FCA 1150
|COURT||Federal Court, Victoria|
|DATE OF DECISION||22 September 2016|
|DECISION||The appeal was allowed|
|ISSUES||Intermediate and special rate – whether the Tribunal erred in misconstruing s 23(1)(c) by reference to s 23(3)(a)(i) and s 24(1)(c) by reference to s 24(2)(a)(i) – Tribunal failed to consider whether veteran not seeking remunerative work for reasons other than his war-caused disabilities – whether the Tribunal failed to give adequate reasons|
The applicant, Mr Terrence Murray, had operational service in Vietnam with 17 Construction Squadron between April 1968 and November 1968. In 2009 Mr Murray applied for a disability pension. The respondent accepted ischaemic heart disease but rejected other claims, and set the rate of disability pension at 80% of the general rate. On review, the Veterans’ Review Board (VRB) determined that Mr Murray’s generalised anxiety disorder, alcohol dependence, tremor associated with anxiety, hypertension and emphysema were war-caused and remitted pension assessment. In 2012 the respondent increased Mr Murray’s disability pension to 100% of the general rate. In 2014 the VRB affirmed that decision. In 2015 the Administrative Appeals Tribunal (the Tribunal) affirmed the VRB’s decision. Mr Murray appealed to the Federal Court.
The Court's consideration
The issue before the Tribunal and on the appeal was whether Mr Murray’s circumstances satisfied section 24(1)(c), or failing that section 23(1)(c).
The Court referred to Repatriation Commission v Richmond (2014) 226 FCR 21, in which the Full Court identified the essence of what each of the two limbs of section 24(1)(c) required and reflected on the overall effect of the provision:
52] As we have said, s 24(1)(c) has two limbs. The first limb, which is capable of being informed by s 24(2)(b), requires a causal connection between the veteran's war-caused incapacity, alone, and the veteran's inability to undertake the remunerative work he or she previously engaged in.
 The second limb, which is amplified by s 24(2)(a), requires a causal connection between that inability to work and the veteran's suffering of financial loss. The enquiry under this limb relates to whether the veteran's financial loss is a result of his or her war-caused incapacity.
 As Buchanan J said in Smith (at ), the overall effect of s 24(1)(c) is that an applicant for the special rate of pension “requires a demonstrated loss of earnings as the direct result of the war-related incapacity, and only for that reason”.
Echoing these observations, in Summers v Repatriation Commission (2015) 230 FCR 179 the Full Court said this:
 Section 24(1)(c) has two main limbs. The first limb provides:
“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 ... ”
It requires that the veteran be prevented, by war-caused incapacity alone (that is, not for other reasons) from continuing his or her earlier remunerative work: Smith v Repatriation Commission  FCAFC 53; (2014) 220 FCR 452 (Smith) at - per Rares J, - per Buchanan J, -168] per Foster J; Richmond at - per Middleton, Murphy and Rangiah JJ and the authorities there cited. The possible harshness in the “alone” test in this limb is ameliorated to an extent by s 24(2)(b).
 The second limb of s 24(1)(c) is:
... and [the veteran] 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;
The operation of this limb is amplified by s 24(2)(a).
 We respectfully agree with Buchanan J's explanation in Smith at  where his Honour said that “[t]he 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” (emphasis added).
The Court considered the connection between the second limb and section 24(2)(a) is apparent from the above extract, and Richmond similarly said at :
The plain words of s 24(2)(a)(i), informing the second limb of s 24(1)(c) as they do, make specific provision for the situation where a veteran, for reasons unrelated to war-caused incapacity, has voluntarily decided to leave his or her remunerative employment. This indicates that the legislature intended that matters other than strictly preventative factors would be picked up under that limb. The second limb (and s 24(2)(a)(i)) provide for a broad enquiry as to fact and degree that is well capable of catering for factors such as a veteran's voluntary or elective decision to cease work.
The Court noted an example of the ameliorative effect of section 24(2)(b) referred to in Summers, was given in Richmond at :
... Further, s 24(2)(b) allows a veteran to qualify for the special rate where the veteran ceases remunerative work for reasons unrelated to war-caused incapacity, and then later (perhaps when the veteran's war-caused incapacity has worsened) demonstrates genuine efforts to obtain work which are made fruitless substantially by reason of that incapacity: Smith at  per Buchanan J.
The Court indicated that the focus of the enquiry under the first limb of section 24(1)(c) is on what has prevented the veteran from continuing to undertake remunerative work, by reference to Richmond in :
The enquiry under the first limb is therefore whether the veteran's war-caused incapacity alone, prevented, the veteran from continuing to undertake the remunerative work he or she previously engaged in. It is factors that prevent the veteran from engaging in remunerative work that are relevant to the enquiry under the first limb of s 24(1)(c).
The Court noted a counterfactual analysis has often been employed in the application of section 24(1)(c) – 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. In Repatriation Commission v Smith (1987) 15 FCR 327 Beaumont J, which whom Northrop and Spender JJ agreed, said at 337:
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 ...
The Full Court in Richmond regarded the counterfactual approach at  as “expressing a practical rolled up approach to the operation of both limbs”.
The Court emphasised that whether the section 24(1)(c) criteria is satisfied has to be answered by reference to the circumstances prevailing during the assessment period.
The Court went on to examine the reasons of the Tribunal.
Third ground of appeal
The Court considered the Tribunal’s reasoning did not evince a sufficient engagement by the Tribunal with the counterfactual assessment of “what [Mr Murray] probably would have done if he had none of his service disabilities” (following Smith). Accepting that Tribunal made a finding that, as at the assessment period, Mr Murray was not seeking to engage in remunerative work (addressing the criterion in section 24(2)(a)(i)), the Tribunal needed to consider and determine whether Mr Murray was not then seeking remunerative work “for reasons other than his…incapacity” from his war-caused disabilities. The Tribunal’s reasons did not support the conclusion the Tribunal grappled with the question of whether, after June 2007, Mr Murray no longer sought work “for reasons other than” his incapacity from his war-caused disabilities. In failing to address that issue, the Court considered the Tribunal erred by misconstruing the task required of it by section 24(2)(a)(i), and in turn, section 24(1)(c). For the same reason, the Tribunal erred by misconstruing the task required of it by section 23(3)(a)(i), and in turn, section 23(1)(c).
Fifth ground of appeal
The Court considered the Tribunal’s reasons failed to expressly identify the basis for the Tribunal’s conclusion at  that it was “not reasonably satisfied that [Mr Murray’s] circumstances met the provisions of ss 23(1)(c) or 24(1)(c)”.
The Court referred to the High Court’s observations about the content and purpose of the duty to provide adequate reasons in Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at :
... It ensures that a person who is dissatisfied with the result at which the Tribunal has arrived can identify with certainty what reasons the Tribunal had for reaching its conclusion and what facts it considered material to that conclusion. Similarly, a court which is asked to review the decision is able to identify the Tribunal's reasons and the findings it made in reaching that conclusion.
The Court considered the Tribunal’s reasons did not ensure that a dissatisfied person like Mr Murray “can identify with certainty” the reasoning of the Tribunal. The Court also referred to what the Full Court said in Summers at :
... One of the central objects behind the statutory obligation to give reasons is to expose the Tribunal’s reasoning process which may facilitate appeals on a question of law or judicial review. The Tribunal was required to explain what it decided on the issue of cl. 6(a) and why, and in our view it did not: Preston v Secretary, Department of Family and Community Services  FCA 300; (2004) 39 AAR 177 at  per Stone J; Hill v Repatriation Commission  FCA 832; (2004) 207 ALR 470 at  per Mansfield J; Civil Aviation Safety Authority v Central Aviation Pty Ltd  FCAFC 137; (2009) 179 FCR 554 at  per Bennett, Flick and McKerracher JJ; Dornan and Others v Riordan and Others  FCA 383; (1990) 24 FCR 564 at 573-574 per Sweeney, Davies and Burchett JJ.
The Court considered the failure to provide adequate reasons constituted an error of law.
The other grounds of appeal were unsuccessful.
The Court’s Decision
The appeal was allowed.
On 14 October 2016 the Court amended one of its orders made on 22 September 2016 that the remittal to the AAT was made without limitation. That order was set aside and in lieu thereof the case was remitted to the AAT limited to reconsideration of the issues raised by:
- Section 23(1)(c) and (3); and
- Section 24(1)(c) and (2),
of the VEA.
The Court left it for the reconstituted Tribunal to determine whether a limitation on the calling of further evidence should be imposed.