Forbes and Military Rehabilitation and Compensation Commission

[2007] AATA 1123

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1123

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No W 200500235

VETERANS’ APPEALS DIVISION		)
Re		IAN FORBES

Applicant

And MILITARY REHABILITATION AND COMPENSATION COMMISSION

Respondent

DECISION

Tribunal

Ms L R Tovey, Member

Dr D Weerasooriya, Member

Date              9 March 2007

PlacePerth

Decision The Tribunal affirms the decision under review.

.......(Sgd. Ms L R Tovey)..........................

Member

CATCHWORDS

COMPENSATON – Commonwealth employees – Military compensation and rehabilitation ‑ rehabilitation program – whether plan should be directed to self-employment

LEGISLATION

Safety, Rehabilitation and Compensation Act 1988 (Cth), s. 36, 37

REASONS FOR DECISION

9 March 2007	Ms LR Tovey, Member
Dr D Weerasooriya, Member

1.      This is an application by Mr Ian Forbes ("the Applicant") for a review of a decision taken by the Military Compensation and Rehabilitation Commission ("the Respondent") on 15 February 2005.  The decision related to the Applicant's rehabilitation program under the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the Act"). The decision was that the Respondent would no longer support a self-employment option as vocational rehabilitation.

2.      The issues before the Tribunal generally relate to the question of whether the rehabilitation program which the Applicant should undertake is to be directed to the goal of assisting the Applicant to establish a small business involving the sale of books, which he intends to operate principally from home.

BACKGROUND

3.      The Applicant enlisted in the Australian Regular Army on 16 March 1983 as a rifleman grade 1.  On 5 August 1985 the Applicant lodged a claim for compensation in respect of injuries sustained in a motorcycle accident which occurred on 23 September 1984.

4.      The Applicant was discharged from the Army at the rank of private on 29 October 1985.  It is not in contention that he was not discharged on medical grounds and undertook civilian employment for a time after his discharge.  Subsequently, however, the Applicant's spinal injuries caused him to become incapacitated for work.

5.      On 24 June 1987 the statutory predecessor of the Respondent accepted liability in respect of the personal injury sustained by the Applicant on 23 September 1984, which at that time was identified in the determination as "2 fractures of spine, 3 broken ribs".  On 3 May 2000 the injury for which the predecessor of the Respondent accepted liability was extended to include "Crush Fractures T7, T9, T10, T11 and C5 and Fractured Ribs".

6. On 8 December 1998 the deterioration of the Applicant's symptoms from his spinal injuries caused him to be certified unfit for work for a period of 60 days commencing on 11 December 1998. He has remained at either wholly or partially incapacitated for work since that time. Aside from some occasions on which payments have been suspended for alleged non-compliance with the requirements of the Act, the Applicant has been in receipt of incapacity payments from the Respondent since that time.

7.      The Applicant was provided with rehabilitation programs from 1999 to 2000 and 2001 to 2002.  Those programs did not, however, achieve the result of the Applicant's return to paid employment.

8.      It is apparent from the submissions and evidence of the Applicant that the process by which the Army, the Respondent and its predecessors dealt with his claim and rehabilitation programs have given rise to a strong sense of grievance in the Applicant.  While we have considered all of that evidence and those submissions, in the end we do not find it necessary to set out that history in detail or to make any findings about aspects of the positions of the Applicant and Respondent which are in contention.  Those are now matters of history which, while they may explain the current attitude of the Applicant to the Respondent and those engaged by the Respondent, are of little assistance in determining the kind of rehabilitation program with which the Applicant should now be provided.

9.      On 6 February 2003 a delegate of the Respondent determined that the capability of the Applicant to undertake a rehabilitation program should be assessed.  On 17 February 2003 a delegate of the Respondent determined that the assessment should be jointly undertaken by Mr Darren Brandis, a registered psychologist and rehabilitation consultant, and Dr Brian Dare, a specialist in occupational medicine.  On 28 February 2003 the composition of the assessment panel was altered, apparently at the request of the Applicant, to comprise Mr Brandis and Dr Michael Bowles, an occupational physician.

10.     On 4 March 2003 Dr Bowles provided an assessment that concluded that the Applicant was fit for part time work of 4 hours a day, 5 days a week.  Dr Bowles identified the Applicant's physical restrictions as lifting not more than 5kg, sitting for up to one hour and standing for 30 minutes with posture changes as required.  Dr Bowles specified repetitive back bending, repetitive neck flexion and head turning as actions or movements to avoid.  The Applicant was identified as having an afternoon rest break requirement.  Dr Bowles recommended sedentary or light manual work as being appropriate for the Applicant, and that the duration of the restrictions was "initially" 4-6 months.  He also recommended that the Applicant undertake a physical rehabilitation program and a graded return to work program, initially 4-5 hours a day, 5 days a week increasing to 6-8 hours a week over a 6-8 week period.  However, Dr Bowles also noted

"common agreed goal only chance of succeeding".

11.     A "Rehabilitation Plan" was signed by the Applicant and Mr Brandis on 14 March 2003.  The "overall plan goals" were described as being:

"To enable Ian to increase his physical fitness, complete vocational training and complete his work training."

The plan was to have the Applicant undertake a computer awareness course, a public speaking course and a physical rehabilitation program, to be followed by "work trial/placement activities".

12.     Mr Brandis submitted a report to the Respondent on 16 April 2003.  Mr Brandis said that the Applicant indicated he wanted to become a "social policy facilitator", and they had "agreed on him pursuing work as a research assistant, preferably in a political office, completing administrative tasks".  Mr Brandis' recommendation was that:

"Following further discussions with Ian I advised I would arrange for him to undertake computer training and a public speaking course before commencing a work experience program, in order to reintroduce him back into the workplace.  I have submitted a return to work plan outlining activities and associated costs for the abovementioned services, and upon approval will assist Ian with his rehabilitation."

13.     Attached to that letter was a Rehabilitation Assessment signed by Mr Brandis which expressed the view that the Applicant was capable of undertaking a rehabilitation program, which was likely to increase his capacity for work.  That assessment generally adopted the assessment of Dr Bowles in relation to the Applicant's physical capability.  It concluded with the comment:

"Ian expressed a keen desire to complete tertiary studies followed by a career in social policy/politics.  If a suitable vocational goal cannot be identified which both Ian and MCRS are satisfied with, I believe there is a poor chance of obtaining a successful outcome.

14.     We note that during this period the Applicant's treating medical practitioner, Dr Blackwell, continued to regard the Applicant as totally unfit for work.  On 12 March 2003 Br Blackwell certified the Applicant totally unfit for work for a further 90 days.  On 13 June 2003 a Dr Yates certified the Applicant totally unfit for work for a further period of 90 days.

15. On 28 April 2003 the Rehabilitation Plan, which had been signed by the Applicant and Mr Brandis on 14 March 2003, was approved by a delegate of the Respondent. That approval amounted to a determination under s. 37 of the Act that the Applicant should undertake the rehabilitation program described in the rehabilitation plan.

16.     It appears from the papers that the implementation of this rehabilitation plan did not go well.  There appear to have been a number of missed appointments with the physical rehabilitation provider and a delay in commencing the computer training course.  A dispute arose as to whether the Respondent was liable to pay for glasses which the Applicant said he required to complete his rehabilitation options.  The Applicant appears to have contended that his failure to attend was due to his involvement in proceedings in the Family Court, a failure to receive notification of the commencement of the computer course and the lack of glasses which he required to complete that course.  This led to the suspension of the Applicant's compensation benefits on 30 September 2003. 

17.     It is again unnecessary for the purposes of determining the present matter to discuss this issue in further detail.  We do, however, note in passing that we find nothing in the material before us to support the Applicant's contention that the reasons for the suspension was to "achieve the termination of the above vocational goal and rehabilitation program due to the Respondent's determination not to accept or facilitate the Applicant's preferred vocational aspirations".

18.     On 23 October 2003 Mr Brandis provided the following update to the Respondent:

"I met with Ian on 15 October 2003.  In discussion with Ian he advised that he wished to investigate the option of owning and operating a small business in book sales.  Ian advised that he has a contact in Melbourne who may be able to assist him in the development of this small business.  Primarily, Ian would operate at weekend markets selling books.  Further he proposed to develop a mail order system whereby books could be obtained by mail order."

19.     Also on 15 October 2003 Mr Brandis and the Applicant signed a Rehabilitation Plan Amendment.  The overall plan goals were changed to read "To assist Ian to obtain suitable employment / investigate small business (self-employment) opportunity".  That Rehabilitation Plan Amendment was adopted by a delegate of the Respondent, who directed the Applicant to undertake that plan, on 27 October 2003.

20.     On 6 November 2003 Mr Brandis submitted a further report to the Respondent.  That report stated that the Applicant had indicated to Mr Brandis on 29 October 2003 that he had discussed his self-employment option with a publisher who indicated that if the Applicant was to present as a registered business, and his orders were accompanied by a cheque, he would be eligible for the same discounts as any other book retailer.  Mr Brandis indicated that the Applicant had attended the Small Business Development Corporation and obtained information, and sought to attend a number of courses relating to commencing a small business.

21.     Attached to Mr Brandis' report of 6 November 2003 was a further Rehabilitation Plan Amendment, signed by the Applicant and Mr Brandis on 5 November 2003.  The goal of the plan was changed to "Investigate the feasibility of self-employment".  The plan for the program was changed to the Applicant's attendance at a number of courses operated by the Small Business Development Corporation and a meeting between Mr Brandis and the proposed supplier.  That Rehabilitation Plan Amendment was adopted by a delegate of the Respondent, who directed the Applicant to undertake that plan, on 7 November 2003.

22.     In a further report from Mr Brandis to the Respondent on 16 December 2003, Mr Brandis referred to a meeting with the Applicant following the completion of the Small Business Development Corporation courses on 25 and 26 November 2003.  That report noted:

"The Small Business Development Corporation provided Ian with numerous resources and workbooks to work through in order to determine the viability of commencing a small business and developing a business plan.  When Ian has completed these workbooks he is to return to the Corporation for discussions and advice on costing, planning and further research.  The Corporation also recommended that Ian seek advice from an accountant in relation to the structure of a small business.

Ian has shown a commitment to the process involved thus far in relation to operating a small business.  Given the quantity of preparatory work that Ian had to do I arranged for a review of progress on 9 January 2004, at which time he assured me he would have completed the workbooks."

23.     On 5 December 2003 the Applicant registered the name "Onus Australia" as a business name.

24.     On 19 January 2004 Mr Brandis reported to the Respondent in the following terms:

"I met with Ian on 9 January 2004 to review his progress related to the viability of commencing a small business.  Ian provided me with a draft of his business plan, which is enclosed for your information.  Ian has set up a bank account, registered his business name and applied to the Australian Taxation Office to trade, pending receipt of an ABN.

It is evident that Ian has gone to considerable lengths in preparing the business plan and follow up with organisations such as the Department of Consumer Employment Protection, the ATO and financial institutions.

Ian has shown that he is motivated and committed to this vocational option, however further research and development needs to be pursued in relation to his self-employment.  This includes contact with the Small Business Development Corporation as well as the publisher relating to material that Ian plans to sell.  I have therefore enclosed a rehabilitation plan amendment for your information".

25.     On a date unknown, a delegate of the Respondent approved a Rehabilitation Plan Amendment.  The goal was unchanged and the plan simply stated "no additional services required".  The "reason for extension request" was said to be "ongoing exploration of viability of business".  A further "extension" was granted on 4 May 2004, the reason being expressed as "business proposal being submitted to SBDC on Friday 7/5/04 for review and assessment"

26.     On 3 June 2004 Mr Brandis reported to the Respondent in the following terms:

"As you are aware Ian has been liaising with the Small Business Development Corporation (SBDC) regarding the development of a business plan.

Following my discussions with Mr Brian Childs, SBDC, on 3 June 2004 he indicated he had received a second proposal from Ian.  Brian advised that he is meeting with Ian on 9 June 2004 to provide specific feedback related to the proposal and provide information about getting a business plan ready for review by an accountant.  Brian advised that he will give Ian ten days to complete the proposal and provide a written report relating to the plan's viability as a business.

Following receipt of the report, I will meet with Ian to discuss the recommendations and will also forward a copy to your offices for your information.

Please find attached an updated rehabilitation plan amendment with a new estimated end date of 30 June 2004."

27.     The Rehabilitation Plan Amendment referred to in this report proposed an accountant's review of the business plan, and Mr Brandis liaising with the Applicant, the SBDC and an accountant.  A delegate of the Respondent adopted that Rehabilitation Plan Amendment on 11 June 2004, and directed the Applicant to undertake that plan.  An "extension" to that plan was approved on 16 July 2004 for the reason "awaiting advice from Small Business Development Corporation in relation to Ian's business proposal".

28.     On 31 August 2004 Mr Brandis provided a further report to the Respondent.  He relayed recommendations of Mr Childs in relation to making the business proposal "more commercially oriented", including providing data and research related to statements the Applicant had made in his proposal.  Mr Brandis continued:

"I met with Ian on 25 August 2004 to discuss Mr Child's recommendations.  Ian agreed that he would complete his proposal within 4 weeks of the date of our meeting to present to an independent accountant who would review the proposal.  Ian also agreed that should the accountant feel that the proposal is not commercially viable then he would accept that decision."

The Rehabilitation Plan Amendment attached to that report simply recommended the purchase of gym equipment to assist with the symptoms of the Applicant's injury.  We note that the Applicant, in his evidence before us, denied making the statement in the last sentence of the passage quoted above.  We note, however, that in a subsequent e-mail to Mr Brandis, sent on 22 November 2004, the Applicant referred to the "verbal assurance I gave you previously to 'accept the referee's decision'".

29.     Mr Brandis forwarded a copy of the revised business plan to Brian Thornley, an accountant, on 19 October 2004.  On 5 November 2004 Mr Thornley submitted a report to Mr Brandis.  The report expressed concern at whether the level of sales predicted in the business plan could be achieved by a sole trader.  Mr Thornley expressed the view that the rewards likely to be received by an investor would be in the vicinity of $20,000 per year.  His report concluded with a statement that:

"In our opinion the Business Plan is labour intensive and if our calculations are correct the financial reward is poor for time and effort required to support this venture.  Our concern is that the Business Plan lacks sustainability."

30.     After evidently having received a copy of Mr Thornley's report, the Applicant wrote to Mr Brandis by e-mail sent on 22 November 2004.  The Applicant expressed the view that the Mr Thornley's conclusion was based on several assumptions that were misrepresentative of the true intention portrayed in the Applicant's plan.

31.     On 25 November 2004 Mr Brandis forwarded to the Respondent copies of both Mr Thornley's report and the Applicant's response to that report.  Mr Brandis said:

"As you are aware, a business plan developed by Ian was forwarded to Brian Thornley Accountants on 19 October 2004.

We received a written report from Mr Thornley on 9 November, providing feedback relating to the business plan.  As you will see, Mr Thornley has indicated that he feels Ian's business plan is unsustainable.

I met with Ian on 18 November to discuss this business plan and Mr Thornley's recommendations.  I advised Ian that, on the basis of Mr Thornley's recommendations, I could no longer support his self-employment as a realistic vocational outcome.

Upon reviewing Mr Thornley's report, Ian requested a right of reply.

Ian forwarded correspondence to me on 19 November 2004.  In Ian's correspondence he made several statements to contest assumptions made by Mr Thornley in his assessment.  Ian has requested that a further review of his business plan be conducted …

Once you have had an opportunity to review the assessment provided by Mr Thornley, along with Ian's correspondence, please contact me to discuss my ongoing involvement in Ian's vocational rehabilitation program.  Should you feel that Mr Thornley's assessment is accurate and appropriate, I will arrange to meet with Ian and discuss the need to ascertain a new vocational goal.

32.     On 29 November 2004 a delegate of the Respondent wrote to the Applicant indicating that the Respondent would no longer support the Applicant with his proposed self-employment option under the auspices of a rehabilitation program.  The letter said:

"In conclusion I believe that MCRS has allowed sufficient time and resources for you to try and establish the viability of your proposal.  However the weight of evidence leads to a conclusion that your proposal has little chance of success, and that no useful purpose can be gained by further exploration of this option."

The letter indicated that Mr Brandis had been requested to meet with the Applicant to prepare a new return to work plan for the Respondent's approval.

33.     The Respondent approved a Rehabilitation Plan Amendment on 2 December 2004, although it contemplated only further meetings with Mr Brandis to discuss the Applicant's rehabilitation and vocational goals.

34.     On 24 December 2004 the Applicant requested a reconsideration of the Respondent's decision of 29 November 2004.  On 13 January 2005 the Respondent advised that, pending resolution of the Applicant's request for reconsideration, his vocational rehabilitation plan was suspended.  The Applicant provided further material for consideration as part of this review on 31 January 2005.  On 15 February 2005 a delegate of the Respondent affirmed the decision of 29 November 2005, that the Respondent would no longer support the self-employment option as vocational rehabilitation.

35.     On 25 July 2005 the Applicant was given an extension of time until 29 June 2005 to lodge an application for review against the decision of 15 February 2005.

36.     We also note the following developments, subsequent to the making of the reviewable decision.

37.     We note that, after the reviewable decision, the Applicant was reviewed by Dr Garry Garside, a specialist in Occupational Medicine.  In relation to the Applicant's capacity for work, Dr Garside noted, in his report dated 17 May 2005:

"Based on his presentation today, his capacity for work is quite limited.  He has difficulty sitting for any period of time and also presents with difficulty concentrating as a result of persistent pain and discomfort.  In my opinion, he would have some limited capacity for general administrative, clerical or computer based work, however he would require specific training with specific focus in my opinion for this to be successful.  It is more likely that a rehabilitation programme for Mr Forbes would have a higher chance of success should his rehabilitation programme be focussed towards his specific skills and interests.  I understand that these interests in the past have included politics, and also more recently some form of book mailing business, based from home.

Given his need to sit, stand and position on a regular basis and difficulty with concentrating for prolonged periods of time, some degree of flexibility would be required within the rehabilitation programme to accommodate these specific needs.  Given his presentation today, I would be of the opinion that he would have a capacity to undertake such administrative or clerical work for between two and four hours per day, but these hours of activity would need to be interspersed with regular breaks and/or exercise programme.  I would also be of the opinion that Mr Forbes would require specific further training or study in order to achieve gainful employment within the broader community within these restrictions"

38.     Dr Garside also expressed the view that the mainstay of the Applicant's treatment would be a home based exercise programme, but that given that it was 20 years after the original accident further improvement or recovery appeared to be unlikely.

39.     On 26 July 2005 the Respondent's delegate determined that the Applicant should undertake a new Rehabilitation Plan, the overall goal of which was to assist the Applicant to complete a Certificate III course in Business Administration.

LEGISLATION

40. Section 36(1) of the Act provides for the Respondent to require an assessment of the Applicant's capacity of undertaking a rehabilitation program, in the following terms:

"Where an employee suffers an injury resulting in an incapacity for work or an impairment, the rehabilitation authority may at any time, and shall on the written request of the employee, arrange for the assessment of the employee’s capability of undertaking a rehabilitation program."

41. Section 37 of the Act then provides for the Respondent to make a determination as to a rehabilitation program to be undertaken by the Applicant. As this section is central to the current review application, it is appropriate to set its provisions out in full:

37Provision of rehabilitation programs

(1)A rehabilitation authority may make a determination that an employee who has suffered an injury resulting in an incapacity for work or an impairment should undertake a rehabilitation program and, where the authority so determines, it may make arrangements with an approved program provider for the provision of a rehabilitation program for the employee.

Note:A rehabilitation program that is being provided to a person under this section might cease if the person is also provided with rehabilitation under the MRCA (see section 18 of the CTPA).

(2)A rehabilitation authority must not make arrangements for the provision of a rehabilitation program to its employees other than by an approved program provider.

(3)In making a determination under subsection (1), a rehabilitation authority shall have regard to:

(a)any written assessment given under subsection 36(8);

(b)any reduction in the future liability to pay compensation if the program is undertaken;

(c)the cost of the program;

(d)any improvement in the employee’s opportunity to be employed after completing the program;

(e)the likely psychological effect on the employee of not providing the program;

(f)the employee’s attitude to the program;

(g)the relative merits of any alternative and appropriate rehabilitation program; and

(h)any other relevant matter.

(4)The cost of any rehabilitation program provided for an employee under this section shall be paid by the relevant authority in relation to that employee.

(5)Where an employee is undertaking a rehabilitation program under this section, compensation is not payable to the employee under section 19 or 31 but:

(a)if the employee is undertaking a full‑time program—compensation is payable to the person of an amount per week equal to the amount per week of the compensation would, but for this subsection, have been payable under section 19 if the incapacity referred to in that section had continued throughout the period of the program; or

(b)if the employee is undertaking a part‑time program—compensation is payable to the employee of such amount per week as the relevant authority determines, being an amount not less than the amount per week of the compensation that, but for this subsection, would have been payable to the employee under this Act and not greater than the amount per week of the compensation that would have been payable under paragraph (a) if the employee had been undertaking a full‑time program.

(6)An employee who is entitled to receive compensation under subsection (5) during a period is not entitled to receive rehabilitation allowance under the Social Security Act 1991 during that period.

(7)Where an employee refuses or fails, without reasonable excuse, to undertake a rehabilitation program provided for the employee under this section, the employee’s rights to compensation under this Act, and to institute or continue any proceedings under this Act in relation to compensation, are suspended until the employee begins to undertake the program.

(8)Where an employee’s right to compensation is suspended under subsection (7), compensation is not payable in respect of the period of the suspension.

42. Section 4 of the Act provides that:

"rehabilitation program includes medical, dental, psychiatric and hospital services (whether on an in-patient or out-patient basis), physical training and exercise, physiotherapy, occupational therapy and vocational training."

ISSUES

43.     There is no dispute in the present case that the Applicant should be required to undertake a rehabilitation program.  The difference between the parties is as to the content of the rehabilitation program that the Applicant should be required to undertake.

44. The principal issue for our determination is whether, having regard to the matters identified in s. 37(3) of the Act, the rehabilitation program which the Applicant is to undertake should be directed towards enabling the Applicant to operate his own business. An important factual issue for that assessment, which it is convenient to address first, is whether the business plan prepared by the Applicant is a viable plan.

45.     The Respondent identified the issue as being:

"Whether the respondent is liable pursuant to s. 37 of the [Act] for the applicant's proposed self-employment vocation, being the setting up of a business for the purposes of selling books over the internet and by door-to-door sales"

46. In our view this somewhat mis-states the issue for our determination. Section 37(1) of the Act, under which the reviewable decision was taken, does not impose a liability on the Respondent. Rather, it is concerned with determining the rehabilitation program, if any, which the Applicant should undertake. Under s. 37(4) of the Act the Respondent is responsible for the cost of whatever program it is determined the Applicant should undertake.

CONSIDERATION OF THE ISSUES

Content of the Business Plan

47.     It appears from the discussion of the evidence, above, that the Applicant's business plan has been through a number of drafts, each one seeking to improve on the former.  In considering the viability of the plan, we have had principal regard to the plan entitled "Book Service Proposal" which was provided by the Applicant to the Tribunal under cover of letter dated 12 March 2006 ("the Revised Plan").

48.     The Revised Plan describes the business as "Wholesale and Retail of Independently Published/Produced Non-fiction/Educational Information" in a variety of formats.  The plan identifies a number of "interest groups", and describes the proposal to sell both individual items and "subject packs" containing a number of titles targeted to the relevant interest groups.  The plan indicates that the main supplier has offered the Applicant a trade discount of 30% off their retail price, and that subject packs have been compiled for sale at $50 each. 

49.     Appended to the Revised Plan are a series of profit and loss statements for the first three years.  These statements project sales of $98,717 in year one, $214,343 in year two and $327,240 in year three.  That would provide an estimated net profit of $11,856 in year one, $38,433 in year two and $62,310 in year three.  There is provision for the payment of wages of $7,085 in year two and $15,696 in year three.  It is evident from the Applicant's account before us that these wages would not be paid to the Applicant, but to a person engaged to process orders.

Report of Mr Thornley

50.     Mr Thornley prepared a further report dated 15 November 2005, based on further information provided to him by the solicitor for the Respondent under cover of a letter dated 8 September 2005.  In that further report Mr Thornley indicated that he stood by his report of 5 November 2004.

51.     On 29 March 2006 Mr Thornley provided a further report to the Respondent's solicitor.  Mr Thornley did not regard the Revised Plan as substantially different from earlier drafts.  In short summary, his report focussed on what he regarded as the labour intensive nature of the Revised Plan, and its inadequate provision for employees, the doubt whether predicted sales figures could be achieved and the small reward for effort by the business owner.  Mr Thornley said:

"Our revised calculations would show the business as making a small profit in year one, a profit of $13,000 in year two and at very best profit of $30,000 in year three.  A small reward for effort by the business owner given he will be required to spend 50 hours plus per week.

These results are based on unit sales of 2172 in year one, 4716 in year two, 7200 units in year three.  We doubt these unit sales figures will be achieved given the lack of advertising and promotion."

Report of Mr Lehmann

52.     The Applicant called Mr Guy Lehmann, a Chartered Accountant, to give evidence.

53.     Mr Lehmann had prepared a report dated 4 May 2006, reviewing the Revised Plan.  Mr Lehmann indicated that his work was primarily associated with business forecasts and determining specific business and personal goals.  In relation to sales forecasts, Mr Lehmann noted that a sales forecast at best will only identify sales which the business has the capacity to achieve.  He said that forecasts were only prepared for three years "as at that point the income level achieved was the ultimate goal that our client wished to achieve".

54.     Mr Lehmann noted that while direct sales of books is not a unique business, the material which the Applicant proposed to sell was not readily available at a  normal bookshop.  Mr Lehmann recommended that the Applicant adopt an "e-commerce" mentality combined with direct marketing to interest groups and organisations.  Mr Lehmann was of the view that this should enable "the initial sales platform to be developed".  Mr Lehmann recommended only a moderate advertising budget because he estimated that advertising would not give short-term results and the best results will be the direct approach.

55.     In relation to product distribution and employee requirements, Mr Lehmann noted that the business will only take orders which are placed directly with the distributor who in turn dispatches the order direct to the client.  This, in Mr Lehmann's view, minimises the labour associated with the distribution process and frees up the business proprietor to do the tasks that generate sales.  It also meant that minimal stock would be held on site.  He included employee requirements in the forecasts that are relative to the receipt and placement of orders only, and regarded the wage allocation as adequate for that function.  He said that:

"We agree that the proposed business requires an enormous amount of energy to get off the ground but would also argue that this is the case for any new business, particularly if you are entering the market with a new concept or product.  We would discourage any client from entering into any venture if they are not prepared to do the hard yards in the short term".

56.     Under the heading "Return of Proprietor Personal Exertion" the report stated:

"Return on any investment does not necessarily have to be financial only.  Upon reviewing the goals of the proprietor he only wishes to achieve a reasonable income over the first three years of operation and partake in a business activity that he has an interest and a passion for.  Once again many people in business would not bother if the income earned was benchmarked against the hours worked.  There are additional factors which motivate people in business, such as a sense of achievement, control of their time and the successful operation of a home based business."

57.     Under the heading "Business Success" Mr Lehmann said:

"Business success is predetermined by the business proprietor having knowledge of the market, knowledge of product or service, capacity to service the market and most importantly the motivation and drive to take the business forward.  Ian Forbes has most of these attributes.  Yes he will need assistance to implement his marketing strategy and to put business management systems in place, but this is normal for most new businesses.  Business success can never be guaranteed, and in fact more businesses fail than succeed in the first two years of operation.

However the proprietor is the net loser and must make an evaluation of the business risk in light of the available facts and after consultation with professional advisors.  Mindful of the fact that accountants acting in an advisory role can tend to be risk adverse and would take a negative view to a proposed business venture if there are any uncertainties.  The reality is that every new business has a level of uncertainty and I believe that the accountants that have reviewed the business plan have got stuck on the uncertainty and should have considered other entrepreneurial factors.  The business world would not move forward if we were not prepared to take on considerable risk, particularly with regard to a new business or concept."

Assessment of competing positions

58.     Both accountants gave evidence before us that was generally in accordance with their reports.  We regarded both witnesses as giving their honest opinion as to the viability of the business proposed in the Revised Plan.  To the extent of the difference between their evidence, we prefer the evidence of Mr Lehmann, principally for two reasons. 

59.     Firstly, it is apparent from his evidence that Mr Lehmann has sat down with the Applicant on a number of occasions and gone through the business proposal with the Applicant.  In his oral evidence Mr Lehmann indicated that he had met with the Applicant about 10 times and, in addition, spoken to the Applicant on the telephone on a number of occasions.  He has also prepared the financial statements appended to the Revised Plan.  That, in our view, has given Mr Lehmann a better understanding of the Applicant's business proposal than Mr Thornley who reviewed the business plan without meeting with the Applicant. 

60.     Secondly, Mr Thornley has looked at the Revised Plan from a purely financial perspective, and regarded the reward as inadequate for the effort.  Mr Lehmann has taken account of the Applicant's more limited financial goals and the non-financial rewards associated with the operation of the business such as a sense of independence and achievement.  As Mr Lehmann noted in cross-examination:

"And what was the ultimate goal?‑‑‑Well, the ultimate goal really was from Ian's point of view is to - to be independent, number one.  To be - because there are financial and non financial goals here.

Yes?‑‑‑The non financial goals personally, from my discussions with Ian are most probably to a certain extent maybe more important and that's independence.  He has a passion for providing information outside the square to interest groups and so on and so forth and that's something he would like to go forward with and be happy to sort of see his time out doing that - that type of work.  And on the other side of the fence, he has to be practical and realistic and ideally,  you know, if he could get 40 to $50,000 as an annual type income, effectively, over a period of time, that's really wanted to work to, so that's what we brought that from.

Okay?‑‑‑Work to the goal and work back and that's really the only way you can do any - any effective planning on any new business because the reality is that as - as it's been pointed out in the reports, statistics are statistics.  At the end of the day, you know, one of the successes in business really, the - the principal thing is to have a passion, fire in your belly, you know, a sense of wanting to, you know, achieve a goal and working with that.  That's really what I've worked on."

61.     For these reasons, we find that if appropriate provision was made for the necessary capital and set up costs of the business then there is a reasonable prospect (not amounting to a probability) that the business would be capable of achieving a net profit in the range of $38-62,000 in a two to three year period, and maintaining that level of profit thereafter.

62.     We also find that the Applicant is more likely to be able to have the physical capacity to work from home running his business than he is to be capable of achieving employment in an administrative capacity.  The report of Dr Garside, which was not challenged in these proceedings, illustrates the limited physical capacity of the Applicant.  The Applicant's evidence before us was consistent with the report of Dr Garside.  There is no evidence before us that the Applicant is likely to obtain employment of an administrative nature in an environment where he can take the regular breaks which Dr Garside recommends.  While Mr Brandis indicated in his oral evidence that there were employees willing to take on someone on that basis, the evidence adduced by the Respondent did not go into any details about those prospects.  Further, while the Applicant will be required to devote considerable energies to the establishment and running of his proposed business he can, with appropriate equipment, maintain the levels of movement and rest periods while working at home during the hours which suit him.  The persistence with which the Applicant has pursued the business proposal to date suggests that he has the motivation and determination required for the establishment of the proposed business.

63.     However, the views of Mr Lehmann proceed on the assumption that adequate start-up and capital costs will be available to the business.  This is where the Applicant's proposal runs into a fundamental difficulty.  It appears from the papers and the Applicant's evidence before us that he proposes that the start-up and capital costs be provided by the Respondent, as part of a "rehabilitation program".  That would involve the Respondent, rather than the Applicant, undertaking the business risk referred to in Mr Lehmann's report leaving the Applicant to enjoy the fruits of the business if it succeeds.

64. As we have noted above, the imposition of a requirement for the Applicant to undertake a rehabilitation program is not directed to imposing a liability on the Respondent, although the effect of s. 37(4) of the Act is that the Respondent is obligated to pay the costs of the rehabilitation program. In that regard we accept the submission of the Respondent that there is no provision in the Act requiring the Respondent to pay the capital and start-up costs of a new business. We would not regard the payment of those costs as appropriately forming part of a "rehabilitation program" which the Applicant is required to undertake under s. 37(1) of the Act.

65. With sufficient financial contribution to establishment or purchase costs, most business will provide an employee with an opportunity to receive an income, even if the employees' capacity to participate in the running of the business is limited. To impose on a rehabilitation authority the burden of establishing a business that could produce an income for an employee would in many cases impose a very significant financial burden on the authority. The extent of that burden would not be related to the incapacity of the employee, or the cost of restoring their capacity for work, but rather would depend on the costs of establishing and operating a business. The employee would be given, not only the benefit of weekly payments or a restored income, but also the capital value of the established business. The business risk to which Mr Lehmann refers would be borne by the authority rather than the employee. In the case of many businesses, the extent of that risk could be very substantial. We do not think that it could have been the intention behind s. 37 of the Act to require an authority to make such a capital investment under the auspices of a rehabilitation program. We do not regard the establishment of a business, or the provision of money sufficient to meet the capital, start-up or purchase costs of a business, as constituting a "rehabilitation program" for the purposes of the Act. While the establishment of a business may provide a means of providing an income for an employee, it is not itself means by which the skills or physical capability of the employee to engage in work of a particular kind is either restored or enhanced.

66.     In the absence of any proposal or provision by the Applicant for the capital or start-up costs of his business, we do not regard the Revised Plan as viable.  While those costs are relatively modest, they are costs that the Applicant must provide for himself, and cannot rely on the Respondent to provide for him. 

67.     Our attitude to the viability of the Revised Plan might have been different if the Applicant were able to show that he could secure the money necessary for the capital, start-up and on-going running costs of the business.  In such a case a rehabilitation program which provided for some training or other activity which would assist the Applicant in establishing and operating a viable business financed at this own cost may well be the most appropriate rehabilitation plan.  However, that was not the position of the Applicant either at the time the reviewable decision was made or when the matter was heard by us.  The effect of the Applicant's evidence was that he had no capacity to pay the establishment costs of the business and expected the Respondent to do so.

68.     For these reasons, on the evidence before us, we would not regard the Revised Plan as likely to provide for a viable business at this stage.

Criteria in s. 37(3) of the Act

69. Against the background of those findings, it is necessary to consider the relevant considerations identified in s. 37(3) of the Act

70. The first matter to consider, under s. 37(3)(a) of the Act, is any rehabilitation assessment under s. 36(1) of the Act. We have had regard to the reports of Dr Bowles, Mr Brandis and Dr Garside, referred to above, for this purpose. The physical limitations identified in those reports give reason for concern as to whether the Applicant would be physically capable of doing the work required to establish and maintain a business. However, the advantages of being able to work from his home at the times which suit him, so as to accommodate his rest and exercise requirements, suggest to us that, comparatively, the Applicant is more likely to have the physical capacity to operate a small business from home than he is to achieve long term employment at an employer's premises during fixed hours. This first factor tends to count in favour of a rehabilitation program directed to giving the Applicant the skills and capacity required to operate a small business from home.

71. The second matter to consider is any reduction in future liability to pay compensation, pursuant to s. 37(3)(b) of the Act. As we do not consider the business proposal to be viable at this time because of the issue of capital and start-up costs, we do not consider that a rehabilitation program specifically directed towards this goal is likely to lead to a reduction in the Respondent's future liability to pay compensation to the Applicant.

72. The third matter to consider is the cost of the program, under s. 36(3)(c) of the Act. There is a difficulty in assessing this factor as neither party introduced evidence as to the detail of the rehabilitation program costs, or indeed its elements, beyond the requirement for the Respondent to contribute towards start-up and capital costs (which we do not consider it can be required to do).

73.     The fourth matter we are required to consider is any improvement in the Applicant's capacity to be employed.  We do not consider that the Applicant attempting to operate an under-financed and under-capitalised business, which is not viable for that reason, would be likely to improve his opportunity to be employed.

74.     The fifth matter to consider is the likely psychological effect on the Applicant of not providing the program.  In that regard Mr Brandis gave evidence that there would not be any adverse psychological effects on the Applicant of the program not being provided.  While the Applicant sought to challenge this conclusion in submissions and cross-examination, he did not specify what the psychological effects would be or adduce any expert evidence to contradict the view expressed by Mr Brandis.  Mr Brandis is, as we have noted, a registered psychologist and rehabilitation consultant, so that the opinion he expressed falls within his area of expertise.  Mr Brandis has had contact with the Applicant over an extended period of time, and so would be in a position to make that assessment.  In those circumstances we accept Mr Brandis' evidence that there will not be any adverse psychological effects on the Applicant of the program not being provided.

75. The sixth matter to consider is the employee's attitude to the program, pursuant to s. 37(3)(f) of the Act. This is a factor that we consider favours a rehabilitation program directed to self-employment. The Applicant's positive attitude to his proposed business is to be contrasted to his negative attitude the vocational directions which the Applicant feels have been foisted upon him. The Applicant is, in our view, less likely to cooperate with and therefore less likely to succeed in a rehabilitation program directed to a goal which the Applicant does not support. The reports of Dr Garside, Dr Bowles and Mr Brandis, noted above, support that view.

76. The seventh matter to consider is the relevant merits of alternative programs, under s. 37(3)(g) of the Act. The only competing programs suggested by the parties was the current program, requiring the Applicant to undertake a business administration course, and a program with a goal of allowing the Applicant to operate a home business but without any specification of the elements of the program. As we have concluded that the home business option does not appear to be currently viable, the current program does appear to us to be the better option. We would note that a business administration course would seem capable of improving the Applicant's capacity either to operate a small business of his own or gain employment. Even if self-employment were the better goal then the content of the rehabilitation plan might still be to undertake a course that would improve the applicants skills and therefore his capacity to operate his own business from home.

77. Finally, it is necessary to consider "any other relevant matter" under s.37(3)(h) of the Act. In this category, we have regard to the concerns about the viability of the proposed business, in the absence of any adequate provision for capital or start-up costs, discussed above.

Conclusion

78.     In balancing the above factors we have reached the conclusion that it is not, at this stage, appropriate to require the Applicant to undertake a rehabilitation program other than that which he is currently undertaking.  In the absence of a viable business plan, with provision as to how capital and start-up costs are going to be provided from a source other than the Respondent, a rehabilitation program specifically directed to increasing the Applicant's capacity for self-employment does not seem likely to substantially increase the Applicant's opportunities for employment.  It is a better utilisation of the resources of the Respondent to pursue the current business administration course which will better equip the Applicant for employment as well as self-employment.  As we have noted, this position may change in the future if the Applicant is able to develop a viable business plan and a means of himself securing the finances necessary for the implementation of the plan.  In those circumstances if there were steps which could be taken to improve the Applicant's skills, and so increase his capacity to operate such a business, or provide for a graduated return to work program focussing on home employment, it might well then be appropriate to require the Applicant to undertake such a program. 

DECISION

79.     For the above reasons, the Tribunal affirms the decision under review.

I certify that the 79 preceding paragraphs are a true copy of the reasons for the decision herein of Ms LR Tovey, Member and Dr D Weerasooriya, Member

Signed:         ............(Sgd. Ms R Riberi)..............................
  Associate

Dates of Hearing  8-9 May 2006
Date of Final Written Submissions          10 July 2006
Date of Decision  9 March 2007
Representative for the Applicant              Self Represented
Counsel for the Respondent  Mr B Dube

Solicitor for the Respondent  Ms I McCormick

Australian Government Solicitor