Re Keith Kingsford Smith v Repatriation Commission [1982] FCA 28 (18 March 1982)

FEDERAL COURT OF AUSTRALIA

Re: KEITH KINGSFORD SMITH
And: REPATRIATION COMMISSION
No. G.18 of 1981
Repatriation

COURT

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Davies, J

CATCHWORDS

repatriation _ 65 year old grazier _ severe disabilities _ in partnership with sons running property _ giving unpaid advice etc _ whether capable of earning more than negligible wage _ relevance of partnership profits

Repatriation Act 1920 s 107VH(2)(B), Schedules 1 and 2

HEARING

CANBERRA
18:3:1982

ORDER

THE COURT ORDERS 1. that the decision under appeal be set aside and the matter remitted to the Tribunal for re-hearing;

2. that the respondent pay the appellant's costs of the appeal.

DECISION

This is an appeal from a decision of the Repatriation Review Tribunal made on 19 March 1981 affirming a decision of a Repatriation Board which assessed the appellant's rate of pension at the Intermediate rate (paragraph 6 Schedule 1, Repatriation Act 1920), plus a Fifth Schedule benefit, the assessment to have effect from 10 July 1979.

The appellant had a war-related incapacity resulting from a corneal nebula left eye, paranasal sinusitis, mixed deafness with vertigo, nervous dyspepsia, severe lumbo-sacral spondylosis and a deflected nasal septum. Evidence was given to the Tribunal by the appellant that for many years he had been a grazier and that when, in 1974, his health deteriorated, he formed a partnership with his two sons who then came home to the property and have since worked it. The appellant said that he owned the land but the partnership owned the stock and chattels. He said that he was not able to do physical work but still advised his sons and attended to correspondence and the payment of bills. He said that no amount was paid to him by the partnership for the work he contributed to it. He said that he did not get a share of the net profits of the partnership, that he did not pay income tax and had not done so since 1974. He said he was not getting any income from the partnership. He said,

'I'm not getting a scrap from personal exertion, and just put it on record, the boys get paid for their labour, and then the profits, if any, of the partnership is left in the partnership to run it. That's the thing in a nutshell, and I don't think I should be forced to divulge what the profits of the partnership are.'

The Tribunal did not have before it the partnership agreement or any details of the partnership and did not have any partnership accounts. In response to a questionnaire, the appellant said on 2 May 1980 that his earnings were his war pension and 'Free house, Electric light, phone & Petrol'.

The Intermediate rate provided by paragraph 6 of Schedule 1 is for the circumstance, 'Where the incapacity of a member of the Forces is such that he is unable to earn a living wage by reason that he is unable to engage in a remunerative occupation except on a part-time basis or intermittently'. Schedule 5 provides an additional amount in relation to loss of vision. The Tribunal considered that the appellant was entitled to the Intermediate rate plus an additional amount for the loss of vision in one eye. The appellant had sought the Schedule 2 TPI rate, the rate applicable to a person who is totally and permanently incapacitated for life to such an extent as to be precluded from earning other than a negligible percentage of a living wage. The Tribunal found as facts :

'The Applicant now suffers a great deal of incapacity from his accepted disabilities and in particular from his lack of sight in one eye, considerable loss of hearing and the gross spondylosis in his lumbar spine and that these disabilities severely limit his working capacity.

The Applicant still contributes to the running of his property by providing advice and counselling to his sons, acting in a supervisory capacity, undertaking correspondence work and having financial control.

This activity constitutes work on a part time basis or intermittently and demonstrates the capacity to earn a living wage on that basis.'

The Tribunal then held,

'From the above facts the Tribunal is satisfied beyond reasonable doubt that the Applicant is not precluded by his service related disabilities from earning other than a negligible percentage of a living wage and that the appropriate rate of pension in this case is the Intermediate Rate plus the additional amount payable under the Fifth Schedule for the loss of vision in one eye.'

A difficulty with the Tribunal's approach to the problem before it is that the Tribunal seems to have considered that it could take a purely theoretical view of the appellant's disabilities and that it was not necessary for the Tribunal to ascertain what were the real facts of his ability to earn remuneration. After the above remarks which I have set out, the Tribunal said,

'The Tribunal desires to record that in its consideration of the whole of the evidence due cognizance was taken of the Applicant's statement that he does not receive any income from personal exertion and also the letter submitted by him from the Commonwealth Employment Office concerning his employability, or rather his unemployability. As to the former, the fact that the Applicant chooses to contribute to the running of the property, in the manner described above, without payment does not alter the fact that he has the capacity to do this work. As to the matters contained in the Commonwealth Employment Office letter it may well be that, due to his age and the depressed state of the Labour Market, as well as other factors including the state of his health and the location of his place of residence the Applicant could not be placed in a job by the Commonwealth Employment Service. It does not follow however from that evidence that the extent of incapacity from his service related disabilities is such that he is unable to earn more than a negligible percentage of a living wage.'

The Tribunal was dealing with a person who, at the time of the hearing, was 65 years of age, was resident on a grazing property and had physical disabilities such that, on his evidence, he could not undertake physical labour. Although it did not necessarily follow that, because the Commonwealth Employment Service had the view that it could not place the appellant in a job, he was therefore incapacitated from earning other than a negligible percentage of a living wage, yet the Tribunal never appears to have investigated the factual question of what capacity the appellant had to earn. The Tribunal said that '...due cognizance was taken of the Applicant's statement that he does not receive any income from personal exertion...', yet it appears to have concluded that he was capable of doing so in some way. The Tribunal concluded that the appellant's activity on the grazing property '...constitutes work on a part-time basis or intermittently and demonstrates the capacity to earn a living wage on that basis...'. But the Tribunal did not insist that it have before it adequate details of the partnership agreement, nor did it have before it any evidence that the partnership or the sons would have been prepared to pay the appellant for the work that he did. It is one thing to find that the appellant did some work on the property by way of giving advice and attending to correspondence. It is another thing to conclude beyond reasonable doubt that he could have earned an income from doing so. That conclusion is inconsistent with the tenor of the appellant's evidence to the Tribunal. Moreover, the Tribunal seems to have taken into account the possibility that the appellant could have earned an income by working elsewhere than on the grazing property. The Commonwealth Employment Office had reported, inter alia, '...no competent employment officer would send him to any job'. After referring to this evidence, the Tribunal said,

'It does not follow however from that evidence that the extent of incapacity from his service related disabilities is such that he is unable to earn more than a negligible percentage of a living wage.'

Of course, it did not necessarily follow from the Commonwealth Employment Office evidence that that was the position. But if the Tribunal had in mind that the appellant was able to earn an income elsewhere than on the grazing property, it was at least incumbent upon it to discuss what form of employment the appellant might have obtained. There is no discussion of this in the Tribunal's reasons.

The problem lies, I think, in the Tribunal's approach to the matter which perhaps reflected the approach of the departmental medical officer whose report of 23 June 1980 is set out in the Tribunal's reasons as follows :

'As a composite assessment, this veteran would still be suitable for very light or semi-sedentary type work not requiring good hearing or acute eyesight and a one hundred per cent composite assessment is recommended. He is not Intermediate Rate or Totally and Permanently Incapacitated. In view of age and previous occupation as a grazier, I would regard him as Permanently Unemployable where he resides at the present time.'

It will be seen that the departmental medical officer regarded the appellant as permanently unemployable where he resided yet, without discussing whether or not the appellant might move his place of residence, nevertheless concluded that the appellant's incapacity did not justify either the Intermediate rate or the TPI rate.

The necessity to look at the particular circumstances of the claimant was emphasised by Bowen, CJ, Deane and Lockhart JJ, in Repatriation Commission v Bowman (delivered 25 November 1981, not yet reported). That case was an appeal from a judgment of Ellicott J and counsel for the Repatriation Commission put the view that a hypothetical approach was to be taken to the application of the Intermediate and TPI tests. Their Honours said,

'The main challenge to his Honour's judgment concerned his interpretation of paragraphs 3 and 6 of Schedule 1 and the first paragraph of Schedule 2 and the application of these to the facts. His Honour said :

'In my opinion therefore, the Tribunal is bound in law in applying those provisions to take into account the effect of an applicant's physical or mental disability on his or her capacity to earn remuneration by employment or otherwise in any market reasonably accessible to the applicant. It is not enough simply to form a view that an applicant in a physical sense can still undertake work despite war related injuries. The incapacity so arising may well have destroyed or impaired his or her earning capacity in the market place. It is from such circumstances that the relevant provisions are designed to protect the applicant. Needless to say, in applying them, regard must be had to the specific tests contained in them.'

.....

The proper interpretation and application of the words of Schedules 1 and 2 was at the heart of the present litigation. It was argued that the interpretation and application adopted by Ellicott J required an examination of the labour market as it applied to the applicant with his disabilities, viewed in isolation. Counsel for the Commission did not contend that it was proper to disregard the labour market and in this respect he could not support the course taken by the Tribunal. However, he submitted the proper test to be applied was a comparison in the labour market of the applicant with another person of the same age, sex, background and abilities, without the war related disability. If neither could find employment, the applicant's inability to earn a living wage could not be attributed to his disability. Only if the hypothetical man without the disability could find employment while the applicant could not, would the test be satisfied. This test was modelled on the test applied in the United Kingdom to assess the degree of disablement due to war service. It was prescribed by Royal Warrant dated 24 May 1949 (Cmd 7699 Article 10(1)). It is now found in Statutory Instrument 1978 No.1525.

.....

We find ourselves in agreement with the orders of Ellicott J and with the reasons which he gave for them. His conclusion that the Tribunal had failed to consider Mr. Bowman's capacity to earn remuneration by employment by finding work for which it was said he was fit, was not really challenged before us. Even if the test of comparing the capacity to earn of a hypothetical man with the capacity of Mr. Bowman were the correct test, the Tribunal has simply not entered upon any such enquiry.

.....

The Schedules and his Honour's judgment are concerned with the proper way to assess the extent of an applicant's war related disability by reference to his ability to earn. It is fundamental to such an enquiry that any inability to earn should be due to the war related disability. If the circumstances proved in a particular case showed that the applicant could not earn even if he were not suffering from the war related disability, then his claim for the particular pension would fail. We are reluctant to let loose another hypothetical man in the corridors of judicial administration."

I think that the present is a similar case. The Tribunal simply did not enter upon a consideration of the appellant's actual capacity to earn remuneration by employment. It appears to have looked theoretically at the appellant's war-related disabilities and to the question whether a hypothetical person with those disabilities could earn income. But the question was not what a hypothetical person would have been able to do, the question was what capacity the appellant had to earn in the light of his war-related incapacity. If, having regard to this incapacity, the appellant was unable to earn a living wage by reason that he was unable to engage in a remunerative occupation except on a part-time basis or intermittently, he was entitled to the Intermediate rate. If he was incapacitated for life to such an extent as to be precluded from any other than a negligible percentage of a living wage, he was entitled to the TPI rate. The issue was to be determined in relation to a person who was a grazier in his middle sixties, who lived on a property some distance from Warwick and who had quite severe physical disabilities. If there was remunerative work of a type which the appellant reasonably could obtain, then it was proper to identify what type of work that was and to investigate whether the appellant physically could do the work and whether he would be paid to do it. If the appellant could not obtain remunerative employment, it was proper to consider whether this was due to his war-related disabilities or to some other cause, such as age.

In the course of his argument, Mr. J.G. Crowley, of counsel, who appeared for the respondent, submitted that the TPI test 'must be consistently construed' and that 'It is a theoretical test' and, speaking of the appellant, 'Theoretically, that man is able to earn'. However, Bowman's case has emphasised that the test looks to the effect which the war-related incapacity has upon the particular ex-serviceman.

In my opinion, the proper enquiries were not made and the decision of the Tribunal must therefore be set aside.

I do not wish, however, to give any indication as to what the result of a re-hearing should be. Further evidence as to the appellant's capacity to engage in remunerative employment may be given. Moreover, on the present evidence, the appellant is one of a partnership which carries on a grazing business. He contributes to that business in his own way and his entitlement to profits may be income from personal exertion. It would be relevant for the Tribunal to enquire what the profits of the partnership were, what was the entitlement to profits, what were the terms of the partnership agreement and whether the appellant's entitlement, if any, to profits was referable solely to his ownership of the land on which the partnership carried on business or his proprietary interest in the partnership or whether it was referable in part to his personal exertion. Due to the appellant's insistence that many of these matters were irrelevant, the Tribunal was left without information which was relevant to its enquiry. The Tribunal may or may not have information on these matters when the claim has been re-heard. As to the significance of the appellant's age and place of residence, I make no comment. It is premature to do so. The Tribunal did not turn its decision upon them.

In the course of his argument, Mr. Crowley referred to s.107VH(2)(b) of the Repatriation Act and to the expression therein 'satisfied beyond reasonable doubt'. He submitted,

'...that the words 'beyond reasonable doubt' add almost nothing in the context of that matter. It is submitted that really if the tribunal is satisfied that that is their decision, then it is submitted that they are satisfied beyond reasonable doubt.'

On this point, I need say nothing more than that the expression 'satisfied beyond reasonable doubt' is a well understood expression which has a meaning and effect quite different from 'satisfied' or 'satisfied on the balance of probabilities' (see Repatriation Commission v Law [1981] HCA 57; (1981) 55 ALJR 694).

For the above reasons, the order of the Court will be that the decision under appeal be set aside and the matter remitted to the Tribunal for re-hearing. The respondent should pay the appellant's costs of the appeal.