Re Drakoulis Koutsakis v Director-General of Social Security [1985] FCA 409 (1 November 1985)

FEDERAL COURT OF AUSTRALIA

Re: DRAKOULIS KOUTSAKIS
And: DIRECTOR-GENERAL OF SOCIAL SECURITY
No. G 109 of 1985
Social Security

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Northrop J.
Morling J.
Wilcox J.

CATCHWORDS

Social Security - invalid pension - whether failure to accept treatment amounts to disentitlement - finding that fears are groundless not enough if no finding that the fears are not genuinely held - failure to accept treatment not unreasonable if fears held are genuine.

Social Security Act ss.23, 24, 135M, 135TJ

Administrative Appeals Tribunal Act 1975 ss.43(1), 44(1)

Fazlic v. Milingimbi Community Inc. (1982) 38 A.L.R. 424

Dragojlovic v. Director-General of Social Security (1984) 52 A.L.R. 157

HEARING

SYDNEY
1:11:1985

ORDER

The appeal be allowed.

The judgment appealed from be set aside and in lieu thereof it is ordered that the appeal from the Administrative Appeals Tribunal be allowed, that the Tribunal's decision be set aside and the matter remitted to the Tribunal for hearing and determination according to law after hearing such further evidence it may decide to receive.

The respondent pay the appellant's costs of the appeal from the Tribunal and the appeal to the Full Court.

(Settlement and entry of Orders is dealt with in O.36 of the Rules of Court.)

DECISION

This is an appeal from a decision of a judge of the Court dismissing an appeal brought to the Court pursuant to sub-s.44(1) of the Administrative Appeals Tribunal Act 1975. Such an appeal may be brought only on a question of law.

2. The decision of the Tribunal which was the subject of the appeal was the decision of a Senior Member to affirm a decision made in 1982 by the Director-General of Social Security to cancel an invalid pension which had been granted to the appellant in 1977. Section 24 of the Social Security Act 1947 provides that if a person is otherwise suitably qualified, he is entitled to receive an invalid pension if he is permanently incapacitated for work. Section 23 provides that a person shall be deemed to be permanently incapacitated for work if the degree of his permanent incapacity for work is not less than 85%. The Director-General's decision to cancel the appellant's pension was based upon his opinion that, as at 1982, the appellant was not permanently incapacitated for work. The question which fell to be determined upon the review of the Director-General's decision in the Administrative Appeals Tribunal was whether the Director-General's decision should be affirmed, varied or set aside - vide sub-s.43(1) of the Administrative Appeals Tribunal Act.

3. Much evidence was given before the Senior Member of the Tribunal who heard the application for review. The Tribunal accepted that the appellant was suffering from an anxiety state with depression associated with various other symptoms. It was satisfied that it was established on the probabilities "that for some time Mr Koutsakis' state of anxiety and depression have been and are at present, such as to incapacitate him completely from working either in his own business (such as he had before) or employment of the kind open to him.

4. We take this to be a finding by the Tribunal that it was satisfied that the appellant was incapacitated for work to a degree in excess of 85%. However, the Tribunal was not satisfied that the appellant's incapacity for work was permanent. There was evidence before the Tribunal that treatment was available for the appellant which, if undertaken by him, would be likely to significantly reduce his incapacity for work. Thus in May 1982 Dr Collins expressed the opinion that the appellant's "psychiatric condition is potentially treatable and that therefore he cannot yet be classed as permanently incapacitated to a degree of 85% or more". He also then expressed the opinion that "without adequate psychiatric treatment and/or rehabilitation I think he is quite unemployable. Treatment is available and has been offered to him by a very experienced and competent psychiatrist - with positive motivation on Mr Koutsakis' part he could be helped over a one to two year period. Rehabilitation would also help him, again if he were motivated". There was other evidence, particularly from Dr Giuffrida that it was extremely unlikely that there would be any improvement in the appellant's condition. He expressed the opinion that it was not worth seriously considering occupational rehabilitation for the appellant and he did not advise any further psychological treatment for him. He strongly disagreed with Dr Collins' view that any curative form of psychotherapy was going to produce an improvement in the appellant's condition. He appears to have been firmly of the view that nothing could be done to improve the appellant's ability to work.

5. As we have said, the Tribunal accepted that the appellant was unfit for work on psychiatric grounds but was of the view that his psychiatric condition was potentially treatable. It was for that reason that it came to the view that the appellant could not yet be classed as permanently incapacitated.

6. Apparently the appellant rejects any suggestion that he has psychological problems. He has refused psychiatric counsel, and protests that all his problems are physical. He does not think that psychiatrists can help him. Although in 1982 he saw a psychiatrist to whom he was referred he now declines to accept psychiatric treatment because of the belief which he holds that it would not be of assistance to him.

7. The critical findings in the Tribunal's decision were expressed in the following terms:

"11. I prefer Dr. Collins' views as to the

desirability and probable effectiveness of
psychotherapy
to Mr. Koutsakis' case, supported as they
appear to be by Dr. Gluskie, to the more
pessimistic ones of Dr. Giuffrida. I accept it as
established on the probabilities that there are
numerous psychotherapeutic avenues as well as
rehabilitative procedures open which offer good
prospects of improving the psychological balance of
the applicant and of getting him back to work -
particularly in the self-employed shop role in
which he appeared to do well. And I think it is
shown that these possibilities are such that his
present state of incapacity for employment (over
85%) should not therefore be regarded as permanent
in the sense of indefinitely continuing. On this
basis, I consider the Statutory entitlement to
pension not made out, and that the
Director-General's decision should be affirmed.

12. But further, I consider that the
applicant's fears of undertaking the psychotherapy
regarded as desirable by two psychiatrists, and as
to which he received advice, to be groundless; and
his stated reasons against it which motivated his
refusal, namely that it would do him no good
because his troubles were physically caused and not
in the area of psychiatry, to be unreasonable.
His refusal to undertake such treatment is in my
opinion unreasonable within the test laid down by
the High Court in Fazlic v Milingimbi Community
Inc. (38 ALR 424) for application in Workers'
Compensation cases. That such a concept might
equally apply in the consideration of pension case
has been accepted in previous decisions of this
Tribunal (re Coban V82/40 - 4 ALN 198; re
Ververellis N81/72 of 30 May 1983; re Dragojlovic
V82/48 of 3 August 1983). I would therefore
regard the Director-General's decision herein as
justifiable also under s.135M of the Social
Security Act."

8. As we read the Tribunal's reasons as so expressed, it arrived at two quite separate conclusions. First, in paragraph 11 it concluded that the applicant had not made out his entitlement to a pension and that the decision under review should be affirmed. It arrived at this decision for the reasons expressed in that paragraph. This much appears both from the form of the paragraph and the opening words in the last sentence of it.

9. Secondly, a finding was made in paragraph 12 that the Director-General's decision was justifiable under s.135M of the Social Security Act. It is odd that this section should have been referred to, since no decision had been taken by the Director-General under the section and hence the question of review of a decision under that section did not arise for consideration. The decision to cancel the appellant's pension was taken under s.46 (since repealed but now see s.135TJ) of the Act.

10. We turn now to consider the finding in paragraph 11. Upon its face it is a finding that there are numerous psychotherapeutic avenues and rehabilitative procedures "open" which offer good prospects of getting the appellant back to work. There is a further finding that these avenues and procedures are such that the appellant's existing incapacity for employment should not be regarded as permanent in the sense of indefinitely continuing. The finding is then made "on this basis" that the appellant had not made out his entitlement to a pension.

11. It is virtually conceded by counsel for the respondent that these findings would not, in law, have justified a finding that the appellant was not entitled to an invalid pension unless they be read as encompassing or incorporating further findings that the appellant had unreasonably refused to undertake the rehabilitative procedures which were available to him. The cases make it clear that the mere failure of a person to undertake medical or other treatment which is recommended to him does not disentitle him from receiving a pension or an award of compensation. See Fazlic v Milingimbi Community Inc. (1982) 38 ALR 424 and Dragojlovic v Director-General of Social Security (1984) 52 ALR 157. But it was said that the statement that these avenues and procedures were "open" should be treated as a finding by the Tribunal that the appellant had unreasonably refused to undertake those procedures.

12. It may well have been the Tribunal's intention to make such a finding in paragraph 11, but in our opinion it cannot safely be assumed that this was the case. If it had been the case, much of what appears in paragraph 12 would be otiose. Had the Tribunal intended, by the use of the word "open" in paragraph 11 to make a finding that the appellant's refusal to undertake treatment was unreasonable, it would have been unnecessary for it to make the same finding in paragraph 12.

13. We have therefore come to the conclusion that the decision contained in paragraph 11 of the Tribunal's reasons was based upon the finding that the mere availability of psychotherapeutic and rehabilitative procedures which gave good prospects of improving the appellant's prospects of getting back to work was sufficient to disentitle him to a pension. In these circumstances the decision cannot be allowed to stand.

14. However, whilst the finding in paragraph 12 is in a sense irrelevant, since no decision under s.135M of the Act was under review, what is said by it in paragraph 12 confirms our opinion that an error of law was made by it in arriving at its decision. The statement is made in paragraph 12 that the Tribunal considers that the appellant's fears of undertaking the recommended psychotherapy are groundless. But there is no finding that the appellant's fears are not genuinely entertained by him. In our opinion, the mere fact that the appellant's fears are groundless does not make them unreasonable if they are genuine. We agree with and adopt what is said by Smithers J. in Dragojlovic's Case (supra) at p.160 and 161. It is to be observed that this decision had not been published at the time the Tribunal gave its decision. We think it is plain from what is said in paragraph 12 that the Tribunal accepted that the appellant entertained fears of undertaking the psychotherapy recommended by the psychiatrists. The Tribunal makes it plain that it regards those fears as being groundless, but nowhere in its reasons is there a specific finding that, groundless though they may be, the fears are not genuinely entertained by the appellant.

15. Counsel for the respondent argued that the reference by the Tribunal to Fazlic's Case carries with it a finding that the Tribunal did not regard the appellant's fears as being genuinely held, since the High Court in Fazlic's Case was dealing with a case involving a genuine reluctance to undergo operative treatment. We do not think that the words used by the Tribunal sufficiently convey a finding (if, indeed, any such finding was intended to be made) that the appellant's fears are not genuine. Indeed, we find some difficulty in accepting that the Tribunal intended to find that fears are entertained by the appellant, but not genuinely so. The statement that the appellant entertains fears seems to us to carry the inference that they are real to him. If they were not real to him, they would not be fears at all. Thus, given a finding that the appellant does have fears, it is difficult to see how there could be a concurrent finding that they are not genuine. They well may be irrational and groundless, but that is not to say that they are not genuine. Certainly it would have been necessary for the Tribunal to express itself in clearer terms had it intended to convey a finding that although the appellant did have fears, those fears were not genuinely entertained by him.

16. The appeal should be allowed, the judgment appealed from set aside and in lieu thereof it should be ordered that the appeal from the Tribunal be allowed, the Tribunal's decision set aside and the matter remitted to it for determination. The respondent must pay the appellant's costs of the appeal from the Tribunal and to the Full Court.