FEDERAL COURT OF AUSTRALIA

Thomson v Repatriation Commission [2000] FCA 204

VETERANS’ AFFAIRS –pension at the special rate for a veteran over the age of 65 years – whether s 24(2A)(g)(ii) requires continuity of work undertaken over 10 years or continuity of the capacity in which the work was undertaken over that period.

Veterans’ Entitlements Act 1986 (Cth) s 24(2A)(g)

Grant v Repatriation Commission [1999] FCA 1629 - applied

WILLIAM McLAREN THOMSON  v  REPATRIATION COMMISSION

T29 of 1999

RYAN, NORTH and MERKEL JJ

MELBOURNE (Heard in HOBART)

7 MARCH 2000

ON APPEAL FROM A SINGLE JUDGE

OF THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.      The appeal be allowed.

2.      The orders of the primary Judge made on 29 October 1999 be set aside.

3.      The matter be remitted to the Administrative Appeals Tribunal to be determined in accordance with law.

4.      The respondent pay the appellant’s taxed costs of the application and of the appeal.

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

ON APPEAL FROM A SINGLE JUDGE

OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

THE COURT

Introduction

1                     The appellant has appealed from the judgment given and the orders made by the learned primary Judge on 29 October 1999, affirming the decision of the Administrative Appeals Tribunal (“the Tribunal”) which refused the appellant’s claim for a special rate of pension.  The effect of both decisions was to deny Dr Thomson, the appellant, the special rate of pension payable to a veteran who is over the age of 65 and who satisfies the requirements of ss 24 and 24(2A) of the Veterans Entitlements Act 1986 (Cth) (“the Act”).  For present purposes the relevant criteria which were required to be satisfied by Dr Thomson are set out in s 24(2A):

“(2A)   This section applies to a veteran if:

(a)     the veteran has made a claim under section 14 for a pension, or an application under section 15 for an increase in the rate of the pension that he or she is receiving; and

(b)     the veteran had turned 65 before the claim or application was made; and

(c)      paragraphs (1)(a) and (1)(b) apply to the veteran; and

(d)   the veteran is, because of incapacity from war-caused injury or war-caused disease or both, alone, prevented from continuing to undertake the remunerative work (last paid work) that the veteran was last undertaking before he or she made the claim or application; and

(e)   because the veteran is so prevented from undertaking his or her last paid work, the veteran is suffering a loss of salary or wages, or of earnings on his or her own account, that he or she would not be suffering if he or she were free from that incapacity; and

(f)   the veteran was undertaking his or her last paid work after the veteran had turned 65; and

(g)     when the veteran stopped undertaking his or her last paid work, the veteran:

(i)    if he or she was then working as an employee of another person – had been working for that person, or for that person and any predecessor or predecessors of that person; or

(ii)     if he or she was then working on his or her own account in any profession, trade, employment, vocation or calling – had been so working in that profession, trade, employment, vocation or calling;

for a continuous period of at least 10 years that began before the veteran turned 65; and

(h)   section 25 does not apply to the veteran.”

2                     It is common ground that Dr Thomson satisfied all the applicable requirements other than s 24(2A)(g).

The Tribunal decision

3                     The Tribunal set out the questions before it as follows:

“It was contended on behalf of the applicant that he had continued his work as a medical practitioner on his own account in the same manner as he had been previously engaged.  The respondent submitted that the applicant’s work as a medical practitioner was not continuous, but sessional work often broken by significant periods of time.”

4                     The first question was whether Dr Thomson was working on his own account for the requisite period.  The Tribunal outlined the evidence on this issue as follows:

“Dr. Thomson gave evidence as to the history of his practice which commenced when he began as a medical practitioner on the Tasman Peninsula in 1953.  After four years he joined a practice in Sandy Bay with Dr. Paul Clark.  He remained a partner in this practice until 1994 when he retired on reaching the age of 70 years as was required under the partnership agreement.  Under the agreement he was prohibited from practising in the area for three years.  Following retirement from the Sandy Bay practice Dr. Thomson said that he worked in his son’s practice for over a month and then as a locum practitioner in various practices at Campbell Town, Zeehan and Bridgewater.  The arrangements made with the owners of the practices were that he would look after the practice in the absence of the owner and be paid according to the work performed.  The applicant negotiated a rate with the various practice proprietors which was in line with the rates specified by the AMA for locum practice.  Dr Thomson said that he was not subject to any directions, but performed his work as he saw fit.  He bore his own expenses in relation to travel, accommodation, medical subscriptions and insurance.  He had also set up an office in his home where he treated some private patients from time to time.”

5                     The Tribunal found that Dr Thomson was working on his own account.  The Tribunal said:

“9.       The Tribunal was referred to the decision in Re Melocco and Repatriation Commission (1997) 25 AAR 451, where the Tribunal found that the nature of the applicant’s locum work as a dentist, following retirement from the practice that he had sold, constituted work on his own behalf and not as an employee of the practice.

10.       This issue did not appear to be in contention in the present case, but even if its was, the nature of Dr. Thomson’s work is consistent with the findings of the Tribunal in Melocco and would in this Tribunal’s view constitute work on his own account in accordance with sub-paragraph g(ii).  The relevant factors being that the applicant was not subject to supervision and paid his own medical subscriptions and insurance.  In accordance with the words of the Tribunal in Melocco, this Tribunal accepts that Dr. Thomson ‘(ran) the practice for the time that the principal…is absent’.”

6                     The Tribunal then turned to what it saw as the second issue, being whether Dr Thomson’s work had been continuous for the period of 10 years prior to July 1996, being the date he reluctantly agreed to cease work as a result of war-caused injury:

“11.     The remaining issue for the Tribunal to decide is whether that work was continuous for a period of at least 10 years.  There is no dispute as to this issue for the period up until the applicant’s retirement in July 1994.  It was also conceded by Mr. Castle that the applicant’s work was basically full-time for the remaining six months of 1994.  An examination of the diaries showed, and the Tribunal is satisfied that the applicant’s work was fairly consistent during the first part of 1995, at least until May when it appears that the applicant only worked for two days in Campbell Town and did not work again between 10 May and 19 June when he worked for a period until 6 July at Bridgewater.  There are no recordings in the diaries for any work performed by the applicant during August 1995, except on the 9^th when he attended to complete a death certificate for a patient.  The diaries reveal a greater workload in the latter part of 1995 when the applicant worked for a medical practice in Zeehan, the Aboriginal Medical Service, for Dr. Maharaj, and for Dr. Scarr at Bridgewater.  Whilst the applicant’s work was fairly consistent during the early part of 1996 there is a significant gap for the months of April and May 1996 when the applicant was not working apart from, as he said in evidence, attending a few old friends during a three day stay at Koonya on the Tasman Peninsula.  During June 1996, the applicant said that he spent time visiting a number of practices in an endeavour to obtain a more regular type of work.  As a result of negotiations he was employed by Dr. Ayling at the Glenorchy Medical Centre.  However this did not continue as he understood the practice wished to employ a female practitioner and Dr. Thomson’s services were terminated after only eight days of practice.”

The Tribunal expressed its conclusion as follows:

“14.     …the Tribunal does agree with Mr. Castle’s [who appeared for the Repatriation Commission] submission that there must be continuity of employment.  The Tribunal was referred to the Oxford English Dictionary’s definition of continuous, being connected, unbroken, uninterrupted by time.  On the evidence before the Tribunal, it is not possible to conclude that the applicant was working on his own behalf for a continuous period for the whole of the period in question.  The Tribunal has already referred to significant periods of time when he was not working at all.  The Tribunal is unable to conclude that the applicant was working on his own account ‘for a continuous period of at least 10 years that began before the veteran turned 65’ as required by s.24(2A)(g) of the Act for entitlement to the special rate of pension.  The appeal must accordingly be dismissed.”

The decision at first instance

7                     After setting out the reasoning of the Tribunal, including paras 11-14, part of which is extracted above, the primary Judge said:

“On the appeal to this Court counsel argued that s 24(2A)(g)(ii) did not require a person to be working for a continuous period of ten years for the whole of that period.  He argued that the Tribunal had misconstrued the provision by reading it as though it said:

“had been so continuously working in that profession…for a continuous period of at least ten years.”

However, as counsel conceded, if a veteran carrying on a profession simply stopped working for a period of, say, a year, there would not be the continuous period required by the Act.  At the other end of the spectrum, interruptions caused by holidays or sickness for a week or so would not prevent the period being continuous.  It is all a matter of fact and degree.  An eighteen month period contains about 390 weekdays.  Even allowing for public holidays and personal holidays, if the veteran worked for only 180 days, it was open to the Tribunal to find that there were sufficiently long periods in which the veteran was not working to prevent the period up to July 1996 being continuous.”

8                     The main issue arising on the appeal is whether the AAT and his Honour erred in law in treating s 24(2A)(g)(ii) as requiring that there be continuity of “work” by the veteran throughout the relevant 10 year period, rather than that there be continuity of the veteran working in his professional practice on his own account during that period.  The distinction between the two situations can be significant where, for example, there are gaps in the continuity of “work” (eg where none is available) which do not result in the cessation of the veteran working in the professional practice of a self-employed person.

Section 24(2A)

9                     In Grant v Repatriation Commission [1999] FCA 1629 at [7] to [9] the Full Court considered the operation of s 24(2A) in the context of the statutory scheme for a pension at the special rate for veterans over the age of 65:

“7.       Section 5Q defines “remunerative work” as including any remunerative activity.  Sections 19(5), 19(9) and 24A operate to entitle a veteran, who satisfies the requirements of s 24 at any time during the assessment period (being the period starting on the day the application or claim for a pension is made and ending when the claim or application is determined) to a pension at the special rate until, inter alia, the veteran is undertaking or is capable of undertaking remunerative work for periods aggregating more than eight hours per week (s 24A(1)(c)).

8.         In order for a decision maker to be satisfied that the criterion in s 24(2A)(d) has been met the decision maker must determine:

·        the “remunerative work” that the veteran was last undertaking before he or she made the claim or application;

·        whether the veteran is, at any time during the assessment period, because of incapacity from war-caused injury or war-caused disease or both, alone, prevented from continuing to undertake that remunerative work.

9.         Determination of the “remunerative work” referred to in s 24(2A)(d) requires the characterisation of the specific remunerative activity or activities that the veteran was last undertaking before making the claim or application rather than of the capacity in which that work was undertaken.  The particular capacity in which the work was undertaken is dealt with as a separate criterion in s 24(2A)(g).  Thus, whether or not the work was undertaken as an employee or as a self employed person is irrelevant to the characterisation to be given to that work under s 24(2A)(d).  That conclusion follows from the definition of “remunerative work” in s 5Q, the recognition in s 24(2A)(g) that the capacity in which work is undertaken is to be treated as a matter separate from the work that was undertaken for the purposes of s 24 and is consistent with the purpose of s 24(2A) of providing for payment at the special rate where a person is prevented solely by war-caused incapacity from continuing to undertake the work that the veteran was last undertaking before making the claim or application.  In our view it would be inconsistent with that purpose for the characterisation of that work to include, or to be made to depend upon, the capacity in which that work was undertaken.”

10                  As was pointed out by the Full Court, sub-section (g) of s 24(2A) is concerned with the capacity in which the last paid work was undertaken.  A veteran meets the requirements of the sub-section if the last paid work has been undertaken in the relevant capacity for a continuous period of at least 10 years.  If the capacity is as an employee, the veteran must have been employed by the same employer (or its predecessor) continuously for the 10 year period.  If the veteran is self-employed, then the last paid work must have been undertaken in that capacity continuously for the 10 year period.  When sub-clause (ii) refers to the requirement that the self-employed veteran must have been “so working” continuously for the 10 year period, the reference is to the capacity in which the veteran worked.

11                  Thus, the enquiry mandated by the sub-section in the present case required consideration of whether the appellant had been working as a medical practitioner on his own account for a continuous period of at least 10 years prior to his cessation of work during July 1996.  Continuity of the appellant’s medical work throughout the period is relevant to, but not determinative of, that matter.  Continuity of a doctor’s work as a self-employed medical practitioner in a case such as the present would also, usually, be expected to involve consideration of whether indemnity insurance, medical registration, AMA membership, medical journal subscriptions and the requisite medical equipment continued to be maintained throughout the relevant period.

12                  Furthermore, if there were gaps in the continuity of work during the relevant period the reason for the gaps will be relevant.  For example, if the gaps occurred solely as a result of a temporary unavailability of work, that could not, properly, lead to a conclusion of lack of continuity under s 24(2A)(g)(ii).  This is particularly the case if the doctor had been actively, but unsuccessfully, seeking work during the relevant period.  However, if the gaps occurred because the doctor had decided to retire, or the unavailability was more permanent, that would support a conclusion that he or she had ceased to continue working as a medical practitioner on his or her own account.  Plainly, questions of fact and degree will be involved.

13                  Counsel for the respondent also sought to rely upon certain passages from the Second Reading Speech to the Veterans’ Affairs (1994-95 Budget Measures) Legislation Amendment Bill 1994 (Hansard, House of Representatives, 9 June 1994 at 1809) and the Explanatory Memorandum at 20 and 23-25 in relation to s 24(2A).  There was some support for counsel’s contention that s 24(2A)(g) required continuity of work throughout the relevant 10 year period.  However, when the passages relied upon are read as a whole it is clear that they are consistent with our interpretation of the sub-section.

14                  In a written submission filed by leave after Grant v Repatriation Commission had been drawn to his attention, Mr Green QC, who appeared for the respondent, contended:

"Sub-paragraph (g) (ii) is directed to the nature and extent of the work undertaken by the veteran.  The fact that a veteran takes a vacation may not sever the continuous period of at least 10 years that began before the veteran turned 65.  The duration of the vacation, taking into account the nature of the work undertaken, may so sever the requisite period.  But unexplained absences from his or her work sit ill with satisfaction of the requisite period."

We do not regard the intervals of non-performance of remunerative work by the present appellant as unexplained.  Nor do we consider that the material before the Tribunal established that they effected a severance of the requisite ten year period.

15                  Furthermore, our construction is compelled by the wording of the statute.  If s 24(2A)(g) were concerned only with the continuity of the last paid work, then sub-clauses (i) and (ii) would be otiose.  All that would have been necessary was a requirement that the undertaking of the last paid work be continuous during the 10 years prior to the relevant date.  As explained above, sub-clauses (i) and (ii) make it quite clear that s 24(2A)(g) is concerned with the capacity in which the last paid work was undertaken.  The purpose of those sub-clauses in s 24(2A)(g) appears to be to prevent claims by veterans over 65 years of age that are based on new or recent employment or self-employment (ie in the present context, less than 10 years in duration).

Reasoning on the appeal

16                  The Tribunal and the primary Judge treated s 24(2A)(g) as requiring that the capacity in which work was undertaken and the continuity of the work undertaken be considered as separate matters.  In the result, the issue of continuity of work was approached on the basis of some form of mathematical exercise; for example, the primary Judge concluded that a failure to work 180 out of the last 360 week days was sufficient to warrant the Tribunal’s finding of a lack of continuity.

17                  However, on the facts found by the Tribunal and the unchallenged material before it, there appears to have been continuity in the appellant’s working as a medical practitioner on his own account during the relevant period.  He maintained indemnity insurance, medical registration, AMA membership fees and subscriptions and his medical equipment throughout the period.  Further, Dr Thomson appears to have been actively engaged in working as a locum, and was continuing to seek “more regular” work as a locum on his own behalf, during June and early July 1996.  In the circumstances, there was ample evidence and material to support a finding of continuity, rather than discontinuity, of the appellant’s professional practice as a medical practitioner.  We note that counsel for the respondent was unable to identify, on the basis of the Tribunal’s fact findings, the point of time at which the appellant had ceased to engage in his work as a self employed medical practitioner.

18                  By treating s 24(2)(g)(ii) as only requiring consideration of the continuity of the work undertaken by a self-employed person, it is our view that the Tribunal and his Honour erred in law in their construction of the sub-section and, as a result, failed to apply the test required by it.

19                  There is a further difficulty with the approach of the Tribunal and his Honour.  Whilst they both quite properly considered the recent gaps in the work undertaken by Dr Thomson as relevant, they appeared to approach that issue mainly by reference to the last 18 months of the 10 year period, rather than by reference to the whole of that period.  Recent intermittent gaps in work are likely to take on less significance when continuity is viewed, as we believe it should be, over a 10 year period, rather than one of 18 months.

Conclusion

20                  It follows from the foregoing that the appellant is entitled to succeed on his appeal.

21                 The question arises as to the orders that should be made.  Section 44(4) of the Administrative Appeals Tribunal Act 1975 (Cth) allows the Court to “make such order as it thinks appropriate by reason of its decision”.  As we explained earlier in these reasons, on the basis of its fact findings and the unchallenged material before it, it was open to the Tribunal to conclude that the requirements of s 24(2A)(g)(ii) had been satisfied.  However, as a result of its erroneous approach to the construction of s 24(2A)(g), the Tribunal failed to take into account a number of matters that might have led it to be satisfied that those requirements were met.  Those matters include whether the recent gaps in the appellant’s work as a medical practitioner were due to the temporary unavailability of such work, as well as the maintenance by the appellant of indemnity insurance, registration etc throughout the relevant period.

22                 Whilst we are of the view that on the whole of the material before the Tribunal the appellant had strong grounds for contending that the requirements of s 24(2A)(g) were satisfied, we are not satisfied that the findings made by the Tribunal are such that the appellant must succeed on his claim for a pension at the special rate.  Accordingly, the orders that are appropriate are that the appeal be allowed, the orders of the primary judge be set aside and the matter be remitted to the Tribunal to be determined in accordance with law.  As the appellant has succeeded, he is entitled to his costs of the application and of the appeal.

Associate:

Dated:              7 March 2000