FEDERAL COURT OF AUSTRALIA

Watkins v Repatriation Commission [2014] FCA 787

THE COURT ORDERS THAT:

1.    The appeal is allowed.

2.    The decision of the Administrative Appeals Tribunal of 21 December 2011 in matter number 2010/3204 be set aside and the matter be remitted to the Tribunal, differently constituted, to be determined according to law.

3.    Costs be reserved.

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

REASONS FOR JUDGMENT

1    This is an application, by way of appeal on a question of law, brought pursuant to s  44(1) of the Administrative Appeals Tribunal Act 1975 (Cth).

2    The applicant (Mr Watkins) appeals the decision of the Administrative Appeals Tribunal (the Tribunal) of 21 December 2011 which was published as Watkins v Repatriation Commission [2011] AATA 918.

3    For the reasons which follow, I have found that the Tribunal erred on one of the questions of law raised for consideration by the appeal. The Tribunal misconstrued s 24(1)(c) of the Veterans’ Entitlement Act 1986 (Cth) (VE Act). As a consequence, the Tribunal’s decision will be set aside and the matter remitted to the Administrative Appeals Tribunal (AAT) for reconsideration.

SECTION 24(1)(c) ISSUES

4    It is convenient that I commence my consideration of the issues raised by this appeal by dealing first with the competing views as to the proper construction of s 24(1)(c) of the VE Act. The intended meaning of s 24(1)(c) has exercised judicial minds for many decades without a settled and enduring construction emerging. That unhelpful and unfortunate consequence is the result of what Rares J recently described in Smith v Repatriation Commission [2014] FCAFC 53 (Smith No 2) at [26] as the fog of a drafting style which has created a nearly impenetrable shroud over the meaning that the Court is expected to attribute to the intention of the Parliament. This is yet another attempt to lift the fog.

5    Before turning to the text of s 24, I will consider how s 24 fits within the scheme for pensions provided by the VE Act and also give a brief description of the applicant’s relevant circumstances.

6    Mr Watkins is a veteran who served in the Royal Australian Navy for nine years. His service included operational service in Vietnam. Mr Watkins suffers from multiple medical conditions, of which bilateral sensorineural hearing loss with tinnitus, osteoarthrosis of the right ankle and foot, solar keratosis, post-traumatic stress disorder and alcohol dependence have been accepted by the Repatriation Commission as having been war caused (Mr Watkins’s war caused ailments).

7    Mr Watkins was granted a general rate of pension at 100% of the general rate pursuant to s 22 of the VE Act. Beyond the general rate of pension, the VE Act also provides for the payment of an “intermediate” rate of pension under s 23 and a “special rate” of pension under s 24. The intermediate rate of pension and the special rate of pension provide for a rate of pension which is substantially more beneficial to a veteran than the general rate, with the special rate being the most beneficial rate available.

8    On 31 July 2009, pursuant to s 15 of the VE Act, Mr Watkins applied for an increase in the rate of his pension and sought a special rate pension. That application was made shortly before Mr Watkins turned 64. On 29 October 2009, the Repatriation Commission decided that Mr Watkins was not eligible for a special rate pension and declined his application. On 21 June 2010, the Veterans’ Review Board agreed with the Repatriation Commission. Mr Watkins then lodged an application for review of the decision of the Veterans’ Review Board by the Administrative Appeals Tribunal (the Tribunal). By reference to what it understood as the requirements of s 24 of the VE Act, the Tribunal determined that Mr Watkins failed to meet the criteria in s 24(1)(c) and was therefore not eligible for payment of a pension at a special rate. That decision is the subject of this appeal.

9    Section 24(1) and (2) of the VE Act provides:

(1) This section applies to a veteran if:

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

(aab)     the veteran had not yet turned 65 when the claim or application was made; and

(a)     either:

(i) the degree of incapacity of the veteran from war-caused injury or war-caused disease, or both, is determined under section 21A to be at least 70% or has been so determined by a determination that is in force; or

(ii) the veteran is, because he or she has suffered or is suffering from pulmonary tuberculosis, receiving or entitled to receive a pension at the general rate; and

(b)     the veteran is totally and permanently incapacitated, that is to say, the veteran's incapacity from war-caused injury or war-caused disease, or both, is of such a nature as, of itself alone, to render the veteran incapable of undertaking remunerative work for periods aggregating more than 8 hours per week; and

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

(d)     section 25 does not apply to the veteran.

(2) For the purpose of paragraph (1)(c):

(a) a veteran who is incapacitated from war-caused injury or war-caused disease, or both, shall not be taken to be suffering a loss of salary or wages, or of earnings on his or her own account, by reason of that incapacity if:

(i)     the veteran has ceased to engage in remunerative work for reasons other than his or her incapacity from that war-caused injury or war-caused disease, or both; or

(ii)     the veteran is incapacitated, or prevented, from engaging in remunerative work for some other reason; and

(b) where a veteran, not being a veteran who has attained the age of 65 years, who has not been engaged in remunerative work satisfies the Commission that he or she has been genuinely seeking to engage in remunerative work, that he or she would, but for that incapacity, be continuing so to seek to engage in remunerative work and that that incapacity is the substantial cause of his or her inability to obtain remunerative work in which to engage, the veteran shall be treated as having been prevented by reason of that incapacity from continuing to undertake remunerative work that the veteran was undertaking.

10    In Flentjar v Repatriation Commission (1997) 48 ALD 1, Branson J (with whom Beaumont and Merkel JJ agreed) posed and answered four questions in testing whether the s  24(1)(c) criteria was satisfied in that case. Since that judgment, those questions (the Flentjar questions) have been regarded in many decisions of the AAT to be a guide to the manner in which s 24(1)(c) should be applied. A number of judges of this Court have also followed that approach.

11    Whilst the third Flentjar question addresses that part of the s 24(1)(c) criteria with which I am concerned, the manner in which the question is expressed does not really assist in the resolution of the issue of construction in contest here.

12    Nevertheless, because the Tribunal carried out its task by reference to the four Flentjar questions and because those questions have been the subject of a number of the authorities I need to consider, it is necessary that I set them out. They appear at 4-5 of Flentjar and are as follows:

1.    What was the relevant “remunerative work that the veteran was undertaking” within the meaning of s 24(1)(c) of the Act?

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

3.    If the answer to question 2 is yes, is the war-caused injury or war-caused disease, or both, the only factor or factors preventing the veteran from continuing to undertake that work?

4.    If the answers to questions 2 and 3 are, in each case, yes, is the veteran by reason of being prevented from continuing to undertake that work, suffering a loss of salary, wages or earnings on his own account that he would not be suffering if he were free of that incapacity?

13    The Tribunal concurred with the parties that Mr Watkins met the criteria required by ss 24(1)(a) and 24(1)(b) of the VE Act and no issue arises on the appeal in relation to those provisions. In respect to the criteria specified by s 24(1)(c) and by reference to the first Flentjar question, the Tribunal found that the remunerative work undertaken by Mr Watkins was as a fire fighter and as a station officer which involved both management and operational responsibilities. In respect of question two, the Tribunal accepted that Mr Watkins is prevented from working more than eight hours per week due to his accepted war caused disabilities. For reasons which I shall give more detailed attention to later, the Tribunal answered no to question three. The Tribunal did not consider question four.

14    Turning then to the text of s 24, I want to commence with the meaning of s 24(1)(b) which is not controversial. It requires that the veteran is totally and permanently incapacitated and defines what that means. Relevantly, total and permanent incapacitation means that the veteran’s war related incapacity is of such a nature that “of itself alone” that incapacity renders the veteran incapable of undertaking remunerative work for more than eight hours per week.

15    Paragraphs (b) and (c) of s 24(1) are cumulative. A veteran who does not satisfy the criteria of paragraph (b) fails to qualify for a special rate of pension. In that case, the paragraph (c) criteria need not be considered. In other words, paragraph (c) only addresses veterans who have “war-caused injury or war-caused disease, or both which is of such a nature as, of itself alone, to render the veteran” incapacitated.

16    Read in light of the description of “incapacity” in s 24(1)(b), s 24(1)(c) has the purpose of requiring first, a causal connection between the veteran’s incapacity and the veteran’s inability to undertake particular work (the first causal limb) and secondly, a causal connection between that inability and the veteran suffering financial loss (the second causal limb).

17    The first causal limb has three elements of relevance to the issues raised by this case. It requires that “by reason of” (first element) the veteran’s war caused incapacity, the veteran is “alone” (second element) “prevented” (third element) from undertaking particular remunerative work.

18    Commencing the analysis with the third element, the word “prevented” identifies the nature of the restriction upon the veteran undertaking the relevant work. Given the terms of s  24(1)(b), the capacity to work in question is the capacity to undertake remunerative work for periods aggregating more than eight hours per week. The nature of the restriction contemplated by the word “prevented” then needs to be considered. The required effect upon the veteran’s capacity to undertake the relevant work (the preventative effect) is put in absolute terms. In the context raised by s 24(1)(c), where the veteran’s capacity to undertake any work in excess of eight hours per week is to be assessed, the word prevent means to stop and not merely to hinder. In other words, the veteran’s capacity to undertake the relevant work for periods aggregating more than eight hours per week must (in practical terms) be negated and not merely prejudicially affected by the injury or disease suffered.

19    That preventative effect must be brought about by the veteran’s war caused incapacity. The first element (“by reason of”) requires that causal nexus. Thus, because of the war caused incapacity, the veteran must be prevented from undertaking the work. The second element (“alone”) is concerned with whether or not there is more than one cause of the preventative effect. It requires that there not be another cause or causes beyond the war caused incapacity, which has or have brought about the preventative effect.

20    It would be helpful if I now identify the competing constructions of the “alone” element in s 24(1)(c) which are at issue on this appeal. Those competing constructions arise in a context such as that applicable to Mr Watkins, where beyond the war-related injury or disease suffered, the veteran also suffers from non-war caused disabilities capable of impacting upon the veteran’s capacity to undertake the work. In Mr Watkins’s case, these were found by the Tribunal to be chronic headaches, ataxia, Mr Watkins’s age and that he had not performed work for four years prior to applying for a pension at the special rate (Mr Watkins’s non-war caused disabilities).

21    On the Repatriation Commission’s construction, a veteran who is affected by non-war caused disabilities which contribute in combination with the veteran’s war caused ailments to cause the veteran’s incapacity to undertake the relevant work fails to meet the requirement that the veteran’s war caused ailments alone prevent the continuance of work. On that construction, it is not necessary to consider whether the veteran’s non-war caused disabilities were capable, of themselves and independently of the war caused ailments, of causing the preventative effect. The existence of non-war caused disabilities insufficient of themselves to have the preventative effect would nevertheless be a disqualifying factor if, in combination with the war caused ailments, the veteran is prevented from undertaking the work.

22    The construction contended for by the Repatriation Commission is most clearly supported by the judgment of RD Nicholson J in Forbes v Repatriation Commission (2000) 171 ALR 131 who said at [39] and [40]:

[39]    …The question whether the veteran by reason of the war-caused condition “alone” has been prevented from continuing to undertake remunerative work can only be answered by reference to all the circumstances in which the war-caused condition exists. The fact that a non war-caused condition is not alone causative of such preventative effect does not prevent it having that effect in combination with the war-caused condition.

[40]    …it is possible that the war-caused condition will be by far and away the more dominant of the causes of the preventative effect where there is also present a non war-caused condition having such effect in combination. The result is that the presence of the latter will deny to a veteran qualification for the special rate of pension.

23    That approach was expressly followed by Finn J in Repatriation Commission v Van Heteren [2003] FCA 888 at [20].

24    The construction contended for by the applicant is that the “alone” element requires that the preventative effect not be, by reason of or because of, some cause or causes other than the war caused incapacity. The “alone” element asks whether there is a non-war caused disability (or disabilities) which independently of the war caused ailments have also brought about the preventative effect. The war caused ailments and their consequences are to be put to one side and an assessment be made as to whether there is an additional cause or causes which prevent the veteran from working. The non-war caused disabilities will only be a disqualifying factor if they of themselves and independently of the war caused ailments also have the preventative effect.

25    In support of that construction, Mr Watkins relies on the observations I made in Willis v Repatriation Commission [2012] FCA 399 at [24]-[25] as follows:

[24]    …If there is another reason which, independently of the war-caused reason, is preventing the veteran from working, the inability of the veteran to engage in remunerative work is not “by reason” of the war-caused incapacity “alone”.

[25]    The assessment to be made asks whether absent the war-caused reason, another reason (or other reasons) is a reason for the veteran’s inability to engage in remunerative work: Repatriation Commission v Smith (1987) 15 FCR 327 at 337 (Beaumont J, with whom Northrop and Spender JJ agreed); Byrne v Repatriation Commission [2001] FCA 1134 at [8]-[10] (Gyles J).

26    In Repatriation Commission v Smith (1987) 15 FCR 327 (Smith No 1), Beaumont J (with whom Northrop and Spender JJ agreed) identified (at 337) the nature of the task as follows:

As has been said, the question posed by s 24(1)(c) is one of hypothetical fact. The Tribunal must attempt an assessment of what the respondent probably would have done if he had none of his service disabilities. The starting point is an examination of the prospects of employment, including self-employment, in southern Tasmania in early 1985 for a healthy sixty-nine year old plumber.

27    As I hope is now apparent, what essentially divides the two constructions at issue is whether a disqualifying feature of the criteria is the existence of non-war caused disabilities which contribute to but do not of themselves bring about the preventative effect.

28    In my view, the “alone” element is concerned with whether beyond the war caused ailments as a cause of the preventative effect there is another or other causes that have also brought about the preventative effect. As I said in Willis at [28], the assessment to be made does not look to combinations of the kind which RD Nicholson J referred to in Forbes at [39], because it proceeds on the basis that the war caused ailments must of themselves, unaided by other factors, be causative of the preventative effect. Once that is appreciated, it must logically follow that the “alone” element is addressing whether another factor with the same preventative effect exists.

29    The latest Full Court authority of this Court to consider the meaning of s 24(1)(c) is Smith No 2. Before turning to that judgment, I need to refer to the first instance judgment of Gordon J published as Smith v Repatriation Commission [2012] FCA 1043. In that judgment, Gordon J held that s 24(2)(b) only applied where a veteran had not been engaged in remunerative work at all since becoming incapacitated. Her Honour also had to consider the meaning of s 24(1)(c). That arose because the veteran contended that the Administrative Appeals Tribunal (AAT) erred by taking into account medical evidence dealing with the veteran’s non-war related ailments. Those matters were said to be irrelevant to a determination of the question posed by s 24(1)(c). In order to consider (and reject) that challenge, Gordon J identified the question posed by s 24(1)(c) at [58] as follows:

Section 24(1)(c) requires, in part, that the AAT undertake a hypothetical exercise. What would the veteran have done but for the war-caused incapacity?: Repatriation Commission v Smith (1987) 15 FCR 327 at 337 and Byrne v Repatriation Commission (2001) 33 AAR 410 at [10]-[11]. If the answer is the same, then that war-caused incapacity cannot be said to have been “the reason, rather than merely a reason, for the veteran’s inability to engage in the remunerative work which the veteran had previously done”: Willis v Repatriation Commission (2012) 202 FCR 323 at [24]. That hypothetical exercise necessarily requires a consideration of the other circumstances which might affect the veteran’s ability to obtain remunerative work.

30    The approach to the construction of s 24(1)(c) adopted by Gordon J is consistent with the approach for which Mr Watkins here contends and which I favour.

31    Shortly after the hearing of this application, it became apparent that the first instance judgment in Smith No 2 was the subject of an appeal and judgment on the appeal was reserved. I acceded to the request of the parties that my judgment await the publication of the judgment of the Full Court. When that occurred, the parties filed written submissions as to its import.

32    There are a number of aspects of the Full Court’s judgment which are of assistance in resolving the issues raised by this application, including as to the “alone” test which I am currently addressing. The approach to that test followed by Gordon J was not the subject of any direct challenge on the appeal. However, it was nevertheless necessary for the Full Court in Smith No 2 to give some attention to the operation of s 24(1)(c) in determining (and ultimately disagreeing) with the approach adopted by Gordon J to the proper construction of s  24(2)(a). That came about, as the passages which I later set out reveal, because of the interrelationship between those two provisions which the Full Court recognised. Thus, although Gordon J’s approach to the “alone” element was not the subject of any specific attention, for the reasons I will now explain, it seems to me that both Buchanan and Foster JJ made observations consistent with that approach and thus consistent with the approach for which Mr Watkins here contends.

33    Mr Smith suffered from war caused PTSD and non-war caused physical disability. The AAT made a finding that Mr Smith’s physical injuries “played an important part in his inability to continue to work” although, as Buchanan J stated in the passage I will shortly set out, the extent of that contribution was not otherwise quantified. Relying on those physical disabilities and applying the “alone” test, the AAT concluded that “Mr Smith’s PTSD is not the only factor preventing him from continuing to undertake his previous work, so the answer to question (3) is No”.

34    Of that conclusion, Buchanan J said at [67]:

The question (3) which the AAT referred to was the third issue distilled in Flentjar, but in my respectful opinion approaching the matter that way distracted attention from the operation of the Act. The finding that physical injuries played “an important part” in the appellant’s inability to continue to work must be related to the circumstances in 2006. That is when the appellant ceased to continue to work. However the second part of the AAT’s conclusion in my view raises other questions. Accepting that it was open to the AAT to conclude that the appellant’s PTSD was not the only factor which in 2006 prevented him from continuing to undertake his previous work, there appears not to be any disclosed foundation for a finding that his physical disabilities were what was preventing him from working after that date. The question of what might be preventing a resumption of remunerative work was an important one in its own right.

35    More significantly for current purposes, at [68] Buchanan J said:

Although the AAT said that the appellant’s physical injuries played an important part in his inability to continue working, the extent of that contribution was not otherwise quantified, except that the disabling effects of the physical injuries did not overlap completely with the war-related incapacity. As the physical injuries did not render the appellant incapable of working more than eight hours per week, and as he had in fact worked consistently more than eight hours per week in the past despite his physical injuries, in my view the possibility must remain that an entitlement might arise under s 23 if not s 24.

36    Those observations are to be understood in light of what Buchanan J said of the operation of s 24(1)(c) at [48] as follows:

The operation of s 24(1)(c) is capable of being informed by the provisions of s 24(2). The overall effect of s 24(1)(c) may be summarised as one which requires a demonstrated loss of earnings as the direct result of the war-related incapacity, and only for that reason. Section 24(2)(a) supplements the requirements of s24(1)(c) by identifying specific circumstances which will cause it not to be satisfied. Those circumstances, in effect, state the opposite to the conditions in s 24(1)(c) itself. Thus, there is no established loss of earnings by reason of the incapacity if remunerative work was ceased for other reasons (s 24(2)(a)(i)), or if the veteran is also incapacitated or prevented from doing remunerative work for some other reason (s 24(2)(a)(ii)). In this assessment, of course, it continues to be accepted that the veteran is actually incapacitated in any event (“a veteran who is incapacitated …”). The purpose of the enquiry is to see whether, nevertheless, there are other explanations for economic loss so that the incapacity is not the only reason for it.

[Emphasis added]

37    Whilst Buchanan J was here specifically addressing the assessment to be made under s 24(2)(a), his Honour noted that the conditions stated in that provision put in negative rather than positive terms the conditions required by s 24(1)(c). His Honour appreciated, as I do, that s 24(2)(a) helps to explain the intended operation of s 24(1)(c). Relevantly, s 24(2)(a)(ii) is a re-expression of the “alone” element. That re-expression is consistent with the construction which I prefer. As Buchanan J stated at [48], the assessment required to be made is based upon an acceptance that the veteran is incapacitated from working by reason of his or her war caused ailments. The purpose of the enquiry is to “see whether, nevertheless, there are other explanations” for the economic loss caused by the veteran’s inability to work. Such an enquiry must necessarily put to one side the preventive effect of the war caused ailments. The necessity for those other causes to, of themselves, prevent the veteran from working is reflected in the concern Buchanan J expressed at [68] as to the AAT’s failure to quantify the extent to which Mr Smith’s physical injuries affected his capacity to work.

38    The manner in which s 24(2)(a) sheds light on the intended operation of s 24(1)(c) was also acknowledged by Foster J in the following passage at [172]:

Section 24(2)(a) should be regarded as an attempt to make crystal clear that s  24(1)(c) requires that the veteran be prevented from engaging in relevant remunerative work by reason of his or her war-caused incapacity. The cessation of work and the financial loss caused by that circumstance must be the consequence of the war-caused incapacity not the result of an independent decision to stop work or the consequence of incapacity brought about by some incident or other matter which is not war-caused.

(Original Emphasis.)

39    Those observations also support the proposition that the veteran’s inability to work must be “brought about” or be “the result of” the veteran’s non-war caused disabilities, examined in isolation from the preventative effect of the war caused ailments. It is only then that the non-war caused disabilities may be regarded as disqualifying the veteran from satisfying the “alone” requirement of s 24(1)(c) because the preventative effect has not been brought about by the war caused ailments alone.

40    Furthermore, the terms of s 24(2)(b) support my preferred construction. The alternative criteria in that provision are designed to ameliorate the potentially harsh consequences of s 24(1)(c): Smith No 2 at [49] (Buchanan J). A veteran prevented from engaging in remunerative work by non-war caused disabilities and thus unable to satisfy the first causative limb of the s 24(1)(c) criteria may nevertheless satisfy the s 24(2)(b) criteria (and thus qualify for the special rate) if the veteran’s incapacity as a result of war caused ailments is “the substantial cause of his or her inability to obtain remunerative work”. The terms of s 24(2)(b) reinforce the construction of s 24(1)(c) which I prefer because they contemplate the existence of independent preventative causes – war caused and non-war caused – and require an assessment of which is the substantial cause.

41    It will be evident then that I reject the Repatriation Commission’s contention that the Full Court’s judgment in Smith No 2 is of no assistance. In arriving at the construction that I prefer, I have also rejected the basis upon which the Repatriation Commission contended that the Full Court’s judgment in Smith No 1 is to be distinguished. In that respect, the Repatriation Commission contended that the question of “hypothetical fact” (what the veteran would have done if he had none of his service disabilities) which Smith No 1 says is the question posed by s  24(1)(c) is only relevant to the second causative limb and not the first causative limb of s  24(1)(c). Or, to put the position by reference to the four Flentjar questions, is only relevant to the fourth but not the third Flentjar question.

42    To my mind there is nothing in the judgment of Beaumont J that suggests that the Full Court in Smith No 1 intended that the exercise of putting aside the veteran’s war caused ailments was intended to be confined to the issue of financial loss and not to the issue of whether another cause explains the veteran’s inability to work.

43    Nor, to my mind, is there support for that contention to be found in either Flentjar or the Full Court’s judgment in Repatriation Commission v Hendy (2002) 76 ALD 47. Those matters were recently considered by Dodds-Streeton J in Richmond v Repatriation Commission [2014] FCA 272 at [145]-[171]. Her Honour concluded by reference to an analysis which I need not here set out but which I respectively adopt, that the hypothetical fact required to be presumed by Smith No 1 is applicable to both the first and second causative limbs of the criteria in s 24(1)(c).

44    That conclusion is of course at odds with the way in which Forbes was determined. In Forbes at [31], RD Nicholson J analysed s 24(1)(c) on the basis that Smith No 1 was only addressing the second causative limb of s 24(1)(c). That departure from Smith No 1 helps to explain the difference between the construction RD Nicholson J preferred and that which I favour.

45    In my view, the hypothetical fact analysis in Smith No 1 was intended to apply to both limbs of the s 24(1)(c) criteria. I consider that I should follow Smith No 1 and that Smith No  2 lends support to the construction which I favour.

46    To sum up, where a veteran suffers from both war caused ailments and non-war caused disabilities, the correct approach to the “alone” element posed by the first causative limb of the s 24(1)(c) criteria is to ask whether, putting aside the veteran’s war caused ailments and their consequences, the veteran’s non-war disabilities prevent the veteran from continuing to undertake the remunerative work that the veteran was undertaking? If the answer to that question is yes, it will follow that the veteran’s war caused ailments are not the only cause and are not “alone” in preventing the veteran from working. In that case, the s  24(1)(c) criteria will not be satisfied. Alternatively, if the answer is no, it will follow that the veteran’s war caused ailments are the only cause preventing the veteran working and the first causative limb of the s  24(1)(c) criteria will be satisfied.

47    Taking that approach to the task required of the Tribunal in this case, it was necessary for the Tribunal to determine, putting to one side Mr Watkins’s war caused ailments and their consequences, whether Mr Watkins’s non-war caused disabilities prevented him from undertaking remunerative work as a fire fighter. On the facts as found by the Tribunal, if the answer to that question was yes, the Tribunal was entitled to reject Mr Watkins’s application for the special rate of pension. If the answer was no, the Tribunal then needed to consider whether Mr Watkins was suffering a loss of salary or wages by reason of his war caused ailments that he would not have suffered if he were free of that incapacity.

48    Before the Tribunal, the Repatriation Commission argued that the Tribunal should reject Mr Watkins’s application because his war caused and non-war caused disabilities, in combination, prevented Mr Watkins from working as a fire fighter.

49    It is clear from the Tribunal’s reasons that it accepted the construction of s 24(1)(c) for which the Repatriation Commission contended. At [16], the Tribunal referred with approval to the passage from Forbes reproduced at [18] above. The Tribunal at [17] set out a passage to similar effect from the judgment of Spender J in Repatriation Commission v Alexander [2003] FCA 399 and of that passage said at [38]:

As was pointed out in Alexander (at paragraph 17 above), the decision maker is required to determine if there are any other factors that also impacted on Mr Watkins’s ability to continue to work to determine if he meets s 24(1)(c).

[Emphasis added]

50    Given the construction of s 24(1)(c) which the Tribunal accepted, it seems clear from that passage that what the Tribunal turned to consider was whether the existence of non-war factors had impacted upon the veteran’s ability to work rather than the proper question of whether the non-war factors had caused that inability.

51    At [40] of the its reasons the Tribunal stated:

The Tribunal finds it unlikely that a person with Mr Watkins’s health history would be employed as a fire fighter. He was almost 64 years of age at the beginning of the assessment period. It was then four years since he had actually worked as a fire fighter. There are onerous physical requirements for those working as fire fighters as well as medical standards to be met. An examination of Mr Watkins’s medical history, which included the chronic headaches and ataxia at the time he stopped working with those conditions continuing for some time thereafter would be likely to rule him out of such a role as would his accepted disabilities. His age and time out of the workforce would also be likely to rule him out of reappointment to a similar role. The answer to the third Flentjar question is therefore no.

(emphasis added)

52    The opening sentence of that paragraph contains the Tribunal’s ultimate finding in relation to what the Tribunal described as the third Flentjar question. That finding was that it is unlikely that “a person with Mr Watkins’s health history would be employed as a fire fighter”. The reference to “health history” is an obvious reference to the combination of Mr Watkins’s war caused and non-war caused ailments. The making of that finding is consistent with what the Tribunal’s reasons otherwise reveal to be the construction of s 24(1)(c) which the Tribunal adopted.

53    It is apparent then that I consider that the Tribunal erred by misconstruing s 24(1)(c) of the VE Act.

54    The Repatriation Commission contended in the alternative that even if the Tribunal misunderstood the “alone” element of s 24(1)(c), its reasons reveal that it did in fact isolate Mr Watkins’s non-war caused disabilities and determined that those disabilities of themselves prevented Mr Watkins’s from working as a fire fighter. In that respect, the Repatriation Commission relied upon the words I have italicised in [40] of the Tribunal’s decision which is extracted at [51] above.

55    At no point in its decision did the Tribunal identify as a possibility, let alone adopt the proposition, that the correct question for it to consider was whether Mr Watkins’s non-war caused disabilities, looked at in isolation from his war caused ailments and their consequences, prevented Mr Watkins from resuming work as a fire fighter. Given that, it is most unlikely that the Tribunal would have sought to answer a question that it did not pose.

56    This is not a case in which a decision-maker, having made a finding based on the decision-maker’s preferred construction of a provision, goes on to consider an alternative possible construction and make findings on the basis of the alternative construction. There is nothing in the Tribunal’s decision to suggest that beyond the first sentence of [40], the Tribunal in the remainder of that paragraph (or anywhere else) was involved in making additional findings based on an alternative construction of s 24(1)(c). To my mind, all that the Tribunal sought to do by the remainder of [40] was identify the factors which contributed to the ultimate finding expressed in the first sentence.

57    Furthermore, I do not read the fifth sentence in [40] as doing anything more than recording the Tribunal’s view that Mr Watkins’s medical history would rule him out of employment as a fire fighter. While the Tribunal there emphasised that Mr Watkins’s history includes non-war ailments, the sentence is not suggestive of a finding that those ailments on their own had the effect of preventing Mr Watkins from working as a fire fighter. The entirety of the medical history is there utilised to arrive at the conclusion that Mr Watkins would be ruled out. Whilst the phrase “as would his accepted disabilities” suggests that the Tribunal considered that Mr Watkins’s war caused ailments on their own would have ruled him out, it does not necessarily suggest that the Tribunal was satisfied that the same conclusion was applicable in respect of Mr Watkins’s non-war caused disabilities.

58    Nor, can the next sentence be understood as a finding that, in isolation from Mr  Watkins’s war caused ailments and their consequences, the factors there identified were non-war caused and sufficient of themselves to prevent Mr Watkins’s employment as a fire fighter. The Tribunal did not make a finding that Mr Watkins’s time out of the workforce was not a consequence of his war related ailments. Given the evidence before the Tribunal that the war caused ailments were involved in Mr Watkins ceasing active employment, such a finding would have been necessary in any attempt by the Tribunal to consider the preventive effect of Mr Watkins’s non-war caused disabilities in isolation from his war caused ailments and their consequences.

59    It follows that in my view the Tribunal misconstrued the meaning of s 24(1)(c) and did not address, even in the alternative, the proper question raised by the first causal limb of that provision. It was not in issue and there can be no doubt that such an error is an error of law. Accordingly, I consider that, by reference to ground 7 of the Further Amended Notice of Appeal, Mr Watkins has established that the Tribunal’s decision is tainted by an error of law.

SECTION 24(2)(b) ISSUES

60    Grounds 1 to 4 of the Further Amended Notice of Appeal raise a number of alleged errors in relation to the manner in which the Tribunal applied s 24(2)(b) of the VE Act. I have earlier described at [40] the ameliorative operation of s 24(2)(b). In outline, the errors alleged by Mr Watkins were that:

(i)    the Tribunal failed to apply s 24(2)(b) and have regard to all relevant factors pertaining to the application of that provision (grounds 1 and 2);

(ii)    the Tribunal failed to provide adequate reasons in relation to its purported application of s 24(2)(b) (grounds 3 and 4).

61    Ground 4 also raises a failure by the Tribunal to provide reasons in relation to the application of s 24(1)(c). I will deal with that matter separately later.

62    There are pre-conditions specified by s 24(2)(b) which a veteran must satisfy before the veteran is eligible for consideration under the more beneficial criteria (relative to that in s  24(1)(c)) provided for by that paragraph. Broadly speaking, those pre-conditions are that:

(i)    the veteran is less than 65 years of age (pre-condition one); and

(ii)     the veteran has been genuinely seeking to engage in remunerative work and but for his or her war caused incapacity would be continuing to seek to engage in remunerative work (pre-condition two).

63    There is only a brief reference in the Tribunal’s decision to s 24(2)(b). At [42], the Tribunal said:

He [Mr Watkins] does not claim to meet, nor does the evidence show he meets, s  24(2)(b) of the Act.

64    In the proceeding before the Tribunal, Mr Watkins did not articulate a case that his application should be accepted because he satisfied the s 24(2)(b) criteria. Nevertheless, Mr Watkins contended before me by reference to [18] of Grant v Repatriation Commission [1999] FCA 1629, that the Tribunal was obliged to consider such a claim.

65    At [18] of Grant, Merkel, Goldberg and Weinberg JJ said:

An inquisitorial review conducted by the AAT, as with the Refugee Review Tribunal, is one in which the tribunal is required to determine the substantive issues raised by the material and evidence advanced before it and, in doing so, it is obliged not to limit its determination to the “case” articulated by an applicant if the evidence and material which it accepts, or does not reject, raises a case on a basis not articulated by the applicant: see Sellamuthu v Minister for Immigration and Multicultural Affairs [1999] FCA 247 at [23] and Satheeskumar v Minister for Immigration and Multicultural Affairs [1999] FCA 1285 at [15]).

66    Mr Watkins contended that he was under the age of 65 at the date of applying for an increase to his pension and that it was open for the Tribunal to find that he had been genuinely seeking work and had therefore met the pre-conditions in s 24(2)(b).

67    Mr Watkins was unable to point to any evidence or other material placed before the Tribunal capable of satisfying pre-condition two. In those circumstances, Mr Watkins’s reliance upon Grant is misplaced. The evidence and material before the Tribunal did not raise a case capable of establishing that Mr Watkins satisfied the s 24(2)(b) criteria.

68    The Repatriation Commission contended by reference to Hussain v Minister for Foreign Affairs (2008) 169 FCR 241 at [26]-[41] that by not making a claim or advancing any evidence or submissions in relation to s 24(2)(b), Mr Watkins conceded that he could not satisfy that provision. It was therefore said that it must follow that the Tribunal could not have erred in law.

69    Whether a failure to articulate a claim and advance any evidence amounts to an implied concession that there is no material sufficient to satisfy the claim is a question the answer to which is likely to turn on the facts and circumstances of the particular case. It is not a question I need to determine in this case as I have already rejected the primary contention in relation to s 24(2)(b) upon which Mr Watkins relied. Further, I was not taken to the detail of the relevant facts and circumstances in a manner sufficient for me to properly assess whether an implied concession was made.

70    For those reasons, grounds 1 and 2 of the Further Amended Notice of Appeal must be rejected.

71    As the claim that Mr Watkins satisfied s 24(2)(b) was neither articulated by Mr Watkins nor by the evidence before the Tribunal, the reasons given to that effect by the Tribunal were adequate to satisfy the requirements of s 43(2) of the AAT Act. Accordingly, grounds 3 and 4 (insofar as it relates to s 24(2)(b)) must also be rejected.

SECTION 24(2)(a) ISSUES

72    Having answered the third Flentjar question in the negative at the end of [40] of its decision, the Tribunal then said at [41]:

The Tribunal finds that Mr Watkins ceased work as a fire fighter due to his accepted disabilities but also due to his headaches and ataxia. The Tribunal finds that Mr Willis [sic] fails to satisfy s 24(2)(a) of the Act.

73    Mr Watkins contended that the Tribunal’s conclusion that he failed to satisfy s  24(2)(a) of the Act was based on the finding in the prior sentence that Mr Watkins “ceased work” as a fire fighter due to his accepted disabilities but also due to his headaches and ataxia. That finding is then said to be based on a misconception of the word “ceased” in the phrase “ceased to engage in remunerative work” found in s 24(2)(a)(i). That misconstruction is the error of law asserted to support ground 5 of the Further Amended Notice of Appeal. The error is said, in essence, to be constituted by the Tribunal regarding Mr Watkins to have ceased to engage in remunerative work when he stopped actively working and took leave (in May 2006) rather than when Mr Watkins’s remunerative employment ended in June 2008.

74    Ground 6 of the Further Amended Notice of Appeal then asserts that on the basis of that misconstruction, the Tribunal wrongly took into account Mr Watkins’s state of health as at May 2006 rather than his state of health as at June 2008.

75    Accepting for the moment the presumption made by Mr Watkins’s submission that “ceased to engage in remunerative work” is an intended reference to the time when the veteran was last in employment rather than when the veteran last performed work in that employment, this ground must nevertheless fail. Fairly read, including by reference to the content of [40], I consider that the Tribunal assessed and relied upon its findings as to Mr Watkins’s state of health as at June 2008 when his remunerative employment ceased. In doing so, it also relevantly considered Mr Watkins’s health and capacity to work at the time that he stopped active work. However, I do not accept that in the context of what the Tribunal said at [40], the phrase “ceased work” in the opening sentence of [41] was intended to be other than a reference to the time at which Mr Watkins ceased to be employed.

76    For those reasons grounds 5 and 6 of the Further Amended Notice of Appeal should be rejected.

the requirement to give reasons

77    The principles applicable to the AAT’s obligation to give reasons were canvassed in my judgment in Willis. In Repatriation Commission v Holden [2014] FCA 605 at [77], Mortimer J observed by reference to the observations I made in Willis that:

…the s 43(2)(B) obligation must be applied with a view to the materiality and the significance of particular findings on material questions of fact in each review.

78    Both parties accepted those principles. The contest between them was whether the Tribunal had adequately explained its conclusions as to the findings it made in relation to the first causal limb of the s 24(1)(c) criteria.

79    As I have already observed, the Tribunal misconstrued s 24(1)(c). If my view as to that is correct, the question of the adequacy of the Tribunal’s reasons does not arise. If I am incorrect as to the proper question raised by the first causal limb of the s 24(1)(c) criteria, then the findings made by the Tribunal about Mr Watkins’s non-war caused disabilities have, in my mind, been sufficiently explained.

80    Mr Watkins contended that the Tribunal failed to explain whether the preventative effect was caused by the non-war caused disabilities in combination with the war caused disabilities or alone. However, for reasons I have already given, the Tribunal’s reasons, as a whole, explain that it came to the conclusion that the preventative effect was brought about by a combination of war and non-war caused factors. Mr Watkins then contended that the Tribunal failed to explain why the applicant’s time out of the workforce and his history of ataxia and headaches prevented him from working. Whilst I agree that the reasons given in reaching that conclusion are cursory, they do adequately explain that the Tribunal regarded those matters as adversely affecting the likelihood that Mr Watkins would be selected for employment as a fire fighter and were thus factors which contributed to preventing Mr Watkins working as a fire fighter. Whether the evidence sustained that conclusion is a different question to whether the basis for the conclusion reached by the Tribunal is able to be understood from the reasons that it gave.

81    Those observations dispose of that part of ground 4 of the Further Amended Notice of Appeal not earlier addressed.

irrationality

82    Mr Watkins also contended by reference to ground 8 of the Further Amended Notice of Appeal that a number of findings made by the Tribunal were irrational and illogical and thus errors of law.

83    Those submissions are misconceived.

84    First, Mr Watkins contended that the findings made that he suffered from headaches and ataxia prior to the assessment period could not support a conclusion that those ailments affected his capacity to work during the assessment period. However, the contention presumes that the Tribunal was satisfied that the headaches and the ataxia had ended prior to the assessment period and were no longer of any significance. Although there may be room for the suggestion that, on the evidence, the Tribunal should have been satisfied that Mr Watkins no longer suffered from headaches and ataxia, in my view, the Tribunal proceeded on the basis that headaches and ataxia remained an issue for Mr Watkins during the assessment period. In that context, the reliance placed by the Tribunal on those ailments was not illogical.

85    Secondly, Mr Watkins contended that it was illogical or irrational for the Tribunal to have relied upon his age (63) and time out of the workforce (5-6 years) in assessing his capacity to work as a fire fighter. Whilst the fact that a prospective employee is close to a likely retirement age and has not worked for a substantial period may not be determinative of a person’s capacity to obtain new employment, it cannot be said that those factors are not rationally probative of the likelihood of that person obtaining such employment.

86    For those reasons, ground 8 of the Further Amended Notice of Appeal must be rejected.

disposition

87    In light of my conclusion that the Tribunal misconstrued s 24(1)(c) of the VE Act, I will allow the appeal, make orders setting aside the Tribunal’s decision and remit to the AAT for reconsideration Mr Watkins’s application for a special rate of pension.

88    I will reserve for later consideration the question of costs. Unless, after consultation, the parties have agreed upon a proposed costs order, short submissions on that issue should be filed and served within seven days hereof.

Associate:

Dated:    29 July 2014