Stewart and Repatriation Commission - [2000] AATA 372

DECISION AND REASONS FOR DECISION [2000] AATA 372

ADMINISTRATIVE APPEALS TRIBUNAL )

) No V98/712

VETERANS' APPEALS DIVISION       )
           Re      John Allen STEWART and Jennifer Elaine STEWART
  Applicant
           And    REPATRIATION COMMISSION
  Respondent

DECISION

Tribunal Mrs Joan Dwyer, Senior Member

Date15 May 2000
PlaceMelbourne

Decision      The Tribunal affirms the decision under review.
  (Sgnd) Joan Dwyer
  Senior Member
CATCHWORDS
VETERANS' AFFAIRS - invalidity service pension - permanent incapacity for work - veteran in full time employment with benevolent employer - whether question of permanent incapacity is to be determined by actual employment with a benevolent employer or by standard of the market place or labour market - decision affirmed
Veterans' Entitlements Act 1986 S 37(1)(2
Re Panke and Director-General of Social Services (1981) 4 ALD 179

Annas v Director-General of Social Security (1985) 8 ALD 520

Re Cimino and Director-General of Social Services (1982) 4 ALN 63

REASONS FOR DECISION

15 May 2000 Mrs Joan Dwyer, Senior Member

This is an application under s 175(2) of the Veterans' Entitlements Act 1986 ("the Act") for review of a decision of the Repatriation Commission ("the Commission") made 30 January 1998, which cancelled the invalidity service pension paid to Mr Stewart and Mrs Stewart, with effect from 12 February 1998, on the basis that Mr Stewart was employed. That decision was affirmed under s 57B of the Act on 4 March 1998.
Mr R Niall of Counsel appeared for Mr and Mrs Stewart. Mr R Douglass, an advocate with the Department of Veterans' Affairs, appeared for the Commission. The Tribunal had before it the documents ("the T documents") lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 ("the AAT Act") and two reports of Dr Stone which were obtained by agreement between the parties and which the Tribunal received as Tribunal exhibits. Evidence was given by Mr Stewart and by his brother-in-law Mr Hansford, the proprietor of Nulon Products Northern Vic ("Nulon Products"), where Mr Stewart is employed as a sales representative.
There is no factual dispute between the parties. It is agreed on the basis of the medical reports of Dr Stone which are before the Tribunal that medically Mr Stewart satisfies the requirements of s 37(2)(a) of the Act. It is also agreed that since April 1996 Mr Stewart has been in full-time paid employment as a sales representative with Nulon Products. That employment was made available to him by his brother-in-law, Mr Hansford.
The question for determination is whether or not on these facts Mr Stewart is entitled to an invalidity service pension under s 37 of the Act which so far as relevant provides as follows:
37 Eligibility for invalidity service pension
(1)Subject to subsection (6), a person is eligible for an invalidity service pension if the person:
(a)is a veteran; and
(b)has rendered qualifying service; and
(c)is, in the opinion of the Commission, permanently incapacitated for work.
Note 1:For veteran see subsection 5C(1).
Note 2:For qualifying service see section 7A.
(2)For the purposes of this section, a person is taken to be permanently incapacitated for work if:
(a)the degree of the permanent incapacity for work is 85% or more; or
(b)the person is permanently blinded in both eyes.
Mr Stewart has suffered from severe rheumatoid arthritis since 1991. He gave evidence as to the pain and other symptoms he suffers. He listed the medication he takes and explained the effects the condition has had on his mental state, and on his family and financial circumstances.
Dr Stone who is a rehabilitation physician and a specialist in occupational medicine saw Mr Stewart in August 1999. He provided a report dated 27 August 1999. He wrote:
This form of arthritis, rheumatoid arthritis, has a much greater impact upon a person's workability than oesteoarthrosis. This is because of the systemic effects of rheumatoid arthritis, as well as the much more disabling impact of the flareups that occur with rheumatoid arthritis. I have no doubt accepting from Mr Stewart that he is totally disabled for some 4 to 5 weeks per annum. I also agree with his comment that "any other employer would not put up with me". How I am to assess all of this in terms of Service Pension (Incapacity) is not entirely clear to me. However, I believe Mr Stewart is in the situation where he would have great difficulty being able to obtain employment in the open market place because of the ongoing nature of his rheumatoid arthritis, and especially because of the 8 or 9 flareups he has each year. He requires rest in bed with each of these flareups.
In a second report of 21 October 1999 Dr Stone wrote:
I do feel Mr Stewart would find it virtually impossible to work in a full-time capacity, if indeed his present employment can be considered full-time, if he were not able to work for his brother-in-law. Considerable allowances are made for Mr Stewart, including about 5 weeks absence per annum because of flare-ups of the rheumatoid arthritis. It needs to be understood rheumatoid arthritis not only affects the joints involved in the flare-up, but also has a systemic effect. He would experience lethargy, tiredness and general malaise during the periods of flare-up. This would be to an extent which would make it virtually impossible for him to perform any work during that period.
I note Service Pension (Incapacity) requires the degree of permanent incapacity to be 85% or more. I have noted the assessment of incapacity is not a mathematical process, but should be undertaken in qualitative terms. I continue to find it very difficult to be able to state whether Mr Stewart fulfils the criteria for 85% permanent incapacity, though it is my feeling that he probably does. There would be few people who would even try to maintain ongoing substantial employment with the degree of disability faced by Mr Stewart.
Mr Stewart said that he was in a bad way in 1996 when Mr Hansford offered him employment to replace a sales representative who had decided to leave Nulon Products. Mr Stewart said his health had been shocking but he had obtained some improvement by taking a multi vitamin product which had been recommended to him, in addition to the drugs which were prescribed by his doctor.
Mr Stewart said that Mr Hansford told him that a vacancy was coming up for a sales representative with Nulon Products. Mr Hansford thought it would be good for Mr Stewart to do something. He had been at home for three and a half years and was "mentally down". Mr Hansford said that he, as employer, could "work around" the problems due to Mr Stewart's rheumatoid arthritis.
After speaking to his doctor and his wife about the offer, Mr Stewart accepted the offered position. He explained that Mr Hansford had been extremely accommodating. He had changed the vehicle used for deliveries, buying a dearer vehicle because it was more suitable for Mr Stewart. The customers are also very helpful. They themselves carry in any deliveries with which Mr Stewart has difficulty.
Mr Stewart and Mr Hansford estimated that Mr Stewart is off work due to a flare-up of rheumatoid arthritis approximately 20-30 days a year. Mr Stewart and Mr Hansford both explained that when Mr Stewart cannot attend work either Mr Hansford or someone else makes alternative arrangements for his deliveries. Depending on a customer's requirements deliveries are either postponed or dispatched by some other method. Similarly Mr Hansford has allowed Mr Stewart to change the work pattern from that of his predecessor, so that he is usually out on the road only four days a week, and works in the office on the fifth day.
With these accommodations Mr Stewart has apparently succeeded in carrying out the work entrusted to him. He said the employment has helped him psychologically. It has given him "a feeling of self-worth". He also benefits from his social interaction with his customers, with many of whom he is on friendly terms.
Mr Stewart is paid a wage and declares his earnings on his tax return. His statement of financial circumstances (T32) dated 15 April 1998 discloses a gross income of $900.00 per fortnight.
Mr Hansford said that he would not have offered the vacant sales representative position to Mr Stewart, were it not for the family connection. He said he offered the position to Mr Stewart as he thought it was a good opportunity to help him and also to help Mrs Stewart, who is Mr Hansford's sister. He said he knew Mr Stewart would have plenty of limitations and would require an appropriate vehicle. He knew he and other staff would have to cover for Mr Stewart when he had a flare-up.
Mr Hansford said that Mr Stewart has "given it his best shot", and does the deliveries required when he is able to work and "currently maintains a good portion of the work". He said that most of the time Mr Stewart supplies the customers.
On that evidence I find that Mr Stewart is employed full-time by a benevolent employer. The question is whether that precludes him satisfying s 37(1) of the Act. That section requires that Mr Stewart be, in the opinion of the Commission, (or of the Tribunal standing in the shoes of the Commission) "permanently incapacitated for work."
On the medical evidence it is conceded that Mr Stewart at all relevant times has satisfied requirement (a) in s 37(2) of the Act.
Mr Niall and Mr Douglass agreed that the term "permanent incapacity for work" must be interpreted as explained in Re Panke and Director-General of Social Services (1981) 4 ALD 179. Both Mr Niall and Mr Douglass sought support for their contentions in that decision. Mr Niall submitted that Mr Stewart's eligibility for invalidity service pension should depend on whether or not he would be able to attract an employer in the market place. Mr Douglass submitted that the fact that Mr Stewart is employed, albeit by a benevolent employer, means that he is not "permanently incapacitated for work".
The reasons of the Tribunal in Re Panke, in my opinion, support the Commission's contentions. Davies J said at p180:
I would not dispute the term "permanent incapacity for work" in the Social Services Act must be construed having regard to the scope and object of that Act. But, having regard to that scope and object, it appears to me that the Social Services Act is concerned not with compensation for injury or disease but rather with the economic effects of a disabling medical condition.

His Honour quoted with approval the remarks of Lord Loreburn LC in Ball v William Hunt and Sons, Ltd [1912] AC 496 at 499-500:

In the ordinary and popular meaning which we are to attach to the language of this statute I think there is incapacity for work when a man has a physical defect which makes his labour unsaleable in any market reasonably accessible to him, and there is partial incapacity for work when such a defect makes his labour saleable for less than it would otherwise fetch.

Mr Niall relied on a passage in the reason of Davies J where his Honour said that a person is "permanently and totally disabled":
when capacity for earning has gone except for the chance of obtaining special employment of an unusual kind."

His Honour added at p180-181:

It follows that the term "incapacity for work" in the Social Services Act denotes incapacity to engage in remunerative employment, that is to say, a lack of capacity for earning.

At p182 Davies J posed the question:

No doubt there is work which he can do provided he has a sympathetic employer. But is it likely that a sympathetic employer can be found who will remunerate him for the limited type of work which he is physically capable of doing?

Mr Hall (Senior Member) (as he then was) and Dr Glick (Member) at p195 explained that in their opinion the concept of "permanent incapacity for work" required two distinct steps:
. . . —firstly an evaluation in purely medical terms of the person's physical or mental impairment and secondly, the ascertainment of the extent to which that physical or mental impairment affects the person's ability to engage in paid work.

They had earlier explained at p192 that the concept of permanent incapacity for work "necessarily . . . involves the notion of the loss of the capacity to earn a wage."

In my opinion Panke establishes that some residual capacity in a person who is incapacitated for work, but who is unable to attract an employer did not prevent a person being "permanently incapacitated for work" within the meaning of that term in s 23 of the Social Services Act 1947 or in s 37 of the Act. Mr Hall and Dr Glick, in discussing "the odd-lot" principle said at p193:
The principle underlying these so called "odd lot" cases, which was first enunciated by Fletcher Moulton LJ in Cardiff Corporation v Hall, supra, at 1020 is that if an accident had left a workman so injured that "he is incapable of becoming an ordinary workman of average capacity in any well-known branch of the labour market—if in other words the capacities for work left to him fit him only for special uses and do not, so to speak, make his powers of labour a merchantable article in some of the well-known lines of the labour market", it is incumbent on the employer to show that such special employment can in fact be obtained by him. In such a case, as his Lordship pointed out, it is not a question of fluctuations of the labour market at all. It is a question as to the chance of someone being found who can and will avail himself of the special residue of powers which have been left to the workman. What was in fact a case of partial incapacity was treated as total incapacity if the workman was unable to exploit his residual capacity for work in remunerative employment.
In this matter Mr Stewart, due to the assistance of his brother-in-law, has been able to use his residual capacity for work in remunerative employment. It is no longer a question "as to the chance of someone being found who can and will avail himself of the special residue of powers left to [Mr Stewart]." Someone has in fact done so and Mr Stewart has been employed since April 1996. Thus to return to the reasons of Davies J, Mr Stewart's labour, due to him having found a benevolent employer, is no longer "unsaleable in any market reasonably accessible to him." Nor does Mr Stewart's disabling condition since April 1996 cause him to suffer the economic effects of "permanent incapacity for work."
The analysis of the Tribunal in Re Panke was approved by the Full Court of the Federal Court in Annas v Director-General of Social Security (1985) 8 ALD 520 at 524. In a joint judgement Northrop, Morling and Wilcox JJ said at p524:
Panke should be regarded as reflecting a correct understanding of ss 23 and 24 of the Act and of the appropriate process of assessing the degree of incapacity for work. Of course, like any other decision, it must be read in the light of its own facts. There may be cases in which the incapacity is so overwhelming, or so minimal, as to make the two stage process of evaluation unnecessary. But in relation to the many cases, like Panke and like the present case, where the disability is significant — in relation to work capacity — but not totally destructive of any prospect of employment, the approach suggested in that decision ought to be applied.
The Full Court explained the principle behind Panke at pp525-526:
The principle behind the decision in Panke is that developed in the workers compensation cases: if a worker has been left so incapacitated as to be fit only for special duties it is incumbent on the employer to show that such special employment is in fact available to him or her. The principle, formulated for the benefit of injured workers, requires attention to be directed to the circumstances of the particular worker. So, according to Panke, is it in relation to incapacitated applicants for the invalid pension. Attention must be concentrated upon what avenues of work there are for this particular applicant, having regard to his or her particular characteristics. Resources and limitations of intelligence, experience, training, physical capacity and personality must all be taken into account. There is no logical reason to ignore material resources. We therefore reject the submission that, in the present case, the Tribunal was required to leave out of account the possibility that the appellant might find work within his capacity by working in his own business acquired out of funds provided by him or by others on his behalf.

Following that explanation in my opinion, it would be inappropriate for the Tribunal in this matter "to leave out of account" the actuality that Mr Stewart has found work within his capacity due to the family feeling and sympathetic understanding of a benevolent employer.

In Annas the Full Court, at p526, referred to a submission that had been made on behalf of Mr Annas in respect of the decision of the Tribunal in Re Cimino and Director-General of Social Services (1982) 4 ALN 63, where the Tribunal had said:
I do not think it right . . . that the matter should be decided against the standard of a beneficent relation who employs a person to give him work out of sympathy or family loyalty. I have to look at the situation in the market place, that is to say in the labour market.
At first sight that passage could appear to support Mr Niall's argument that permanent incapacity is to be determined in accordance with the situation in the market place or the labour market. However the Full Court, in commenting on the passage relied on in Re Cimino, explained at p526:
We accept the correctness, in its context, of that comment. But we do not understand Mr Todd to have denied the relevance of evidence that a particular relation, whether out of motives of benevolence or otherwise, was prepared to employ the applicant. There was, apparently, no such evidence in that case. The learned senior member merely denied that it was appropriate to determine the matter upon the basis of a theoretical possibility that such work would be available. We think that a similar situation applies in relation to the possibility of finance being provided to enable an applicant to establish his or her own business in which he or she might work. Evidence that such finance is available upon terms indicating the feasibility of the applicant taking advantage of that availability and, upon the probabilities, establishing and successfully maintaining that business must be relevant to the issue of incapacity. In a particular case it may be of critical importance. But a theoretical possibility of finance, or a proved possibility in relation to which essential matters — such as the amount to be provided, the terms of the loan, the cost of establishing the business and the likely profitability of the business — are left unspecified, is not enough.
In this matter the Commission is not relying on a theoretical possibility of employment with a benevolent employer. There is evidence of actual employment. That, in the words of the Full Court, must be relevant to the issue of incapacity and must be of critical importance. It establishes that in spite of the medical evaluation of the degree of Mr Stewart's incapacity for work being 85% or more, he is not in fact permanently incapacitated for work.
The decision under review will be affirmed.
I certify that the 29 preceding paragraphs are a true copy of the reasons for the decision herein of Mrs Joan Dwyer, Senior Member
Signed:         Anne O'Rourke
  Associate
Date/s of Hearing  15 May 2000
Date of Decision  15 May 2000
Counsel for the Applicant        Mr R Niall
Solicitor for the Applicant         Mr B O'Haire
Counsel for the Respondent    Nil
Solicitor for the Respondent    Nil
Departmental Advocate           Mr R Douglass