Hermsen and Repatriation Commission - [2001] AATA 983

DECISION AND REASONS FOR DECISION [2001] AATA 983

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2000/406
VETERANS'      APPEALS     DIVISION
  Re:         GARRY HENRY HERMSEN
  Applicant
  And:       REPATRIATION COMMISSION
  Respondent

DECISION

Tribunal:       G.D. Friedman, Member
Date:             30 November 2001
Place:            Melbourne

Decision:The Tribunal sets aside the decision of the Veterans' Review Board of 18 February 2000 (relating to the respondent's decision of 5 January 1998) and substitutes the following decision:
(a)that avascular necrosis was war-caused with effect from 24 September 1997; and
(b)that disability pension be paid to the applicant as follows:

at 40% of the general rate from 24 September 1997 to 8 May 1998;
at 60% of the general rate from 9 May 1998 to 21 March 1999; and
at 100% of the general rate from 22 March 1999.

(sgd) Graham Friedman
Member
VETERANS' AFFAIRS - veterans' entitlements - assessment of rate of pension – avascular necrosis - whether war-caused incapacity alone rendered applicant incapable of remunerative work for more than 8 hours per week - whether special rate applicable
Veterans' Entitlements Act 1986 ss9, 24, 28
Banovich v Repatriation Commission (1986) 69 ALR 395
Cavell and Repatriation Commission (AAT 2891, 19 September 1986)
Hall v Repatriation Commission (1994) 33 ALD 454
Re Laugher and Repatriation Commission (1985) 11 ALN 56
Re Maloney and Repatriation Commission [1999] AATA 879
Starcevich v Repatriation Commission (1987) 76 ALR 449

REASONS FOR DECISION

30 November 2001 G.D. Friedman, Member

This is an application by Garry Henry Hermsen (the applicant) for review of a decision of the Veterans' Review Board (VRB) dated 18 February 2000. The VRB affirmed a decision of a delegate of the respondent dated 5 January 1998 to refuse a claim for disability pension for incapacity from avascular necrosis (lack of blood to the hips). On 19 May 1997 the respondent had accepted that chronic bronchitis, bilateral tinnitus and sensorineural hearing loss of the right ear were war-caused injuries or diseases. On 22 March 1999 the respondent accepted that osteoporosis, chronic bronchitis with obstruction and cor pulmonale were war-caused injuries or diseases. On 19 October 1999 the respondent granted pension to the applicant at 50% of the general rate with effect from 22 March 1999. On 17 May 2000 the respondent decided to increase the applicant's disability pension to 100% of the general rate with effect from 22 March 1999.
At the hearing of this matter on 25 October 2001 Mr P. Liefman, Solicitor, represented the applicant and Mr G. Purcell of Counsel represented the respondent. At the commencement of the hearing the respondent conceded that the applicant's claimed condition of avascular necrosis was war-caused with effect from 24 September 1997. In these circumstances the only matter before the Tribunal in this application was the decision of the respondent of 19 October 1999 granting disability pension to the applicant at 50% of the general rate with effect from 22 March 1999. The applicant sought assessment of pension at the special rate rather than at 100% of the general rate.
In a separate application (V2000/726) the applicant sought review of a second decision by the VRB dated 18 February 2000. Among other matters the VRB affirmed a decision of a delegate of the respondent dated 19 October 1999 to refuse a claim for disability pension for incapacity from alcohol dependence and alcohol abuse. At the commencement of the hearing the applicant withdrew the application.
The Tribunal received into evidence the documents lodged under s37 of the Administrative Appeals Tribunal Act 1975 (T1-T19), together with three exhibits lodged by the applicant (Exhibits A1-A3) and six lodged by the respondent (Exhibits R1-R6).
BACKGROUND
The applicant was born on 17 December 1947 in Holland. His family migrated to Australia when he was aged 7 years. On 8 May 1965 he joined the Royal Australian Navy (the Navy) at the age of 17 years and served as a medical orderly and nursing attendant, reaching the rank of Chief Petty Officer. During his service with the Navy the applicant served on a number of ships including HMAS Sydney and HMAS Torrens, and he saw service in Vietnam on several occasions between 17 November 1969 and 3 March 1972. On 8 May 1986 he was discharged and took up a position as a technician with a pathology laboratory. In 1989 he and his wife took over a general store and post office at Frankston South. In 1996 the applicant tendered successfully for a contract with Australia Post to deliver postbags in the Frankston region, so he sold the store and post office business. In March 1996 he began a series of cortisone injections for pain to his hips. In 1997 the pain became worse and on 8 August 1997 he discontinued the contract. He has not worked since then.
On 20 August 1997 the applicant underwent a hip operation and on 8 May 1998 his other hip was replaced. On 19 June 2000 the applicant sought review by the Tribunal of the VRB decision.
EVIDENCE
The applicant told the Tribunal that his specialised training in the Navy enabled him to obtain employment in a pathology laboratory, after which the opportunity to operate a small business seemed attractive to him and his wife. He stated that although the business was successful, it was extremely time-consuming, and for that reason he applied for the courier contract with Australia Post. The applicant told the Tribunal that he was building up the business when avascular necrosis (degeneration of tissue) forced him to discontinue the contract in August 1997 as he had difficulty in walking, sitting, squatting and bending.
The applicant stated that he becomes tired easily, has difficulty sleeping, has heart palpitations, and has limited mobility. He said that he cannot sit or stand for long periods and also suffers from chronic bronchitis, osteoporosis, pulmonary heart disease, tinnitus and hearing loss. He said that he has to wear a back brace because of the osteoporosis and that this restricts his movements. The applicant told the Tribunal that the operations on his hips have made him unstable. He stated that he attends hydrotherapy twice each week and takes medication for the pain and for depression. He said that he is able to undertake some basic household tasks and drive a car but needs to rest during the day.
The applicant stated that each week or two he attends HMAS Cerberus, where he performs voluntary filing and archival work in the library for several hours. He emphasised that he would like to work on a remunerative basis but that it would not be possible because of the pain in his back, hips, knees and heels. In addition his sleeping difficulty makes him extremely tired and he would be unable to undertake clerical or other work that involved sitting for extended periods. He said that he was offered casual work as a first aid instructor at the medical training school at HMAS Cerberus, but this was not feasible as it would involve movements such as bending.
When questioned about his drinking habits the applicant stated that alcohol consumption was an important part of service life in the Navy and he commenced the habit when he was aged 18 years. He said that his consumption gradually increased and he admitted that he has had a serious alcohol problem, although he said that his alcohol use never affected his ability to work. The applicant stated that he has moderated his drinking considerably. He told the Tribunal that he became a heavy smoker in the Navy and that this contributed to his condition of chronic bronchitis.
The applicant produced taxation records and stated that he and his wife made a comfortable living from the store and post office business, together with his superannuation entitlements. He produced figures for his income from the courier contract and stated that there was potential for developing that business considerably before he was forced to discontinue the contract.
In a written report dated 24 July 2001 Dr J. Rowe, Specialist Occupational Physician, stated:
. . . it is my opinion that because of his accepted conditions and particularly the osteoporosis, the avascular necrosis of the head of both femurs requiring hip replacement, and his chronic lung condition, that they alone prevent him from going back to work.
It is my view that he is not employable in any capacity in any occupation. He does not have the training, education or experience to obtain employment and no-one would give him a job. He does not have labour saleable in any job market.

In oral evidence Dr Rowe told the Tribunal that the applicant's problems with his hips and his mobility, together with ongoing pain and discomfort when sitting and standing, make him unemployable, even if modifications were made to the workplace. Under cross-examination Dr Rowe stated that he was not aware of any discussions he had held with the applicant about whether the applicant had applied for any positions.

In a written report dated 11 August 1998 Dr E. Redmond, Consultant Psychiatrist, stated that the applicant has an adjustment disorder with depressed mood which is related to his physical deterioration and alcohol abuse. She concluded that the applicant has moderate interference with function in everyday situations, and that alcohol abuse affects optimum work performance. In a further report dated 22 October 2001 Dr Redmond stated that the major impediments to the capacity of the applicant to work were his physical disabilities and that alcohol abuse had a limited role. In evidence given by telephone Dr Redmond told the Tribunal that she had not seen the applicant since her initial consultation in 1998.
In a written report dated 24 May 2001 Dr W. Cooper, Occupational Physician, stated that the applicant's accepted disabilities alone would not prevent him from working more than 8 hours and up to 20 hours per week, provided that physical restrictions were imposed such as sedentary work facilities, a weight limit on material to be lifted, and no repetitive bending below waist level. In oral evidence Dr Cooper told the Tribunal that the voluntary work currently undertaken by the applicant could be expanded into clerical or administrative work, as long as the appropriate modifications to the workplace were made.
CONSIDERATION OF THE ISSUES
Section 24 of the Act provides for a special rate of pension for a veteran who satisfies the criteria laid down in s24:
(1) This section applies to a veteran if:
(aa)the veteran has made a claim under section 14 for a pension, or an application under section 15 for an increase in the rate of the pension that he or she is receiving; and
(aab)the veteran had not yet turned 65 when the claim or application was made; and
(a)either:
(i)the degree of incapacity of the veteran from war-caused injury or war-caused disease, or both, is determined under section 21A to be at least 70% or has been so determined by a determination that is in force; or
(ii)the veteran is, because he or she has suffered or is suffering from pulmonary tuberculosis, receiving or entitled to receive a pension at the general rate; and
(b)the veteran is totally and permanently incapacitated, that is to say, the veteran's incapacity from war-caused injury or war-caused disease, or both, is of such a nature as, of itself alone, to render the veteran incapable of undertaking remunerative work for periods aggregating more than 8 hours per week; and
(c)the veteran is, by reason of incapacity from that war-caused injury or war-caused disease, or both, alone, prevented from continuing to undertake remunerative work that the veteran was undertaking and is, by reason thereof, suffering a loss of salary or wages, or of earnings on his or her own account, that the veteran would not be suffering if the veteran were free of that incapacity; and
(d)section 25 does not apply to the veteran.
(2) For the purpose of paragraph (1)(c):
(a)a veteran who is incapacitated from war-caused injury or war-caused disease, or both, shall not be taken to be suffering a loss of salary or wages, or of earnings on his or her own account, by reason of that incapacity if:
(i)the veteran has ceased to engage in remunerative work for reasons other than his or her incapacity from that war-caused injury or war-caused disease, or both; or
(ii)the veteran is incapacitated, or prevented, from engaging in remunerative work for some other reason; and
(b)where a veteran, not being a veteran who has attained the age of 65 years, who has not been engaged in remunerative work satisfies the Commission that he or she has been genuinely seeking to engage in remunerative work, that he or she would, but for that incapacity, be continuing so to seek to engage in remunerative work and that that incapacity is the substantial cause of his or her inability to obtain remunerative work in which to engage, the veteran shall be treated as having been prevented by reason of that incapacity from continuing to undertake remunerative work that the veteran was undertaking.

Section 28 of the Act provides that:

In determining, for the purposes of paragraph 23(1)(b) or 24(1)(b), whether a veteran who is incapacitated from war-caused injury or war-caused disease, or both, is incapable of undertaking remunerative work, and in determining for the purposes of section 24A whether a veteran who is so incapacitated is capable of undertaking remunerative work, the Commission shall have regard to the following matters only:
(a)the vocational, trade and professional skills, qualifications and experience of the veteran;
(b)the kinds of remunerative work which a person with the skills, qualifications and experience referred to in paragraph (a) might reasonably undertake; and
(c)the degree to which the physical or mental impairment of the veteran as a result of the injury or disease, or both, has reduced his or her capacity to undertake the kinds of remunerative work referred to in paragraph (b).

Mr Liefman, on behalf of the applicant, submitted that in relation to s24 (1)(b) the Tribunal should accept the evidence of Dr Rowe that the applicant's incapacity from war-caused injury or disease, alone, renders him incapable of any remunerative work for more than 8 hours per week. He said that Dr Rowe's assessment was based on the actual work capacity of the applicant in the real world, whereas the opinion of Dr Cooper was based on a return to work. Mr Liefman submitted further that the evidence from Dr Redmond supported the view that excessive consumption of alcohol by the applicant was not a significant factor. He referred to an opinion by Mr M. Scott, a treating specialist, who on 17 July 1998 stated in relation to avascular necrosis:
The disability for this would be virtually 100% ie despite the replacement, there is significant residual weakness and movement control problems.
In relation to s24 (1)(c) Mr Liefman submitted that, in accordance with s24 (2)(b), the words genuinely seeking to engage in remunerative work should be interpreted generally as assessing the applicant's willingness to work, rather than a literal interpretation of the words (Starcevich v Repatriation Commission (1987) 76 ALR 449). He cited Hall v Repatriation Commission (1994) 33 ALD 454 in which Spender J said at p 461:
It seems to me that the question of whether a veteran has been genuinely seeking to engage in remunerative work, that he or she would, but for that incapacity, be continuing to so seek, has to be addressed in a realistic way, having regard to the nature and extent of the incapacity. Many veterans are permanently incapacitated by war-caused injury or disease for any form of remunerative work, and the requirement that such persons should genuinely be seeking work seems to involve something of a charade.

Mr Liefman said that the onset of avascular necrosis and its rapid effect on the applicant made it impossible for him to continue working at any level, and he did not regain his health sufficiently to contemplate work from then onwards.

In relation to s24 (1)(c) regarding any loss of salary, wages and earnings, Mr Liefman referred the Tribunal to Re Laugher and Repatriation Commission (1985) 11 ALN 56 and Re Maloney and Repatriation Commission [1999] AATA 879 and submitted that loss is more than a financial loss and includes present and future loss. He said that there is nothing in the Act that requires the loss to be other than the result of part-time work, and nothing to specify that the loss be substantial or significant (Cavell and Repatriation Commission AAT 2891, 19 September 1986). Mr Liefman referred the Tribunal to Banovich v Repatriation Commission (1986) 69 ALR 395 in which the Full Federal Court stated at p 402:
. . . the phrase "remunerative work which the respondent was undertaking" should be read as a reference to the type of work which the member previously undertook and not to any particular job.

He submitted that although the level of remuneration received by the applicant from the courier business was relatively low, the applicant had an expectation of increased earnings, as he was developing the business in anticipation of further privatisation of Australia Post, before he was forced to discontinue the contract.

In relation to the capacity of the applicant to undertake remunerative work, Mr Liefman referred to s28 of the Act, and urged the Tribunal to take into account the applicant's vocational, trade and professional skills, qualifications and experience and the type of work available. He stated that the accepted war-caused conditions suffered by the applicant have reduced his capacity to undertake the kinds of remunerative work that would be appropriate.
Mr Purcell, on behalf of the respondent, submitted that the applicant does not satisfy s24 (1)(b) because he is not incapable of undertaking remunerative work for more than 8 hours per week, and his incapacity for work is not the result of war-caused injuries or diseases alone. He said that the Tribunal should give little weight to the evidence from Dr Rowe because the report was too general and did not properly address the symptoms suffered by the applicant. He said that Dr Rowe did not take from the applicant a detailed history of health status or work experience, so that without this clinical evidence there was no proper basis for an assumption that the accepted war-caused conditions would prevent the applicant from working in any occupation. He added that Dr Rowe had made no reference to the conditions of alcohol abuse or adjustment disorder, or their possible impact on work capacity.
Mr Purcell submitted that Dr Cooper had carried out a more comprehensive examination of the issues and had taken a more practical approach with regard to workplace modifications that would be desirable to enable the applicant to find employment. Mr Purcell stated that Dr Redmond had not seen the applicant since 1998 when she examined him in her capacity as a consultant psychiatrist, and that her second report was based on reports of other medical practitioners.
In respect of the alone test, Mr Purcell submitted that the non-accepted disabilities such as alcohol abuse and adjustment disorder have contributed to any incapacity to engage in remunerative work. He referred to the medical evidence that describes alcohol abuse and mild depression, the prescribed medication for which has caused insomnia. Mr Purcell also referred to the report dated 21 March 2000 from Dr B. Dooley, orthopaedic surgeon, who stated:
His current disability is multifactorial, namely the effects of chronic alcoholism, chronic stress with anxiety and depression and impairment from avuscular necrosis of the femoral heads and the total hip replacement arthroplasties. This would make it unlikely that he could seek employment for each of the factors mentioned.

Mr Purcell submitted further that the applicant does not satisfy s24 (1)(c) because there was no loss of salary, wages or income suffered by him. Mr Purcell referred to Starcevich in which Fox J said at p 454:
It seems to me that the intention of s24(1)(c) is that the applicant must have suffered substantial loss of remuneration consequent alone upon the incapacity referred to in s24(1)(a) and (b). The loss must be real, in the sense that the applicant cannot rely upon any remunerative work that he has undertaken in the past…

Mr Purcell said that the assessment period commenced on 24 December 1997 when the applicant lodged his claim for avascular necrosis. Taxation records for 1997/98 show that the applicant's income from the courier business was $729.00 and that this was not a real or substantial loss. He said that the only substantial loss of earnings occurred in 1996/97, before the assessment period, when the applicant's taxable income decreased from $23,020 to $16,548 because he was no longer receiving income from the store and post office.

Mr Purcell told the Tribunal that any loss of income was not related to the applicant's accepted disabilities, and the decision to sell the store and post office was based on lifestyle considerations. The courier business was always going to be a part-time operation. He said that s24 (1)(c) applies to an actual loss of earnings and should not be based on speculation or other factors.
In reaching its decision the Tribunal takes into account the written and oral evidence and submissions made. There was no dispute between the parties in respect of s24 (1)(a) and the Tribunal finds that the applicant satisfies this provision. In respect of s24 (1)(b) the Tribunal accepts the submission by Mr Purcell that the evidence from Dr Cooper demonstrates that his assessment of the applicant was more complete than that by Dr Rowe. In particular, the Tribunal agrees that Dr Cooper based his assessment on a thorough understanding of the history of the applicant and the potential for employment in the context of the current situation. In addition the Tribunal believes that Dr Cooper's thorough analysis of the current status regarding physical incapacity, daily activities and workability led to a conclusion that was soundly based. The Tribunal agrees that, without a detailed history or a consideration of possible employment in health administration or a clerical occupation, Dr Rowe was unable to justify his conclusion that the applicant is not employable in any capacity in any occupation.
The Tribunal also agrees with Mr Purcell that Dr Redmond examined the applicant once in 1998 in her capacity as a consultant psychiatrist and that her evidence was relevant only with regard to the psychiatric symptoms present at that time. This means the Tribunal preferred the evidence of Dr Dooley who is experienced in the field of the effect of physical disabilities. There was no other evidence before the Tribunal, including the oral evidence by the applicant, which persuaded the Tribunal otherwise.
In accepting the evidence from Dr Cooper and Dr Dooley, and after taking into account the factors specified in s28, including the voluntary work undertaken by the applicant, the Tribunal finds that the applicant is not incapable of undertaking remunerative work for more than 8 hours per week, and that the applicant's incapacity for work is not the result of his war-caused injuries or diseases alone. Therefore the Tribunal finds that the applicant does not satisfy s24 (1)(b) and he cannot meet the criteria in s24 for the grant of pension at the special rate. Consequently there is no need for the Tribunal to consider other matters raised at the hearing such as loss of earnings, and there is no need to consider the matters set out in s24 (2)(b).
On the material provided by the parties in relation to the combined impairment assessment the Tribunal finds that pension be paid as follows:

at 40% of the general rate from 24 September 1997 to 8 May 1998;
at 60% of the general rate from 9 May 1998 to 21 March 1999; and
at 100% of the general rate from 22 March 1999.

DECISION

The Tribunal sets aside the decision of the Veterans' Review Board of 18 February 2000 (relating to the respondent's decision of 5 January 1998) and substitutes the following decision:
(a)that avascular necrosis was war-caused with effect from 24 September 1997; and
(b) that disability pension be paid to the applicant as follows:

at 40% of the general rate from 24 September 1997 to 8 May 1998;
at 60% of the general rate from 9 May 1998 to 21 March 1999; and
at 100% of the general rate from 22 March 1999.

I certify that the twenty-nine [29] preceding paragraphs are a true copy of the reasons for the decision of:
G.D.Friedman, Member
(sgd)       Rhona Hammond
              Clerk
Date of hearing:  25 October 2001
Date of decision:  30 November 2001
Solicitor for applicant:                  Mr P.Liefman of Peter J. Liefman, Barrister & Solicitor

Counsel for respondent: Mr G. Purcell
Solicitor for respondent: Advocacy Section, Department of Veterans' Affairs