Michael Renehan and Commonwealth Superannuation Corporation
[2014] AATA 619
[2014] AATA 619
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2013/4366
Re
Michael Renehan
APPLICANT
And
Commonwealth Superannuation Corporation
RESPONDENT
DECISION
Tribunal Senior Member N Isenberg
Date 2 September 2014 Place Sydney The Tribunal sets aside the decision under review and in substitution decides that the Applicant’s reclassification has effect from 7 December 2011.
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Senior Member N Isenberg
Catchwords – Defence Force Retirement and Death Benefits – multiple conditions – reclassification from Class B to Class A pension – whether reclassification should take effect from earlier date – whether special circumstances – decision set aside
Legislation
Defence Force Retirement and Death Benefits Act 1973 ss 34(1); 34(3); 34(1B)(a); 34(3)(b); 99(2); 99(4)
Social Security Act (1991)
Veterans’ Entitlement Act (1986)
Cases
Re Scrivener and Secretary, Department of Social Security (1986) 10 ALN 67
Meaney v Defence Force Retirement and Death Benefits Authority [1993] AATA 210
Bygrave and Secretary, Department of Social Security (No. 2) [1986] AATA 619
Groth v Secretary, Department of Social Security [1995] FCA 170
REASONS FOR DECISION
Senior Member N Isenberg
On 24 May 2012 the Respondent made a decision pursuant to subsection 34(1) of the Defence Force Retirement and Death Benefits Act 1973 (the Act) to reclassify the Applicant, Mr Michael Renehan’s, percentage of incapacity in relation to civil employment for the purposes of the Defence Force Retirement and Death Benefits Scheme (DFRDB).
The decision of the Respondent determined the following;
a)the kinds of civil employment a person with the Applicant's skills, qualifications and experience could reasonably undertake were Marine Engineer, Outboard Motor Technician and Maritime Services Officer;
b)the prescribed impairment was L4/5 disc prolapsed (sic), right rotator cuff injury, anxiety/depression and neural hearing loss; and
c)the impairment diminished his capacity to perform those kinds of employment to a large degree and he be reclassified from 30% Class B to 60% Class A with effect from 16 January 2012.
On 27 June 2012 the Applicant, through his solicitor, applied for reconsideration of the decision pursuant to s.99(2) of the Act. The Applicant stated that he was seeking Class A pension to a date earlier than 16 January 2012. The Respondent then referred the decision to the Defence Force Case Assessment Panel (the Panel) for the Panel to reconsider the decision pursuant to s.99(4) of the Act.
On 13 August 2013 the Panel varied the decision (the Reviewable Decision) and determined that:
a)the relevant kinds of civil employment which a person with the Applicant's vocational, trade and professional skills, qualifications and experience might reasonably undertake (disregarding any impairment) were Deck and Fishing Hand, Marine Transport Professional and Metal Fitter and Machinist;
b)the Applicant's prescribed impairment was L4/5 disc prolapse, right rotator cuff injury, anxiety/depression and high frequency sensory neural hearing loss;
c)overall, the prescribed impairment diminished the Applicant's capacity to undertake the civil employment listed in item (a) by a large degree for the purposes of section 30 of the Act (60% incapacity, Class A); and
d)the Applicant's reclassified percentage of incapacity is to take effect from 24 May 2012.
As the Applicant had been paid at Class A level from 16 January 2012, there was a consequent overpayment from that date to 24 May 2012 – an amount in excess of $7000.
The scope of this review is limited to whether the Applicant's reclassification of impairment should take effect from 24 May 2012 or if there are special circumstances for a different date of effect.
Relevant Legislation
Section 34 Reclassification in respect of incapacity
(1) [Commonwealth Superannuation Corporation] may, from time to time, if it is satisfied that the percentage of incapacity in relation to civil employment of a recipient member in receipt of invalidity pay is such that the classification of the member should be altered, reclassify him in the appropriate classification set out in section 30 according to the percentage of his incapacity in relation to civil employment.
…
(1A) In determining:
(aa) what is the percentage of incapacity in relation to civil employment of a recipient member; or
…
CSC shall have regard to the following matters only:
(a) the vocational, trade and professional skills, qualifications and experience of the recipient member;
(b) the kinds of civil employment which a person with skills, qualifications and experience referred to in paragraph (a) might reasonably undertake;
(c) the degree to which any physical or mental impairment of the recipient member, being a prescribed physical or mental impairment, has or had diminished the capacity of the recipient member to undertake the kinds of civil employment referred to in paragraph (b);
(d) such other matters (if any) as are prescribed for the purposes of this subsection.
(1B)In subsection (1A), prescribed physical or mental impairment, in relation to a recipient member …, means:
(a)a physical or mental impairment of the member that was the cause, or one of the causes, of the invalidity or physical or mental incapacity by reason of which the member was retired, whether or not that impairment changed, for better or worse, since that retirement; or
(b)any other physical or mental impairment of the member causally connected with a physical or mental impairment referred to in paragraph (a).
(2) Where a recipient member is reclassified under this section, CSC shall specify the date from which the reclassification has effect, and, on and after that date, the recipient member shall, for the purposes of this Part, be deemed to be classified under section 30 accordingly.
…
(3) Where CSC reclassifies a recipient member (other than a member to whom section 37 applies) under this section, the date specified by CSC as the date from which the reclassification has effect shall not be a date earlier than the date on which CSC reclassifies the member unless:
(a) the member is reclassified as Class A or, having been classified as Class C is reclassified as Class B; and
(b) CSC is satisfied that special circumstances exist that justify an earlier date being so specified. (Emphasis added)
Background
The Applicant served in the Royal Australian Navy from 9 January 1978 to 28 March1989, when he was retired on medical grounds.
On 22 October 1985, he had been exposed to hydrogen sulphide during an incident on HMAS Stalwart, when he helped other casualties who had collapsed. He also sustained a fall and a loss of consciousness.
Following the incident, the Applicant developed physical and psychological symptoms, which led to him being "land based' with the RAN and ultimately a medical retirement in 1989. Soon after his retirement from the RAN Mr Renehan commenced employment with the Marine Services Board, where he worked until he was medically retired in August 2011.
CONSIDERATION
Mr Renehan, who is presently unrepresented, gave evidence with the assistance of his partner, Ms L Melson, by phone from France where he now lives. The proceedings were interrupted while Ms Melson administered medication to the Applicant for an anxiety attack.
The Applicant’s former solicitor made written submissions by way of a Statement of Facts and Contentions (‘the submissions’), and these are addressed below. The submissions acknowledge that the issue for the Tribunal is whether there are special circumstances to commence the re-classification at an earlier date.
In summary, the submission on behalf of Mr Renehan was that there are special circumstances for his Class A pension to be paid from a date to at least when he permanently retired from the work place on 12 September 2011, if not earlier, being the time leading up to and following the need for spinal surgery for his retiring impairment. In his evidence the Applicant said he sought back-dating to 2008 when he had spinal surgery.
It was submitted that the term "special circumstances” in s.34(3) of the Act should be interpreted in the context of the Act being 'beneficial legislation'.
The Applicant correctly, identified that in order to establish whether special circumstances existed, consideration should be given to:
a)whether the circumstances under consideration are unusual, uncommon or exceptional; or
b)whether an aggregation of factors exist which, if considered separately, would not be of sufficient significance to constitute special circumstances or amount to special circumstances.
Failure to provide reasons
Mr Renehan’s solicitor was critical of the Respondent for failing to provide any reason as to why it did not exercise its discretion and determine that the Applicant's impairment have an earlier date of effect. The Respondent referred me to paragraphs 9.1 to 9.6 of the Panel's reasons in which special circumstances were discussed. Whether or not adequate reasons were provided does not assist me in consideration of the exercise of the discretion.
Obligation to inform the Applicant of his entitlement to apply for reclassification
One of the Applicant's contentions was that he did not apply for reclassification under s.34(1) of the Act prior to December 2011 because he did not know that he was entitled to do so.
The Applicant’s submissions criticised the Respondent, contending that insufficient information was provided to DFRDB Class B recipients, that if their medical circumstances were to change, to ensure they request an increase in their Class B pension in order to receive a back payment to that date (or earlier), subject to 'special circumstances’. In this regard, I note that on 24 August 2011 the Respondent informed Mr Renehan that he could request a review of his invalidity classification at any time while he is less than 55 years of age.
The Applicant also submitted, in effect, that it was also incumbent on the Respondent to advise DFRDB recipients of the 'special circumstances’ criteria in order to seek an increase of the Class A pension to a date with an earlier effect. There is no obligation on the Respondent to do so. I do not accept that the information provided was misleading. From his evidence Mr Renehan had received assistance from the Vietnam Veterans’ Counselling Service (the VVCS) for some time and may have had the services of counsel and then the solicitor for some time also. I note that the Applicant was represented, and that it was his solicitor who made the Application on his behalf.
In the absence of a specific obligation under the Act to do so, the Respondent further contended that it would be inappropriate for such a duty to be indirectly imposed on the Respondent through the Tribunal's interpretation of the 'special circumstances' discretion in s.34(3) of the Act: Re Scrivener and Secretary, Department of Social Security (1986) 10 ALN 67 (‘Scrivener’), at [15].
In support of his contention, the Applicant referred in his submissions to Meaney v Defence Force Retirement and Death Benefits Authority [1993] AATA 210 (‘Meaney’). In that decision, the Tribunal relevantly records that “the weight of authority clearly establishes that mere ignorance of the law will not constitute 'special circumstances’”: at [15]. This would tend to demonstrate precisely the opposite to what the Applicant was asserting.
The Respondent also referred me to Scrivener above where the Tribunal said:
An omission to inform will only suffice to found special circumstances when that omission is misleading in its own right... and when it is incumbent upon the party in the circumstances to supply the information.
Obligation to undertake regular reviews of the Applicant
The Applicant contended in his submissions that the Respondent was required to conduct regular reviews of recipient members who have been assessed as suffering from Class B impairments to determine whether a reclassification to Class A under s.34(1) of the Act should occur. There is no obligation to do so and I do not consider the Respondent’s failure to perform regular reviews constitutes 'special circumstances' for the purposes of s.34(3) of the Act.
I also agree that, in the absence of a specific obligation under the Act to do so, it would be inappropriate for such a duty to be indirectly imposed on the Respondent through the Tribunal's interpretation of the 'special circumstances' discretion in s.34(3) of the Act: Re Scrivener and Secretary, Department of Social Security (1986) 10 ALN 67 at [15].
Respondent’s delay in making the decision under review
The Applicant’s submissions observed that his request for review of his Class B pension to Class A was made by letter dated 7 December 2011, but that it had taken the Respondent until May 2012 to make its decision. It was submitted, in effect, that it was unfair that the Respondent could rely on its own delay in order to deny the Applicant an earlier date of effect.
As discussed above, the statutory scheme provides that the date of effect is the date of the determination unless there are special circumstances. At the hearing I discussed with the solicitor for the Respondent that although this was the statutory scheme, it was unlike veterans’ entitlements under the Veterans’ Entitlement Act (1986) and also various social security benefits under the Social Security Act (1991), in both of which the date of effect is, for the most part, linked to the date of application and that the date of decision is irrelevant.
The Respondent’s solicitor submitted that the six month delay in the decision-making process in this matter was not inordinately long and that the time taken for it to make the decision was reasonable in the circumstances, having regard to the 2011 Christmas holiday period, the administrative workload of the Respondent and the need to obtain and consider two independent medical reports for the purposes of considering Mr Renehan’s application. I do not accept that the Respondent can rely on Christmas holidays and its staff being overworked as a reason for not making a more prompt decision.
At the hearing the Respondent’s solicitor referred to the need to have Mr Renehan medically examined and suggested that availability of both the Applicant and the doctors may have occasioned the delay. In that regard I observe that Mr Renehan’s solicitor was not informed of medical appointments until 20 February 2012, some 11 weeks after the date of the application. The appointments were not until mid-April 2012 - another eight weeks. There was no indication that those appointment dates were not met or were postponed at the request of the Applicant.
While this may be standard practice for the Respondent, and in that respect, could probably not, on its own, be regarded as unusual, uncommon or exceptional, it is a factor that I have taken into account in considering if there are, when taken together, 'special circumstances' for the purposes of s.34(3) of the Act.
Ability of the Applicant to apply for reclassification
The Respondent conceded that the extent to which Mr Renehan was prohibited from making an application is a relevant consideration when determining whether 'special circumstances' arise for the purposes of s.34(3) of the Act. However, the Respondent contends that the Applicant was free and able to make an application for reclassification at an earlier time but did not do so. The Respondent was critical of the Applicant having provided no evidence for his delay in making the application.
Mr Renehan said he had been receiving a DFRDB pension since 1994. When he was having difficulties at work he had wanted a ‘TPI’ (Special Rate) of pension, and had not considered applying for an increase in his DFRDB. It was unclear where his Special Rate application is up to. Mr Renehan said his former solicitor had recommended the application for increase in his DFRDB.
The Applicant had moved to France in November 2012 because the cost of living was less there and he could not afford to live anywhere in Australia. His house here was in a terrible state of disrepair. He had some personal problems in Australia which also led to his re-location. He had problems with his elderly mother and his children, describing his relationship with them as ‘poor’. He was unable to support them either financially or emotionally. They did not understand his problems and expected him to be like a ‘normal’ father. He needed to get away so as to have his own life.
Since being in France he had to seek out an English-speaking psychiatrist, whom he sees weekly. When he had a severe panic attack he telephoned the VVCS, whose counselling he had benefited from over a period of eight years, and was fortunate to receive some urgent long-distance counselling. He continues to be in contact with VVCS counsellors.
Mr Renehan’s evidence about seeking reclassification was difficult to follow. In that regard I note that he is heavily medicated: Lovan (an anti-depressant) three times daily and Lyrica (for nerve pain) daily. He has taken those, in increasing doses for about 10 years. He also, in the course of the hearing took Prazepam, a fast-acting medication for panic attacks, which he has been recently prescribed. One feature of his condition is his inability to concentrate.
The medical evidence, discussed in more detail below, suggested to me that the Applicant was somewhat unable to manage his affairs for a period. I take this into account as a factor in considering his circumstances, but do not place great weight on this, as there was no direct evidence of incompetence to seek advice or to lodge an application himself.
Medical evidence of increased severity of conditions
The Respondent was also criticised in the Applicant’s submissions for ‘penalising’ the Applicant in circumstances where there was substantial medical and other evidence as to the degree of his retirement impairment to justify a Class A reclassification. It was submitted that the medical evidence commissioned by the Respondent clearly indicated that Mr Renehan was entitled to the Class A pension with an earlier date of effect taking into account the difficulties he was experiencing both due to his psychiatric and physical injuries that were part of the retiring impairment.
The Applicant referred to the report of Dr Inglis Howe Synnott, consultant psychiatrist, dated 23 April 2012, who had examined Mr Renehan at the request of the Respondent. Dr Synnott wrote that the Applicant had "not actually worked" for the Maritime Services Board for eighteen months as he "went off work to have an operation on his back in late 2009/early 2010 and did not return to work after that". Dr Synnott referred to the Applicant’s psychiatric assessment by Dr G Gibney in September 1994 that following his experiences in HMAS Stalwart he had at that stage, symptoms of anxiety and mild depression. Even at that time, his work capacity was said to be reduced by 10-30%. Dr Synnott considered the Applicant to have a “loss of psychological resistance”. The Applicant’s treating psychiatrist, Dr Graham Altman, wrote on 15 September 2011 that he was permanently unfit to work.
The solicitor for the Respondent noted that there was a diagnosis of post-traumatic stress disorder as well as anxiety/depression by Dr Stephen Kenny, a GP, in his letter of 12 September 2011. Dr Kenny is not a psychiatrist, and there was no psychiatric evidence diagnosing that condition, which would otherwise be unrelated to his retiring condition: s.34(1B)(a).
Mr Renehan also referred to the reports from his treating neurosurgeon, Dr Marc Coughlan, especially the report dated 28 September 2011, which clearly indicates the nature and extent of surgery undertaken and that the Applicant required periods of time off work following spinal surgery on two occasions:
"Given his ongoing issues I feel that it is reasonable that he be certified to have total and permanent incapacity to do his current job as a marine engineer. I have discussed this with Michael and would support him in his endeavours to seek retirement on medical grounds, and given his significant ongoing chronic issues with his lumbar and cervical spine, this appears reasonable. His work as a marine engineer involves protracted periods of working in a hunched-over position in small spaces and this is no longer viable. "
Extracts from the Applicant’s service file includes evidence dating back to 2007 that the Applicant was having difficulties with his lumbar spine. Dr Kenny recorded in November 2007, for example, that he was ‘barely coping’. There were notes of multiple days off work and frequent attendances at the doctor’s surgery because of his lumbar spine. Further, the Applicant referred to the report of Dr Coughlan dated 24 April 2009 in which the doctor mentioned the Applicant’s concerns with respect to his back given the nature of his pre-injury duties:
"Michael is concerned given the nature of his pre-injury duties as this involved physically demanding work on boats and he is not confident that he can return to that type of activity."
It was submitted that the overall medical evidence should be considered as well as Mr Renehan’s employment history, and consideration should be given to when he would have developed a significant impairment to have undertaken employment in the physical and/or mental tasks associated with the duties of the employment that he was capable of undertaking.
It was also submitted that Mr Renehan has struggled for a number of years to undertake any employment, had required spinal surgery and was totally incapacitated for a period in excess of 18 months. His working life ended prematurely on 12 September 2011 as evidenced by the letter of that date by his GP, Mr Kenny. This was also the view of his treating neurosurgeon Dr Coughlin and his long-standing psychiatrist Dr Altman.
I consider that the medical evidence which was available to the Panel clearly demonstrated that Mr Renehan’s condition had been poor for some time before the date of his application.
It is true, as the Respondent pointed out, that the date on which a recipient member first experienced symptoms of a higher level of impairment is not a mandatory consideration for the exercise of statutory discretion under s.34 of the Act. I do not think this is helpful because it does nothing more than state the obvious, and does not address the Applicant’s contention that his level of disability well-preceded the date of his application for increase.
The Respondent also contended that in all cases where recipient members are reclassified from Class B to Class A impairment under s.34(1) of the Act, the recipient has reached the higher level of impairment prior to the date of the decision in order that they are able to be reclassified. Therefore, it was contended, there is nothing unusual, uncommon or exceptional that the Applicant's symptoms of his higher level of impairment arose prior to the date of decision. While on its face, the Respondent’s submission is quite correct, but again, I think this misses the point of the Applicant’s argument. The Respondent’s position does not take into account that the medical evidence indicates, in this matter, Mr Renehan’s long-standing impairment at the higher level.
The Respondent relied on the proposition expressed in Bygrave and Secretary, Department of Social Security (No. 2) [1986] AATA 619, that when considering issues of timing, the longer the retrospective period over which the Applicant contends the reclassification should take effect, the more 'weighty' the facts will need to be to give rise to 'special circumstances'. I agree. Mr Renehan, ideally it seemed to me, sought to have his re-classification ‘backdated’ to 2008. Despite the medical evidence to which I have referred above which demonstrates the poor state of his condition at that time, I do not consider that information alone, in the circumstances of the present matter, sufficient to amount to special circumstances such that the re-classification should be backdated that far.
Applicant’s finances
Subsection 34(3) of the Act is analogous to s.1184 of the Social Security Act 1991 which was considered in Groth v Secretary, Department of Social Security [1995] FCA 1708, at [8]. There, Kiefel J held that the relevant statutory provision (which conferred discretion to treat a disability support pension differently in 'special circumstances'), did not confer a discretion on a decision-maker to find that such circumstances existed by reason only of the fact that to do so would be to place the applicant in a more advantageous financial position. I agree. It is clear that in respect of a re-classification decision, and most likely any situation where an applicant seeks the exercise of the discretion, that there is a financial component. In the present case, Mr Renehan’s evidence was certainly to that effect, and I have disregarded his financial situation in consideration of his circumstances.
Conclusion
I have taken into account the whole of the Applicant’s circumstances, insofar as evidence was available to me. I have particularly taken into account the delay experienced by Mr Renehan in having his claim for increase considered by the Respondent, and the abundant medical evidence that his condition was, by the time of his claim, poor, and had been for some time. I also take into account that the Applicant has needed psychiatric care for some time which has affected his concentration, and from the evidence, his planning and self-management skills.
I have therefore come to the view that Mr Renehan’s circumstances, when taken together, are sufficiently unusual, uncommon or exceptional to constitute special circumstances such that it is appropriate that the discretion in s.34(3)(b) of the Act should be exercised to set an earlier date as the date from which the Applicant’s reclassification has effect. While I do not accept that some time in 2008 or 2009 is appropriate as Mr Renehan sought, I find 7 December 2011, the date of application, an appropriate date from which the Applicant’s reclassification should have effect.
DECISION
The decision under review is set aside and the decision is substituted that 7 December 2011 as the date from which the Applicant’s reclassification has effect.
I certify that the preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Senior Member.
Signed: .......................................................
Associate
Date: 2 September 2014
Date/s of Hearing 9 July 2014
Date of Decision 2 September 2014
Representative for the Applicant Self-represented
Representative for the Respondent Hamish Nair, Solicitor
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