FEDERAL COURT OF AUSTRALIA Smith v Repatriation Commission [2004] FCA 743 DEFENCE AND WAR – Veterans' entitlements – appeal from Administrative Appeals Tribunal – disability pension – special rate of pension under s 24 of the Veterans' Entitlements Act 1986 (Cth) – whether enough evidence to conclude that veteran had ceased to engage in remunerative work Veterans' Entitlements Act 1986 (Cth) s 24 Administrative Appeals Tribunal Act 1975 (Cth) s 44 Sheehy v Repatriation Commission (1996) 66 FCR 569 cited Flentjar v Repatriation Commission (1997) 48 ALD 1 referred to GRAHAM JOHN SMITH v REPATRIATION COMMISSION Q 193 OF 2003 DOWSETT J 11 JUNE 2004 BRISBANE (HEARD IN TOWNSVILLE) IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q 193 OF 2003 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY A PRESIDENTIAL MEMBER BETWEEN: GRAHAM JOHN SMITH APPELLANT AND: REPATRIATION COMMISSION RESPONDENT JUDGE: DOWSETT J DATE OF ORDER: 11 JUNE 2004 WHERE MADE: BRISBANE (HEARD IN TOWNSVILLE) THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the respondent's costs of and incidental to the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q 193 OF 2003 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY A PRESIDENTIAL MEMBER BETWEEN: GRAHAM JOHN SMITH APPELLANT AND: REPATRIATION COMMISSION RESPONDENT JUDGE: DOWSETT J DATE: 11 JUNE 2004 PLACE: BRISBANE (HEARD IN TOWNSVILLE) REASONS FOR JUDGMENT The appeal 1 Since 29 October 2000 the appellant has received a disability pension pursuant to the Veterans' Entitlements Act 1986 (Cth)(the "Act"). On 29 January 2001 he applied to the respondent for a special rate disability pension but was unsuccessful. On 19 June 2001 he applied to the Veterans' Review Board for review of that decision. The Board upheld the respondent's decision. On 15 February 2002 the appellant unsuccessfully applied to the Administrative Appeals Tribunal (the "AAT") for review. This is an appeal from the AAT's decision. Pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth), such an appeal is limited to questions of law. Appellant's service history and medical conditions 2 The appellant was born on 23 April 1938 and joined the Royal Australian Air Force (the "RAAF") in 1956, at the age of 18. He served in Vietnam for eight months from 1 July 1965 to 3 March 1966. He became 'stressed out', and was sent to Butterworth hospital for two weeks before being sent back to Australia. He was discharged from the RAAF on 4 May 1973. The AAT accepted that the applicant now suffers from the following service-related disabilities: · bilateral sensori-neural hearing loss with tinnitus; · squamous cell carcinoma; · other specified gastritis; · post-traumatic stress disorder; · alcohol dependence or alcohol abuse; · gastro-oesophageal reflux disease; and · depressive disorder. Work history 3 Between his discharge from the RAAF and 1995 the appellant owned and managed various squash centres in the Townsville region. He sold his squash business in 1995 and bought a limousine business which he conducted until 1998. In 1998 he sold that business to enable him to move with his family to Brisbane so that his son, Marcus, could further his career as a squash player. The appellant took a lease of a squash centre in Capalaba. He intended that the family should run the centre and draw income from it. The appellant had only very limited involvement in the business and did not derive income from it. The family lived in a four-bedroom house attached to the centre. After acquiring the business, the appellant discovered that the local authority required that extensive remedial work be done. The lessor refused to pay for the work. The appellant was unwilling to do so. The local authority closed the squash centre in June 2000. The appellant and his family remained in the adjoining house until October 2000. The appellant and some of his family then returned to Townsville. There, he spent several months and about $30 000 in upgrading his home. He also bought cars for himself and his wife. 4 The appellant claims that after returning to Townsville, he investigated the possibility of purchasing a squash centre but decided that he would not be able to run such an undertaking by himself. Two of his sons, including Marcus, had not returned to Townsville. He also investigated the possibility of re-entering the limousine business but decided that due to high blood pressure, he would not be able to drive for lengthy periods. Under those circumstances it was not economically viable to run a limousine business. It seems that his high blood pressure was not attributable to his military service. In any event, it is now controlled. He also said that his medication for anxiety tended to make him feel drunk. He presently drives a limousine for the person to whom he sold his business in 1998. He drives on two mornings each week, for about two hours at a time. Legislative Provisions 5 A veteran will qualify for a special rate of pension if he or she meets the criteria set out in s 24 of the Act. That section provides: (1) This section applies to a veteran if: (aa) the veteran has made a claim under section 14 for a pension, or an application under section 15 for an increase in the rate of the pension that he or she is receiving; and (aab) the veteran has not yet turned 65 when the claim or application was made; and (a) either: (i) the degree of incapacity of the veteran from war-caused injury or war-caused disease, or both, is determined under section 21A to be at least 70% or has been so determined by a determination that is in force; or (ii) the veteran is, because he or she has suffered or is suffering from pulmonary tuberculosis, receiving or entitled to receive a pension at the general rate, and (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 earning on his or her own account, that the veteran would not be suffering if the veteran were free of that incapacity; ... (2) For the purpose of paragraph (1)(c): (a) a veteran who is incapacitated from war-caused injury or war-caused disease, or both, shall not be taken to be suffering a loss of salary or wages, or of earnings on his or her own account, by reason of that incapacity if: (i) the veteran has ceased to engage in remunerative work for reasons other than his or her incapacity from that war-caused injury or war-caused disease, or both; or (ii) the veteran is incapacitated, or prevented, from engaging in remunerative work for some other reason; and (b) where a veteran, not being a veteran who has attained the age of 65 years, who has not been engaged in remunerative work satisfies the Commission that he or she has been genuinely seeking to engage in remunerative work, that he or she would, but for that incapacity, be continuing so to seek to engage in remunerative work and that that incapacity is the substantial cause of his or her inability to obtain remunerative work in which to engage, the veteran shall be treated as having been prevented by reason of that incapacity from continuing to undertake remunerative work that the veteran was undertaking.' 6 Paragraph 24(1)(c) contains two requirements: · that the veteran is prevented by his incapacity from performing work which he had previously undertaken; and · that he is suffering a loss of earnings as a result of his being so prevented. 7 Paragraph 24(2)(a) relates to the second requirement while par 24(2)(b) relates to the first. Medical evidence 8 The AAT considered the evidence of two psychiatrists, Dr Rogers and Dr Mulholland. Dr Rogers had treated the appellant since 19 March 2001. Dr Mulholland saw the appellant on 28 August 2002. The AAT summarized Dr Rogers' evidence at par 8 of its reasons as follows: 'In his report dated 11 April 2001, Dr. Rogers said that the [appellant] told him that he retired in June 2000 due to a build up of work related stress and irritability which was affecting his relationship with his clientele. He also suffered chest pains and an acute cardio-vascular episode which required admission to intensive care in Brisbane, immediately prior to his retirement. Dr. Rogers does not believe that the [appellant] is capable of working more than eight hours per week. In a report dated 26 September 2001, Dr. Rogers said, "The deterioration in his mental state was the sole reason for him deciding to sell the business and retire from work." ' 9 Dr Mulholland reported: 'Upon reviewing the total situation I consider that Mr. Graham Smith probably does suffer from a chronic major depressive disorder and chronic PTSD [post-traumatic stress disorder]. He formally suffered from chronic alcohol abuse/dependence but fortunately he has now got that under control. The genesis of his conditions appear to be his service in Vietnam when he was flying as assistant loadmaster in Caribou transports. His description was that chronic fear was the main psychological issue for him at that time and this led to problematical drinking. The problematical drinking continued for 30 + years however fortunately and wisely he ceased same in 1991. The reason this man stopped work is not due to psychiatric factors and the reason he is not working now is not due to psychiatric factors. It is likely that psychiatric factors did to some extent impair his working effectiveness but are not the fundamental reason for his not working. If suitable work was available there is no reason why this man could not work 20 hours + per week at the present time.' 10 The AAT said, concerning Dr Rogers' evidence: '10. Although Dr. Rogers appears to have misunderstood the reasons for the [appellant's] cessation of his interests in the limousine business in 1998 and the squash business at Capalaba in June 2000, the Respondent and the Tribunal accept his evidence that the [appellant's] service-related disabilities are of such a nature as, of themselves alone, to render him incapable of undertaking remunerative work for periods aggregating more than eight hours per week.' 11 The AAT did not make specific findings concerning Dr Mulholland's evidence. Findings 12 The AAT found that the appellant satisfied pars 24(1)(a) and 24(1)(b) of the Act. The remaining matter for determination was whether the appellant satisfied par 24(1)(c). Concerning that matter, the AAT found: '12. There is no doubt that the last remunerative work undertaken by the [appellant] was his limousine business which he sold in late 1998. He treated the Capalaba period as a holiday and he took no drawings from the business. He has not worked for remuneration since he returned to Townsville in October 2000. 13. The sale of the limousine business in 1998 had nothing to do with any service-related disabilities. It was part of a strategic plan to give his son Marcus a chance at becoming professional squash player. 14. The closure of the squash business at Capalaba was also not due to service-related disabilities. It was due to non-compliance with council regulations which culminated in the Council closing down the business. 15. The Tribunal finds that the [appellant] ceased to engage in remunerative work in late 1998 for reasons other than his incapacity from war-caused injury or war-caused disease, or both. 16. On his return to Townsville in October 2000, the [appellant] worked on his house and surroundings and built a shed. He did not look for work. By then he was receiving the Service Pension plus Disability Pension at 70% of the General Rate (later increased to 100% from 29 October 2000). At the same time he also significantly reduced his capital resources by spending $30,000 to $40,000 on his house and by buying two cars. 17. The Tribunal finds that when the [appellant] returned to Townsville in October 2000 he had no intention of getting back into business. 18. At the date of this application for an increase in pension to the Special Rate, 29 January 2001, the [appellant] had not sought remunerative work for over two years and he had just completed major refurbishment of his house in the previous four months. 19. The Tribunal is satisfied that the main reason for the failure of the [appellant] to engage in remunerative work since November 1998 is the fact that he retired. He now drives limousines for a few hours per week as an interest, a hobby. 20. The [appellant] does not satisfy subsection 24(1)(c) of the Act and is not entitled to disability pension at a rate above 100% of the General Rate. 21. The decision to reject his claim is affirmed.' 13 As I understand it, the appellant does not challenge the findings in pars 12, 13 and 14. Grounds of appeal 14 In the notice of appeal, the appellant advanced six grounds of appeal, namely: 'A. There was no evidence that the [appellant] did not intend to engage in remunerative work when he returned to Townsville in October 2000. B. In his Facts & Contentions, the [appellant] indicated he was relying upon the ameliorating effect of s. 24(2)(b) of the Veterans' Entitlement Act 1986. The [appellant] gave evidence of the effect of the medication that he was taking for his war caused conditions. The learned Deputy President erred by failing to have regard to the [appellant's] inability to engage in remunerative employment after he returned to Townsville in 2000 because of his medication. C. The Tribunal failed to ask itself the first three questions set out in Flentjar v Repatriation Commission (1997) 48 ALD 1 (at 4-5) and thereby fell into error. Instead the Tribunal sought to determine only when the [appellant] had ceased remunerative employment, not why. D. The learned Tribunal member failed to have regard to submissions (in the [appellant's] Facts & Contentions) and at the close of the hearing regarding reliance upon the ameliorating effect of s. 24(2)(b). E. The learned Tribunal member erred by taking into account an irrelevant consideration being the expenditure made by the [appellant] on his home in Townsville after October 2000, or alternatively giving too much weight to the expenditure made by the [appellant] on his home in Townsville after October 2000. F. It was clear that the [appellant] had suffered a psychiatric condition as a consequence of his war service, the effects of which required medication that affected the alertness and drive of the [appellant]. The Tribunal decision did not give due weight to these factors when considering if the [appellant] was unable to undertake remunerative employment or had genuinely attempted to engage in remunerative employment and as a consequence whereof the decision of the Tribunal is unreasonable.' 15 Some of these criticisms are factual and therefore cannot constitute proper grounds of appeal. In the appellant's outline of argument, six grounds of appeal were advanced, namely: · That there was no evidence to support the AAT's finding that the appellant had no intention, upon returning to Townsville, to re-enter business; · That the AAT failed properly to consider the operation of par 24(2)(b); · That the AAT failed to ask the correct questions as to the operation of par 24(1)(c); · That the AAT failed to have regard to relevant considerations; and · That the AAT had regard to irrelevant considerations. · That the AAT's decision was unreasonable. 16 I will address these grounds and then return to those in the notice of appeal. However I should make some preliminary comments concerning the section and the AAT's decision. The AAT accepted that the appellant was 'totally and permanently incapacitated', to adopt the language of par 24(1)(b). The first requirement of par 24(1)(c) was that the applicant be prevented from continuing to undertake remunerative work which he was undertaking, such prevention being wholly by reason of a war-caused injury or disease. The appellant had a history of employment in squash centres and in the limousine industry. Each was relevant remunerative work for the purposes of par 24(1)(c). See Sheehy v Repatriation Commission (1996) 66 FCR 569 at 574-5. The finding that the appellant satisfied the requirements of par 24(1)(b) would, in this case, have probably led to the conclusion that he also satisfied the first requirement of par 24(1)(c) without regard to par 24(2)(b). However the AAT seems to have made no express finding in that regard, probably because it concluded that the appellant had ceased work for reasons other than his incapacity and therefore did not satisfy the second requirement of par 24(1)(c). The language used in par 15 of the reasons suggests that the AAT relied upon subpar 24(2)(a)(i) in reaching that conclusion. 17 I turn to the specific grounds of appeal. Intention to re-enter business 18 The AAT found that when the appellant returned to Townsville, he did not intend to re-enter business. At that time he had not engaged in remunerative employment since late 1998. One might have thought that if he had any interest in doing so, the Capalaba squash centre offered an appropriate opportunity. However he chose to have only very limited and unpaid involvement in that operation. He returned to Townsville and spent some months in renovating his house. He also spent money on that project and in acquiring motor vehicles, apparently for private use. The AAT concluded that these circumstances suggested that the appellant had chosen to cease work in 1998 and not thereafter resiled from that choice. It should be kept in mind that the applicant was, in 2000, aged 62. It would be a little unusual if he were to seek to return to active employment at that age after a break of some years. If he in fact intended to do so, one might reasonably have expected him to act quickly, given his age, and to have sought to conserve his financial resources. These facts certainly invited the inference that he had retired from gainful employment. 19 However the appellant claimed to have considered re-entering the squash centre business. He abandoned this idea because he no longer had the support of two sons, including Marcus, who had not returned to Townsville. As he was aware of this lack of support at all material times, he cannot have given serious consideration to this option. He also considered buying a limousine business. The person to whom he had sold his business in 1998 was interested in taking him on as a partner or sub-contractor. The appellant was, however, having blood pressure problems at the time. Those problems are now controlled. He decided that he could not drive for lengthy periods and that it was not economically viable to employ a driver. He abandoned this line of investigation. Although it is not clear, it may be that he was also influenced in reaching that decision by the perception that his medication for "anxiety" made him feel drunk. 20 There is a clear difference between thinking about returning to business and forming the intention to do so. The AAT was satisfied that when the appellant returned to Townsville he had no intention of working. His conduct thereafter was consistent with that state of mind. The AAT's view was fairly available on the evidence, notwithstanding the appellant's claim to have considered returning to business. In any event, the question of his intention was not an ultimate question posed by s 24. However the matter was of evidentiary significance in answering the second question posed by par 24(1)(c) and questions arising pursuant to subs 24(2). Paragraph 24(1)(c) – The correct questions 21 The appellant submitted that, for the purposes of par 24(1)(c), the AAT was obliged to answer the four questions propounded in Flentjar v Repatriation Commission (1997) 48 ALD 1 at 4-5, namely: '1. What was the relevant "remunerative work that the veteran was undertaking" within the meaning of s 24(1)(c) of the Act? 2. Is the veteran, by reason of war-caused injury or war-caused disease, or both, prevented from continuing to undertake that work? 3. If the answer to question 2 is yes, is the war-caused injury or war-caused disease, or both, the only factor or factors preventing the veteran from continuing to undertake that work? 4. If the answers to questions 2 and 3 are, in each case, yes, is the veteran by reason of being prevented from continuing to undertake that work, suffering a loss of salary, wages or earnings on his own account that he would not be suffering if he were free of that incapacity?' 22 It is likely that the AAT gave favourable answers to questions 1, 2 and 3 or, perhaps, assumed such answers. It answered question 4 unfavourably. This unfavourable answer was based on the view that the appellant's decision not to work, rather than his incapacity, was causing his lost earnings, applying subpar 24(2)(a)(i). This aspect of the appellant's argument depended upon the alleged error in the AAT's finding that he did not intend to return to business. I have rejected that submission. Application of par 24(2)(b) 23 It may be that the unfavourable application of subpar 24(2)(a)(i) rendered consideration of par 24(2)(b) unnecessary. Nonetheless, the AAT considered that paragraph in pars 16-19 of its reasons. Clearly, it was not satisfied that the appellant had been genuinely seeking remunerative work. This view was fairly open on the evidence. Failure to have regard to relevant considerations 24 It is a little difficult to understand this ground. After summarizing (in a very general way) the material upon which the Tribunal relied, the appellant submitted that '[t]he Tribunal also received submissions based on s. 24(2)(b) of the Act, by way of Facts & Contentions and submissions by Counsel. It is submitted the Tribunal failed to have regard to these matters.' This submission is said to be based upon the alleged absence from the AAT's reasons of any consideration of such matters or of an explanation of the way in which the Tribunal reached the conclusion that the appellant had not intended to go back into business after returning to Townsville. As to the suggestion that certain matters were not referred to in the reasons, one might have expected the applicant to identify such matters with rather more precision. As to the Tribunal's reasons, I consider them to be relatively clear, if somewhat sparse. I am unable to see any merit in this submission. Irrelevant considerations 25 It is said that the Tribunal 'focussed upon the [appellant's] last remunerative work ... and the work the [appellant] had undertaken on his home in October 2000.' It is further submitted that these matters were irrelevant 'as to whether or not the [appellant] was prevent [sic] by reason of his war-caused disabilities alone, from undertaking remunerative employment as at the application day.' These matters do not address the appellant's inability to satisfy the second requirement of par 24(1)(c). It was also submitted that the appellant's inability to obtain employment could not be seen 'in any realistic or sensible way to be attributed to any motivation concern [sic] the [appellant's] work in doing up his house, purchasing new vehicles or ceasing work in his limousine business in 1998 – or prior to the application day'. I cannot pretend to understand this submission. Unreasonableness 26 In light of the findings above, this ground adds nothing to the appellant's other submissions. Grounds in the notice of appeal 27 As to the grounds specified in the notice of appeal, I do not consider that any of them adds anything to the grounds which appear in the outline. Orders 28 The appeal must be dismissed with costs. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. Associate: Dated: 10 June 2004 Counsel for the Appellant: Mr D Honchin Solicitor for the Appellant: Purcell Taylor Lawyers Counsel for the Respondent: Mr R Derrington Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 31 March 2004 Date of Judgment: 11 June 2004