Administrative Law - review of decision of AAT - error of law - AAT not bound by rules of evidence - in what circumstances wrongful rejection of evidence amounts to error of law.

Evidence - evidence in AAT proceedings - rejection of uncontested evidence without any adverse findings concerning credibility - rejection of best evidence - rejection of "uncorroborated" evidence - no rule of law requiring corroboration.

Words and Phrases - "discount" - "discount" of evidence.

Counsel and Solicitors Mr A. Emmett QC with Ms R.M. Henderson

Solicitor

Counsel and Solicitors Mr A. McInnes QC with for Respondent:

Vary the orders made by Einfeld J. by setting aside orders 2 and 3; in lieu thereof order that the matter be remitted to the Tribunal to be determined in accordance with law.

Otherwise, the appeal is dismissed, with costs.

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

The Repatriation Commission ("the Commission"), appeals from orders made by a judge of this Court setting aside a decision of the Administrative Appeals Tribunal ("the Tribunal") and remitting the matter to the Tribunal for further determination. In its decision, the Tribunal affirmed a decision of the Veterans' Review Board refusing to determine that the respondent, Alfred Torrens Maley, was entitled to a special rate of pension as provided by s. 24(1) of the Veterans' Entitlement Act 1986 ("the Act").

"(1) This section applies to a veteran, other

than a veteran to whom section 25 applies,

if -

(a) there is in force in respect of the

veteran a determination under this

Act determining that the degree of

incapacity of the veteran from war-

caused injury or war-caused disease,

or both, is 100 per centum;

(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."

3. Section 24 specifies three qualifying criteria which may be shortly described as (1) receipt of 100 per cent general rate pension; (2) total and permanent incapacity; (3) economic loss. Only the third criterion (s. 24(1)(c)) is in contention here (see Repatriation Commission v Smith (1987) 15 FCR 327 at 329).

4. By s. 24A(1) of the Act, inserted in 1987, it is relevantly provided that where the Commonwealth is or becomes liable to pay a pension at the rate applicable under s. 24, that rate continues, while a pension continues to be payable to the veteran, to apply to the veteran unless the veteran is undertaking or is capable of undertaking remunerative work for periods aggregating more than eight hours per week.

5. Mr Maley, who was born on 10 September 1919, served in the Australian Army from 7 November 1939 to 13 December 1945, including service overseas, which was classified as operational service under the Act. In August 1975, it was determined that Mr Maley was entitled to a war pension at 10 per cent of the general rate in respect of an incapacity from war-caused injury or disease, or both. In September 1979, it was determined that Mr Maley's pension be increased to 40 per cent of the general rate. In January 1981 this was increased to 70 per cent. In May 1986, Mr Maley applied for an increase in his disability pension assessment. In September, 1986 his pension was increased to 80 per cent of the general rate.

6. In October 1986, Mr Maley appealed to the Veterans' Review Board ("the Board"). In August 1987, the Board assessed his pension at 100 per cent with effect from May 1986. The Board also rejected Mr Maley's claim for a special rate pension.

7. Mr Maley appealed to the Tribunal against this. In November 1988, the Tribunal affirmed the Board's decision.

8. Mr Maley then appealed to a judge of this Court on a question of law under s. 44 of the Administrative Appeals Tribunal Act 1975. As has been noted, his appeal was allowed. The Commission now appeals from this judgment.

9. Before the Tribunal Mr Maley said that in 1935, he joined Tubemakers of Australia Pty Limited and worked with that company until he joined the Army in November 1939. On his discharge from the Army in December 1945, he resumed his employment with Tubemakers. With the exception of a period of about 20 months in around 1969, when he was unable to work because of a nervous condition induced by his war injuries, Mr Maley remained in the employment of Tubemakers as an executive until his retirement in September 1979 at the age of 60.

10. At the time of his retirement, in circumstances to be explained shortly, Mr Maley was marketing manager of the company's steel pipe division. His evidence was that he retired before the normal retiring age of 65 because of his war-caused nervous condition.

11. At that time, Mr Maley had the following disabilities which had been accepted as being war-caused: 1. Anxiety state; 2. Tinea pedis; 3. Dermatitis; 4. Left bunion and metatarsalgia; 5. Cerebrovascular disease.

12. In 1978, a carcinoma of Mr Maley's larynx was diagnosed. It appears that this was not war-caused. In July 1980, an operation was performed on the larynx. Pathology showed no residual tumour.

13. The circumstances of his retirement were explained to the Tribunal as follows. On 21 August 1979, Mr Maley wrote to Tubemakers stating that his health had deteriorated and requested the company's approval to his early retirement on the grounds of ill-health. He enclosed a report from his medical practitioner, who advised that Mr Maley cease to work "in the interests of health and safety" on "the grounds of ill health including vaso vagal syncope". There was evidence that Mr Maley's symptoms including having dizzy spells and bad tremors in both hands making it difficult to write. By letter dated 23 August 1979, the company granted Mr Maley permission to retire on the grounds of ill-health.

14. As has been said, at the time of his retirement, Mr Maley was marketing manager of Tubemakers' steel pipe division. In his evidence before the Tribunal, Mr Maley explained that this involved the "review of market manufacturing range; review of plant and equipment; price structure; marketing and distribution; and product development". Mr Maley also gave evidence that, on his retirement, he did a little part-time consulting work for a firm, Illawarra Engineering, the proprietor of which, Mr Jim Beattie, Mr Maley had known for some time. This retainer effectively terminated on the death of Mr Beattie in July 1986. On behalf of Mr Maley, a case was sought to be made before the Tribunal that, apart from his consultancy with Illawarra Engineering, Tubemakers may have retained him as a consultant after his retirement. In this connection, there was placed before the Tribunal a letter from Tubemakers dated 4 October 1988 addressed to the solicitors for Mr Maley, in which the Managing Director, Mr A.B. Daniels, stated:

"Following our phone conversation of last week,

I enclose extracts from our Staff Policy Manual

that we discussed.

You will note that from February 1985 our

retirement age was reduced to 62. Before that

date the retirement age was 65, as per item 1.1

on the July 1982 issue. You will also note

under item 2.1, there is a paragraph on

extension of service which refers to the fact

that the Managing Director may grant an

extension of service in exceptional

circumstances. Despite the availability of this

clause, exceptional is really the operative

word, and I would have to say that it was most

unlikely that the Company would have retained

Mr Maley beyond the normal retirement age as a

full time employee.

It is more possible that Mr Maley could have

been retained as a consultant for specific

projects. He had particular knowledge in the

area of steel fittings and, over a period, we

have retained outside consultants and have done

specific studies on our position in this

business over recent years. It is my

understanding that Mr Maley did some consulting

work for one of our suppliers, Illawarra

Engineering, although I do not know the time

period involved.

We do have precedence (sic) in Tubemakers where

we retain retired employees for consulting work in

areas where they have particular knowlegde.

If you ask me to put a degree on the likelihood

of such an occurrence with Mr Maley, I can only

say it would have been possible, but if that is

of assistance to you, I would be prepared to

give a statement to the above effect."

15. There was further tendered on behalf of Mr Maley another letter, which was also written to his solicitors, which, for reasons to be given shortly, is now contentious. The letter was as follows:

"26th April, 1988

JTD:BJE

Mr J.T. Davies

c/- Tubemakers of Australia Limited

P.O. Box 156B,

NEWCASTLE NSW 2300

Dear Mr Roberts,

RE: ALFRED TORRENS MALEY (Tony Maley)

With regard to your letter of 6th April 1988,

and our subsequent telephone conversation of the

20th April, I would like to make the following

points.

1. I have known Mr Maley both during his

employment with Tubemakers and have

continued to be acquainted with him since

his retirement.

2. Tubemakers developed during Tony's period

of employment a relationship with Mr Jim

Beattie (owner of Illawarra Engineering -

Peakhurst Sydney). The relationship saw

the development of a number of new

products which Illawarra Engineering

manufactured under subcontract to

Tubemakers. My understanding has always

been that after Tony's retirement with

Tubemakers he maintained a relationship

with Jim Beattie.

3. During the period since Tony's retirement

from Tubemakers, the Fittings operation

has from time to time employed retired

staff members as consultants for specific

projects. Had Tony's health been better,

we may have approached him, if a

consulting job requiring his particular

business acumen arisen. Our understanding

has been since his retirement however,

that Tony's health was too poor to allow

him to participate in any work.

I hope this note helps to clarify the questions

raised by yourself.

Yours sincerely,

(Signed)

J.T. DAVIES"

16. Before the Tribunal, evidence was called, on behalf of Mr Maley, from Mrs Berenice Felicia Jensen, the General Manager of Illawarra Engineering from 1980 to 1986. She confirmed that in about 1980 Mr Beattie offered Mr Maley some consulting work. She said that Mr Maley could not commit himself to permanent employment as a consultant, but would be available for limited periods. She said that Mr Maley informed her that she "could phone him at any time if there was anything he could do, but not as an employee."

17. The relevant reasoning of the Tribunal, in affirming the decision of the Veteran's Review Board, was as follows:

"5. The veteran put into evidence (on) appeal

(a) letter from Tubemakers. This shows

that when the veteran decided to retire,

the normal retirement age in the company

was 65. The letter says that it is

possible that after his retirement, Mr

Maley could have been retained as a

consultant for specific project projects

as he had special knowledge in the area of

steel fittings. As to the likelihood of

such an occurrence with Mr Maley, all

that could be said was that it would have

been possible ...

6. Another letter from a Mr Davies, C/-

Tubemakers repeats that the company may

have approached the veteran for consulting

work but believed his health would not

have permitted the work.

7. I am not reasonably satisfied that the

official letter from Tubemakers

establishes satisfactorily the

availability for the veteran of

consultancy work for the company. There

was no more than a possibility which, in

the event, did not become anything more.

In the absence of any evidence as to who

Mr Davies, C/- Tubemakers is, I discount

his letter (emphasis added).

8. The veteran testified that after his

retirement, he encouraged Illawarra

Engineering Co., which was owned and run

by a friend, a Mr J. Beattie, to enter

into the manufacture of steel fittings;

the veteran worked as an unpaid consultant

about one morning each week at this

company. In 1983 or 1984, Mr Beattie

offered him paid employment as a marketing

and sale representative interstate but the

veteran turned down the offer because of

his war-caused disabilities.

9. This is the only real evidence of

availability to the veteran since his

retirement of the kind of work referred to

in S. 24(c) of the Act. The evidence is

uncorroborated as Mr Beattie died in 1986

and the veteran's association with the

company then ceased. In the absence of

corroboration, I am not prepared to accept

this evidence as demonstrating compliance

with S. 24(1)(c) (emphasis added).

10. I believe on the balance of probabilities

that when the veteran retired in 1979, it

was not his war-caused disabilities alone

which prevented him from continuing to

undertake the remunerative work he had

been undertaking. I am not reasonably

satisfied that leaving his war-caused

disabilities to the side, he wanted to

work on nor am I reasonably satisfied that

had he had the motivation to do so, he

could have attracted an employer. He

retained an interest in one aspect of the

work he had been engaged upon and was

prepared without remuneration to assist a

friend to get into it but this is where

the matter rested. The applicant fails

therefore to meet S. 24(1)(c) of the Act."

18. The primary Judge said that, in this Court, the principal matters of law agitated on the appeal from the Tribunal were:

"1. The discounting of Mr Davies' letter and

of the evidence of the availability of

work for the applicant at Tubemakers.

2. The rejection of the evidence concerning

work at Illawarra Engineering because of

the lack of corroboration.

3. The failure to take any account of the

evidence of a Mrs B.F. Jensen as such

corroboration."

19. In respect of Mr Davies' letter, the judge said:

"I cannot accept that the Tribunal's treatment

of Mr Davies' letter was correct. The applicant

was not asked in evidence who Mr Davies was, the

matter was apparently not raised in address, and

it was nowhere suggested that this evidence,

produced by the applicant, was other than

genuine. The letter itself was apparently not

only admitted into evidence without either

objection to relevance or other inadmissibility,

but without any indication of the fatuity of the

exercise. It was consistent with if not

corroborated by the letter on the Tubemakers'

letterhead of 4 October 1988. No ground is

identified in the Tribunal's determination, by

the respondent in this Court or by any other

fact or circumstances as to why it should not be

treated as probative and credible evidence of

the statements embodied in it. There was and is

no attack on the applicant's credibility in this

regard and the Tribunal did not reject the

applicant's evidence on this subject.

Furthermore, the Tribunal's conclusion that the

Tubemakers' letter did not establish

satisfactorily the availability of work for the

applicant because it only raised the work as a

possibility was, in my opinion, not available.

No employer asked some years later whether

another person would certainly or probably have

been employed some years earlier if he had not

had, as they presumably knew he did have,

various medical conditions which in fact

disabled him from working, could truthfully

answer in anything more than possibilities. To

dismiss the letter, and to reject its probative

weight when taken with Mr Davies' letter of 5

months earlier, without more, seems to me to

have been a significant legal error. Contrary

to the position in Cavell v Repatriation

Commission (1988) 9 AAR 534, this was crucial to

the Tribunal's decision."

20. With respect to the evidence concerning Illawarra Engineering, the judge said:

"On the question of corroboration of the

employment opportunities at Illawarra

Engineering, the first point to make is that

there is no rule of law, and section 24(1)(c) of

the Act does not demand or imply, that evidence

in a case such as this requires corroboration.

In any event corroboration could only be

required for something in doubt, and only then

if corroboration might be expected to be

forthcoming from a readily available source.

Again no reasons were given by the Tribunal for

rejecting this evidence without corroboration.

Mr Beattie was of course dead. But Mrs B.F.

Jensen, Mr Beattie's general manager and close

business confidante between 1978 and 1986, who

had been employed at Illawarra Engineering since

1958, did give evidence. Her testimony was that

the applicant often helped the company with

expertise after his retirement from Tubemakers,

especially when Mr Beattie was overseas. He

held himself available for advice and

consultation but he could not commit himself to

the regular hours of employment or a consultancy

because of his illnesses and incapacity. Mrs

Jensen said in cross examination that Mr Beattie

would have been 'very keen' to have the

applicant as his 'right hand' man if he had been

available.

On its face this evidence represented powerful

corroboration of the applicant's evidence albeit

that it is not literally corroborative of the

position precisely at the relevant date. The

Tribunal did not disavow or disbelieve this

evidence; it did not even mention it. In my

view, it is a clear error of law that this

evidence was not taken into consideration,

especially as it would manifestly qualify to

fill the gap which the Tribunal felt existed."

21. At first instance, it was argued on behalf of the Commission, that even if a favourable assessment of the availability of work should have been made, it would not have altered the Tribunal's decision. The judge rejected the submission, saying:

"It was not put to the applicant in

cross-examination that he had no motivation or desire

to work whether by reason of his war-caused

disabilities or otherwise. The applicant was

diagnosed as early as 1946, or even earlier, as

having a service-related anxiety state. It was

not put that any problems with his motivation

may have been a consequence of this condition.

There was no evidence that he could not have

attracted an employer even if he had been

motivated to do so. In fact, the evidence of Mr

Daniels, Mr Davies and Mrs Jensen, as well as

the applicant, would all have had to be rejected

to make such a finding. The Tribunal did not

reject that evidence or refrained from saying

that it did. If it had rejected the evidence,

it would have been obliged to expose its

reasoning for doing so. This in turn would have

been examinable for any error of law manifested.

Decisions of the Tribunal cannot be upheld in

the face of silence on such crucial matters."

22. As has been said, the judge set aside the Tribunal's decision and remitted the matter to the Tribunal for determination.

23. In respect of the three principal matters relied on by the judge, it is now submitted, on behalf of the Commission, that provided there was evidence before the Tribunal which could support its conclusions on the facts, this Court should not interfere, because the Court had no jurisdiction under s. 44(1) of the Administrative Appeals Tribunal Act except on a question of law.

24. It is clear that this Court cannot review a matter of fact on appeal from the Tribunal unless the finding is vitiated by an error of law (see Waterford v The Commonwealth of Australia [1987] HCA 25; (1987) 163 CLR 54 per Brennan J. at 77). Brennan J. there went on to say (at 77):

"The error of law which an appellant must rely

on to succeed must arise on the facts as the

A.A.T. has found them to be or it must vitiate

the findings made or it must have led the A.A.T.

to omit to make a finding it was legally

required to make. There is no error of law

simply in making a wrong finding of fact."

25. See also Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 per Mason C.J. at p 356.

26. We turn first to the rejection of Mr Davies' letter.

27. It will be recalled that the Tribunal stated that in the absence of any evidence "as to who Mr Davies, C/- Tubemakers (was)", the Tribunal discounted the letter.

28. One of the dictionary meanings of "discount" is "to leave out of account; disregard" (Macquarie Dictionary). It appears that the Tribunal was using the word in that sense. That is, the Tribunal concluded that there was no evidence indicating any relevant association between Mr Davies and Tubemakers; it followed, the Tribunal thought, that Mr Davies' opinion, expressed in his letter, should not be taken into account.

29. The Tribunal is not bound by the rules of evidence (Administrative Appeals Tribunal Act, s. 33(1)(c)) and may inform itself on any matter in such manner as it thinks fit (see Repatriation Commission v Smith (1987) 15 FCR 327 at 335; see the discussion by Enid Campbell, "Principles of Evidence and Administrative Tribunals" in E. Campbell and L. Waller (eds), Well and Truly Tried: Essays in Honour of Sir Richard Eggleston (1982) at 36-7, 70-1, 80; see also Margaret Allars "Neutrality, The Judicial Paradigm and Tribunal Procedure" in C. Phegan and P. Loughlan (Eds), The Sydney Centenary Essays in Law (1991) at 171).

30. In Bond, above, Mason C.J. discussed errors of law made by an administrative tribunal where there is no evidence or other material to justify the making of the decision (a reference, in that case, to s. 5(1)(f) of the Administrative Decisions (Judicial Review) Act (1977)).

"The question whether there is any evidence of a

particular fact is a question of law: ...

Likewise, the question whether a particular

inference can be drawn from facts found or

agreed is a question of law: ... This is

because, before the inference is drawn, there is

the preliminary question whether the evidence

reasonably admits of different conclusions: ...

So, in the context of judicial review, it has

been accepted that the making of findings and

the drawing of inferences in the absence of

evidence is an error of law: ...

But it is said that '(t)here is no error of law

simply in making a wrong finding of fact':

Waterford v The Commonwealth ..., per Brennan J.

Similarly, Menzies J. observed in Reg. v

District Court; Ex parte White ...:

'Even if the reasoning whereby the

Court reached its conclusion of fact

were demonstrably unsound, this

would not amount to an error of law

on the face of the record. To

establish some faulty (e.g.

illogical) inference of fact would

not disclose an error of law.'

Thus, at common law, according to the Australian

authorities, want of logic is not synonymous

with error of law. So long as there is some

basis for an inference - in other words, the

particular inference is reasonably open - even

if that inference appears to have been drawn as

a result of illogical reasoning, there is no

place for judicial review because no error of

law has taken place."

32. In the present context, the Tribunal found that there was no evidence or other material which indicated any connection between Mr Davies and Tubemakers. With respect, we cannot agree with this finding. It will be recalled that, in the letter, it was stated that Mr Davies was "c/- Tubemakers" (para. 7). This is at least some evidence of, or material which indicates, an association between him and the company. Of course, the letter did not stand alone, but it should have been considered together with other evidence in the light of which, had the Tribunal chosen to do so, it could have been considered persuasive. A finding of no evidence in this respect was in our opinion, an error of law.

33. As was pointed out in Smith, above (at 335), the fact that the Tribunal fell into any error of law does not mean that its decision was necessarily wrong. In considering, on the requisite statutory assumptions, the prospects of employment of Mr Maley by Tubemakers after attaining the normal retiring age, it would be logical to take into account the views of the management of that company as the best evidence available on this issue. There is at least some material in Mr Davies' letter which would tend to suggest that, if he had not suffered his war injuries, Mr Maley would have been able to undertake remunerative work as a consultant with Tubemakers after he had attained the normal retiring age. This material was relevant, indeed potentially important. In our view, the failure of the Tribunal to consider it at all means that, on this ground alone, the Tribunal's decision should be set aside. However, since other matters were fully argued, we will consider them also.

The rejection of the evidence of Mr Jensen and the question of "corroboration" of the evidence with respect to Illawarra Engineering.

34. It will be recalled that the Tribunal rejected the evidence of the witnesses called with respect to the prospects of Mr Maley's obtaining employment with Illawarra Engineering. This was done on the footing that the material was not the subject of "corroboration", Mr Beattie having died.

35. With respect, this also involved an error of law on the part of the Tribunal. There is no rule of law requiring corroboration in this context. Mr Maley was not mounting a claim against the estate of his deceased friend. As has been said, the Tribunal was not bound by the rules of evidence. Mr Maley and Mrs Jensen both gave evidence on the point, but the Tribunal appears to have thought that this material must be rejected because, in the absence of Mr Beattie, the evidence was not "corroborated". There is no legal rule to this effect, and no requirement of natural justice that this should follow. It was open to the Tribunal to inform itself by reference to what Mr Maley and Mrs Jensen said on the point. Instead, the Tribunal appears to have treated itself as constrained not to take their evidence into account because Mr Beattie could not be called. In our view, this was wrong in law. Again, this material was potentially important on the ultimate issue to be decided by the Tribunal. It constitutes another reason why, in our opinion, the Tribunal's decision must be set aside. It should be added that, if corroboration had been requisite, it could in reality have been found in the evidence of Mrs Jensen and the letters from the Managing Director of Tubemakers and from Mr Davies. Corroboration of evidence need not take the form of duplication of it by the evidence of another witness.

36. On behalf of the Commission, it was submitted to us that regard should be had to evidence before the Tribunal which, it was said, indicated a present lack of motivation to work on the part of Mr Maley.

37. In our opinion, the submission is without substance. It may be accepted that, given his war-caused injuries, Mr Maley now suffers from a lack of motivation to work. This is why he retired prematurely. But this circumstance could hardly assist the Commission here. For the purposes of s. 24(1) it is necessary to inquire, inter alia, into the hypothetical position which would have obtained if Mr Maley had not suffered his war injuries and had retired at the time when, in that case, he would have retired. He claims he would have worked to age 65 and would then have continued to do consulting work for his former employer and, as well, or alternatively, for Illawarra Engineering until Mr Beattie's death. It is no answer to his claim to point to the difficulties he has now encountered in keeping or obtaining employment because of his war injuries (cf. Defence Force Retirement and Death Benefits Authority v House [1989] FCA 516; (1989) 22 FCR 138 at 143).

38. In the result the appeal must fail on the merits. However, a question has arisen as to the form of certain of the orders made by the primary judge which were relevantly as follows:

"1. Decision of Administrative Appeals

Tribunal of 3 November 1988 set aside.

2. Claim remitted to Administrative Appeals

Tribunal for determination in accordance

with reasons for judgment.

3. Any necessary full rehearing to be

conducted by another member of Tribunal."

39. It is possible, although not likely, that order 2 could be misunderstood as a direction to the Tribunal to make certain findings. To remove any doubt, we will vary this order so as to provide that the matter is remitted to the Tribunal to be determined in accordance with law. Order 3 is, in our view, not necessary (see Northern NSW FM Pty. Limited v Australian Broadcasting Tribunal (1990) 26 FCR 39).

40. Subject to these variations, the appeal will be dismissed, with costs.