CATCHWORDS APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL - Invalid Pension ~ permanent incapacity for work - training courses available to applicant - effect of courses on capacity for work - no opportunity to raise issue of further training during hearing Social Security Act 1947 (Cth) ss.23, 24 ALI ERSOY v. THE SECRETARY TO THE DEPARTMENT OF SOCIAL SECURITY NSW G113 of 1987 Davies J. 27 October 1987 Sydney. 27 OCT 1987 FEDERAL COURT OF AUSTRALIA PRINCIPAL BN \. AgaisTR: IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G113 of 1987 GENERAL DIVISION On Appeal from the General Administrative Division of the Administrative Appeals Tribunal BETWEEN: ALI ERSOY Applicant AND: THE SECRETARY TO THE DEPARTMENT OF SOCIAL SECURITY Respondent CORAM: Davies J. DATE: 27 October 1987 PLACE: Sydney MINUTES OF ORDER THE COURT ORDERS THAT:- The appeal be dismissed. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G113 of 1987 ~eewrwr we GENERAL DIVISION On Appeal from the General Administrative Division of the Administrative Appeals Tribunal — BETWEEN: ALI ERSOY Applicant THE SECRETARY TO THE DEPARTMENT OF SOCIAL SECURITY lz z iw] Respondent CORAM: Davies J. DATE: 27 October 1987 PLACE: Sydney REASONS FOR JUDGMENT This is an appeal from a decision of the Administrative Appeals Tribunal which, by majority, affirmed a decision of a delegate of the Secretary to the Department of Social Security refusing to grant to the applicant, Mr Ali Ersoy, an invalid pension. The appeal raises points of law only. The relevant provisions of the Social Security Act 1947 (Cth), which have since been amended by Act No. 88 of 1987, provided:- "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 eighty five per centum. 24.(1) Subject to this Act, a person above the age of sixteen years who is not receiving an age pension and - (a) 1S permanently incapacitated for work or is permanently blind; and (b) as residing in, and is physically present in, Australia on the date on which he lodges his claim for a pension, shall be qualified to receive an invalid pension." In Annas v. Director-General of Social Security (1985) 8 F.C.R. 49, Northrop, Morling and Wilcox JJ. approved the approach to the legislation which had been enunciated in Re Panke and Director-General of Social Services (1981) 4 A.L.D. 179. At pp.52-53, their Honours said, inter alia:- "In that case the Tribunal sought to state the principles governing the application of ss 23 and 24 of the Social Security Act 1947 to persons fit only for selected duties. The President of the Tribunal, Davies J, at 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 1S¢ incapacitated for work. Davies J. quoted an extract from Wicks v. Union Steamship Company of New Zealand (1933) 50 CLR 328 at 338 which included the following statement: 'This condition' (that 1s, 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 1947 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 AN 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 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 types 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 workers' 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 195, two distinct steps: 'first 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 195-196: 'In our view, it 1s 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 1s suitable to be undertaken by a person. It 1s only after a 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 1s suitable to be undertaken by a person would appear to require consideration of matters such as the natures 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 avartlable 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.' Their Honours further said at p.53:- "There may be cases in which the incapacity 1s 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 1s 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." It 1s not necessary that the incapacity for work be total. At least 85 per cent incapacity 1s sufficient. As the Administrative Appeals Tribunal said in Re Howard and Director-General of Social Services (1983) 5 A.L.N. N178:- "Decisions of the Tribunal have endeavoured to make 1t clear that the '85 per cent' to which s 23 refers 1S not a degree of orthopaedic disability. Section 23 is an ameliorating provision, that is to say, it enables the grant of a pension to a person who, for practical purposes, 1S permanently incapacitated for work notwithstanding that that person may be able to obtain some part-time remunerated employment." In McDonald v. Director-General of Social Security (1984) 1 F.C.R. 354 at p.360, Woodward J. said:- "I assume without deciding (because the matter was not argued before us) that this [s.23] means that a person who is able to work part-time or irregularly and so earn more than fifteen per cent of a prescribed wage 1s not entitled to an invalid pension." Thus, a small capacity for remunerated work, as on an occasional or intermittent basis, will not preclude the grant of an invalid pension. The requirement that the incapacity be permanent was considered in McDonald v. Director-General of Social Security, cited above. At p.360, Woodward J. said:- "The vital contrast between temporary and permanent incapacity must be based upon an assessment of future prospects at the time the decision 1s made. It is not inconsistent with the notion of permanent incapacity that the pensioner's position should be reviewed from time to time. Unexpected improvement in the person's condition, advances in medical science, the achievement of fresh skills, or even changes in the labour market, could bring to an end an incapacity which had been thought to be permanent. In my view the true test of a permanent, as distinct from temporary, incapacity is whether in the light of the available evidence, it is more likely than not that the incapacity will persist in the foreseeable future. (Cf. Re Tiknaz and Director-General of Social Services (1981) 4 A.L.N. No.19.) This test involves two questions. The first 1s whether 1t is more likely than not that the disability will terminate (or fall below eighty-five per cent in the sense referred to above) at some time in the future. Even if the answer to this question is 'Yes', I think it would be inaccurate in the context of employment to describe as 'temporary' a condition which was likely to last for a number of years. Hence the two elements of degree of likelihood of improvement and time-span for that improvement, should be weighed together in determining what is permanent and what 1s temporary. The greater the likelihood of substantial improvement and the earlier that it is likely to occur, the more accurate will be a 'temporary' label. The longer the period and the less probable the improvement, the more appropriate will be a finding of permanent incapacity. I do not regard what I have just said as conflicting in any way with the passage from Panke's case (see above), quoted by the AAT. The choice 1s indeed between incapacities 'likely to last indefinitely' - meaning for a long and indeterminate time but not necessarily forever - and incapacities 'likely to last only for a time' - meaning a time which 1s predictable and capable of being quantified, though not necessarily with any precision." At p.365 Northrop J. expressed agreement with these views as did Jenkinson J. at p.368. In their reasons for decision, the majority of the A . 2» Administrative Appeals Tribunal referred to these principles. No passage in their reasons has been pointed out as containing an error. The applicant 1s a man of Turkish extraction and upbringing who migrated to Australia in 1975 at the age of 27. At the time of the hearing before the Tribunal the applicant was 38 years of age. In 1976, when employed by Australian Glass Manufacturers, the applicant suffered an injury to his lower back when he was required to lift a heavy pallet. An examination established that the L5-Sl disc was ruptured. Since that time the applicant has been under regular treatment by Dr J. Bannister, an orthopaedic surgeon. The applicant has suffered chronic or persistent pain as a result of his back condition. The majority of the Tribunal expressed the crux of their findings of fact as follows:- "the applicant was unsuited, by dint of physique, background, and education to unskilled manual labour. The circumstances which prevailed at the time of his arrival in Australia gave him little alternative but to enter this market. However, quite independently of any injury sustained in the course of it, he is not well motivated towards manual labour, and if he can avoid 1t, he will. His minor back injury would make it uncomfortable for him in a manual labouring position. And in combination with his slight physique, he is effectively now precluded from the unskilled manual labouring market. However, he already has personal skills and a background which equip him for semi-skilled positions, particularly those which involve some managerial and organisational abilities. And if he were to take advantage of the skills and retraining programmes which exist, he could, with application, and if appropriately motivated, become even more qualified for work ing areas relying predominately on clerical or other skills, and less upon physical exertion, than is the case at present; and in obtaining and holding down such skilled or semi-skilled light physical work, the applicant would not to any significant extent be affected by what we have found to be only a minor organic back condition." The majority went on to sSay:- "On one view of the evidence, the applicant might be described as a person inhibited by a foreign cultural background, limited literacy in English, and an education outside the Australian school system, in his attempts to re-enter the job market after two significant work injuries. On the other hand, the same evidence supports a view of the applicant whereby he has the advantages of a high school education through to final year, of being bilingual, of exposure to two radically different cultures and societies, and is a person whose natural work inclination is more in the areas of sales, management, or clerical, but who, if he and his family can comfortably survive without it, will avoid work, using a relatively minor back injury as a rationale for so doing. ane If the applicant were to achieve fresh skills, through courses and training programmes which we know to be available to him, such achievement being as we find within his capabilities, his employability and capacity in semi-skilled areas, areas involving some managerial component, or areas such as sales and other activity involving communication with the public, would be enhanced. But that capacity is already there. His spoken and particularly written English could be improved. But it is already reasonably good. And he 1s well educated in the Turkish language and culture. Courses are available to him; and it 1s within his capacity to improve his English. This would enhance, rather than create his work capacity." The majority concluded: "We find that the applicant is permanently incapacitated from performing heavy manual work, but that his capacities are not limited to this area. He 1S capable of work which 1s less physically arduous than that involved in his past occupations in Australia, calling more for the exercise of communication and managerial skills ¢ than purely physical exertion. In seeking to enter this market, he would not be much affected by the relatively minor back condition which we find causes him persistent pain and discomfort; but that market will be narrowed somewhat by his lack of fluency in spoken English, and his limited English literacy. Nevertheless, while narrowed, it will not be pre-empted altogether by this lack of fluency. And if he were to apply himself, it 1s well within the applicant's capabilities to achieve greater fluency through the adult migrant English programmes which we know to be available to him. Thus, this is not a case where 'achievement of fresh skills ... could bring to an end an incapacity which had been thought to be permanent' (per Woodward J. above). Rather, it 1s a case where a work market is open for the applicant to exploit, his potential in which holding the prospect for enhancement through his development of existing skills." The dissenting member of the Tribunal took a more serious view of the applicant's disabilities and preferred the evidence given by Dr Bannister, which favoured the applicant's case, to that of other medical practitioners who considered the applicant's medical condition to be less significant. The dissenting member said: "I find, on the evidence, that the applicant's back condition is permanent and will not improve. I also find on the evidence of Dr Bannister that, not only does it preclude heavy manual labouring, but also it precludes his returning to work such as he performed for the SRA ... On the evidence of Dr Bannister, the applicant would be suited to process work where he was sitting or standing at will "watching" a production line or manipulating small process parts. He could not sit or stand for more than an hour without experiencing significant discomfort necessitating a five to ten minute rest or walk. Effectively then, on the evidence of Mr Groves, that represents sheltered employment - not employment on the open market. On the assessment of the evidence the applicant 1s inhibited by a foreign cultural background, he hag limited literacy and fluency in English, he 1s 10. educated outside the Australian school system to a level well below that of completing high school education, he 1s intellectually below average, he has a significant history of work injuries for which compensation has been paid, and he has not worked nor attempted to work since the end of 1982 because of his experience of pain from his disabilities which are represented by an organic condition with a superimposed functional overlay. I do not consider, from the evidence presented to the Tribunal, that it is at all feasible that he can achieve fresh skills through courses and tralning programmes, through adult migrant language classes, or through an active rehabilitation programme. There 1s no evidence to support a proposal that he could acquire managerial skills." It will be seen that the difference between the view of the majority and the view of the dissenting member was a difference not of law but of fact. In an appeal limited to points of law, it is not open to this Court to reconsider for itself the facts found by the Administrative Appeals Tribunal. The function of the Court 1s to determine whether, having regard to the majority's exposition of the facts and of the law, there was any error of law in the reasoning process leading to the decision. Mr T. Lynch, counsel for the applicant, made a forceful and interesting submission based upon the several references which appear in the reasons of the majority as to the possibility that the applicant's capacity for work would be improved should he undertake a course or courses to train him for a type of work other than that which he had undertaken after coming to Australia. Mr Lynch submitted that 1t was not clear what courses e the majority had in mind, not clear how long those courses might ll. take and sheer speculation as to what the result of undertaking the courses might be. He submitted that the reasoning of the majority was in error in that the majority took into account not the applicant in his present condition but the applicant having regard to capacities that he might attain at some time in the future should he undertake unspecified courses. Mr Lynch further submitted, on this aspect of the matter, that there was a breach of the principles of natural justice for the majority must have had a course or courses in mind which were not identified to the applicant during the hearing and the applicant was given no opportunity to turn his attention to the question whether or not he could undertake those courses and, 1f so, what the likely result might be. I need not go into this aspect of the matter in any more detail for, notwithstanding the several references made by the majority of the Tribunal to the possibility of further training, I agree with the submission put by Mr J.S. Hilton, counsel for the respondent, that the majority made it clear that the applicant had a sufficient capacity to carry out remunerated employment and to obtain that employment to preclude his satisfying the requirement of 85 percent incapacity for work. The majority said that, although the market in which the applicant could be expected to sell his labour had been narrowed by his medical condition, a certain lack of fluency in spoken English and his limited English literacy, nevertheless, there was a work market still open to him to exploit if he wished to do so. e 12. The majority went on to add that the applicant's capacity for work would be enhanced by his undertaking a course or courses of study. This additional finding does not detract from the clear finding of fact made by the majority as to the applicant's existing capacity for work. Mr Lynch further submitted that there was little evidence before the Tribunal as to precisely what avenues of work were avallable to the applicant, having regard to his back condition. Mr Lynch submitted that the majority did not identify any labour market open to the applicant, having regard to his medical condition and to his background and, further, that the majority apparently took into account factual circumstances as to which there was little or no evidence. I do not see any error in the Tribunal's approach to this matter. When, as in this case, an applicant has not actively sought employment, there may be little that the Tribunal can do save rely on its general knowledge of the employment market and its view of the applicant's employability, having regard to his medical condition, his training, his skills, his personality and like matters. Thus in J & H Timbers Pty Limited v. Nelson (1972) 126 C.L.R. 625 at 651 Gibbs J., in the context of Workers' Compensation, referred to " ... the well-established rule that the Commission is entitled to make use of its judicial knowledge as to such matters as rates of wages and availabjlity 13. of employment ... There was evidence before the Tribunal which supported the view of the matter which the majority took. Thus, ina written report dated 27 March 1986, Dr G.A. Robbie, psychiatrist, sald:- "There is no psychiatric condition, and no psychiatric disability. I would think any social disability is less than 20%. I forgot to ask if he can write in English. He is thirty-eight, but he is personable, and would relate well. He has adequate English. He is of small build, which might weigh against him in a 'labour' market, but not in a clerical market. Perhaps a course in English would enable him to get a more satisfying job, and solve the problem. In the meantime, he made it clear that he sees others getting the Invalid Pension, so that he feels he should try for 1t too. I can give him no psychiatric support. His claim must rest almost entirely on the physical, and I leave that to others." In his oral evidence, Dr Robbie said:- "His language 1s good; but he does lack some written English, I would think. One has to allow for prejudice in this country, and that has to be considered; but he 1S a personable man. He has done clerical and selling duties. He relates well. He got on easily with me - handled me very well. He does not have much of a social disability at all." That was the view taken by the majority of the Tribunal. They regarded the applicant as a personable man, of a relatively young age, who had an adequate command of English and who was better suited to work of a non-labouring type than the work he had in fact undertaken in Australia. They considered that he could obtain and undertake suitable paid employment if he chose 14. to do so. I can see no error of law in the Tribunal''s approach to this matter. In the circumstances, therefore, the appeal must be dismissed. I certify that this and the 1% preceding pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Davies. Associate: J Gadtdoo 27 Cheba (187 Date: Counsel for the applicant: Mr T. Lynch Solicitors for the applicant: Craddock, Murray & Neumann Counsel for the respondent: Mr J.S. Hilton Solicitors for the respondent: Australian Government Solicitor Date of hearing: 30 September 1987