CATCHWORDS

ADMINISTRATIVE LAW - appeal from Administrative Appeals Tribunal - Tribunal ignored significant evidence supportive of medical view it rejected - whether there was a failure to take account of a relevant consideration - whether there was a breach of the duty to give reasons under s. 43 - whether justice could be seen to have been done - where the Tribunal had relied on observations of the applicant "in and about the hearing room" without advising counsel, whether natural justice had been denied - discussion of Marelic v. Comcare and reliance on demeanour - whether the exception in Stead v. Government Insurance Commission had application.

Administrative Appeals Tribunal Act 1975, s. 43

Brackenreg v. Comcare Australia Sheppard J., unreported, 15 March 1995

Sullivan v. Department of Transport (1978) 20 ALR 323

ARM Constructions Pty Ltd v. Commissioner of Taxation (1986) 10 FCR 197

Marelic v. Comcare (1993) 121 ALR 114

Stead v. Government Insurance Commission (1986) 161 CLR 141

Australian and Overseas Telecommunications Corporation Limited v. McAuslan (1993) 47 FCR 492

Angaston and District Hospital v. Thamm (1987) 47 SASR 177

Government Insurance Office of New South Wales v. Bailey (1992) 27 NSWLR 304

TONY GLEN WALDRON v. COMCARE AUSTRALIA

DG 7 of 1994

Burchett J.

Darwin

24 March 1995

IN THE FEDERAL COURT OF AUSTRALIA  )

                                    )

NORTHERN TERRITORY DISTRICT REGISTRY )DG 7 of 1994

                                    )

GENERAL DIVISION                    )

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY A SENIOR MEMBER

           BETWEEN:     TONY GLEN WALDRON

                             Applicant

               AND:     COMCARE AUSTRALIA

                             Respondent

CORAM: Burchett J.

PLACE: Darwin

DATE : 24 March 1995

                     ORDERS OF THE COURT

THE COURT ORDERS THAT:

1.   The decision of the Administrative Appeals Tribunal (other than its decision to set aside the decision under review by it; its finding with respect to the physical injury to the applicant's left upper limb; and its decision that the respondent should pay certain costs) be set aside;

2.   The matter be remitted to the Administrative Appeals Tribunal differently constituted for determination of the remaining questions according to law; and

3.   The respondent pay the applicant's costs of the appeal, other than the costs of the second day, which were necessitated by the amendment made to the grounds of appeal.

NOTE:     Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA  )

                                    )

NORTHERN TERRITORY DISTRICT REGISTRY )DG 7 of 1994

                                    )

GENERAL DIVISION                    )

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY A SENIOR MEMBER

           BETWEEN:     TONY GLEN WALDRON

                             Applicant

               AND:     COMCARE AUSTRALIA

                             Respondent

CORAM: Burchett J.

PLACE: Darwin

DATE : 24 March 1995

                    REASONS FOR JUDGMENT

BURCHETT J.:

     On 14 June 1986, the applicant, then a sergeant in the Northern Territory Police Force, attended the scene of an incident some kilometres out of Katherine.  A man armed with an automatic weapon and two large knives confronted him.  Three junior officers appear to have taken cover.  The applicant had a police revolver, but the armed man walked towards him.  They grappled, and in the ensuing struggle, the man was subdued, but the applicant was shot in the left arm with his own revolver. 

     The present application is a consequence of this occurrence.  The applicant, whose workers' compensation payments in respect of his injury and its consequences were terminated in January 1993, sought a review by the Administrative Appeals Tribunal of the decision to terminate those payments.  The Tribunal rejected his case that he was suffering from the continuing serious effects of a post traumatic stress disorder.  (It should be noted that on 15 February 1989 a delegate of the Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees established by s. 89A of the Commonwealth Employees' Rehabilitation and Compensation Act 1988 had determined, in pursuance of the provisions of the Act, that the applicant had "sustained personal injury out of [sic] or in the course of his employment on 16 June 1986 namely gunshot wound to upper arm and Post Traumatic Stress Disorder").  Although it denied the existence of a post traumatic stress disorder, the Tribunal did accept that the applicant had suffered a permanent loss of 15% of the efficient use of his left upper limb.  Against the decision so arrived at, the applicant appeals to this Court, raising two questions of law. 

     The legal grounds put forward by the applicant in his amended grounds of appeal are that the Tribunal failed in its duty to provide adequate reasons for its decision, as required by s. 43 of the Administrative Appeals Tribunal Act 1975, and that the Tribunal denied him natural justice by its reliance on certain observations of its own which he was given no opportunity to controvert or explain. 

     The reasons of the Tribunal detail with some care the history of the applicant in the Northern Territory Police Force, and his personal history.  The applicant had entered the force at the age of 22 in 1978.  In that year and in the following year, two of his superiors noted that certain actions of his had exhibited immaturity.  Nevertheless, in 1981 he succeeded in passing his qualifying examinations for promotion to sergeant, and in 1982 he was promoted to the rank of senior constable.  On 22 October 1984, he was promoted to the rank of sergeant.  The latter promotion was despite two incidents, one in 1980, when of course he was quite junior, and the other in 1982, as a result of which he had incurred further criticism.  Both involved confrontations with members of the public in situations where there was some threat of violence.  In each, the applicant himself meted out a measure of violence against another person involved, but in the earlier matter charges of assault against the applicant were dropped, and a complaint in relation to the latter seems only to have led to a deferment of the applicant's ultimate promotion to sergeant.  At some stage, the applicant was placed on prosecuting duties, for which he showed aptitude.  The Tribunal's reasons do not suggest that the number of adverse comments to which reference has been made, incurred by the applicant prior to 14 June 1986, was particularly unusual for his period of eight years of service in the Northern Territory Police Force, or that his promotions were particularly delayed, compared with the careers of others.  Although it appears he did not cope well with conflict, he managed to do his police work, possibly compensating to some extent for what was really a personality problem by an intelligence perhaps rather above the average.  His personal life suggests a measure of stability, since all that time he had maintained, with occasional quarrels, a relationship with a de facto wife, Miss M.L. Hayder, which is revealed by the evidence as having been valued by them both.

     Following the incident when he was shot, the applicant was taken to Katherine Hospital, and then to Darwin Hospital.  The bullet was removed and a compound fracture of the lower humerus was fixed, the arm being placed in plaster for about two months.  In September, the applicant resumed prosecuting duties in Katherine.  But he began to drink alcohol to excess, and his relationship with Miss Hayder began to suffer.  In December 1986, she left Katherine to work in Perth.  As they had lived together for almost eight years, since she was 17 and he 22, this must have been a significant break.  At some time in 1987, the applicant also went to Perth, where he stayed with Miss Hayder and, on 30 November 1987, had an operation performed on his elbow, which was still troubling him.  Thereafter, and following physiotherapy for some period, he noticed an improvement in the range of movement of his arm.

     In February 1988, the applicant and Miss Hayder returned to Darwin, where they lived together again, and the applicant recommenced duties in the prosecutions section.  But his relations, both with his fellow police officers and with Miss Hayder, became more and more strained.  He was still having physiotherapy for his arm.  Very soon after his return to Darwin, in May 1988, he came under the care of a psychiatrist, Dr J. Ridley, the then Director of Mental Health Services of the Northern Territory.  He had been referred to her by his general practitioner because of headaches, disturbed behaviour, sleeplessness, lack of concentration, and inability to cope.  Under Dr Ridley's superintendence, he was placed in group therapy with a Dr Amaral.  Dr Amaral put the applicant off duty in September 1988, and just before Christmas that year he and Miss Hayder went to live in a house they owned in Lismore, a house they had actually acquired for the applicant's mother.  After some time, Miss Hayder left to go to Sydney to stay with her parents.

     Dr J. Ridley was a Member of the Royal College of Psychiatrists and a Fellow of the Royal Australian and New Zealand College of Psychiatrists and, as I have said, Director of Mental Health Services in the Northern Territory.  She was deceased at the time of the hearing in the Tribunal, but she had furnished a report dated 21 September 1988 in respect of the applicant, who had been referred to her on 12 May 1988 by his general practitioner "querying depression".  Dr Ridley wrote:

    "I did not think he had a depressive illness nor that medication was likely to help him.  I did think he was suffering from stress and asked my medical officer to arrange for him to join the psychotherapy group here [i.e. at the Tamarind Centre]."

In a further report dated 26 October 1988, Dr Ridley wrote:

    "After the accident ... , Mr Waldron developed post-traumatic stress disorder.  He required psychotherapeutic intervention and treatment was arranged at Tamarind Centre.  It is still on-going.

     Whilst I would expect that in the future Mr Waldron will be able to return to work of some kind, it is my opinion that he will be unable to return to work in the Police Force. 

     I would estimate that he will require another six months period of treatment, by which time he should be able to consider working in some totally different job, where he is not likely to be subject to stresses similar to those he had in the Police Force.

     In my opinion the post-traumatic stress disorder for which Mr Waldron is now being treated is a direct result of the incident [when he was shot]."

     In mid 1989, the applicant was asked by the Commonwealth to see a psychiatrist, a Dr Milton, in Sydney.  Dr Milton wrote a report including the following comments:

    "The reaction to the injury is typical of those seen in driving, energetic, independent men with pride in physical achievement.  Initially there are strenuous efforts to overcome the disability and only as these fail do symptoms appear, commonly in the form of behaviour problems, depression, restlessness, and irritability.  It appears that these were the principal problems rather than the specific and persistent anxiety and social withdrawal seen in most post traumatic stress reactions, the only firm evidence for this condition being his complaint of persistent nightmares.  My experience with the New South Wales Police indicates that sleep disturbance, including nightmares are [sic] universal after major stressful incidents but do not necessarily interfere with duty, and gradually diminish as time passes.  He is not in any way depressed now, does not appear to be showing any behavioural problems, and looks settled, confident, and assertive at interview.

     There was no information in the file concerning any deficiency in Mr Waldron's competence at work, or anything to indicate that he might be a danger, or more than a minor nuisance to others when on the job, and there was certainly nothing in the interview to suggest that this is the case."

     In October 1989, the applicant resumed general duties as a sergeant at police headquarters in Darwin.  For a few months, he coped well and enjoyed the work.  Then he started having difficulties sleeping, and experienced violent dreams.  He again attended the Tamarind Centre, where Dr Amaral prescribed drugs for him.  In August 1990, Miss Hayder obtained a job at a remote tourist resort called Seven Spirit Bay, and in September 1990 the applicant transferred to the marine and fisheries section of the police force, but he felt that he never fitted in there.  Although during 1991 Miss Hayder used to return to the house in Darwin from time to time, the relationship had by now been seriously ruptured, and the applicant began to associate with a Miss Johnson.  By the end of 1991, the applicant and Miss Johnson had developed a sexual relationship, and in mid January 1992 he and Miss Hayder decided finally to separate.  In March 1992, he paid out her interest in their joint possessions for an agreed sum of $50,000.  On 9 June 1992, the applicant saw a Dr Shoulder, a psychiatrist to whom he had been referred by his solicitors.  But Dr Shoulder did not merely furnish a medico-legal report.  He prescribed the powerful anti-depressant drug Prozac, and suggested that the applicant should change his lifestyle.  It will be recalled that Dr J. Ridley had said the same much earlier.  After seeing Dr Shoulder, the applicant did not return again to police duties.

     Dr Shoulder expressed the opinion that the applicant

    "suffered a post traumatic stress disorder in the early days after the shooting incident at his place of work in the course of his duty.  This has now developed into a Major Depressive Episode with anxiety, depression, panic, phobias, suicidal thoughts and somatic aches and pains being present together with quite profound memory and concentration problems". 

The doctor noted a "strong family history of depression", but said that the applicant "would appear to have coped well", and commented:

    "He is a conscientious person who has endeavoured to deny even to himself the major extent of his serious disability which has now been evident for more than five years.  He has just about destroyed every facet and aspect of his life whilst struggling to maintain a facade of competence. 

     Whilst his illness is a genetically predisposed one, the trigger of the injury sustained at work is the issue that has actually brought about the emergence and manifestation of his illness, impairment and incapacity. 

                            . . .

     PROGNOSIS

     It is my opinion that Mr Waldron is seriously ill and may well recover sufficient of his health to be able to go about something of his personal life and lead it at the level of coping.  More than that is difficult to predict at the present time and a further reassessment will be needed in three months and again in another three months. 

     IMPACT ON HIS LIFE

     Almost every aspect of his life has been [a]ffected to a very substantial degree.  He is in financial difficulty, his relationships are disintegrating, he has no friends, his professional life is in tatters, he only has his sailing left.

     WORK

     I do not believe that Mr Waldron will be able to work for the Police in any capacity, in any way at any time in the future and indeed such further contact with [the] Police Department may well be a further provocation and aggravation of his injury.  I recommend that he be retired on medical grounds and have given him a certificate to that end."

     Shortly after this, on 21 June 1992, the applicant started work at Seven Spirit Bay resort.  He also went in a race as captain of a boat known as "Black Magic" from Darwin to Ambon in Indonesia.  Sailing had been the applicant's passion for most of his life, and he was plainly an extremely competent sailor.  But on this occasion, things did not go well because of his conduct and attitude towards the crew.  However, after his return to Seven Spirit Bay, he appears to have recovered his equilibrium and showed no sign of depression.  That, of course, was doing something he loved and found relaxing. 

     On 14 October 1992, the applicant was examined by another psychiatrist, a Dr Burvill.  Dr Burvill wrote:

    "It is my opinion that he may have had anxiety and severe depression at some time in the past, but he clearly currently has no evidence at all of anxiety or depression.  He is of course taking the antidepressant Prozac.  Therefore his current condition could be seen as a good outcome from his treatment with Prozac from depression previously existing.  I can only comment on his present state, which is one of good functioning.  He is currently working very happily on a resort, and described himself as happy and contented because of where he was and what he was doing was making him feel contented.  I consider that many of Mr Waldron's problems in the past stem from his personality, in that he has a number of personality traits which has [sic] caused him problems in interacting with his environment.  ...  He had an injury and was involved in an incident in 1986 of such a nature that it could well have caused him to experience symptoms of post traumatic stress disorder for a period afterwards.  Those symptoms have resolved completely now.  He is clearly not incapacitated in any way for physical work or due to any psychological disorder.  [I note that Dr Burvill is a psychiatrist and not an orthopaedic specialist; the accepted evidence concerning the applicant's physical condition is that he had lost 15% of the effective use of his left arm.]  As a person, it would appear that his functioning relates very much to his environment, as evidenced by seeing several doctors early in June and being given further time off on the basis of anxiety and depression, yet returned to a state of very healthy functioning within a short time of starting work at the Seven Spirits [sic] Bay Resort, doing all the things that he likes doing."

     While the applicant was working in October 1992 at Seven Spirit Bay, investigators photographed him and reported on him.  Despite the difficulties he had had, shortly before, when sailing "Black Magic", by the time of that investigation, he plainly did not appear depressed.  Upon notification of the investigation, in November 1992, and legal advice that his work at Seven Spirit Bay was jeopardising the continuance of his workers' compensation, the applicant returned to Darwin.  Thereafter, and until the hearing in late 1993, he did very little work. 

     After recounting the history, and noting the physical impairment of the applicant's left arm, and that at the time of the hearing the applicant was still receiving half rate sick pay, the Tribunal expressed its conclusions in four paragraphs, as follows:

    "50.  The three psychiatrists who gave evidence in this case, Dr. Milton, Dr. Shoulder and Dr. Burvill all agree on at least some of the issues.  They all say that a major trauma can precipitate a severe depressive episode.  They all say that people usually recover sufficiently well enough from such an episode to return to work within eighteen months to two years, with fairly complete recovery within five years.  They all say that a small percentage of people do not recover.  Dr. Shoulder is of the view that the shooting incident was sufficiently stressful to Mr. Waldron to cause a post-traumatic stress disorder and that he is one of the minority who has not been able to recover.  Dr. Milton and Dr. Burvill do not accept that the shooting incident was of sufficient psychological magnitude to cause serious psychiatric illness.  In any event they believe that if it did, Mr. Waldron's behaviour indicates that he recovered fairly quickly.  They believe that his subsequent work history, social life and yachting exploits rule out the possibility that he suffers or ever suffered from a major depressive illness.  They are of the opinion that his problems arise from a personality disorder which has nothing to do with the shooting incident.

     51.  I am not satisfied that Mr. Waldron has been fully frank with Dr. Shoulder.  On 11 June 1992 he presented to Dr. Shoulder as a person suffering major depression and unable to cope with work, life and personal relationships.  Ten days later he was working at Seven Spirit Bay, where he worked for three weeks.  He then sailed a yacht to and from Indonesia.  He then worked at Seven Spirit Bay with Ms. Johnson until late 1992 when he ceased because he discovered that he had been under surveillance.

     52.  Having observed Mr. Waldron give evidence on 8, 9 November 1993 in Sydney and 11 November 1993 in Darwin and having observed him in and about the hearing room I find that I agree with the analyses of Dr. Milton and Dr. Burvill.  Mr. Waldron's language, demeanour and behaviour were often inappropriate for the proceedings, especially when considered against his background and court experience as a prosecutor.

     53.  Dr. Burvill gave more detailed evidence about personality disorder than Dr. Milton.  I accept what Dr. Burvill said about the disorder and about how it is relevant to Mr. Waldron.  Consequently I find as follows:

          (a)  Mr. Waldron suffers from a personality disorder which is severe enough to cause him to be dysfunctional.  He is so severely disabled by this personality disorder that he now has a psychiatric illness.

          (b)  Mr. Waldron's disorder is such that he has aggressive and explosive personality traits to the extent that he cannot work in the police force.

          (c)  People who develop personality disorders usually start to have problems in their late teens or early twenties and then get worse and worse till they peak at some stage in their lives.

          (d)  Mr. Waldron showed some signs of the onset of personality disorder in his early days in the Northern Territory Police but it was not severe enough to be a psychiatric illness at that stage.  It was not until May 1988 that he became dysfunctional.

          (e)  Mr. Waldron's personality disorder has nothing to do with the shooting incident.

          (f)  Mr. Waldron's personality disorder is not such that he is incapacitated for all forms of work.  He has the capacity to work at occupations in which there is a minimum of controversy and confrontation."

     The Tribunal said nothing at all in this very brief discussion about the confirmation the applicant's case had received from the reports of Dr Ridley (and also Dr Amaral) or about the evidence of Miss Johnson and Miss Hayder, both of whom had given evidence supporting his account of his condition.  The evidence of Miss Hayder, in particular, was plainly extremely relevant.  So far as the written transcript can reveal its impact, it was given with restraint, direct responsiveness to questions, and no appearance of exaggeration.  They had been living together from January 1979, when she was aged 17 years, their relationship having the cement of a mutual love of sailing.  They had won some championships together and competed in a World Championship.  Not surprisingly, having regard to that history, the applicant had not over indulged in alcohol.  But, after the applicant was shot, she said:

    "He was very short-tempered and had no patience at all really; just really different, I suppose.  But I just think he was just in agony in all the time, so I just put up with it." 

According to her evidence, he began drinking and staying out drinking, which he had not done previously.  He did it probably four or five nights in the week.  He became angry over nothing.  She described in detail the applicant's downward course, including sleeplessness, nightmares, excessive drinking and arguments.  She attributed the break-up of their relationship to the strain placed upon it.  She said:

    "Question:And for your part what was causing the strain?

     Answer:   Him getting shot, being very angry and very impatient.  Yes.

     Question:Were you worried about him?

     Answer:   I still worry now.

     Question:Well, why do you worry about him?

     Answer:   Why shouldn't I? We lived together for a long time.

     Question:Sorry.  I should have asked what things about him make you worry?

     Answer:   That he's got to stay on medication forever and that - I know what he used to be like before and now what he's like."

She described his present temperament as "frightening".  But asked: "Now, if Tony had remained the way he had been before he got shot at Katherine, do you think you and he would have broken up?" she answered: "Probably not".  She acknowledged it was a "bit hard to tell".  Asked about the negotiations for settlement of their property affairs, which led to the payment to her of $50,000, she displayed common sense and lack of bitterness. 

     It is impossible to regard this evidence as other than central to the resolution of the problem in the case.  Nothing in cross-examination of Miss Hayder suggested that she was being deliberately untruthful.  The tendency of her evidence was plainly to support the opinions of Dr Shoulder and Dr Ridley.  If her evidence was accurate, a great change came over the applicant following his being shot, and continued, despite the apparent (but temporary) recoveries made by him, right up until the time of their separation. 

     The determination of the facts was, of course, for the Tribunal.  Had it considered the evidence of Miss Hayder and rejected it, for whatever reason, good or bad, no ground of appeal would have arisen.  But what the Tribunal was not entitled to do, the evidence being relevant and potentially significant, was to ignore it.  This was evidence it was bound to take into account.  As it had a duty to state its reasons, and said nothing about evidence plainly supporting the view of Dr Shoulder which it rejected, the inference arises that it did not take that evidence into account.  If it had, it would have explained why, notwithstanding the apparent cogency of the evidence, it did not accept it as making Dr Shoulder's opinion probable.  Cf.: Sullivan v. Department of Transport (1978) 20 ALR 323 at 349, 352-353; ARM Constructions Pty Ltd v. Commissioner of Taxation (1986) 10 FCR 197 at 205.

     In Brackenreg v. Comcare Australia (unreported, 15 March 1995), Sheppard J. arrived at a similar conclusion.  His Honour elaborately examined the law concerning the obligation of the Administrative Appeals Tribunal to furnish reasons under s. 43.  He held that the Tribunal, in that case, had failed "to consider material facts, namely the applicant's evidence of her difficulties", difficulties relevant to her claim of disability.  In my opinion, the present case involves a failure which, by comparison with that, is a fortiori.  Here, there is material evidence, not of the applicant, but of a witness who was ideally placed to observe the applicant.  Sheppard J. thought "justice cannot be seen to have been done" where evidence reasonably relied on by an applicant was ignored while his case was rejected.  This consideration also applies here.  As in that case, the evidence "went to the heart of the matter.  If it had been fully considered, it may be that it would have been accepted or at least have had the
effect of cutting down the absolute proposition [in fact asserted by the Tribunal]."

     In my opinion, the failure of the Tribunal to take into account the evidence of Miss Hayder, or to refer to it so as to disclose the reasoning of the Tribunal, and so as to state the evidence upon which crucial findings of fact were based, did constitute an error of law.  If anything further were required to confirm the importance of Miss Hayder's evidence, it would be confirmed by the ground the Tribunal itself selected as distinguishing the views of Drs Milton and Burvill from those of Dr Shoulder.  For in para. 50 of the reasons, the Tribunal said that the doctors it accepted "believe that his subsequent work history, social life and yachting exploits rule out the possibility that he suffers or ever suffered from a major depressive illness".  On each of those three matters, the evidence of Miss Hayder covered the whole period from the applicant's enlistment in the Northern Territory Police Force until well after May 1988, when the Tribunal itself concluded that "he became dysfunctional". 

     The second ground taken by the applicant relates to the basis on which the Tribunal rejected Dr Shoulder's opinion.  In an apparent reversal of the onus, for this was a case of termination of continuing compensation, the Tribunal said it was not satisfied that the applicant had been "fully frank with Dr. Shoulder", referring to the work he had done at Seven Spirit Bay, including the voyage to Indonesia, but without mentioning the difficulties encountered on that voyage, on the one hand, or the possible effects of the powerful medication prescribed (according to Dr Burvill, in a large dosage) by Dr Shoulder, on the other; and the Tribunal then went on to make the comments set out in para. 52 of the reasons.  Just what these comments related to is not clear.  The Tribunal did not specify the "behaviour" of the applicant "in and about the hearing room" upon which it relied.  The expression "in and about the hearing room" indicates that some of this behaviour was not even in the hearing room, but about it.

     The difficulty of understanding the nature of the behaviour alluded to by the Tribunal is only increased if it is remembered that the dispute which the parties required the Tribunal to resolve was not about whether the applicant was suffering a psychiatric illness at the time of the hearing.  Early in the reasons, it is recorded that "Mr Cummins [counsel for the respondent] conceded that Mr Waldron is no longer suited to any form of police work".  What the respondent was contending was that the applicant's disability was due to "a long-standing personality disorder, the onset of which pre-dates his police service".  Inappropriate behaviour during the hearing or in the vicinity of the hearing room could not, in that situation, be thought particularly surprising.  The evidence of both parties made it far from improbable.  Nor is it easy to see how it could bear on what was the issue in dispute, namely, the aetiology of the condition suffered by the applicant.  (A further issue, of course, which is not discussed in the reasons, is the extent to which the acknowledged disability produced a loss of earnings or earning capacity.)  At no time during the hearing did the Tribunal give an indication that it had observed anything in or about the hearing room that would or might bear on its assessment of the evidence as to the cause of the applicant's condition.  There was a warning issued about his use of language and, very late in the hearing, an observation that he seemed to be a person who would in the future have problems with people above him and those he might have to deal with.

     It is a fundamental principle of natural justice, as understood in our law, that a party should be made aware of the case alleged against him.  Otherwise, he cannot be in a position to attempt to answer it.  This principle has been applied to observations made by a judge or tribunal within a hearing room, and its application to observations made "about" the hearing room is a matter of course.  The subject was fully considered by Beazley J. in Marelic v. Comcare (1993) 121 ALR 114, where the Administrative Appeals Tribunal had made observations of an applicant's "movements" during the time she was in the witness box to support conclusions as to her physical capabilities.  On appeal, Beazley J. concluded (at 127):

    "In the present case, the tribunal did not, at any time during the course of the proceedings, advert to the observations it made and the use to which it proposed to put those observations until it referred to them in para. 46 of its reasons.  It therefore
breached the obligation to determine the matter on the basis of the evidence before it."

In the course of her reasons (at 125-126), her Honour cited the judgment of the Full Court of South Australia in Minagall v. Ayres [1966] SASR 151 at 156, where Napier C.J. said:

    "It seems to us that it is a matter of what we should regard as `fair play and common sense'.  The condition upon which a judge is at liberty to take notice of what he has seen for himself is that the party should know or be informed of what he has noticed, and have an opportunity of answering or dealing with it."

Beazley J. pointed out that this ruling had been applied by the Full Court of South Australia in Jobst v. Inglis (1986) 41 SASR 399, where (at 417) Johnston J. said:

    "Here his Honour used his observations in respect of what he plainly regards as a very important finding namely that the plaintiff had exaggerated her symptoms.  I think if he was going to use his observations for this purpose, he was bound to draw the attention of counsel to his observations at a time when it was open to the party to bring forward such evidence as might be desired in explanation of it.  I think that his indication to counsel was too late."

     Beazley J. quoted other passages which make it clear that the rule is not to be understood in a technical spirit, so as to apply to every general observation of a witness in a courtroom, but as a rule of substance, going to the reality of fairness in the presentation and consideration of a case.  Demeanour is a recognized test of evidence, and a tribunal which merely has regard to it can come under no criticism on that score: Jones v. Hyde (1989) 85 ALR 23 at 27; Abalos v. Australian Postal Commission (1988) 171 CLR 167 at 179; Devries v. Australian National Railways Commission (1993) 177 CLR 472 at 480, to all of which Mr McDonald referred me in his very helpful argument.  The distinction between the ordinary use of demeanour, and reliance on particular undisclosed observations is, however, clearly brought out by King C.J. in Angaston and District Hospital v. Thamm (1987) 47 SASR 177 at 178-179, where he said:

    "Something will depend, no doubt, on the circumstances of the particular case and upon the significance of the particular observations.  It is clear, however, that where the judge makes observations of the actions or demeanour of a party, which actions and demeanour are not observable by counsel, and makes use of those observations in a way which has a significant influence upon his decision of the case, he is required in justice, before making such use of those observations, to make those observations and the possibility of his using them in the course of his judgment known to counsel at a stage of the hearing at which counsel still has an opportunity of dealing with them in a proper and effective way."

This approach was also adopted by Clarke J.A. (with whom Hope A.-J.A. agreed) in Government Insurance Office of New South Wales v. Bailey (1992) 27 NSWLR 304 at 323, where a judge observed a party while sitting in the back of the Court, but failed to disclose this fact to counsel.  Clarke J.A. (at 324-325) made it clear that he thought the judge should not have made use of "an observation of the respondent prior to the trial", although in the particular circumstances he was satisfied no injustice had resulted.  But he said: "(H)is Honour did not observe the fundamental rule that the case should be decided upon evidence which all parties had an opportunity to question". 

     In my opinion, it is clear that this fundamental rule was broken in the present matter.  In contrast to the case considered by Clarke J.A., in this case the breach of the rule related to the basic issue in the case, and the result must be that the decision should be set aside.  The respondent submitted otherwise, asking me to apply the exception allowed, though barely, by Stead v. Government Insurance Commission (1986) 161 CLR 141 at 145 and Australian and Overseas Telecommunications Corporation Limited v. McAuslan (1993) 47 FCR 492 at 495-497, 506, 508-511 and 516-520.  But the nature of the issue denies that exception any application here: I cannot be satisfied the decision would not have been different had the principles of natural justice been observed.

     For these reasons, it is ordered:

1.   that the decision of the Administrative Appeals Tribunal (other than its decision to set aside the decision under review by it; its finding with respect to the physical injury to the applicant's left upper limb; and its decision that the respondent should pay certain costs) be set aside;

2.   that the matter be remitted to the Administrative Appeals Tribunal differently constituted for determination of the remaining questions according to law; and

3.   that the respondent pay the applicant's costs of the appeal, other than the costs of the second day, which were necessitated by the amendment made to the grounds of appeal.

     I certify that this and the preceding twenty-one (21) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett.

     Associate:

     Date: 24 March 1995

     Counsel for the Applicant:        Mr J. Tippett

     Solicitors for the Applicant:         Elston & Gilchrist

     Counsel for the Respondent:       Mr C.R. McDonald

     Solicitor for the Respondent:         Australian Government Solicitor

     Dates of hearing:                 20 and 24 March 1995