a lump sum payment mentioned in paragraph (3A)(a) or (3B)(a)) is made: (i) to a person, being a member of the Forces or a member of a Peacekeeping Force, in respect of the incapacity of the member from injury or disease; or (ii) to a person, being a dependant of a member of the Forces or of a member of a Peacekeeping Force, in respect of the death of the member from injury or disease; and (b) that person is in receipt of, or is subsequently granted, a pension under this Part in respect of the incapacity of that member from that injury or disease, or the death of that member from that injury or disease, as the case may be; that person shall be deemed, by reason of that payment by way of compensation, to have been, or to be, in receipt of payments, by way of compensation, on and after: (c) the date of commencement of the period in respect of which his or her pension is, or becomes, payable; or (d) the date on which the lump sum payment is made; whichever is the earlier date, for the life of the person, at such rate per fortnight as is determined by, or in accordance with the instructions of, the Commonwealth Actuary, to be the equivalent of a lump sum equal to that lump sum payment and paid to the person on that earlier date. (3A) In this section, if: (a) a lump sum payment is made under section 137 of the Safety, Rehabilitation and Compensation Act 1988 to a person who is: (i) a member of the Forces or a member of a Peacekeeping Force, in respect of the incapacity of the member from injury or disease; or (ii) a dependant of a member of the Forces or of a member of a Peacekeeping Force, in respect of the death of the member from injury or disease; and (b) that person is in receipt of, or is subsequently granted, a pension under this Part in respect of that incapacity or death; the person is taken to have been, or to be, in receipt of payments of compensation: (c) that is determined by, or under the instructions of, the Commonwealth Actuary to be equivalent to the amount of that lump sum payment; and (d) at the rate per fortnight for the person's life determined by, or under the instructions of, the Commonwealth Actuary; and (e) beginning: (i) on the day that lump sum payment is made to that person; or (ii) on the day the pension becomes payable to the person; whichever is the later day. (3B) In this section, if: (a) a lump sum payment is made under section 30 of the Safety, Rehabilitation and Compensation Act 1988 to a person who is: (i) a member of the Forces or a member of a Peacekeeping Force, in respect of the incapacity of the member from injury or disease; or (ii) a dependant of a member of the Forces or of a member of a Peacekeeping Force, in respect of the death of the member from injury or disease; and (b) that person is in receipt of, or is subsequently granted, a pension under this Part in respect of that incapacity or death; the person is taken to have been, or to be, in receipt of payments of compensation: (c) that is determined by, or under the instructions of, the Commonwealth Actuary to be equivalent to the amount of that lump sum payment; and (d) at the rate per fortnight determined by, or under the instructions of, the Commonwealth Actuary for the period until the person reaches 65; and (e) beginning: (i) on the day that the lump sum payment is made to that person; or (ii) on the day the pension becomes payable to the person; whichever is the later day. (4) For the purposes of this section, a payment by way of compensation made on behalf of, or for the benefit of, a person shall be deemed to have been made to that person. (5) Where: (a) an amount of damages payable to a member of the Forces or a member of a Peacekeeping Force, or to a dependant of such a member, is paid to the Commonwealth in pursuance of a notice under section 76; or (b) the liability of the Commonwealth to pay damages to a member of the Forces or a member of a Peacekeeping Force or to a dependant of such a member, is, by virtue of section 77, to be deemed to have been discharged to the extent of a particular amount; subsection (3) of this section applies to and in relation to the member or dependant as if pension commenced to be payable, or commences to be payable, only after the member or dependant has received payments by way of instalments of pension aggregating the amount referred to in paragraph (a) or (b), whichever is applicable, of this subsection. (6) In the application of subsections (8) and (9) in respect of the death of a member of the Forces or a member of a Peacekeeping Force: (a) if payments by way of compensation in respect of the death of the member are being made to 2 or more persons included in the relevant class of persons - a reference in those sections to the rate per fortnight at which compensation is payable in respect of the death of the member shall be read as a reference to the aggregate of the rates per fortnight at which those payments are being made; and (b) if pensions under this Part in respect of the death of the member are being paid, or are payable, to 2 or more persons included in the relevant class of persons - a reference in those sections to the rate at which pension under this Part is payable in respect of the death of the member shall be read as a reference to the aggregate of the rates per fortnight at which those pensions are being paid or are payable. (7) For the purposes of subsection (6), the dependants of a member of the Forces or a member of a Peacekeeping Force constitute the relevant class of persons. (8) If, in a case where this section applies in respect of the death of a member of the Forces or a member of a Peacekeeping Force, or the incapacity of such a member from injury or disease, or both, the rate per fortnight at which compensation is payable in respect of the death or incapacity equals or exceeds the rate per fortnight at which pension under this Part is payable in respect of the death or incapacity, then, pension is not payable under this Part to any person in respect of the death of the member, or the incapacity of the member from that injury or disease, or both, as the case may be. (9) If, in a case where this section applies in respect of the death of a member of the Forces or a member of a Peacekeeping Force, or the incapacity of such a member from injury or disease, or both, the rate per fortnight at which pension under this Part, or the aggregate of the rates per fortnight at which pensions under this Part would, but for this subsection, be payable in respect of the death or incapacity exceeds the rate per fortnight at which compensation is payable in respect of the death or incapacity, then: (a) if a pension under this Part is being paid, or is payable, to one person only in respect of the death or incapacity of the member - the rate per fortnight at which that pension is payable; or (b) if pensions under this Part are being paid, or are payable, to 2 or more persons in respect of the death of the member - the aggregate of the rates per fortnight at which those pensions are payable; is an amount per fortnight equal to the amount of that excess. (10) In giving effect to subsection (9) as between 2 pensions in a case where one is required by subsection (12) to be preferred to the other, the rate per fortnight of the pension that is to be so preferred shall not be reduced until the pension that is not to be so preferred has ceased to be payable by reason that its rate per fortnight has been reduced to nil. (11) In giving effect to subsection (9) as between 2 or more pensions in a case where subsection (10) does not apply, the rate per fortnight of each of those pensions shall be reduced by an amount per fortnight that bears the same proportion to the amount per fortnight of the reduction required to be made to all those pensions as the rate per fortnight of that pension before the reduction bears to the aggregate rate per fortnight of all those pensions before the reduction. (12) For the purposes of this section: (a) a pension payable under this Part to the widow or widower of a member of the Forces or a member of a Peacekeeping Force who is deceased shall be preferred to such a pension payable to a child of the member; and (b) a pension payable under this Part to a child of a member of the Forces or a member of a Peacekeeping Force shall be preferred to such a pension payable to a younger child of the member. 36 There was some debate in submissions, oral and written, as to the correct approach to the construction of s 74. The required approach is settled at ultimate appellate level. One must begin with the text of the provision, uninfluenced by a priori assumptions based on historical considerations or extrinsic materials. If, after considering the text, alternative meanings are open, context and via that purpose and policy, as well as historical considerations or extrinsic materials, may indicate which is the meaning to prefer: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46-47, [47] (Alcan). 37 In relation to repatriation benefits, Repatriation Commission v Law (1981) 147 CLR 635 at 648-649 per Aickin J, with whom Gibbs CJ and Stephen and Mason JJ agreed, supplies an example of considerations of context, policy and purpose dictating that a narrow construction of a particular provision promoted by the Commission be rejected. It does not though follow from that outcome that, in every statutory construction controversy arising under the VEA, that legislation must be beneficially construed in favour of a veteran. Such an approach would be quite contrary to that mandated by Alcan. 38 Logically, and in respect of the form of s 74 under present consideration, a textual analysis ought to begin, and may even end, with s 74(2) of the VEA. For it is that subsection which provides for the application of the section. If, properly construed, s 74 did not apply to Mr McDermid's circumstances, consideration of its elaborate mechanisms for determining the amount of pension under the VEA, if any, to which he was entitled is unnecessary. 39 The effect of a definition in s 5D(2)(b) of the VEA that, subject to any contrary intention is (and none is evident) the reference in the chapeau to s 74 to the incapacity of the member from "a defence-caused injury or a defence-caused disease is a reference to the effects of that injury or disease and not a reference to the injury or disease itself". Incapacity then is to be distinguished from the injury or disease which has caused it. 40 The chapeau to s 74 casts "defence-caused injury" and "defence-caused disease" in the singular. It is permissible to read each of these terms in the plural: Acts Interpretation Act 1901 (Cth) s 23(b). To read these terms as including the plural is in keeping with the scheme of the VEA, evident from ss 21A, 22, 24, 28 and 70, 71 and 73 and the s 5D definition of incapacity, which is that a member does not receive multiple incapacity pensions but, if eligible, one incapacity pension, determined by reference to the totality of effects from all accepted defence caused injuries or defence caused diseases on the member, including, in the case of the special rate pension, on the member's capacity to undertake remunerative work. This also means that the "or" which separates "defence-caused injury" and "defence-caused disease" in the chapeau is not being used solely in its disjunctive sense but also in a conjunctive sense. 41 Proceeding further into s 74 and as a matter of ordinary English, the reference in each of s 74(2)(a) and s 74(2)(b) to, "that injury or disease" must be to the same "defence-caused injury or defence-caused disease" referred to in the chapeau. And that, in turn, means that it is a reference to whatever accepted defence caused injuries or diseases, or combination if more than one have caused the member's incapacity. So much is dictated by the use of "that" in its adjectival sense to govern "injury or disease". The Oxford Dictionary (online edition), in its full entry, is instructive as to the import of such a use of "that": B. adj. Demonstrative determiner. Pl. as in I. 1. a. The simple demonstrative used (as adjective in concord with a n.), to indicate a thing or person either as being actually pointed out or present, or as having just been mentioned and being thus mentally pointed out. (Now distinguished from the definite article THE adj., pron.2, and n.2 as being demonstrative, i.e. pointing out, and not merely definitive, i.e. distinguishing or singling out.) (Emphasis added) (Oxford English Dictionary (online edition) http://www.oed.com viewed 12 April 2016.) 42 In the face of this adjectival use of "that" in s 74(2)(a) and s 74(2)(b), it is not, in my view, possible, as a matter of ordinary English, to read the reference to "injury or disease" either as between these subsections or as between them and the chapeau to s 74 in an asymmetrical way. Yet that is what would be entailed in acceptance of the Commission's approach to the construction and application to Mr McDermid of s 74(2) of the VEA. 43 As at the time when the Commission made its determination in 1999, Mr McDermid had a number of defence caused injuries (detailed above), one of which was "lumbar disc degeneration". It was the effect of this injury, in combination with his other defence caused injuries, which, necessarily, had to be considered in order to determine his incapacity for the purposes of the VEA. Mr McDermid was, at the time, a person to whom, for the purposes of s 74(2)(b), pension under Pt IV of the VEA, was being paid or was payable in respect of the his incapacity from "that injury or disease", but that incapacity, necessarily, was not just from the effects of "lumbar disc degeneration". 44 At that time, Mr McDermid was also entitled to receive compensation under s 19 of the SRC Act but that was only as a result of his incapacity for work caused by his lumbar spine condition. His entitlement to receive compensation under s 19 of the SRC Act was not in respect of the same injuries or diseases which were defence caused, the effects of which had made pension for incapacity payable to him under Pt IV of the VEA. There was an overlap, the lumbar spine condition, but not symmetry. He was not, in terms of s 74(2)(a) entitled, to receive payments by way of compensation in respect of incapacity of the member from "that injury or disease", being one and the same as the defence caused injuries referred to in the chapeau to s 74. That being so and in its then form, s 74 did not apply to Mr McDermid. 45 It was put on behalf of the Commission that such a construction of the VEA ought not to be adopted, because it was subversive of a legislative endeavour to prevent doubling up of incapacity compensation. But this is not a case where an absurd result follows. The symmetrical construction of s 74(2) which I have outlined means that the section has application where there is symmetry of injury or disease. If, the language of a statutory provision is clear and unambiguous, as I consider s 74(2) to be, "it must be given its ordinary and grammatical meaning, even if it leads to a result that may seem inconvenient or unjust": Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (1981) 147 CLR 297 at 305. Pincus J, when a judge of this Court, made a like point in Gauntlett v Repatriation Commission (1991) 32 FCR 73 at 77, a case arising under the VEA: … [T]his is not the first time in which the respondent Commission has implied in argument that provisions of this sort could not possibly have been intended to produce such anomalies as, literally read, seem to follow from them; but it is the constitutional function of Parliament, and not that of the judges, to correct any anomalies thought to arise from applying the plain language of legislation. 46 This aspect of the construction of s 74 of the VEA did not arise before Gyles J in Hobbs v Repatriation Commission (2002) 124 FCR 151 (Hobbs). That case concerned the different subject of the meaning of "compensation" in that section. I respectfully agree, for reasons given by his Honour, with his construction of that word as it appears in that section. There is no doubt that, so construed, what Mr McDermid was entitled to receive under the SRC Act was "compensation" for the purposes of s 74 of the VEA. Equally, that SRC Act entitlement was compensation for "incapacity" for the purposes of s 74 of the VEA. I did not understand Mr McDermid to submit otherwise in either respect. It is just that, for reasons already given, it was not, in terms of s 74(2)(a), compensation in respect of the incapacity of the member from "that injury or disease". 47 The observation made by Gyles J in Hobbs, at 153, [4] that s 74 is: part of Div 4 of Pt IV of the VE Act, which contains a number of provisions in relation to the consequences of the existence of other rights to compensation or pension of a kind which are familiar in compensation legislation, the general purpose of which is to guard against duplication of compensation and to enable indemnity to be received from third parties, where appropriate. is, with respect, correct at a general level of descriptive abstraction. That this is an evident general purpose is not a licence to depart from the ordinary and grammatical meaning of the language Parliament has chosen to employ in s 74(2) of the VEA. 48 It was also put on behalf of the Commission that, even if this were a literal meaning of s 74(2), it was given a different complexion by reading it in the context of the qualification of s 19 of the VEA made by s 71(3), which, at the time provided: (3) In the application of Division 3 of Part II in accordance with subsections (1) and (2) of this section, section 19 shall be read as if the following subsection were substituted for subsection (7) of that section: "(7) Where: (a) the Commission, upon considering a claim for a pension in respect of the incapacity of a member of the Forces or a member of a Peacekeeping Force from injury or disease determines, or is satisfied, that the member suffered the injury or contracted the disease as claimed and that the injury is a defence-caused injury or the disease is a defence-caused disease, as the case may be; and (b) the Commission is also satisfied that a determination under this Act is in force determining that the member has suffered an injury or contracted a disease (not being the injury or disease referred to in paragraph (a)) and that: (i) that injury is a defence-caused injury, or is a war-caused injury for the purposes of Part II; or (ii) that disease is a defence-caused disease, or is a war-caused disease for the purposes of Part II; as the case may be, whether or not a pension under Part IV or Part II, as the case requires, has been granted in respect of that injury or disease; the Commission shall not, in a case where the claimant is in receipt of a pension under Part IV or Part II in respect of incapacity resulting from the injury or disease referred to in paragraph (b), grant a separate and additional pension to the claimant in respect of incapacity resulting from the injury or disease referred to in paragraph (a), but the Commission shall, having regard to any incapacity resulting from the injury or disease referred to in paragraph (a) and any incapacity resulting from the injury or disease referred to in paragraph (b) and treating any such war-caused injury as defence-caused injury and any such war-caused disease as defence-caused disease: (c) if the claimant is not in receipt of a pension under Part IV or Part II - determine whether the claimant is entitled to be granted a pension under Part IV and, if it determines that the claimant is entitled to be granted a pension, assess the rate of the pension to be granted to the claimant; or (d) if the claimant is in receipt of a pension under Part IV or Part II - re-assess the rate of that pension.". 49 This submission must be rejected. Subsection 71(3) is a measure directed to a conjunctive incapacity assessment in respect of defence caused injury or disease and war caused injury or disease suffered by a member to the end of ensuring that pension is not paid under both Pt II and Pt IV of the VEA. It has no work to do beyond this. In particular, it is not directed to the subject of incapacity from a defence caused injury or disease which happens to be compensable under the SRC Act or one of its predecessors or compensable at law by damages. Subsection 71(3) is part of a suite of measures in Div 2 of Pt IV of the VEA which, according to their terms, qualify the compensatory pension eligibility found in s 70 and in s 13 of Pt II of that Act. Within Div 2, s 71(2) and s 71(4) perform analogous roles to s 71(3) to the like end of ensuring that pension is not paid at the same time under Pt II and Pt IV of the VEA. That same end is evident in s 72 in respect of a person who is a member of the Forces or a member of a Peacekeeping Force and also a veteran. 50 Because s 74(2) did not apply to Mr McDermid's circumstances, there was no occasion for the undertaking of the reassessments and calculations for which s 74 provides. 51 It follows that the Commission's determination of 29 June 1999 and related determinations of Mr McDermid's pension entitlements under the VEA were based on an error of law as to the application of s 74, as it then stood, to his circumstances. 52 The submissions of the parties also addressed the meaning to be given to s 74(8) of the VEA. Consideration of s 74(8) is only necessary if s 74 applies. The application of that section is governed by s 74(2), not s 74(8). Because, in its then form, s 74(2) did not apply to Mr McDermid, it is unnecessary to consider s 74(8). 53 The Commission's submissions in respect of both the former s 74 and as materially amended referred to s 74(8), "read with" s 74(2). That misconceives and thus misdescribes the relationship between the two subsections. Subsection 74(8) commences with a conditional clause, "[i]f, in a case where this section applies". Subsection 74(2) supplies the application test. If that test is not met, the condition is not fulfilled. The reference in s 74(2) to "[s]ubject to this section" is not a gateway through which some additional content is given by s 74(8) to the application test.
Later s 74 54 Apart from an amendment in 2002, which is not material to Mr McDermid's circumstances, s 74 of the VEA was next amended in 2011. The amending Act, the Veterans' Entitlements Amendment Act 2011 (Cth) (the amending Act), materially commenced on 15 September 2011. It was then that, by virtue of s 2(1) of the amending Act, amendments of s 74 of the VEA made by s 3 and detailed in Sch 2 to the amending Act commenced. 55 As amended by the amending Act, s 74 provides: 74 Payments by way of compensation or damages (1) In this section, compensation includes: (a) any payment in the nature of compensation; and (b) any damages recoverable at law (including any amount paid under a compromise or settlement of a claim for damages at law), whether from the Commonwealth, a State, a Territory or any other person (whether within or outside Australia), in respect of injury to, or the death of, a person; but does not include any amount that represents expenses incurred in medical or hospital treatment. (2) This section applies in relation to a member of the Forces, or a member of a Peacekeeping Force, in respect of the death of the member, or the incapacity of the member if: (a) a person is entitled, or 2 or more persons are each entitled, to receive payments by way of compensation in respect of the death of the member or of the incapacity of the member from an injury or disease; and (b) subject to this section, pension under this Part is being paid or is payable to a person, or to each of 2 or more persons, in respect of the death of the member or to the member in respect of the same incapacity of the member from that or any other injury or disease. (3) For the purposes of this section, where: (a) a lump sum payment by way of compensation (other than a lump sum payment mentioned in paragraph (3A)(a) or (3B)(a)) is made: (i) to a person, being a member of the Forces or a member of a Peacekeeping Force, in respect of the incapacity of the member from injury or disease; or (ii) to a person, being a dependant of a member of the Forces or of a member of a Peacekeeping Force, in respect of the death of the member; and (b) that person is in receipt of, or is subsequently granted, a pension under this Part in respect of the same incapacity of the member from that or any other injury or disease or in respect of the death of that member, as the case may be; that person shall be deemed, by reason of that payment by way of compensation, to have been, or to be, in receipt of payments, by way of compensation, on and after: (c) the date of commencement of the period in respect of which his or her pension is, or becomes, payable; or (d) the date on which the lump sum payment is made; whichever is the earlier date, for the life of the person, at such rate per fortnight as is determined by, or in accordance with the instructions of, the Commonwealth Actuary, to be the equivalent of a lump sum equal to that lump sum payment and paid to the person on that earlier date. (3A) In this section, if: (a) a lump sum payment is made under section 137 of the Safety, Rehabilitation and Compensation Act 1988 to a person who is: (i) a member of the Forces or a member of a Peacekeeping Force, in respect of the incapacity of the member from injury or disease; or (ii) a dependant of a member of the Forces or of a member of a Peacekeeping Force, in respect of the death of the member; and (b) that person is in receipt of, or is subsequently granted, a pension under this Part in respect of the same incapacity of the member from that or any other injury or disease or in respect of the death of that member; the person is taken to have been, or to be, in receipt of payments of compensation: (c) that is determined by, or under the instructions of, the Commonwealth Actuary to be equivalent to the amount of that lump sum payment; and (d) at the rate per fortnight for the person's life determined by, or under the instructions of, the Commonwealth Actuary; and (e) beginning: (i) on the day that lump sum payment is made to that person; or (ii) on the day the pension becomes payable to the person; whichever is the later day. (3B) In this section, if: (a) a lump sum payment is made under section 30 of the Safety, Rehabilitation and Compensation Act 1988 to a person who is: (i) a member of the Forces or a member of a Peacekeeping Force, in respect of the incapacity of the member from injury or disease; or (ii) a dependant of a member of the Forces or of a member of a Peacekeeping Force, in respect of the death of the member; and (b) that person is in receipt of, or is subsequently granted, a pension under this Part in respect of the same incapacity of the member from that or any other injury or disease or in respect of the death of that member; the person is taken to have been, or to be, in receipt of payments of compensation: (c) that is determined by, or under the instructions of, the Commonwealth Actuary to be equivalent to the amount of that lump sum payment; and (d) at the rate per fortnight determined by, or under the instructions of, the Commonwealth Actuary for the period until the person reaches 65; and (e) beginning: (i) on the day that the lump sum payment is made to that person; or (ii) on the day the pension becomes payable to the person; whichever is the later day. (4) For the purposes of this section, a payment by way of compensation made on behalf of, or for the benefit of, a person shall be deemed to have been made to that person. (5) Where: (a) an amount of damages payable to a member of the Forces or a member of a Peacekeeping Force, or to a dependant of such a member, is paid to the Commonwealth in pursuance of a notice under section 76; or (b) the liability of the Commonwealth to pay damages to a member of the Forces or a member of a Peacekeeping Force or to a dependant of such a member, is, by virtue of section 77, to be deemed to have been discharged to the extent of a particular amount; subsection (3) of this section applies to and in relation to the member or dependant as if pension commenced to be payable, or commences to be payable, only after the member or dependant has received payments by way of instalments of pension aggregating the amount referred to in paragraph (a) or (b), whichever is applicable, of this subsection. (6) In the application of subsections (8) and (9) in respect of the death of a member of the Forces or a member of a Peacekeeping Force: (a) if payments by way of compensation in respect of the death of the member are being made to 2 or more persons included in the relevant class of persons - a reference in those sections to the rate per fortnight at which compensation is payable in respect of the death of the member shall be read as a reference to the aggregate of the rates per fortnight at which those payments are being made; and (b) if pensions under this Part in respect of the death of the member are being paid, or are payable, to 2 or more persons included in the relevant class of persons - a reference in those sections to the rate at which pension under this Part is payable in respect of the death of the member shall be read as a reference to the aggregate of the rates per fortnight at which those pensions are being paid or are payable. (7) For the purposes of subsection (6), the dependants of a member of the Forces or a member of a Peacekeeping Force constitute the relevant class of persons. (8) If, in a case where this section applies in respect of the death of a member of the Forces or a member of a Peacekeeping Force, or the incapacity of such a member, the rate per fortnight at which compensation is payable in respect of the death or incapacity equals or exceeds the rate per fortnight at which pension under this Part is payable in respect of the death or incapacity, then, pension is not payable under this Part to any person in respect of the death of the member, or the incapacity of the member, as the case may be. (9) If, in a case where this section applies in respect of the death of a member of the Forces or a member of a Peacekeeping Force, or the incapacity of such a member, the rate per fortnight at which pension under this Part, or the aggregate of the rates per fortnight at which pensions under this Part would, but for this subsection, be payable in respect of the death or incapacity exceeds the rate per fortnight at which compensation is payable in respect of the death or incapacity, then: (a) if a pension under this Part is being paid, or is payable, to one person only in respect of the death or incapacity of the member - the rate per fortnight at which that pension is payable; or (b) if pensions under this Part are being paid, or are payable, to 2 or more persons in respect of the death of the member - the aggregate of the rates per fortnight at which those pensions are payable; is an amount per fortnight equal to the amount of that excess. (10) In giving effect to subsection (9) as between 2 pensions in a case where one is required by subsection (12) to be preferred to the other, the rate per fortnight of the pension that is to be so preferred shall not be reduced until the pension that is not to be so preferred has ceased to be payable by reason that its rate per fortnight has been reduced to nil. (11) In giving effect to subsection (9) as between 2 or more pensions in a case where subsection (10) does not apply, the rate per fortnight of each of those pensions shall be reduced by an amount per fortnight that bears the same proportion to the amount per fortnight of the reduction required to be made to all those pensions as the rate per fortnight of that pension before the reduction bears to the aggregate rate per fortnight of all those pensions before the reduction. (12) For the purposes of this section: (a) a pension payable under this Part to the widow or widower of a member of the Forces or a member of a Peacekeeping Force who is deceased shall be preferred to such a pension payable to a child of the member; and (b) a pension payable under this Part to a child of a member of the Forces or a member of a Peacekeeping Force shall be preferred to such a pension payable to a younger child of the member. 56 It can be seen at once that, as a result of amendment, s 74(2) is cast in very different terms to its predecessor. Gone is any reference at all in the chapeau to injury or disease, replaced materially by a statement that s 74 applies "in relation to a member of the Forces … in respect of … the incapacity of the member", subject to fulfilment of its nominated conditions. Thus far, the subsection is apt to apply to Mr McDermid's circumstances. 57 There are two conditions. The first, found in s 74(2)(a), is, materially, that, "a person is entitled … to receive payments by way of compensation in respect of … the incapacity of the member from an injury". Mr McDermid's then entitlement under the SRC Act was an entitlement to receive a payment by way of "compensation" as that term is to be understood, having regard to the inclusive definition of "compensation" in s 74(1) and the explanation by Gyles J in Hobbs, at 158, [12] that the word "compensation" carries its ordinary meaning, "something given or received as an equivalent for (inter alia) loss or suffering". His Honour's explanation of the meaning remains apt in relation to s 74 in its amended form. 58 Another feature of s 74(2)(a) as amended is the use of the indefinite article, "an" to precede "injury or disease". Mr McDermid's lumbar spine condition was an injury. 59 The payment to which Mr McDermid was entitled under the SRC Act for his lumbar spine condition was an entitlement to "receive payments by way of compensation in respect of … the incapacity of the member from an injury". In its amended form, s 74(2)(a) of the VEA applied to Mr McDermid's circumstances. 60 What of s 74(2)(b)? 61 It is symmetry of incapacity to which the condition found in that paragraph is directed. As used adjectively in s 74(2)(b), "same", as a matter of ordinary English, means "identical" (Oxford English Dictionary, online edition). If the incapacity is the "same", it matters not that the compensable injury which has yielded that incapacity is but one of the injuries or diseases accepted for the purposes of the VEA or even quite different from the injury or disease accepted under the VEA which have yielded that same incapacity - "that or any other injury or disease". 62 As it happens, the view which I have reached as to the construction of the amended s 74(2) of the VEA is in harmony with the evident intent of the amending Act, as revealed by the Explanatory Memorandum in respect of the Bill which became that Act. The amendments made by the amending Act were, by reference to their text alone, directed to replacing symmetry of injury with symmetry of incapacity and thus removing an anomaly. That this is so is confirmed by the Explanatory Memorandum at p ii: The amendments will make it clear that the compensation offsetting provisions are to apply where compensation from another source (a source other than the Veterans' Entitlements Act) and pension under Part II or IV of the Veterans' Entitlements Act are payable in respect of the same incapacity and do not require that the incapacity results from the same injury or disease. 63 While the particular explanation (Explanatory Memorandum at p 12) in respect of what became the amended s 74(2) does not, in terms, mention the "same incapacity" in fact, it is tolerably clear from the context in which "same incapacity" is used in the explanation that that it is same incapacity in fact not in law that is intended. 64 It is also evident from the Explanatory Memorandum that a particular catalyst for the amending Act was the judgment of the Full Court in Commonwealth v Smith (2009) 180 FCR 569. The issue in that case concerned the meaning and effect of the then s 30C of the VEA, not the then s 74. There are though affinities of language as between the two provisions. The following observation made by the Full Court, at 574, [27], in respect of the then ss 30C(1)(b) and 30C(1)(c) of the VEA might equally well have been made of the former ss 74(2)(a) and 74(2)(b) of the VEA: As a matter of ordinary language, the injury identified in paras (b) and (c) must be the same. Therefore, common to both the compensation payment and the pension is the underlying injury for which both payments for incapacity are made. The clear dichotomy between "incapacity" and "injury" or "disease" reinforces the deliberate emphasis placed upon the need for there to be a common injury. Those observations provide an additional reason why I consider the construction which I have adopted of the former s 74(2) to be correct. Indeed, and with all due respect, in the face of those observations, it is somewhat surprising that the Commission chose to contest the position as to the construction of the former s 74(2). 65 Mr McDermid's "lumbar disc degeneration" is but one of a number of defence caused injuries accepted by the Commission for the purposes of the VEA. The scheme of the VEA in respect of incapacity from either war caused or defence caused injury or disease is for one incapacity assessment to be made. Put another way, a member might, as does Mr McDermid, have multiple, accepted injuries or diseases but that does not mean that pension is separately paid under either Pt II or Pt IV of the VEA in respect of a separate incapacity from each separate accepted injury or disease. 66 Is there any sameness of incapacity? 67 Materially, s 19 of the SRC Act applies to "an employee who is incapacitated for work as a result of an injury". Having regard to s 73 and s 24 of the VEA, an assessment of incapacity which yields eligibility for a disability pension at the special rate necessarily entails acceptance that the member is incapable of undertaking remunerative work for periods aggregating more than eight hours per week. At a general level of abstraction, it might be said that s 19 SRC Act compensation and disability pension at the special rate under the VEA are each paid in respect of incapacity to undertake remunerative work. But the statutory tests which lead to that conclusion are different under each Act; witness the dispensation under the VEA in respect of a capacity to undertake eight hours per week or less of remunerative work. 68 In my view, as used in s 74(2), the word, "incapacity" carries the same meaning as Gyles J opined of it in Hobbs at 158, [12], ""Incapacity" is lack of capacity. Capacity (relevantly) refers to the power, ability or possibility of doing something". So read, incapacity in fact is sufficient, even if the legal tests for incapacity may differ as between a particular compensation regime and the VEA. 69 It will be recalled that one of the agreed facts was that, with effect from 1 January 1994, Mr McDermid was paid compensation under s 19 of the SRC Act as a result of his incapacity for work caused by his lumbar spine condition. As a result of its reconsideration on 19 July 1999 of the determination dated 29 June 1999, the Commission decided that Mr McDermid was entitled to a disability pension at the special rate from 20 February 1997. That also was because of an assessed incapacity to work but, because of the statutory dispensation mentioned, Mr McDermid might in fact have had a capacity to undertake eight hours or less remunerative work. 70 It is an agreed fact that Mr McDermid's incapacity from his, "lumbar disc degeneration", as originally accepted under the predecessor to the VEA and taken to have been accepted under the VEA, is the same incapacity as the incapacity from the lumbar spine condition, accepted under the 1971 Act. Given the way that agreed fact is cast and even though it does not, as it ought, expressly take into account Mr McDermid's other defence caused injuries, it must inferentially follow what has been agreed that the combined effects of all of these defence caused injuries would still yield the same incapacity accepted under s 19 of the SRC Act, which was an incapacity to work. I draw that inference on the basis that, if his "lumbar disc degeneration" has yielded the same incapacity as the incapacity from the lumbar spine condition, accepted under the 1971 Act, it must follow that the taking into account of the further defence caused injuries as required by a VEA assessment could not yield any greater incapacity than that accepted under the 1971 Act. 71 Mr McDermid was therefore a person to whom, subject to s 74 of the VEA, pension under Pt IV of the VEA was being paid or was payable in respect of the same incapacity from his compensable lumbar spine condition (same as his "lumbar disc degeneration") and his other defence caused injuries. The "or" in "that or any other injury or disease" is to be read both disjunctively and conjunctively. The condition in s 74(2)(b) is met in the circumstances of his case. 72 Because s 74(2) applies to Mr McDermid, s 74(8) applies to him on and from 15 September 2011. It follows then that, to the extent that, on and from that date, the rate per fortnight at which compensation under the SRC Act was payable in respect of the incapacity equals or exceeds the rate per fortnight at which pension under Pt IV is payable in respect of that incapacity, then, pension is not payable under Pt IV. 73 In this regard, it is nothing to the point, as Mr McDermid seems to have believed, that he might have qualified for a special rate pension under Pt IV of the VEA even disregarding his defence caused "lumbar disc degeneration" and just by reference to his other defence caused injuries. On and from 15 September 2011, and for the reasons given as to why s 74(2)(b) applied to him, it was incapacity from his "lumbar disc degeneration" and his other defence caused injuries which formed the element of the test posited by that paragraph of s 74(2). The other element, found in s 74(2)(a) was the incapacity from injury in respect of which he was entitled to receive payment by way of compensation. Where, as here, the two were the same, s 74 applied to him. That being so, there was no scope, given the operation of s 74(8), for any separate assessment of incapacity for Pt IV pension purposes by reference to defence caused conditions other than his "lumbar disc degeneration". 74 I note that Mr McDermid's compensation payments ceased on 27 May 2013 when he turned 65 years of age. Whatever reducing effect his incapacity compensation payments had on what would otherwise have been the amount of the pension payable to him under Part IV of the VEA also ceased on that date. 75 The relief formally sought by Mr McDermid is: (1) A Writ of Certiorari or an order in the nature of Certiorari to remove into this Honourable Court the decisions of the Commission refusing to pay pension to him on the basis that s 74(8) of the VEA has operated to prevent pension being payable to him under Pt IV of the VEA at the special rate for the purpose of quashing the decisions. (2) A Writ of Mandamus or an order in the nature of Mandamus commanding the Commission to pay outstanding pension to him under Pt IV of the VEA at the special rate in accordance with law. 76 It follows from the foregoing that, prior to 15 September 2011, such of the Commission's decisions as were predicated on an application of s 74(8) of the VEA and a related reduction calculation were wrong in law, because s 74 had no application to Mr McDermid. On and from 15 September 2011, s 74 did apply to him and the Commission was obliged to make an assessment as to the effect of s 74(8), having regard to his receipt, until 27 May 2013, of incapacity compensation under the SRC Act. 77 It may be that declaratory relief is more apt than a mandamus order, although the quashing of decisions made prior to 15 September 2011 may be necessary. It may also be that additional declaratory relief as to resultant amounts payable to Mr McDermid under the VEA before and the amount, if any, payable to him after 15 September 2011 is desirable. 78 In any event, having regard to what I have concluded to be the correct construction and application of the VEA before and on and after 15 September 2011, the better course, in my view, is to give the parties an opportunity to consider these reasons for judgment and to bring in short minutes of orders to give effect to them. It will also be necessary to hear from the parties in respect of costs. I certify that the preceding seventy-eight (78) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.
McDermid
Repatriation Commission
[2011] AATA 834
(2009) 239 CLR 27
(2009) 180 FCR 569
(1944) 68 CLR 227
(1981) 147 CLR 297
(1991) 32 FCR 73
(2002) 124 FCR 151
(1981) 147 CLR 635