Defence Force Retirement and Death Benefits Authority v O'Fee, Jeffrey James William

[1985] FCA 218

Defence Force Retirement and Death Benefits Authority v. Jeffrey James William O'Fee
Administrative Law

FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

JUDGE: McGREGOR J

No. NSW G71 of 1984

FED No. 218/85

Catchwords

Administrative Law pension of member of Defence Force after discharge - appeal from decision of Administrative Appeals Tribunal setting aside a classification of a pensioner for a Class B pension made by the Defence Force Retirement and Death Benefits Authority, substituting therefor a classification for a Class A pension - matters to be taken into account under s.53(1A) - ageing process - reduced opportunity for employment - medical expert witness changing opinion by lay evidence which may have been unreliable - "unsatisfactory" proceedings.

Administrative Appeals Tribunal Act 1975 ss.33, 39.

Defence Forces Retirement Benefits Act 1948 s.51, s.53.

Federal Proceedings (Costs) Act 1981

DATE OF HEARING: 6 June 1985

DATE OF DECISION: 6 June 1985

PLACE: SYDNEY

#DATE 6:6:1985

THE COURT ORDERS THAT:

1.       The appeal is allowed.

2.       The proceedings are remitted to the Administrative Appeals Tribunal to be heard and decided again.

3.       Each side is to pay its own costs of the appeal.

Pursuant to the Federal Proceedings (Costs) Act 1981, I certify that it would be appropriate for the Attorney-General to authorise a payment to Jeffrey James William O'Fee in respect of the costs incurred by him in relation to this appeal.

Note:       Settlement and entry of orders I dealt with in Order 26 of the Federal Court Rules.

REASONS FOR JUDGMENT

The DEFENCE FORCE RETIREMENT AND DEATH BENEFITS AUTHORITY (to whom in conformity with the Reasons for Decision appealed I shall refer to as "the respondent" has appealed from a decision of the ADMINISTRATIVE APPEALS TRIBUNAL (AAT) given on 31 January 1984. The AAT had reviewed the decision of the respondent granting JEFFREY JAMES WILLIAM O'FEE (applicant) a Class B invalidity pension from 21 may 1982.

The AAT by majority, in its Reasons for Decision, on 31 January 1984, set aside the decision of the respondent and substituted therefor a decision that the applicant be classified as having the percentage of incapacity referred to as Class A in S.51(2) of the Defence Forces Retirement Benefits Act 1948 (the Act). Relevant sections of that Act are set out in the Reasons of the majority.

In their Reasons the majority set out the following facts and references to evidence which I repeat though not necessarily in the order they appear there.

The applicant was born in New Zealand on 15 November 1930. He came to Australia at the age of two. He was apprenticed as a manufacturing jeweller. He enlisted in the Army on 25 February 1949. Whilst in the Army he suffered the removal of his right eye. That was the reason for his discharge as medically unfit on 19 December 1960. The majority of the AAT in their Reasons state that when he left the Army he could not go back to that occupation because of his disability. He obtained work as a T.V. repairer in Broken Hill. He said that the held down this job until 1981 although he had to work longer hours to keep up with the work. His claim was that he became redundant when the work he was doing was miniaturised which he could not see to do.

When discharged from the Army the applicant was classified as Class B in terms of s.51 with pension rights appropriate thereto. With effect from 21 June 1963 he was re-classified as 20% Class C under s.53 of the Act. The applicant claimed to have ceased employment at the end of September 1981. On or about 29 October 1981, by letter he advised the respondent that his eyesight had diminished and that he was no longer employed. He requested that his disability be re-assessed. A review was undertaken. On 21 May 1982 the Committee of Alternates considered his case. It was resolved that he remain classified as Class C. He was so advised by letter dated 28 May 1982. By letter dated 7 June 1982 he requested a reconsideration of that decision.

On 12 November 1982 the respondent resolved to vary that decision by determining that the applicant's incapacity in relation to civil employment was 30%. It reclassified the applicant as Class B as and from 21 May 1982. By letter dated 15 December 1982 he was so advised. This was the decision which was the subject of the application for review to the AAT. The applicant sought reclassification as Class A.

The Reasons for the Decision of the majority of the AAT referred to the proceedings before it thus -

"4.       The facts have tended to become confused because of the manner in which the further evidence came to be presented. The applicant's counsel was from the New South Wales Bar. Neither the applicant nor his counsel could return to Adelaide (inter alia because of legal aid difficulties) for the purpose of the evidence of Dr. Ancell. The respondent's representative maintained that it was essential for Dr. Ancell's evidence to be heard. The Tribunal accepted that view because that report had been largely instrumental in the decision under review and because the unavailability of the doctor had been disclosed before the hearing. It was agreed that to try and overcome the resulting difficulty closing addresses should take place at the Adelaide hearing and the evidence [of] Dr. Ancell should be taken on a conference telephone hook-up with the presiding member of the Tribunal and the representative of the respondent in Canberra, two members of the Tribunal and Dr. Ancell in Adelaide and the applicant's counsel in Sydney.

5.       This procedure was followed and showed that there are distinct limits to the practicality of the conference telephone procedure in this Tribunal. Dr. Ancell, to whom the procedure was novel, was indistinct. The respondent sought to introduce new evidence of further investigations conducted since the Adelaide hearing and the applicant sought to introduce a further report.

6.       Further issues thus arose. Firstly, between the dates of the hearing in Adelaide and the resumed telephone hearing from Canberra the respondent conducted some research into Crystal TV Rentals Pty. Ltd, the company by which, the applicant had said, he was employed. This research indicated that the applicant and his wife in fact still owned the company. Secondly, the applicant sought leave to tender a further report from an ophthalmologist in Adelaide, Professor D.J. Coster; this was not objected to by the respondent and was allowed. Thirdly, Dr. Ancell gave evidence to the effect that the applicant's glasses were two years old, out of date and he would have expected larger corrections in the glasses he was wearing; the applicant was thus at a disability because his glasses were out of date.

7.       These new developments on each side bring forward issues on which the experts who gave evidence in Adelaide should have been questioned. Dr. Ancell's view that the applicant's problems were compounded by out of date spectacles should plainly have been put to Dr. Slade, the treating specialist, who in fact did prescribe stronger spectacles after the date on which Dr. Ancell saw the applicant. However, as Dr. Slade "increased the strength of his glasses very slightly but the ones he was using were almost strong enough" here seems still to be a disagreement. Dr. Ancell was at all times the respondent's witness and, if he was going to base his view on inadequate spectacles, this should have been put to Dr. Slade and Dr. Davies. Similarly, the evidence of the registration details of Crystal TV Rentals Pty Ltd should have been put to the applicant and to the employee. Mr Ryan, who gave evidence as to that company; although in this case we appreciate that the initial information as to this aspect of the matter only came out at the Adelaide hearing. Further, difficulty arises from the report of Professor Coster, presented to us by consent of the parties but without explanation of why he was unable to give evidence and be cross-examined in Adelaide, where he resides. The Tribunal sees no advantage in reconvening the matter. The parties have both closed their cases without applying for such a course. We do not think another telephone hoop-up would prove more successful than the last. We have concluded that we should reach a decision in this matter on the evidence before us."

What appear to me to be further unsatisfactory features of the hearing before the AAT are noted in the Reasons of the majority, e.g. -

1.       The value of the testimony of Dr. Ancell (who practices as an ophthalmologist in Adelaide and whose testimony generally favoured the respondent) was much reduced by the failure of the respondent to send him a copy of the transcript thitherto taken or to bet him see certain equipment which had been exhibited.

2.       The medical assessment of another ophthalmologist, viz. Dr. Slade, was, in the view of the majority of the AAT, based upon a significantly greater knowledge of the applicant's ocular condition than that of Dr. Ancell.

3.       Dr. Slade's evidence was based on, to some extent, or influenced by, evidence he accepted from Crystal TV Rentals Pty. Ltd. (Crystal) which the majority were "not convinced accorded with the facts and particularly with information obtained from the NSW Companies' Registry."

4.       This information (i.e. from the N.S.W. Companies' Registry) showed that the applicant had a greater role in the management of Crystal than he would have had the AAT believe.

5.       The majority did not accept that the applicant was "fired" as he had said in evidence.

It did not seem to the majority that the applicant's loss of sight in his remaining eye had changed much since he left the Army. The majority proceeded to quote the report of Professor Coster thus -

"I could quite imagine a situation where someone got by for a prolonged period but with advancing age became more disabled as a result of losing one eye."

They commented that this aspect was not adequately put to Dr. Slade or Dr. Davies, two other witnesses whose evidence had been available to the AAT. Both were ophthalmologists, the views of the latter, generally speaking, favouring the applicant. The words quoted of Professor Coster seen to me to be of questionable value; they refer to a possible hypothetical situation, not necessarily related to this case.

With this somewhat unpromising background, the majority in their Reasons posed the question for the AAT thus -

"The issue before us is really whether the applicant's incapacity has increased as a result of the ageing process together with the alteration of the character of the employment in which he was engaged."

It might have been possible to read "ageing process" as implying not advancing years but the overtaking of the applicant's admittedly defective sight by the change in the character of the employment. Yet having regard to the quotation earlier from Professor Coster and the rest of the sentence. "together with the alteration of the character of the employment in which he was engaged", I am satisfied that it pointed merely to the applicant's increase in years. The majority explicitly accepted there was an alteration in the character of the employment, i.e. onset of miniaturisation.

The majority stated further -

"It was suggested to us that the applicant might have remained working as a manager but we see no reason to believe that the small company could have supported a manager who could not work in the trade or to doubt the applicant's evidence that it could not."

The majority then said -

"Applying sub-section 53 (1A) of the Act to this matter, taking into account the applicant's skills and the employment available in Broken Hill the only option open to him was to continue in the same employment. On Dr. Slade's evidence we accept that he is no longer able to do this. We think therefore that the applicant is now entitled to be classified as Class A."

By reference to the above matters the respondent contended in detailed written submissions in support of which viva voce argument was offered, that there had been no proper hearing; that the telephone hook-up had been undertaken over the objection from the representative of the respondent; and that the lack of success of the telephone hoop-up was recognized by the majority. The argument included reference to the "invidious position" in which the respondent had been placed concerning the tender of Professor Coster's report; particularly as it contained what appeared to be a most important proposition, viz, that advancing age had led to greater disability as a result of losing one eye; it was "perhaps the only repository of evidence touching upon that matter"; and its contents were "not adequately put to Dr. Slade or Dr. Davies". The submissions included criticisms of the AAT, e.g. having regard to the importance attributed to the documents from the Corporate Affairs Commission by the majority and minority, an adjournment should, at the very least, have been offered even though not sought; the failure to seek an adjournment should not be fatal to the respondent's argument on this point "having regard to the terms of the section", i.e. s.39 of the Administrative Appeals Tribunal Act 1975. He referred to Kuswardana v. Minister for Immigration and Ethnic Affairs (1981) 35 ALR 186, particularly at p.194. He submitted there had been, in the circumstances of this review, a departure from the rules of natural justice. He submitted further that what s.53 of the Act referred to was physical impairment leading to diminution of capacity to undertake civil employment; it was not relevant to look at the vagaries of the employment market, whether in Broken Hill or elsewhere, as had been done by the majority; that s.53(1A) required certain matters "only" to be looked at; these did not include any reference to the employment market. He referred to Re Howard and Director-General of Social Services 5 ALN No. 123 (Howard) though involving a different statute. He submitted that "capacity" in s.53 (1A)(c) referred to incapacity in the general labour market, "not the particular vagaries of a labour market at one place at one time". He referred to Anderson v. Australian Postal Commission (1982) 39 ALR 94 at p.101 and cases cited there; Re Shelton and Defence Force Retirement and Death Benefits Authority (Decision of the AAT; 20 July 1979; unreported) para.48. He submitted that incapacity relating to the depressed state of the employment market should not have been taken into account; whether there was a high rate of unemployment was not relevant. He referred to Re Bos and Defence Force Retirement and Death Benefits Authority 1 ALD 31 at p.35. He submitted that the civil employment ... a person ... might reasonably undertake" (s.53(1A)(b)) was distinct from a consideration of employment opportunities actually available. He referred to Re Conway and Defence Force Retirement and Death Benefits Authority (Decision of the AAT; 23 May 1979.. unreported), to ascertain the percentage referred to, s.53(1A) required a comparison of capacity without the injury and in the light of the injury. In his submission the majority had wrongly taken account of the ageing process; in the light of what the majority said (quoted earlier) as to not much change in the loss of sight, there was "no relevant result of the ageing process". It was, he submitted, necessarily relevant to the determination of any percentage disability whether the applicant could have continued to work as a manager in the business of Crystal; and further relevant that there was an existing manager; and pertinent to that question was whether the applicant's evidence as to the circumstances of cessation of employment was believed. The majority, he said, had failed to look at the ability of the applicant to perform other jobs.

For the applicant it was submitted that it was not necessary for this Court to decide whether the availability of employment was a proper consideration pursuant to s.53 of the Act; there was a separate and independent finding of fact which fell within the matters set out in s.53(1A)(a). (b) and/or (c) i.e. that the applicant's incapacity had increased as a result of an alteration in the character of his employment (i.e: miniaturisation of the equipment); the AAT had been satisfied that there was such an alteration and there was other evidence relevant to miniaturisation and the effects thereof Counsel submitted, referring to the transcript, that the use of the telephone hook-up procedure was not "decided upon over the objection of the respondent". The use of the telephone hook-up procedure, she submitted, was clearly authorised by s.33(1)(a) of the Administrative Appeals Tribunal Act; it was a question of discretion, in the exercise of which the AAT was directed to take into account that proceedings were to be conducted with as little formality and technicality and as much expedition as a proper consideration of the matter before it permitted; the AAT properly exercised its discretion. She referred to the evidence. The AAT in fact only recognized that the telephone hook-up had been unsatisfactory in some respects, primarily because Dr. Ancell's evidence was much reduced in value by the failure of the respondent to send him a transcript of the Adelaide hearings etc. She submitted the respondent's counsel was not "in an invidious position" as a result of the tender of the Coster report; it was admitted without objection. on the same basis as the company documents concerning Crystal; no useful purpose could have been achieved by an adjournment, She said that the majority did not make a finding that advancing age led to greater disability as a result of losing one eye; to the contrary, it found that the applicant's loss of sight had not changed much since he left the Army; it did not rely upon the Coster report; merely noted that it provided some evidence to the contrary of this finding. It followed that the Coster proposition had no importance to the outcome of the case, as the respondent had submitted. It did not matter. therefore, that the contents of the report might not have been adequately put to Drs. Davies and Slade. She submitted, for the reasons outlined, that the documents tendered by the respondent at the telephone hook-up were not, in fact, contrary to the applicant's evidence. She referred to the evidence. She argued that no purpose would have been served by recalling the applicant to put the company documents to him; they disclosed only what he had already admitted, in any event, the circumstances under which the applicant ceased his employment were irrelevant (as the majority found). The crucial findings, she said, with respect to his employment, were that it had so changed in character that the applicant was no longer able to do it; that he could not have found employment as a manager, the only other employment possibly available to him. She referred toevidence. She submitted, had one of the parties been unrepresented it might be arguable that the AAT ought to have offered that party an adjournment, even in the absence of a request to enable it to consider its position in the light of this evidence; see Sullivan v. Department of Transport 1 ALD 383. But each party was represented. She referred to the words of Barwick C.J.; i.e. only "in the clearest case and for the most cogent reasons that a party who has conceded matter at trial should be allowed to make the validity of what has been conceded the basis for overturning the result of the trial"; Port Jackson Stevedoring Pty. Ltd. v. Salmond & Spraggon (Aust.) Pty. Ltd. 139 C.L.R. 231 at p.241. She said that the rules of natural justice clearly applied to the AAT; there had been no breach in the circumstances of this case. She conceded that the decision-maker could take into account only the matters set out in s.53(1A)(a), (b) and (c) in determining the percentage of total incapacity of the person in relation to civil employment; however, in considering the matters in s.53, the decision-maker must embark upon a similar analysis to that required in relation to determining the degree of permanent incapacity for work in invalid pension cases where the decision-maker has to assess what work is suitable to be undertaken by a person. She referred to Howard; Re Panke and Director-General of Social Services 4 ALD 179. It was appropriate, she said, in this case for the AAT to look at whether work of a suitable kind was actually available in the labour market reasonably accessible to the applicant. There was no evidence that either of the types of civil employment for which Dr. Ancell considered the applicant was fit (i.e. as a service manager and/or instructor in an electrical or T.V. repair/retail business), were in fact available to the applicant in the labour market which was reasonably accessible to him, i.e. Broken Hill. She said the AAT did not wrongly take account of the consequences of the ageing process because, despite the statement of the issue by the majority, they made no finding with respect to whether or not the ageing process had affected the applicant's incapacity; the finding that the applicant's loss of sight of his eye had not changed much since the Army necessarily meant that it did not regard the ageing process as having had any relevant result. She said that the statement of the issue (quoted above) may have been incorrect; but no error of law resulted. She submitted there was no evidence that the applicant could have continued to work as a manager in the business carried on by Crystal. Indeed, the evidence was to the contrary; in any event the AAT took into account whether or not the applicant could have continued to work as a manager for Crystal and also the applicant's ability to perform other jobs.

I have not attempted fully to restate all the arguments of counsel.

It appears to me that the majority accepted that the ageing process was an issue. It is axiomatic that the applicant has grown older since he was discharged; so that from one point of view the "issue" could be resolved only in favour of the applicant. Yet earlier the majority, as quoted, had said that it had not seemed to them that the applicant's loss of sight in his eye had changed much since he left the Army.

Further, the majority have apparently had regard to restricted employment opportunities open to the applicant in Broken Hill; there was "a negligible share of vacant positions" as the letter from the Barrier Industrial Council, part of the evidence, had stated. The applicant could be "regarded as unemployable in Broken Hill". The majority referred to that letter in their reasons and the "deplorably bad unemployment conditions in Broken Hill". The majority accepted the applicant was no longer able to be appointed as Manager at Crystal but made no finding about the opportunities the applicant might have to obtain work as a manager elsewhere in Broken Hill; their comments were confined to Crystal as quoted earlier. Dr. Slade had come to an opinion more adverse to the applicant's capacity, as noted in his letter dated 27 October 1982. He indicated he was influenced by a "report" from Crystal and a "statement" from a man who worked there as a foreman and technician.

It is beyond question that the letter from Crystal dated 22 July 1982 was signed by the daughter of the applicant, though this was not recognized or realised in the hearing before the AAT. The letter, by referring to the applicant as employed as a technician until 1 October 1981, did not truly reflect the applicant's association with Crystal. Other later evidence showed that he had been the holder of one of the two shares issued in Crystal, the other being held by his wife; and they were original subscribers in and the directors of Crystal, this information having been revealed by records obtained from the Corporate Affairs Commission of New South Wales, immediately prior to the telephone hook-up held on 27 October 1983. The majority attached some importance to what was revealed in this evidence.

The only matters which the respondent (and thus the AAT) may take into account in determining percentage of Incapacity - and "only" those - are set out in s.53(1A) referred to earlier. They do not include the ageing process or a depressed labour market or a state of unemployment or the shortage of employment for those who might engage in management.

The "issue", despite what was stated by the majority, was not really related to the "ageing process" and I interpret these words as advancing age. Such a process per se has no place in s.53(1A). It seems to me that the majority misdirected itself as to the real issues; or took into account an irrelevant matter; or relied upon something as bearing upon incapacity which in terms of s.53(1A) they were not entitled to do.

Much of the respondent's argument was directed to demonstrating that the hearing and hence the result in this matter were "unsatisfactory" even though that expression may not have been used to describe or to encompass all its various unfortunate aspects. It is clear that all the members of the AAT were troubled by the inadequate account of the applicant's association with Crystal, the implication of later revealed evidence that they may have been misled, the effect on Dr. Slade's views of information from Crystal that later came to be regarded as suspect material and the disastrous telephone hook-up. I do not accept that on a fair reading of the transcript the respondent's counsel did agree to the telephone hook-up. I have already referred to what seemed to me to be errors of the majority in their Reasons which could well have affected the result. I have been impressed also by the reasoning in the minority judgment.

The whole proceeding seems to me one which could be described as unsatisfactory. It is recognized that a litigant is to be bound to a considerable extent, at least, by the manner in which he has conducted his case - see McCormack v. Federal Commissioner of Taxation (1978) 143 C.L.R. 284 per Gibbs J. (as he then was) at pp.305, 306. But in that case the failure to evaluate important evidence in the original hearing was considered of significance. See per Barwick C.J. at pp.292, 293. He came to the conclusion that the matter "has never properly been tried". In Mapley v. Radial Industries (1982) 61 F.L.R. 189 at p.200 it was said, because of some unfortunate circumstances of the hearing, that by a re-hearing the "overall objectives of justice" would be met. The appeal was allowed by Deane J. on that basis. Gallop J. apparently upheld the appeal because "the very issue upon which the appellant failed before the Supreme Court [i.e. the Court from which the appeal had been brought] has never been properly litigated" (p.212).

I have reached the view that the appeal should be allowed because of matters apparently wrongly considered or taken into account by the majority and the unsatisfactory nature generally of the hearing. I am also of the view that much of the explanation for the unsatisfactory situation lies in fortuitous circumstances. This view has influenced me in the order I make as to costs.

The Orders I make are -

1.       The appeal is allowed.

2.       The proceedings are to be remitted to the Administrative Appeals Tribunal to be heard and decided again.

3.       Each side is to pay its own costs of the appeal.

4. Pursuant to the Federal Proceedings (Costs) Act 1981 I certify that it would be appropriate for the Attorney-General to authorise a payment to Jeffrey James William O'Fee in respect of the costs incurred by him in relation to this appeal.