Dept of Defence] - [2002] AATA 383

DECISION AND REASONS FOR DECISION [2002] AATA 383

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2001/1067

GENERAL ADMINISTRATIVE DIVISION       )
           Re      William Watts
  Applicant
           And    Comcare (Department of Defence)
  Respondent

DECISION

Tribunal Mr RP Handley, Deputy President

Date24 May 2002
PlaceSydney

Decision      The Tribunal affirms the decision under review.
  ..............................................
  RP Handley
  Deputy President
CATCHWORDS
COMCARE - Department of Defence – issue of jurisdiction – whether the Tribunal has jurisdiction in respect of a determination made pursuant to the Safety Rehabilitation and Compensation Act 1988 – held that the Tribunal does not have jurisdiction – held that the applicant has not established sufficient grounds for the Tribunal to exercise discretion to grant an extension of time to lodge an application for re-determination – decision under review affirmed.
Commonwealth Employees Compensation Act 1930
Compensation Commonwealth Employees Act 1971
Safety Rehabilitation and Compensation Act 1988 ss 14, 16, 19, 60(1), 62(3), 64(1)
Lees v Comcare (1999) FCA 753
Re Carson and Telstra Corporation [2001] AATA 648
Re Denison-Smith and Comcare [2000] AATA 553

REASONS FOR DECISION

24 May 2002 RP Handley

This matter involves an application by William Watts ("the Applicant") for a review of a decision of a delegate of Comcare (Department of Defence) ("the Respondent") made on 25 June 2001 refusing to accept a request for reconsideration of a determination dated 1 December 1989 on the ground that the decision failed to comply with s 62(3) of the Safety Rehabilitation and Compensation Act 1988 ("the 1988 Act"). At the hearing, the Applicant was represented by John Fitzgerald, of Counsel, and the Respondent was represented by John Wallace, of Counsel. The evidence before the Tribunal comprised the documents produced pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 ("the AAT Act"). Oral evidence was given by the Applicant.
BACKGROUND
Mr Watts was born on 25 September 1945 and is aged 56. He enlisted in the Army to undertake National Service on 2 February 1966. On an Army Medical Examination Record dated 4 November 1965, it was noted that Mr Watts suffered from osteochondritis of the spine and "Painful back for four years – still painful. Has worn brace".
On or about 28 March 1966, Mr Watts suffered back pain during recruitment training at Singleton and was hospitalised from that date until 13 May 1966. A Hospital Discharge Summary recorded "X-Rays show clear cut osteochondritis" and recommended that he was unfit for strenuous use of his back. He was discharged to wear a back brace, continue exercises and undertake sedentary duties. Mr Watts was medically discharged from the Army on 6 December 1966. His Final Medical Record records that he was "Below Entry Standard" and confirmed a history and treatment of Scheuermann's Disease requiring that he "wear back brace at all times".
On 21 May 1986, Mr Watts claimed compensation for Injury to the back involving the "lumbar spine". He attributed this to strenuous activity during recruit training in about March 1966.
On 1 December 1989, a delegate of the Commission for the Safety Rehabilitation and Compensation of Commonwealth Employees admitted liability under the Act for "AGRAVATION OF A DISEASE NAMELY PRE-EXISTING BACK INJURY" sustained in the course of his employment by the Department of Defence on 28 March 1966, for which the Department would have been liable to pay compensation under the Commonwealth Employees Compensation Act 1930 ("the 1930 Act"). However, the delegate determined that liability ceased in respect of that aggravation on and from 14 November 1989. The delegate relied on a report by Dr Maurice P Cleary, Consultant in Occupational and Rehabilitation Medicine, dated 14 November 1989. Dr Clearly diagnosed Mr Watts as suffering from a well-established constitutional spinal disorder, Osteochondritis juvenilis (Scheuermann's disease). He said:
The natural history of Scheuermann's disease is normally for complete resolution of symptoms in youth with no further disabilities in later life. Occasionally osteoarthritic changes in the thoraco-lumbar spine do occur and, in this case, these are well-defined radiologically.
These post-Scheuermann's osteoarthritic changes are the major factors responsible for Mr Watt's continuing back pain…
There is now radiological evidence of a lumbar spine intervertebral disc prolapse. It was not noted or recorded at the time of discharge and may have occurred subsequently as a later complication of a pre-existing constitutional spine abnormality or as part of a normal degenerative process.
On 25 November 1999, Mr Watts lodged a claim for compensation for "aggravation of osteochondrosis with signs of Scheuermann's disease and Schmorl's nodes". This claim was accompanied by reports from Dr Mario Benanzio, Orthopaedic Surgeon, dated 29 September 1998, and Dr Martha Baz, Occupational Physician, dated 2 June 1999. Dr Benanzio diagnosed "a developmental condition of osteochondrosis with signs of Scheuermann's disease and Schmorl's nodes" which he said was aggravated by Mr Watts' national service training, leading to a whole person impairment of 15% pursuant to Table 9.6 of the Guide to the Assessment of the Degree of Permanent Impairment. Dr Baz made a combined impairment rating of 19%, attributing 15% to Mr Watts' thoraco-lumbar spine and 10% to loss of function in his leg.
By letter dated 14 December 1999 (T84), the Respondent noted that Mr Watts had previously lodged a claim for the same condition which was accepted in January 1989. The Respondent continued:
I am also enclosing a "Benefits" leaflet. Once you have read that and if you think that your client is entitled to claim any of the benefits, you are welcome to write in with the relevant evidence and information.
On 18 January 2000 (T86), Mr Watts' solicitors responded and stated that he was claiming "a lump sum for permanent impairment and for reasonable medical, hospital, pharmaceutical or treatment costs". In addition, he sought reimbursement of Dr Benanzio's and Dr Baz's fees for their reports. After another four follow-up letters from Mr Watts' solicitors dated 14 April 2000, 24 October 2000, 22 December 2000 and 19 April 2001, a delegate of the Respondent replied by letter 23 April 2001 (T92) including the following statement:
On 14/12/99 a letter was sent to Rockliffs inviting you to claim benefits in relation to Mr Watts' accepted claim. Unfortunately, this letter erroneously advised that you could claim benefits on behalf of Mr Watts. Commonwealth liability for Mr Watts was ceased on and from 14 November 1989.
The delegate agreed to reimburse Mr Watts for the cost of the medical reports provided by Dr Benanzio and Dr Baz but declined to make a decision about permanent impairment in relation to this matter as "Commonwealth liability ceased on and from 14 November 1989".
By letter dated 26 April 2001 (T93), Mr Watts' solicitors replied asking the delegate to make a determination so that a reconsideration could be sought. The delegate referred the matter to Dr Helen Bashir, Defence Medical Officer, for advice with respect to the medical issues. In a report dated 30 April 2001, Dr Bashir stated that she believed "service aggravated what should have been a self limited disease". The delegate treated Mr Watts' solicitors' letter of 26 April 2001 as a request for a reconsideration of the decision of 1 December 1989. On 25 June 2001, another delegate of the Respondent notified Mr Watts that his request for reconsideration dated 1 December 1989 could not be accepted because of failure to comply with s 62 (3) of the Act. On 24 July 2001, Mr Watts lodged an application for a review of this decision with the Tribunal.
APPLICABLE LAW
Section 62 (3) of the 1988 Act states as follows:
A request for reconsideration of a determination shall:
(a) set out the reason for the request; and
(b)be given to the determining authority within 30 days after the day on which the determination first came to the notice of the person making the request, or within such further period (if any) as the determining authority either before or after the expiration of that period allows.
The issue for the Tribunal in this matter is whether the Tribunal has jurisdiction to hear Mr Watts' application.
EVIDENCE
Mr Watts said he was conscripted into the Army having undergone a medical examination at Parkes on 4 November 1965. At that examination, he advised the medical officer that he had been diagnosed as suffering from osteochondritis, had had a painful back for approximately four years, and had worn a brace for about the same time. However, he said at the time of the medical examination, he was not worried about his back. Mr Watts commenced his recruit training at Singleton Army Base on 2 February 1966. He was admitted to hospital six to seven weeks later having woken one morning and been unable to straighten up. This followed his having previously jarred his back after participating in an exercise.
Mr Watts said that he has mostly been self-employed since being discharged on 6 December 1966. He operated a milk run for a few years until the back pain stopped him doing this. In 1985, he ran a fruit shop but was unable to manage the lifting and carrying involved. Since about August 1987, a particular problem has been pain and numbness in his lower right leg. This has gradually worsened, so that lifting his right leg now gives him pain in the lower back and numbness going down that leg. He has learned to be careful not to jar his leg and can walk on the flat with care for up to about one kilometre.
Mr Watts said that he believed that Comcare had agreed to liability in respect of his condition in 1989. He remembered saying to his wife that at least he was covered if he had other back related problems in the future. He did nothing further about his back until 1999 when he contacted a representative of his solicitors after speaking to a returned serviceman.

SUBMISSIONS
Applicant

With respect to whether or not the Tribunal has jurisdiction in this matter, Mr Fitzgerald, for the Applicant, emphasised that all Mr Watts' early claims for compensation before 1989 were in respect of his incapacity for work. Mr Fitzgerald submitted that the decision dated 1 December 1989 was a primary decision on Mr Watts' claim for incapacity payments. It was not a denial of liability by the Respondent. The claim lodged by Mr Watts on 25 November 1999 was a claim for compensation in respect of permanent impairment and medical costs and not in respect of incapacity. Mr Fitzgerald noted that a delegate at first accepted liability but then, of its own motion, undertook a reconsideration of the decision dated 1 December 1989. Mr Fitzgerald submitted that the Applicant had been mislead by the Respondent and drew attention to the delay between the Applicant's apparent acceptance of the claim on 14 December 1999 and its reconsideration decision dated 25 June 2001.
Mr Fitzgerald drew the Tribunal's attention to the similarities between Mr Watts' situation and the facts of Re Carson and Telstra Corporation [2001] AATA 648, where the Tribunal held that, pursuant to Lees v Comcare (1999) FCA 753, a "cease effects" decision on incapacity did not affect the substantive determination on liability
Mr Fitzgerald submitted that if the Tribunal were to find that it had no jurisdiction as a result of the application of s 62(3) of the 1988 Act, the Tribunal should exercise its discretion to grant an extension of time for the lodging of Mr Watts' application for review pursuant to s 29(7) of the AAT Act. Mr Fitzgerald contended that the explanation for the delay is that Mr Watts made a mistake and believed he could make a claim for compensation against Comcare at a later date.
Respondent
Mr Wallace, submitted that the Respondent's liability to Mr Watts originally lay for the aggravation of a disease pursuant to the 1930 Act, since the aggravation took place in the period February to March 1966. The 1930 Act was repealed in September 1971 when the Compensation Commonwealth Government Employees Act 1971 ("the 1971 Act") took effect. At the time Mr Watts' claim for compensation was lodged on 21 May 1986, liability had to be determined under the 1930 Act and entitlements assessed under the 1971 Act. However, there was no provision under either Act for the payment of lump sum compensation in respect of the spine. Thus, during the processing of Mr Watts' claim, the focus was on incapacity because compensation for permanent impairment was not then available. Such compensation only became available with the 1988 Act taking effect on 1 December 1988.
Mr Wallace submitted that there was no evidence of any damage to or loss of function in Mr Watts' leg. The problems Mr Watts is experiencing with his right leg are related to sciatica consequent upon his spinal condition.
Mr Wallace submitted that the facts of this case bear no similarity to those in Carson (supra). That case involved the Applicant sustaining an injury in the course of his employment. In the present case, liability was only ever accepted for an aggravation of Mr Watts' disease. Mr Wallace said there is no liability to pay compensation for aggravation of a pre-existing disease where the factors causing the aggravation no longer exist. He referred the Tribunal to the decision in Re Denison-Smith and Comcare [2000] AATA 553, where the Tribunal found there was no primary liability to pay compensation if the effects of the aggravation have ceased. The present case also involves an aggravation and the delegate's decision dated 1 December 1989 clearly states that the effects of Mr Watts' Army-related aggravation have been deemed to have ceased, based on Dr Cleary's report of 14 November 1989, a copy of which was enclosed with the decision.
Mr Wallace noted the lapse of approximately 10 years from the time of the decision on 1 December 1989 until the further claim for compensation was lodged on 18 October 1999. He said the Applicant has given no reasonable explanation as to why a reconsideration decision was not sought in 1989 when there is no question that Mr Watts could have had recourse to legal advice at that time. With regard to the delegate's letter of 14 December 1999, Mr Wallace submitted that this was not a determination. The delegate was not aware of the decision of 1 December 1989 and merely stated that Mr Watts could claim benefits. When this mistake was later realised, a delegate apologised for the error and agreed to reimburse Mr Watts' out of pocket medical expenses in respect of the reports provided by Dr Benanzio and Dr Baz.
Mr Wallace submitted that Mr Watts would be unable to succeed in a claim under the 1971 Act. He said that even if a claim were accepted, the medical evidence does not establish a causal connection between the aggravation of Mr Watts' disease in 1966 and his present condition. His work history suggests that he may have had other aggravations which could have been responsible for his present condition and which have not even been considered. In conclusion, Mr Wallace submitted that there was no jurisdiction for the Tribunal to hear this matter pursuant to s 62(3) of the 1988 Act and the Tribunal should not exercise its discretion under s 29(7) of the AAT Act to extend the time for Mr Watts to lodge an application for review of the decision of 1 December 1989.
APPLICATION OF THE LAW AND FINDINGS
As stated above, the principal issue is whether the Tribunal has jurisdiction to hear Mr Watts' application for a review, given that Mr Watts did not request a reconsideration of the determination dated 1 December 1989. Section 62(3) of the 1988 Act requires that a request for reconsideration of a determination shall be made to the determining authority within 30 days after the day on which the person was first notified of the decision.
An important consideration is the character of the decision dated 1 December 1989 and whether this merely ceased liability in respect of incapacity payments or whether it ceased all liability in respect of Mr Watts' claim for aggravation of his osteochondrosis. In terms of the operation of the 1988 Act, the former effect would be to cease liability under s 16 in respect of incapacity payments while the latter effect would constitute a cessation of all liability in respect of s 14. The Tribunal notes the distinction drawn by the Full Federal Court in Lees (supra) between a determination made under s 14 on liability to pay compensation in respect of a particular injury and, determinations on claims in respect of particular benefits, for example, compensation in respect of medical expenses (s 16), incapacity (s 19), and permanent impairment (s 24).
There is no dispute that Mr Watts' claim for compensation in 1986 was in respect of an aggravation of a pre-existing back condition, namely osteochondrosis. The Tribunal finds, based on Mr Watts' evidence, that after being medically discharged from the Army, he, at various times, engaged in employment or self-employment involving lifting which caused him back pain. For example, he ran a milk run for a few years and worked in a fruit shop, in both instances ceasing work because of back pain. There was no medical evidence before the Tribunal as to the effect of that employment on his condition, which the Tribunal assumes, involved an aggravation of his pre-existing osteochondrosis. The Tribunal notes that Dr Benanzio's report dated 29 September 1998 (T70) makes no reference to Mr Watts' other employment. Dr Baz' report of 2 June 1999 (T80) refers to Mr Watts' purchasing a milk run: "This aggravated the back pain, and he sold the business after 2 years". Dr Baz also refers to Mr Watts's current disposal business and states that this involves "lifting stock, although he does as little as possible by giving the lifting tasks to an employee". The reports also refer to Mr Watts' right lower limb. Dr Benanzio states:
the paraesthesia on the lateral aspects on the right thigh is related to radiculitis in the lumbar spine caused by L4/5 degenerative pathology with a degree of acquired spinal stenosis. The radiculitis is also the cause of a restricted right straight leg raising.
In the Tribunal's opinion, the delegate's letter dated 1 December 1989 (T78) notifying Mr Watts of the cessation of liability was quite clear. The letter states:
The effects of your Army related aggravation have been deemed to have ceased on the basis of Dr Cleary's report of 14 November 1989 (copy enclosed)

The letter goes on to discuss Dr Cleary's report and then states:

In light of the above evidence the Department of Defence is not liable to pay compensation in respect of your back condition on and from 14 November 1989…

Paragraph 7 of the letter refers to the formal determination which was enclosed together with a notice "outlining your rights under the above Act". The formal determination which was enclosed refers to the cessation of liability in similar terms.

Given what appears to the Tribunal to be a clear statement of cessation of liability, it is difficult to explain Mr Watts' evidence that despite receiving this letter, he believed he was covered for the purposes of compensation if he had problems with his back in the future. Mr Watts agreed that he could have afforded legal advice in 1989 if he had needed this, but he chose to take no further action in respect of his claim for compensation until he contacted Rockliffs in 1999.
In the Tribunal's view, this case is similar to that of Denison-Smith (supra) in that both cases involve the aggravation of pre-existing conditions. In Denison-Smith, Deputy President Burns found that a letter from the respondent advising the applicant that the respondent would cease liability from a particular date in respect of the aggravation of the condition was a decision made pursuant to s 14 of the 1988 Act. Because there had been no reconsideration of that decision, the Tribunal did not have jurisdiction to undertake a review. A later decision rejecting a claim for permanent impairment and non-economic loss on the ground that there was a prior determination pursuant to s 14 of the Act denying liability, was affirmed.

In the Tribunal's view, the situation in the present case is exactly the same. There was no reconsideration of the decision dated 1 December 1989 and thus the Tribunal does not have jurisdiction to review that decision. With respect to the decision under review dated 25 June 2001, that decision must be affirmed because of the decision of 1 December 1989 made pursuant to s 14 of the Act. In the absence of a favourable determination under that section, the Respondent correctly rejected the Applicant's claim for compensation in respect of medical expenses and permanent impairment.
With regard to Mr Fitzgerald's alternative claim that the Tribunal should grant an extension of time in respect of the decision dated 1 December 1989 pursuant to s 29(7) of the AAT Act, as already stated, the Tribunal does not have jurisdiction because the decision of 1 December 1989 is not a "reviewable decision" within the meaning of s 60(1) of the 1988 Act. Even if it was a reviewable decision in respect of which an application could be made to the Tribunal under s 64(1) of the 1988 Act, the Tribunal is not satisfied that the Applicant has established reasonable grounds for the exercise of the Tribunal's discretion to grant an extension of time for the making of an application.
In conclusion, the Tribunal affirms the decision under review.

I certify that the 32 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President RP Handley.
Signed:         .....................................................................................
  Associate
Date/s of Hearing  1 May 2002
Date of Decision  24 May 2002
Representative for the Applicant              Mr J Fitzgerald, Barrister
Representative for the Respondent        Mr J Wallace, Barrister