Re Ian Hamilton Hansell v Repatriation Commission [1992] FCA 469; (1992) 16 Aar 339 (1992) 38 FCR 202 (22 September 1992)

FEDERAL COURT OF AUSTRALIA

Re: IAN HAMILTON HANSELL
And: REPATRIATION COMMISSION
No. N G719 of 1991
FED No. 712
Administrative Law
[1992] FCA 469; (1992) 16 AAR 339
(1992) 38 FCR 202

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Foster J.(1)

CATCHWORDS

Administrative Law - Appeal from Administrative Appeals Tribunal - construction of ss 120(1) and (3) of the Veterans' Entitlement Act 1986 (Cth) - whether Administrative Appeals Tribunal correctly construed and applied ss 120(1) and (3) of the Veterans' Entitlement Act 1986 (Cth) in rejecting application for pension arising from claim by applicant that ischaemic heart disease arising from smoking was "war-caused" - whether Administrative Appeals Tribunal acted correctly by rejecting claim according to s 120(1) threshold.

Veterans' Entitlement Act 1986 - s 5, s 6, s 9, s 120(1), s 120(3)

Repatriation Commission v O'Brien [1985] HCA 10; (1985) 155 CLR 422

East v Repatriation Commission [1987] FCA 242; (1987) 16 FCR 517

Webb v Repatriation Commission (1988) 19 FCR 139

Gilbert v Repatriation Commission (1989) 86 ALR 713

Repatriation Commission v Lowerson [1989] FCA 344; (1989) 22 FCR 430

Repatriation Commission v Bushell [1991] FCA 185; (1991) 13 AAR 176

Repatriation Commission v Whetton [1991] FCA 472; (1991) 31 FCR 513

Law v Repatriation Commission (1980) 29 ALR 64

HEARING

SYDNEY
22:9:1992

Counsel for the Applicant: Mr A. Hill

Instructed by: Vardanega Roberts

Counsel for the Respondent: Ms R. Henderson

Instructed by: Australian Government Solicitor

ORDER

THE COURT ORDERS THAT:

1. The decision of the Administrative Appeals Tribunal
affirming previous decisions of the Repatriation
Commission and the Veterans' Review Board in relation
to the applicant's claim for disability from ischaemic
heart disease be set aside;
2. That the application be remitted to the Administrative
Appeals Tribunal for reconsideration in accordance
with these reasons;
3. That the respondent pay the applicant's costs of the appeal.

Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.

DECISION

This is an appeal from a decision of the Administrative Appeals Tribunal (the "Tribunal") given on 17 October 1991. The Tribunal set aside in part a determination of the Veterans' Review Board given on 18 August 1988. This determination had affirmed a previous decision of a delegate of the Repatriation Commission (the "Commission") given on 16 June 1986 which had rejected totally the applicant's claim that his existing conditions of ischaemic heart disease, cervical and lumbar spondylosis, left rotator cuff degeneration and osteoarthritis of the left knee were war-caused diseases within the meaning of s 9 of the Veterans' Entitlement Act 1986 (Cth) (the "Act").

2. By its decision the Tribunal allowed all the applicant's claims except for that in respect of ischaemic heart disease. It is against the disallowance of this claim that the applicant appeals to this Court.

3. The determination of this appeal requires yet another consideration of the construction and application of ss 120(1) and (3) of the Act. It is convenient to set out those provisions now:-<)6

"120 (1) Where a claim under Part II for a pension in respect
of the incapacity from injury or disease of a veteran, or of the
death of a veteran, relates to the operational service rendered by
the veteran, the Commission shall determine that the injury was a
war-caused injury, that the disease was a war-caused disease or
that the death of the veteran was war-caused, as the case may be,
unless it is satisfied, beyond reasonable doubt, that there is no
sufficient ground for making that determination.
...
(3) In applying subsection (1)...in respect of the
incapacity of a person from injury or disease, or in respect
of the death of a person, related to service rendered by the
person, the Commission shall be satisfied, beyond reasonable
doubt, that there is no sufficient ground for determining:
(a) that the injury was a war-caused injury or a defence-caused
injury;
(b) that the disease was a war-caused disease or a
defence-caused disease; or
(c) that the death was war-caused or defence-caused;
as the case may be, if the Commission, after consideration
of the whole of the material before it, is of the opinion
that the material before it does not raise a reasonable
hypothesis connecting the injury, disease or death with the
circumstances of the particular service rendered by the person."

4. There has been no dispute at any stage of the proceedings that the applicant was a "veteran" or that he had been engaged in "operational service" as defined in ss 5 and 6 of the Act. His claim in respect of his ischaemic heart disease was based upon the assertion that whilst a soldier on operational duty in the Second World War in the western desert, he had acquired a smoking habit. The smoking habit thus acquired had, over the years, played a causal role in the development of his heart condition. There was a major contest in the case as to whether he had in fact acquired the smoking habit during army service. Reliance was placed by the Commission on a significant number of statements allegedly made by him when giving histories to medical practitioners investigating his case. These appeared to be in significant conflict with the version he gave in evidence as to his acquisition of the habit. It does not appear, nor was it suggested in argument before me, that there was any dispute as to the proposition that habitual cigarette smoking can play a part in the aetiology of ischaemic heart disease.

5. The Tribunal dealt with the principles to be applied and the application of the principles to the applicant's case in the following paragraphs of its reasons:-

"5. As the applicant has `operational service' as defined in s.6 of
the Act the standard of proof in this matter is that provided in
s.120(1) and (3) of the Act. These sub-sections provide that the
Tribunal shall determine that the applicant's ischaemic heart
disease, lumbar cervical spondylosis, left rotator cuff
degeneration and osteoarthritis of left knee were war-caused,
unless it is satisfied beyond reasonable doubt that there is no
sufficient ground for making that determination. The Tribunal
shall, however, be deemed to be satisfied beyond reasonable doubt
if, after consideration of the whole of the material before, it is
of the opinion that the said material does not raise a reasonable
hypothesis connecting the disease with the circumstances of the
particular service rendered by the applicant
6. As to what constitutes a `reasonable hypothesis' see the decision
of te Full Court of the Federal Court in East v Repatriation
Commission [1987] FCA 242; 74 ALR 518 at 534, namely:
`A reasonable hypothesis requires more than a
possibility, not fanciful or unreal, consistent
with the known facts, it is an hypothesis
pointed to by the facts, even though not proved
on the balance of probabilities.'
7. The process to be undertaken by the Tribunal in its consideration
of the case is further explained by the Federal Court in
Repatriation Commission v Webb 76 ALR 131 and on appeal in Webb v
Repatriation Commission 78 ALR 696.
Counsel referred the Tribunal to both East's case and Webb.
These cases indicate that the Tribunal, at the end of the
day, must ask itself whether there exists a reasonable
hypothesis of connection with the war service based upon
facts which have not been negatived beyond reasonable doubt.
In a series of later decisions viz: Gilbert v Repatriation
Commission 86 ALR 713; Repatriation Commission v Lowerson 18
ALD 153; Hambling v Repatriation Commission (unreported
decision of Davies J. No. G913 of 1988), the Federal Court
has reiterated the analysis set out in East's case of the
meaning of `reasonable hypothesis'.
8. As the Tribunal understands the evidence adduced, the
hypothesis raised by the applicant's case in respect of his
ischaemic heart disease is that due to his smoking habit
acquired following his being supplied with cigarettes (he
having prior to joining the Army been a non-smoker) whilst
`going along the front line into Bardia in the western
desert near Libya' before taking part in the attack on the
fortress, Mr Hansell on 9 August 1984 suffered an acute
inferior myocardial infarct as a result of which, on 23 June
1986, he underwent a coronary artery by-pass. The
hypothesis raised related his smoking habit to the
occurrence of his coronary disease.
The Tribunal heard a great deal of evidence regarding the quantum
of cigarettes smoked by the applicant. Mr Castle, for the
respondent, made reference to some ten separate reports in the T
documents of serious inconsistencies in histories given to a large
number of medical practitioners who treated the applicant in
regard to his ischaemic heart disease. Mr Castle also emphasised
the findings of Dr Demetriou, Dr Wearne, and Dr Freeman regarding
his use of cigarettes and submitted that the applicant's
credibility in his oral evidence was seriously flawed on the same
subject.
Mr Vinden conceded that there was a plethora of inconsistent
estimates of the applicant's consumption of cigarettes but
submitted that Mr Hansell, in his oral evidence, gave the correct
version of the quantity he consumed. Whilst the Tribunal feels
that these inconsistencies may not so much reflect on the
applicant's credibility as upon his interaction with the medical
profession, it is nevertheless unable to accept that sufficient
satisfactory evidence exists between the documented smoking
history and the claim seeking acceptance of ischaemic heart
disease as a war-caused disease.
9. There being no reasonable hypothesis connecting the circumstances
of the war service with the disease suffered by the applicant, the
Tribunal is deemed to be satisfied beyond reasonable doubt that
there is no sufficient ground for determining that the disease is
war-caused and the decision under review, so far as it relates to
the ischaemic heart disease is affirmed."

6. It is the applicant's contention that these reasons necessarily indicate that the Tribunal has approached the matter by misconstruing ss 120(1) and (3), or by wrongly applying them, or both. It is necessary, therefore, that I consider again the construction of these provisions in the light of previous decisions.

7. It is a well recognised fact, frequently referred to in the decisions, that the previous legislation relating to this subject matter was amended to give effect to views expressed by Brennan J in his dissenting judgment in Repatriation Commission v O'Brien [1985] HCA 10; (1985) 155 CLR 422. His Honour said (at 438):-

"Section 47 thus operates in a context where an
investigation has been carried out with reasonable diligence
and where all the relevant facts ascertained in the
investigation and furnished by the claimant are before the
decision-maker. If the facts thus ascertained support a
reasonable hypothesis that the claimant is entitled to a
benefit under the eligibility provisions of the Act, the
Board or the Commission must determine to grant the claim.
If a reasonable hypothesis of entitlement arises on some of
those facts, the Board or Commission must determine to grant
the claim unless other facts dispel the hypothesis beyond
reasonable doubt. If the Board or Commission is satisfied
that no reasonable hypothesis of entitlement is supported by
the facts or that any such reasonable hypothesis is
dispelled beyond reasonable doubt, the Board or Commission
should reject the claim. Where, on the whole of the
material no reasonable hypothesis of entitlement arises,
there are `insufficient grounds for granting the claim'."

8. It is clear that this passage provided a basis for the introduction into the legislation of the concept of the "reasonable hypothesis" and of the necessity of its being "dispelled beyond reasonable doubt". The amendments which produced the section in its present form were, in fact, passed by the legislature shortly after the decision was given. The detailed history of these alterations to the law is set out in East v Repatriation Commission [1987] FCA 242; (1987) 16 FCR 517. There is no need for me to refer to it any further. It may be noted that in that decision, the Full Court of this Court considered the concept of a "reasonable hypothesis" and the part that it was intended to play in the application of the legislation to a veterans' claim. The Court said (at 532) in a passage which is very frequently cited:-

"The obvious intention of the 1985 amendment was to reverse,
to some extent, the trend towards improvement of the
position of claimants. Parliament wished to retain the
requirement that the Commission should negative claims
beyond reasonable doubt but to limit the operation of that
requirement to cases where there was some reason to believe
in the existence of a causal connection. ...
The means chosen to give effect to that intention were apt.
The adoption of Brennan J's notion of a reasonable
hypothesis meant that Parliament was requiring something by
way of a causal link, but which fell short of proof of the
link - even prima facie - as a fact. The meaning of the
phrase `reasonable hypothesis' was felicitously explained by
a Veterans' Review Board in Stacey (unreported Nos V83/0396,
V84/0821 and V28/072, 26 June 1985); words quoted by the
Administrative Appeals Tribunal in Re Dell and Repatriation
Commission (1986) 5 AAR 253 at 254-255:
`A hypothesis may be conveniently defined as:
"proposition made as basis for reasoning, without
assumption of its truth; supposition made as starting
point for further investigation from known facts;
groundless assumption": The Concise Oxford Dictionary.
...
The addition of the word "reasonable" would however
seem to imply that what is required is more than a
mere hypothesis. In the opinion of the Board, to be
reasonable, a hypothesis must possess some degree of
acceptability or credibility - it must not be
obviously fanciful, impossible, incredible or not
tenable or too remote or too tenuous. For a
reasonable hypothesis to be "raised" by material
before the Board, we think it must find some support
in that material - that is, the material must point
to, and not merely leave open, a hypothesis as a
reasonable hypothesis. At the same time, however, a
hypothesis may be reasonable without having been
proved (either on the balance of probability or beyond
reasonable doubt) to be correct as a matter of fact.
Were it otherwise, it would no longer be a hypothesis
but would have been elevated to some higher status.
Accordingly a connection asserted by a hypothesis to
exist between death or incapacity and service may
still be reasonable even though theoretical, and it
may be theoretical in either both or of at least two
senses: by postulating a known medical fact but in
circumstances not known to have definitely existed in
the instant case; or by postulating a medical
principle which science is not yet able to definitely
prove but is unable to describe as unreasonable.'
We agree with this analysis. A reasonable hypothesis
requires more than a possibility, not fanciful or unreal,
consistent with the known facts. It is an hypothesis
pointed to by the facts, even though not proved upon the
balance of probabilities."

9. The sub-sections were again the subject of detailed consideration in Webb v Repatriation Commission (1988) 19 FCR 139. Davies J, after setting out the passage from East to which I have already referred made these following further observations (at 142):-

"Section 120(3) thus requires there to be material which
postulates a reasonable theory or hypothesis positively
connecting the claimant's incapacity or death with his war
service. But that is not to say that s 120(1) is otiose or
has no work to do. Indeed, the legislative terms which were
considered in Law's case and O'Brien's case were re-enacted
in s 120(1) after both those decisions had been given.
Section 120(1) establishes the primary standard with respect
to matters of fact, that is to say that if there be doubt as
to the existence of a crucial fact, the claimant has the
benefit of that doubt unless the non-existence of that fact
is established beyond reasonable doubt. The requirement in
s 120(3) of a reasonable hypothesis is not a requirement
that facts must be established positively in the claimant's
favour. Section 120(3) operates in the light of the
standard established by s 120(1), notwithstanding that it
requires that on the whole of the material there must be a
reasonable theory or hypothesis connecting the incapacity or
death to the war service.
Necessarily, a theory or hypothesis which is otherwise
reasonable may be dispelled or brought to nought if there be
proof beyond reasonable doubt that one of the facts, which
according to the theory or hypothesis is essential to the
connection postulated, does not exist. As Brennan J said in
the passage from O'Brien's case cited above:
`If a reasonable hypothesis of entitlement
arises on some of those facts, the Board or
Commission must determine to grant the claim
unless other facts dispel the hypothesis beyond
reasonable doubt.' (The emphasis is mine.)
Take, for example, a case where there was a reasonable
theory or hypothesis connecting the development of a cancer,
the subject of a claim, with an injury which was alleged to
have occurred during war service. If it were proved beyond
reasonable doubt that that injury had in fact occurred, not
during war service, but shortly after war service ended,
that proof would bring the otherwise reasonable hypothesis
to nought.
The consideration of proof may take place wholly within the
confines of s 120(3). But it would not be incorrect for the
Repatriation Commission or a Review Tribunal to consider
such a matter of pure fact, distinct from medical theory,
simply under the terms of s 120(1). Thus, in the instance I
have earlier outlined, if the Repatriation Commission or a
Review Tribunal were satisfied beyond reasonable doubt that
the injury which the theory or hypothesis reasonably
connected with the claimant's incapacity or death had
occurred not in but outside war service, it could dismiss
the claim under the general provisions of s 120(1) on the
footing that a fact essential for the applicant's claim did
not exist."

10. His Honour later (at 144) spoke of there being, in the application of the sub-sections:-

"... a two stage process, namely the first being to
ascertain whether there was a reasonable hypothesis and the
second, if that were answered in the claimant's favour,
being to ascertain whether or not some fact necessary for
that hypothesis had been disproved beyond reasonable doubt."

11. In the same case I expressed agreement in relation to this two stage process but approached the question in a somewhat different way. In view of the analysis of the provisions which undertake later in these reasons, it is not necessary that I set out again what I said in Webb.

12. The sub-sections have been the subject of additional judicial consideration and exposition since Webb. It is necessary that I make reference to a number of these decisions.

13. In Gilbert v Repatriation Commission (1989) 86 ALR 713, Hill J considered the construction of these provisions. After considering in some detail the decisions in East and in Webb, he expressed the opinion, it having been argued to the contrary, that there was "no inconsistency at all between what is said in East's case and what is said in Webb" (at 721). His Honour went on to discuss the meaning and effect of the provisions as follows:-

"Where, as will usually be the case, the material before the
Commission does not itself show a clear connection between
the death or incapacity or injury and the member's war
service, it will be the duty of the Commission to examine
the material before it to see whether that material raises
an hypothesis which connects the injury, disease or death
with the claimant's war service. The tribunal must consider
whether any hypothesis so raised is reasonable. If the
material before the Commission discloses no evidence at all
grounding the hypothesis so that the hypothesis is merely
abstract, then it may be said either that the hypothesis is
not raised on that material at all or that such a hypothesis
is not, having regard to that material, a reasonable one.
In other words, there must be some evidence to be found in
the material before the tribunal, or, as was said in East,
the hypothesis must 'find support in that material, that is,
the material must point to and not merely leave open, a
hypothesis as a reasonable hypothesis'
Taking by way of example the facts in Webb, the material
before the Commission must raise the hypothesis and the
hypothesis must be reasonable ; that is to say, there must
be some evidence in that material as to a blow to the arm
occurring to the veteran while on war service.
Once the Commission has formed the opinion that the material
before it does raise a reasonable hypothesis then s 120(1)
will fall to be considered. It may then come about that,
having regard to the material before the tribunal, the
hypothesis is dispelled beyond reasonable doubt. This, with
respect, in my opinion, is what was meant by Davies J in the
passage I have cited from Webb when his Honour dealt with
the case where it was proved beyond reasonable doubt that,
although the cancer might be hypothesised to have originated
in an injury, that injury did not occur during war service.
His Honour, in the passage cited, had assumed that there was
first found a reasonable hypothesis, that is to say, one
which in the East sense was grounded in fact. His Honour
then considered the application of s 120(1).
The same idea, it can be said, is caught up by Foster J when
his Honour refers to the basic factual material upon which
the reasonable hypothesis is raised being found `at the end
of the day' to exist. The application of s 120(1) in a case
such as the present, in my view, will normally arise only
after the reasonable hypothesis has been raised on the
material before the tribunal, that is to say, only after
there is some ground of fact which both raises the
hypothesis and allows it to be described as reasonable. An
interpretation of the relation between s 120(1) and s 120(3)
of the Act which suggests that in determining whether an
hypothesis is reasonable any fact upon the existence of
which the hypothesis is dependent is to be assumed unless
dispelled by the evidence beyond reasonable doubt, would be
contrary to the clear legislative intention to replace the
O'Brien test with that expressed in dissent by Brennan J.
It is not to be assumed that the court in Webb overlooked
what had been said in East."

14. In Repatriation Commission v Lowerson [1989] FCA 344; (1989) 22 FCR 430, Morling J had to consider whether the Tribunal had correctly applied the tests arising from the sub-sections. In holding that it had failed to do so his Honour said (at 434):-

"There is nothing in s 120(3) itself which required the Commission
to resolve any doubt as to the existence of a fact in favour of a
claimant for pension unless the non-existence of that fact is
established beyond reasonable doubt. In East v Repatriation
Commission (supra) it was argued that the words `reasonable
hypothesis' in s 120(3) take their colour from s 120(1). It was
also argued that the effect of the adoption of the phrase `beyond
reasonable doubt' in s 120(1) is to exclude a determination
adverse to a claimant where there exists a possibility which is
not fantastic or unreal. These arguments were rejected by the
Court, which said that they paid insufficient regard both to the
history of the legislation and to the meaning of the phrase
`reasonable hypothesis': [1987] FCA 242; 16 FCR 517 at 531-532."

15. His Honour then referred to the decision in East and to the passage already set out in these reasons in which a previous exposition of the meaning of the phrase "reasonable hypothesis" was adopted. He then referred to the "obvious approval by Davies J" of East's case in Webb. He expressed the view that Davies J could not have intended, in Webb,to convey an opinion as to the effect of s 120(3) different from that expressed by the Court in East. After citing the passage already set out in these reasons from the judgment of Davies J in Webb, his Honour said of it (at 435):-

"Read in its entirety, what his Honour said is not inconsistent
with East. His Honour accepted that on the whole of the material
before the Commission there must be a reasonable hypothesis
connecting a veteran's death with his war service. His Honour did
not state that if there is any doubt as to the existence of a fact
which might form part of the material under consideration by the
Commission then the onus is on the applicant for a pension to
prove the non-existence of the fact beyond reasonable doubt."

16. His Honour continued by stating that the Tribunal had fallen "into the error of construing s 120(3) as requiring it to find a fact proved unless it was disproved beyond reasonable doubt". He said that this construction:-

"diverted the Tribunal from considering whether an
assessment of the whole of the material before it caused it
to be of the opinion that the material raised a reasonable
hypothesis connecting the veteran's death with his war service".

17. Morling J concludes his reasons by citing with clear approval the passage from the judgment of Hill J in Gilbert, to which I have already made reference. In light of this fact, I conclude that in none of the other passages which I have cited from his judgment is his Honour expressing the opinion that s 120(3) requires a decision-maker to find proved or disproved any facts critical to the establishment of a claimant's claim. In my opinion, Hill J adopts the approach, with which I respectfully agree, that s 120(3) requires no more than that the decision-maker determine whether evidence capable of raising a reasonable hypothesis exists. He is not required, under that sub-section, to determine whether that evidence should be accepted or rejected.

18. It is necessary also to refer to two decisions of Full Courts of this Court. The first is Repatriation Commission v Bushell [1991] FCA 185; (1991) 13 AAR 176. In this case Davies J dealt with ss 120(1) and 120(3) of the Act as follows (at 177):-

"What is and what is not a reasonable hypothesis is a
question of fact, not of law, and it is a question committed
to the decision-maker of fact, that is to say, the
Repatriation Commission, the Veterans' Review Board or the
Administrative Appeals Tribunal. It is not a matter for
this Court to determine. Moreover, this Court cannot lay
down other terms to take the place of the term `reasonable
hypothesis'. The term means what it says. As to whether
such an hypothesis exists in a particular case is a matter
on which the decision-maker of fact must make a value
judgment. The Court should interfere only when it appears
clearly that the decision-maker has made an error of law,
eg, in the sense that the decision was perverse, that no
reasonable decision-maker could have come to it: see, eg,
Puhlhofer v Hillingdon London Borough Council [1986] UKHL 1; (1986) AC 484,
per Lord Brightman, at p 518; Australia Broadcasting
Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321, per Mason C.J., at pp 355-360;
Gilbert v Repatriation Commission (1989) 10 AAR 73 at 82."

19. His Honour then referred to the exposition of the meaning of the words "reasonable hypothesis" which I have already set out. He then continued (at 178) as follows:-

"A reasonable hypothesis will ordinarily be established if a
responsible medical practitioner, speaking within the ambit
of his expertise, and after considering the particular facts
of the veteran's case, puts forward a theory of a likely, in
a sense of a realistically possible, not fanciful, causal
connection between war service and the veteran's disability.
That being done, the s 120(1) standard of proof will apply.
The veteran's claim may be dismissed if the decision-maker
is satisfied beyond reasonable doubt on all the evidence
that any necessary element of fact did not exist, or that
the theory was, in the circumstances of the case, completely
untenable: see Webb v Repatriation Commission (1988) 19 FCR
139 at 139-141, 147-148; 8 AAR 274 at 276-278, 283; Gilbert
v Repatriation Commission, at 79-81.
Of course, to be reasonable an hypothesis must be
responsible. Therefore an element of proof may be involved
in the application of s 120(3). But that is not to say
that, to be reasonable, an hypothesis must be supported by
scientific proof or the general acceptance of the medical
profession."

20. Later in his reasons (at 179) his Honour said that he took the opportunity:-

"... to emphasise that s 120(3) is concerned with an
hypothesis, a theory or supposition, whilst s 120(1) is
concerned with the determination of facts, including
disputed medical facts. To require, in the consideration of
s 120(3), too strict a proof of the validity of an
hypothesis would be to subvert the operation of s 120(1).
Respectability or general acceptability by the medical
profession of an hypothesis, as Dr Freeman had in mind,
seems to go beyond the concept of `not fanciful' adumbrated
in East's case."

21. I do not understand anything stated in the reasons for judgment of the majority (Morling and Neaves JJ.) to run contrary to the view of Davies J in this regard.

22. I refer finally to the decision of a Full Court of this Court in Repatriation Commission v Whetton [1991] FCA 472; (1991) 31 FCR 513. In that case, after a consideration of previous decisions on the sub-sections, the Court (Beaumont, Burchett and Lee JJ.) said (at 515):-

"It is convenient, at this point, to note some aspects of
the application of s 120(3) which are particularly relevant
to the present case. First, as the concluding observation
in the citation made in East (supra) illustrates, the
antithesis of `reasonable hypothesis' is not `speculative
hypothesis', but `unreasonable hypothesis'. Indeed, a
hypothesis is by definition speculative.
In The Shorter Oxford English Dictionary (1980), the word is
relevantly defined as:
`a supposition or conjecture put forth to account for
known facts; esp (ie especially) in the sciences, a
provisional supposition which accounts for known
facts, and serves as a starting-point for further
investigation by which it may be proved or disproved.'
And Blakiston's Gould Medical Dictionary (4th ed, 1979)
defines hypothesis as `a supposition or conjecture put
forth to account for known facts'. Next, the explication
with which the Full Court expressed its agreement in East
expressly accepts, as reasonable, a hypothesis asserting a
connection between death or incapacity and service which is
uncertain both because it postulates a medical principle in
circumstances not known to have definitely existed in the
instant case, and because the medical principle is one which
science, although unable to describe it as unreasonable, is
not yet able to prove definitely. What is required is `some
degree of acceptability or credibility', to make the
hypothesis `reasonable', and `some support in (the)
material' before the Tribunal, so that the hypothesis can be
said to be `raise(d)' by that material. Finally, not merely
does the section not place any onus on the applicant for a
pension - it does not require the formation of a positive
opinion in the applicant's favour. To the contrary, a
decision against an applicant is permitted only if the
Tribunal is able to form the opinion that the material
before it does not raise a reasonable hypothesis connecting
the injury disease or death (as the case may be) with the
circumstances of the particular service rendered by the
incapacitated or deceased person."

23. Later in their reasons their Honours said (at 519):

"For the purpose of the statutory concept of a `reasonable
hypothesis', the discrimen which has been adopted to enable
unreasonable hypotheses to be discarded has frequently been
expressed, as it was in East, by the word `fanciful'. (See
Also Bushell, per Davies J (at 179, 179, 180) and per
Morling and Neaves JJ. (At 182, 183); Gilbert (supra) (at
720) citing Webb (supra) (at 147); O'Brien v Repatriation
Commission [1984] FCA 95; (1984) 1 FCR 472 at 499.) Given a hypothesis
that is not fanciful, East requires only the additional
element that it be `raise(d)' by the material, that is, that
the material points to it as applicable to the particular
case."

24. In the light of these prior judicial pronouncements, I am of the opinion that the position in relation to the construction and application of these sub-sections may be summarised as follows:-

(1) The decision-maker must first consider whether, on the whole
of the material placed before him, the requisite reasonable hypothesis
of connection between operational service and injury, disease or death
of the veteran, is raised.
(2) This preliminary question is a question of fact (East at
531; Gilbert at 922; Bushell at 177).
(3) It is, however, a question of fact of a peculiar or limited
kind. The decision-maker is not called upon at this stage to determine
whether a connection in fact exists between the veteran's injury,
disease or death and the circumstances of the particular service
rendered by him. He must decide two things and two things only viz: (a)
whether the whole of the material raises a hypothesis or theory of
connection and (b) whether, if it does, that hypothesis or theory is a
reasonable one. Thus, although the material may allow the postulation
of a theoretical connection between the veteran's service and his
current condition of injury, disease or his death, that hypothesis will
not earn the description "reasonable" unless the decision-maker also
decides that it is not so fanciful, remote or tenuous as to be rendered
unworthy of credence. This involves a value judgment which, although
one of fact, is different in kind from a factual judgment as to whether
the hypothesis is proved to be correct or incorrect. Section 120(3) not
only does not require this latter judgment to be made but it positively
excludes it. The sub-section deals solely with the existence or
otherwise of a reasonable theory. It does not deal with the question of
whether that theory is valid. It is a "consideration" of material not a
"determination" of fact that is required.
(4) The inquiry is not dissimilar to the inquiry required in
other fields of the law where a judge decides whether the material
placed before him is capable of establishing a prima facie case. In
making this decision a judge is constrained to form no view as to what
facts may be ultimately accepted or rejected. Similarly in the present
inquiry if the decision-maker has facts before him which are capable of
supporting the requisite hypothesis of connection, he should at this
stage, subject to what I say below, ignore any countervailing material.
If the supportive facts are sufficient to raise a hypothesis which is
itself not so fanciful, tenuous or remote as to be termed unreasonable
then the claim that the injury or disease was "war-caused" surmounts the
barrier of s 120(3).
(5) It must be borne in mind that the inquiry as to
"reasonableness" required by s 120(3) necessarily covers two broad
areas. The first is the material relating to the aspects of the
veteran's operational service said to be connected with the injury or
disease in respect of which he claims, or his death. The second is
material relating to the question whether he is indeed suffering from
such injury or disease and, if so, whether there is a connection between
this and the aspects of his service relied upon. The first area
embraces matters of simple fact. The second covers some matters of fact
such as whether the claimant demonstrates the relevant signs and
symptoms of injury and disease, but it also deals with matters of
medical opinion such as whether the signs, symptoms and relevant tests
indicate as a matter of diagnosis the existence of the injury or disease
claimed, and if so, whether that injury or disease can be connected with
the facts of the claimant's service.
(6) In the first area of inquiry the decision-maker must
consider whether the facts alleged as to operational service are too
fanciful or tenuous to base a reasonable hypothesis. Of course, it must
be rare, indeed, that such a characterisation could be applied to a
claimant's narration of the facts upon which he relies for his claim.
It is no doubt possible that the narration could be so bizarre and
obviously far-fetched as to be incapable of providing any basis for a
reasonable hypothesis. If this view could not be formed, however,
without recourse to countervailing facts put forward in the material,
then the claimant's version should not be rejected at the s 120(3) level
of inquiry.
(7) In relation to the second area of inquiry it is possible
that the claimant's evidence is support of the signs and symptoms relied
upon by him to establish the existence of the alleged injury or disease
may be found by the decision-maker, without resort to countervailing
evidence in the material, to be so inherently incredible as to be
incapable of forming a basis for the inference of a reasonable
hypothesis. As this evidence will, for the most part, consist of the
claimant's own narration of his subjectively experienced complaints
coupled with supporting factual observations of the signs of injury or
disease, it will, obviously, be very rare that a reasonable hypothesis
would be excluded on this basis. In almost every case rejection of
these basic facts by the decision-maker could occur only as a result of
adverse findings made under s 120(1), and in accordance with the onus of
proof prescribed by that section.
(8) The second area of inquiry necessarily involves, as already
indicated, a consideration of the testimony of medical experts as to the
existence or otherwise of the relevant injury or disease and its
connection with the claimant's operational service. In many cases it
can be expected that there will be some conflict of expert opinion
between the medical witnesses called by the claimant and the respondent.
In nearly all such cases, where medical testimony called on behalf of
the claimant supports the hypothesis, this will be sufficient to render
it reasonable and to take the case out of ambit of s 120(3). If that
hypothesis is to be nullified, this can occur only on the basis that the
countervailing medical opinion operates to eliminate it beyond
reasonable doubt pursuant to s 120(1). It is possible, however, to
envisage the situation where, because the area is one of purely
scientific testimony, that the countervailing opinions of responsible
and reputable medical experts may so denigrate and overwhelm the opinion
evidence relied upon by the claimant as to prevent the hypothesis based
on this latter evidence being accepted as "reasonable". In my opinion,
in cases which would necessarily be very rare, this result could be
achieved without subjecting the countervailing opinions to the onus of
proof required by s 120(1). In such circumstances the hypothesis relied
upon would be shown to be fanciful, tenuous and unacceptable.
(9) It is only in these circumstances, in my opinion, that
countervailing material can properly be considered by the decision-maker
in determining the outcome of the inquiry under s 120(3). Obviously
great care must be exercised by the decision-maker not to characterise
too readily medical opinions as being fanciful even in circumstances
where they are heavily attacked by other medical opinion. The
discarding of a claimant's supporting medical testimony, if done
lightly, may deprive him, in an unwarranted way, of the benefit that he
should receive from the application of s 120(1) to his case.
(10) As I understand it, with respect, it is to matters of the
kind that I have just discussed that Davies J was referring in the
passages from Bushell which I have cited when his Honour says that "an
element of proof may be involved in the application of s 120(3)" and
that "to require in the consideration under s 120(3), stricter proof of
the validity of an hypothesis would be to subvert the operation of
s 120(1)". I do not take his Honour to have been referring, by the use
of the term "validity", to questions relating to the ultimate proof of a
hypothesis. He is dealing with the situation where an ultimate decision
may be pre-empted by a finding under s 120(3) that a hypothesis is so
obviously fanciful or frivolous as not to warrant further investigation.
Where such further investigation is warranted, then the claimant is to
have the benefit of s 120(1).
(11) Of course, a claim may still fail under s 120(1). Despite
the "heavy burden of disproof" (per Toohey J, Law v Repatriation
Commission (1980) 29 ALR 64 at 74), the decision-maker may yet be
persuaded beyond reasonable doubt that the veteran's injury, disease or
death was not connected with his war-service. It is this inquiry, and
this inquiry alone, which involves the decision-maker in ultimate
determination of what facts or opinions he accepts or rejects from
amongst the material that has been placed before him. In approaching
that question he is required to accept the facts and opinions favourable
to the claim unless satisfied beyond reasonable doubt that he should not
do so. Putting it another way, he will accept the reasonable hypothesis
of connection that he has found to exist at the purely theoretical level
required by s 120(3) unless, in the second stage of the inquiry, he is
satisfied beyond reasonable doubt that he should reject it.

25. I come, then, to the present case. Here the Tribunal will have fallen into legal error if, in determining whether a reasonable hypothesis was raised at the s 120(3) stage of the inquiry, it made ultimate decisions as to whether it accepted or rejected the applicant's version of his acquisition of a smoking habit during his army service. In my view, it was required to accept those facts for the purpose of determining whether they could give rise to a reasonable hypothesis unless it decided they were inherently "fanciful". Equally, although this does not seem to have been a significant matter in this case, it was required to accept the medical evidence favourable to the establishment of the relevant connection, even if other scientific evidence was before it tending to disprove that connection, unless this latter evidence demonstrated that the former evidence was a product of fancy rather than science.

26. It is not easy to determine what the Tribunal has done. It has, of course, found that, on the material before it, no reasonable hypothesis was raised of connection between the applicant's operational service and his condition of ischaemic heart disease. This would necessarily have involved a decision that, despite his evidence, he did not acquire a smoking habit during his army service. But, how has the Tribunal arrived at this decision? It has not described the applicant's evidence on this issue as being too fanciful or tenuous or incredible to warrant acceptance. Nor, despite its reference to the relevant test, has it rejected that evidence on the basis that it was satisfied beyond reasonable doubt that it should not be accepted. There is no indication, therefore, that in rejecting the applicant's claim he acquired his smoking habit in the army, the Tribunal applied either a test appropriate to the inquiry under s 120(3) or to that under s 120(1).

27. Where the Tribunal has said that it was "unable to accept that sufficient satisfactory evidence exists between the documented smoking history and the claim seeking acceptance of ischaemic heart disease as a war-caused disease", it appears to have been making a finding critical to its determination that "no reasonable hypothesis connecting the circumstances of the war service with the disease suffered by the applicant" was raised in the material before it. This reads as a rejection of the case under s 120(3). However, the reference to "documented smoking history" shows that it was taking into account the countervailing effect of those "histories" upon the applicant's version of his acquisition of his smoking habit. This consideration should not have arisen in its inquiry under s 120(3). It was appropriate to an inquiry under s 120(1). If this was the inquiry in fact being undertaken then the Tribunal appears to have applied the wrong standard of proof.

28. In my opinion, an error of law has been demonstrated in relation to the approach taken by the Tribunal. The result is that the determination appealed against should be set aside and the matter remitted to the Tribunal for consideration in accordance with these reasons.

29. Accordingly, I make the following orders:-

1. that the decision of the Tribunal affirming previous
decisions of the Repatriation Commission and the Veterans' Review Board
in relation to the applicant's claim for disability from ischaemic

heart

disease be set aside;
2. that the application be remitted to the Tribunal for
reconsideration in accordance with these reasons;
3. that the respondent pay the applicant's costs of the appeal.