Comcare v Russell Edward Smith [1997] FCA 140 (5 March 1997)

CATCHWORDS

Administrative Law - appeal from Administrative Appeals Tribunal - appeal on a question of law - Tribunal ordered extension of time to request a reconsideration of a decision to terminate compensation - request made 21 months out of time - whether Tribunal applied a correct test in considering the merits of the substantial claim for compensation - whether the Tribunal erred in failing to consider potential prejudice to the other party - whether failure constituted error of law - whether Court has power to re-exercise the discretion to extend time.

Matter No. DG6 of 1996

COMCARE v RUSSELL EDWARD SMITH

von Doussa J

Darwin

5 March 1997

IN THE FEDERAL COURT OF AUSTRALIA

NORTHERN TERRITORY DISTRICT REGISTRY No. DG6 of 1996

GENERAL DIVISION

On appeal from the Administrative Appeals Tribunal constituted by Senior Member K L Beddoe

BETWEEN:

COMCARE

Applicant

AND:

RUSSELL EDWARD SMITH

Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER : VON DOUSSA J

WHERE MADE : DARWIN

DATE ORDER MADE : 5 MARCH 1997

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The decision of the Administrative Appeals Tribunal dated 2 May 1996 be set aside.

3. The matters be returned to the Administrative Appeals Tribunal to be heard and determined again.

4. Question of costs reserved. Liberty to parties to apply on question of costs.

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 DG6 of 1996

GENERAL DIVISION

On Appeal from the Administrative Appeals Tribunal constituted by Senior Member K L Beddoe

BETWEEN:

COMCARE

Applicant

AND:

RUSSELL EDWARD SMITH

Respondent

REASONS FOR JUDGMENT

Coram: von Doussa J

Place: Darwin

Date: 5 March 1997

This is an appeal on questions of law brought pursuant to the provisions of s.44 of the Administrative Appeals Tribunal Act 1975 ("the AAT Act").

By a determination dated 16 June 1992 the applicant ("Comcare") determined, with effect from 18 June 1992, that liability no longer existed to pay compensation to the respondent ("Mr Smith") in respect of an injury which occurred on 10 October 1989. By letter dated 20 April 1994 solicitors acting for Mr Smith applied to Comcare for a reconsideration of the determination dated 16 June 1992. The application for reconsideration included an application for an extension of time to make the request for reconsideration. On 19 December 1994 Comcare notified its refusal to extend time. Mr Smith applied to the Administrative Appeals Tribunal ("the Tribunal") for review of the decision refusing to extend time. The Tribunal on 2 May 1996 set aside the decision and ordered that the request for reconsideration by Mr Smith contained in his solicitor's letter of 20 April 1994 be treated as being within time. It is against that decision which the present appeal is brought.

Section 62 of the Safety, Rehabilitation and Compensation Act 1988 provides for reconsideration of determinations made by a determining authority. A request for reconsideration shall set out the reasons for the request, and be given to the determining authority within 30 days after the day on which the determination first came to the notice of the person making the request, or within such further period (if any) as the determining authority, either before or after the expiration of that period, allows. In the present case the request for reconsideration and the application for an extension of time were made approximately 21 months after the 30 day period expired.

The power to extend time given by s.62 is a discretionary one. The parties are agreed that in the exercise of that discretion the determining authority, and the Tribunal in its stead on review, should be guided by the principles discussed by Wilcox J in Hunter Valley Developments Pty Ltd v Minister for Home Affairs and Environment [1984] FCA 176; (1984) 58 ALR 305 at 310-311. In support of this appeal it was submitted on behalf of Comcare that the Tribunal fell into error of law in its consideration of two of those principles, namely on the question whether Comcare would suffer any prejudice if time were extended, and on the assessment of the merits of Mr Smith's claimed entitlement to compensation. Relevant to the second of these matters Wilcox J in Hunter Valley Developments said (at p.311): "The merits of the substantial application are properly to be taken into account in considering whether an extension of time should be granted..."

At the hearing before the Tribunal both parties were represented by counsel. Many documents comprising Comcare's file were tendered in evidence including medical reports concerning Mr Smith which were written both before and after the decision of 16 June 1992 to terminate the payment of compensation. Affidavits were tendered from Mr Smith, from a Comcare officer Ms Ellis, and from Ms Day, who is a solicitor from the firm which commenced to act for Mr Smith in May 1993. These deponents gave evidence, as did Mr Schneider who is a solicitor with another firm who acted for Mr Smith for a time before Ms Day was instructed.

The material before the Tribunal established that on 18 October 1989 Mr Smith lodged a claim for compensation alleging that he suffered injury on 10 October 1989 in the course of his employment as a labourer with the Department of Defence in Darwin. He alleged that he had sustained back and rib injuries when he fell whilst alighting from a truck that he had been driving. The claim was accepted, and he received compensation payments until 18 June 1992. In the intervening period he saw a number of doctors including Dr Schmidt who prepared reports dated 22 January 1992 and 9 April 1992. The material part of the latter report read:

"He suffers from mechanical lower back pain and mechanical lower back dysfunction. He has a pre-existing spondylolisthesis and degenerative arthrosis of the lower spine.

Neither of these conditions were caused by the incident of 10th. October, 1989. I would assume that he had an aggravation of a pre- existing injury which by now should have settled.

Mr. Smith has been unable to convince me that he has any significant residual disability. Giving him the benefit of the doubt I suggested he come back and see me for review after again working on his exercise programme. He has not subsequently returned for a visit.

I would not employ this man doing any form of physical work.

It would appear ongoing treatment is fruitless in this gentleman.

It is my impression that this man is malingering to remain on compensation payments."

A copy of this report was sent to Mr Smith who was asked to respond to the medical opinion. On 11 May 1992 Mr Smith contacted Comcare saying that he was not happy with the report and that he intended to provide supporting evidence from his own specialist, but that as he was living on Bathurst Island he was concerned that he might not be able to arrange the report in a short time. Thereafter Mr Smith had a number of telephone conversations with Comcare seeking payment of his airfares from Bathurst Island to the mainland, which Comcare refused to pay. In the course of these discussions Mr Smith was informed that a decision was about to be made to terminate his payments. He said that he would be requesting a reconsideration. As no medical report had been received from Mr Smith by 16 June 1992, Comcare proceeded to make the determination ceasing compensation on the basis of Dr Schmidt's report.

The Tribunal held that the evidence before it quite conclusively established that Mr Smith was informed and well aware of the reasons as to why the decision terminating payment of compensation was made.

On about 18 June 1992 Mr Smith came to Darwin at his own expense, and saw a Dr McMahon. However, shortly after his arrival in Darwin he was incarcerated for possessing and supplying cannabis on Bathurst Island, and was in goal from 25 June 1992 to 10 August 1992. It seems that Dr McMahon's report, if it were prepared, was mislaid. Mr Smith said he received no report. His treating general practitioner therefore referred him to another orthopaedic surgeon, Mr Mills, who prepared a report dated 8 December 1992. That report was sent directly to Comcare. Mr Smith said that he thought this was the way that he should go about getting a reconsideration of the decision to terminate his compensation entitlements. Mr Mills' report expressed the opinion that there was a likely long term lumber spondylolisthesis that had been exacerbated by the work injury in 1989.

On 18 December 1992 solicitors, Waters James McCormack, wrote to Comcare saying that they acted for Mr Smith in relation to his claim for compensation, and requested copies of correspondence that had passed between Comcare and Mr Smith as Mr Smith had lost his copies. That request was complied with on 10 February 1993. The Tribunal held that Comcare's response to this correspondence indicated that it was aware that Mr Smith had not accepted the decision to terminate his compensation entitlement.

In March 1993 Mr Smith made a complaint to the Ombudsman, who contacted Comcare. Comcare advised that a request for a reconsideration of the decision of 16 June 1992 was required before further consideration of the claim would be undertaken, and that advice was relayed by the Ombudsman to Mr Smith. Mr Smith referred the matter back to his solicitors but they did not seek a reconsideration. The Tribunal observed that whilst the file of Waters James McCormack was produced by Mr Schneider, who explained that the solicitor who had been handling the matter had now moved interstate, the file was not put into evidence. The Tribunal observed that no real explanation for the delay during the time that the file was with that firm of solicitors was forthcoming.

After Mr Smith complained to the Ombudsman, he contacted the Darwin Community Legal Service and subsequently contacted Ms Day. He instructed Ms Day as to the history of his case and to apply for legal aid to investigate whether he had an ongoing entitlement.

Ms Day took steps to obtain further medical evidence. Eventually a letter of merits was prepared and forwarded to the Northern Territory Legal Aid Commission in November 1993. A grant of legal aid was made on 1 December 1993 and Ms Day continued then with the preparation of Mr Smith's case. This preparation included further review by medical specialists. In March 1994 a further application was made to the Northern Territory Legal Aid Commission for an extension of grant of legal aid to cover the costs of seeking a reconsideration of the cessation of liability, and if necessary to institute proceedings in the Tribunal. During March and April 1994 Ms Day sought information from the Commonwealth Rehabilitation Service. It became clear that the information she sought would not be readily available, and on 20 April 1994 she wrote to Comcare requesting a reconsideration of Mr Smith's case. The Tribunal found that Ms Day lacked an understanding of the procedures under the Safety Rehabilitation and Compensation Act, Mr Smith's case being the first of the kind which she had handled. She had proceeded on the basis that she needed to prepare the material for reconsideration before actually seeking the reconsideration, and this accounted for her delay in making the request.

Ms Day's letter to Comcare enclosed three new medical reports, one from Mr Mills dated 30 November 1993, one from Dr G Thompson dated 17 September 1993 and another from Dr I Yaksich dated 9 February 1994. Mr Mills repeated the opinion earlier given by him. Dr Thompson also diagnosed the condition of spondylolisthesis which he considered was longstanding, and concluded his report with the observation:

"...we have a pre-existing condition which was symptom-free until the time of the accident, and (sic) aggravated this pre-existing condition producing continuous pain, which fluctuates in its intensity."

Dr Yaksich had first seen Mr Smith on 8 February 1990 but had re- examined him for the purposes of the report on 2 February 1994. He agreed with the diagnosis of spondylolisthesis. He expressed his conclusions as follows:

"I would regard his continuing disability as being related to the fall as he described as his pain has never settled completely in the intervening period. There was a pre existing condition of spondylolisthesis, but this was symptom free prior to the fall and it is likely that this would have continued to remain so in the absence of the injury at work."

Subsequently Ms Day provided Comcare with a further medical report from a psychiatrist, Dr Robert Shoulder, dated 2 February 1994. He considered that Mr Smith was suffering a reactive depression, and concluded his report by saying:

"There is no indication that he is other than truthful. His pain, deterioration and depression are consequent on his injury at work on 10/10/89."

Mr Smith's affidavit in support of his application to the Tribunal, and his evidence in chief, outlined the course of events summarised above. He alleged continuing back pain and inability to work. He attributed his difficulties to the accident on 10 October 1989. To the various doctors he had consulted he had acknowledged a back injury at about the age of 14, but reported no other back trouble. A different picture however emerged from his cross-examination. His medical records had been subpoenaed by Comcare from the Darwin Hospital. These records indicated that he had consulted the hospital for back related symptoms on 25 June 1982, 30 March 1978, and 19 December 1977. He had also suffered injury to his sacrum as a result of being kicked on 19 November 1979, and had attended in respect of a shoulder injury on 13 March 1979. He had also suffered a serious knee injury on 29 September 1980 which had kept him away from work for upwards of 15 months. None of these injuries had been disclosed to any of the doctors that had examined him in respect of the subject compensation claim.

The cross-examination also touched on the circumstances of the accident on 10 October 1989. In respect of that cross-examination the Tribunal observed:

"In the course of the proceedings the applicant demonstrated the way he fell from the truck and that demonstration, quite frankly, raises concerns as to the credibility of the explanation offered. However, it is not necessary that I consider that matter further at this stage. The applicant's claim for compensation was accepted by the authorities and he continued to receive payments of compensation until 18 June 1992..."

Dealing with Mr Smith's oral evidence about his injuries, the Tribunal said:

"The effect of the applicant's oral evidence was to establish a long history of back problems in the L4/L5 region with spondylolisthesis being diagnosed on a number of occasions prior to 1989. The applicant was taken through his medical records held by the Royal Darwin Hospital and, although the applicant was less than frank in his answers, and preferred to avoid giving a responsive answer if he could, it seems clear enough from the responses that the applicant did give that he accepts that there was more than one occasion when he was admitted to hospital with back problems arising from accidents, football injuries, and other causes. I formed the impression that the applicant is an unreliable witness but at this stage I do not think that is in any way determinative of the matter which is before me."

The Tribunal found that Comcare understood that Mr Smith was dissatisfied with the Determination of 16 June 1992, and was made well aware by him of the fact in June 1992, and by the correspondence from Waters James McCormack dated 18 December 1992. Mr Smith had indicated in June 1992 that he would seek a reconsideration, and the Tribunal held that the receipt of Mr Mills' report by Comcare in December 1992 led Comcare to understand that the applicant was seeking reconsideration, and that he had asked Mr Mills to report to Comcare for that reason.

The reasons for setting aside the decision of Comcare to refuse an extension of time are contained in the concluding paragraphs of the reasons for decision which read:

"18. There is now a considerable volume of medical reports which postdate 18 June 1992 and which, at least in some aspects, can be said to be supportive of the applicant's case. I do not propose, and do not consider it appropriate, that I give any detailed consideration of those medical reports for the purposes of the present application, because that is a matter for consideration by the delegate rather than for this Tribunal at this stage. It is, however, relevant to take into account whether the merits of the case are such as to justify the granting of an extension of time. I am satisfied on the material before me and in the circumstances of this case that there is material which establishes that the applicant has at least an arguable case that should go before a delegate.

19. I am also satisfied, and so find, that the applicant's case has sufficient merit as to justify it being reconsidered by a delegate, there being no evidence of any prejudice to the respondent in allowing the reconsideration to take place. The matter is important to the applicant and he made this clear to the respondent from the beginning.

20. Clearly the time limit in section 62 must be taken into account; it is not unreasonable to expect applicants for reconsideration to comply with the time limits and follow the written advice given at the time of the determination. However, I am satisfied that the applicant had difficulty understanding the written material and preferred the oral approaches which he made.

21. I have taken into account the delays caused by both firms of solicitors but have come to the view that the applicant was entitled to rely upon his solicitors and is not thereby to be disadvantaged by the delays of those solicitors (Comcare v A'Hearn [1993] FCA 498; (1993) 119 ALR 85).

22. For these reasons, I am satisfied that the decision under review should be set aside and that the applicant should be allowed a further period. The request for reconsideration, which is contained in his solicitor's letter of 20 April 1994, is to be treated as being within time."

Counsel for Comcare submitted that the Tribunal had fallen into error of law in its consideration of two important aspects of the case. On the question of prejudice it was argued that the Tribunal erroneously said that there was no evidence of prejudice. On the contrary, counsel argued, first there was evidence of prejudice given expressly in the oral re-examination of Ms Ellis, and in her affidavit, and secondly the cross-examination of Mr Smith gave rise to the inference of prejudice.

On the question of the merits of the substantial claim it was argued that the Tribunal applied a wrong test in law when it found that the material before the Tribunal established "at least an arguable case".

On both topics it was further argued that the Tribunal fell into error of law in that it failed to comply with s.43(2B) of the AAT Act which directs that where the Tribunal gives in writing the reasons for its decision those reasons shall include its findings on material questions of fact and a reference to the evidence or other material on which those findings are based. Counsel said that central submissions made on Comcare's behalf before the Tribunal were that Comcare would be seriously prejudiced if an extension of time were granted, and that the cross-examination of Mr Smith so undermined his credibility and the factual premises on which the medical opinions were given, that the claim for compensation was without merit and was doomed to failure if a reconsideration occurred. Counsel argued that the Tribunal failed to make findings on questions of fact material to these arguments. Counsel referred to East Finchley Pty Ltd v Federal Commissioner of Taxation (1989) 90 ALR 457 at 466 where Hill J, after referring to s.43(2B) of the AAT Act, said:

"Where the tribunal's decision contains no findings on specific questions of fact which are material to the issues before it, the conclusion will ordinarily follow that the tribunal has failed to direct its attention to considerations properly relevant to its determination and the proceedings before it will in such a case have miscarried."

The argument under s.43(2B) as it was developed raised in substance the same issues that were advanced under another submission separately put by counsel (see Notice of Appeal, ground 3(e)) that the Tribunal failed to take into account relevant matters, namely :

"(i) the evidence of Ms Ellis...of prejudice;

(ii) [Mr Smith's] admissions that all his medical reports had been prepared under false assumptions that in relation to the relevant injury he was asymptomatic prior to the accident;

(iii) [Mr Smith's] admissions in cross-examination as to malingering;

(iv) the false denials of [Mr Smith] in relation to his injuries;

(v) the inability of [Mr Smith] to explain to the Tribunal how the accident occurred;

(vi) the unreliability of [Mr Smith] as a witness."

Running throughout the submissions for Comcare was the criticism that the Tribunal failed to make definite findings on issues that had been raised by counsel for Comcare, for example that the Tribunal failed to consider and make findings on the question whether Mr Smith's alleged fall from the truck occurred at all, whether incapacity subsequent to 16 June 1992 had been established, and as to the past medical history of Mr Smith on which the medical opinions favouring his claim were based. If the matter before the Tribunal had been the entitlement of Mr Smith to compensation for personal injury sustained on 10 October 1989 there would be much force in these criticisms. The matter before the Tribunal however was not the merits of the substantial claim for compensation, but the merits of the request to reconsider the determination made 16 June 1992.

That determination was made on the opinion of one medical expert. The opinion is expressed in a way that leaves its meaning less than clear. However it seems to support Mr Smith's claim that he still had ongoing pain caused by a "mechanical" lower back dysfunction, and that he was not suitable for any form of physical work. The opinion offered the pessimistic prognosis that ongoing treatment would be fruitless. Mr Smith, on that opinion, was seriously incapacitated. Dr Schmidt considered that the lower back dysfunction was longstanding. Presumably the statement that "Mr Smith has been unable to convince me that he has any significant residual disability" means that Dr Schmidt was not convinced that the pain and lower back dysfunction that would deter Dr Schmidt from employing him in any form of physical work was still caused or contributed to by the work incident in 1989.

The critical question emerging from Dr Schmidt's opinion is whether the ongoing pain and disability were caused or materially contributed to by an aggravation caused by the incident alleged on 10 October 1989. Causation questions of that kind are well recognised as difficult ones to determine, and as ones on which medical opinions may differ. Where such a question has been decided on only one medical opinion, the subsequent provision of other medical opinions expressing a different conclusion would ordinarily call out for a reconsideration of the decision.

At the time when the request for reconsideration was made the evidence now available about the worker's pre-1989 medical and work history was not known. The information elicited from the Darwin Hospital records, and from other aspects of the cross-examination of Mr Smith, show that the histories on which the medical experts have given their opinions were not entirely correct. The cross-examination raises questions about the credibility and reliability of Mr Smith. Plainly each of the opinions would need to be reconsidered and perhaps revised by the medical experts. It can be anticipated that that is the very process which a reconsideration of the determination of 16 June 1992 would involve.

The arguments of counsel for Comcare urge the view that because the credit of Mr Smith has come under a cloud, the medical opinions are, without more, invalidated, and his claim is doomed to failure. That does not necessarily follow. The earlier medical history is obviously relevant, but the bouts of back disability disclosed by the hospital records were years before the 1989 incident. The details of those events are recorded in the medical records and are not dependent on credit worthiness of Mr Smith's present evidence. The evidence given before the Tribunal was to the effect that since those events Mr Smith returned to regular work - which he was doing at the time of the 1989 incident. The earlier history does not negate the possibility that a fall in 1989 had the effect of changing Mr Smith from a worker to a non-worker, or the possibility that the aggravation caused by the fall continues to cause symptoms. In cases like the present, a well documented medical history of the kind available in the Darwin Hospital records would provide valuable information to medical experts which is likely to influence their opinions. In the present case it is now known that this information is available, yet none of the doctors who has provided an opinion has considered it, and none has reviewed his opinion in light of it. In my opinion the disclosures before the Tribunal provide a reason in favour of there being a reconsideration, not a reason to the contrary.

In my opinion the Tribunal did not fall into error of law in the test which it applied when considering the merits of the substantial application. The Tribunal, after saying that it was satisfied on the material before it, and in the circumstances of the case, that Mr Smith had "at least an arguable case that should go before the delegate" went on to hold that Mr Smith's case "has sufficient merit as to justify it being reconsidered by a delegate..."

The Tribunal did not make specific findings on questions of fact about the incident on 10 October 1989, about Mr Smith's prior medical history, or about his medical condition from time to time after 10 October 1989. It would have been quite inappropriate for it to have done so. The issue before the Tribunal was the limited one of whether an extension of time should be granted. The evidence adduced before the Tribunal did not explore the range of issues and material that would be relied on by the parties on an inquiry into the merits of the compensation claim, in particular none of the medical experts gave evidence. The Tribunal did not have the material to make findings of fact going to the substantive entitlement to compensation. Moreover to undertake that task would be to trespass upon the role of the delegate responsible for conducting a reconsideration.

In my opinion the Tribunal was not required by law to apply any more specific test than that implicit in the value judgment made on material before the Tribunal that the claim had sufficient merit to justify it being reconsidered. Insofar as that judgment constituted a finding of fact on a material question the Tribunal was required to refer to the evidence or other material on which it was based. The Tribunal did that when it referred to the medical reports which post dated 18 June 1992, that is the reports brought forward by Mr Smith's solicitors.

Whilst the considerations referred to above provide obvious reasons why there should be no attempt at a full investigation of the merits of the matter sought to be reconsidered on an application for an extension of time, there may be cases where there are such obvious weaknesses in the applicant's case that refusal of relief might be justified: see Lucic v Nolan (1982) 45 ALR 411 at 417. If it is plain that the underlying claim must fail for some reason that is not dependent on a disputed question of fact, it would be futile to extend time. Even if the weakness is not fatal, there may be other reasons such as the length of the delay, an absence of any satisfactory explanation for the delay, or prejudice to the other party which combine with the weakness to make it fair and equitable that the discretion to extend time be exercised against the applicant. But in my view the evidence did not disclose weakness of a degree, either alone or in combination with other factors, that would have justified dismissing the application. I consider the finding of the Tribunal that Mr Smith's case has sufficient merit to justify it being reconsidered was amply supported by the material before it.

Putting aside the submission that the Tribunal erred in law in failing to take into account as a relevant consideration the evidence of Ms Ellis as to prejudice - a topic yet to be discussed - I do not accept the submission that the Tribunal failed to take into account the other matters identified in the grounds of appeal as relevant. As formulated in the grounds of appeal the alleged admissions of Mr Smith are overstated, although it is the case, as the Tribunal noted, that he admitted to various past injuries about which no reference was made to examining doctors. The Tribunal did not overlook these matters. Rather the Tribunal said that those matters were not determinative of the matter before the Tribunal. That matter was whether there should be a reconsideration, not what the outcome of the reconsideration should be. For reasons I have already endeavoured to state I do not think that the matters revealed during the cross-examination of Mr Smith necessarily denied the validity of his claim. The significance of those matters was something to be considered primarily by the medical experts, and that had not occurred.

I turn now to the submissions made on the question of prejudice in the event that an extension of time were granted. The topic of prejudice is dealt with primarily in paragraphs 19 and 20 of the Tribunal's reasons for decision which are set out earlier in these reasons. Elsewhere, relevant to prejudice, the Tribunal had also made findings that Comcare understood from the time the determination was made on 16 June 1992 that Mr Smith wanted the decision reconsidered.

The consideration of prejudice on an application to extend time is not a one-sided consideration. It is necessary to balance the prejudice which may be caused to the applicant for an extension of time if the extension is refused against the prejudice which may be caused to the other party if it is required to deal belatedly with the claim if time is extended. It is in this context that the Tribunal was required to take into account in making its decision any prejudice to Comcare arising by reason of the lateness of the application to extend time.

In paragraph 19 of its reasons the Tribunal said "...there being no evidence of any prejudice to (Comcare) in allowing the reconsideration to take place." It is not clear what is meant by this statement. If it means that no evidence on the topic of prejudice to Comcare was adduced at the hearing, it is plainly wrong as paragraphs 33 to 39 of Ms Ellis' affidavit were unequivocally directed to the topic of prejudice. So too were questions in her re-examination. On the other hand if the statement means that the Tribunal considered, as a finding of fact, that there was no prejudice a further difficulty arises. On the evidence adduced it would have been open to find that no actual prejudice had been positively identified, but the evidence clearly raised for consideration the question of whether the length of the delay which had occurred in the circumstances of this particular case would be likely to cause prejudice to Comcare in the investigation and defence of the claim, even though at the time of the hearing specific instances of prejudice could not be identified. Paragraphs 33 to 39 of Ms Ellis' affidavit deposed:

"33. The claim for compensation made by the applicant arises out of an incident which occurred on 10 October 1989. Should an extension of time be granted, and an application to review the decision of Mr Harris be made, Comcare would require to have that medical evidence which is presented on behalf of the applicant considered by an appropriate specialist, and an examination of the applicant undertaken by such specialist. A further report would be required from this medical specialist, and the contents of such report would require to be considered by Comcare, and consultation thereafter with Comcare, if necessary, prior to a review of the determination. Reasonable time would be provided to the applicant to respond to matters raised in the report, if a response was appropriate. Accordingly, I would anticipate that some considerable period of time would elapse before any review of the determination of 16 June 1992 would be effected.

34. Should an extension of time be allowed to the applicant, Comcare would require to take evidence from those persons with knowledge of the events surrounding the incident; and to make further enquiries into the applicant's medical history and personal circumstances, both pre-dating and post the incident. Considering the lapse of time since the incident occurred, I would anticipate that the recollection of persons with knowledge of the incident, and of the personal circumstances of the applicant from time to time would be adversely affected, if not poor. Further, documents which may assist Comcare in its consideration of the claim may have been destroyed or no longer available.

35. The applicant has advised of changes of adress (sic) since the incident and Comcare is aware from the Ombudsman of another address. Comcare is unable to identify all those places where the applicant has resided and would be disadvantaged to make enquiries as to events which may affect its liability.

36. Comcare has made enquiries and ascertained that the applicant has served two periods of imprisonment since the date of the incident. Comcare cannot be confident that its enquiries can locate witnesses to provide evidence concerning the applicant's activities and occupations during periods of incarceration and at other times.

37. Comcare would require to test the credibility of the applicant as to the circumstances surrounding the incident, the applicant's graduated return to work, rehabilitation, physiotherapy, medical treatment, social activities and occupations since the incident. Due to the lapse of time since the incident, Comcare cannot be satisfied that all that evidence necessary to enable it to do so, would still be available. Further, Comcare cannot be satisfied that the applicant's own recollection of dates and events would be reliable.

38. Comcare would be obliged to incur considerable costs and allocate significant other resources to make the necessary enquiries. In my experience, such costs would be significantly greater than would normally be incurred in a matter of review of a determination under the Safety, Rehabilitation and Compensation Act 1988.

39. Further, it is also my experience that given the significant effluxion of time since the determination cancelling compensation was made on 16 June 1992, Comcare is placed overall at a significant disadvantage which must inhibit Comcare's ability to make a correct and proper determination on the facts as they then existed at the date of the determination and subsequently."

The costs of investigation and medical enquiries referred to in paragraph 33 are costs of the kind that a thorough assessment of the claim would involve regardless of the time at which the claim was made, and the incurring of those costs does not constitute prejudice of the relevant kind brought about by the delay in seeking a reconsideration. However the matters referred to in paragraphs 34 to 37, and the generalisation in paragraph 39, do concern prejudice related to delay. These paragraphs whilst not identifying any specific prejudice cover areas where the potential for prejudice exists. Experience in the courts shows that the potential for prejudice in these areas is not fanciful, and delay in some cases can seriously impede the investigation process. The potential for prejudice through delay is a matter always to be considered. That consideration may be, and often is, encompassed in an enquiry into the length of the delay but, depending on the circumstances of the case, specific consideration of areas of potential prejudice may be necessary.

In the present case the length of the delay (some 21 months), and the circumstances of the case referred to by Ms Ellis, in my opinion, indicate that the potential for prejudice existed to a degree that required it to be adverted to and expressly considered by the Tribunal to make clear its reasoning process on the exercise of the discretion to extend time.

If the statement that there was no evidence of any prejudice to the respondent is to be read as meaning that there was no proof of any actual prejudice - a finding that I think was open on the evidence - the Tribunal, in my opinion, then failed to consider the potential for prejudice, as yet unidentified, arising from the delay. That potential was referred to in general terms by Ms Ellis, but the cause for concern would have been heightened by the disclosures during Mr Smith's cross-examination about his past medical history, and about his activities since June 1992. I consider the failure to consider the potential for prejudice constituted an error of law in that the Tribunal failed to take into account a relevant consideration.

The question then arises as to the remedy which this Court should order. An appeal under s.44 of the AAT Act is an appeal by way of judicial review. Normally where an error of law is established which vitiates the decision under appeal, the decision will be set aside, and the matter returned to the Tribunal to be decided according to law.

The decision which Mr Smith seeks to have reconsidered was made more than 41/2 years ago and nearly 3 years have elapsed since the extension of time was sought. The potential for prejudice to both parties if further delay is to occur is obvious. The Court was invited by both parties to bring down a judgment that finally determines the extension of time issue. Mr Smith sought to have the appeal dismissed. Comcare argued that the Court should allow the appeal, set aside the Tribunal's decision, and restore the original determination. In urging this course counsel referred to Ogilvy & Mather Pty Ltd v Federal Commissioner of Taxation (1990) 95 ALR 663 at 671 where Sweeney and Ryan JJ said in the course of judgment on an appeal under s.44 of the AAT Act:

"It is true that the AAT made no specific finding on this question. Nevertheless, the need to achieve a final determination of issues without proliferating hearings before the AAT and this court can justify the court in itself identifying relevant facts from the evidence before the AAT where those facts are largely undisputed."

The statement was however obiter as their Honours considered it was unnecessary to pursue that course in the appeal. Moreover in the present case, once an error of law is established that vitiates the decision under appeal, to make a final order on the application for an extension of time requires more than merely identifying relevant facts from the evidence. It involves reaching a conclusion on how the discretion to extend time should be exercised, and implementing that conclusion. I do not read the passage cited as justifying that course.

In McAuliffe v Secretary, Department of Social Security [1991] FCA 268; (1991) 13 AAR 462 at 475, after finding that an error of law had been established, I said:

"It does not follow, however, that the decision of the Tribunal must inevitably be set aside. Under s 44(4) of the AAT Act the Court `shall hear and determine the appeal and may make such order as it thinks appropriate by reason of its decision'. If the Court is of the opinion that although error of law has been demonstrated, the decision is nevertheless clearly correct on the material which was before the Tribunal, it is open to this Court to dismiss the appeal: Austin v Attorney-General's Department (1986) 12 FCR 22 at 26-27. In my opinion on the material before the Tribunal there was only one conclusion open to it once it reached the conclusion that the appellant was not eligible for benefit."

Desirable though it might be to finally determine the application for an extension of time I do not think that the course taken in McAuliffe should be taken where the decision in question involves the re- exercise of a discretion.

I consider that I have no power to do otherwise than to allow the appeal, to set aside the decision under appeal, and to return the matter to the Tribunal to be heard and determined again.

I certify that this and the preceding pages are a true copy of the reasons for judgment of Justice von Doussa

Associate

Dated

Counsel for the applicant : Mr L H Silvester with Mr P Minogue

Solicitor for the applicant : Australian Government Solicitor

Counsel for the respondent : Mr R Davies with Mr S Smith

Solicitors for the respondent : Elston & Gilchrist

Date of hearing : 28 February 1997