Repatriation Commission v Hill [2005] FCAFC 7 (16 February 2005)

Last Updated: 16 February 2005

FEDERAL COURT OF AUSTRALIA

Repatriation Commission v Hill [2005] FCAFC 7

VETERANS’ AFFAIRS – invalidity service pension – application for pension rejected by delegate of Repatriation Commission – appeal to Administrative Appeals Tribunal – Tribunal found veteran suffered from several permanent psychiatric illnesses – however, Tribunal found there was "very little wrong" with veteran – Tribunal not satisfied veteran permanently unable to do work for periods adding up to more than eight hours per week – Tribunal affirmed decision of delegate – appeal to single Judge of Federal Court allowed – appeal to Full Court – whether veteran "permanently incapacitated for work" – whether primary judge erred by construing relevant provisions of Veterans’ Entitlements Act 1986 (Cth) and Veterans’ Entitlements (Income Support Supplement – Permanent Incapacity for Work) Determination 1999 by reference to principles underlying workers’ compensation legislation


WORDS AND PHRASES – "work" – "do work" – "permanently incapacitated for work" – "permanently unable to do work"


Veterans’ Entitlements Act 1986 (Cth) ss 5Q, 6, 7A, 24(1)(b), 37, 37AA, 119(1)(g), 120(1) and (3)
Veterans’ Entitlements (Income Support Supplement – Permanent Incapacity for Work) Determination 1999 (Cth) cl 5(1) and (2)
Acts Interpretation Act 1901 (Cth) s 46A


Hill v Repatriation Commission [2004] FCA 832; (2004) 207 ALR 470 referred to
Cardiff Corporation v Hall [1911] 1 KB 1009 referred to
Foster v Wharncliffe Woodmore Colliery Co Ltd [1922] 2 KB 701 referred to
Wicks v Union Steamship Co of New Zealand Ltd [1933] HCA 58; (1933) 50 CLR 328 referred to







REPATRIATION COMMISSION v COLIN HILL

NTD16 OF 2004


WILCOX, FRENCH & WEINBERG JJ
16 FEBRUARY 2005
MELBOURNE (HEARD IN DARWIN)

IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY	NTD16 OF 2004

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT

BETWEEN:	REPATRIATION COMMISSION APPELLANT
AND:	COLIN HILL RESPONDENT
JUDGE:	WILCOX, FRENCH & WEINBERG JJ
DATE OF ORDER:	16 FEBRUARY 2005
WHERE MADE:	MELBOURNE (HEARD IN DARWIN)

THE COURT ORDERS THAT:

1. The appeal be allowed.
2. Order 2 of the orders made on 1 July 2004 be affirmed.
3. Order 3 of the orders made on 1 July 2004 be set aside.
4. In lieu thereof, there be substituted an order that the application for review of the decision of the Repatriation Commission, rejecting the respondent’s claim for an invalidity service pension under the Veterans’ Entitlements Act 1986 (Cth), be remitted to the Administrative Appeals Tribunal for reconsideration in accordance with the reasons for judgment of this Court.
5. The appellant pay the respondent’s costs of and incidental to the appeal.

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

IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY	NTD17 OF 2004

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT

BETWEEN:	REPATRIATION COMMISSION APPELLANT
AND:	COLIN HILL RESPONDENT

JUDGE:	WILCOX, FRENCH & WEINBERG JJ
DATE:	16 FEBRUARY 2005
PLACE:	MELBOURNE (HEARD IN DARWIN)

REASONS FOR JUDGMENT

THE COURT:

1 This is an appeal from a judgment of Mansfield J: Hill v Repatriation Commission [2004] FCA 832; (2004) 207 ALR 470. His Honour allowed an appeal from a decision of the Administrative Appeals Tribunal ("the AAT") given on 7 November 2003 affirming a decision of a delegate of the Repatriation Commission, rejecting the Mr Colin Hill’s claim, lodged on 25 May 2000, to be entitled to an invalidity service pension under s 37 of the Veterans’ Entitlements Act 1986 (Cth) ("the VE Act").

THE BACKGROUND FACTS

2 The respondent was born on 17 March 1945. He served in the Australian Army for three years, from 30 June 1965 to 30 June 1968. He was posted to Vietnam from 6 June 1967 to 16 April 1968. That period of service was "qualifying service" under the VE Act. His application for an invalidity service pension was based upon a claim that he was "permanently incapacitated for work" in accordance with the meaning of that expression in cl 5(1) of a written determination made by the appellant pursuant to s 37AA of the VE Act.

3 Before the AAT, there was no dispute about the fact that the respondent suffered from several permanent psychiatric illnesses, including significant vulnerability in his personality, alcohol dependency, a pathological gambling addiction, major depression, a dysthymic disorder, and mild post-traumatic stress disorder.

4 After leaving the army in 1968, the respondent worked for the State Electricity Commission of Victoria for approximately twenty-one years. He displayed symptoms and signs of alcohol dependency and gambling addiction during that period. His wife is a qualified nurse. She has provided financial stability to the respondent by working throughout their marriage, apart from those years when she had children.

5 In 1994, the family moved to Darwin. The respondent obtained work as a gardener, and then as a counsellor for the Salvation Army. His wife was employed full-time at the Darwin Hospital. However, the respondent’s problems persisted. In 1995, the family returned to Victoria. The respondent obtained employment as the Chief Executive Officer of a retirement village, while his wife found work as a nurse at a base hospital. His ongoing problems led to his resignation in early 2000. His wife was then the sole breadwinner, and took charge of the family’s finances. The family had virtually no savings because of the respondent’s addictions.

6 In mid-2000, the family returned to Darwin. In August 2000, the respondent and his wife obtained work as carers for Aboriginal school children under a scheme run by a Christian schools group. They were provided with a six-bedroom house in a Darwin suburb, and a mini bus to transport the children to and from school. They cared for about ten boys aged between twelve and fourteen years. They were paid a total of $30,000 per annum. For the first six months, they received $15,000 each. After January 2001, they arranged for the entire amount of $30,000 to be paid to the respondent’s wife, substantially because of the respondent’s inability to manage money. She gave him "pocket money" from time to time, amounting to about $50 per week.

THE LEGISLATIVE FRAMEWORK

7 Section 37(1) of the VE Act relevantly provides:

"(1) ... 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 permanently incapacitated for work in accordance with a determination under section 37AA." (emphasis added)

8 The expression "qualifying service" is defined in s 7A. It includes service rendered during a period of hostilities. Operational service in Vietnam is, in accordance with s 6, qualifying service.

9 Section 37AA relevantly provides:

"(1) The Commission must, by written determination, specify the circumstances in which persons are permanently incapacitated for work for the purposes of paragraph 37(1)(c).

...

(3) A determination under this section is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901."

10 The appellant has made a written determination pursuant to s 37AA – the Veterans’ Entitlements (Income Support Supplement – Permanent Incapacity for Work) Determination 1999 (Cth) ("the Determination"). Clause 5 of the determination provides:

"5 Circumstances of permanent incapacity

(1) A person is permanently incapacitated for work for paragraph 37(1)(c) of the Act if the person:

(a)	is permanently blind in both eyes; or
(b)	is a veteran to whom section 24 of the Act applies; or
(c)	satisfies subsection (2).

(2) A person satisfies this subsection if:

(a) the person has an impairment that, if it were an injury or disease for the Guide to the Assessment of Rates of Veterans’ Pensions, would result in a combined impairment rating of 40 or more under Table 18.1 in that Guide; and
(b) solely because of the impairment, the person is permanently unable to do work for periods adding up to more than 8 hours per week; and
(c) the Commission is satisfied that the impairment is permanent." (emphasis added)

THE AAT’S FINDINGS

11 The AAT found that the respondent’s wife did most of the work at the house caring for the children, including cooking, washing, cleaning, and shopping. It found that the respondent drove the children to and from school, and to sporting events. He also mopped the floor "now and again", and mowed the lawn. He sometimes assisted in serving the food, and sometimes accompanied the children to the shopping centre. The AAT found further that the respondent’s medication for depression made him listless. He had lost interest in life, self-esteem and confidence and was acutely embarrassed about his situation. .

12 The AAT noted the reports of two psychiatrists who had seen the respondent. The first report was that of Dr Knox who saw the respondent in October 2000. Dr Knox considered that although the respondent had been working forty hours a week up to that time, he would not be able to continue at that rate, and would be "most unlikely to be capable of working more than eight hours a week".

13 Dr Parker, who saw the respondent in December 2002, agreed that he could no longer work by reason of his lack of confidence and poor concentration. The AAT noted an extract from Dr Parker’s report that is set out at [14] of the primary judge’s reasons for judgment. That extract referred to the respondent’s daily conflict with his wife as a result of the pervasive irritability associated with his condition, and a lack of social interaction with anyone apart from the immediate members of his family. Dr Parker concluded:

"I consider that Mr Hill’s condition is permanent and is unlikely to resolve in the short term. I did not issue a certificate to Mr Hill at the time of his assessment but, if I had issued this, it would have reflected that he is permanently disabled and is unlikely to work at his full capacity again."

14 The AAT accepted that the respondent suffered from depression, lacked self-esteem, and was unlikely to be able to work at full capacity again. However, curiously, in the light of the psychiatric reports, the AAT noted that "Dr Parker’s mental state examination revealed that there is really very little wrong with the [respondent]" (emphasis added). It then concluded:

"The fact that the Applicant drives the school bus, does the mowing, mops the floor now and again, takes the children to the shops, and helps with serving meals, indicates that he can at least work for a few hours per day. The Tribunal finds that the Applicant is capable of working more than eight hours per week. He does not qualify for the service pension."

15 In substance, the AAT found that the respondent did not meet the requirements of cl 5(2)(b) of the determination because it was not satisfied that he was "permanently unable to do work for periods adding up to more than 8 hours per week". It was that finding that was challenged before the primary judge as involving error of law.

THE PRIMARY JUDGE’S REASONS FOR JUDGMENT

16 The respondent’s notice of appeal under s 44(3) of the Administrative Appeals Tribunal Act 1975 (Cth) contained a number of grounds alleging that the AAT had made various errors of law. The primary judge rejected a challenge to the adequacy of the AAT’s reasons, and a claim that the respondent had been denied procedural fairness. His Honour also rejected a contention that the AAT had wrongly imposed an onus of proof upon the respondent. However, his Honour was satisfied that the AAT had misunderstood, or misapplied, the meaning of the expression "permanently unable to do work" in cl 5(2)(b) of the determination (emphasis added).

17 In substance, his Honour held that the AAT had misunderstood the meaning of the word "work", in context, by failing to adopt a construction which involved working in "meaningful employment" as distinct from some "activity undertaken intermittently and at the [respondent’s] own pace and at the [respondent’s] own whim".

18 His Honour referred in some detail to the uncontradicted, and unchallenged, evidence before the AAT. He noted that the AAT’s reasons for decision did not suggest that it had any doubt as to the accuracy of that evidence, including the psychiatric evidence. He referred to Dr Knox’s report, and to his diagnosis that the respondent was suffering from long-term dysthymic disorder, a form of depression. Even at October 2000, Dr Knox noted:

"While Mr Hill is employed, along with his wife, as a houseparent in a home for Aboriginal boys, his wife says that he does very little about the house, and is only able to work at a low level under her direction. I do not think that he would be able to find work in the open market. Thus, while he works 40 hours per week currently, I think that were he not able to continue in his present work he would be most unlikely to be capable of working more than eight hours per week. His self-confidence is very poor. He reports memory disturbance.

Effectively Mr Hill has no job skills or qualifications likely to enable him to find employment at this time."

19 His Honour then noted that the passages from Dr Parker’s report that were quoted by the AAT were incomplete. He observed that the passage immediately preceding that which was quoted by the AAT read as follows:

"Mr Hill described a pervasive sense of distress as a result of his persistent anxious arousal and frequent flash backs. Mrs Hill noted that she can tell when her husband is affected by the flashbacks because he becomes quiet and withdrawn. Mrs Hill also noted that her husband had become increasingly dependent on her for daily activities. Because of problems related to his gambling, she controls the finances in the family. Mr Hill commented that he cannot work any more due to his lack of confidence and poor concentration."

20 His Honour also noted that the passage from Dr Parker’s report quoted by the AAT did not include the following conclusion:

"Given his current level of disability, I consider that Mr Hill should be considered totally and permanently disabled as a result of his condition."

21 The primary judge also set out in some detail a summary of the evidence by the respondent and his wife given before the AAT. It is useful to repeat that summary:

"[38] The applicant’s statement of 21 February 2003 referred to the arrangements from January 2001 whereby the contract payment went directly to the applicant’s wife "as a result of my inability to handle money at all". He said he "regularly" takes the children to and from school and does the mopping, "say once per week", but in cross-examination he said he collected the children from school "very rarely", as he does very little in the afternoons, although he could do so in an emergency. He is able to mow the lawns. He helps his wife manage the children "from time to time", although she does the washing, cooking and general chores as a rule. She also counsels and disciplines the children. He said his contribution to the care of the children is minor compared to that of his wife, and "I can choose not to do anything at all if I am particularly down, as happens from time to time". He said he could not do his job without his wife, and could not hold down any other job.

[39] The applicant’s oral evidence to the tribunal generally confirmed that picture. He said he "sometimes" takes the children to school or collects them. Some days he does not, as he simply does not get up in time. When he does so, the round trip takes about 30 minutes. He mops the floors perhaps once a week. He mows the lawns. Occasionally he helps prepare a meal, such as by peeling potatoes. He said he could not work elsewhere, because he cannot complete even simple things such as mopping a floor without a break. His cross-examination confirmed that he requested at the end of 2000 that further contract payments be to his wife only. There were two reasons. The first was that despite the apparent tax benefits of splitting the income, even though the applicant would not really work, the benefits were not as much as expected. The second was that it was better if the applicant did not handle or have access to the finances. The applicant felt he had "no argument ... to say it is my money". He explained that to mop the floor, which should take an hour, takes all morning because he stops and starts. He does not work continuously for a period of 1 hour at a time. Over a full morning’s work, he would work a total of up to 1 hour. In answer to questions from the tribunal, he said he could not work for long because "I can’t even concentrate long enough to actually mop the floor without sitting or having breaks".

[40] The applicant’s wife confirmed that picture. Her written statement said the applicant often drove the children to and from school and to sport, that he mopped the floor about once a week, and that he mows the lawns. He also sometimes helps with serving meals. She described the applicant as "often vague" but he is not drinking alcohol or gambling "only as he is under my control 24 hours per day". If the applicant does not feel like doing anything, he simply does not do it.

[41] In her oral evidence, she said the applicant only drives the children to school when he wants to, so if he sleeps in then she must do so. She cannot pre-arrange for him to do so. She described the applicant as having no self-esteem, as being very depressed, and being unable to work. He does only 2% of the work, and the house would operate well without his contribution.

[42] The applicant’s wife was recalled following submissions to the tribunal, to expand upon her evidence about the applicant’s capacity to work. She said:

For a start no-one would employ him. He is 58 years old, he is depressed, he is withdrawn and that is what happens, like he goes into this withdrawal state. I don’t know really this is awful, but you can’t trust him ... I can’t [let him out of the house or out of my sight].

She said he is unemployable."

22 His Honour neatly summarised the effect of this evidence at [53] of his reasons for judgment:

"The evidence (none of which it appears to have rejected) indicates that the applicant does certain tasks intermittently and at his own election and in his own time, which (when performed) may assist his wife in providing services to the children who she looks after. But he does not do so in any organised or structured or reliable way. He is not remunerated for what he does; he receives weekly pocket money irrespective of how much or how little he does. His contribution is not one upon which his wife relies, but rather (it seems from her evidence) is one which she accommodates. The medical evidence categorises the applicant as unable to work notwithstanding what he does." (emphasis added)

23 His Honour concluded that the AAT had fallen into error in its interpretation of cl 5(2)(b) of the determination because it had failed to appreciate that the expression "permanently unable to do work" did not mean unable to perform menial tasks, but rather unable to "work in employment". He reasoned that the relevant provisions of the VE Act should be understood to operate in the same way as the compensatory provisions of the Safety, Rehabilitation and Compensation Act 1988 (Cth) and the workers’ compensation enactments of the various states and territories. He noted that these Acts took their source from the Workmen’s Compensation Act 1906 (UK), and that they had as a common thread the entitlement to compensation for incapacity for work as a result of work related injury or disease. A number of them made provision for the entitlement to compensation where the incapacity was partial only.

24 His Honour said that he could see no reason why, given the legislative genealogy of provisions such as s 37 of the VE Act, the words "permanently incapacitated for work" in ss 37(1)(c) and 37AA, and the words "permanently unable to do work" in cl 5(2)(b) of the Determination, should not be given the meaning which they had traditionally been given in similar legislation.

25 His Honour then said that it would not be consistent with the purposes of the VE Act that the word "work" in the determination should refer to "non-employment activity". Short of being bedridden, a person might be able to attend to daily personal or domestic chores which involve activity of a few hours a day, or more than eight hours a week. The capacity to engage in such activity did not necessarily equate with the capacity to engage in meaningful employment for such periods.

26 His Honour’s analysis of the relevant legal principles proceeded as follows:

"[48] The expression "incapacity for work" means incapacity to earn wages: Thompson v Armstrong & Royse Pty Ltd [1950] HCA 46; (1950) 81 CLR 585 per Latham CJ at 595, per McTiernan J at 602, per Williams J at 608, per Webb J at 615, and per Kitto J at 623. It is the physical inability to provide labour in the open labour market. See also Ball v William Hunt & Sons Pty Ltd [1912] AC 496 at 499–500.

[49] It is also plain that whether a person has a residual capacity to work is determined by reference to labour markets reasonably available to that person: Ruiz v Canberra Rex Hotel Pty Ltd (1974) 5 ACTR 1; Asioty v Canberra Abattoir Pty Ltd [1989] HCA 40; (1989) 167 CLR 533; 87 ALR 385; Tok Carpentry and Partitioning Pty Ltd v Watts [1993] ACTSC 28; (1993) 113 FLR 368; Woden Valley Glass v Psaila [1993] FCA 399; (1993) 44 FCR 140; 122 ALR 387.

[50] Hence, there are cases where the residual capacity to work of a particular claimant for compensation has been treated as so confined that, in reality, there is total incapacity for work. In Foster v Wharncliffe Woodmore Colliery Co Ltd [1922] 2 KB 701, Lord Sterndale MR at 709 referred with approval to the observations of Fletcher Moulton LJ in Cardiff Corp v Hall [1911] 1 KB 1009 at 1020 where his Lordship said:

... if in other words the capacities for work left to [a worker] 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, I think it is incumbent on the employer to show that such special employment can in fact be obtained by him ... I should say that if the accident leaves the workman’s labour in the position of an "odd lot" in the labour market, the employer must show that a customer can be found who will take it.

In that case Scrutton LJ at 715 explained that the term "odd lot" relates to the work capacity of a person who is so impaired that the person is "only able to do certain very special jobs, depending on finding a very special employer who, either through compassion or because he has a special job, is able to give him employment, but any ordinary class of work he is not able to do ...".

[51] Illustrations of cases where a very substantially impaired person has been regarded as having no real residual capacity to work, although not medically described as totally incapacitated for work, are provided by Wemyss Coal Co Ltd v Walker (1929) 22 BWCC 366; Fletcher v Douglas [1934] WCR (NSW) 88 and Schulz v BHP Co Ltd [1934] WCR (NSW) 389. In Wicks v Union Steamship Co of New Zealand Ltd [1933] HCA 58; (1933) 50 CLR 328, the High Court (Gavan Duffy CJ, Rich, Starke, Dixon, Evatt and McTiernan JJ) remitted a determination for reconsideration because the decision-maker had not clearly addressed whether the worker was (at 338):

... physically incapacitated from ever earning by work any part of his livelihood. This condition [their Honours said] is satisfied when capacity for earning has gone except for the chance of obtaining special employment of an unusual kind.

See also Bavcevic v Commonwealth [1957] HCA 67; (1957) 98 CLR 296 at 303–4; Hamiltons Ewell Vineyards Pty Ltd (t/as Mildara Wines Ltd) v Holmes (1985) 38 SASR 153 and Anderson v Australian Postal Commission (1981) 39 ALR 94 at 100–1." (emphasis added)

27 His Honour concluded that the AAT had failed to recognise the distinction between doing "work" or the capacity to do "work" on the one hand, and doing some day to day activities of routine existence on the other. That was a distinction that the AAT was required to address. Accordingly, in his Honour’s view, the AAT erred in law. In arriving at that conclusion, he made it clear that he rejected the contention that any error on the part of the AAT was entirely factual. The fact that it did not refer to certain critical evidence, including in particular the concluding sentence of the passage in Dr Parker’s report, while observing that the effect of that report was that there was "really very little wrong with the [respondent]", indicated that the AAT failed to recognise the way in which the word "work" was used in the expression "incapacity for work" in s 37 of the VE Act, and its analogue in cl 5(b)(2) of the determination.

28 Accordingly, his Honour allowed the appeal, and ordered that the decision of the AAT be set aside. He also ordered that the application for an invalidity service pension be remitted to the AAT for reconsideration according to law.

THE APPEAL TO THIS COURT

29 The notice of appeal filed on 22 July 2004 contains the following grounds:

"2. The learned Judge at first instance erred by determining the application before him on a ground that was not agitated before him and in respect of which the Appellant was not afforded an opportunity to be heard.

3. The learned Judge at first instance erred in the constriction of the Veteran’s Entitlements (Invalidity Service Pension – Permanent Incapacity for Work) Determination 1999 ("the 1999 Determination") by equating its provisions with those of various pieces of workers compensation legislation rather than applying the words of the provisions

4. The learned Judge at first instance erred in the construction of the 1999 Determination by equating its provisions with those of various pieces of workers compensation legislation in respect of which there was no relevant relationship.

5. The learned Judge at first instance erred in failing to appreciate that the matter in issue before the AAT did not involve the veteran having rendered operational service, the provision of s.120(1) and (3) of the Veterans’ Entitlements Act 1986 (Cth) or that the Tribunal was required to determine that the Applicant’s condition was war-caused unless it was satisfied beyond reasonable doubt that there was no sufficient reason for making that determination. There was no requirement that the veteran’s condition be related either to service (operational or otherwise) or to his employment.

6. The learned Judge at first instance erred in determining that the provisions of the 1999 Determination under consideration operated on the basis that the impairment suffered by the Applicant was an employment related impairment or was war-caused.

7. The learned Judge at first instance erred in his construction of cl.5(2)(b) of the 1999 Determination in that he determined that the employability of the veteran was relevant to determining the extent of incapacity of the veteran.

8. The learned Judge at first instance erred in his construction of cl.5(2)(b) of the 1999 Determination in that he determined that the clause required that the incapacity of the veteran related to the veteran’s capacity to earn wages as opposed to incapacity to "work".

9. The learned Judge at first instance erred in his construction of cl.5(2)(b) of the 1999 Determination in that he failed to afford any significance to the word "solely" where it appears in cl.5(2)(b)."

30 The main issue on the appeal is whether the primary judge erred by construing the determination by reference to the principles underlying workers’ compensation legislation generally.

31 Counsel for the appellant, Mr Derrington SC, submitted that his Honour fell into error almost from the commencement of his analysis of the issue before him by wrongly identifying the steps that lay behind the AAT’s reasons. He drew attention to [7] of the primary judge’s reasons for judgment, which was in the following terms:

"Underlying the tribunal’s reasons are the following steps. By reason of having rendered operational services, s 120(1) and (3) applies. That is, the tribunal was required to determine that the applicant’s condition was war caused unless it was satisfied beyond reasonable doubt that there is no sufficient reason for making that determination. Section 120(3) provides the circumstances in which the tribunal might have been so satisfied. The absence of express consideration of those provisions indicates the tribunal did determine that the applicant’s condition was war caused. Whether the condition be identified as a disease or as an injury, under s 13 the condition was one which entitled the applicant to benefits under the Veterans’ Entitlements Act." (emphasis added)

32 Mr Derrington submitted that it was clear from this passage that his Honour considered that the AAT must have determined, sub silentio, that Mr Hill’s condition was "war-caused". In fact, however, the AAT had made no such determination. The provisions of ss 120(1) and (3) had nothing whatever to do with an application for an invalidity service pension. They applied in relation to claims for a pension under Pt II or Pt IV of the VE Act. A claim for an invalidity service pension is made under Pt III. Therefore, quite properly, the AAT did not have regard to ss 120(1) and (3).

33 Mr Derrington submitted that the only issue before the AAT had been whether Mr Hill could satisfy the requirements of cl 5(2)(b) of the Determination. That clause did not require him to establish that his incapacity was "war-caused". His Honour had failed to appreciate that fact, and this led him to approach the construction of cl 5(2)(b) upon the basis that the requirements contained therein were predicated upon Mr Hill having sustained a "war-caused" or "employment-related" injury. Mr Derrington submitted that that error was fundamental, and tainted the balance of his Honour’s reasoning. It led him to embark upon an analysis of case law and legal doctrine that was entirely irrelevant.

34 Mr Derrington contended that the initial error in equating cl 5(2)(b) with employment-related injuries resulted in a failure to characterise correctly the principles that lay behind the grant of an invalidity service pension. The provisions under which a veteran could apply for such a pension were neither equivalent to, nor genealogically related to, various workers’ compensation schemes. There was no "common thread" running through the workers’ compensation statutes and the social security principles underlying the invalidity service pension. There was no basis for treating the expression "permanently incapacitated for work" in s 37(1), or the cognate expression "permanently unable to do work" in cl 5(2)(b), as functionally equivalent to "entitlement to compensation for ‘incapacity for work’ as a result of work-related injury or disease" as his Honour had done at [45] of his reasons for judgment.

35 According to Mr Derrington, this error tainted the balance of his Honour’s judgment. It led him to conclude that the notion of permanent incapacity for work in the invalidity service pension provisions was analogous to the defect that would prevent a person from finding paid employment in any market reasonably accessible to that person. There was a fundamental distinction between workers’ compensation legislation, which involved a compensatory payment for work-related injuries, and those parts of the VE Act that made provision for an invalidity service pension. Such a pension is available to an ex-service person who has become permanently incapacitated for work, irrespective of whether that condition resulted from any service rendered.

36 Mr Derrington submitted that by erroneously equating these provisions, his Honour had wrongly applied the workers’ compensation principle that a person who is regarded as "an odd lot" would fall within the description of a person "totally incapacitated for work" if there were no special employment that could be found for that person: see the authorities cited by his Honour at [50]-[51] of his reasons for judgment, including in particular Cardiff Corporation v Hall [1911] 1 KB 1009; Foster v Wharncliffe Woodmore Colliery Co Ltd [1922] 2 KB 701; and Wicks v Union Steamship Co of New Zealand Ltd [1933] HCA 58; (1933) 50 CLR 328.

37 Mr Derrington argued that the doctrine of the "odd lot", which concerned employability and the capacity to earn income within workers’ compensation principles, had nothing to do with the issue of capacity to "do work" for periods adding up to more than eight hours a week within cl 5 (2)(b). He submitted that the words used in that clause should be given their ordinary and natural meaning. The respondent was required to demonstrate that he was unable "to do work". The language used did not stipulate that he was "unable to work" (in an employment sense), or "unable to go to work", still less that he was "unable to find work".

38 Mr Derrington emphasised that there was nothing in cl 5(2)(b) that suggested the notion of employability. Were that concept intended, the clause could easily have been framed in terms of an ability to undertake "remunerative work", as appeared in s 24(1)(b) of the VE Act. Indeed, it would be odd to think that the term "work" in the Determination would actually be narrower than the expression "remunerative work" which was defined in s 5Q as meaning any "remunerative activity". The focus of the clause was upon the respondent’s "capacity" or "ability" to do work. Plainly, the clause was concerned to establish whether he could undertake the activity of working for periods totalling eight hours or more per week. Given the nature of employment, it would widen the scope of the availability of an invalidity service pension to a considerable degree if an applicant were only required to show that he or she could not obtain employment for periods of up to eight hours a week in labour markets readily available to them.

39 In substance, therefore, Mr Derrington submitted that contrary to the primary judge’s reasoning, cl 5(2)(b) had nothing to do with the capacity "to engage in meaningful employment" for such periods, or the capacity to "earn wages". The concept of "do work" required the focus of attention to be upon an applicant’s ability to undertake the task of working. The decision-maker was required simply to determine whether the impairment from which the applicant suffered was the sole reason for his inability to work for a total of eight hours a week. To add a requirement that there be an employer who was ready, willing and able to offer the applicant employment, or even that there was employment available, would be to impose a gloss upon the clause that was entirely unwarranted.

40 Mr Derrington recognised that the ability to undertake mundane tasks, necessary for the purpose of maintaining one’s existence, would not amount to "work" within the meaning of the clause. However, in the present case, the primary judge had allowed himself to be distracted from a proper consideration of whether the activities undertaken by the respondent amounted to doing work. Mr Derrington submitted that when those activities were considered cumulatively, they amounted to "work" within the meaning of that term in cl 5(2)(b). He submitted that had the primary judge not focused, erroneously, upon the workers’ compensation cases, he would inevitably have concluded that the respondent’s activities as a carer for indigenous school children amounted to "work" in the relevant sense. He emphasised the AAT’s finding that there was "very little wrong" with the respondent, who had been in employment all his life, and who had acquired various job skills.

41 Counsel for the respondent, Mr De Marchi, submitted that before the primary judge, it had been argued, on behalf of his client, that cl 5(1)(b) (in addition to cl 5(2)(b)) provided a gateway to an invalidity service pension. In those circumstances, his Honour had been entitled to consider whether Mr Hill’s disabilities were "war-caused". Subsections 120(1) and (3) were relevant to that consideration.

42 Alternatively, he submitted, the passage at [7] of his Honour’s reasons for judgment had no impact whatever upon the balance of those reasons. The analysis of the workers’ compensation cases had plainly been undertaken as part of a process of construing the expression "incapacitated for work" in s 37(1). His Honour recognised that the language used in the VE Act differed in certain respects from that adopted in workers’ compensation legislation. Nonetheless, the analogy that he drew between the principles developed in cases dealing with that legislation, and the principles applicable to the VE Act, was legitimate, and entirely appropriate.

43 Further, and again in the alternative, Mr De Marchi submitted that even if the primary judge had erred in approaching the matter as he had, the result arrived at was plainly correct. It was simply inconceivable that the AAT could have concluded, in the face of the psychiatric evidence before it, none of which had been challenged, that the respondent was able to "do work" for not less than eight hours per week. The fact that the respondent might have some residual work capacity, which could not translate into any form of remunerative employment, did not operate as a disqualifying factor.

44 Mr De Marchi invoked s 119(1)(g) of the VE Act, which required the appellant to act in accordance with substantial justice and the substantial merits of the case, without regard to legal form and technicalities. He also submitted that the Determination, being a disallowable instrument under s 46A of the Acts Interpretation Act 1901 (Cth), had to be given a beneficial interpretation, consistent with the principles underlying the VE Act.

45 Mr De Marchi concluded by contending that it was clear that the AAT had failed to apply the law correctly to the facts as found. The sporadic activities performed by the respondent, at his whim, did not constitute "work" in the sense described by the Oxford Dictionary, namely "expenditure of energy, striving, application of effort to some purpose" (emphasis added). The primary judge, having recognised that the AAT had erred in law, remitted the matter to be properly determined according to law. That was a correct decision, and should not be interfered with on appeal.

CONCLUSIONS

46 As noted above, Mr Derrington invited the Court to conclude that the AAT had simply determined, as a matter of fact, that the respondent could "do work" which, though apparently mundane, was undertaken for the purpose of generating income. He attacked the construction of cl 5(2)(b) adopted by the primary judge because of its links with a body of learning dealing with workers’ compensation, an entirely different concept. That led the primary judge to focus upon the respondent’s ability to find employment, rather than his ability to do work. It meant that his Honour ignored the fact that the respondent was able to undertake work, in the ordinary and natural meaning of that term, namely assisting his wife in the performance of their contractual obligations to the church school association. In effect, his Honour placed an inappropriate gloss upon the word "work" in the VE Act, and in the Determination.

47 We should say at once that we consider that neither ss 120(1) nor (3) of the VE Act, to which his Honour referred at [7] of his reasons for judgment, had anything whatever to do with the issue that presented itself for determination. It may be that his Honour’s reference to those provisions related to an alternative submission that was advanced at one point, but was either abandoned, or did not have to be dealt with when it came to finalising the judgment. Nonetheless, his Honour’s later reasoning that there was a "genealogical relationship" between the provisions governing invalidity service pensions and workers’ compensation provisions seems to have been influenced by a mistaken belief that the respondent was claiming, in relation to cl 5(2)(b), to have suffered a war-caused injury. In truth, as has been noted, an entitlement to an invalidity service pension does not require proof of any causal link between operational service and the injury or condition that is said to give rise to the relevant incapacity.

48 Contrary to his Honour’s analysis, the AAT said nothing about the respondent’s condition having been war-caused. That was not an issue before it. There was no finding, explicit or otherwise, regarding that matter.

49 The workers’ compensation provisions, to which his Honour referred, and from which he derived principles of construction said to be relevant cl 5(2)(b) were, in fact, dissimilar in many respects. Under workers’ compensation statutes, an employee’s entitlement stems from accidents occurring, or injuries sustained, in the course of employment. There must be a nexus between the employment and the injury. A person need not demonstrate such a nexus in order to qualify for an invalidity service pension.

50 The facts of the present case illustrate the difficulty that can arise in determining the limits that are to be imposed upon the term "work" in the context of the VE Act. Plainly, "work" connotes voluntary action of some kind. It may also be accepted that "work" is purposive, rather than random. However, it is by no means easy to distinguish between work and other purposive activity, much of which may be valuable. What differentiates work from play, sport, exercise, study, or leisure?

51 Mr Derrington accepted that "work", in this context, could be regarded as activity for which, in the normal course, remuneration might be paid. However, that was not a limiting principle so far as the respondent was concerned. By assisting his wife to perform their mutual obligations under the contract, for remuneration, he performed acts that had been sold in the marketplace. He was not engaged in merely personal activities.

52 There are problems with the submission that any ability to perform a remunerative task amounts to capacity for "work". On that definition, a quadriplegic who could make a voice activated response to a telephone request would be capable of doing work. The fact that someone might be willing to pay for such a service would mean that such a person was able to "do work", and probably for more than eight hours per week. Any definition of "work" that treated so severely disabled a person as able to "do work" might all but eviscerate entitlement to an invalidity service pension. It is hardly likely that this is what the legislature intended.

53 On the evidence in the present case, it would be open to conclude that the respondent could perform certain limited tasks. However, in a practical sense, it is unlikely that anyone would employ him. Such tasks, as he performed, were carried out in a sheltered environment. In essence, his wife performed nearly all of the contractual obligations owed to the church school organisation, with only occasional and sporadic assistance from him.

54 We are unable to accept Mr Derrington’s submission that an invalidity service pension is only available to a person who is totally unemployable. Whether a person has the ability to "do work" is likely to depend, in part, upon that person’s background, training and skills. A person may have done hard physical labour all his or her life. That person may have had only minimal education. A serious back injury may render that person incapable of doing work, whereas another person, with a different educational background, might be able to switch from physical labour to clerical duties.

55 There are other difficulties with using the marketplace definition of ability to do work. A veteran who is aged sixty-five might find it almost impossible to procure employment in circumstances where a veteran aged thirty would have little difficulty. A veteran who lives in a small rural town might be worse off, in terms of finding alternative employment, than a veteran who lives in a large capital city. Yet, their physical or mental impairment might be exactly the same. It would be odd to think that the entitlement to an invalidity service pension should depend upon matters of this kind. These difficulties are compounded by the use of the term "solely", meaning "alone", in cl 5(2)(b).

56 What is tolerably clear is that the term "work" in cl 5(2)(b) must essentially mean the same as the term "work" in ss 37(1) and 37AA. Clause 5(2)(b), being delegated legislation, cannot constrain the concept of "work" as it appears in the statute. And given that the statute uses the expression "remunerative work", it is arguable that the term "work" carries a wider meaning. It is of some significance to note that the expression in the Determination is to "do work", and not to "find work". Nonetheless, the term "work" cannot carry a meaning that is so wide as to render the entitlement to an invalidity service pension impossible to attain.

57 In our view, the expression to "do work" in cl 5(2)(b), when read in context, requires the decision-maker to focus upon the applicant, and not some hypothetical person. Consideration must be given to whether a person of the applicant’s background, suffering from his or her condition, is, solely by reason of the impairment, permanently unable to do remunerative work of the type that he or she would otherwise be fitted to undertake. In answering that question, it must be determined whether the applicant can undertake such work for more than eight hours per week. In other words, the test looks at the individual applicant, treats "work" as remunerative activity, and assesses the applicant’s ability to carry out that activity by reference to that person’s qualifications, background and skills.

58 The test that we consider appropriate does not go as far as that seemingly applied by the primary judge. His Honour’s analysis would treat an applicant as relevantly incapacitated in circumstances where that person could not readily find alternative employment. That goes too far. It imposes an unwarranted gloss upon the language used by the legislature. The correct test, in our view, does not focus upon employability, but rather the capacity to perform remunerative work of a kind for which the person is otherwise suited.

59 It will be recalled that, in interpreting the word "work" at [31] of his reasons for judgment, his Honour characterised it as "meaningful employment". He distinguished such employment from "some activity undertaken intermittently and at the applicant’s own pace and ... whim". It is doubtful that the adjective "meaningful" is of assistance in this context. It is difficult to conceive of "employment", whether "meaningful" or not, that would not relevantly constitute "work". Nonetheless, his Honour was correct in distinguishing between the type of activity that could amount to "work", and intermittent activity done at the applicant’s own whim.

60 Where we consider that his Honour erred, however, was in equating the expressions "permanently incapacitated for work" and "permanently unable to do work" in the VE Act and the determination with the meaning given to analogous expressions in workers’ compensation statutes. His Honour concluded that the aim of the VE Act was to provide an invalidity service pension where the veteran was "unable to work in employment". He construed the relevant terms in the VE Act and the determination as meaning "incapacity to earn wages". He equated those terms with a "physical inability to provide labour in the open labour market". Indeed, he said that it was plain that whether a person had a residual capacity to work was "determined by reference to labour markets reasonably available to that person". All of these formulations were taken directly from cases decided in relation to workers’ compensation provisions.

61 In adopting what was in substance a test of "employability", we consider that his Honour fell into error. A test of that nature may be appropriate in the context of whether an employee who has been injured in the course of his or her employment is relevantly incapacitated, and entitled by reason of that fact to compensation. An invalidity service pension is genealogically different. It is analogous to a social security entitlement. There is no need for any link to be shown between the incapacity that the veteran now suffers, and any service that has been rendered. There is nothing to suggest that s 37(1) of the VE Act contains an implication that, in considering whether a person is "permanently incapacitated for work" regard must be had to the availability of the type of work for which that person is suited.

62 The primary judge also adopted the language of the workers’ compensation cases when he referred to a workman who was in the position of an "odd lot" in the labour market. That expression is used in relation to a worker who is "fit only for special uses", and is not a "merchantable article" in the labour market. The cases establish that where an accident at work leaves a worker in that position, he or she is incapacitated unless the employer can demonstrate that there is a "customer" for the worker’s services. With respect, we consider that there is no warrant for importing this notion, or any analogous concept, into the requirements for an invalidity service pension.

THE APPROPRIATE ORDERS

63 It follows that, in our view, his Honour erred in law in interpreting the relevant provisions of the VE Act and the Determination. Initially, Mr Derrington contended that if this Court were persuaded of that error, it should simply reinstate the decision of the AAT affirming the Repatriation Commission’s rejection of the respondent’s claim for an invalidity service pension. However, during the course of argument, Mr Derrington changed his position and conceded that this would not be an appropriate outcome. He accepted that the AAT had itself fallen into error in various ways that his Honour’s reasons for judgment had exposed. That meant that the matter should be considered afresh by a tribunal differently constituted.

64 Mr Derrington submitted that the appeal should be allowed, in order to correct the primary judge’s erroneous interpretation of the relevant statutory provisions. Nonetheless, he accepted that the orders pronounced by his Honour should stand, with one modification. He submitted that the appeal should be allowed, the decision of the AAT of 7 November 2003 be set aside, and the application for review of the decision of the Repatriation Commission rejecting the respondent’s claim for a service pension under the VE Act be remitted to the AAT for reconsideration according to law, but not the law as expounded by the primary judge, but rather the law as expounded by this Court.

65 Mr De Marchi initially submitted that if this Court were to allow the appeal, solely in order to ensure that the law was correctly stated, it should nonetheless order that the decision of the AAT, rejecting the respondent’s claim for an invalidity service pension, be set aside. He submitted that on the unchallenged psychiatric evidence, the only conclusion reasonably open to the AAT was that the respondent was unable to "do work" for the requisite eight hours per week. That is obviously a difficult argument to make, since the weight to be given to the psychiatric evidence is a matter for the tribunal of fact, and not for this Court. Recognising that difficulty, Mr De Marchi ultimately withdrew that submission.

66 In our view, Mr Derrington’s concession, and his submission as to the proper outcome of this appeal, should be accepted. The AAT plainly did not have regard to the full import of the psychiatric evidence regarding the respondent’s mental condition, and his ability to undertake "work" as contemplated by the legislation; it failed to take into account material that was not merely relevant, but highly probative. It would be open to the AAT, upon the totality of the evidence, to conclude that the respondent lacked the capacity to "do work" in the relevant sense. Whether or not the AAT comes to that conclusion, after giving proper consideration to that evidence, is of course a matter for it.

67 Mr Derrington acknowledged that his client had only appealed to this Court from the decision of the primary judge because it was concerned to correct an erroneous interpretation of the relevant statutory provisions. Accordingly, the case may fairly be regarded as something of a "test case". Where a public authority institutes a proceeding in order to clarify a point of law, it often undertakes, or is required to undertake, to pay the respondent’s costs of that proceeding, irrespective of the outcome.

68 In our view, although the appellant has been successful, it would be inappropriate to deprive the respondent of the order for costs made by the primary judge in his favour. Given that the order remitting the matter to the AAT to be reheard and determined according to law will stand, with only slight modification, it would also be inappropriate to visit the costs of this appeal upon the respondent.

69 Indeed, this is an unusual case. The respondent, having lost before the Repatriation Commission, and again before the AAT, really had no alternative but to institute proceedings in the Federal Court in order to have his claim properly considered. He succeeded before the primary judge, and he has succeeded again before this Court (albeit for different reasons), in having the AAT’s decision set aside. Notwithstanding the fact that the appellant has had a measure of success on the appeal, we consider that it should pay the respondent’s costs. The order for costs made below should stand.

I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Wilcox, French and Weinberg.

Associate:

Dated: 16 February 2005

Counsel for the Appellant:	Mr R M Derrington SC
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	Mr D De Marchi
Solicitor for the Respondent:	Pipers Barristers & Solicitors
Date of Hearing:	25 November 2004
Date of Judgment:	16 February 2005