Pepper and Repatriation Commission (Veterans’ entitlements)

[2016] AATA 652

Pepper and Repatriation Commission (Veterans’ entitlements) [2016] AATA 652 (30 August 2016)

Division	VETERANS' APPEALS DIVISION
File Number	2015/3569
Re	Nigel Pepper
APPLICANT
And	Repatriation Commission
RESPONDENT

DECISION

Tribunal	Senior Member J F Toohey
Date	30 August 2016
Place	Sydney

The Tribunal affirms the decision under review.

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

Senior Member J F Toohey

CATCHWORDS

VETERANS ENTITLEMENT – special rate – intermediate rate – whether veteran incapable of undertaking remunerative work for eight or more hours per week – whether veteran incapable of undertaking part-time or intermittent remunerative work – whether veteran prevented by accepted disabilities alone from continuing in remunerative work – whether veteran ceased to engage in remunerative work for reasons other than his accepted conditions – decision under review affirmed

LEGISLATION

Veterans’ Entitlements Act 1986 ss 19, 23, 24, 28, 120

Military Rehabilitation and Compensation Act 2004

CASES

Chambers v Repatriation Commission [1995] 55 FCR 9

REASONS FOR DECISION

Senior Member J F Toohey

30 August 2016

Background

1. Mr Nigel Pepper served in the Royal Australian Navy from 2 April 1979 until he was medically discharged on 17 June 2014.  He receives a disability pension at 100 per cent of the General rate.  He seeks review of a decision by the Veterans’ Review Board (the Board) on 12 June 2015 that he does not qualify for the Special or Intermediate rate of pension.

2. Mr Pepper suffers from multiple disabilities which the Repatriation Commission (the Commission) has accepted are related to his service for the purposes of the Veterans’ Entitlements Act 1986 (the VE Act). They include lumbar and cervical spondylosis, bilateral sensorineural hearing loss, bilateral chondromalacia patellae with patello-femoral subluxation, spiral fracture of the mid shaft of left fourth metacarpal, and bilateral lateral epicondylitis.

3. Mr Pepper also suffers from patello-femoral osteoarthritis of both knees which has been accepted for the purposes of compensation under the Military Rehabilitation and Compensation Act 2004 but not for the purposes of the VE Act. He suffers from several other disabilities which are not accepted as related to his service.

4. According to the doctors who gave evidence, the aetiology and symptoms of Mr Pepper’s knee condition are virtually indistinguishable, making it difficult to know the extent to which either or both affect his capacity for work, if at all.  The fact that one is not an accepted disability was a relevant consideration in the Board’s determination.  In the reasons that follow, I find that Mr Pepper’s claim must fail for reasons different from those of the Board.

   Legislation

5. The legislation concerning the Special and Intermediate rates of pension is in sections 24 and 23, respectively, of the VE Act.

   Special rate

6. To qualify for the Special rate, Mr Pepper must satisfy the criteria in subsection 24(1) of the VE Act. They include that he be under 65 at the time of his claim and the degree of his war-caused incapacity be at least 70 per cent. Neither of these is in dispute.

7. Subsection 24(1)(b) requires that Mr Pepper be totally and permanently incapacitated, meaning that his war-caused incapacity, of itself alone, renders him incapable of undertaking remunerative work for periods aggregating more than eight hours per week.

8. In determining whether subsection 24(1)(b) is satisfied, the only factors that may be taken into account are: Mr Pepper’s vocational, trade and professional skills, qualifications and experience; the kinds of remunerative work which a person with those skills, qualifications and experience might reasonably undertake; and the degree to which the impairment resulting from his or her disability has reduced his capacity to undertake that kind of remunerative work: s 28.

9. Subsection 24(1)(c) requires that Mr Pepper be, by reason of war-caused incapacity alone, prevented from continuing to undertake remunerative work that he was undertaking, and be suffering a loss of salary or wages, or of earnings on his own account, that he would not be suffering were it not for that incapacity.

10. Mr Pepper will not meet subsection 24(1)(c) if he ceased to engage in remunerative work for reasons other than the war-caused incapacity, or is incapacitated or prevented from engaging in remunerative work for some other reason: subsection 24(2)(a).

11. By subsection 24(2)(b), sometimes described as an “ameliorating provision”, Mr Pepper will be taken to be prevented from continuing to undertake the remunerative work that he was undertaking if:

    (i)he has been genuinely seeking to engage in remunerative work;

    (ii)he would, but for his war-caused incapacity, be continuing so to seek to engage in remunerative work; and

    (iii)that incapacity is the substantial cause of his inability to obtain remunerative work in which to engage.

    Intermediate rate

12. To qualify for the Intermediate rate, Mr Pepper must satisfy the criteria in subsection 23(1).  Essentially, the legislative requirements mirror the criteria for the Special rate, the main difference being the extent of the incapacity. 

13. To qualify for the Intermediate rate, a veteran must be rendered incapable of undertaking remunerative work other than on a part-time or intermittent basis: subsection 23(1)(b).  A veteran who undertakes, or is capable of undertaking, work of a particular kind for 50 per cent of the time ordinarily worked by persons engaged in work of that kind on a full-time basis, or for 20 hours or more per week, shall not be taken to satisfy this requirement: subsection 23(2)(a) and (b).

    The standard of proof and the assessment period

14. The standard of proof is to the reasonable satisfaction of the Tribunal: s 120(4).  The rate of pension is to be determined during the “assessment period” which means the period starting on the application day, in this case 27 June 2014, and ending when the claim or application is determined: s 19.

    The issues

15. The Commission contends that Mr Pepper does not qualify for either rate of pension during the assessment period.  The issues for determination are:

    (i)whether Mr Pepper’s incapacity from his accepted disabilities of itself alone renders him incapable of undertaking remunerative work for the period necessary to qualify for either rate of pension;

    (ii)whether his accepted disabilities alone prevent him from continuing to undertake the remunerative work he was undertaking and whether he is thereby suffering a loss of income that he would not otherwise be suffering; and

    (iii)if the answer to (ii) is answered in the negative, whether the ameliorating provision applies so that he should be treated as having been prevented from continuing in remunerative work.

    Mr Pepper’s service and employment history

16. After completing high school, Mr Pepper undertook two years of a law degree before deciding that he wanted to do other things, including travelling.  In April 1979, when he was twenty-four, he joined the Royal Australian Navy.   He trained as an underwater clearance diver and served in that capacity throughout his service career.

17. Approximately 18 months before his discharge in June 2014, Mr Pepper was found medically unfit for diving on account of various conditions including lumbar and cervical spondylosis, and hearing loss.  He continued to serve as a clearance diver but, for approximately the last two years of his service, he was restricted to administrative duties.  He spent three months in Darwin in a senior human resource management role, and the remainder of his time until his discharge in medical administration and related roles in Sydney. 

18. In the period leading up to his discharge, Mr Pepper was seeing his doctors regularly for his back and neck conditions, and he was suffering the effects of his hearing loss, osteoarthritis in his shoulders, and Dupuytren’s disease in both hands.  He had trouble staying at work because of his back and neck pain, and often had to lie down at work.  He also had problems taking telephone calls because of his hearing.  Fortunately, his superior was sympathetic and allowed him the flexibility to work from home when necessary.

19. In June 2014, Mr Pepper turned 60, at which age he was required to retire.  He gave evidence, which is not in dispute, that, if medically cleared, he could have transferred to the Navy reserves.  He was unable to, however, because he lacked the necessary medical clearance.

20. Approximately 18 months before his discharge, Mr Pepper discussed his transition to civilian life with an occupational rehabilitation consultant.  A copy of the consultant’s Case Review Report from September 2013 is before the Tribunal.  She considered that Mr Pepper’s experience and skills made him suitable for office work in workplace health and safety, and training.  As part of his transition to civilian life, Mr Pepper was entitled to assistance with retraining if undertaken within twelve months of his discharge and he obtained approval to undertake vocational courses aimed at improving his chances of finding employment. 

21. Mr Pepper gave evidence that, at a function to farewell him, two service people approached him with offers of work but his medical clearance meant he had to turn them down. 

22. Mr Pepper gave evidence that he had approximately three months leave owing to him when he was discharged and he “took a break for rest and recreation to ease the transition” from military to civilian life.  In October or November 2014, he commenced vocational education and training courses.  In March 2015 he obtained a Certificate IV in Work Health and Safety.  He commenced a second Certificate IV in Training and Assessment, in April 2015 which he completed in June or July 2015.  In February and March 2016 he undertook a first aid courses.

23. I accept Mr Pepper’s evidence that, in the six month or so after completing the second course, he had a number of medical matters to attend to, and he and his wife took two short overseas holidays.  In January 2016, he started looking for work in earnest.  His applications for employment are considered below.

    Does Mr Pepper’s incapacity from his accepted conditions alone render him incapable of undertaking remunerative work for the relevant hours per week?

24. The Board, in its decision, was reasonably satisfied that Mr Pepper is totally and permanently incapacitated by his accepted disabilities alone and so satisfies subsection 24(1)(b). (It decided, however, that Mr Pepper did not satisfy subsection 24(1)(c) and so his claim failed). In these proceedings, the Commission contends that Mr Pepper does not satisfy subsections 24(1)(b) or 23(1)(b).

25. In the last two years or so of his service, Mr Pepper was engaged full-time in sedentary, office-based work of a managerial and administrative nature.   He was given considerable latitude in being able to take breaks when he needed to, and to work from home.

26. According to a medical report completed on 15 May 2013 by Mr Pepper’s medical officer, Lieutenant Michael Reid, Mr Pepper was “fit for sedentary office-based duties in a barracks environment only”.  As I understand the report, Lieutenant Reid did not suggest that Mr Pepper could not undertake those duties in any external environment; rather that, in the context of the Navy environment, barracks were the only suitable environment.  Mr Pepper gave evidence that he and Lieutenant Reid had not actually discussed the report and he was not able to comment on it.

27. The report of the rehabilitation consultant dated 24 October 2013 shows that Mr Pepper was completing suitable duties, as his capacity allowed.

    Medical evidence

28. Dr Thomas Rosenthal and Dr Robin Chase, both occupational physicians, saw Mr Pepper for assessment on 8 March 2016 and 25 November 2015 respectively.  They provided written reports and gave oral evidence before the Tribunal.  They formed different views of the effects of Mr Pepper’s disabilities on his capacity for work. 

29. Dr Rosenthal recorded that Mr Pepper’s back condition had slowly deteriorated over the years and he was now in constant pain; walking and sitting was restricted and he needed to lie down regularly throughout the day to ease the pain.  He recorded that Mr Pepper generally needed a stick to get around because of his back condition and had trouble getting out of a chair; he could walk for 200 to 400 metres but generally takes a stick with him; he needed analgesics for his neck and back every day. 

30. Dr Rosenthal noted a significant reduction of movement in Mr Pepper’s back, neck, and both shoulders, and a significant reduction in his grip strength.  He noted that Mr Pepper had two separate knee conditions but he (Mr Pepper) could not separate the symptoms of each.  He concluded that, taking into account his accepted disabilities, Mr Pepper was precluded from working more than eight hours a week, including in clerical and administrative positions, on account of his accepted disabilities alone.

31. Giving evidence, Dr Rosenthal did not dispute Lieutenant Reid’s assessment from the previous year but said he thought Mr Pepper would have had difficulties even then.  He thought Mr Pepper could probably not sustain part-time sedentary work because he would have trouble sitting, but he might be able to do five to ten hours work over a week, or he might be able to do from one to one and a half hours a day at a computer.

32. Dr Rosenthal thought that, if Mr Pepper controlled the pain in his knees with medication, he should be able to perform clerical duties (Dr Chase shared his opinion) but he disagreed with Dr Chase’s opinion that Mr Pepper could perform full-time duties.

33. Dr Chase took a similar history and his findings on clinical examination were also similar, in particular Mr Pepper’s severely restricted range of movement in his back.  He concluded that Mr Pepper’s accepted conditions place “some barrier regarding the type of work he can do” but none on the hours he could work.  He noted that, around the time he was discharged, Mr Pepper was found to be fit to perform clerical or administrative duties and, in his view, that remains the case. 

34. Giving evidence, Dr Chase acknowledged Mr Pepper’s widespread osteoarthritis and restricted movement of his shoulders, back and knees, and he agreed that, in order to work full-time, Mr Pepper would have to be able to move around and would probably need a “sit/stand desk”.  However, taking into account Mr Pepper’s skills and experience in such roles, he saw no reason he could not work full-time.

35. The Commission submits that the large number of applications for full-time positions that Mr Pepper made from January 2016 (see below) indicates that he considered himself able to work full-time.  Mr Pepper gave evidence, which I accept, that he was unsure whether he would be able to maintain full-time hours, but thought he would apply and, if successful, would have to see how he went. 

36. Mr Pepper gave evidence that he did not know if he could work twenty hours a week, and had no idea if he could perform two hours a day; he would have to see how he went and it would depend on the work.  He agreed he had suitable skills and experience for the positions he had applied for but he could not say, without first trying, whether he could actually do any of those jobs.  Whether his confidence was misplaced has not been tested because his 61 applications resulted in only four interviews and no offers of employment.  

37. Section 28 requires a broad view be taken of a veteran’s skills and qualifications.  In Chambers v Repatriation Commission (1995) 55 FCR 9 (Chambers), the Full Court considered the language of s 28. The Court said at 23 that “skills”, “qualifications” and “experience” in s 28 are not confined to those acquired in formal training or by virtue of experience in particular employment, although only those skills, qualifications and experience that can be described as “vocational, trade and professional” in character may be taken into account.

38. The Court observed in Chambers at 23 that “the inquiry with which s 28 is concerned is whether an incapacitated veteran is incapable of undertaking any remunerative activity”. In support of this construction, the Court cited the Second Reading Speech in relation to the 1985 amendments to the Act which noted that the purpose of the special rate of pension was to support severely disabled veterans of a relatively young age who can never go back to work and can never hope to support themselves or their families.

39. It is not in dispute Mr Pepper has considerable clerical and administrative skills, qualifications and experience by reason of his long service, in particular in the last two or so years before his discharge, and because of the Certificate IV training he has undertaken.  He has experience in management, work health and safety, and training.  I am satisfied, in light of his employment history, that he might reasonably be expected to undertake work of that kind.  To the extent that his physical impairment has reduced his capacity for that kind of work, I am not satisfied that it has substantially reduced his capacity.  Whether or not he would in fact obtain such employment is not the test.

40. As to the extent to which Mr Pepper is able to perform that kind of work, the extent of his disabilities and the accommodations that had to be made for him in the time leading up to his discharge, Dr Chase’s assessment that he can work full-time seems optimistic.  It seems doubtful that Mr Pepper can work full-time, even in a sedentary position.

41. That said, I am not satisfied, on the information before me that Mr Pepper’s accepted disabilities alone render him incapable of undertaking remunerative work for periods aggregating eight or more hours per week.  Nor am I satisfied on the information before me that his accepted disabilities render him incapable of working other than on a part-time or intermittent basis for the purposes of the Intermediate rate.  His capacity for work is untested and, given that he was working full-time, albeit with accommodations, up until his discharge, and that others evidently considered he was able to continue working and offered him work, I am not satisfied that he meets either subsections 24(1)(b) or 23(1)(b).

42. Mr Pepper must meet all of the provisions of subsections 24(1) and 23(1) in order to qualify for the Special and Intermediate rates of pension respectively.  It follows that, whether or not he meets the “alone test” in subsections 24(1)(c) or 23(1)(c), his claim must fail.  For completeness, I have considered the “alone test” below.

    Did Mr Pepper cease to engage in remunerative work for reasons other than his incapacity from his accepted conditions?

43. Section 24(2)(a) provides a veteran who is incapacitated shall not be taken to be suffering a loss of salary, wages or earnings by reason of that incapacity if he or she has ceased to engage in remunerative work for reasons other than that incapacity, or is incapacitated, or prevented, from engaging in remunerative work for some other reason.  (Subsection 23(2) is the equivalent provision concerning the Intermediate rate).

44. In a report dated 17 April 2015, Mr Pepper’s general practitioner, Dr Douglas Falconer, reported that, if patello-femoral osteoarthritis of both knees was Mr Pepper’s only condition, it was not severe enough to stop him from working but it was severe enough to change or limit the type of work that he would be capable of performing.

45. On 20 August 2014, Dr Barry Solomons, Local Medical Officer, completed a Medical Report Ability to Work form.  He assigned a rating of 4 to Mr Pepper’s patella-femoral osteoarthritis of both knees which equates to “severe or disabling effect on many functions.”  He concluded that Mr Pepper was “totally unfit for work due to his multiple injuries and disabilities.”

1. Given the evidence that Mr Pepper’s knee conditions – however described – did not prevent him from continuing in the work he was doing, I find that neither played any material part in preventing him from continuing in remunerative work. 

2. The Commission has suggested that Mr Pepper always intended to retire at the compulsory retirement age of 60 but acknowledges that he has made genuine efforts to find employment.  Mr Pepper denies that he always intended to retire at 60.  I accept what he says. I accept that the training he undertook after his discharge and his many applications for work from early 2016 support his claim that he wanted to keep working if he could.  His wife, Tanya Pepper, provided a written statement and gave oral evidence. She said he was very disappointed when he could not become a reservist after his discharge and he did not want to retire; on his last day to people offered him work as a reservist but he was not able to take it on.  I accept her evidence.

3. The occupational rehabilitation report dated 26 June 2013 records that Mr Pepper was “not sure about his future capacity to work, however he had a few ideas and would like to look into the following options: Explosive Audits Disposal, Assistance Life Support Technician or obtain an Environmental Accreditation”.

4. The Commission submits, and I accept, that factors other than Mr Pepper’s accepted disabilities alone have prevented him from continuing in remunerative work.  Despite being well-qualified for the positions he applied for, he had almost no response to his numerous applications.  Whatever the reason, prospective employers have not responded positively.  I find it more probable than not that factors including Mr Pepper’s age and that he had been out of the job market for approximately 18 months before he started applying, are reasons preventing him from continuing in remunerative work.

5. It follows that Mr Pepper does not satisfy s 24(1)(c) or s 23(1)(c) and his claim must fail for this reason as well.

   Conclusion

6. I have a lot of sympathy for Mr Pepper.  He has served for many years and suffers many serious disabilities as a result.  He is well-qualified and wants to work.  Unfortunately, he does not satisfy the strict requirements for the Special or Intermediate rates of pension.

7. For these reasons I affirm the decision under review.

I certify that the preceding 52 (fifty -two) paragraphs are a true copy of the reasons for the decision herein of Senior Member J F Toohey

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

Associate

Dated 30 August 2016

Date of hearing	19 August 2016
Counsel for the Applicant	Mr G Barter
Solicitors for the Applicant	KCI Lawyers
Solicitors for the Respondent	Mr K Rudge, Repatriation Commission