* Le am tlaemes = enerenenmennatntetinnnensabinis semtieenne denne Ane nn ee mL RM ee ee ent mn nee Nt enn et ee en Pn eer ee oan rene ore ene a J pm mes — ener > = =F vy 7 "F meee eee ee CATCHWORDS SOCIAL SECURITY - Invalid pension - Applicant fit only for selected duties - Applicant previously self-employed - Relevance of capacity to perform selected duties in own business - Whether it is open to the Director General or the Administrative Appeals Tribunal to take into account work opportunities available only as a result of the use of the capital funds of an applicant for a pension - Whether regard may be had to capital funds available by loan from friends or relatives. Social Security Act 1947 ss. 23, 24. Re Panke and Director General of Social Services (1981) 4 A.L.D. 179 approved and applied. Re Cimino and Director General of Social Services (Administrative Appeals Tribunal, N 81/1332, 14 April 1982, not reported) referred to. ANNAS v DIRECTOR-GENERAL OF SOCIAL SECURITY Northrop, Morling and Wilcox JJ. Sydney 21 November 1985 nee eee \ ymrs Yew eka wap Ts PFI i pee ape rere pres te eee ee i . tat . oe IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) ) ) GENERAL DIVISTON CORAM: DATE: PLACE: No. G.124 of 1985 BETWEEN: ARTHUR ANNAS Appellant AND: DIRECTOR-GENERAL OF SOCTAL SECURITY Respondent NORTHROP, MORLING AND WILCOX JJ. 21 NOVEMBER 1985 SYDNEY MINUTE OF ORDERS THE COURT HEREBY ORDERS THAT: 1. The appeal be allowed. The judgment appealed from be set aside and in lieu thereof that the appeal to this Court from the Administrative Appeals Tribunal be allowed and the decision of the Administrative Appeals Tribunal be set aside. — on a Pr mee ee renege nett a I Ne, REAP ene Arent nr Man ery cpr en Me AR ow renriny ny *, ' er 7 hte tS ete eeertnaetntdin Zeteleriees fe MaTAmet nt ste intake a ciad tie aden ante rem te 1 ttm bela eZee aaa Rt ee et ent en aimee nin Shee nha at mann" 2. 3. The matter be remitted to the Administrative Appeals Tribunal to be héard and determined according to.law after hearing such further evidence as the Tribunal may admit. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. , % ey ts e Lotte Meweensiser T enbentniess PANEL anne Si sata = z sateen meena et pant ete it IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G.124 of 1985 GENERAL DIVISION ) BETWEEN : ARTHUR ANNAS Appellant AND: DIRECTOR-GENERAL OF . : SOCIAL SECURITY Respondent CORAM: NORTHROP, MORLING AND WILCOX JJ. DATE: 21 NOVEMBER 1985 PLACE: SYDNEY REASONS FOR JUDGMENT THE COURT: More than five years ago, on 21 July 1980, the appellant Arthur Annas applied to the Department of Social Security for the grant to him of an invalid pension pursuant to the Social Security Act 1947. Sections 23 and 24 of that Act, Which deal with the qualifications for an invalid pension, provide as follows: "23. For the purposes of this Division, a person shall be deemed to be permanently incapacitated for work if the degree of his permanent incapacity for work is not less than 85%. anninten Yo malabinimada «inal muneneenntinnnass eaten tinbn ne Rew meetin Es elle chee Ae Re ee te atte = Dad dane nt ne! Ame ee a Pi tahe tte a me cere t - - > -_ - "sy 2. 24. (1) Subject to this Act, a person above the age of 16 years who is not receiving an age pension and - {a) is permanently incapacitated for work or is permanently blind; and (b) is residing in, and is physically present in, Australia on the date on which he lodges his claim for a pension, shall he qualified to receive an invalid pension." The application was rejected, the view being taken on behalf of the respondent Director General of Social Security that the degree of Mr. Annas' incapacity "is less than that required to qualify for invalid pension". This decision was reviewed, and confirmed, by the Social Security Appeals Tribunal. Mr Annas sought review of that decision by the Administrative Appeals Tribunal. That Tribunal affirmed the decision. Mr. Annas appealed to this Court pursuant to s. 44 of the Administrative Appeals Tribunal Act 1975 contending that the learned Senior Member who, for the purpose of the case, constituted the Administrative Appeals Tribunal had erred in law. His appeal was dismissed by a judge of this Court. The appellant now appeals against that dismissal. The question which arises before us is whether the primary judge was correct in concluding that the decision of the Tribunal discloses no error of law. Thus we must consider for ourselves the correctness of that decision. ee a Pe a RD et tn - TEA aREERD Ieee emmenaemenmontemminte=areemeemenememten . nebo fat sro Vw crags ae Wee The Administrative Appeals Tribunal received considerable evidence, both oral and written, relating to the appellant's physical and psychological condition. In relation to psychological factors, the Tribunal found some history of depression but that it was established upon the probabilities that any existing anxiety depression "is minimal and controlled by medication". The Tribunal added: "I do not accept that by itself it is incapacitating nor that it adds to any appreciable extent to such incapacity as flows from such physical incapacity as he suffers." On the other hand the Tribunal did accept that the appellant suffered significant physical disabilities. The Tribunal accepted the accuracy of the reports of two medical specialists, Dr. F. Ehrlich and Dr. A. Paul. In 1981 Dr. Ehrlich had reported that the appellant: "had well established spondylotic disease which is a source of pain in the head, neck and arms." . However, he commented that: "whilst recognizing that he has sufficient spondylosis to be a source of potential difficulty, this is not severe enough in my opinion to consider him 985% disabled on surgical grounds." He went on to refer to the possibility "that his total combination of physical and psychiatric problems is such as to render him 85% disabled". But he added that "it should be recognised that from the surgical viewpoint alone he would - a ate band "eerie Sactonen adietomeeteenaiee ienaeer 7s menray ohare aeameeenimmemenat atte hese aiete eee wee ee Yt" te : , oo aie . ve . mae "* ' Ts To have major limitations in terms of employability because of the need to rest from time to time, a high likelihood of absenteeism because of acute exacerbations of neck problems, and of course, the likelihood of progression of his underlying symptoms." In April 1983, after a further examination, Dr Ehrlich reported that the applicant "is not fit for the types of duties carried out in the past" - working ina cafe anda take-away food shop - "but would be able to cope with lighter work not involving frequent stooping or heavy lifting tasks. Work permitting a variety of postures such as standing about, sitting or moving about from time to time would be particularly suitable." Dr Paul reported in 1983 that the appellant "suffers from severe degenerative changes in the cervical spine not causing nerve root irritation. This will slowly deteriorate. The percentage disability is at most 40% to 50%. If motivated he could work in a cafe." However, Dr. Paul thought that the appellant "could not continue at casual work which is usually rush hour work so there is a likelihood of future workers compensation claims and absenteeism." The Tribunal found that there "can be no doubt that Mr Annas has an orthopaedic disability which is at times troublesome, and also a stomach ulcer condition." The decision of the Tribunal concluded: ed sr ~ hae nt Re le nie Le meth cee enn Ser mete th eat I ana ne Meme SMe non waar soo nite oF Fe mete td Rm ln ne ' - 2 y "oe £ . 1 . . a net : 1 t > ' sae Tle Se oes ve ' . eerily A se ee, I = es creer a ee a Ore Rene Se ee ren 6 " iy "I accept that Mr. Annas does have the physical capacity for many kinds of work of the various kinds available in coffee shops, small surburban cafes and take-away food outlets. His evidence establishes that there would be little difficulty indeed in finding from friends and relatives the necessary finance and support to set up a business inthis field i" himself in which he could elect which of the bai aspects of its running he would carry out S5 himself. This field is one in which people of ' his ethnic origin have striven excellently with a great industry and skill (this is not a case ma like many others in: the Social Security area 'where a particular ethnic origin could work .: against a person with disabilities affecting I work). He himself has all the necessary experience over long years in Australia to engage as an employee and owner/managerial role, his command of English is excellent. His capabilities and capacities in that regard are regarded as being within the parameters set out in Dr. Ehrlich's reports and evidence, and that of Dr. Paul. They have some provisos as Dr. Ehrlich set out; and it seems that the applicant will experience pain from time to time. That pain may I believe, be regarded as " incapacitating to a certain extent at certain times. But the summation of the evidence establishes I consider, that the degree of incapacity for employment should not be regarded as 85% within the meaning that the Statutory phrase has been construed by the decisions of this Tribunal to bear. For the above reasons I consider the decision subject to review should be affirmed." 'a vot Counsel for the appellant submits that, having regard to its findings as to Mr Annas' disabilities, the Tribunal, in |: making its decision upon the issue of incapacity, ought to have applied the principles laid down in Re Panke and Director General of Social Services (1981) 4 A.L.D. 179. In that case t the Tribunal sought to state the principles governing the tr application of ss. 23 and 24 of the Social Security Act to Ae Sonn mee ee ayer cine tee mememnner eemmeneanierengraee |e gin iment epee cee ye ieee get tye Yuen uty Set ent om yee pyre meerars ee Oe en 2 Fhe ' Sta ets 54 wee tale ae anf ae beneath fen de te ett Rial lene fore mete we me anette sent in ha gst ' - eo ~, ve ET artes ee AP neem enh ae area wits ats * wae 7 niet? tae tare Ti ey ' 6. persons fit only for selected duties. The President of the Tribunal, Davies g., at p. 180 pointed out that "the Social Services Act" - as it then was - "is welfare legislation designed to supplement the income of and to provide other benefits for persons in need". He referred to the use of the phrase "incapacity for work" in workers' compensation legislation and cited passages from decisions in both the High Court of Australia and the House of Lords which indicated that, in such a context, a person suffering such a physical defect as to make his or her labour unsaleable in any reasonable market is incapacitated for work. Davies J. quoted an extract from Wicks v. Union Steamship Company of New Zealand (1933) 50 CLR 328 at Pp. 338 which included the following statement: "This condition" (ie physical incapacity for work)"is satisfied when capacity for earning has gone except for the chance of obtaining special employment of an unusual kind". Davies J. applied the workers' compensation cases in reaching the conclusion that "the term incapacity for work in the Social Services Act denotes incapacity to engage in remunerative employment, that is to say, a lack of capacity for earning". The other members of the Tribunal in Panke, Mr A.N. Hall (Senior Member) and Dr M. Glick (Member) delivered a joint decision, with which Davies J. expressed his agreement in substance. They noted the submission made to them on J petin meine inn fa mower es, - ety ee Ls rene ea oN wen ween come eae tne se a toe rm wT " | ( bessataraateenssielanients Lines Keke dined, ahadel demands Ieeentemeneataeedeenm ae tae veneer it i behalf of the applicant "that a person is wholly incapacitated for work in the relevant sense when he has a physical defect which makes his labour unsaleable in any market reasonably accessible to him" and contrasted the submission put on behalf of the Department that incapacity was independent of "impermanent factors such as the present state of the economy or of the labour market reasonably accessible to an applicant for invalid pension". The Department conceded that it was proper to have regard to the type of jobs that exist as jobs in the community and that might be suitable to be undertaken by a person in the position of the applicant but it submitted that it was irrelevant to consider whether any such job was available to the particular applicant. After referring to various judicial decisions in the area of worker's compensation law, to the history of Commonwealth legislation in respect of social services and to the relationship between the provisions of the Act relating to the payment of unemployment benefits and of invalid pensions the two members rejected the submission put on behalf of the Department. They held that regard must be had to the availability of suitable work to the particular applicant. This involved, they said at p. 195, two distinct steps - "firstly an evaluation in purely medical terms of the person's physical or mental impairment and secondly, the ascertainment of the extent to which that physical or mental impairment affects the person's ability to engage in paid work". They concluded their discussion of the relevant principles by saying at p. 195-196: is] vrooe ate, ah Mop ere ae kt wl oaty, : = a PT pe a - va ny : - - " . a aed : Catal -" L e ania -. = 4 sor wane me nina 8. "In our view, it is not enough for the purposes of s 23 of the Act, to have regard in any abstract sense, simply to "jobs that exist as jobs" in the community. The provisions of the Act with respect to unemployment benefits... indicate that when the Act refers to capacity for work, it is concerned with the capacity to undertake paid work that is suitable to be undertaken by a person. It is only aftera fair assessment of the extent of the person's physical or mental impairment and the impact which that impairment is likely to have upon his capacity to undertake suitable paid work that, in our view, a proper assessment of the degree of incapacity -:can be made. The assessment of what work is suitable to be undertaken by a person would appear to require consideration of matters such as the nature and extent of his disabilities, his capacity to sustain his work effort throughout a normal working day or week, his age, his previous work experience and the types of paid work available in the community which a person with those characteristics may reasonably be expected to be able to perform. If in a case of difficulty a medical practitioner doubts his competence to make such an assessment he will no doubt need to qualify his report in some suitable respect so that the matter can be further considered by the Director-General. The degree of incapacity will then depend upon an assessment, in each individual case, of the extent of the residual capacity for suitable work against the capacity for work which the person, absent his physical or mental impairments, might have expected to enjoy." The decision in Panke has been applied in numerous subsequent decisions of the Tribunal, which are collected in McBay_v. Director General of Social Security (Wilcox J, 15 February 1985, not reported but noted in (1985) 7 A.L.N. N.150). In one of those decisions (Re Mihailov unreported V81/109, 19 April 1982) Morling J., sitting as a Deputy President of the Tribunal, agreed with and followed Panke. pre ramen ten Hi 2 8 PR ge ae Boos, Oe . - > a =r to . <2; ae te tees hr cri 2.22 sal ee i a =, ez : be tat at mre mtn mate ee Then Rn ted Ree A tate te Lage Ae ne eae ad Pieri mine Shee SE Soocpeea me cers ary te § ros oe xh ~Ey le Soa [. SERS nrc reeernnemannineene semen > serene srempccnmeniny grmmcmantacr—oentc= nf é 7 + AOR TYInS es eee Snr eer cree ernie reer ae ere or Panke was discussed, without disapproval, by a Full Court of this Court in McDonald v Director-General of Social Security (1984) 1 F.C.R. 354 but the point at issue in that appeal was a different one: the duration of the anticipated incapacity necessary to constitute 'permanent' incapacity. The decision was referred to, again without disapproval, by Fitzgerald J in Howard v Director-General of Social Security (14 December 1983, not reported). In Khalil v Director General of Social Security (6 December 1984, not reported) Morling J. expressed agreement with the decision but the contrary was not argued. A similar situation occurred in McBay and in Adamou v. Director-General of Social Security (Wilcox J., 11 March 1985, not reported). In the present case counsel for the respondent concedes the correctness of the principles enunciated in Panke; though she disputes their application to the facts of this case. In our view this concession was well made. Panke should be regarded as reflecting a correct understanding of ss. 23 and 24 of the Act and of the appropriate process of assessing the degree of incapacity for work. Of course, like any other decision, it must be read in the light of its own facts. There may be cases in which the incapacity is so overwhelming, or so minimal, as to make the two stage process of evaluation unnecessary. But in relation to the many cases, like Panke and like the present case, where the disability is significant - in relation to work capacity - but not totally destructive of any prospect of employment, the approach suggested in that decision ought to be applied. - a ole et belt le ar ty ort "ae 10. The major issues in the present case are whether Panke is applicable to a case where an applicant for an invalid pension has a history of being self employed and has the prospect of finding the necessary capital to establish a business in which he or she may usefully be occupied and, if so, whether the course taken by the Tribunal in this case satisfied the requirements of that decision in its application to such a case. The question as to the applicability of Panke to self employed persons arises in this case because of the work history of the appellant. The appellant was aged 55 years at the time of the hearing by the Tribunal. He came to Australia from Greece in 1947. He was then aged 19 years. He had reached 4th year in high school but had received no job training. In Australia he worked in his uncle's cafe in the Sydney suburb of Liverpool, cooking and serving. When the uncle retired he went into business with his brother in a cafe nearby. The duration of this enterprise does not appear from the appeal book but it was apparently some years. The appellant actively worked in the business; in the kitchen, behind the counter, supervising the three employed staff and sharing with his brother in ordering supplies and in keeping financial records. However, in 1973 the lease expired. No renewal was available and so the business had to be closed. Mr Annas has not worked, except in various trial jobs, since that time. oe - wk ~ 4 FL . - a ae oy ie wnt Senta tale ota tt teeta ie Be ee Wie ane Sank? Boe ad ee be Renee ateapemin De Santillana we de mt marc Bin ewe ne meee we Sa , re a wore ee Tem we Roe oft Te I ARTY RR EN ERT AT, ET ay Sn ne A PO nee nn ET ee mee ee ' 11. During cross-examination the' appellant was asked about going back into his own business. He said that he could get money from friends or his brother but he thought that he could not manage the duties involved even with other people helping him. It was, no doubt, this evidence that led to the finding by the Tribunal that "there would be little difficulty indeed in finding from friends and relatives the necessary finance and support to set up a business in this field himself in which he could elect which of the aspects of its running he would carry out himself." Counsel for the appellant argues that Panke requires the Director-General, and therefore the Tribunal, in making an assessment of the working capacity of an applicant for an invalid pension, to confine himself to an applicant's prospects of paid employment. It is impermissible, he says, to have regard to any capacity to work in a business owned by an applicant and available only as a result of the use by him or her of capital funds; and the more especially if that capital is only available through the charity of friends or relatives. Counsel for the respondent, on the other hand, submits that the proper course is to take the applicant as he or she is; if, having regard to all of the applicant's attributes - including any access to capital funds - there is available work within his or her capacity, he or she should not be assessed as suffering the requisite degree of incapacity to qualify for an invalid pension. ce fa fe wa DEST ES ee Le vere ° 4 7s - ~ - + wees pree ls Ww meen re wer woe re v $ I~ In Panke the discussion in the various reasons for decision was framed interms of the availability to the applicant of paid employment. However, that was to be expected from the circumstances of that case; Mr Panke had always worked as a paid employee. The authorities referred to in those reasons, and applied to the assessment of incapacity under the Social Security Act, were decisions relating to workers compensation claims: Not unnaturally, they speak in terms of the availability of paid employment. But the Social Security Act does not limit the qualifications for an invalid pension to persons who have immediately previously engaged in paid employment. The qualification is framed simply in terms of capacity "for work". We see no reason to ignore any capacity which the applicant may have to work in his or her own business. Similarly, we see no reason to ignore any financial resources which the applicant may have and which would enable the applicant to establish, or to maintain, that business. In considering the availability of paid employment it is relevant to take into account the geographical assessibility to the applicant of suitable work. There may be cases in which a particular job will be accessible because, but only because, the applicant owns a motor vehicle. It would be artificial to require the Director General, and the Tribunal, to ignore the availability of that motor vehicle in determining whether the Vpn ees IT TET IT te on eases po wa 13. applicant had access to suitable employment. The same attitude should be taken in respect of the relevance of capital assets to suitable self-employment. The principle behind the decision in Panke is that developed in the workers compensation cases: if a worker has been left so incapacitated as to be fit only for special duties, it is imcumbent on the employer to show that such special employment is in fact available to him or her. The principle, formulated for the benefit of injured workers, requires attention to be directed to the circumstances of the particular worker. So, according to Panke, is it in relation to incapacitated applicants for the invalid pension. Attention must be concentrated upon what avenues of work there are for this particular applicant, having regard to his or her particular characteristics. Resources and limitations of intelligence, experience, training, physical capacity and personality must all be taken into account. There is no logical reason to ignore material resources. We therefore reject the submission that, in the present case, the Tribunal was required to leave out of account the possibility that the appellant might find work within his capacity by working in his own business acquired out of funds provided by him or by others on his behalf. In relation to the relevance of the fact that any finance to enable the appellant to set up in business would have to come from friends or relatives, counsel for the appellant refers to what was said in a decision of the {s - ow a tee Tat Ree RR Oe eooy Lt 2 eho trle ™ spr tts => , rye ou - we et =e - ~ .e 1 ona Es vee - Lien ia wets ey te ayy 7 Us ay oo. Woe cet alee! ne Se eo dk Se 6 tern . . - ~~. abe sansSuGhs @atead coment bysnhRasient Lohentnne aPBiete mantle ed went RE Lhe ncamteadinee Cte Macnee AN mee Santana att creme tomer arti items mere 14. ! Administrative Appeals Tribunal, Re Cimino applicant's prospects of obtaining suitable work: beneficent relation who employs a person and Director-General of Social Services (N 81/133, 14 April 1982, not reported). In that case the Senior Member constituting the Tribunal, Mr R.K. Todd, commented in relation to the "T do not think it right .. . that the matter ' should be decided against the standard of a ' : to give him work out of sympathy -or family loyalty. I have to look at the situation in the market place, that is to say in the labour market." We accept the correctness, in its context, of that comment. But we do not understand Mr Todd to have denied the relevance of evidence that a particular relation, whether out of motives of benevolence or otherwise, was prepared to employ the applicant. There was, apparently, no such evidence in that case. The learned Senior Member merely denied that it was appropriate to determine the matter upon the basis of a theoretical possibility that such work would he available. We think that a similar situation applies in relation to the possibility of finance being provided to enable an applicant to establish his or her own business in which he or she might work. Evidence that such finance is available upon terms indicating the feasibility of the applicant taking advantage of that availability and, upon the probabilities, establishing and successfully maintaining that business must be relevant to the issue of incapacity. In a particular case it may he of critical importance. But a theoretical possibility of finance, cok ah alin Woy wr eee ees Paty aay Meme ee ere meer tne ne pe meee meng ani rane 15. or a proved possibility in relation to which essential matters - such as the amount to be provided, the terms of the loan, the cost of establishing the business and the likely profitability of the business - are left unspecified, is not enough. The findings of the Tribunal in relation to the present appellant's prospects of finding work in a business owned and conducted by himself have already been quoted. The generality of the findings is, no doubt, a consequence of the fact that the evidence on this possibility was both sparse and vague. There was no evidence, and no finding, upon any of the specific matters to which we have referred. Nor was there any finding as to the scale of the envisaged business. A large business with numerous employees would maximise the opportunities of the appellant to confine himself to selected duties but it raises questions both as to the amount of capital required and the capacity of the appellant, at the time of the Tribunal hearing and ten years since he had last been involved in running a business, to cope with the demands of such a business. A small business, on the other hand, has the advantages of requiring little finance and being easier to Manage but it presents less opportunity to the appellant to confine himself to selected duties. The questions to which we have referred are not for determination by this Court. But they are matters upon which findings by the Tribunal are required before it could properly wewpe ey i ne eens we fos +4 16. be held that the appellant has a capacity for work in his own business. No such findings have been made. It follows that the Tribunal erred in law in holding that, by reason of the prospect of self-employment, the appellant is not incapacitated to the requisite degree. The appeal should be allowed, the decision of the Tribunal set aside and the matter remitted to the Tribunal to be heard and decided again. Having regard to the paucity of the evidence upon the matters to which we have referred and the time which has elapsed since the previous hearing, the re-hearing should be with such further evidence ag the Tribunal may admit. In view of the substantial delays which have already occurred in relation to this matter, we express the hope that the parties will co-operate in arranging the earliest possible date for that rehearing. By reason of an agreement to that effect made between the parties there will be no order as to the costs of the appeal to this Court or the costs of the appeal from the Tribunal. I certify that this and the fifteenr(iS ) preceding pages are a true copy of the Reasons for Judgment herein of their Honours Mr Justice Northrop, Mr Justice Morling and Mr Justice Wilcox. Associate: Yuamnae.A . He CTow' Date: Bist Aovembéer 19SS. a Sr ee mean weer cener rime Ennprenen menu reece meemaine meena sneer armrest seme mene a oe | Date of Hearing: - z ay ee - y oe . r . —— —_—— Counsel for the Applicant: Solicitors for the Applicant: Counsel for the Respondent: Solicitors for the Respondent: 17. Mr J. Maston The Australian Legal Aid Office Miss S. Ward The Australian Government Solicitor 1/11/85 oe mm mnemarmaneeme owen a ai rene Ymca Yemen g pirat ree arcs mae >