FEDERAL COURT OF AUSTRALIA

House v Defence Force Retirement and Death Benefits Authority

[2011] FCAFC 72

THE COURT ORDERS THAT:

1.    The decision of the Administrative Appeals Tribunal (“the Tribunal”) in the matter of David Richard House and Defence Force Retirement and Death Benefits Authority [2010] AATA 147 is set aside.

2.    The application to the Tribunal by the David House is remitted to the Tribunal to be decided again.

3.    The Court directs pursuant to s 44(5) of the Administrative Appeals Tribunal Act 1975 (Cth) that the parties be at liberty to file further submissions as to the affects of Mr House’s personality disorder upon the capacity of a person exhibiting Mr House’s vocational, trade and professional skills, qualifications and experience, to reasonably undertake the kinds of civil employment (found by the Tribunal in the relevant classes of civil employment), on the footing that Mr House’s personality disorder is a “prescribed physical or mental impairment” for the purposes of the Defence Force Retirement and Death Benefits Act 1973 (Cth).

4.    The matter is to be decided again by the Tribunal without the hearing of further evidence.

5.    The Tribunal is to determine as a matter of its own procedure whether further oral submissions will be entertained from the parties.

6.    The respondent pay the applicant’s costs of and incidental to the application before this Court.

THE COURT ORDERS THAT:

7.    The personality disorder described in the Tribunal’s decision under the heading “The Prescribed Impairments” and described, more particularly, at paragraphs 25 to 29 of the Tribunal’s reasons for decision is, as a matter of law, a “prescribed physical or mental impairment” for the purposes of Part V of the Defence Force Retirement and Death Benefits Act 1973 (Cth) and in particular, for the purposes of, ss 34(1A) and 34(1B) of that Act.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

GREENWOOD J

Introduction

1    By this application, Mr David House, appeals from a decision of the Administrative Appeals Tribunal (the “Tribunal”) constituted by Deputy President Hack SC, by which the Tribunal affirmed a decision of the Defence Force Retirement and Death Benefits Authority (the “Authority”) which had confirmed (upon Mr House’s application to the Authority for a re-consideration), its delegate’s rejection of Mr House’s application for a “reclassification” of the Authority’s existing “incapacity determination” concerning the extent of Mr House’s incapacity for civil employment as a retired member of the Permanent Military Forces (a soldier) discharged on 19 May 1975 as “being medically unfit”.

2    The Court’s original jurisdiction in this appeal arising under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (the “AAT Act”) on a question of law is exercised by the Court constituted as a Full Court: s 44(3) of the AAT Act.

The relevant statutory provisions

3    Subject to considerations not presently relevant, s 26 of the Defence Force Retirement and Death Benefits Act 1973 (Cth) (the “Act”) confers an entitlement to an invalidity benefit under Part V of the Act on a member of the Defence Force (who satisfies the description “contributing member” under s 3(1) of the Act, as Mr House did), retired from the Defence Force on the ground of invalidity or of physical or mental incapacity to perform his or her duties.

4    By s 30, where a person who is or has been an eligible member of the Defence Force is, or is about to become, entitled to an invalidity benefit, the Authority, established under the Act, is required to determine the eligible member’s “percentage of incapacity in relation to civil employment” and shall classify the person according to the following classes:

5    Sections 31, 32A and 33 address the basis for calculating or adjusting the “invalidity pay” applicable to an “invalidity benefit” falling within each of the above classes of incapacity. Section 34 confers power on the Authority to reclassify the percentage incapacity of a recipient member, in these terms:

34     Reclassification in respect of incapacity

(1)    The Authority may, from time to time, if it is satisfied that the percentage of incapacity in relation to civil employment of a recipient member in receipt of invalidity pay is such that the classification of the member should be altered, reclassify him in the appropriate classification set out in section 30 according to the percentage of his incapacity in relation to civil employment.

6    Section 34(1A) provides that in determining the percentage of incapacity in relation to civil employment of a recipient member, the Authority shall have regard to only the following matters:

(a)    the vocational, trade and professional skills, qualifications and experience of the recipient member;

(b)    the kind of civil employment which a person with skills, qualifications and experience referred to in paragraph (a) might reasonably undertake;

(c)    the degree to which any physical or mental impairment of the recipient member, being a prescribed physical or mental impairment, has or had diminished the capacity of the recipient member to undertake the kinds of civil employment referred to in paragraph (b);

(d)    such other matters (if any) as are prescribed for the purposes of this subsection.

7    One of the factors to be taken into account is the degree to which a prescribed physical or mental impairment of the recipient member, has or had diminished the capacity of that member to undertake the kinds of civil employment referred to in s 34(1A)(b). The notion of a “prescribed physical or mental impairment” in s 34(1A)(c) is defined by s 34(1B) in these terms:

(1B)    In subsection (1A), prescribed physical or mental impairment, in relation to a recipient member or a deceased member who was immediately before his or her death a recipient member, means:

(a)    a physical or mental impairment of the member that was the cause, or one of the causes, of the invalidity or physical or mental incapacity by reason of which the member was retired, whether or not that impairment changed, for better or worse, since that retirement; or

(b)    any other physical or mental impairment of the member causally connected with a physical or mental impairment referred to in paragraph (a).

8    The use of the disjunctive “or” in s 34(1B) between sub-paragraphs (a) and (b) in the statutory meaning ascribed to “prescribed physical or mental impairment” is to be understood not as a reference to “either or” but as an inclusive reference with the result that a relevant physical or mental impairment of the member is an impairment that was the cause or one of the causes of the physical or mental incapacity by reason of which the member was retired from the Defence Force and includes any other physical or mental impairment of the member causally connected with the impairment which was the cause or one of the causes of the incapacity by reason of which Mr House was retired as a member of the Defence Force.

The error of law conceded by the respondent

9    The Tribunal by its decision of 26 February 2010 determined at [28] and [29] that “Mr House’s drinking, categorised as alcoholism … caused the incapacity that was the reason for his discharge”. That observation must be taken to mean, using the language of the Act, that Mr House’s impairment, categorised as alcoholism, caused the physical or mental incapacity that was the reason for his discharge. The Tribunal also observed at [28] that the applicant’s drinking was caused by a personality disorder and at [29] the “drinking may have been the overt manifestation of the underlying personality [disorder]”. Having recognised the contribution or causally connected mental impairment of Mr House’s personality disorder to his alcoholism impairment, the Tribunal then observed at [29] that the alcoholism was the “proximate cause of the discharge”. The Tribunal determined that because Mr House’s alcoholism was the proximate cause of his discharge, the Tribunal could not be satisfied that “Mr House’s personality disorder ought to be accepted as a prescribed impairment” [emphasis added].

10    The applicant contends that having regard to s 34(1B) of the Act, the Tribunal fell into methodological error in so finding. The respondent accepts and thus concedes the contention of the applicant that once the Tribunal determined that the applicant’s impairment of alcoholism was caused by the applicant’s personality disorder, the legal consequence which necessarily follows is that the impairment constituted by the personality disorder is to be treated as a “prescribed impairment”. The respondent accepts that to the extent that the Tribunal sought to disregard Mr House’s personality disorder as a prescribed impairment required to be taken into account by force of s 34(1A)(c) of the Act in assessing under s 34(1) of the Act the applicant’s percentage of incapacity in determining his reclassification application, the Tribunal was in error.

11    The applicant contends that since the Tribunal did not regard Mr House’s personality disorder as a “prescribed impairment”, it is impossible to conclusively know from simply reading the Tribunal’s Reasons whether the Tribunal gave proper, genuine and full consideration to the elements of the disorder in assessing whether Mr House’s percentage of incapacity for civil employment should be altered resulting in a reclassification having regard to s 34(1A) of the Act. (T 3, lns 20-25). The applicant says that although the Tribunal appears to have given some consideration to the effects of the personality disorder, the error at the threshold means that the applicant cannot be confident that his personality disorder has been fully taken into account in assessing the statutory requirement, namely, his capacity to undertake the kinds of civil employment which a person with his vocational, trade and professional skills, qualifications and experience might reasonably undertake. Secondly, the applicant says that had the error at the threshold not occurred, the assumption of the correct analytical framework could or might have brought about a different outcome. The applicant asks: “… did the Tribunal fully grapple with the incapacitating effects of the personality disorder or did it not, because it had determined already that it wasn’t a prescribed impairment?” (T 6, lns 26-28; see also T 7, lns 30-36; T 8, lns 1-4; T 11, lns 10-33; T 15, lns 13; T 15, ln 15; and T 19, lns 3843).

12    Counsel for the applicant contends that it is enough that the Tribunal’s Reasons do not expose whether the Tribunal fully came to grips with the impact of the personality disorder and to the extent that it did address the effects of the disorder, it failed to do so in a discrete way and, properly analysed, viewed the applicant’s personality disorder as an incidental feature of the alcoholism impairment. (T 11, lns 9-31).

13    It follows, it is said, that the Tribunal’s decision ought to be set aside and the matter remitted to the Tribunal for reconsideration on the merits.

14    Although the respondent concedes error on the part of the Tribunal, the error is said not to be a material error because the Tribunal’s reasons demonstrate that the features of the applicant’s personality disorder, drawn from the expert evidence, were taken into account on the merits; the evidence of the experts was that disaggregating the effects of the alcoholism impairment from the personality impairment was complex and difficult; the evidence of the experts to that effect was accepted by the Tribunal; the Tribunal elected to consider the impact of both impairments together; and, “despite an error being established it would not have affected the result” and the error does not “vitiate the Tribunal’s decision” (para 52, respondent’s written submissions). That result is said to follow because all of the effects of both the alcoholism and the personality disorder which as a matter of analysis could not be disentangled, were examined and attributed in the aggregate to the impairment of alcoholism. Thus, treating the applicant’s personality disorder as a prescribed impairment would not have resulted, it is said, in a finding of any additional or greater degree of incapacity.

15    Ultimately the Tribunal determined at [75]:

The result is that in the majority of occupational groups there is, at best, a minimal reduction in Mr House’s capacity to undertake employment in those areas. If required to attribute a percentage to the reduction I would put it no higher than 10%. Within the category of security officer, the reduction is a little higher, perhaps as high as 20%. Overall I consider that the extent of the diminution of Mr House’s capacity to undertake civilian employment attributable to his prescribed impairment is in the range of 10% to 15%. That accords, as it happens, with the observable improvement in Mr House following the last decision of the Tribunal in June 2004.

The content of the test to be applied

16    The threshold question to be determined before examining the Tribunal’s treatment of the evidence of both impairments and the impact of those impairments upon Mr House’s capacity to undertake civilian employment, is the content of the test to be applied in determining whether Mr House should be denied relief arising out of a demonstrated error of law on the part of the administrative decisionmaker, in this case the Tribunal, on the ground that the error could not have materially affected the decision. Is it enough to support a remedial order under s 44(4) or s 44(5) of the AAT Act setting aside the Tribunal’s decision that the exposed reasons reveal that had the error not occurred the outcome could or might have been different, as the applicant contends?

17    In Stead v State Government Insurance Commission (1986) 161 CLR 141 (“Stead”) the High Court (Mason, Wilson, Brennan, Deane and Dawson JJ) in the context of demonstrated procedural unfairness on the part of a trial judge in the conduct of the trial said this at p 145 of the remedial qualification on the general principle that everyone is entitled to a fair trial unaffected by procedural unfairness:

That general principle is, however, subject to an important qualification. … That qualification is that an appellate court will not order a new trial if it would inevitably result in the making of the same order as that made by the primary judge at the first trial. An order for a new trial in such a case would be a futility.

For this reason not every departure from the rules of natural justice at a trial will entitle the aggrieved party to a new trial. By way of illustration, if all that happened at a trial was that a party was denied the opportunity of making submissions on a question of law, when, in the opinion of the appellate court, the question of law must clearly be answered unfavourably to the aggrieved party, it would be futile to order a new trial.

Where, however, the denial of natural justice affects the entitlement of a party to make submissions on an issue of fact, especially when the issue is whether the evidence of a particular witness should be accepted, it is more difficult for a court of appeal to conclude that compliance with the requirements of natural justice could have made no difference.

… [W]hen [an appeal court] is invited by a respondent to exercise these powers in order to arrive at a conclusion that a new trial, sought to remedy a denial of natural justice relevant to a finding of fact, could make no difference to the result already reached, it should proceed with caution. It is no easy task for a court of appeal to satisfy itself that what appears on its face to have been a denial of natural justice could have had no bearing on the outcome of the trial of an issue of fact.

                                [emphasis added]

18    In the context of an application for an order of review under the statutory regime of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“ADJR Act”) Mason J in Minister for Aboriginal Affairs v PekoWallsend Ltd (1986) 162 CLR 24 observed at 40:

Not every consideration that a decisionmaker is bound to take into account but fails to take into account will justify the court setting aside the impugned decision and ordering that the discretion be reexercised according to law. A factor might be so insignificant that the failure to take it into account could not have materially affected the decision.

                                [emphasis added]

19    Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 (“Ex parte Aala”) concerned a failure to observe the principles of procedural fairness in the course of administrative decisionmaking by the Refugee Review Tribunal (“RRT”) in the exercise of a statutory power. Gaudron and Gummow JJ at [80] observed, in reliance upon the principles set out in Stead, in the context of whether a remedial order ought to go, that:

It is sufficient that “the denial of natural justice deprived [the prosecutor] of the possibility of a successful outcome”.

20    Gleeson CJ agreed with that statement of principle and observed at [3] that had the visa applicant been given an opportunity to correct a misunderstanding created by an incorrect statement on the part of the RRT which had a bearing upon the credibility of the applicant, “a different view might have been taken as to his credibility”. The Chief Justice also cited the principles identified in Stead concerning the caution a Court of Appeal must keep in mind when invited by a respondent to conclude that a denial of natural justice, relevant to a finding of fact, could make no difference to the result already reached. At [4] Gleeson CJ observed that: “It cannot be concluded that the denial of that opportunity [to correct the RRT’s error on the facts] made no difference to the outcome of the proceeding” and further observed:

It is possible that, even if the prosecutor [aggrieved applicant] had been given an opportunity to deal with the point, the Tribunal’s ultimate conclusion would have been the same. But no one can be sure of that.

21    At [122] McHugh J accepted that the test of remedial intervention is whether the breach of the fairhearing rule deprived the visa applicant of “the possibility of a successful outcome”. Hayne J at [172] agreed with Gaudron and Gummow JJ. Callinan J at [211] could not rule out the possibility of a different result had the visa applicant not been misled by the RRT. Kirby J at [131] regarded the “governing law” as the statement of principle in Stead and observed that only where compliance with the requirements of procedural fairness “could have made no difference to the result” will relief be withheld. The Chief Justice’s conclusion that no one could be sure that the RRT’s decision would have been the same was influenced by the consideration that the error went to credibility and that decisions as to credibility “are often based upon matters of impression, and an unfavourable view taken upon an otherwise minor issue may be decisive”: at [4]. The character and content of the error therefore bears on the relevant “possibility”.

22    Ex parte Aala concerned a question of whether prohibition should go under s 75(v) of the Constitution in remedy of a failure to comply with the requirements of procedural fairness upon which the exercise of the statutory power by the RRT was conditioned. Gaudron and Gummow JJ at [59] noted that a failure to provide procedural fairness goes to the “observance of fair decisionmaking rather than with the character of the decision” [emphasis added] which is “a different rationale from that which generally underpins the doctrine of excess of power or jurisdiction”.

23    Those observations might be thought to suggest that if the error is an error of law or excess of power or jurisdiction going to the character of the decision rather than a failure to observe the requirements of fair decisionmaking (by observing the requirements of procedural fairness (such as in Stead) upon which the exercise of the power is conditioned), the test for determining whether a remedy ought to go or be withheld may be different, by reason of the different underlying rationale.

24    In Lu v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 340; (2004) 141 FCR 346 (“Lu v MIMIA”), Sackville J (Black CJ agreeing) concluded that nothing their Honours had said in Ex parte Aala was inconsistent with adapting the approach taken in cases of alleged procedural unfairness to jurisdictional error or error of law and in so concluding, put to one side the position arising under the statutory regime of the ADJR Act which has its own particular jurisprudence. As to the test, Sackville J at [64] said this:

It seems to me that the correct approach is that stated in Stead and adopted by the High Court in Aala. The test is whether the applicant has been deprived of the possibility of a successful outcome by the decisionmaker’s failure to observe the requirements of the statute. If so, the jurisdictional error could have had a bearing on the outcome and the applicant is not to be denied relief on the basis that the error was insignificant. … The question is not whether the decisionmaker would probably have reached the same result even if the omitted consideration had been taken into account.

                                [emphasis added]

25    At [29] Black CJ said this:

Had [the relevant matter] been correctly stated and put before the Minister there is a rational possibility that a more favourable assessment of the risk of recidivism would have been made in the Issues Paper or, in any event, by the Minister. There would have been a rational possibility of the risk … being seen as low and of the case being seen as one in which the Minister’s discretion could be exercised favourable to the appellant in all the circumstances. I stress “possibility”.

[original emphasis]

26    At [6] Black CJ also said this:

The circumstance that a case seems very heavily weighed against a person does not logically deny that the error may possibly – not “probably” – have affected the outcome adversely to the person’s interests.

27    As to the question of whether a factor not taken into account might be so insignificant (or so trivial) that a failure to take it into account could not have materially affected the decision, Gaudron and Gummow JJ at [59] and [60] in Ex parte Aala, in the context of procedural unfairness, observed that the “bearing of the breach upon the ultimate decision should not of itself determine whether prohibition under s 75(v) should go”. Their Honours observed at [59] (Gleeson CJ and Hayne J agreeing at [5] and [172]) that the issue “always is whether or not there has been a breach of the obligation” and at [51] endorsed the statement of principle of Gibbs CJ in R v RossJones; Ex parte Green (1984) 156 CLR 185 at 194, that once the excess of jurisdiction has been made out, the remedy will lie “almost as of right” although the Court retains its discretion to refuse relief “if in all the circumstances that seems the proper course”.

28    That statement of principle is consistent with the observations of the Full Court in Hill v Repatriation Commission [2005] FCAFC 23, (2005) 218 ALR 251 Wilcox, French and Weinberg JJ, at [81]: “If an error of law can be seen to have affected the decision reached, or arguably even possibly have done so, ordinarily the decision will be set aside” [emphasis added]. The remedy will go (at [82]) unless it is “manifestly clear that the error in no way contributed to the decision”.

29    The Full Court in Hill v Repatriation Commission also observed at [83] that in the context of appeals from the Tribunal, the Court may decline to set aside the decision, notwithstanding a demonstrated error of law, provided it considers that the Tribunal arrived at a decision that was “clearly correct on the material before it”.

30    In McAuliffe v Secretary, Department of Social Security (1992) 28 ALD 609, the Full Court (Spender, Foster and O’Loughlin JJ) at p 618 accepted that s 44(4) of the AAT Act by conferring power to “make such order as [the Court] thinks appropriate by reason of its decision” contemplates that if the Court is of the opinion that although error of law has been demonstrated, the decision is nevertheless clearly correct on the material before the Tribunal, it is open to the Court to dismiss the appeal. See also, to the same effect, Austin v Deputy Secretary, AttorneyGeneral’s Department (1986) 12 FCR 22 at 26, per Fisher, Sheppard and Burchett JJ; and, State Rail Authority (NSW) v Collector of Customs (1991) 33 FCR 211 at 217 per Beaumont, Burchett and Foster JJ. That principle was applied by Sackville J in Morales v Minister for Immigration and Ethnic Affairs (1995) 60 FCR 550 at 560561; (1995) 41 ALD 71 at pp 80 and 81 and accepted by the Full Court in Harris v Repatriation Commission [2000] FCA 1687; (2001) 62 ALD 161, per Whitlam, Sackville and Mansfield JJ at p 163 [7]. The scope of the power under s 44(4) and s 44(5) of the AAT Act however, is not unconstrained: Morales; Minister for Immigration and Ethnic Affairs v Gungor (1982) 4 ALD 575 at 585, Sheppard J.

31    It follows therefore that when the Court is considering whether an applicant should be denied relief on the ground that a demonstrated error of law could not have materially affected the Tribunal’s decision, the Court must be satisfied that the error of law did not deny the aggrieved applicant of the possibility of a successful outcome (Ex parte Aala; Lu v MIMIA) or, put another way, the error of law (ultimately relevant to the Tribunal’s findings of fact) could make no difference (Gleeson CJ, Ex parte Aala) to the result already reached. Dismissing an appeal in the face of a demonstrated error of law, on the ground that the decision of the Tribunal is “clearly correct”, is to be understood as a conclusion that the Court is satisfied the demonstrated error did not deny the aggrieved applicant of the possibility of a successful outcome. A conclusion that the Tribunal’s decision is “clearly correct” necessarily means no possibility of a successful outcome on the material before the Tribunal subsists. A test framed by the Full Court in Hill v Repatriation Commission in terms of the Court not refusing relief if satisfied that the error of law “arguably even possibly” affected the decision reached is simply an emphatic restatement of the test in Ex parte Aala and applied in Lu v MIMIA that relief will not be refused in the face of demonstrated error unless there is no possibility of a successful outcome. An arguable possibility remains a possibility. As to the application of Stead v State Government Insurance Commission (supra) to appeals under s 44 of the AAT Act, see Hoskins v Repatriation Commission (1991) 32 FCR 443 per Pincus J and Dolan v Australian and Overseas Telecommunications Corporation (1993) 42 FCR 206 per Spender J.

32    The question to be determined then is whether or not, without descending into merits review, the Tribunal’s treatment of the evidence concerning the kinds of civilian employment a person with Mr House’s skills, qualifications and experience might reasonably undertake (s 34(1A)), on the footing that Mr House’s personality disorder was not a prescribed impairment, leaves no possibility of a successful outcome in the review of the exercise of the s 34(1) discretion, had the error of law not occurred.

Background to the Tribunal’s decision

33    Mr House joined the Defence Force on 1 October 1968 and was retired from the Force effective from 29 May 1975. His Interim Discharge Certificate describes the ground of discharge as medical unfitness for service in the Military Forces (AB, Part B, 220). That description of the ground of discharge seems to have emerged as a result of a decision taken under s 44(2) of the Defence Act 1903 (Cth) to amend an earlier description of the ground of discharge. On 6 August 1979, the Authority determined that Mr House was entitled to invalidity benefit under s 26 of the Act having regard to a retirement impairment of “alcoholism and alcoholic liver disease”. On 30 August 1985, the Authority determined under s 37 of the Act that Mr House ought to have been retired from the Defence Force on the ground of “invalidity or of physical or mental incapacity to perform his duties” and that Mr House would be treated as having retired on that ground.

34    Since 1985 Mr House’s percentage of incapacity for particular classes of civil employment and his classification under s 30 have been the subject of many applications for reclassification and proceedings before the Tribunal and Courts. The various classifications seem to have been these: from 30 May 1975, Class B, 30 per cent; from 16 January 1977, Class B, 35 per cent; from 4 May 1990, Class B, 40 per cent; from 22 June 1999, Class B, 30 per cent; from 10 August 2001, Class C, 20 per cent; and, from 15 February 2002, Class C, 20 per cent.

35    On 19 November 2004, the applicant requested the Authority to review his incapacity classification within s 30 of the Act. Mr House requested the incapacity classification take into account impairment by reason of a personality disorder and injuries suffered in a car accident which had the effect, he contended, of diminishing his capacity for relevant civil employment. On 14 March 2005, the Authority’s Delegate rejected the request for review under s 34 of the Act on the footing that the additional impairments were not causally connected to Mr House’s alcoholism impairment.

36    Mr House requested the Authority to reconsider the Delegate’s decision and it did so.

37    The Authority observed that on 8 May 2001 the Tribunal had reduced the applicant’s classification from 40 per cent to 30 per cent (Class B) and on 3 July 2001 the Authority’s Delegate reclassified Mr House’s level of incapacity as 20 per cent (Class C). The Authority noted that the Delegate’s decision had been confirmed by the Authority upon reconsideration on 15 February 2002. The Authority also observed that Mr House’s request for a review on 19 November 2004 was made two years and nine months after the last re-consideration on 15 February 2002 resulting in the prevailing Class C classification at 20 per cent and that Mr House had not provided evidence that his capacity to undertake the relevant classes of civil employment had significantly diminished in the interim period.

38    The Authority also made observations about the contended relationship between a personality disorder and Mr House’s history of alcoholism and the extent to which that question already had been addressed in the Authority’s determination of 15 February 2002.

39    On 1 August 2005 the Authority determined that the applicant’s request for review be rejected in the absence of any evidence of diminished capacity since February 2002 and such evidence of diminished capacity would need to be evidence addressing the applicant’s capacity to undertake employment as driver, mobile plant operator, storeperson, mining and construction labourer, and security officer, arising only from the applicant’s prescribed impairment of alcoholism and alcoholic liver disease, or a causally connected physical or mental impairment.

40    On 15 January 2008, the Tribunal constituted by Senior Member Mr P McDermott RFD set aside the Authority’s decision of 1 August 2005 and substituted the following decision:

1    For the purposes of section 34(1B)(a) of [the Act], alcoholism and the personality disorder of Mr House were the prescribed physical and mental impairments of the recipient member; and

2    The percentage of incapacity in relation to civil employment of Mr House for the purposes of s 34(1) is 30%; and

3    For the purposes of s 30 of the Act, the invalidity classification of Mr House is Class B with effect from 19 November 2004.

41    On 1 April 2009 the Tribunal’s decision was set aside and the matter remitted to the Tribunal to be determined according to law: Defence Force Retirement and Death Benefits Authority v House [2009] FCA 302 per Collier J.

42    The Tribunal’s decision of 26 February 2010, constituted by Deputy President Hack SC, is the decision now under appeal arising out of the remission order made by Collier J.

The Tribunal’s Decision

43    The Tribunal notes at [14] that all earlier determinations of the applicant’s incapacity had been made on the footing that the applicant’s sole prescribed impairment was alcoholism. In the proceedings before the Tribunal the applicant contended that his personality disorder; upper left limb injuries as a result of motor vehicle accidents in 1975 and 1976; and a condition of chronic dysthymia (described as “a chronically low mood”) ought to be accepted as impairments causally connected with his accepted prescribed impairment of alcoholism. At [34]-[[38] the Tribunal finds that the upper limb injuries are not causally connected to alcohol consumption on the evidence and thus s 34(1B)(b) is not made out. At [39] - [41], the Tribunal finds that it is not satisfied that Mr House suffers from the condition chronic dysthmyia.

44    There is no challenge to those findings.

45    The Tribunal’s findings at [28] and [29] concerning the relationship between Mr House’s alcoholism and his personality disorder have already been noted. The Tribunal however begins that discussion at [26] by observing at the outset that whether Mr House’s personality disorder ought to be regarded as a “prescribed condition [impairment]” is “controversial”. The Tribunal notes at [26] that there is no issue, on the evidence, that Mr House has a personality disorder. The Tribunal refers to the evidence of Dr Barbara McGuire, a consulting psychiatrist, and notes that in her report of 19 April 2006 (AB, Part B, 402) Dr McGuire refers to reports of other psychiatrists as early as 1983 describing Mr House’s personality disorder. The Tribunal notes the oral evidence of Dr McGuire that Mr House suffers from a personality disorder and that the disorder caused him to drink. The Tribunal also notes at [26] the opinion of Dr McGuire that the two conditions of alcoholism and personality disorder “are so intertwined as to make attempts at teasing them apart at best only an academic exercise”.

46    At [27] the Tribunal notes the evidence of Dr Jill Reddan a consulting psychiatrist who provided three reports in evidence dated 22 June 1997 (AB, Part B, 287), 8 May 2000 (AB, Part B, 334) and 15 January 2003 (AB, Part B, 567). The Tribunal notes the opinion set out at pages 10, 11 and 12 (AB, Part B, 296, 297 and 298) of Dr Reddan’s report of 22 June 1997 that Mr House has a personality disorder and particularly notes Dr Reddan’s observation about primacy and the difficulty of sequential isolation of the affects of the two conditions, at p 12 of the report (AB, Part B, 298), in these terms:

(ii)    The relationship between Mr House’s personality disorder and his alcohol consumption is complicated and it is impossible to state which is the primary problem and which is the secondary.

47    The remaining part of the quote at point (ii) on page 12 of Dr Reddan’s report is this:

It is likely however, that Mr House sought to deal with any uncomfortable affects or anxieties by alcohol abuse but, because of his need to project blame onto others and refusal to see any problems within himself, he has consistently refused to address his alcohol problem. It is likely, however, that is ongoing alcohol consumption did narrow his ability to think through the consequences of his actions and assisted in maintaining the rigidity and self-absorption of his personality.

48    There is no doubt that by these references the Tribunal is conscious of the complexity of the inter-relationship between or intertwining of the two conditions based on an assessment of the reports of the psychiatrists.

49    At [28] the Tribunal accepts the opinion of Dr McGuire that the applicant’s drinking was caused by the personality disorder. The Tribunal notes that it is plain that Mr House was retired from the Defence Force on the ground of his alcoholism impairment. At [29] the Tribunal recognises and accepts, based on the evidence of the difficulty of sequential isolation of primary and secondary factors and the demonstrated interrelationship between the two conditions, that it is “artificial in the extreme” to “seek to separately consider the two conditions”.

50    The Tribunal at that point in its methodological treatment of the evidence of the two conditions makes its acceptance of the extreme artificiality of separate consideration of the affects of each condition (impairment), plain. At [29] the Tribunal also recognises the long-standing inter-relationship of the two conditions by observing in the following terms that:

… in all likelihood Mr House’s long-standing personality disorder pre-dated his discharge from the Australian Army … [and] it was the drinking [impairment] which caused the incapacity that was the reason for the discharge [emphasis added].

51    The Tribunal at [29] notes that the drinking may have been the “overt manifestation of the underlying personality [disorder]”.

52    At [29], as already noted, the Tribunal finds the alcoholism impairment to be the “proximate cause” of the discharge and thus the applicant’s personality disorder ought not to be accepted as a mental impairment falling within s 34(1B), and by so finding, the Tribunal fell into error. Notwithstanding that error, the Tribunal at [30] notes, having regard to the earlier references, that the medical evidence recognises the “difficulties inherent in trying to separate the extent of incapacity arising from alcoholism from that arising from personality disorder”.

53    The Tribunal also notes however at [30] that the task of separation is “now easier given that Mr House has been abstaining from alcohol for a considerable period of time”. The Tribunal at [30] sets out its essential analytical method in these terms:

… I propose to first consider the totality of … [Mr House’s] mental conditions and the extent to which they lead to incapacity for employment before determining whether there is an apparently logical basis for differentiating between the consequences of the two conditions.

54    The Tribunal notes at [31] that there is a “considerable body of psychiatric evidence … available” including “the evidence referred to in … [26] and [27] … , of the interconnection between the two conditions”. In terms of method, the Tribunal also said at [33] that it was logical, helpful and a useful task to compare Mr House’s condition as determined by the Tribunal’s decision of June 2004 with his condition as disclosed in the evidence before the Tribunal in the course of the subject hearing, to consider what might have changed. This approach was also thought to be useful because Mr House was no longer drinking; was in a stable relationship; and was undertaking voluntary work three days per week. The abstention from alcohol was earlier identified at [30] as one factor making separation of analysis easier. Nevertheless, at [42] the analytical course adopted is described in this way:

It follows that I propose to consider the extent of Mr House’s incapacity by reference only to the condition of alcoholism accepting the reality that it may not be possible to differentiate between incapacity attributable to that cause and that attributable to underlying personality disorder.

55    The implementation of that course is further described at [43] in this way: “As it seems to me, the first step is to consider the evidence that touches upon the question of incapacity arising from prescribed impairments [alcoholism] to examine what that evidence says of the relevant consequences to Mr House’s capacity from the impairments”.

56    At [44], the logical starting point for the Tribunal as it had suggested at [33] was the decision the earlier Tribunal reached in June 2004 as to incapacity. That was a decision of 29 June 2004 affirming the Authority’s decision of July 2001 (affirmed on reconsideration by the Authority on 15 February 2002) to classify Mr House’s incapacity as Class C at 20%. By that decision the Authority recognised Mr House’s prescribed impairment as alcoholism but excluded alcoholic liver disease as a prescribed impairment. Mr House did not contend in the earlier Tribunal hearing (leading to the decision of 29 June 2004) that his personality disorder was a prescribed impairment.

57    Deputy President Hack SC notes at [44] that because Mr House had abstained from alcohol; was in a stable relationship; was a carer for his spouse; and, was undertaking voluntary work assisting blind people three days a week, his “level of incapacity … on one view … ought to be reduced … as [t]hose matters … suggest[ed] a marked improvement rather than a worsening of his capacity”.

58    That assessment as a matter of impression, of course, does not in terms take into account at the outset any aspect of Mr House’s personality disorder unless the emotional factors of a stable relationship; acting as a carer; and performing voluntary work assisting blind people are factors the Tribunal treated as bearing upon the expression (or not) of aspects of Mr House’s accepted personality disorder. Those factors, however, seem to be directly related to anticipated improvements in Mr House’s capacity for civilian employment by reason of his abstention from alcohol.

59    At [45], the Tribunal, having noted what might be, on one view, a marked improvement in Mr House’s capacity, said it was nevertheless necessary to look at the evidence.

60    The Tribunal began that examination at [46] by considering the neuropsychological evidence of the extent of any cognitive impairment suffered by Mr House. The Tribunal notes that as long ago as 1992, Mr House was assessed by a clinical neuropsychologist, Ms Maureen Field, and in her report of 21 January 1992 she described cognitive impairments in several areas suffered by Mr House including “significant memory impairment”. The Tribunal notes a further neurological assessment of Mr House undertaken in March 2007 by Ms Chris Schumann and notes Ms Schumann’s report of 17 April 2007 describing Mr House’s memory as being “moderately impaired for immediate recall and learning”. The Tribunal notes Ms Schumann’s observation that Mr House suffered “a retrieval deficit which was consistent with his history of chronic alcohol excess”. The Tribunal also notes at [46] the result of Ms Schumann’s testing which indicated the following problems:

1)    Moderate depression,

2)    Mildly slow processing speed on some tasks,

3)    Mild verbal fluency deficit,

4)    Memory problems that included:

a.    Moderate retrieval deficit,

5)    Executive problems that included:

a.    Mild conceptual shifting problems,

b.    Mild to severe planning and organising deficit,

c.    Mild to moderate visuoperceptual organization deficit

61    The Tribunal at [47] notes that Ms Schumann described the results as consistent with the assessment in 1992 and that there had been no change between 1992 and 2007. At [48], the Tribunal observes that Dr McGuire, in her report of 19 April 2006 had said that Mr House suffered “no obvious cognitive deficits”. That observation of Dr McGuire was consistent with Deputy President Hack SC’s own observations of Mr House in the course of the hearing.

62    These observations at [46], [47] and [48] address the extent of any cognitive impairments evident in Mr House in the context of his history of chronic alcohol excess. At [49], the Tribunal turns to the psychiatric evidence and observed that the extent of Mr House’s memory deficits were the subject of a report from a consulting psychiatrist, Dr Philip Morris. The Tribunal notes the view expressed by Dr Morris in his report and evidence, in these terms:

On examination on various occasions he has been cooperative and showed no obvious distress. His speech shows difficulty with verbal fluency, and with word finding difficulties. His speech is coherent. His affect showed good range and was appropriate. His mood was euthymic. No psychotic features were noted. He does not have any suicidal or homicidal intent now but has had suicidal thoughts in the past. He has been alert on all assessments. His is of average intelligence. His judgment and insight are preserved. Cognitive examination using the Addenbrooke Cognitive Exam revealed problems with verbal memory recall and impaired phonemic verbal fluency. The remainder of his cognitive functions, including attention and orientation, language and visuospatial capacities were impaired. His mini mental state exam score was 29/30 and his ACER score was 96/100. Neither indicates dementia.

Computer based neuropsychological testing … revealed impairments in switching of attention … and verbal interference … and his verbal memory recall after a short and long delay was well below what would be expected based on his premorbid intelligence. These results indicate a mild disturbance of cognition in the areas of attention and concentration, executive function and memory recall that are consistent with his subject complaints.

63    At [49], the Tribunal notes that in oral evidence Dr Morris said that the deficits he had observed were not recent and were consistent with heavy consumption of alcohol.

64    At [50], the Tribunal concludes:

This evidence leads me to conclude that the degree of demonstrable impairment is objectively quite minor and is, at best for Mr House, unchanged over the past few years.

65    Although the Tribunal at [49] refers to the psychiatric evidence of Dr Morris, that evidence is assessed in the context of Dr Morris’s view of any cognitive impairment suffered by Mr House in the context of Mr House’s heavy consumption of alcohol.

66    At [51], the Tribunal notes Mr House’s reliance on the additional matter of “manifestations of his personality that he contends affect his capacity to engage in employment”. The Tribunal notes that the particular manifestations relied upon are “character traits” described by Dr Reddan in her report of 22 June 1997 following a consultation with Mr House on 19 June 1997. The Tribunal notes the content of that view, drawn from Dr Reddan’s report, as follows:

Mr House has difficulty in seeing the points of view of others. His thinking is inflexible and marked by grandiosity and a sense of entitlement. He tends to overstate his case and to project blame onto others for all of his own misfortunes. He thus refuses to accept any responsibility for his situation in life and pursues compensation as part of his drive to prove that others are responsible for any misfortune he has. He is selfabsorbed and unwilling to look at the effect of his behaviour on his family. He consciously and determinedly refuses to change.

67    The Tribunal then notes the further report of Dr Reddan of 15 January 2003 in the following terms:

There have been some shifts in his presentation in that on this occasion [28 November 2002] he expressed more concern for others and a greater capacity for empathy. He also appeared to have insight into certain aspects of his belief patterns. However, he continues to exhibit paranoid traits and he defends against his low self esteem and feelings of inferiority by some narcissistic defences. He has long been reluctant to accept responsibility and he has been absorbed in selfpity (which he describes as a sense of victimisation) for many years. He has been rigid and inflexible in his thinking, but this has been challenged of recent times. His alcohol use has been selfdefeating.

68    At [52], the Tribunal notes that Dr McGuire generally agreed with this aspect of Dr Reddan’s evidence.

69    At [53], the Tribunal notes that the attributes identified by Dr Reddan are said to affect Mr House’s “soft skills” of “initiative, communication, team work, ability to problem solve, selfmanage, plan and learn”, according to the evidence of an occupational therapist, Ms Rowe. The Tribunal notes that Dr Reddan and Dr McGuire had said that as Mr House had stopped drinking, he could no longer be diagnosed as having either alcohol abuse or alcohol dependence, “the relevant psychiatric diagnoses”. The Tribunal notes Dr McGuire’s evidence that Mr House’s relationship, role as a carer and voluntary work was indicative of empathy, care and compassion and shows somebody who is improving. In this context, the Tribunal also notes the evidence of Dr Reddan that those factors reflect “an improvement in his mental state”. As to the relationship between the physical effects of ceasing to drink, and disposition, moods and personality, the Tribunal notes Dr Reddan’s comments as follows:

First of all there is the recovering effects physically on the brain and the improvement of overall competent functioning … [i]f you are not subjecting the brain to a drug that is actually – the central nervous system depresses. So, gradually the brain does recover. Very often it also leads to more stabilisation of moods. Often an improvement in motivation in particular. There is a general decrease in irritability and what we would call dysphoric or unhappy feelings. Alcohol tends to be a drug that over time makes people miserable. You usually find when people have abused alcohol, even if there’s a binge pattern of drinking or its intermittent abuse, that their mood improves when they either sip or drink at low levels.

70    At [54], the Tribunal generally preferred the evidence of Dr Reddan and said this:

But Dr Reddan’s evidence, and that of Dr McGuire, satisfies me that the personality traits earlier identified by Dr Reddan would be less marked now that Mr House is no longer drinking and is in a stable relationship. … I am then satisfied that by the time of the present application to the Authority, Mr House was no longer abusing alcohol which had the effect of considerably improving his capacity for care, compassion and empathy as well as leading to an improvement in his “soft skills”.

The classes of employment

71    Mr House contended before the Tribunal that someone with his skills, qualifications and experience might reasonably undertake employment as a driver (including truck, taxi or courier driver); operator of equipment, plant and machinery; work requiring mechanical aptitude; work as a subcontractor in mining or construction; a labourer; a storeman; a security officer; and work as a foreman in any of those fields. The Authority contested whether a person with Mr House’s skills could perform the role of a worker undertaking work requiring mechanical aptitude and work as a foreman in any of the other occupations. The Tribunal concluded at [59] that employment in areas requiring mechanical aptitude was not the type of employment that a person with Mr House’s background might reasonably undertake and nor did the Tribunal accept that a person with his background might reasonably undertake employment as a foreman: [60] and [61].

72    At [63], the Tribunal adopts a method of assessing the extent of Mr House’s capacity to undertake the remaining categories of employment by examining the duties or work demands of each calling as identified by Ms Rowe, and the affect of his “conditions” upon his capacity to perform those duties or work tasks.

73    As to employment as a delivery driver or truck driver, the Tribunal said this at [65]:

The only difficulties identified that are capable of being attributed to Mr House’s accepted condition [impairment] of alcoholism is a deficiency in his capacity to plan and to find geographical locations and an inability to relate to customers because of his aggression. I am prepared to accept that the first of these is the consequence of alcoholism and is the manifestation of the memory deficits first reported on by Ms Field in 1992 and more recently by Dr Morris and Ms Schumann. … The other difficulty identified, that of aggression, seems more likely to be the consequence of Mr House’s personality disorder. But, as Dr Reddan observed, Mr House is quite capable of controlling his emotions. Moreover, there is evidence of considerable maturation on the part of Mr House from 2004 onwards.

74    At [66], the Tribunal observed that these two matters “even taken together” suggested that the extent of any impairment to Mr House’s capacity to undertake employment as a truck driver of any type is minimal at best.

75    As to employment as a driver of mobile plant, the Tribunal observed that Ms Rowe had identified a range of difficulties but that the “only relevant difficulty is a claimed inability on Mr House’s part to work as part of a team”. The Tribunal at [67] said this:

Mr House identified to Ms Rowe episodes of aggression in the workplace on his part and a warning from his employer [by reference to two letters] … I hardly think that an occasional incident of aggression in the workplace should lead to the conclusion that Mr House had difficulty working as part of a team. It is to be borne in mind that he was a longterm employee in two workplaces and left both employers of his own accord. His longevity seems to me to be inconsistent with the notion of having difficulties working as part of a team.

76    At [68], the Tribunal reached the conclusionary opinion that “[i]t is not apparent to me how this difficulty could be regarded as being attributable to Mr House’s alcoholism however even if it be assumed that it was, I regard the extent of reduction of Mr House’s capacity for employment of this type to be minimal at best”.

77    In respect of the category of truck driver or delivery driver and, more particularly, the category of driver mobile plant, the applicant contends that the Tribunal has undertaken its assessment of incapacity by reference to Ms Rowe’s analysis (AB, Part B, p 422 to 424), without proper regard to the evidence of Dr Reddan. Although the applicant concedes that in the case of employment as a truck driver, the Tribunal has had regard to Mr House’s personality disorder, the applicant says that in each case (but particularly with regard to the consideration of work as a driver of mobile plant) the Tribunal did not take into account the evidence of Dr Reddan at AB, Part B, p 297 concerning Mr House’s inflexibility and marked grandiosity and sense of entitlement. The applicant contends that those matters (also the subject of Dr Reddan’s oral evidence at AB, Part C, p 82) were not taken into account in the assessment of the affects on the capacity of a person exhibiting Mr House’s skills to undertake the work of a driver of mobile plant. The applicant further contends that the elements of Mr House’s personality disorder were not “fully given consideration [by the Tribunal] … because of the way it set up its task” (T 15, lns 13). The applicant further says that the Tribunal’s reliance upon the skills and affects analysis undertaken by Ms Rowe was simply not sufficient in taking into account the demonstrated elements of Mr House’s personality disorder in the exercise of the discretion for the purposes of s 34(1).

78    As to employment as a storeman, the Tribunal at [69] notes Ms Rowe’s comments to the effect that there are concerns in the nature of workplace, health and safety concerns due to Mr House’s history of aggression, difficulty taking orders from supervisors, interpersonal communication skills and poor interpersonal/social skills in the workplace. The Tribunal elected not to accept the conclusions of Ms Rowe as the evidence did not support concerns of workplace, health and safety due to Mr House’s history of aggression and the other matters mentioned. The Tribunal concluded that this was all the more so having regard to changes in Mr House’s behaviour and temperament since 2004 and thus the reduction in capacity, in the context of the duties of a storeman, was minimal.

79    The applicant relies upon the conclusion of the Tribunal that nothing in the evidence supports Ms Rowe’s conclusion, as indicating that the Tribunal has failed to have regard to the evidence of Dr Reddan contained in her report of 22 June 1997 as modified by the shifts noted by Dr Reddan in her report of 15 January 2003, which did support the comments and conclusions of Ms Rowe. The applicant also relies, in that regard, upon the transcript (AB, Part C, pp 9293) of the Tribunal hearing where Dr Reddan is taken to two letters of Mr House’s coworkers which express concerns they had held of difficulties working with Mr House, in part, because of his social problems and aggression. However, at p 88 of the Transcript (AB, Part C) Dr Reddan seemed to be guarded about suggestions put to her that Mr House suffered from a major impairment by reason of an inability to work as a team player. Dr Reddan observed that the impairment was not significant and that it was somewhere between 0% and 5%. The point the applicant makes about this evidence is that there was evidence before the Tribunal supporting the conclusions of Ms Rowe and thus the failure to deal expressly with the aspects of Dr Reddan’s evidence suggests that the Tribunal did not give full consideration to the evidence before it concerning the all of the elements of applicant’s personality disorder. The applicant says the Tribunal failed to do so because it started from the very point that the personality disorder was not a prescribed condition (T 16, ln 46 - T 17, ln 6).

80    At [70], the Tribunal examines the category of work as a labourer and notes that although Ms Rowe refers only to the building industry, the Tribunal treats this occupational group as one falling within the construction or mining industry. The Tribunal observes that for the reasons previously indicated, the impairment of Mr House’s capacity is minimal.

81    The applicant (at T 17, lns 2544) contends that at T 93, lns 1013 (AB, Part C, p 97) of Dr Reddan’s evidence, there is evidence that shows that Mr House’s personality disorder would diminish his capacity to work as a labourer in the mining and construction industries in more ways than was recognised for the position of storeman (that is, by reason of his aggression and inability to work as part of a team). At that part of the Transcript, counsel for the applicant put to Dr Reddan that in the mining and construction industries, you do not want someone who thinks that they are the sole holder of all knowledge on how to mine or construct. Dr Reddan responded by observing that it was a matter of degree and “so as I said there, I think there would be a significant degree of impairment”.

82    At T 91 of AB, Part C, p 95, Dr Reddan was asked about her earlier observation that in the mining and construction industries a combination of Mr House’s personality disorder and alcoholism meant that he suffered from a 40% impairment. Dr Reddan said that the impairment is likely to be less than 40% now that Mr House is no longer drinking (AB, Part C, T 91, lns 2931). At T 92, ln 27, Dr Reddan also agrees that when he suggested to the Tribunal in 2003 that a probable apportionment of the 40% impairment between alcoholism and personality disorder was 50/50, Dr Reddan was undertaking a somewhat artificial exercise.

83    The applicant contends that the Tribunal did not fully address the incapacities for this category of employment flowing from Mr House’s personality disorder.

84    The Tribunal began its perceived task of assessing the affects of Mr House’s impairment of alcoholism upon his capacity to undertake the classes of civilian employment a person with his skills might reasonably undertake, by recognising that the two conditions of alcoholism and personality disorder (one treated as a prescribed impairment and one not) were so intertwined that attempts at teasing them apart were at best only an academic exercise; determining which was primary and which secondary was impossible; and, to separately consider the two conditions was artificial in the extreme. The Tribunal considered the conditions so integrated that Mr House’s drinking was the overt manifestation of his underlying personality disorder.

85    Those foundation observations of the Tribunal rationally suggest that the affects upon Mr House’s capacity for civilian employment were analysed by reference to both conditions notwithstanding that the Tribunal treated, as a matter of law, only the alcoholism impairment as a prescribed impairment.

86    However, the Tribunal had in mind that separation was relevant and had been made analytically easier by reason of Mr House’s abstention from drinking. The impression the Tribunal reached at the threshold arising out of Mr House’s changed and stable circumstances, before examining the evidence in detail, was that Mr House’s capacity for civilian employment had improved, that impression did not seem to take into account, in terms, any aspects of Mr House’s well recognised personality disorder. The Tribunal recognised however the applicant’s reliance on manifestations of a personality disorder; “character traits” reflecting those manifestations identified by Dr Reddan (generally agreed with by Dr McGuire) such as inflexible thinking; grandiosity; a sense of entitlement; paranoid traits; the particular affects upon Mr House’s soft skills; and, Dr Reddan’s evidence that lifestyle changes reflected an improvement in his mental state and soft skills.

87    Although the Tribunal accepted the inseparability of the two conditions, the Tribunal ultimately elected to consider incapacity by reference “only to the condition [impairment] of alcoholism” although accepting that “in reality it may not be possible to differentiate between incapacity attributable to [alcoholism] and that attributable to the underlying personality disorder” (see the discussion at [52] – [55] of these reasons). In analysing the aggregated affect attributed entirely to alcoholism of both conditions upon the capacity of someone exhibiting the vocational, trade and professional skills, qualifications and experience of Mr House in each of the classes of employment, emphasis was placed upon the occupational affects identified by Ms Rowe without expressly weighing in each class of employment, the impact of the elements or integers of the personality disorder identified by Dr Reddan in her reports (and accepted by the Tribunal) and the subject of general agreement by Dr McGuire.

88    These matters are not examined, of course, so as to enable the Court to substitute its own view of the merits or of the competing factual contentions. The examination of the methodological approach of the Tribunal is undertaken for one purpose only, that is, to enable the Court to consider and form a view as to whether relief ought to be denied to the applicant under the AAT Act on the footing that the Court can be confident that there is no possibility of a more favourable outcome to Mr House had the decision been made according to law rather than in error of law.

89    When the question involves the exercise of a discretion and the error of law is relevant to the framework within or foundation upon which the facts are to be determined and upon which the discretion is exercised, the Court ought to exercise great caution before deciding that the error of law could make no difference to the result already reached. The result may be precisely the same when the Tribunal makes its decision recognising correctly that Mr House’s personality disorder is a “prescribed impairment” for the purposes of the Act, but no one can be sure of that. Although, unfortunately, the matter has engaged a number of administrative determinations and subsequent challenges as exhibiting errors of law (as Gilmour J has observed), the only question to be determined in these proceedings is whether the citizen ought to be denied a remedy in the face of demonstrated and conceded error of law in the present decision of the Tribunal under review.

90    In my view an order ought to be made under s 44(4) of the AAT Act setting aside the Tribunal’s decision and remitting the matter for determination according to law as I cannot be confident that there is no possibility that the decision already reached might be different having regard to all of the factors I have mentioned. An order, declaring the correct position as a question of law, ought also to be made to the effect that the personality disorder described at paragraphs 28 and 29 of the Tribunal’s Reasons for Decision of 26 February 2010 (and as elaborated according to the evidence accepted by the Tribunal) as a personality disorder that caused the overt manifestation of Mr House’s alcoholism impairment, is a prescribed impairment for the purposes of Part V of the Defence Force Retirement and Death Benefits Act 1973 (Cth).

91    Such an order is appropriate as it reflects the correct position as a question of law having regard to the Tribunal’s findings of fact. Although such a declaratory order is, of course, inconsistent with the conclusion reached by the Tribunal on the legal question of whether Mr House’s accepted personality disorder is a prescribed impairment for the purposes of the Act, the respondent rightly concedes that having regard to the findings of fact, it necessarily follows that Mr House’s personality disorder is a prescribed impairment.

92    Making a declaration to that effect does not offend s 44(7) of the AAT Act as the declaration does not operate as a finding of fact but operates to declare the correct legal conclusion arising out of findings of fact made by the Tribunal.

93    The case ought to be remitted to the Tribunal to be decided again with a procedural direction that the parties be at liberty to make further submissions as to the affects of Mr House’s personality disorder upon the capacity of someone exhibiting Mr House’s vocational, trade and professional skills, qualifications and experience to reasonably undertake the kinds of civil employment found by the Tribunal to be the relevant classes of civil employment, on the footing that Mr House’s personality disorder is a “prescribed impairment” for the purposes of the Act.

94    The case ought to be remitted to be decided again without the hearing of any further evidence: s 44(5) of the AAT Act.

Associate:

Dated:    1 June 2011

REASONS FOR JUDGMENT

Gilmour J

95    The appeal is from a decision made on 26 February 2010 by the Administrative Appeals Tribunal ("the Tribunal"), constituted by Deputy President Hack SC, which affirmed the decision under review in relation to reclassification of the applicant in accordance with s 34(l) of the Defence Force Retirement and Death Benefits Act 1973 (Cth) ("the Act") ("the decision").

96    The respondent concedes that in relation to the only ground of appeal pressed that the Tribunal was in error when it failed to characterise the applicant’s personality disorder as a prescribed “impairment” for the purposes of s 34(1A)(c) of the Act. The principle issue in the appeal, in light of that concession, is whether there is any possibility that the Tribunal, had it not made that error, would have come to a different decision. Put another way, the question is whether the applicant has been deprived of a different and successful outcome by the respondent’s admitted error. The respondent says that there is no such possibility and that the error was an immaterial one.

Legislative scheme

97    Part V of the Act provides invalidity benefits for members of the scheme established by the Act, who have been retired on the ground of invalidity or physical or mental incapacity to perform their duties.

98    The initial classification of a member is made under s 30 of the Act. This section provides that the Authority shall determine the member's percentage of incapacity in relation to civil employment and shall classify the person according to the percentage of incapacity as follows:

60% or more:     Class A

30% or more but less than 60%:     Class B

Less than 30%:    Class C

99    Section 31 provides for the rate of invalidity pay in respect to a member classified either Class A or B. A member classified Class C is not entitled to invalidity pay.

100    Section 34(1) of the Act provides:

34(1)    The Authority may, from time to time, if it is satisfied that the percentage of incapacity in relation to civil employment of a recipient member in receipt of invalidity pay is such that the classification of the member should be altered, reclassify him in the appropriate classification set out in section 30 according to the percentage of his incapacity in relation to civil employment.

101    Section 34(lA) of the Act provides:

(1A)    In determining:

(aa)    what is the percentage of incapacity in relation to civil employrnent of a recipient rnember; or

(aab)     ...

the Authority shall have regard to the following matters only:

(a)    the vocational, trade and professional skills, qualifications and experience of the recipient member;

(b)    the kinds of civil employment which a person with skills, qualifications and experience referred to in paragraph (a) might reasonably undertake;

(c)    the degree to which any physical or mental impairment of the recipient member, being a prescribed physical or mental impairment, has or had diminished the capacity of the recipient member to undertake the kinds of civil employment referred to in paragraph (b);

(d)    such other matters (if any) as are prescribed for the purposes of this subsection.

102    Section 34 (1B) of the Act provides (emphasis added):

(1B)    In subsection (1A), prescribed physical or mental impairment, in relation to a recipient member or a deceased member who was immediately before his or her death a recipient member, means:

(a)     a physical or mental impairment of the member that was the cause, or one of the causes, of the invalidity or physical or mental incapacity by reason of which the member was retired, whether or not that impairment changed, for better or worse, since that retirement; or

(b)     any other physical or mental impairment of the member causally connected with a physical or mental impairment referred to in paragraph (a).

103    Section 34(2) states that the respondent must specify the date from which the reclassification shall have effect.

Background

104    The applicant, born on 20 March 1950, commenced service with the Australian Defence Force (Army) on 1 October 2010.

105    On 29 May 1975, the applicant was discharged from the Army on the ground that his: ‘Retention in the Military Forces was not in the interests of those Forces’.

106    In October 1976, following representations by the Defence Force Ombudsman, a medical assessment of the applicant was arranged. Based on that assessment, the applicant's mode of discharge was amended to ‘medically unfit for further service. The physical or mental impairments that caused the medical discharge were said to be alcoholism and alcoholic liver disease.

107    A minute paper dated 3 February 1977 from the Office of Director General of Army Health Services discloses that the applicant was discharged from the Army with the disabilities of alcoholism and alcoholic liver disease. It further stated that the applicant was considered to be a man suffering from alcohol addiction with a severely damaged personality, and that his composite percentage disability for employment in the general labour market was assessed at 20% at that time. The respondent first considered the extent of the applicant’s incapacity in 1979 and classified him as Class C with a percentage of incapacity of 10% with effect from the date of his discharge.

108    On 30 August 1985, under s 37 of the Act, the respondent decided to treat the applicant as though he had been retired on the ground of invalidity or physical or mental incapacity.

109    On 11 October 1985, a delegate of the respondent, under s 30 of the Act, assessed the applicant's incapacity at the time of discharge as 20% Class C. This was not sufficient for the applicant to be entitled to a benefit. On 11 April 1986, the respondent varied the applicant's classification to 30% Class B which did entitle him to a benefit. The applicant's retirement impairments were said to be ‘alcoholism and alcoholic liver disease’.

110    The question of Mr House's benefits has a long history of disputes in the Tribunal and the Federal Court. It is helpful to have an understanding of that history which follows.

First Tribunal Proceedings

111    On 5 December 1986, a delegate of the respondent reviewed the applicant's incapacity under s 34 of the Act. The applicant was reclassified to 20% Class C with effect from 16 January 1987. The respondent affirmed the delegate's decision. The applicant appealed to the Tribunal. On 24 June 1988, the Tribunal affirmed the decision under review. The applicant appealed to this Court which allowed the appeal and remitted the matter to the Tribunal for further consideration. The respondent’s appeal to this Court was dismissed and the matter was remitted to the Tribunal: Defence Force Retirement and Death Benefits Authority v House (1989) 22 FCR 138; (1989) 91 ALR 286.

Bulley Tribunal

112    Meanwhile, in 1989, the applicant requested from the respondent a review of his incapacity. On 10 November 1989, a delegate of the respondent decided that the applicant's classification was 20% Class C. On 4 May 1990, the respondent affirmed the delegate's decision. The applicant's retirement impairment remained ‘alcoholism and alcoholic liver disease’.

113    On 20 March 1992, the Tribunal set aside the respondent's decisions of June 1987 and May 1990 and classified the applicant as 35% Class B from 16 January 1987 and 40% Class B from 10 November 1989 ('Bulley Tribunal'). The Bulley Tribunal specifically rejected personality disorder as a prescribed impairment.

Muller Tribunal

114    Meanwhile, the applicant again applied for review of his incapacity. On 6 November 1992, a delegate of the respondent determined that the applicant's incapacity remained 40% Class B. That decision was affirmed by the respondent on 3 April 1993. The retirement impairments remained alcoholism and alcoholic liver disease. The applicant appealed to the Tribunal ('Muller Tribunal'). The Tribunal in its decision of 16 February 1994 noted that the timing of the decision under review was proximate to the decision of the Bulley Tribunal: House and Defence Force Retirement and Death Benefits Authority [1994] AATA 442. The Tribunal therefore found:

We adopt the findings of fact, the analysis of the law and the decision of the Tribunal on 20 March 1992. We see no point in repeating what was said there.

The applicant's subsequent appeal to this Court was withdrawn.

Purcell Tribunal

115    In 1995, the applicant requested a review of his incapacity by the respondent. On 23 May 1995, a delegate of the respondent determined that the applicant's incapacity remained 40% Class B and that the applicant's prescribed impairment remained ‘Alcoholism and Alcoholic Liver Disease’. That decision was subsequently affirmed by the respondent on 27 October 1995. The applicant appealed to the Tribunal (‘Purcell Tribunal’). On 16 June 1997, the Purcell Tribunal affirmed the reviewable decision: House and Defence Force Retirement and Death Benefits Authority [1997] AATA 836. At [18]-[19], the Tribunal adopted the reasoning and conclusion of the Bulley Tribunal that the applicant’s personality disorder was not a separate impairment.

Beddoe Tribunal

116    In October 1997, the respondent rejected a review requested by the applicant. That decision was reconsidered and affirmed by the respondent on 11 November 1998. The applicant appealed to the Tribunal. In addition, in 1999, the applicant requested yet another review of his incapacity. A delegate of the respondent decided that the applicant's classification remained 40% Class B with effect from 20 June 1999. The respondent affirmed the decision. The applicant again appealed to the Tribunal.

117    The Tribunal heard the above applications together (‘Beddoe Tribunal’) and delivered its decision on 8 May 2001: House and Defence Force Retirement and Death Benefits Authority [2001] AATA 375. The Tribunal stated at [7]:

The applicant says he was discharged from the Army because of alcoholism. He has also attributed the discharge to racist attitudes of his commanding officer and to drunkenness. During his Army service he served in South Vietnam and attributes his heavy drinking to his service in Vietnam.

118    In relation to incapacity and prescribed impairment, the Tribunal stated the following:

It seems to us to be the case that the applicant’s abuse of alcohol is a controlled abuse reflecting personality disorder rather than addiction. On the material before us he seems to be in control of his situation at all times, except when intoxicated, and he reaches that state because that is something that he sets out to achieve rather than because he is unable to control an addiction for alcohol. It is more likely, in our view that the applicant has an aggravated but endogenous personality disorder. [41]

However we were not asked to change the prescribed physical or mental impairment by the respondent and we have decided that it is now too late in the day to do so. The history of the payment of pension to the applicant denies that there is not a prescribed physical or mental impairment. [42]

The prescribed physical or mental impairment in this case is Alcoholism and Alcoholic Liver Disease. As we have already noted we have doubts, with the benefit of hindsight, that those conditions are a correct diagnosis of the applicant’s present condition. There is deliberate alcohol abuse but in a controlled way so as to mitigate against a finding of alcoholism. However we accept that the applicant’s controlled binge drinking can be accepted as alcoholism and that abuse of alcohol had its genesis in the applicant’s war service. [46]

119    The Tribunal reclassified the applicant from 40% to 30% Class B with effect from 22 June 1999. The applicant's appeal to this Court was dismissed: House v Defence Force Retirement and Death Benefits Authority [2002] FCA 65.

Cowdroy Tribunal

120    Meanwhile, the applicant sought another review of his incapacity. On 3 July 2001, a delegate of the respondent reclassified the applicant to 20% Class C. The respondent reconsidered and affirmed the decision on 13 February 2002. The applicant appealed to the Tribunal.

121    In its decision of 29 June 2004 ('Cowdroy Tribunal'), the Tribunal affirmed the respondent's decision: Re House and Defence Force Retirement and Death Benefits Authority (2004) 83 ALD 792. At [42] the Tribunal found:

The tribunal shares the view of the delegate that the incapacity by reason of which the applicant was retired was the effects of alcoholism. It is not in dispute that the applicant's prescribed physical or mental impairments are alcoholism and alcoholic liver disease. It finds that there is, within the relevant time period to which this tribunal must have regard, no evidence of any impairment arising from alcoholic liver disease. Therefore, the tribunal has to consider the effects of alcoholism, which has been described in terms such as alcohol abuse and alcohol dependence.

122    The applicant's appeal to this Court was referred to the Federal Magistrates Court. The appeal was subsequently dismissed.

Current matter

123    The history of the current matter commenced on 19 November 2004 when the applicant sought review of his invalidity classification. The respondent declined the applicant's request for review, which was affirmed on reconsideration. The applicant appealed to the Tribunal.

McDermott Tribunal

124    On 15 January 2008, the Tribunal ('McDermott Tribunal') set aside the respondent's decision and reclassified the applicant to 30% Class B with effect from 19 November 2004: House and Defence Force Retirement and Death Benefits Authority [2008] AATA 38. The Tribunal considered that the applicant's prescribed physical and mental impairments were alcoholism and personality disorder. The respondent appealed to this Court.

125    On 1 April 2009, the Court upheld the respondent's appeal and the matter was remitted to the Tribunal: Defence Force Retirement and Death Benefits Authority v House [2009] FCA 302; (2009) 49 AAR 525.

Hack Tribunal

126    On 26 February 2010, Deputy President Hack determined that the applicant's classification remains Class C, assessing the applicant's incapacity as 10-15%: Re House and Defence Force Retirement and Death Benefits Authority [2010] AATA 147. The Tribunal observed at [14] that all earlier determinations of the applicant’s incapacity had been made on the footing that the applicant’s sole prescribed impairment was alcoholism. The Tribunal rejected the applicant’s contentions that his upper left limb injuries as a result of motor vehicle accidents in 1975 and 1976; and a condition of chronic dysthymia (described as “a chronically low mood”) were impairments causally connected with his accepted prescribed impairment of alcoholism. There is no challenge to those findings. The Tribunal determined that personality disorder did not form part of the applicant's prescribed impairments, considering that it was “plain that alcoholism was the basis on which Mr House was retired” at [28].

127    On 26 March 2010, the applicant instituted the present appeal.

The appeal

128    The only ground of appeal pressed was that the Tribunal erred in law in failing to properly consider whether the condition of “personality disorder” was a mental impairment which was, in addition to alcoholism, “one of the causes of the invalidity or physical or mental incapacity by reason of which the applicant was retired”.

129    As I mentioned at the outset, the respondent conceded jurisdictional error on the part of the Tribunal in failing to characterise the applicant’s personality disorder as a prescribed impairment for the purposes of s 34(1A)(c) of the Act. This concession flowed from the respondent’s acceptance of the contention of the applicant that once the Tribunal determined that the applicant’s impairment of alcoholism was caused by the applicant’s personality disorder, the legal consequence which necessarily follows is that the impairment constituted by the personality disorder is to be treated as a prescribed impairment.

130    The applicant contends that, in light of the admitted error, it is impossible to conclude that the Tribunal gave proper, genuine and full consideration to the elements of the personality disorder in assessing whether the applicant’s percentage of incapacity for civil employment should be altered resulting in a reclassification having regard to s 34(1A) of the Act. The applicant says that although the Tribunal appears to have given some consideration to the effects of the personality disorder, the legal error demonstrates that no one can be sure that the applicant’s personality disorder was fully taken into account by the Tribunal in assessing the statutory requirement, namely, his capacity to undertake the kinds of civil employment which a person with his vocational, trade and professional skills, qualifications and experience might reasonably undertake. It follows, the applicant contends, that had the error not occurred, the assumption of the correct analytical framework could or might have brought about a different outcome.

131    The applicant contends that the Tribunal’s Reasons do not expose whether the Tribunal fully came to grips with the impact of the personality disorder and to the extent that it did address the effects of the disorder, it failed to do so in a discrete way and, properly analysed, viewed the applicant’s personality disorder as an incidental feature of the alcoholism impairment. This, it contends, is sufficient to warrant the decision being set aside and the matter being remitted to the Tribunal for reconsideration on the merits.

132    The respondent concedes error on the part of the Tribunal but submits that it is not a material error because the Tribunal’s reasons demonstrate that the features of the applicant’s personality disorder drawn from the expert evidence were taken into account on the merits; the evidence of the experts was that disaggregating the effects of the alcoholism and personality impairment was complex and difficult; the evidence of the experts to that effect was accepted by the Tribunal; the Tribunal elected to consider the impact of both impairments together; the result is said to follow because all of the effects of both the alcoholism and the personality disorder which as a matter of analysis could not be disentangled were examined and attributed in the aggregate to the impairment of alcoholism. Accordingly, it further submits that treating the applicant’s personality disorder as a prescribed impairment would not have resulted in a finding of any additional or greater degree of incapacity.

The relevant test

133    Where, as in this case, there is demonstrated jurisdictional error on the part of the Tribunal and which is conceded by the respondent, it is sufficient, in order to attract relief setting aside the Tribunal’s decision, that had the error not occurred the outcome could or might be different: Stead v State Government Insurance Commission (1986) 161 CLR 141. Being deprived of the mere possibility of a successful outcome is enough to warrant a remedial order: Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 per Gleeson CJ at [3]-[4]; per Gaudron and Gummow JJ at [80]; McHugh J at [122]; per Kirby J at [131]; per Callinan J at [211]. Here, “successful outcome” would require an outcome such that the applicant’s percentage incapacity be determined, at the least, at 30% or more giving him a Class B determination under s 30 of the Act and thereby an entitlement to an invalidity pay under s 31 of the Act. This would require an assessment of his percentage incapacity at least double that of the top of the range of percentages determined by the Tribunal from 10-15%. An assessment at less than 30% would not entitle the applicant to invalidity pay.

134    Indeed, once the jurisdictional error is established, the remedy, as sought here, will lie almost as of right although the Court retains its jurisdiction to refuse relief if in the circumstances that seems the proper course: R v Ross-Jones; Ex parte Green (1984) 156 CLR 185 at 194; Ex parte Aala per Gaudron and Gummow JJ at [59]; Gleeson CJ and Hayne J agreeing at [5] and [172].

135    Accordingly, it is not every error of law that will result in a matter being remitted for re-determination: the error in question must be material to the Tribunal's decision: BTR PLC v Westinghouse Brake and Signal Co (Australia) Ltd (1992) 34 FCR 246 at 253-254 per Lockhart and Hill JJ; Klinkert v Australian Postal Corporation (1992) 16 AAR 86 at 92 per Hill J; Hyundai Automotive Distributors Australia Pty Ltd v Australian Customs Service (1998) 81 FCR 590, 599D; 3D Scaffolding Pty Limited v Commissioner of Taxation (2009) 75 ATR 604 at [35].

136    Here, the question for the Tribunal was the degree of the applicant's incapacity as at 19 November 2004 (the date that the applicant applied for his review of his classification) and since. The Tribunal determined that the applicant's incapacity for employment was minimal (10-15%). For the reasons which follow I am satisfied that in making that assessment the Tribunal took into consideration both the applicant’s alcoholism and his personality disorder. I am satisfied that the Tribunal would have reached the same result, had an error of the kind demonstrated not been made: cf. Stead v State Government Insurance Commission at 145 per Mason, Wilson, Brennan, Deane and Dawson JJ.

137    Before the Tribunal, the applicant had contended that his personality disorder was centrally connected to his alcoholism. The Tribunal at [26] observed that, whilst there was no issue that the applicant had a personality disorder, the question whether his personality disorder ought to be regarded as a “prescribed condition [impairment]” was “controversial”. It referred to the evidence of Dr Barbara McGuire, a consulting psychiatrist, and her report of 19 April 2006 where she referred to reports of other psychiatrists as far back as 1983 describing the applicant’s personality disorder. Dr McGuire said that the applicant suffered from a personality disorder which caused him to drink. The Tribunal at [26] then noted the opinion of Dr McGuire that the two conditions of alcoholism and personality disorder were “so intertwined as to make attempts at teasing them apart at best only an academic exercise”.

138    At [27] the Tribunal referred to the evidence of Dr Jill Reddan, another consulting psychiatrist, who provided three reports dated 22 June 1997, 8 May 2000 and 15 January 2003. The Tribunal noted Dr Reddan’s opinion contained in her report of 22 June 1997 that the applicant had a personality disorder and importantly Dr Reddan’s observation that:

The relationship between Mr House’s personality disorder and his alcohol consumption is complicated and it is impossible to state which is the primary problem and which is the secondary. It is likely however, that Mr House sought to deal with any uncomfortable affects or anxieties by alcohol abuse but, because of his need to project blame onto others and refusal to see any problems within himself, he has consistently refused to address his alcohol problem. It is likely, however, that his ongoing alcohol consumption did narrow his ability to think through the consequences of his actions and assisted in maintaining the rigidity and self-absorption of his personality. (Emphasis added)

139    It was Dr McGuire’s opinion, accepted by the Tribunal at [28], that the applicant’s drinking was caused by the personality disorder but that it was “artificial in the extreme” to “seek to separately consider the two conditions”. The Tribunal then stated at [29]-[30]:

It seems clear that Mr House’s personality disorder is a long-standing condition and, in all likelihood, pre-dated his discharge from the Australian Army. But it was Mr House’s drinking, categorized as alcoholism, which caused the incapacity that was the reason for his discharge. The drinking may have been the overt manifestation of the underlying personality but nonetheless the alcoholism was the proximate cause of the discharge. I am, then, not satisfied that Mr House’s personality disorder ought to be accepted as a prescribed impairment.

140    Then the Tribunal stated at [30]:

The medical evidence recognises the difficulties inherent in trying to separate the extent of incapacity arising from alcoholism from that arising from personality disorder however that task is now easier given that Mr House has been abstaining from alcohol for a considerable period of time. In the practical application of the statute to Mr House’s circumstances I propose to first consider the totality of his mental conditions and the extent to which they lead to incapacity for employment before determining whether there is an apparently logical basis for differentiating between the consequences of the two conditions. (Emphasis added)

141    I take, in its stated context of “the difficulties inherent in trying to separate the extent of incapacity arising from alcoholism from that arising from personality disorder …” the expression “the totality of his mental conditions” as including the effects upon the applicant of his personality disorder. Indeed, at [32] the Tribunal concluded that there was no unfairness in permitting the applicant to argue his case on a “wider basis” than he had previously done in the June 2004 decision. At that earlier hearing the applicant had not contended that he had a personality disorder which was a separate impairment. However, before the Tribunal, the argument was widened to include incapacity as a result of his personality disorder.

142    Then, at [43] the Tribunal, in effect, repeated its proposed approach which was to consider the evidence on incapacity arising from prescribed impairments. The use of the plural “impairments” again, in context, I infer, is inclusive of his personality disorder.

143    Deputy President Hack SC observed at [44] that because the applicant had abstained from alcohol; was in a stable relationship; was a carer for his spouse; and, was undertaking voluntary work assisting blind people three days a week, his “level of incapacity … on one view … ought to be reduced … as [t]hose matters … suggest[ed] a marked improvement rather than a worsening of his capacity”.

144    The Tribunal considered neuropsychological evidence of the extent of cognitive impairment suffered by the applicant. The main cognitive impairment appeared to have been a significant memory impairment, although the Tribunal said that the applicant had suffered no obvious cognitive deficits in the course of the hearing which reflected the view of Dr McGuire. Another consulting psychiatrist, Dr Morris, indicated a mild disturbance of cognition in the areas of attention and concentration, executive function and memory recall that are consistent with his subject complaints and were consistent with heavy consumption of alcohol. The Tribunal concluded that the applicant’s degree of demonstrable impairment was objectively quite minor.

145    At [51], the Tribunal noted the applicant’s reliance on the additional matter of “manifestations of his personality that he contended affect his capacity to engage in employment”. The Tribunal noted that the particular manifestations relied upon were “character traits” described by Dr Reddan in her report of 22 June 1997 following a consultation with the applicant on 19 June 1997. Her description was that:

Mr House has difficulty in seeing the points of view of others. His thinking is inflexible and marked by grandiosity and a sense of entitlement. He tends to overstate his case and to project blame onto others for all of his own misfortunes. He thus refuses to accept any responsibility for his situation in life and pursues compensation as part of his drive to prove that others are responsible for any misfortune he has. He is selfabsorbed and unwilling to look at the effect of his behaviour on his family. He consciously and determinedly refuses to change.

146    These were undoubtedly referrable to his acknowledged personality disorder.

147    The Tribunal then set out the following extract from a further report of Dr Reddan of 15 January 2003 which again are an expression of the applicant’s manifest personality disorder:

There have been some shifts in his presentation in that on this occasion [28 November 2002] he expressed more concern for others and a greater capacity for empathy. He also appeared to have insight into certain aspects of his belief patterns. However, he continues to exhibit paranoid traits and he defends against his low self esteem and feelings of inferiority by some narcissistic defences. He has long been reluctant to accept responsibility and he has been absorbed in selfpity (which he describes as a sense of victimisation) for many years. He has been rigid and inflexible in his thinking, but this has been challenged of recent times. His alcohol use has been selfdefeating.

148    At [52], the Tribunal noted that Dr McGuire generally agreed with this aspect of Dr Reddan’s evidence.

149    At [53], the Tribunal observed that these personality attributes identified by Dr Reddan were said to affect the applicant’s “soft skills” of “initiative, communication, team work, ability to problem solve, selfmanage, plan and learn”, according to the evidence of an occupational therapist, Ms Rowe. The Tribunal noted that Dr Reddan and Dr McGuire had said that as the applicant had stopped drinking, he could no longer be diagnosed as having either alcohol abuse or alcohol dependence, the relevant psychiatric diagnoses. The Tribunal noted Dr McGuire’s evidence that the applicant’s relationship, role as a carer and voluntary work was indicative of empathy, care and compassion and showed somebody who was improving. In this context, the Tribunal also noted the evidence of Dr Reddan that those factors reflect “an improvement in his mental state”. As to the relationship between the physical effects of ceasing to drink, and disposition, moods and personality, the Tribunal noted Dr Reddan’s observations as follows:

First of all there is the recovering effects physically on the brain and the improvement of overall competent functioning … [i]f you are not subjecting the brain to a drug that is actually – the central nervous system depresses. So, gradually the brain does recover. Very often it also leads to more stabilisation of moods. Often an improvement in motivation in particular. There is a general decrease in irritability and what we would call dysphoric or unhappy feelings. Alcohol tends to be a drug that over time makes people miserable. You usually find when people have abused alcohol, even if there’s a binge pattern of drinking or its intermittent abuse, that their mood improves when they either sip or drink at low levels.

150    At [54], the Tribunal stated:

But Dr Reddan’s evidence, and that of Dr McGuire, satisfies me that the personality traits earlier identified by Dr Reddan would be less marked now that Mr House is no longer drinking and is in a stable relationship. … I am then satisfied that by the time of the present application to the Authority, Mr House was no longer abusing alcohol which had the effect of considerably improving his capacity for care, compassion and empathy as well as leading to an improvement in his “soft skills”. (Emphasis added)

151    When the degree of incapacity for each category of civilian employment was considered by the Tribunal, I am satisfied for the reasons which follow that the Tribunal took into consideration all the incapacities upon which the applicant relied whether said to be the result of his personality disorder or his alcoholism.

Categories of employment

152    The applicant contended before the Tribunal that someone with his skills, qualifications and experience might reasonably undertake employment as a driver (including truck, taxi or courier driver); operator of equipment, plant and machinery; work requiring mechanical aptitude; work as a subcontractor in mining or construction; a labourer; a storeman; a security officer; and work as a foreman in any of those fields. The respondent contested whether a person with the applicant’s skills could undertake work requiring mechanical aptitude and work as a foreman in any of the other occupations. The Tribunal concluded at [59] that employment in areas requiring mechanical aptitude was not the type of employment that a person with the applicant’s background might reasonably undertake and nor did the Tribunal accept that a person with his background might reasonably undertake employment as a foreman: [60] and [61].

153    At [63], the Tribunal adopted a method of assessing the extent of the applicant’s capacity to undertake the remaining categories of employment by examining the duties or work demands of each category of work as identified by Ms Rowe, and the affect of his “conditions” upon his capacity to perform those duties or work tasks.

Delivery driver or truck driver

154    The Tribunal said at [65]:

The only difficulties identified that are capable of being attributed to Mr House’s accepted condition [impairment] of alcoholism is a deficiency in his capacity to plan and to find geographical locations and an inability to relate to customers because of his aggression. I am prepared to accept that the first of these is the consequence of alcoholism and is the manifestation of the memory deficits first reported on by Ms Field in 1992 and more recently by Dr Morris and Ms Schumann. … The other difficulty identified, that of aggression, seems more likely to be the consequence of Mr House’s personality disorder. But, as Dr Reddan observed, Mr House is quite capable of controlling his emotions. Moreover, there is evidence of considerable maturation on the part of Mr House from 2004 onwards. (Emphasis added)

155    At [66], the Tribunal observed that “[t]hese matters even taken together” suggested that the extent of any impairment to the applicant’s capacity to undertake employment as a truck driver of any type is minimal at best.

156    I am accordingly satisfied that the Tribunal considered the relevant aspect of the applicant’s personality disorder, namely aggression, as well as the cognitive deficits caused by his alcoholism in making its assessment.

Driver of mobile plant

157    In respect of this category the applicant contends that the Tribunal undertook its assessment of incapacity by reference to Ms Rowe’s analysis without proper regard to the evidence of Dr Reddan.

158    Although the applicant concedes that in the case of employment as a truck driver the Tribunal has had regard to his personality disorder he says that in each case, but particularly with regard to the consideration of work as a driver of mobile plant, the Tribunal did not take into account the evidence of Dr Reddan concerning his inflexibility and marked grandiosity and sense of entitlement.

159    It is correct that Dr Reddan had identified those traits in her June 1997 report. However, the position concerning his personality traits had shifted significantly, as Dr Reddan noted in her January 2003 report. Moreover, the applicant’s contention in relation to employment as a driver of mobile plant was that the only relevant difficulty was his claimed inability to work as part of a team and that in that respect the applicant had relied upon episodes of his aggression in the workplace which, as I have observed, was considered and dealt with by the Tribunal.

160    At [68], the Tribunal concluded that it was not apparent as to how this difficulty could be regarded as being attributable to the applicant’s alcoholism however even if it be assumed that it was “the extent of reduction of Mr House’s capacity for employment of this type (was) minimal at best”.

161    Whether this aggression was the product of alcoholism or his personality disorder I am satisfied that the Tribunal, in making its assessment, considered this relevant manifestation and its apparent consequences in the work place relied upon by the applicant as evidence of his diminished capacity to undertake civil employment.

162    Moreover, the Tribunal in its consideration of this claim by the applicant observed that the applicant had been a long term employee in two workplaces and had left both employers of his own accord and that longevity in those workplaces was inconsistent with a notion of him having difficulties working as part of a team. I am satisfied that the Tribunal, in making its assessment, fully considered the personality disorder based evidence and contentions relied upon by the applicant in this respect.

Storeman

163    The Tribunal noted Ms Rowe’s comments to the effect that there were concerns in the nature of workplace health and safety concerns due to the applicant’s history of aggression, difficulty taking orders from supervisors, interpersonal communication skills and poor interpersonal social skills in the workplace. These concerns are referrable to the applicant’s history of personality disorder. The Tribunal however, as it was entitled to do, did not accept Ms Rowe’s conclusions as the evidence as a whole did not support concerns of workplace health and safety due to those matters. The Tribunal concluded that this was all the more so having regard to changes in the applicant’s behaviour and temperament since 2004.

164    The Tribunal came to the same conclusion and for essentially the same reasons in relation to the applicant’s claimed reduction in capacity to work as a labourer in the building industry or as a security officer. In each case the degree of diminished capacity was found to be “minimal” or “modest”.

Conclusion

165    I am not persuaded that the Tribunal failed to take into account the relevant personality disorder traits when considering the various categories of civil employment for the purposes of s 34(1A)(c) of the Act. Indeed I am satisfied that it did. The fact that it referred initially to only one impairment, namely, alcoholism does not affect that conclusion. That it did not consider the personality disorder issues in isolation apart from express references to some of them or to their manifestations is because, as the Tribunal found, it is impossible to unravel these conditions or at least their manifestations from those caused by alcoholism.

166    The evidence and the Tribunal’s observations go beyond characterising the inter-relationship of the applicant’s alcoholism and personality disorder as complex or intertwining. The force of Dr McGuire’s evidence was that the intertwining was such “as to make attempts at teasing them apart at best only an academic exercise” and Dr Reddan regarded the inter-relationship as so complicated that it “is impossible to state which is the primary problem and which is the secondary”. At [139], as I mentioned, the Tribunal recognised and accepted these opinions, and characterised any attempt to disengage the two conditions as “artificial in the extreme”. It is the force of the accepted opinions of each of these psychiatrists which it seems to me is fundamental to the disposition of the appeal. There is no appeal from those findings. If the matter were to be remitted the Court would, in effect, be inviting another Tribunal to perform an analysis which the Tribunal found was, in effect, incapable of being done.

167    For all these reasons, I would dismiss the appeal with costs.

Associate:

Dated:    1 June 2011

REASONS FOR JUDGMENT

LOGAN J

168    I have had the advantage of reading in draft the reasons for judgment of Greenwood J. I agree generally with his Honour’s reasons and with the orders he proposes. I wish to make some additional observations.

169    It was common ground between the parties to the appeal that the learned Deputy President had erred in his construction of s 34(1B) of the Defence Force Retirement and Death Benefits Act 1973 (Cth) (the “DFRDB Act”). In this they were not mistaken. In the definition of “prescribed physical or mental impairment” for the purposes of s 34(1A)(c) of the DFRDB Act, found in s 34(1B) of that Act, the word “or” acts as a connecting conjunction between paragraphs (a) and (b) of that definition.

170    In Freeman v Defence Force Retirement and Death Benefits Authority (1985) 5 AAR 156 at 160, Sheppard J, with whom Sweeney J agreed, remarked:

The provisions of s 34(1A) are similar, but not precisely the same as the provisions of s 30(2) earlier referred to. It is to be observed that the matters specified in s 34(1A) as the matters to which the Authority is to have regard are the only matters with which the Authority is to be concerned. The subsection is exhaustive in this regard. It is also to be observed that because of the definition of ‘prescribed physical or mental impairment’ in s 34(1B) a member may be reclassified at any time and may be reclassified so that he is found to have either a greater or a lesser degree of incapacity than was previously the case. That is because the definition in s 34(1B) takes one back to the physical or mental impairment that was the cause of the original invalidity or physical or mental incapacity by reason of which the member was retired. It follows that the Authority is always obliged to look at the current capacity of a member and reach a conclusion on the degree to which the original physical or mental impairment which caused his incapacity has diminished his capacity for civil employment.

When one recalls the definition of “prescribed physical or mental impairment” much may lie behind the remark by Sheppard J that the provisions of s 34(1A) of the DFRDB Act are similar, but not precisely the same as the provisions of s 30(2) of that Act. Materially, s 30(2)(c) of that Act provides:

(c)    the degree to which the physical or mental impairment of the member that caused the invalidity or physical or mental incapacity because of which he or she was retired has or had diminished the capacity of the member to undertake the kinds of civil employment referred to in paragraph (b).

Unlike s 34(1A), there is no particular definition of “physical or mental impairment” for the purposes of s 30(2)(c) of the DFRDB Act. In particular, unlike the position with respect to s 34(1A), it is not expressly stated in or for the purposes of s 30(2)(c) of the DFRDB Act that “physical or mental impairment” includes, “any other physical or mental impairment of the member causally connected with a physical or mental impairment referred to in paragraph (a)”.

171    Referring to the DFRDB Act, the learned Deputy President (at para 28) stated, “[The] legislation requires a determination of the cause or causes of the invalidity or physical or mental incapacity by reason of which the member was retired”. By way of authority for that proposition, he then referred to Re Greer and Defence Force Retirement and Death Benefits Authority [2001] AAT 186; (2001) 63 ALD 282 at [33] in which Deputy President Forgie had stated, “The focus is not upon the invalidity or physical or mental incapacity upon which a person could, or should, have been retired. The focus is upon those invalidities, physical or mental incapacities upon which he was retired.” That statement though was made by Deputy President Forgie with respect to s 30(2) of the DFRDB Act, not s 34(1A). To rely on that statement for the purpose of approaching the reclassification task under s 34 is, given the presence of the definition in s 34(1B) of the DFRDB Act, apt to, and in fact did, mislead.

172    It is not necessary for the purpose of deciding this appeal to attempt to reconcile 30(2)(c) with s 34(1A) of the DFRDB Act or to determine the correctness of statements made in past cases in the Tribunal as to the meaning of s 30(2)(c) of that Act.

173    One of the cases to which Greenwood J refers in considering whether it would, notwithstanding the identified error of law, be an exercise in futility to remit the matter to the tribunal is Stead v State Government Insurance Commission (1986) 161 CLR 141 (“Stead”). In Hoskins v Repatriation Commission (1991) 32 FCR 443 and in Dolan v Australian and Overseas Telecommunications Corporation (1993) 42 FCR 206 Pincus J and Spender J respectively applied Stead by analogy in appeals under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (“AAT Act”) to remit a matter to the tribunal in circumstances where the identified error of law was a denial of procedural fairness by the tribunal. That was on the basis that all that the appellant needed to show was that the denial deprived the appellant of the possibility of a successful outcome.

174    Where, as in those cases, findings of fact made by the tribunal rely in part on an assessment of an applicant’s credibility a deprivation of the possibility of a successful outcome constituted by a denial of procedural fairness is inherently likely. Here, there was no denial of procedural fairness, but because of the error of law, Mr House’s application for review was not determined against the correct statutory criteria. Sometimes, even though the tribunal applies an incorrect statutory test, it can be seen that the same issues would have fallen for consideration had the correct statutory test been applied and that, given the findings of fact made by the tribunal, the same decision must necessarily have resulted. In those circumstances an order remitting the matter to the tribunal would be an exercise in futility. In Secretary, Department of Education, Employment and Workplace Relations v Holmes [2008] FCA 105; (2008) 168 FCR 301 I dismissed the Secretary’s appeal on just such a basis. In so doing and by reference to earlier authority I observed (at [66] to [67]):

66    There is a limited class of case in which an error of law does not vitiate the Tribunal's decision such that, without violating the role consigned to it in an appeal on a question of law, the Court may, in determining the appeal, dismiss the appeal. The authorities concerning this class of case were collected and discussed by Sackville J in Morales v Minister for Immigration and Ethnic Affairs (1995) 60 FCR 550 at 560-561 where his Honour observed:

In certain circumstances, however, the Court may exercise the power in s 44(4) of the AAT Act and make orders finally resolving the matter. In Harradine v Secretary, DSS, for example, the only question was the construction of a particular section of an Act. The parties agreed that whoever succeeded on that issue was entitled, as a matter of law, to succeed in the AAT. Accordingly, the Court made orders finally disposing of the case without remitting the matter to the AAT (at 36, 43, 49). Similarly, if the Court hearing an appeal from the AAT finds an error of law in its reasons, but nonetheless considers that the decision was clearly correct on the material before the AAT it is open to the Court to dismiss the appeal: Austin v Deputy Secretary, Attorney-General's Department (1986) 12 FCR 22 (FCA/FC), at 26-27; McAuliffe v Secretary, Department of Social Security [1992] FCA 483; (1991) 23 ALD 284 (FCA/von Doussa J), at 295-296, aff'd at (1992) 28 ALD 609 (FCA/FC), at 618-619; State Rail Authority of New South Wales v Collector of Customs [1991] FCA 610; (1991) 33 FCR 211 (FCA/FC), at 217.

The scope of the power conferred by s 44(4) of the AAT Act is, however, subject to limitations. These flow from both the fact that an appeal from the AAT is on a question of law only and from the language of s 44(4) and (5). The limitations were explained by Sheppard J in Minister for Immigration and Ethnic Affairs v Gungor [1982] FCA 99; (1982) 63 FLR 441 (FCA/FC), at 454-455:

It is in my opinion not correct to say that this Court is by these provisions given wide powers to make such orders as it thinks fit. Implicit in its powers are a number of restrictions. The appeal is expressly limited to error of law, which alleged error is the sole matter before this Court and is the only subject matter of any order made consequent on the appeal. The order which this Court can make after hearing the appeal is also similarly restricted to an order which is appropriate by reason of its decision. It follows that the only order which can be properly made is one the propriety of which is circumscribed by and necessary to reflect this Court's view on the alleged or found error of law. To go further I would see as amounting to exceeding the jurisdiction of this Court under this section. A power to make "such order as it thinks appropriate by reason of its decision" is much more restrictive than a power "to make such order as it sees fit" or a power "to make a decision in substitution for the decision" the subject of the appeal. S 44(5) confirms, though it states that it does not purport to limit, this as an appropriate reading of the power in s 44(4) when it limits its statement to the express power of the Court when setting aside a decision to the making of an order remitting the case to be heard again. Having set aside a decision, it has no express power to substitute what it sees as the correct decision unless such is the appropriate order by reason of its decision on the point of law in the context of the particular proceedings.

67    Later in time and having referred with approval to Morales 60 FCR 550, the Full Court (Ryan, O'Connor and Weinberg JJ) in Tankey v Adams (2000) 104 FCR 152 at [119] stated that, "The relief which may be granted will depend on the effect of the error of law on the decision-making process. Errors of law which are ‘harmless’ or ‘trivial’ do not normally warrant the setting aside of an administrative decision — Department of Social Security v McKenzie (1993) 31 ALD 55". This statement, in my respectful opinion, is peculiarly apposite in the circumstances of the present case. The Tribunal did err in law in formulating the questions before it for decision but, for the reasons I have given, that error was "harmless". It seems to me that this is a case in which it is open to determine the appeal by dismissing it.

175    It is tempting in this case, having regard to the difficulty on the medical evidence, as noted by the learned Deputy President (at [30]), “in trying to separate the extent of incapacity arising from alcoholism from that arising from personality disorder” just to treat this case as one where the error of law was “harmless” because the tribunal in substance looked at the effects of the two conditions in any event in deciding to affirm the reclassification decision under review. The comprehensive analysis by Greenwood J of the medical evidence and the learned Deputy President’s reasons demonstrates, that it is a temptation to be resisted.

176    The constitution of the tribunal on remission following a successful appeal under s 44 of the AAT Act is usually a matter for that Tribunal’s President and those to whom he has delegated his authority in relation to determining such matters. There is no reason in this matter, exceptionally, to give any direction as to the constitution of the Tribunal on remission. I do no more than observe that the nature of the identified error of law is not such as would prevent the learned Deputy President from again constituting the Tribunal if that accords with the President’s determination as to how best efficiently to administer the Tribunal’s business.

Associate:

Dated:    1 June 2011