FEDERAL COURT OF AUSTRALIA

Repatriation Commission v Connell [2011] FCAFC 116

THE COURT ORDERS THAT:

1.    The appeal pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) is dismissed.

2.    The applicant pay the respondent’s costs to be taxed in default of agreement.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

REASONS FOR JUDGMENT

the Court

1    The applicant, the Repatriation Commission, appeals pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (“the AAT Act”) from a decision of the Administrative Appeals Tribunal (“the Tribunal”). In its decision the Tribunal set aside a decision of the Veterans’ Review Board (“the Board”). The Board had affirmed a decision of the Repatriation Commission to pay the respondent, Mr Connell, a disability pension under the Veterans’ Entitlements Act 1986 (Cth) (“the Act”) at 60% of the General Rate. The Tribunal accepted, on review, a concession by the Repatriation Commission that Mr Connell’s disability should be assessed at the higher rate of 70%. It also, over the objection of the Repatriation Commission, considered that Mr Connell should be paid at the Intermediate Rate of pension.

2    The current application arises in the original jurisdiction of the Court but has been referred to a Full Court for hearing and determination pursuant to s 44(3)(b) of the AAT Act.

3    The issue for determination in the application is whether, in reviewing the decision of the Board, the Tribunal failed to properly construe the provisions of s 23(1)(c) of the Act. In particular, it is necessary to consider the proper meaning of the following words:

prevented from continuing to undertake remunerative work that the veteran was undertaking…

where those words appear in s 23(1)(c) of the Act.

Background facts

4    Mr Connell served in the Australian Army in Vietnam from September 1968 to September 1969. On 13 February 2009, when aged 61 years, Mr Connell applied for a disability pension under the Act. On 25 May 2009, the Repatriation Commission accepted that some of Mr Connell’s disabilities were war-caused. The Repatriation Commission decided that a disability pension should be paid to Mr Connell at 60% of the General Rate of pension. As referred to at [1] above, on the review before the Tribunal, the Repatriation Commission conceded that Mr Connell’s pension should be assessed at 70% of the General Rate of pension. The issue for the Tribunal was whether Mr Connell should have his pension paid at the Intermediate Rate. Central to the resolution of that question was whether Mr Connell satisfied the provisions of s 23(1)(c) of the Act and in particular that portion of the paragraph (c) which is highlighted below. That provision states:

The veteran is, by reason of incapacity from war-caused injury or war-caused disease, or both, alone, prevented from continuing to undertake remunerative work that the veteran was undertaking and is, by reason thereof, suffering a loss of salary or wages, or of earnings on his or her own account, that the veteran would not be suffering if the veteran were free from that incapacity.

(Emphasis added.)

5    Mr Connell gave evidence before the Tribunal that after a holiday in Vietnam in 2004 and visiting a war museum there, he experienced recurring flashbacks about his time spent in Vietnam during the war. Psychiatrists diagnosed Mr Connell as suffering from post traumatic stress disorder in reports given in April 2009, April 2010 and July 2010. Mr Connell’s condition has become worse since his Vietnam holiday and he has greater difficulty concentrating. Mr Connell works as a self employed painter. He works to quotations for jobs rather than for actual hours worked. In a good week he works for about 19 hours. In some weeks he does not work at all. In the period June to August 2010, Mr Connell worked, on average, for about 15 hours per week. Difficulties in his concentration have caused the quality of his work to deteriorate. He often has to go back and rectify work he previously performed.

6    Before the Tribunal, the Repatriation Commission submitted that an applicant for a pension who is still engaged in remunerative work that he or she was undertaking prior to the relevant injury or disease is not eligible to be paid the pension at the Intermediate Rate. At [21], the Tribunal said:

Turning to [the] requirement in s 23(1)(c), I am reasonably satisfied on the evidence of Mr Connell’s tax returns that his war-caused incapacity has led to a loss of earnings. However, the Commission submits that Mr Connell cannot satisfy s 23(1)(c) because he continues to undertake the same remunerative work that he was undertaking before he suffered a loss of earnings by reason of his incapacity.

7    At [25], the Tribunal applied the obiter dicta observations made by Hill J in Repatriation Commission v Haskard (2002) 126 FCR 1 at [32]. There, Hill J considered that the correct construction of s 23(1)(c) was that:

…a veteran who had worked full time but whose ability to work full time was impaired because of incapacity from war-caused injury so that he or she was only able to work part-time, might be said to have been prevented by reason of incapacity from continuing to undertake his [or her] initial full time remunerative work…

8    At [28], the Tribunal said that s 23(1)(c):

…does not require that the veteran must be prevented by his war-caused injury or disease from continuing to undertake any remunerative work of the kind previously undertaken. Rather the requirement in paragraph (c) focuses on the loss of salary, wages or earnings suffered as a result of the incapacity. It is that financial loss suffered by the veteran by reason of his or her reduced capacity to work as a result of the war-caused injury or disease for which the veteran is compensated.

The legislative context

9    The Act obliges the Repatriation Commission to pay a pension to a veteran who has become incapacitated from a war-caused injury or disease. There are three rates at which pensions may be payable:

    the General Rate, under s 22 of the Act;

    the Intermediate Rate, under s 23 of the Act; and

    the Special Rate under s 24 of the Act.

10    The Special Rate is sometimes referred to as the Totally and Permanently Incapacitated pension or the “TPI” pension. It is, broadly speaking, payable to a veteran who, because of total and permanent incapacity resulting from war service, has been unable to resume or continue employment. The General Rate is paid to a person whose incapacity exceeds 10% in accordance with an approved assessment guide. General principles dealing with assessment are set out at s 21A of the Act.

11    Section 23 of the Act provides for an Intermediate Rate of pension, falling between the General Rate and the Special Rate. The section provides various criteria which must be satisfied before a veteran is entitled to a pension at the Intermediate Rate. The only criteria in issue for current purposes are those set out in s 23(1)(c).

12    To satisfy s 23(1)(c) of the Act, a veteran must, for current relevant purposes:

    by reason of incapacity from a war-caused disease;

    be prevented from continuing to undertake remunerative work that the veteran was undertaking; and

    by reason thereof suffer a loss of earnings that the veteran would not be suffering if the veteran was free from that incapacity.

13    There was no issue that Mr Connell is incapacitated due to a war-caused disease. The critical question for determination by the Tribunal was whether that incapacity prevented him from continuing to carry out remunerative work that he was undertaking.

The applicant’s contentions

14    The Repatriation Commission’s counsel, Ms Henderson, referred the Court to the judgment of the Full Court in Peacock v Repatriation Commission (2007) 161 FCR 256, where the difference between the type of incapacities which might qualify a veteran for payment of a pension at the Special Rate and the Intermediate Rate is discussed. At [11] the Full Court said:

The difference between the total and permanent incapacity required for the special rate and the incapacity required for the intermediate rate is that, in the former, the incapacity must render the veteran incapable of working for more than eight hours per week and, in the latter, of working otherwise than on a part-time basis or intermittently.

15    Ms Henderson submits that s 23(1)(c) contains 3 distinct elements:

    the veteran must be prevented from continuing to engage in remunerative work that the veteran was undertaking;

    that prevention must be due to incapacity from the war-caused injury or disease alone; and

    the veteran must be suffering a loss of earnings that he or she would not be suffering but for that incapacity.

16    In accordance with the analysis of s 23(1)(c) favoured by Ms Henderson, the following may be said of the Tribunal’s decision:

    it identified house painting as the remunerative work which Mr Connell was undertaking;

    it did not address whether Mr Connell’s war-caused diseases or injuries prevented him from undertaking that work;

    it did not consider whether the injury or disease or both were the only factor or factors which prevented Mr Connell from undertaking that work; and

    it did consider whether Mr Connell has suffered a loss of earnings due to his war-caused injury.

17    Counsel referred to Flentjar v Repatriation Commission (1997) 48 ALD 1 at 4-5. There Branson J (with whom Beaumont and Merkel JJ agreed), set out questions arising from s 24(1)(c) in the context of a claim for the Special Rate of pension. Section 24(1)(c) is materially identical to s 23(1)(c). Her Honour referred, in substance, to the following four questions:

1)    What was the “remunerative work” that the veteran was undertaking?

2)    Is the veteran, by war-caused injury or disease, or both, prevented from continuing to undertake that work?

3)    If yes to (2) is that injury, disease or both, the only factor or factors preventing the veteran from continuing to undertake that work?

4)    If yes to (2) and (3) is the veteran by reason of being prevented from continuing to undertake that work, suffering a loss of earnings that he would not otherwise be suffering?

18    Ms Henderson observed that the Tribunal purported to distinguish Flentjar on its facts. Counsel contended that the four questions in Flentjar reflect a proper construction of s 23(1)(c) as well as s 24(1)(c) and should have been posed and answered by the Tribunal. Ms Henderson submitted that the Tribunal failed to apply s 23(1)(c) in accordance with its terms.

The contentions of Mr Connell

19    Ms Ronalds SC, with Ms Wood of counsel, appeared for Mr Connell. Ms Ronalds submitted that the four step process in Flentjar was not relevant to the issues which the Tribunal was required to determine in the present matter. Only the first and fourth steps in Flentjar were relevant, counsel contended. The Tribunal was only required to identify the remunerative work that Mr Connell was undertaking and decide whether by reason of being prevented from continuing to undertake that work, Mr Connell suffered a loss of earnings.

20    Ms Ronalds observed that the four questions posed by Branson J in Flentjar were expressly posed in respect of the issues before the Tribunal in that matter. As counsel identified, the claim in Flentjar failed due to the veteran being unable to work as a taxi driver not only because of his injuries but due to his age. No such issue, counsel contended, arises here.

21    Counsel for Mr Connell submitted that the phrase “that he was undertaking” in s 23(1)(c) requires that prior to the incapacity the veteran was working rather than being unemployed. Counsel also stressed the purpose of s 23(1)(c) which is to provide an increased pension for veterans who could no longer work full-time due to their increased injuries. Ms Ronalds contended that it is not the intention of s 23(1)(c) that the Intermediate Rate would only apply to those who could not work at all in their usual occupation, but could work on a limited basis in some other occupation.

22    Stressing the beneficial nature of the Act, counsel for Mr Connell submitted that a curious or unfair anomaly would arise if the following situation applied. A veteran who has an incapacity to work in a former occupation but can still work part-time in another occupation is entitled to the pension at the Intermediate Rate, but a veteran who is partially incapacitated for the usual occupation but continues to work in that occupation at reduced hours is not so entitled. Ms Ronalds submitted that such would be the result of the Court’s acceptance of the submissions of the Repatriation Commission in this matter.

Consideration

23    The sole ground of appeal advanced by the Repatriation Commission is:

Having determined that the Respondent was continuing to work as a painter, the Tribunal purported to find that he was nonetheless “prevented from continuing to undertake remunerative work that [he] was undertaking” within the meaning of the expression in s 23(1)(c) of the [Act].

24    For reasons which follow that ground of appeal is misplaced. It urges an interpretation of s 23(1)(c) which is at odds with the language and purpose of the provision.

25    There was no issue in the matter before the Tribunal about the satisfaction of elements of s 23 apart from s 23(1)(c). Under s 23(1)(aa), Mr Connell had made a claim for an increase in the pension he was receiving. Under s 23(1)(aab) he had not turned 65 years of age when he made his application. Under s 23(1)(a) the degree of his incapacity was assessed as 70%. Under s 23(1)(b) Mr Connell’s war-caused injury, of itself alone, was of such a nature as to render him incapable of undertaking remunerative work otherwise than on a part-time basis or intermittently. As a consequence he has suffered a loss of wages that he would not otherwise be suffering, as referred to in the last part of s 23(1)(c).

26    The only live issue before the Tribunal, and now this Court on appeal, is whether the words “prevented from continuing to undertake remunerative work that the veteran was undertaking” has the effect that if the veteran was undertaking a particular type of work such as painting and still continued to perform that type of work, albeit on a restricted basis, that part of s 23(1)(c) is not satisfied.

27    The Repatriation Commission’s construction is based on the expression “remunerative work” being read as though it said “all remunerative work”. The contention also equates the word “work” with “occupation”. A plain reading of the provision does not support that contention. The prevention of some of the work that the veteran was undertaking is also encompassed by the phrase “prevented from continuing to undertake remunerative work”. That is particularly so because the definite article “the” does not precede “remunerative work”. It would be erroneous to equate “work” with occupation because “remunerative work” is defined in s 5Q(1) of the Act as including “any remunerative activity”. On the facts of this case, it is clear, that Mr Connell was prevented for continuing some of the remunerative activities that he had been undertaking.

28    Further, in the context of the beneficial nature of the Act in question, “remunerative work” should not receive a restrictive interpretation. There is no valid reason to confine the expression to work of a particular type. “Remunerative work that the veteran was undertaking” should not be confined to the actual type of work involved but should also be referrable to its nature and quality. A person who works as a painter on a full time basis but who, due to incapacity, can now only do that work on an intermittent or part-time basis is not continuing to perform the same remunerative work. The restricted nature of the work gives it an entirely different character. Being able to perform work without restriction because of illness or injury is a situation far removed from being able to perform the same work, but with restrictions due to illness or injury. Each is remunerative work of the same type, in this case, painting. But it is not the same remunerative work considering the nature and quality of the work. If one is performing full-time work without any health related restrictions that reduce one’s hours on account of such restrictions it cannot be sensibly said that the later work is a continuation of the work previously undertaken. It is of an entirely different nature and quality, although identical in terms of describing the relevant occupation.

29    We do not consider that a worker must be working full-time prior to the worker becoming entitled to payment at the Intermediate Rate.  A worker who ceases to be able to work 30 hours a week (whether these hours are voluntary or the result of the war-caused injury or disease) and who becomes incapacitated for work for more than 15 hours because of the war-caused injury or disease will be entitled to the Intermediate Rate pension.  The veteran is prevented from undertaking remunerative work that he was undertaking, namely, the work he was undertaking in the 15 hours each week which he can no longer work.

30    The contrary construction would lead to a most curious result, as Ms Ronalds contended; see at [22] above. Such a result should not be lightly arrived at when one is construing beneficial legislation; see Kowalski v Repatriation Commission [2011] FCAFC 43 at [36], per Logan J, with whom Dowsett and Cowdroy JJ agreed.

31    Nothing in the reasons of Branson J in Flentjar supports a different construction of the contested part of s 23(1)(c) in this proceeding. Flentjar does not set out a template of questions which are required to be considered in every case involving the interpretation of s 23(1)(c) or s 24(1)(c). The setting out of the four questions by Branson J is preceded by the words, “(i)n my view the issues before the AAT in this case were as follows…” (emphasis added).

32    It is the duty of this Full Court to consider the question of law raised by the Repatriation Commission in the context of the issue which divided the parties in the Tribunal. Distilled to its basics, that issue was whether Mr Connell was entitled to the pension at the Intermediate Rate in circumstances where he followed the same occupation prior to being affected by a relevant injury or disease as that occupation which he followed, albeit on a restricted basis, after being affected by the relevant injury or disease. For the reasons given above, the Tribunal did not err in law in finding that Mr Connell was entitled to a pension at the Intermediate Rate.

33    In addition, as the Tribunal noted at [24] of its reasons for decision, there is no requirement in s 23 or s 24 that a veteran who has not turned 65 before applying for an increase in the rate of pension is prevented from continuing to undertake his or her last paid remunerative work. There is such a requirement for veterans over 65 years of age; see ss 23(3A)(d) and 24(2A)(d). The construction favoured by the Repatriation Commission of the contentious part of s 23(1)(c) in issue on this appeal would have the effect of imposing such a restriction on a veteran who is under 65 when the legislation could have and did not impose such a restriction on those veterans as it has with older veterans.

Conclusion

34    There was no error of law committed by the Tribunal as alleged by the Repatriation Commission. The appeal must be dismissed, with costs.

Associate:

Dated:    31 August 2011