Defence Force Retirement and Death Benefits Act 1973, s.34

Solicitors for the Appellant: Australian Government Solicitor

Solicitors for the Respondent: Messrs Cannan & Peterson

1. THAT the orders (other than in respect of costs) made by Spender J. be varied to the following:

That the decision of the Administrative

Appeals Tribunal be set aside, and that the

matter be referred back to the Tribunal for

further consideration in accordance with law.

2. THAT otherwise the appeal be dismissed.

3. THAT the appellant pay the respondent's costs.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The respondent's discharge from the Australian Regular Army on 29 May 1975 was subsequently determined to have been on the ground that he was medically unfit for service. That unfitness was caused by a "physical or mental impairment" within the meaning of s.30 of the Defence Force Retirement and Death Benefits Act 1973 (the Act), being alcoholism and alcoholic liver disease. In those circumstances, the appellant (the Authority) determined, the respondent being entitled to invalidity benefit, that under s.30 his "percentage of incapacity in relation to civil employment" was 30%, and accordingly his classification was B.

2. Subsections (1), (1A), and (1B) of s.34 of the Act read as follows:

"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, for the purposes of

sub-section (1), the percentage of incapacity

in relation to civil employment of a

recipient member, 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 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

sub-section.

(1B) In sub-section (1A), 'prescribed

physical or mental impairment', in relation

to a recipient member, means -

(a) a physical or mental impairment of the

recipient member that was the cause,

or one of the causes, of the

invalidity or physical or mental

incapacity by reason of which the

recipient member was retired, whether

or not that impairment has changed,

for better or worse, since that

retirement; or

(b) any other physical or mental

impairment of the recipient member

causally connected with a physical or

mental impairment referred to in

paragraph (a)."

3. A review by a delegate of the Authority on 5 December 1986, confirmed by the Authority upon reconsideration on 25 September 1987, resulted in a reclassification of the respondent as falling within Class C on and from 16 January 1987. A determination was also made that the kind of civil employment, to be taken into account for the purposes of the respondent's case pursuant to s.34(1A)(b), was "freezer hand/fork-lift driver", and that the respondent's incapacity in relation to civil employment was 20%. The respondent sought review of this determination by the Administrative Appeals Tribunal pursuant to s.99(6) of the Act. The Tribunal affirmed the decision.

4. From the decision of the Administrative Appeals Tribunal, the respondent appealed, on a question of law, to the Federal Court of Australia. His appeal was heard by a single judge of the court, and was allowed. An order was made that the matter be referred to the Tribunal for further consideration in accordance with the reasons of the court. It is that decision which has now been brought before this full court by the appellant. The first issue in the appeal is whether any error of law can be demonstrated in the decision of the Administrative Appeals Tribunal. The next, and only other, issue is what order should be made by the court.

5. The Tribunal considered a contention, advanced by the respondent in evidence, that the kinds of civil employment which should have been taken into account under s.34(1A)(b) included employment as a driver or backhoe operator, a contention which was disputed on behalf of the appellant. The Tribunal found that, at the time of the respondent's discharge, he "did possess the ability to undertake employment as the driver of 'any motor truck other than an articulated vehicle' (which) would open up several types of driving employments to him." It also found that the respondent has three times been convicted of driving under the influence of alcohol, and that his alcoholism "would have diminished his capacity for undertaking driving tasks". The Tribunal then commented:

"This is however theoretical. The

(respondent) never applied for a Queensland

'C' class driver's licence so it is little to

the point to speculate on what employment he

may have been able to gain as a driver. . . .

(A)s at 25 September, 1987 the (respondent)

had never held (a) 'C' class licence. The

question of employment as a driver does not

therefore arise."

6. The Tribunal went on to find that similar considerations applied to the question of employment as a backhoe operator. It found that "(f)ollowing his discharge from the Army the (respondent) was trained and gained a certificate of competency as a backhoe operator". But, shortly afterwards, his driver's licence was suspended for an alcohol related driving offence which, as the respondent was led to believe, precluded him from driving a backhoe. In fact it would have precluded him from driving a backhoe on a public street. However, naturally this inability would, in itself, have seriously restricted any employment opportunity he might otherwise have had as a backhoe operator.

7. As the Tribunal pointed out, the respondent had never worked as a backhoe operator; he would now require a refresher course before he could manage to do so. The Tribunal referred to the lack of evidence as to whether or not there is a shortage of experienced backhoe operators in the employment market, and continued:

"The only conclusion possible is to say that

the (respondent) has a potential to be

employed as a backhoe operator but as to

whether that potential would, as at the time

under review, have been realised is speculative."

8. Reference was made by the Tribunal to the report of a medical board which considered the respondent had a 20% current disability as a result of his ongoing alcohol addiction. There was no evidence of organic deterioration "so far", and the respondent was of "good nutrition and strong physique". He was of below average intelligence, and had minimal educational qualifications. Prior to his enlistment, he had been a bicycle mechanic at one time, and a poultry farm worker at another. In the army, he had had driver training and training as an infantryman. Since leaving the army, he had been employed for six years, up to the hearing in the Tribunal, in the one job as a fork-lift driver in the freezer section of a warehouse. He had been absent from work on many occasions as a result of his condition, but it was clear he had been able to do the tasks required of him sufficiently satisfactorily to retain his job.

9. Apart from the specific reasons given for rejecting the occupations of driver and backhoe operator, which have been referred to, the Tribunal's reasons do not explain why, for the purposes of s.34(1A)(b) the kinds of civil employment applicable to this case were limited to the one employment, that which the respondent in fact follows. Sub-section (1A) requires consideration, not of employments the member has followed or would be likely to follow, but of the kinds of civil employment which a person with the skills qualifications and experience identified in paragraph (a) might reasonably undertake. The words "kinds", "might" and "reasonably" all indicate that a narrow view is not to be taken. As was made clear by Davies J., when sitting as president of the Tribunal in Re Thomson and Defence Force Retirement and Death Benefits Authority (1987) 6 AAR 424 at 433-434, an individual is likely to have open to him a wide range of employment opportunities of various kinds. The sub-section does not narrowly scrutinize one example of the kinds of employment open in the particular circumstances. For example, if a man can operate a backhoe, it would be wrong to think of backhoe operation as the kind of employment open to him - it is rather a specific example of a kind of employment which includes the operation of posthole diggers and a host of other pieces of equipment.

10. It should also be observed that the primary question posed by paragraph (b) is not what an employer might do, nor even what the particular member might do, but what a hypothetical person with the relevant skills, qualifications and experience "might reasonably undertake". Substituted expressions may tend to lose the peculiar force of the statutory language, which does not at all suggest that the absence of a particular licence, or the need of a particular refresher course, would constitute a barrier. People constantly undertake employments which require some degree of new learning or the obtaining of a new certificate or licence; to do so involves a small increment upon their existing skills, qualifications and experience. The statutory test is not whether the postulated person already has everything that is requisite, but whether a person with his skills, qualifications and experience might reasonably undertake the kind of employment in question. The extent to which in some way he might have to prepare himself bears on whether he might reasonably undertake the employment, which is the ultimate question under the paragraph, but the fact that he must do so does not debar him. It is a question of degree.

11. One thing which is abundantly clear is that paragraph (b) does not restrict a member to the employments in which he is now engaged in his impaired state. That would be to mock the statutory purpose, which is to find an objective criterion for the assessment of the extent of the impairment. The criterion is a broad one which relates to categories of employment and not to particular occupations. It is concerned with the range of occupations open to the person described, so that the effect of the disability may be measured against the opportunities that might have been open. As Brennan J. said in Re Bos and Defence Forces Retirement and Death Benefits Authority (1977) 20 ALR 663 at 666 in an often-cited passage:

"If there be no incapacity of the

relevant kind, a person's talents - his

education, training, skills, physical

strength, personality or other attributes -

open to him a range of employment

opportunities. The range may cover

opportunities for engaging in various kinds of

employment, for earning various levels of

remuneration and for deriving tangible and

other benefits. These are the opportunities

which are appropriate to the individual - his

own range of employment opportunities

estimated by reference to the talents which,

but for the incapacity, he would have had.

When he suffers an incapacity, some of these

opportunities are denied to him. He suffers

an incapacity in relation to civil employment.

A comparison between the lost opportunities

and the whole range of the individual's

employment opportunities provides the measure

of his percentage incapacity."

12. Paragraph (a) contains no verb. It follows that no tense (past, present or future) is expressed within the paragraph itself, and that resort must be had to the context to determine the time as at which the skills, qualifications and experience referred to must be assessed in respect of the recipient member. Plainly enough, paragraph (b) is looking to the time as at which the authority is making the assessment, and paragraph (c) is looking back to previous time over which the impairment "has diminished the capacity of the recipient member to undertake the kinds of civil employment referred to in paragraph (b)". That means, of course, that the capacity to undertake kinds of employment must itself be considered as at past times before it was diminished, since otherwise its diminishment cannot sensibly be assessed. You have to know what a man could do once if you are to consider the extent to which an impairment has diminished his capacity to do it. It follows that paragraph (a) cannot be applied on a basis which excludes a pre-impairment capacity simply because a relevant skill has been lost over the period the illness prevented its use, or because a relevant qualification has lapsed or relevant experience has become dated during the same period. These things are an inevitable part of the process of diminishment of capacity through illness, and it is the result of that process which the subsection is designed to measure. Nevertheless, if new skills, qualifications and experience have been acquired, they must be taken into account.

13. As Sheppard J. (with whom Sweeney J. agreed) said in Freeman v. Defence Force Retirement and Death Benefits Authority (1985) 5 AAR 156 at 160:

"(T)he definition in s 34(1B) takes one back to

the physical or mental impairment that was the

cause of the original invalidity or physical

or mental incapacity by reason of which the

member was retired. It follows that the Authority

is always obliged to look at the current capacity

of a member and reach a conclusion on the degree

to which the original physical or mental

impairment which caused his incapacity has

diminished his capacity for civil employment."

14. It is true that almost immediately after making this point his Honour went on to say:

"A further matter to be observed in relation to

s 34 is that the matters specified in pars (a)

and (b) of subs (1A) are to be considered as

at the date when the Authority comes to the

question of reclassification."

But it must not be thought that his Honour intended to contradict what he had just said. He was merely making the point that s.34 is concerned with updating the position; though, as he had said, it "takes one back to the . . . impairment that was the cause of the original invalidity" and requires a consideration of its effects, that consideration is directed to the reaching of a current conclusion.

15. There is one other aspect of a determination to which reference should be made. This was adverted to by Davies J. in Re Thomson (supra) at 433:

"Most employees hold one job at a time and

many, particularly skilled tradesmen and

professional persons, undertake one type of

work throughout the whole of their working

life, notwithstanding that they may have a

capacity and even a qualification to undertake

some other employment. The width of the range

in employment opportunity is only one of the

matters to be taken into account. The quality

and nature of the range is another. Moreover,

a particular impairment may indeed not greatly

reduce the range of employment opportunities,

but it may preclude the person from working

more than part-time or intermittently. Thus,

the determination of a percentage of

incapacity is not to be undertaken as if it

were a mathematical calculation. Rather it is

a value judgment of the extent to which,

expressed in percentage terms, and taking into

account only the matters set out in s 34(1A),

a person has suffered incapacity to engage in

civil employment brought about by a prescribed

physical or mental impairment."

The Tribunal did not discuss that aspect of the matter. Indeed, it may be that the Tribunal's assessment of percentage incapacity was calculated, not in accordance with the statute, but in accordance with a medical assessment.

16. There have been no "other matters" prescribed for the purposes of subsection (1A)(see paragraph (d)), and accordingly only the considerations expressed in the subsection may be taken into account.

17. In the present case, the Tribunal asked whether the respondent's potential would have been realized, and it answered that question by reference to factors in which his disability itself played a part. Both the question and the way in which it was answered involved error. The Tribunal should have asked itself what kinds of civil employment a person with the appropriate skills, qualifications and experience might reasonably undertake, not whether the respondent would in fact have gained employment in particular areas. By the very process of changing the objective question the statute poses into a subjective question concerning the respondent, the Tribunal introduced into its answer factors personal to the respondent which were inextricably bound up with his disability. The measure became confused with the thing to be measured. As a result, the assessment of percentage incapacity was not explained.

18. The appropriate orders are that the decision of the Administrative Appeals Tribunal be set aside, and that the matter be referred back to the Tribunal for further consideration in accordance with law. The learned trial Judge made orders to the same effect, but referring to reasons for judgment suggesting a factual finding that the respondent might reasonably undertake employment as a backhoe operator. Although it is difficult to see why a person with the trade skills, qualifications and experience of the respondent within the meaning of paragraph (a) might not reasonably undertake employment as a backhoe operator, the question is ultimately one of fact for the Tribunal. As has been made clear, the real question is in any event a wider question related to kinds of civil employment and is not restricted by any narrow definition. Accordingly, it is better that the orders should be varied to the formulation set out above. With that variation, the appeal should be dismissed, and the appellant should pay the respondent's costs.