McLaughlin and Repatriation Commission

[2008] AATA 449

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 449

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/5940

VETERANS' APPEALS DIVISION		)
Re		DENNIS McLAUGHLIN

Applicant

And REPATRIATION COMMISSION

Respondent

DECISION

Tribunal M J Carstairs, Senior Member

Date30 May 2008

PlaceBrisbane (heard in Townsville)

Decision The Tribunal sets aside the decision under review and substitutes the decision that the applicant is entitled to pension at the special rate with effect from 23 August 2004.

....................[sgd]..........................

SENIOR MEMBER

CATCHWORDS

VETERANS’ AFFAIRS – benefits and entitlements – applicant in receipt of intermediate rate of pension – application for increase in pension – whether applicant is suffering from a loss of salary wages or earnings – decision under review set aside

Veterans’ Entitlements Act 1986 (Cth), ss 19, 24,

Tunny and Repatriation Commission (2008) AATA 243
Flentjar v Repatriation Commission (1997) 48 ALD 1
Repatriation Commission v Smith (1987) 15 FCR 327
Forbes v Commission (2000) 171 ALR 131
Hill v Repatriation Commission [2000] FCA 929

REASONS FOR DECISION

30 May 2008   M J Carstairs, Senior Member

1.      Dennis McLaughlin has applied for an increase in the rate of his pension, from the rate at which he is now paid, which is the “intermediate rate” (a rate that recognises its recipient’s inability to work 20 hours or more per week), to the “special rate” (which requires, amongst other things, that a person’s capacity for work amounts to no more than 8 hours per week).  

2. The respondent acknowledges that Mr McLaughlin’s capacity to work is reduced to that extent. Indeed the parties agree upon a number of matters going to other aspects of qualification for special rate under s 24 of the Veterans’ Entitlements Act1986 (“the Act”).   

3. What the parties disagree upon is confined in essence to that part of the legislative test set out in s 24(1)(c) of the Act referring to “suffering a loss of salary or wages, or of earnings on his or her own account”.

4. That phrase appears in the following context in the Act:

24 This section applies to a veteran if:

…

(1)(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;…

5. A provision, similarly worded, appears at s 23(1)(c) of the Act in relation to intermediate rate of pension.

6.      The respondent maintains that Mr McLaughlin’s claim fails because he cannot show that he has suffered a loss beyond that relied upon for purposes of qualifying for intermediate rate of pension.  As this submission runs, Mr J Stoner, who appeared for the respondent, maintains that it is necessary for Mr McLaughlin to show a further loss, that is, beyond that which pertained when he was granted pension at intermediate rate[1]. 

[1]        Exhibit R1.

7.      Mr McLaughlin’s case was heard in Townsville shortly after the Tribunal (constituted by Deputy President Dr B H McPherson CBE, and Member Mr R G Kenny), heard and reserved their decision upon a matter which raised similar issues: Tunny and Repatriation Commission[2].   I allowed the parties time to make further submissions after that case was handed down.   

[2] [2008] AATA 243.

8.      I have come to the conclusion that the same principles which the Tribunal applied in Tunny’s case ought be applied in Mr McLaughlin’s case, with the result that Mr McLaughlin is entitled to be paid at special rate of pension with effect from the date of his application.   

THE EFFECT OF THE TRIBUNAL DECISION IN TUNNY AND REPATRIATION COMMISSION

9.      The issue in Tunny’s case was whether a person who was in receipt of intermediate rate of pension, who then claimed for an additional disability, might be paid special rate (where it was shown that he was now unable to work 8 hours per week as a result of increased disability).   Mr McLaughlin’s case, however, does not involve a newly accepted medical condition.  His circumstances were, rather, that his health had declined since he was granted intermediate rate of pension a year or so previously.   That slight difference aside, Mr McLaughlin’s and Mr Tunny’s cases have much in common.     

10. I shall first address the similarities in their cases, particularly with regard to those matters which needed to be addressed under s 24 of the Act in order to qualify for special rate of pension:

§ both men were under 65 years of age when they claimed: s 24(1)(aab);

§ both were receiving more than 70% of the general rate of pension: s 24(1)(a);

§ both were prevented from working more than 8 hours a week by reason of war-caused incapacity alone: s 24(1)(b); and

§ both were prevented from continuing in remunerative work by reason of incapacity from accepted disabilities alone (referred to as the first limb of the test in s 24(1)(c) of the Act [3]). 

[3] There being 2 limbs to s 24(1)(c) of the Act: Forbes v Repatriation Commission (2000) 171 ALR 131.

11.     Mr McLaughlin’s particular facts were as follows:

§ he had as accepted disabilities and relevantly to be taken into account for the tests in s 24 of the Act: a fracture of cervical vertebra (C3); cervical spinal cord concussion; osteoarthritis of the left knee; and adjustment disorder;

§  he ceased work at the State Transit Authority (NSW), where he worked in driver training, on 13 September 2002, when he was retired on medical grounds;

§  he was assessed as eligible for intermediate rate of pension from 14 September 2002, that is, the day after his retirement;

§  his psychiatric condition (in particular) appears to have worsened the year after he left work, such that in 2003 he required in-patient care for four weeks.  Soon after, he moved to Townsville and made the present claim; and

§  he had effectively stopped looking for other work (2002/2003) after his early attempts proved futile.   He did not look for remunerative work in the assessment period. 

12. Mr McLaughlin’s adjustment disorder is unquestionably related to the very significant orthopaedic injuries he sustained during his Army service. (These matters form part of the undisputed medical history; the orthopaedic and psychiatric conditions being Mr McLaughlin’s accepted “war-caused injuries” referred to at various places in s 24 of the Act). When Mr McLaughlin was involuntarily retired, his psychiatrist, Dr U Subhas, was treating him for chronic adjustment disorder, with mixed anxiety and depressed mood, and intermittent episodes of major depression. It seems that Dr Subhas thought that Mr McLaughlin was capable of part-time work and supported him by writing to the State Transport Authority recommending that Mr McLaughlin be transferred to part-time work, not more than 20 hours per week[4].   Dr Subhas stated that he thought it would be better to keep Mr McLaughlin occupied.   However, the Authority did not heed that suggestion.

[4]         T4.

13.     It should be observed that all psychiatrists who have prepared reports on Mr McLaughlin agree that he is seriously disabled by his psychiatric condition; there is no real dispute that it renders him unable to work at all.   Dr J Rogers, who thought that the better description of Mr McLaughlin’s condition was “depressive disorder with melancholic features”, said that all reasonable treatment had been tried and there was no hope of improvement.   Dr L Ding, consultant psychiatrist, preferred Dr Subhas’ original diagnosis of chronic adjustment disorder with mixed anxious and mood disorder.   He said that Mr McLaughlin was psychiatrically totally incapacitated for employment. 

14.     On these facts it is sufficient to note that the delegate who made the original decision (29 April 2005)[5] was satisfied of two matters:

§  Mr McLaughlin was prevented from working 8 hours per week by reason of adjustment disorder; and

§ this condition alone prevented him from returning to remunerative employment (the first limb of s 24(1)(c)).

[5]         T2.

15.     However, the claim for special rate of pension was refused because Mr McLaughlin had not suffered a further loss of earnings, beyond, that is, the loss he established to qualify for intermediate rate.   The Veterans’ Review Board, having twice adjourned the matter, ultimately affirmed the delegate’s decision, stating as follows:

As the applicant had already ceased remunerative full-time work before the start of the assessment period and not undertaken part-time work to the extent medical opinion said he was capable of he has not suffered any loss of earnings solely due to his incapacity to work for less than eight hours a week.  Therefore the Board finds that the applicant does not meet the requirements of subsection 24(1)(c) and is not eligible for the payment of the Special rate.

THE LEGISLATIVE TEST

16.     Mr Stoner’s submissions essentially support such an approach applied at earlier levels of review.   However, it is an approach that runs counter to authority, as the decision in Tunny makes plain.   It is unquestionably true, and reaffirmed in Tunny, that the starting point for determining questions of entitlement to special rate of pension if that entitlement must be looked at, is the “assessment period,” defined in s 19(9) of the Act[6].  The assessment period in this case commences on 23 August 2004 (Mr McLaughlin’s application day) and ends when this application is determined by the Tribunal.

[6] Read with s 19(5C) of the Act.

17. That point is equally true when determining whether there has been the loss of salary wages or earnings that is required under s 24(1)(c) of the Act.

18. In that regard the test which appears was applied at the earlier levels of review requires a reference to the previous decision-making (granting intermediate rate of pension). However, the decision-making for the grant of the intermediate rate of pension predates the assessment period for Mr McLaughlin’s new claim; the approach followed by the delegate and by the Veterans’ Review Board finds no mandate in the terms of s 24 of the Act.

19.     As Tunny makes plain, the proper approach for decision-makers when a person receiving intermediate rate of pension claims special rate has been the subject of some guidance from the Federal Court.  Tunny makes reference in particular to the principles applied by the Federal Court in Hill v Repatriation Commission[7].   In that case Wilcox J set aside the decision of the Tribunal which, he observed, had been premised on an acceptance of a submission that the Tribunal’s task was to assess what had changed since the applicant had been granted intermediate rate of pension.  Additionally, the Tribunal in Hill had erred by requiring that the applicant demonstrate attempts to undertake the part-time hours of work that had formed the basis of the previous grant of intermediate rate of pension. 

[7] (2000) FCA 929.

20.     It will be observed that this approach, criticised by the Wilcox J in Hill, seems to have been that applied by those considering Mr McLaughlin’s case to date.

21.     Put simply, the correct approach is that all aspects of the qualification provisions must be satisfied in the assessment period.  The correct approach is not predicated upon earlier decision-making, except that an applicant must satisfy the requirement of having accepted disabilities and a minimum of 70% general rate of pension.    

22.     The Tribunal in Tunny followed Hill and observed[8]:

In order to meet the requirements of the second limb of s24(1)(c) of the Act, there must be a loss of salary, wages or earnings and this must be referrable to the assessment period. We do not accept the contention that, in order to demonstrate such a loss, a veteran must have exercised the residual work capacity which is inherent in the grant of pension at the intermediate rate. The loss will be established if, at the commencement of the assessment period, absent the accepted conditions, it is probable that the veteran would have continued in the type of employment he had enjoyed previously.

[8]        Tunny and Repatriation Commission (2008) AATA 243 at [24].

23.     In the circumstances in Mr McLaughlin’s case, it seems to me that the test of loss set out in Tunny is met, bearing in mind that this was the only matter in dispute and, like other parts of s 24(1)(c), required “an assessment of what the [veteran] probably would have done if he had none of his service disabilities” [9].

[9]        Repatriation Commission v Smith (1987) 15 FCR 327.

24.     Mr McLaughlin’s remunerative work can be described as driver/trainer and tester, although he seems to have had supervisory roles in his employment at the State Transport Authority.   As the fourth question posed in Flentjar v Repatriation Commission (1997) 48 ALD 1 sets out Mr McLaughlin needed to show with respect to the second limb of s 24(1)(c) that he was:

… 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…

25. Section 24(2)(a) of the Act makes plain that the “loss of earnings” referred to in the s 24(1)(c) will not be established where there are other reasons why a person has ceased to engage in remunerative work, nor where other reasons prevent the veteran from engaging in remunerative work.

26.     In Mr McLaughlin’s case there are no other reasons, apart from the accepted disabilities, which account for Mr McLaughlin being prevented from continuing to engage in remunerative work as a driver trainer and supervisor.   At the time of the claim he was only 47 years of age.   Apart from the severity of his orthopaedic and psychiatric conditions he reasonably would have expected to be in employment (or employable) in a range of remunerative work consistent with his specialised skills and reliable work history. 

27. In 2003 Mr McLaughlin’s suffered a downturn in his mental health such that his residual capacity for part-time work (assuming that Dr Subhas was right as to that capacity) was further reduced. However, Mr McLaughlin’s present qualification for special rate does not rest merely on further reduced capacity. That is but part of the test in s 24. In other words, not every veteran, paid at intermediate rate, can succeed on a claim for increase to special rate simply on the basis of increased incapacity. In many instances the factors addressed under s 24(2)(a) will defeat the claim, factors which can include such matters as age, and time out of the work force. However, no such factors operate in Mr McLaughlin’s case.

28. Having reached this conclusion, there is no need to address the very interesting submission which Mr D Honchin, counsel for Mr McLaughlin, made with respect to the “loss” question, namely that a veteran’s lost ability to work to the extent of his or her residual capacity identified for purposes of intermediate rate of pension, may be part of the s 24(1)(c), “loss of salary wages or earnings on his or her own account”.

29.     I should observe finally, that Mr McLaughlin receives payments, at 75% of the final salary at the State Transport Authority, under an income protection policy.   His pension payments from the Department of Veterans’ Affairs are adjusted accordingly.   It was not argued that his receipt of these payments was of any relevance to the matters before me.   However they do confirm aspects of his loss, at least in relation to his last employment. 

30.     Accordingly, and for the reasons stated, I am reasonably satisfied that in the assessment period, Mr McLaughlin was suffering a loss of salary, wages or earnings that he would not be suffering in the absence of his war-caused injury or disease.

DECISION

31.     The Tribunal sets aside the decision under review and substitutes the decision that the applicant is entitled to pension at the special rate with effect from 23 August 2004.

I certify that the 31 preceding paragraphs are a true copy of the reasons for the order herein of M J Carstairs, Senior Member

Signed ………………[sgd]……………………          
  Joan Torbey, Associate

Date of Hearing  11 March 2008
Date of Decision  30 May 2008
Counsel for the Applicant         Mr D Honchin
Solicitors for the Applicant        Purcell Taylor Lawyers
Advocate for the Respondent   Mr J Stoner