Hobbs v Repatriation Commission
[2002] FCA 560
•3 MAY 2002
FEDERAL COURT OF AUSTRALIA
Hobbs v Repatriation Commission
[2002] FCA 560VETERANS’ ENTITLEMENTS – where applicant received special rate pension for defence-caused injury under Veterans’ Entitlements Act 1986 (Cth) – where applicant received additional permanent impairment lump sum under Div 4 of Pt II of Safety, Rehabilitation and Compensation Act 1988 (Cth) – where Repatriation Commission deducted payments representing lump sum from pension – whether compensation for incapacity in s 74(3) of the Veterans’ Entitlements Act included lump sum payment received under Div 4 of Pt II of the Safety, Rehabilitation and Compensation Act
WORDS AND PHRASES – “incapacity”, “compensation”
Veterans’ Entitlement Act (Cth) 1986, ss 21A, 22, 24, 74
Safety, Rehabilitation and Compensation Act 1988 (Cth), ss 14(1), 19, 24(1), 27(1)Apthorpev Repatriation Commission (1987) 77 ALR 42 referred to
ALAN HOBBS v REPATRIATION COMMISSION
A 70 OF 2001GYLES J
SYDNEY (HEARD IN CANBERRA)
3 MAY 2002
IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
A 70 OF 2001
BETWEEN:
ALAN HOBBS
APPLICANTAND:
REPATRIATION COMMISSION
RESPONDENTJUDGE:
GYLES J
DATE OF ORDER:
3 MAY 2002
WHERE MADE:
SYDNEY (HEARD IN CANBERRA)
THE COURT ORDERS THAT:
1. The application is dismissed.
2. The applicant is to pay the costs of the respondent.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY
A 70 OF 2001
BETWEEN:
ALAN HOBBS
APPLICANTAND:
REPATRIATION COMMISSION
RESPONDENT
JUDGE:
GYLES J
DATE:
3 MAY 2002
PLACE:
SYDNEY (HEARD IN CANBERRA)
REASONS FOR JUDGMENT
This is an application pursuant to s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth), or in the alternative, pursuant to s 39B of the Judiciary Act 1903 (Cth), to review decisions of the Repatriation Commission (“the respondent”) made in respect of payments made to the applicant pursuant to the Veterans Entitlement Act 1986 (Cth) (“the VE Act”).
Facts
It is convenient to set out the Statement of Agreed Facts.
1.The applicant was a member of the Australian Army from 11 July 1977 to his discharge on 20 January 1995.
2.The applicant claimed a disability pension under Part IV of the VE Act. On 2 February 1995 the respondent determined, with effect from 4 July 1994, that the applicant’s lumbar invertebral disc prolapse with nerve root compression was defence-caused.
3.As a result of the 2 February 1995 determination, the applicant was paid a pension by the respondent at 100% of the general rate (see ss 73 and 22 of the VE Act) with effect from 4 July 1994.
4.During two periods between 2 February 1995 and 24 October 1996, the applicant was temporarily paid a pension at the special rate (see ss 25 and 24 of the VE Act). The applicant is currently being paid a pension at the special rate (see s 24 VE Act).
5.In 2001 the applicant made a claim for compensation under the Safety, Rehabilitation and Compensation Act 1988 (Cth) (“the SRC Act”) in respect of acute lumbar disc prolapse with irritation of L4/5 and L5 S1 nerve roots. The claim was refused by the Military Compensation and Rehabilitation Service (“MCRS”), and the applicant applied to the Administrative Appeals Tribunal for review of the decision.
6.On 19 June 2001, the Administrative Appeals Tribunal set aside the MCRS decision and substituted a decision that the applicant was entitled to receive a payment for permanent impairment under ss 24 and 27 of the SRC Act.
7.By a letter dated 28 June 2001, the MRCS notified the respondent that pursuant to the AAT decision, an “additional lump sum” of $4,291.02 was to be paid to the applicant.
8.On 3 July 2001, the respondent notified the MCRS that $1,118.95, representing pension payments made by the respondent to the applicant, should be deducted from the applicant’s lump sum SRC payment (see s 74(3) VE Act).
9.By a letter dated 10 July 2001 MCRS notified the applicant’s solicitors of the respondent’s claim for repayment of pension. In the same letter, MCRS advised the solicitors that the sum of $3,172.07 would be paid to the applicant “by the end of this week.”
10.In a letter to the Secretary of the Department of Veterans’ Affairs dated 20 August 2001, the applicant’s solicitors asserted that there was no legal basis for recovering amounts from the SRC Act payments. They requested repayment of all amounts deducted from the payments made to the applicant under ss 24 and 27 of the SRC Act.
11.The Branch Head of the Legal Services Group, Department of Veterans’ Affairs, responded to the applicant’s solicitors’ correspondence on behalf of the Secretary. In a letter dated 15 November 2001, the Branch Head maintained that the respondent’s conduct was lawful and declined to repay the amounts claimed.
The decisions subject to review in this Court are those of the respondent dated 3 July 2001 and 15 November 2001.
Legislative Background
The VE Act provides for a number of types of pension to be available to ex-service personnel. The critical provision for present purposes is s 74 of the VE Act which is part of Div 4 of Pt IV of the VE Act, which contains a number of provisions in relation to the consequences of the existence of other rights to compensation or pension of a kind which are familiar in compensation legislation, the general purpose of which is to guard against duplication of compensation and to enable indemnity to be received from third parties, where appropriate. The relevant parts of s 74 are as follows:
“74 Payments by way of compensation or damages
(1)In this section, compensation includes:
(a)any payment in the nature of compensation; and
(b)any damages recoverable at law (including any amount paid under a compromise or settlement of a claim for damages at law), whether from the Commonwealth, a State, a Territory or any other person (whether within or outside Australia), in respect of injury to, or the death of, a person;
but does not include any amount that represents expenses incurred in medical or hospital treatment.
…
(3) For the purposes of this section, where
(a)a lump sum payment by way of compensation (other than a lump sum payment mentioned in paragraph (3A)(a) or (3B)(a)) is made:
(i)to a person, being a member of the Forces or a member of a Peacekeeping Force, in respect of the incapacity of the member from injury or disease; or
(ii)to a person, being a dependant of a member of the Forces or of a member of a Peacekeeping Force, in respect of the death of the member from injury or disease; and
(b)that person is in receipt of, or is subsequently granted, a pension under this Part in respect of the incapacity of that member from that injury or disease, or the death of that member from that injury or disease, as the case may be;
that person shall be deemed, by reason of that payment by way of compensation, to have been, or to be, in receipt of payments, by way of compensation, on and after:
(c)the date of commencement of the period in respect of which his or her pension is, or becomes, payable; or
(d)the date on which the lump sum payment is made;
whichever is the earlier date, for the life of the person, at such rate per fortnight as is determined by, or in accordance with the instructions of, the Commonwealth Actuary, to be the equivalent of a lump sum equal to that lump sum payment and paid to the person on that earlier date.
(3A)In this section, if:
(a)a lump sum payment is made under section 137 of the Safety, Rehabilitation and Compensation Act 1988 to a person who is:
(i)a member of the Forces or a member of a Peacekeeping Force, in respect of the incapacity of the member from injury or disease; or
(ii)a dependant of a member of the Forces or of a member of a Peacekeeping Force, in respect of the death of the member from injury or disease; and
(b)that person is in receipt of, or is subsequently granted, a pension under this Part in respect of that incapacity or death;
the person is taken to have been, or to be, in receipt of payments of compensation:
(c)that is determined by, or under the instructions of, the Commonwealth Actuary to be equivalent to the amount of that lump sum payment; and
(d)at the rate per fortnight for the person’s life determined by, or under the instructions of, the Commonwealth Actuary; and
(e)beginning:
(i)on the day that lump sum payment is made to that person; or
(ii)on the day the pension becomes payable to the person;
whichever is the later day.
(3B)In this section, if:
(a)a lump sum payment is made under section 30 of the Safety, Rehabilitation and Compensation Act 1988 to a person who is:
(i)a member of the Forces or a member of a Peacekeeping Force, in respect of the incapacity of the member from injury or disease; or
(ii)a dependant of a member of the Forces or of a member of a Peacekeeping Force, in respect of the death of the member from injury or disease; and
(b)that person is in receipt of, or is subsequently granted, a pension under this Part in respect of that incapacity or death;
the person is taken to have been, or to be, in receipt of payments of compensation:
(c)that is determined by, or under the instructions of, the Commonwealth Actuary to be equivalent to the amount of that lump sum payment; and
(d)at the rate per fortnight determined by, or under the instructions of, the Commonwealth Actuary for the period until the person reaches 65; and
(e)beginning:
(i)on the day that the lump sum payment is made to that person; or
(ii)on the day the pension becomes payable to the person;
whichever is the later day.
…”
It is important to the argument for the applicant to appreciate the nature of the special rate of pension provided by s 24 of the VE Act to which the applicant was entitled at the relevant time. This sufficiently appears from s 24(1):
“24 Special rate of pension
(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.”
Section 25 does not apply to the applicant.
The operation of s 24 requires an understanding of s 21A and parts of s 22:
“21A Determination of degree of incapacity
(1)The Commission shall, subject to subsections (2) and (3), determine the degree of incapacity of a veteran from war-caused injury or war-caused disease, or both, according to the provisions of the approved Guide to the Assessment of Rates of Veterans’ Pensions.
(2)Subject to subsection (3), the degree of incapacity shall be determined as 10% or a multiple of 10%, but not exceeding 100%.
(3)The Commission may determine that the degree of incapacity of a veteran from war-caused injury or war-caused disease, or both, is less than 10% (including 0%), and, where it does so, it shall not assess a rate of pension, but shall refuse to grant a pension to the veteran on the ground that the extent of the incapacity of the veteran from that war-caused injury or war-caused disease, or both, is insufficient to justify the grant of a pension.
22General rate of pension and extreme disablement adjustment
(1)This section applies to a veteran who is being paid, or is eligible to be paid, a pension under this Part, other than a veteran to whom section 23, 24 or 25 applies.
(2)Subject to this Division, the rate at which pension is payable to a veteran to whom this section applies in respect of the incapacity of the veteran from war-caused injury or war-caused disease, or both, is the rate per fortnight that constitutes the same percentage of the general rate as the percentage determined by the Commission in accordance with section 21A to be the degree of incapacity of the veteran from that war-caused injury or war-caused disease, or both, as the case may be.
(3)For the purposes of this section, the maximum rate per fortnight is $216.90 per fortnight.
…”
Section 23 provides for an intermediate rate of pension, the quantum of which is between the general and special rate.
The relevant provisions of Pt II of the SRC Act were as follows:
“Compensation for injuries
14(1)Subject to this Part, Comcare is liable to pay compensation in accordance with this Act in respect of an injury suffered by an employee if the injury results in death, incapacity for work, or impairment.
…
Compensation for injuries resulting in incapacity19 …
(2)Subject to this Part, Comcare is liable to pay compensation to the employee in respect of the injury, for each of the first 45 weeks (whether consecutive or otherwise) during which the employee is incapacitated, of an amount calculated under the formula:
NWE - AE
where:
NWE is the amount of the employee’s normal weekly earnings; and
AE is the amount per week (if any) that the employee is able to earn in suitable employment.
(3)Subject to this Part, Comcare is liable to pay to the employee, in respect of the injury, for each week during which the employee is
incapacitated, other than a week referred to in subsection (2), compensation:
…
Compensation for injuries resulting in permanent impairment
24(1)Where an injury to an employee results in a permanent impairment, Comcare is liable to pay compensation to the employee in respect of the injury.
…
Compensation for non-economic loss
27(1)Where an injury to an employee results in a permanent impairment and compensation is payable in respect of the injury under section 24, Comcare is liable to pay additional compensation in accordance with this section to the employee in respect of that injury for any non-economic loss suffered by the employee as a result of that injury or impairment.
…”
Included amongst the defined terms in s 4 of the SRC Act are:
“ “non-economic loss”, in relation to an employee who has suffered an injury resulting in a permanent impairment, means loss or damage of a non-economic kind suffered by the employee (including pain and suffering, a loss of expectation of life or a loss of the amenities or enjoyment of life) as a result of that injury or impairment and of which the employee is aware;
“impairment” means the loss, the loss of the use, or the damage or malfunction, of any part of the body or of any bodily system or function or part of such system or function;
“permanent” means likely to continue indefinitely;
“injury” means:
(a) a disease suffered by an employee; or(b)an injury (other than a disease) suffered by an employee, being a physical or mental injury arising out of, or in the course of, the employee’s employment; or
(c)an aggravation of a physical or mental injury (other than a disease) suffered by an employee (whether or not that injury arose out of, or in the course of, the employee’s employment), being an aggravation that arose out of, or in the course of, that employment;
but does not include any such disease, injury or aggravation suffered b y an employee as a result of reasonable disciplinary action taken against the employee or failure by the employee to obtain a promotion, transfer or benefit in connection with his or her employment.”
Question
The precise question of law for determination is whether compensation for “incapacity” in s 74(3) of the VE Act in relation to a person in receipt of a special rate pension includes a lump sum payment received under Div 4 of Pt II of the SRC Act.
Contentions of the parties
Counsel for the applicant submits that “incapacity” in s 74 will have a different application depending upon the rate of pension being paid to the person in question. He submits that a special rate pension compensates for loss of earning capacity, whereas a general rate pension compensates for impairment without regard to earning capacity, citing Apthorpev Repatriation Commission (1987) 77 ALR 42 at 49. Section 21A of the VE Act refers to the Guide to the Assessment of the Rates of Veterans’ Pensions (“GARP”). The assessment for which GARP provides takes account of the economic effects of impairment only in a minor, almost indirect, manner. Thus, in the case of a person receiving a special rate pension, “incapacity” in s 74 refers to loss of earning capacity. As a lump sum received pursuant to Div 4 of Pt II of the SRC Act is compensation for impairment, not for loss of earning capacity, it is not compensation for incapacity for the purposes of s 74. He submits that it is well established that the VE Act is beneficial legislation which should receive a liberal interpretation favourable to pensioners. Counsel devoted some attention in both his written and oral submissions to seeking to demonstrate that the construction of the section applied by the respondent would disadvantage the applicant, and persons in his position, together with those who had seen active war service, compared with civilian public servants and others, and in debating whether the special rate pension is generous or not compared with, for example, the SRC Act. The detail of these comparisons is of no real relevance to the question of statutory construction at issue.
Counsel for the respondent does not agree that a special rate pension is based solely on incapacity for work and not at all upon impairment. She points out that, in relation to a person in the position of the applicant, the eligibility criteria include a 70% degree of incapacity assessed under GARP, and it is common ground that it substantially relates to impairment. It was submitted that the characteristics of and criteria for a special rate pension are quite distinct from conventional workers compensation provisions such as s 19 of the SRC Act, which do not depend upon permanent impairment. She referred to the history of the VE Act provisions in support of this submission. Counsel for the respondent laid stress upon the width of the definition of “compensation” in s 74(1) of the VE Act, and did not agree with the variable meaning attributed to “disability” in s 74 by the submissions for the applicant. She submitted that this was a simple case of attempted double dipping. Counsel for the applicant retorted to this riposte by describing the respondent’s position as mean spirited.
Decision
In my opinion, the argument for the applicant, whilst ingenious and carefully constructed, cannot be accommodated by the terms of s 74 of the VE Act, taken in context. “Incapacity” and “compensation” are ordinary words. “Incapacity” is lack of capacity. Capacity (relevantly) refers to the power, ability or possibility of doing something. “Compensation” is something given or received as an equivalent for (inter alia) loss or suffering. (The Macquarie Dictionary, 3rd ed). The phrase in s 74(3) is “lump sum payment by way of compensation … in respect of incapacity … from injury or disease”, and, by s 74(1), “compensation” includes any payment in the nature of compensation.
In my opinion, a lump sum payment pursuant to Div 4 of Pt II of the SRC Act plainly answers the description in s 74(3). The words of s 24 and s 27 of the SRC Act describe the liability to pay in virtually those express terms and that is consistent with the ordinary usage of language. The cross references to the SRC Act in s 74(3A) and s 74(3B) of the VE Act make it most unlikely that the draftsman of s 74(3) would have intended a different, and unusual, meaning to be given to compensation in that section compared with the SRC Act. Giving full weight to the beneficial nature of the statute, I cannot agree that “compensation” in s 74(3) would have a different meaning depending upon the nature of the pension in question. Naturally, a statutory provision might vary in operation depending upon the facts, but the meaning of a word in the statutory provision can hardly change.
Furthermore, I am far from satisfied that the neat dichotomy between impairment and economic loss contended for on behalf of the applicant in respect of general rate and special rate pensions exists. Loss of earning capacity is not entirely irrelevant to the GARP assessment. In Apthorpe at 49 the Full Court summarised the difference between the criteria for a special rate and a general rate pension as follows:
“… In brief, the criteria for the intermediate rate and for the special rate look to incapacity for work, that is to say incapacity to earn, whereas incapacity for the purposes of the general rate is not concerned primarily with incapacity for work but looks to incapacity which takes into account the effect of the relevant disability upon the whole of the veteran’s life, not only his working life, but also his social and family life. Capacity to earn is a relevant factor to be taken into account in an assessment of total or partial incapacity for the purposes of the general rate but it is not a determining factor. …”
More importantly, although eligibility for the special rate depends upon incapacity to earn, there is nothing to indicate that the amount of the special rate does not include a component for general impairment. It would be strange if it were otherwise. The reality is that the general rate is increased to the special rate because of the special consequences of permanent incapacity to earn. One criteria for the special rate is a 70% degree of incapacity in the s 21A sense, or entitlement to the general rate by reason of pulmonary tuberculosis.
In my opinion, the applicant has not established any error of law in the manner in which the respondent has administered the legislation in this case. This conclusion as to the merits of the application makes it unnecessary to consider the question of jurisdiction.
Orders
The application is dismissed. The applicant is to pay the costs of the respondent.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate:
Dated: 3 May 2002
Counsel for the Applicant: A Anforth Solicitor for the Applicant: Canberra Lawyers Counsel for the Respondent: R Henderson Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 26 April 2002 Date of Judgment: 3 May 2002
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