HARRY NEST and REPATRIATION COMMISSION

[2009] AATA 112

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 112

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/3019

VETERANS' APPEALS DIVISION		)
Re		HARRY NEST

Applicant

And REPATRIATION COMMISSION

Respondent

DECISION

Tribunal Dr K S Levy RFD, Senior Member

Date18 February 2009

PlaceBrisbane

Decision The decision under review is affirmed.

......................[Sgd]..................

SENIOR MEMBER

CATCHWORDS

VETERANS’ AFFAIRS – benefits and entitlements – appropriate rate of pension – whether  war-caused disabilities, alone, prevent Applicant from undertaking remunerative work – condition of lumbar spondylosis accepted as defence-caused – non war-caused conditions also prevent Applicant from undertaking remunerative work – decision under review affirmed.

Veterans’ Entitlements Act 1986 (Cth), ss 19, 20, 23, 24(1), 24(2), 120

Apthorpe v Repatriation Commission (1987) 13 ALD 656

Cavell v Repatriation Commission (1988) 9 AAR 534

Chambers and Repatriation Commission (1995) 36 ALD 207

Flentjar and Repatriation Commission (1997) 48 ALD 1

Forbes v Repatriation Commission (2000) 58 ALD 394

Leane v Repatriation Commission [2003] FCA 889

Magill and Repatriation Commission [2002] FCA 744

Rendell and Repatriation Commission [2001] FCA 1881

Repatriation Commission v Alexander (2003) 75 ALD 329

Repatriation Commission v Braund (1991) 23 ALD 591

Tomlin v Repatriation Commission [1997] FCA 705

REASONS FOR DECISION

18 February 2009 Dr K S Levy RFD, Senior Member

BACKGROUND

1.      The Applicant is Harry Eerik Nest.  Following service in the Royal Australian Navy (RAN) from 31 May 1982 to 30 May 2004, he was discharged on medical grounds.  He was then 43 years of age and has not sought work since.  He applied on 6 July 2004 for a pension based on a condition of anxiety.  On 15 February 2005 it was accepted that he had a defence-caused condition of depressive disorder with effect from 6 April 2004.  On 16 February 2005 he was granted a disability pension at 100 % of the general rate.  He subsequently had a condition of lumbar spondylosis accepted as defence-caused with effect from 17 November 2005, and, on 9 June 2006, it was determined that a disability pension of 100 % of the general rate was still the appropriate pension for his accepted conditions.  He appealed on 23 June 2006.  On 27 November 2006 it was determined that further professional reports were required.  Subsequently, the Veterans’ Review Board, on 21 April 2008, determined that the appropriate rate of pension was still 100% of the general rate.  Mr Nest now appeals that decision to the Administrative Appeals Tribunal.

ISSUES

2.      The question for the Tribunal is whether the pension payable to Mr Nest is correctly assessed at 100 % of the general rate under the Veterans’ Entitlements Act 1986 (“the Act”). Taking account of submissions made at the hearing and the Statements of Facts and Contentions of the Applicant and the Respondent, the issue specifically is whether Mr Nest is entitled to pension at the intermediate rate (s 23) or at the special rate (s 24).

EVIDENCE

3.      Oral evidence was received from the Applicant and Dr John Sowby.  Mr Nest has not applied for work since discharge from the RAN on medical grounds.  He has a number of conditions which have been accepted as being defence-caused and he also claimed other conditions which have not been so recognised.  The following conditions have been accepted: bilateral sensorineural hearing loss; bilateral tinnitus; tinea; Scheuermann’s disease; internal derangement of the right knee; depressive disorder; rotator cuff syndrome of the right shoulder; lumbar spondylosis; post traumatic stress disorder (PTSD); and alcohol dependence.  He has also applied for recognition of nummular dermatitis and spondylolisthesis L5/S1, but neither of these conditions have been recognised as being service related.

4.      Mr Nest was educated to Year 12 and at the age of 18 was employed as a shop assistant for approximately two years.  At the age of 21, he joined the RAN and served there for 22 years attaining the rank of Petty Officer.  He was 43 years of age on discharge and had qualified in a trade.  He was employed largely as a submariner during his defence service.  At the time of discharge, he had not been fully employed within his trade in the RAN for some time but had restricted supervisory duties in a workshop office.  This was concurrent with a period of treatment and recuperation for back and shoulder conditions.

5.      The medical evidence comprises two major components: orthopaedic/occupational medical disabilities on the one hand; the other major component comprises psychiatric disabilities.

orthopaedic/occupational disabilities

6.      In relation to the orthopaedic and muscular skeletal disabilities, a number of expert medical reports were available.  On 3 March 2004, Dr Eamonn McCloskey, an orthopaedic spinal surgeon, examined the Applicant prior to his discharge from the RAN and identified restrictions in movement by examination and also from MRI scans. He identified the Applicant as having a spondylolisthesis L5/S1, significant degenerative disc disease L5/S1 and degenerative changes in the L1/L2 disc.  He reported restrictions in forward and lateral flexion but said Mr Nest, at that time, had no obvious stress and that there was no neurological deficit in his lower limbs.  He reported Mr Nest as being overweight and with poor abdomen muscle tone.  While surgery was possible, it was not recommended.  He instead suggested the appropriate course at that time was for Mr Nest to lose weight, cease smoking and attend a pain clinic with localised facet joint injections. 

7.      Subsequently on 23 March 2007, Dr D Gope identified the Applicant as having Scheuermann’s disease as well as problems with the right knee and rotator cuff syndrome of the right shoulder.  He said that prevented Mr Nest from standing or walking for prolonged periods of time or lifting weights or bending repetitively.  Dr Gope opined from an orthopaedic point of view that the Applicant could consider working in a sedentary position undertaking clerical duties, for example, light duties in a warehouse.  He stated that the disabilities which were not related to the Applicant’s service had an insignificant contribution to his disability.  He also noted that psychiatric problems (which were not part of his specialty) were a significant component of the Applicant’s disability and that these commenced when the Applicant and his wife had a stillborn child.

8.      A subsequent report was tendered dated 31 January 2008 by Dr Beryl Turner, an occupational physician.  She reported that a large part of the Applicant’s disability related to a major depressive disorder and to lumbar spondylosis of the right knee.  She noted that the left knee made a small contribution.  She mentioned that a bilateral shoulder condition caused difficulty when the Applicant worked above shoulder height.  She also concluded, as did Dr Gope, that the non-service related condition of spondylolisthesis had a minimal contribution to the overall disability.  She identified the overlapping incapacities as being 50 % related to service conditions, 50 % to psychiatric conditions, 40 % to a back condition and smaller percentages attributable to the right knee (5 %), the shoulder (3 %) and spondylolisthesis (2 %) - a non accepted condition.

9.      Dr John Sowby, an occupational physician, provided a report dated 7 October 2008.  In a similar way to Dr Turner, he stated that the accepted and non-accepted conditions tend to interact with each other to some degree and that the total disability is greater than the sum of the individual disabilities identified.  He differed however with Dr Turner in some respects and said that, considering the non-accepted conditions, the Applicant could work greater than eight hours per week.  In relation to the psychiatric disability, he acknowledged that this was related in part to a consequence of chronic pain from the joint and orthopaedic conditions and also to non-accepted conditions.  In cross examination, Dr Sowby referred to the Applicant’s condition of Scheuermann’s disease and said that it was typically a degenerative condition resulting from a developmental period commencing in teenage years.  He did not think that Scheuermann’s disease affected the likelihood of a prolapsed disc.  He also commented that his report was different from Dr Turner’s because Dr Turner was assessing different areas in some respects.  Dr Sowby said that the onset of the left knee problem was in January 2002, while Mr Nest was in the RAN.  However, it was operated on and the Applicant then worked on for more than two years after that time.  He also referred to the left shoulder condition which had an onset in 2001, but stated that the Applicant had worked on in the RAN for another three years.  He agreed that the Applicant would be totally and permanently incapacitated if the right knee and right shoulder condition, together with alcohol abuse and the psychiatric disabilities, were all service related. 

psychiatric disabilities

10.     The psychiatric evidence also consisted of multiple expert reports.  Dr Victor Cheng provided a report dated 26 May 2005 which opined that the Applicant was not suffering post traumatic stress disorder.  This was based on information provided by the Applicant that he would rather go away with the Navy on patrol than be with his wife and child.  This indicated a preference for isolation and that the Applicant had some difficulty with close relationships.  Dr Cheng thought the traumatic experiences which Mr Nest said he had in the RAN were not significant in perpetuating the major depressive episodes, as he continued to function for many years doing the same duties and in the same environment.  Dr Cheng stated that the death of the Applicant’s son had been very distressing to the Applicant and he had not, at that time, overcome that distress.  Dr Cheng regarded this as the major cause of the depressive disorder but said that alcohol use also contributed to the depression. 

11.     A further report was provided by Dr Stephen Proud dated 19 March 2007.  He concluded that the major depressive disorder was a composite outcome of both PTSD (a service related disability) and the death of the Applicant’s son (a non-service related disability).  He identified alcohol dependence as being secondary to the PTSD condition.  He concluded that Mr Nest would have a moderate permanent incapacity to work based solely on his major depression. 

12.     There was also a further report by Dr Scott Jenkins, the current treating psychiatrist of Mr Nest.  That report was dated 8 December 2008.  Dr Jenkins indicates that the current status of Mr Nest is that he continues to have depression, poor concentration, fatigue, lack of motivation, loss of pleasure, intrusive memories, sleep disturbance and anxiety.  He said all the symptoms were a direct result of accepted conditions of PTSD and major depression.  He concluded that Mr Nest was now permanently unable to work in any capacity, even for 8 hours per week.

CONSIDERATION

13. I have considered all the evidence and all of the relevant legislative provisions. The relevant legislation is contained in sections 19, 23 and 24 of the Act. In addition, in assessing this claim s 20 provides that, if successful, the Applicant would be entitled to receive pension at a higher rate with a date of effect not earlier than 3 months before the date of the claim. The Respondent argues that the application is dated 17 February 2006 and therefore, if successful, a date of effect will be no earlier than 17 November 2005. The s 37 documents contain the formal claim (folios 179-188) and appear to show the date of claim as 2 February 2006. If that is the correct date of application then the date of effect would be a date not earlier than 2 November 2005.

14. Section 19 is relevant in that it outlines the process for determination of the application. It refers to the “assessment period” which is defined in s 19(9) as commencing on the application day and ending when the claim or application is determined (that is, when determined by this Tribunal).

15.     The assessment of the claim is to be determined according to the standard of reasonable satisfaction (s 120(4)).  It is also noted that neither the Applicant nor the Respondent bear any onus of proof in relation to matters related to a claim for pension or increase in pension (s 120(6)).

16. The key statutory provisions are sections 23 and 24 of the Act. Section 23 is related to the intermediate rate of pension and applies when somebody cannot work greater than 20 hours per week. Based on the evidence, it is apparent that the Applicant’s condition has deteriorated since the date of application and while there may have been prospects for improvement in earlier times, both the physical pain from accepted conditions and the psychiatric condition have deteriorated. From the trend in evidence, I accept that the Applicant cannot now work. Therefore s 23 is not of any significance in the current application. However s 24 dealing with the special rate is highly relevant and is dealt with below.

17. I find that subsections (aa), (aab) and (a)(i) of section 24(1) are satisfied. Section 24(1)(b) provides that sub-section applies if the veteran is totally and permanently incapacitated, that is, that he is incapable of undertaking remunerative work for periods aggregating more than 8 hours per week. The Respondent has accepted that the Applicant satisfies this provision. The Tribunal must determine whether it is prepared to accept that submission. Section 24(1)(b) is concerned with whether an Applicant’s incapacities “alone” restrict the veteran from undertaking remunerative work for more than 8 hours a week. This provision is concerned only with war-caused disabilities and an Applicant’s resulting capacity to participate in working life. This provision is differentiated from s 24(1)(a) which is concerned with non-defence related aspects of the veteran’s life, that is, “… not only his working life, but also his social and family life”[1]. Based on the evidence presented, I accept that s 24(1)(b) is satisfied in relation to Mr Nest.

[1] See Apthorpe v Repatriation Commission (1987) 13 ALD 656 at 662, cited in Chambers and Repatriation Commission (1995) 36 ALD 207 at 217).

18. The main question to be determined therefore is whether the Applicant satisfies s 24(1)(c). This provision has two limbs. The first limb is whether an Applicant is “prevented from continuing to undertake remunerative work that the veteran was undertaking”. The second limb is whether the Applicant is as a result, suffering a loss of salary or wages that he would not be suffering if he were free of that war-caused injury or disease “alone”.

19. The first limb of 24(1)(c) is amplified in s 24(2)(b). The test in the first limb is an ameliorating provision. A key word in that sub-section is the use of the word “alone”. In making a determination about the test as to whether an Applicant is being prevented from continuing to undertake remunerative work and whether it is attributable to war-caused reasons “alone”, it has been said that the task of the Tribunal is “… to make a practical decision whether the veteran’s loss of remunerative work is attributable to service related incapacities, and not to something else as well”. This task is to be undertaken “with an eye to reality” and using “common sense”[2]. Consideration must be given to the principles that, even though the Applicant has not been “genuinely seeking to engage in remunerative work”, an Applicant might still satisfy the “alone” test in s 24(1)(c) if the substantial cause of the inability to obtain remunerative work is based on the defence-caused incapacity[3].  But even though a war-caused condition could be “by far and away the more dominant of the causes of the preventative effect”, where there is concurrently a non war-caused condition also contributing to that effect, then the non war-caused condition “…will deny to a veteran qualification for the special rate of pension”[4].  The real test is “…whether war-caused conditions, alone, prevent the Respondent from continuing to undertake remunerative work that he had been undertaking”[5]. 

[2] See Cavell v Repatriation Commission (1988) 9 AAR 534 at 539.

[3] Magill and Repatriation Commission [2002] FCA 744.

[4] Forbes v Repatriation Commission (2000) 58 ALD 394.

[5] Repatriation Commission v Alexander (2003) 75 ALD 329 at 334 per Spender J.

20.     In determining this test, the four questions outlined in Flentjar and Repatriation Commission[6] must be addressed.  These questions highlight that the war-caused disabilities must be virtually the only factors which are preventing the veteran from undertaking remunerative work.  The questions are:

1. What was the relevant "remunerative work that the veteran was undertaking" within the meaning of s 24(1)(c) of the Act?

2. Is the veteran, by reason of war-caused injury or war-caused disease, or both, prevented from continuing to undertake that work?

3. If the answer to question 2 is yes, is the war-caused injury or war-caused disease, or both, the only factor or factors preventing the veteran from continuing to undertake that work?

4. If the answers to questions 2 and 3 are, in each case, yes, is the veteran by reason of being prevented from continuing to undertake that work, suffering a loss of salary, wages or earnings on his own account that he would not be suffering if he were free of that incapacity?

[6] (1997) 48 ALD 1 at 4-5 per Branson J.

21.     The first question, concerning relevant remunerative work, deals with the category of work rather than a specific position that a person has held.  Mr Nest, it was submitted, was employed in the engineering branch of the RAN as a Marine Technical Propulsion Sailor and had qualifications as a fitter and machinist.  Prior to discharge as a Petty Officer he was also a workshop floor supervisor.  It is submitted that it should be regarded as being employed in “skilled work”.  I accept this as an adequate categorisation given that he was a senior non-commissioned officer, although a qualification to that term as being ‘skilled technical engineering work and supervisor’ might be more specific.

22.     The second question concerns whether the Applicant is prevented from continuing to undertake remunerative work because of war-caused injury or disease or both.  The Applicant contends that he is so prevented.  The Respondent in its Statement of Facts and Contentions suggests that question should be answered “no”, based on the fact that Mr Nest was discharged for both accepted and non-accepted disabilities of the back, neck, shoulder and knees.  In his oral submissions before the Tribunal, Mr Terry Thrupp, the Respondent’s advocate, then argued that the Respondent now accepts that the question should be answered “yes” as the requirement to seek work must not be a “charade”[7].  On the basis of the overlapping nature of the conditions, in my view, Mr Nest is entitled to the more generous application of the evidence and I accept that he satisfies this question. 

[7] Hall v Repatriation Commission (1994) 53 ALD 454.

23.     In relation to the third question, the broad test to be applied is whether the war-caused disease or injuries are the only factors preventing Mr Nest from continuing to engage in remunerative work.  The Applicant’s advocate, Mr Noel Payne, says the evidence must be looked at in a logical sense or “with an eye to reality”[8].  He submitted that the Applicant was not capable of working in the RAN for a number of reasons and that within a short period of leaving the RAN he was having psychiatric treatment.  He was assessed at that time as not being capable of working. He also refers to the evidence of Dr Turner which, he says, shows that non accepted conditions have only minimal significance.  The Veteran’s Review Board in its decision points to other evidence given by the Applicant at that hearing, on discharge from the RAN and the RAN Medical Employment Classification Review Record which shows previous inconsistent evidence that the non accepted conditions were of greater significance (Folio 310). He also urged me that Dr Sowby’s evidence should be given less weight.  Mr Payne also put to me that this issue should be judged based on whether the Applicant was capable of working in the RAN at time of discharge, to which he suggested that question should be answered “no”.

[8] SeeCavell v Repatriation Commission (1988) 9 AAR 534 at 539.

24.     Mr Thrupp, on the other hand points to the combined effect of defence-caused and non-accepted conditions leading to the Applicant’s present condition.  Mr Thrupp argues that the ‘alone test’ is not fulfilled.  The Respondent has also highlighted the non defence-caused disabilities which work in combination with accepted conditions and submitted that question three should be answered “no”, although he seemed to struggle in arguing that position as he said that submission was put “under instruction”. 

25.     In reviewing the evidence and submissions presented, the Applicant’s submission that the test should be whether the Applicant was capable of working when he left the RAN, is not the correct test. The correct test is the “alone” test.  The submission of the Applicant’s advocate is also to the effect that the war-caused conditions, by themselves, are sufficient to demonstrate that Mr Nest is prevented from engaging in remunerative work.  That however, is also not a correct application of the “alone” test[9]. The correct application of that test also requires consideration of whether non war-caused conditions have also prevented Mr Nest from undertaking remunerative work and therefore, whether the non war-caused conditions have undermined the war-caused conditions alone. That assessment determines whether the first limb of s 24(1)(c) can be satisfied[10].

[9] See Leane v Repatriation Commission [2003] FCA 889.

[10] Rendell and Repatriation Commission [2001] FCA 1881.

26. I note that Mr Nest’s accepted disabilities had a combined impairment rating of 85 impairment points (Folio 308). Mr Thrupp emphasised that was one of the highest he had seen in his experience. That is relevant to the evidence that Mr Nest has not worked since he left the RAN. That itself is not fatal to satisfying the first limb of s 24(1)(c). The incapacity from the war-caused injury or disease must be directly related to not engaging in remunerative work. But that consideration is not to be judged only at the date of cessation from the RAN. The critical question is whether, at 2 February 2006 (the “application day” as defined in s 19(9) of the Act) and for the duration of the assessment period following the application day, Mr Nest has been prevented from working because of the defence-caused incapacity “alone”[11]. 

[11] Repatriation Commission v Braund (1991) 23 ALD 591.

27.     The medical evidence in this case clearly establishes war-caused injuries.  It also clearly establishes non accepted disabilities and psychiatric disabilities which are affected by both war-caused and non accepted injuries. The evidence of the magnitude of the non accepted disabilities is disputed and there is at least some evidence going in favour of the Applicant and some evidence not supporting his position.  I find that there is evidence which at a minimum, suggests that it is of more than minor impact. But there are also psychiatric disabilities. Those psychiatric disabilities are significant and are mentioned by the occupational physicians as well as the psychiatrists whose specialty deals with those conditions.  It shows that not only is there some effect on the psychiatric condition by the war-caused injuries, there are also non war-caused injuries which have contributed to the psychiatric condition.  Indeed, the impact of the unfortunate death of the Applicant’s son which is not attributable to the war-caused injuries has been seen to be a significant factor in the degree of disability manifested in the major depressive disorder.  Dr Cheng, who saw Mr Nest at the earliest time after he left the RAN, saw treatment for the bereavement of his son as being critical in overcoming his psychiatric disability at that time. 

28.     Dr Proud, almost two years later, reported that the major depressive disorder was a composite factor contributed to by both the PTSD (from defence-caused injuries) and the death of the Applicant’s son (non defence-caused).  There was, in addition, the effect of alcohol abuse which was secondary to the defence-caused PTSD.  Dr Proud reported that at that time, the Applicant would have a moderate permanent incapacity to work which was attributable solely to the major depression.  The current treating psychiatrist now regards the Applicant as being permanently unable to work largely because of PTSD and major depression.  The progression of the psychiatric disability clearly has its etiology in non-defence related incidents and in defence related injuries, as alluded to by Dr Turner.  This is also confirmed in the opinions of Dr Cheng and Dr Proud.  I rely upon their evidence, as they presented a more contemporary view, thereby providing a more accurate perspective in the development of the psychiatric condition.  Their evidence highlights that Mr Nest has not been prevented from undertaking remunerative employment because of war-caused incapacity alone.  I find that as a matter of commonsense or “with an eye to reality”, the impact of the psychiatric condition on his total disability is significant, and that the non war-caused component of that psychiatric condition is also significant.  I therefore find that the answer to question three of the Flentjar taxonomy is “no”.

29. In relation to the fourth question, this is essentially relevant only if the answer to questions two and three above is “yes”. This in fact relates to the second limb of s 24(1)(c) or, in other words, the ‘loss test’ as explicated in s 24(2)(a). Because the answer to question three above is “no”, it is strictly unnecessary to answer this question. However, even had I not answered question three in that way, answering question four would require viewing the circumstances of the Applicant using a hypothetical test. The test here is essentially one which mimics the language of s 24(1)(c). That is, the question is what would Mr Nest would have done at the application date or during the assessment period if he had not had any of his war-caused injuries or disabilities[12].

[12] Tomlin v Repatriation Commission [1997] FCA 705.

30.     In answering this question, I am obliged to take into account all of the evidence before the Tribunal.  The psychiatric disability based evidence and the expert opinion of the psychiatrists clearly show that Mr Nest would have been likely to suffer the psychiatric disability quite apart from the physical injuries and their consequential psychological impact.  The psychiatric condition which has been contributed to by the non war-caused factors are significant.  Based on the evidence, the war-caused injuries alone are not so dominant as to minimise the effect of the non war-caused injuries on Mr Nest.  Consequently, even without the war-caused disability, I am satisfied the non war-caused psychiatric disability would have resulted in a loss of salary or wages or, in other words, an inability to undertake remunerative work.  Therefore, even if I had not decided question three in the way I had, then the ‘loss test’ would not be satisfied. 

31. As a result, Mr Nest does not meet the requirements of s 24(1)(c) and therefore is not qualified for payment at the special rate of pension. Pension is therefore payable at 100 % of the general rate.

DECISION        

32.     The decision under review is affirmed.

I certify that the 32 preceding paragraphs are a true copy of the reasons for the decision herein of Dr K S Levy RFD, Senior Member

Signed: ....................[Sgd]........................................................
              Matyas Kochardy, Associate

Date of Hearing  18 December 2008 
Date of Decision  18 February 2009
Advocate for the Applicant       Mr Noel Payne, OAM 
Advocate for the Respondent   Mr Terry Thrupp