Veterans' Affairs - whether inability to undertake more than eight hours a week remunerative work due to war-caused incapacity alone.

Veterans' Entitlements Act 1986, ss.24, 24A

Solicitors for the respondent: Australian Government Solicitor

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

This is an appeal on questions of law from the Administrative Appeals Tribunal in a claim for a special rate pension under the Veterans' Entitlements Act 1986 ("the Act"). The applicant failed in his claim to such a pension at two levels: a determination of a delegate of the respondent and a subsequent affirmation of the delegate's decision by the Veterans' Review Board. He challenged the latter decision by application for review made to the Tribunal. Success was dependent upon the applicant satisfying the Tribunal that he complied, on the date of his application for the pension, with both of paragraphs (b) and (c) of s.24(1) of the Act. Those paragraphs read as follows:

"(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".

The Tribunal was not satisfied as to either paragraph. The interpretation of paragraph (c) is affected by the terms of s.24(2), but I think it unnecessary to set that out.

2. The notice of appeal asserted, in substance, that on the findings and the material incorporated in those findings, the Tribunal should, as a matter of law, have held that paragraph (c) was satisfied. There is no specific challenge in the notice of appeal to the Tribunal's conclusion as to paragraph (b).

3. In summary, the Tribunal's findings were as follows.

4. The applicant was born on 18 March 1923. He retired from the RAAF in 1980 and later took up employment with the Department of Defence. According to a letter from that Department, he retired from the Australian Public Service on 6 November 1987 on "invalidity grounds", being degeneration of the lumbar spine.

5. Apart from the spinal degeneration, which was accepted as war-caused, the applicant suffered from other disabilities, namely osteo-arthritis of the right wrist, carpal tunnel syndrome and psoriasis. These, however, did not "by themselves or in association with each other cause or effect (sic) the termination of employment in the Department of Defence".

6. Apart from working in the Department of Defence, the applicant had by 1987 sought to develop a fruit-growing enterprise on a property in excess of eight acres in area, which the applicant bought jointly with his wife in July 1981. The land has potential as a fruit-growing area and was bought to be developed into an "orchard or other fruit growing activities". The applicant has some expertise in growing fruits of various kinds.

7. However, the Tribunal held that the applicant's plans had never come to fruition and that he had not been "engaged in income producing operations which could be described as a business or remunerative work". The planting (of twenty trees of various kinds) was described as a trial planting of a wide variety of trees or a feasibility study to determine future action.

8. Although, as I have said, the applicant retired on 6 November 1987, he had the right to remain at work on sick leave until 22 February 1988. The applicant was unable to explain why he had retired earlier than necessary; he had accumulated enough sick leave credits to stay longer. It appeared from the evidence that the date of retirement was fixed by agreement. As to the reason for the early retirement, the Tribunal was prepared to infer that "the applicant consented to his retirement on invalidity grounds for reasons which included his satisfaction with the financial arrangements". The Tribunal found that the applicant retired when he did, not by reason alone of the accepted disability - the spinal disease - but also because of other factors including, as I understand the reasons, that state of satisfaction.

9. The Tribunal was not satisfied that the applicant suffered a loss of salary or earnings because he was, at the date of application for the special rate pension (15 March 1988), "virtually 65 years of age which is the generally accepted retirement age". The Tribunal was unwilling to "assume a further hypothetical employment prevented by the war-caused disability": it was, I understand, not satisfied that the applicant would have sought part-time clerical work.

10. In Repatriation Commission v Braund (unreported, 4 September 1991), I discussed the interpretation which should be placed upon the relevant provisions. I will not repeat the discussion of the decisions of the Full Court which is to be found there, but draw attention to one point. This is that the Full Court has emphasised consideration of the age of the applicant as being important, when deciding a claim under the provisions in question in the present case. The Tribunal has not referred to these authorities, but has rightly treated the circumstance that the application for the special rate pension was made just before the applicant reached the age of 65 as a most material point. I should add that, as pointed out in Braund, there appears to be some difference of view as to the date upon which eligibility for pension at the special rate should be determined. Here, no question was raised as to the correctness of the course followed by the Tribunal, namely to consider eligibility at the date of the application for the pension.

11. To apply paragraphs (b) and (c) set out above to the present case, and to put the matter broadly, the applicant had to show that his spinal disease rendered him incapable of undertaking remunerative work for more than eight hours a week and prevented him from continuing to undertake remunerative work that he was undertaking and that, by reason thereof, he suffered a loss of earnings. Before the Tribunal, the applicant had relied upon two contentions to avoid adverse findings on these issues. The first was that he would have undertaken part-time work after retirement. The Tribunal, as it appears to me, did not accept that and the notice of appeal did not challenge what the Tribunal said on the point. The second is the basis of the appeal, the incipient orchard; the critical finding, in my view, is in a passage in paragraph 16 of the reasons terminating with the sentence:

"It is merely hypothetical as to whether the applicant would have

progressed to the point where the fruit growing activity could have come

(sic) remunerative in the relevant sense".

Although the Tribunal does not use the precise language of paragraph (c) ("is ... suffering a loss of salary or wages, or of earnings on his ... own account"), I take the finding to be inconsistent with the notion that there was such a loss shown at the relevant date, 15 March 1988. Indeed, the finding seems inconsistent with the idea that it was shown that such a loss of earnings as an orchardist would have been likely to accrue at any time.

12. It does not appear to me arguable that there is any error of law involved in making these findings. They were factual questions and it was the Tribunal's task to weigh the evidence and make its own assessment of the probabilities.

13. I should add that it may seem an oddity that if this applicant had succeeded in establishing the existence of the conditions in paragraph (b) and (c) at the date of application - only a few days before he turned 65 - he would have been entitled under s.24A(c) to continue to receive the special rate of pension unless he undertook or was capable of undertaking remunerative work for periods aggregating more than eight hours per week. To this extent, there is now a degree of incompleteness in the statement of the Tribunal that:

"Parliament intended sections 23 and 24 to assist veterans who suffered

relevant economic loss during the course of their working life and not

after they reached the generally accepted retirement age".

Accepting that this was originally the intention, it must have changed sharply in 1987, when s.24A was added; that section can produce the result that an elderly veteran who establishes an initial entitlement by showing the necessary conditions, including a loss of earnings, can continue to receive the special rate, perhaps for many years, after the loss of earnings has ceased. However, no question arises here as to the continuation of an initial entitlement; the Tribunal, correctly in my view, considered the matter as at the date of the application.

14. It was suggested before this Court that decisions in the tax field could assist in solving the problems with which the Tribunal was confronted. I think otherwise but, in deference to the argument, some reference should be made to these authorities.

15. The income tax problems arising from conduct of a cattle business at a preliminary stage were discussed by the Full Court in Ferguson v Federal Commissioner of Taxation [1979] FCA 29; (1979) 26 ALR 307. There, the question was whether a small-scale cattle breeding business at an early stage could produce outgoings deductible under s.51(1) of the Income Tax Assessment Act 1936. The Full Court pointed out that one may be, in truth, carrying on a business in a particular year although there is no immediate purpose of profit-making in that year (311). Businesses may go through phases, perhaps long periods, in which nothing but losses is produced. This, however, has little to do with the present applicant's problem. It was not enough for him to show that his activities amounted to a business; that is not the test which the relevant paragraphs of the statute lay down, and even if one were to equate the concept of being in business with that of "undertaking remunerative work", the applicant had to show that, at the relevant time, he was suffering a loss of earnings, and that he failed to do. For similar reasons, the discussion of the expression of "carrying on a business" in Hope v The Council of the City of Bathurst [1980] HCA 16; (1980) 144 CLR 1 is, in my view, of no present assistance. It appears to me to be unnecessary in the present case to discuss whether, and in what circumstances, carrying on a loss-making business should be held to be "undertaking remunerative work" for the purposes of s.24 of the Act.

16. Counsel submitted that it would be desirable to obtain an expression of view as to the general effect of ss.23 and 24 of the Act in cases of this kind. I am reluctant to do so because it appears to me desirable to follow the traditional path of dealing with the law only so far as is necessary to dispose of the particular case before the Court, but it is desirable to make mention of two contentions put forward on behalf of the respondent.

17. Mr Logan of counsel suggested that s.24 should be construed as requiring that the veteran must show that he or she has been prevented from earning a "living" by the incapacity. The provision does not say that, nor is it possible to read into it such a substantial limitation. It is true that in the absence of the limitation, some anomalous results follow, but they are inherent in the working of the section as passed by Parliament. As I read s.24, to qualify under it a veteran does not have to show that he has lost a "living", but merely that he has lost salary, wages or earnings. Applying the provision in this fashion can considerably over-compensate a veteran who falls within the section's scope, as compared with other veterans who do not so fall: the extra pension paid may considerably exceed the actual earnings lost. But that seems necessarily to follow from the language used.

18. Mr Logan also said there needs to be not merely a loss of salary, wages or earnings, but a substantial loss, and relied on Starcevich v Repatriation Commission (1987) 18 FCR 221 at 225, 226. The word "substantial" is used in the judgment of Fox J. and it is not clear to me that Jenkinson J., who agreed generally with his Honour's reasons, is to be taken as accepting that qualification. The better view appears to be that the extent to which the section should be read down so as to exclude from its scope insubstantial or trivial losses, in order to avoid absurdity, is still an open one, and it is unnecessary to determine it in this case. I feel obliged to add, however, that this 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.