Alexander and Repatriation Commission - [2002] AATA 575

DECISION AND REASONS FOR DECISION [2002] AATA 575

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2000/458, Q2000/678

VETERANS' APPEALS DIVISION       )        and Q2001/231
           Re      HUBERT JOACHIM ALEXANDER
  Applicant
           And    REPATRIATION COMMISSION
  Respondent

DECISION

Tribunal Dr EK Christie, Member

Date12 July 2002
PlaceBrisbane

Decision In relation to Q2000/458: The Tribunal affirms the decision under review. In relation to Q2000/678 and Q2001/231: The Tribunal sets aside the decisions under review and in substitution therefor decides that the applicant, Hubert Joachim Alexander, is entitled to pension payable to him at the Special Rate. The earliest date of effect is 11 October 2000.

..................(Sgd)........................
EK Christie
Member
CATCHWORDS
VETERANS' AFFAIRS - disability pension - veteran assessed at 100% of the General Rate - whether entitled to Special Rate - assessment.

Veterans' Entitlements Act 1986 ss 24(1)(c), 120(4)

Repatriation Commission v Sheehy (1995) 133 ALR 654
Forbes v Repatriation Commission (2000) 101 FCR 50
Flentjar v Repatriation Commission (1997) 48 ALD 1
Re Starcevich and Repatriation Commission (1986) 10 ALN 202
Re Doyle and Repatriation Commission (1986) 47 ALD 187
Jackman v Repatriation Commission [1997] FCA 564
Magill v Repatriation Commission [2002] FCA 744
Polivitte Ltd v Commercial Union Assurance PL [1987] 1 Lloyds Rep 379
Cavell v Repatriation Commission (1988) 9 AAR 534
Briginshaw v Briginshaw (1938) 60 CLR 336

REASONS FOR DECISION

12 July 2002 Dr EK Christie, Member

This is an application by Hubert Alexander to review the following decisions of the delegate of the Repatriation Commission:

(a)Q2000/458:   A decision of the Veterans' Review Board ("the Board") dated 1 February 2000 which determined that osteoarthrosis of the knees, right ankle and right foot, lumbar spondylosis and migraine were not war-caused and pension continued at 100%.
(b)Q2000/678:   A decision of the Board dated 21 June 2000 which continued pension at 100%.
(c)Q2001/231:   A decision of the Board dated 14 February 2001 which continued pension at 100%.

At the hearing, Mr J Griffiths of Counsel represented Mr Alexander. The respondent was represented by Mr M Smith, a Departmental Advocate.
The Tribunal had before it documents lodged pursuant to Section 37 of the Administrative Appeals Tribunal Act 1975 (Cth) and the various documents tendered by the parties.
Oral evidence on behalf of the applicant was given by Mr Alexander and Stephen Stockell. Dr S Goode, a specialist in occupational medicine, gave expert opinion evidence on behalf of the respondent.
Issues to be Decided
The only issue for the Tribunal to decide was whether Mr Alexander was entitled to pension payable to him at the Special Rate. It was common ground between the parties that only the application of subsection 24(1)(c) of the Veterans' Entitlements Act 1986 was in dispute.
At the commencement of the hearing, the parties agreed that the earliest date of effect, should the applicant succeed, be the date the business was sold – 10 October 2000.
The following conditions of Mr Alexander have been accepted as war-caused:
(a)      With effect from 11 December 1998:
·     bilateral sensori-neural hearing loss with tinnitus;
·     chronic bronchitis and emphysema;
·     gastro-oesophageal reflux disease;
·     athersclerotic peripheral vascular disease affecting both legs;
·     impotence;
·     claustrophobia; and
·     post traumatic stress disorder

(b) With effect from 14 April 2000:

· irritable bowel syndrome

ischaemic heart disease.

The following conditions have been determined not to be war-caused:

migraine
lumbar spondylosis
localised osteoarthrosis of the left knee
localised osteoarthrosis of the right knee
localised osteoarthrosis of the right ankle and foot

Legal Framework

In the Second Reading Speech of the Veterans' Entitlements Bill 1985 relating to amendments which created the current Section 24, the then Minister for Veterans' Affairs said:
"The amendments clarify the eligibility criteria and make it clear that to qualify for a TPI pension, the veteran must be eligible for the 100 per cent general rate pension. In addition the TPI rate pension can become payable only when a veteran is totally and permanently disabled by accepted disabilities and is thereby precluded from continuing to engage in remunerative work. If a person has had the usual span of the working life or, and we emphasise these words, has retired voluntarily or has left employment for reasons other than accepted disabilities, the TPI pension is not payable."
The legislative intent was considered by Sackville J in Repatriation Commission v Sheehy (1995) 133 ALR 654:
"The legislative intent seems to me to be that a veteran over the age of 65 is to receive a special rate of pension only if the veteran is prevented from engaging in a field of remunerative activity that he or she was able to perform at some stage during his or her working life. If the veteran could never perform the duties for which he or she was employed, it may be accurate to say the war-caused incapacity prevented the veteran from undertaking the work. It is much more difficult to say that the veteran has been prevented from continuing to undertake the remunerative activity…"
The difficulties identified by Sackville J were subsequently addressed in Forbes v Repatriation Commission (2000) 101 FCR 50 at 52 and 53 by RD Nicholson J. The following approach was used to interpret and to apply the provisions of subsection 24(1)(c):
"That approach [ss 24(1)(c)] is best understood by dividing it into its two limbs and relating those limbs to the relevant portions of what follows in s 24(2).
The first limb of s 24(1)(c) reads:
'(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…'
That limb must be read subject to the application of s 24(2)(b) which reads:
'(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.'
The second limb of s 24(1)(c) reads:
'(c)….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'
This is to be read in conjunction with s 24(2)(a) which provides:
'(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, be reasons 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…'"
With respect to the requirements of subsection 24(1)(c), Nicholson J referred to the decision of the Full Court of the Federal Court in Flentjar v Repatriation Commission (1997) 48 ALD 1 at pages 4-5 where the Court said that the issues before the Tribunal were:
"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?"
The above matters must be satisfied to the reasonable satisfaction of the Tribunal in accordance with the standard in subsection 120(4): Re Starcevich and Repatriation Commission (1986) 10 ALN 202; Re Doyle and Repatriation Commission (1986) 47 ALD 187. That meant, as Tamberlin J noted in Jackman v Repatriation Commission [1997] FCA 564:
"The AAT had to determine, to its reasonable satisfaction, whether the applicant's war-caused disabilities were the only reason for him not being in remunerative employment. Burchett J in Cavell stated that this determination is not to be made upon 'nice philosophical distinctions', equally it is not to be made upon complex calculations of the probability that an intervening event may have occurred. The approach is to be guided by commonsense with an 'eye to reality'."
The question of a combination of war service conditions and non-war caused conditions and undertaking remunerative work, was also considered by Nicholson J in Forbes v Repatriation Commission (supra) at page 57:
"The applicant's case requires the Tribunal to not have regard to the non war-caused condition where there is a finding that it alone did not stop the applicant from undertaking work. In my view, that course is not open to the Tribunal in the light of the words used in the first limb of s 24(1)(c). 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. The possibility of combination is recognised in the third conceptional environment identified in the applicant's case. Furthermore, it is consistent with the application by a Tribunal of a common sense approach 'with an eye to reality'.
As in the case of the present applicant, it is possible that the war-caused condition will be 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. Parliament has sought to ameliorate this position by the provisions in s 24(2)(b), to which reference has been made. To date, the applicant has been unable to qualify pursuant to that provision. Whether he can qualify pursuant to that provision in the future remains a question for consideration."
Drummond J clarified the situation with respect to satisfying the requirements of subsection 24(1)(c) so as to come within subsection 24(2)(b): Magill v Repatriation Commission [2002] FCA 744 at paragraph 28:
"28. It remains only to note that, having found that Mr Magill's war-caused disabilities did not alone prevent him from continuing to undertake remunerative work, the Tribunal correctly went on to consider whether, notwithstanding that conclusion, Mr Magill might still be able to satisfy s 24(1)(c) by bringing himself within s 24(2)(b). The Tribunal found that he could not do this because he had not genuinely sought to engage in remunerative work after retiring from the Supreme Court. However, the Tribunal's decision that his war-caused disabilities did not alone prevent him from continuing to undertake remunerative work is flawed with error of law. If he can persuade the Tribunal, on reconsideration, that his disabilities were the sole reason for his not being able to continue to undertake remunerative work, it will, for the reasons given, be irrelevant for the Tribunal to consider whether he made genuine attempts to seek work after leaving the Supreme Court in November 1997."

Oral Evidence before the Tribunal

Evidence of Hubert Alexander

Mr Alexander was the sole proprietor of "Paramount Video Productions", a business first registered in 1988. Mr Alexander commenced the business with an initial capital outlay of $20,000 and then increased capital inputs as technology changed with time.
Because of difficulties he experienced copying with his business, he placed the business on the market during 1998 for $135,000. This figure represented a valuation of $85,000 for capital items and the balance for goodwill. Because of a very competitive market, Mr Alexander received few offers.
Mr Alexander stated that Stephen Stockell's involvement in his business increased after it had been placed on the market. At this stage he had come to rely on Mr Stockell to do most of the computerised editing and camera shoots as he could not handle these tasks himself. From this time on, Mr Stockell's involvement in the business continued to increase, whereas his own involvement reduced to a few days per week.
Mr Alexander said that the primary reason that he employed Mr Stockell was for him to take over the business when Mr Alexander could not function effectively. Over time, he said that he found that he had become less effective, especially in dealing with his clients.
Around this time, and acting on the advice received from his dentist as to the cause of a chronic oral dental problem (severe grinding of teeth), Mr Alexander consulted a psychologist and, then later sought counselling from the Vietnam Veterans' Counselling Service at Southport in relation to identifying the cause for this problem.
Mr Alexander described an accident where he fell off a ladder in mid-March 1999 and where he injured his right ankle. He remained in a plaster cast for five months and was restricted to crutches. However, these injuries had healed when he sold the business in October 2000.
Following this injury, Mr Alexander resumed work at his business carrying on the same tasks (e.g. administrative, writing cheques) as he did before the accident. He still relied on Mr Stockell for all camera shoots and editing.
Mr Alexander said that he eventually sold his business in October 2000 for $60,000 as this amount cleared him of his leasing commitments and so freed him of his business worries and problems. Mr Alexander stated that the factors which led to the low sale price of his business were the problems he had dealing with his clients, memory loss and concentration problems. However, he said that the crucial factor for the sale was that he wanted to avoid dealing with people, as the other limitations he had "learnt to put up with".
Under cross-examination by Mr Smith, Mr Alexander acknowledged that at the time of the VRB hearing, 1 February 2000, he continued to receive treatment for his right ankle injury. He also acknowledged that his back injury was also a problem, at that time, for working in the video business.

Evidence of Stephen Stockell

Mr Stockell said that he became involved in Mr Alexander's business, on a casual basis as a cameraman, in 1993/94. His involvement then gradually increased, markedly changing from a casual basis over time. In 1998, Mr Stockell said that he had a significant involvement in the business. He said that Mr Alexander's explanation for the need for his increasing involvement was that Mr Alexander was struggling with the business because of difficulties dealing with people. He said that Mr Alexander became aggressive if things went wrong - as well as having problems with concentration and remembering things and dates. He said that Mr Alexander's problems in dealing with clients became more frequent over time.
Mr Stockell said that he had agreed to take over the customer services part of the business in addition to his other work with camera shoots and video editing.
Mr Stockell concluded by saying that Mr Alexander's involvement in time and nature of work viz. banking, bookwork functions, were the same prior to and after the injury from the fall off the ladder. He said that at each of these two periods of time, Mr Alexander's involvement in the business had reduced to about 3 mornings or 8 hours per week, and that Mr Alexander generally only came in for an "odd morning each week".

Oral Evidence of Dr Steven Goode (Specialist in Occupational Medicine)

Dr Goode acknowledged the following conclusions in his report dated 17 July 2001 (Exhibit 4) in relation to questions raised by the Department of Veterans' Affairs relating to Mr Alexander's ability to undertake remunerative work because of either (i) his service-related conditions or (ii) his non-service-related conditions:

(a)"3. [Question] Report on the degree to which the physical or mental impairment Mr Alexander suffers from as a result of his service related conditions has reduced his capacity to undertake the kinds of remunerative work identified by you in the dot point above.
I believe the psychiatric condition, which is a service related condition, means that Mr Alexander would be unable to return to any of the jobs previously performed by him. I believe his concentration and attention would be adversely affected, and he would be irritable in the workplace, such that he would not relate well to work mates or Supervisors in any usual open competitive job situation.
Mr Alexander would be further limited by his service-related physical problems such as his chronic obstructive airways disease and peripheral vascular disease. The noise induced hearing loss and tinnitus would further impair his ability in the office environment. The claustrophobia would specifically limit some electronics work.
Taken overall, the service-related conditions on their own would be sufficient to prevent Mr Alexander returning to work in any of his previous work environments, and it is the psychiatric condition which is most important in this regard. [Dr Goode's emphasis]

(b)4. [Question] In what ways if any, do Mr Alexander's non service-related and unclaimed conditions prevent him from undertaking the remunerative work which he ceased on 13 March 1999. Please comment on any other conditions you may diagnose during your examination that do not appear in the lists below.
Please note that the chronic stable exertional angina has only recently been diagnosed, and I have detailed this above. I feel this has simply served to further reduce Mr Alexander's ability to do aerobic exercise and manual handling as part of his job.
The lumbar spondylosis will further impair (beyond the service-related conditions) Mr Alexander's ability to do bending, lifting and long distance driving.
The left shoulder rotator cuff tendonitis will further reduce Mr Alexander's ability to do manual handling, especially activities above shoulder height.
I would see the non service-related conditions as being of secondary importance to the service-related conditions in their adverse effects on work capacity."

During cross-examination, Dr Goode stated that Mr Alexander's ankle injury was only a temporary condition but that this was not the case for his shoulder problem. Dr Goode acknowledged that aggressive behaviour was a feature of PTSD. However, he could express no opinion whether memory loss was related to depression rather than to PTSD.
In relation to a Tribunal question, Dr Goode ranked Mr Alexander's PTSD, above all his other conditions, as the main limitation for his ability to return to work.
Contentions and Submissions of the Parties

Mr Matthews submitted that Mr Alexander would have continued his video business had he not experienced problems associated with his war-caused PTSD. To maintain his video business and payment of ongoing overheads, Mr Alexander had employed Mr Stockell because of his disassociative state, memory loss and aggression problems and inter-personal difficulties with his clients.
Mr Matthews submitted that from the time Mr Alexander employed Mr Stockell, his involvement in business declined over time: his work time reduced down to 8 hours per week and the nature of his activities changed from video production to simply administrative work. Mr Stockell had taken over the video production work and the client relations. It was Mr Matthews' contention that the injuries sustained in the fall from the ladder were not the reason the business was sold.
Mr Matthews contended that it was significant that Mr Alexander had placed his business on the market some five months before he broke his leg falling off a ladder. Furthermore, Mr Alexander had made every effort to continue, and even increase, his involvement in the business during the actual recovery period following the fall when his injury had healed sufficiently to enable him to return to work.
Mr Matthews submitted that the sale of the business and the cessation of work by Mr Alexander were due to the symptoms "acutely associated" with his war-caused PTSD. Mr Matthews contended that it was illogical to conclude that Mr Alexander would sell his video business – a business he had owned and invested in for well over a decade, for a loss of $75,000 "because he fell off a ladder and broke his leg". Moreover, he contended that neither would have Mr Alexander's non-war caused disabilities contributed, in any way, to the sale of the business. Mr Matthews contended that this view was supported by Dr Goode i.e. Mr Alexander's PTSD and other war-caused disabilities were of such a nature to alone prevent Mr Alexander from undertaking work.
Mr Matthews concluded with the submission that Mr Alexander was entitled to the intermediate rate of pension from 3 June 1999 to the time his video business was sold, 11 October 2000, "based on the fact that he worked less than 20 hours per week".
Mr Smith contended that the test to be satisfied for entitlement for Special Rate under subsection 24(1)(c) was that accepted war service disabilities were the predominant cause for Mr Alexander to cease work. Mr Smith contended that Mr Alexander's orthopaedic condition, to a lesser but not insignificant degree, contributed to Mr Alexander ceasing work.
Mr Smith submitted that the predominant reason Mr Alexander sold his business was as a result of not being able to cope because of his accepted disabilities. However, Mr Alexander's non-war service related orthopaedic problems would have also contributed to his decision to sell the business.
It was Mr Smith's contention that Mr Alexander was not entitled to payment at the intermediate rate, up until the time of selling his business, because there was no medical evidence adduced that Mr Alexander was capable of working 20 hours per week up to this time.
Consideration of the Issues
The Tribunal finds that the opinion evidence of Dr Goode incorporates clinical examination with quantitative measurements, where appropriate, and that his report reviews all existing medical opinion evidence. Because of this integration of these materials, the Tribunal finds that Dr Goode's expert evidence has provided independent assistance to the Tribunal by way of objective, unbiased opinion regarding matters within his expertise (see Polivitte Ltd v Commercial Union Assurance Co PL [1987] 1 Lloyds Rep 379 at 386) and should be given weight in the Tribunal's fact finding process.
The next issue for the Tribunal to decide relates to the application of subsection 24(1)(c) to all the evidence and information before the Tribunal. In evaluating the factual evidence, the Tribunal has done so in accordance with subsection 120(4)(c) of the Veterans' Entitlements Act 1986. In addition, the Tribunal has determined the factual issues to its "reasonable satisfaction" by applying the approach in Cavell v Repatriation Commission (1988) 9 AAR 534, as referred to in Jackman v Repatriation Commission (supra), that is "…to be guided by commonsense with an 'eye to reality'."
Accordingly, the Tribunal considers the four sequential issues identified in Flentjar's case and makes the following findings.
The relevant "remunerative work" that Mr Alexander was undertaking within the meaning of subsection 24(1)(b) of the Act was video productions: external camera shoots, video editing, client relations, business administration.
The second issue is whether Mr Alexander's war-caused conditions prevented him from undertaking this work. The Tribunal finds, based on Dr Goode's report (Exhibit 4) that this is the case and is made clearly evidence in his report (see paragraph 28).
The next issue is whether Mr Alexander's war-caused conditions were the only factors preventing him from continuing to undertake that work. Alternatively, whether there is a possibility that a combination of war service conditions and non-war service conditions prevented Mr Alexander from continuing to undertake that work.
The Tribunal has given weight to Dr Goode's opinion evidence (paragraph 28). It is significant that Dr Goode's opinion identifies Mr Alexander's war service conditions as going beyond being simply dominant over the non-war service conditions but are elevated to a significantly higher level. That is, the war service conditions on their own would be sufficient to prevent Mr Alexander from returning to any of his previous work environments, including those activities prior to 1988 [Tribunal emphasis].
Moreover, Dr Goode, in recognising the psychiatric condition as the most important disability, states in his report (Exhibit 4, page 8):
"Because of the psychiatric condition, I doubt that Mr Alexander would cope very well at all with the general workplace environment, with the necessary interaction with workmates and Supervisors. He would be irritable in the workplace, with reduced concentration and attention, with the potential to make mistakes. I would see this as cutting across all potential work places."
Accordingly, the Tribunal concludes that, notwithstanding that Mr Alexander has non-war service conditions, that it can be clearly adduced from Dr Goode's expert opinion to the reasonable satisfaction of the Tribunal, that Mr Alexander's war service conditions, alone, would prevent him from undertaking the relevant "remunerative" work. That is, the question of whether some combination of war service conditions and non-war service conditions preventing Mr Alexander from undertaking remunerative work does not arise.
The Tribunal accepts Dr Goode's evidence and finds that if Mr Alexander did not have a psychiatric condition (PTSD), concentration and attention difficulties, physical problems (chronic obstructive airways disease; peripheral vascular disease), noise induced hearing loss and tinnitus as well as claustrophobia, he still would have been working. Unfortunately, he does have these war service conditions which prevent him from continuing in remunerative work. These war service conditions act independently from the non-war service conditions in preventing Mr Alexander from working. That is, in themselves, these war service conditions, alone, prevent Mr Alexander working in any of his previous work environments [see paragraph 28(a)]. Accordingly, the issue whether a combination of war service and non-war service related conditions preventing Mr Alexander from working is a non-issue in the factual circumstances of this application for review. Given this finding that Mr Alexander's war service conditions are the sole reason for Mr Alexander not being able to continue to undertake relevant remunerative work, the subsection 24(2)(b) requirements are satisfied: that is, it is irrelevant for the Tribunal to consider whether Mr Alexander made genuine attempts to seek work after he sold his video production business in October 2000 (see Magill's case).
Accordingly, the Tribunal concludes that the first limb of subsections 24(1)(c) and 24(2)(b) are both satisfied.
The final issue for the Tribunal to consider is whether Mr Alexander, by reason from continuing to undertake that work, has suffered a loss of salary, wages or earnings that he would not be suffering if he were free of that incapacity. The Tribunal concludes that Mr Alexander has lost a significant amount in the value of his business (of the order, $75,000) through the sale of his business because of his war service conditions (see paragraph 42). The impacts of these war service conditions on his "income capacity" are reflected in the significant downward income spiral for the taxation year 1999/2000 ($4,326) relative to the earlier years 1998/99 ($35,044), 1997/98 ($42,689) and 1996/97 $30,111). The Tribunal concludes that this application for review by Mr Alexander is not one where there was a clear financial advantage to him when he left work when he did.
Accordingly, the Tribunal concludes that the second limb of subsections 24(1)(c) and 24(2(a) are both satisfied.
For all of the above reasons the Tribunal decides that Mr Alexander was entitled to have the pension paid to him at the Special Rate. The earliest date of effect is the date the business "Paramount Video Productions" was sold on 10 October 2000.
Finally, the Tribunal finds that it has not been proved to the "reasonable satisfaction" of the Tribunal that Mr Alexander is entitled to the intermediate rate of pension from 3 June 1999 to 10 October 2000. The Tribunal finds that there are only "inexact proofs, indefinite testimony or indirect inferences" to establish the number of hours Mr Alexander was capable of working over this period (see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361,362).
I certify that the 53 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member
Signed:         Sarah Oliver
  Associate
Date/s of Hearing  28 June 2002
Date of Decision  12 July 2002
Counsel for the Applicant        Mr J Griffiths
Solicitor for the Applicant         Messrs Alwyn Game
Solicitor for the Respondent    Mr M Smith, Departmental Advocate