Allen and Repatriation Commission
[2002] AATA 453
•14 June 2002
DECISION AND REASONS FOR DECISION [2002] AATA 453
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q1998/1047
VETERANS' APPEALS DIVISION )
Re MAXWELL IAN ALLEN
Applicant
And REPATRIATION COMMISSION
Respondent
DECISION
Tribunal Mr I R Way
Date14 June 2002
PlaceBrisbane
Decision The Tribunal varies the decision under review as follows:
(a)the respondent's decision to increase the applicant's disability pension to 90% of the General Rate with effect from 12 February 1997 is affirmed;
(b)the applicant's disability pension is increased to 100% of the General Rate with effect from 27 January 2000; and
(c)the applicant's disability pension is to be paid at the Special Rate with effect from 1 January 2001.
................(Sgnd)........................
Mr I R Way
Member
CATCHWORDS
VETERANS' AFFAIRS – disability pension – special rate – eligibility
Veterans' Entitlements Act 1986
Cavell v Repatriation Commission (1988) 9 AAR 539
Banovich v Repatriation Commission (1986) 69 ALR 395
Re Cavell and Repatriation Commission (1986) 10 ALN 233
REASONS FOR DECISION
14 June 2002 Mr I R Way, Member
This is an application by Maxwell Allen (the applicant) for review of a decision of the Repatriation Commission dated 24 November 1997 and affirmed by the Veterans' Review Board (VRB) on 10 September 1998, which assessed the applicant's pension at 90% of the General Rate.
The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (T1-T6) and documentary evidence as set out below:
Exhibits tendered by applicant:
A1 - Report by Dr Davison dated 13/8/01
A2 - Report by Dr Davison dated 21/1/02
A3 – Statement by Mr Allen dated 18/1/01
A4 – Aide Memoir – Financial detailsExhibits tendered by respondent:
R1 – Report by Dr Watson dated 25/2/00
R2 – Report by Professor Morris dated 25/1/00
R3 – Opinion by Dr Grant dated 15/3/00
R4 – Report by Dr Knight dated 18/1/99
R5 - Report by Dr Knight dated 13/12/01
R6 – Tax Forms for Faymar Pty Ltd
R7 – Financial Statements for Faymar Pty Ltd
The applicant and his wife, Mrs Allen, gave oral evidence.
BACKGROUND
The applicant was born on 1 February 1936 and was aged 61 when he first lodged an informal claim on 12 May 1997 for pension and medical treatment as a result of service-caused stress.
The applicant rendered operational service in SVN from 16 May 1966 to 7 May 1967 and from 10 March 1969 to 16 April 1969.
The VRB in affirming the decision of the respondent that 90% of the General Rate was appropriate, took into account the applicant's following accepted disabilities:
Bilateral sensorineural hearing loss
Lumber spondylosis
Sprain or strain of the left knee or leg
Post Traumatic Stress Disorder
The applicant has been in receipt of a disability pension from the Repatriation Commission at 90% of the General Rate with effect 12 February 1997. He also has been in receipt of a service pension (on the grounds of age) from 16 January 1997.
ISSUESThe issue in this matter is whether pension payable pursuant to the provisions of the Veterans' Entitlements Act 1986 (the Act), is correctly assessed at 90% of the General Rate of pension. And in particular whether pension is payable at the Special Rate.
The applicant contends that he should be paid pension at 100% of the General Rate as from 27 January 2000. With respect to Special Rate, the applicant contends that he satisfies the requirements for this rate of pension as he is unable to work due to war-caused accepted disabilities alone, and that he has suffered loss of earnings as a result of his accepted disabilities.
LEGISLATIVE FRAMEWORKThe Act relevantly provides as follows:
"24 Special rate of pension
(1) This section applies to a veteran if:(aa) the veteran has made a claim under section 14 for a pension, or an application under section 15 for an increase in the rate of the pension that he or she is receiving; and
(aab) the veteran had not yet turned 65 when the claim or application was made; and
(a) either:
(i)the degree of incapacity of the veteran from war-caused injury or war-caused disease, or both, is determined under section 21A to be at least 70% or has been so determined by a determination that is in force; or
(ii)the veteran is, because he or she has suffered or is suffering from pulmonary tuberculosis, receiving or entitled to receive a pension at the general rate; and
(b) the veteran is totally and permanently incapacitated, that is to say, the veteran's incapacity from war-caused injury or war-caused disease, or both, is of such a nature as, of itself alone, to render the veteran incapable of undertaking remunerative work for periods aggregating more than 8 hours per week; and
(c) the veteran is, by reason of incapacity from that war-caused injury or war-caused disease, or both, alone, prevented from continuing to undertake remunerative work that the veteran was undertaking and is, by reason thereof, suffering a loss of salary or wages, or of earnings on his or her own account, that the veteran would not be suffering if the veteran were free of that incapacity; and
(d) section 25 does not apply to the veteran.
(2) For the purpose of paragraph (1)(c):
(a) a veteran who is incapacitated from war-caused injury or war-caused disease, or both, shall not be taken to be suffering a loss of salary or wages, or of earnings on his or her own account, by reason of that incapacity if:
(i)the veteran has ceased to engage in remunerative work for reasons other than his or her incapacity from that war-caused injury or war-caused disease, or both; or
(ii)the veteran is incapacitated, or prevented, from engaging in remunerative work for some other reason; and
(b) where a veteran, not being a veteran who has attained the age of 65 years, who has not been engaged in remunerative work satisfies the Commission that he or she has been genuinely seeking to engage in remunerative work, that he or she would, but for that incapacity, be continuing so to seek to engage in remunerative work and that that incapacity is the substantial cause of his or her inability to obtain remunerative work in which to engage, the veteran shall be treated as having been prevented by reason of that incapacity from continuing to undertake remunerative work that the veteran was undertaking."
This matter is to be determined pursuant to section 120(4) of the Act, to the Tribunal's reasonable satisfaction (that is, on the balance of probabilities).
In these proceedings it was not contested and the Tribunal accepts that the assessment period commences on the date of application (12 May 1997) and continues to the date of this Tribunal's decision.
APPLICANT'S EVIDENCEThe applicant told the Tribunal that on leaving school he completed a five-year apprenticeship as an electrical fitter with the NSW Transport Department. He served in the Australian Army as a National Serviceman in 1956 and subsequently joined the CMF. During his training as a CMF soldier he applied for and successfully completed officer training at Scheyville, NSW, being commissioned as a lieutenant in December 1964. He joined the ARA in September 1965 (on 12 months renewable engagements) and served initially as an officer in regimental postings in the Royal Australian Artillery Corps, including two tours of Vietnam. He also served as a platoon commander with 2 Recruit Training Battalion, as camp commandant at Army Headquarters, Puckapunyal, as a quartermaster for 8 Medium Regiment and as a staff officer with school cadets. He said he left the Army in 1973 on the expiry of his twelve-month engagement, at which time the Army recognised that he had a service related hearing problem, and knee and back problems.
On leaving the Army, he saw his skills as being mainly of an administrative nature, and he then worked as the operations manager for a customs agent/wharf cartage business (for eighteen months until his services were terminated following a disagreement with the firm's General Manager), a driving instructor for approximately ten years, during which time he thought he had performed his duties in a very satisfactory manner particularly with respect to interpersonal skills. He told the Tribunal that he left this job because of a better job offer from his cousin who asked him to start a state transport terminal which he did successfully for eight years, until such time as the business could not support the increasing drawings being taken from the company by his cousin, and as a result became insolvent. It was during this time he met his now third wife, Margaret. Following this employment he started a fuel depot business in partnership, producing lubricating oil and diesel fuel, but this only lasted two years because of his partner "dudding me". It was also during this time that he went through what he described as an horrendous property settlement with his second wife.
In 1994 he and Margaret moved to Tweed Heads and they set up a car rental business, initially with six "tuk tuk" vehicles from Thailand. This business was not successful and they then purchased an existing car rental business for $85,000. They renamed this business from "Car-Azy" to "Happy Days Car Rentals" and operated the business through a company structure called Faymar Pty Ltd, which they had established in 1993 for this purpose. The applicant and Margaret were sole shareholders and sole directors of this company.
This business was initially set up in Coolangatta where interstate visitors generated most of the business. The business subsequently moved to Kirra where again most of the business was generated by other than local customers.
It was the applicant's evidence that up until mid 1998 he undertook most of the physical work such as vehicle maintenance, vehicle cleaning and vehicle electrical and mechanical repairs. The applicant said he was capable of doing all of the routine mechanical repairs and maintenance (which he described as "donkey work" and "spanner monkey work") whereas more technical work such as that requiring machining was outsourced. Although the number of cars varied, the applicant said that from 1995 to 1998 the company ran approximately twenty cars and the cars were on average about ten years old.
The applicant told the Tribunal that he progressively found the physical work to be too demanding because of his back and knee problems, and because he was getting bad tempered and short with customers. He said that he would "blow up" if someone said the wrong thing and his relationship with Margaret (who he married in September 1997) was becoming "testy at times", to the point where she finally broke down and started crying. At this stage he said that it became apparent because of his physical and mental problems that the business was suffering to the point where expenses exceeded income and there was insufficient money to allow he or his wife to draw money from the business, the last such payment being in 1998.
The applicant and his wife then agreed to merge their business with a similar business owned by a friend, and this was done in mid 1998, with new business premises at Broadbeach and with the friend as a Co-director of the new company called "Beachside Happy Days Car Rentals" (still trading under the company structure of Faymar Pty Ltd).
Following this amalgamation of the two businesses, the applicant told the Tribunal that from mid 1998 his participation in the business was limited to occasional and irregular car cleaning, collection of mail, banking and answering the phone. The applicant described these activities as "odd light work" and he told the Tribunal that he ceased all activities with the company towards the end of 1999. In his written statement (Exhibit A3), the applicant said that he would have been quite happy to work in the business until he was seventy or seventy five, except for his physical and mental problems. The Tribunal notes that Professor Morris in his written report of 25 January 2000 (Exhibit R2) following examination of the applicant on the same day, commented as follows:
"Patient does most of cleaning and washing of cars. Has limitations at work due to back and knee osteoarthritis. Irritability causes problems with customers and so limits his ability to work at the business. Thus he has modified his job duties at work."
In cross-examination the applicant was taken to Exhibit A4, where the financial details of the Faymar Company for the years 1995 to 2000 were summarised. The applicant said that the figures shown reflected the business outcomes. The Tribunal notes that for the year 2000 it was agreed by both parties that Exhibit A4 showed a figure of $14,000 for maintenance, whereas this figure should be $9000 and the corresponding figure of $12,000 in the preceding column should be $2500 less, that is, $9500. The applicant told the Tribunal that the salary as shown in Exhibit A4 was split equally between himself and his wife.
The Tribunal notes that the figures for Faymar Pty Ltd (Exhibit A4) have been derived from the financial statements prepared by Simpson and Winston Pty Ltd, registered tax agents and accountants who have acted for the applicant and his wife for many years. The Tribunal further notes that the applicant ceased to be director of Faymar Pty Ltd in May/June 2001.
Mrs Allen told the Tribunal that she was born in the UK in 1947 and immigrated to Australia in 1959. For many years after school she worked in various clerical and administrative positions such that she was competent in general office duties including keeping of accounts. She said she first met the applicant in 1983 and eventually they were married on 7 September 1997. She confirmed the details the applicant gave about the establishment of Faymar Pty Ltd and the car rental businesses conducted by the company. She said the distribution of duties between herself and her husband were such that she basically did the office work while he did the car maintenance work. She said that her husband's condition deteriorated to the point where maintenance work had to be done by others and the costs of undertaking this work meant the company progressively began to make losses. She said her husband stopped working full time because of his physical and mental conditions in about July/August 1998, and thereafter he would occasionally clean cars, do car pick-ups and collect mail until it became clear that her husband should get out of the business altogether. She said she thought her husband had last cleaned a car for the company in April/May 2001. Mrs Allen told the Tribunal that the new partnership arrangement whereby the company merged with Beachside Car Rentals came into effect in June 2001, at which time her husband ceased being a director of Faymar Pty Ltd.
MEDICAL EVIDENCEDr T A Grant, Senior Medical Officer Compensation, in a report dated 15 March 2000 (Exhibit R3) provided a combined impairment assessment of the applicant of sixty. The Tribunal notes that this results in an appropriate assessment of pension at 100% of the General Rate.
Dr A Davison, Consultant Psychiatrist, in his written report dated the 13 August 2001 (Exhibit A1) opined:
"My opinion, having assessed and treated his condition over the past 19 months, is that the combination of his psychological disability post Traumatic Stress Disorder and physical pain and disability related to his Spine and Knee Degenerative Disorders, is that Mr Allen is no longer able to work in his small car rental business. In my opinion he is totally unfit for any other form of employment. His disability is permanent."
In a further report dated 21 January 2002 (Exhibit A2), Dr Davison stated:
"In my opinion Mr Allen is unable to work as a result of emotional responses arising from his PTSD. These include irritability, poor concentration, and inability to handle minor stress in his relationships with customers involving episodes of severe impatience and outbursts of anger. These outbursts have placed him, his wife, and customers at risk. They had the potential to destroy the goodwill of his former business if he had continued in it.
It is the psychological disability deriving from PTSD that has stopped him from working in his business. Further, he is not fit to work in any other situation such as those that he may formally have managed by way of qualification or experience, had it not been for the deterioration in his condition. He is in no condition to learn new work skills."Professor T Morris, Director Mental Health Service, in a written report dated 25 January 2000 (Exhibit R2) states:
"I examined this man today.
…
His capacity to undertake remunerative work is similar to the last time I examined him on July 22, 1998. He is capable of undertaking full time work in a non-demanding occupation as a manual worker in his family's car rental business."
Professor Morris went on to say in his report that he expected the applicant's PTSD condition will fluctuate over time and suggested to the veteran that he consider being assessed for the Veterans' PTSD program at the Palm Beach Currumbin Private Hospital.
Dr G Knight, Consultant Occupational Physician, in a written report dated 13 December 2001 (Exhibit R5) assessed the applicant as follows:
"In the light of my review of further documents provided and listed above, perhaps in spite of his reasonably mentally robust presentation within the context of my review examination, I am now more inclined to support that Mr Allen probably should now be classified as totally and permanently incapacitated consequential to the combination of his service accepted (mild or stable) PTSD, moderate arthritic/degeneration of the left knee, and lumbar spondylosis.
…
Despite any of the above, my clear impression was that this 65 year old man has now reached a point of combined physical and mental problems where he has recently reported retirement from remunerative duties seems to have produced some benefit in stabilising his medical status. I would not suggest that he will ever become a suitable candidate for occupational rehabilitation but his word processing/writing and intellectual interests substantiate that he can function quite satisfactorily in an environment of little social threat. He appeared quite mentally competent and responsible for the purposes of personal accountability and liability for any of his actions or behaviour."Dr Knight in an earlier report dated 18 January 1999 (Exhibit R4), had stated:
"Mr Allen's work restrictions arising solely from his listed, service-related orthopaedic conditions thus restrict his handyman and labouring duties. In particular, I support that he should be able to continue indefinitely in his present duties, that is vacuuming, cleaning, washing of the vehicles and general administration of his car rental business. He is totally unfit for heavy labouring including mechanical repair of his vehicles."
SUBMISSIONS
Mr Mylne, for the applicant, submitted that the uncontroverted evidence before the Tribunal clearly showed the applicant suffered a loss of earnings when he left Faymar Pty Ltd in August 1998 and that this loss amounted to at least $5,000 per annum.
It was further submitted that the report of Dr Knight (Exhibit R5) provided by the respondent clearly supported the applicant's case, in particular the assessment referred to in paragraph 27 above, which the applicant agreed with and adopted.
On this basis Mr Mylne contended the applicant met the requirements of section 24(1)(c) of the Act, and that the applicant should therefore be paid pension at the Special Rate with the earliest date of payment being 15 August 1998.
Mr Smith, for the respondent, submitted that with respect to the substantive requirements of section 24(1)(c) of the Act, the evidence before the Tribunal did not support the applicant's contention that the applicant met the alone test nor did the applicant meet the "loss criterion".
It was submitted that the merging of Happy Days Car Rentals with Beachside Car Rentals and the applicant's relinquishment of his directorship with Faymar Pty Ltd were influenced by the applicant's age and the economics of the business, as well as his ill health.
It was submitted that the applicant's company always made a loss and the small wage paid to the applicant only compounded this loss. Furthermore it was submitted that the applicant's company was not viable for reasons unrelated to his war-caused diseases and the non-payment of wages after 1998 was due to economic factors alone.
CONSIDERATIONIt was common ground between the parties that the applicant satisfies section 24(1)(a) of the Act and the Tribunal so finds.
In these proceedings the respondent conceded that the applicant also satisfies section 24(1)(b). In the light of this concession and on the material before it the Tribunal finds that the applicant satisfies section 24(1)(b) of the Act.
Turning then to section 24(1)(c). In order for the applicant to meet the "alone" test he must establish that:
(a) it is by reason of incapacity from his war-caused injury or war-caused disease, or both, "alone" that he is prevented from continuing to undertake remunerative work that he was undertaking; and
(b) that this led to loss of salary or wages or of earnings on his own account.In Cavell v Repatriation Commission (1988) 9 AAR 539, His Honour Justice Burchett said:
"…to distract the Tribunal from its true task – to make a practical decision whether the veterans loss of remunerative work is attributable to his service – relative incapacities, and not something else as well. It is a decision that should not be made upon nice philosophical distinctions, but with an eye to reality and as a matter in respect of which common sense is the proper guide."
With respect, the Tribunal adopts this approach in considering this matter.
With regard to the first limb of section 24(1)(c), section 24(2)(a) of the Act is also relevant and pursuant to this subsection the question to be answered is whether the veteran has ceased to work because of non-war related matters.
In this case the respondent contends that the merging of the applicant's car rental company with a second company and his relinquishment of the directorship were influenced by age and economics as well as ill health and hence section 24(1)(c) is not satisfied.
In considering this matter the Tribunal is mindful that the applicant has no non-service related disabilities; that he has strong management and administrative skills; that he first started as a self employed businessman in 1984; that he managed in partnership with his wife, a car rental business from 1994 until when he ceased work; and that he has stated that if it were not for his war caused disabilities, he would continue to work into his seventies.
On the evidence before it the Tribunal accepts that the applicant ceased to be a director of Faymar Pty Ltd in May 2001.
There is conflicting evidence with respect to the date at which the applicant ceased to work actively for Faymar Pty Ltd. The Tribunal accepts that the applicant reduced his work activities in the company in mid 1998. However, the evidence points to the applicant continuing to engage in some of his duties until shortly before he relinquished his directorship. The Tribunal is reasonably satisfied that the applicant ceased to engage in any work-related activities at the end of 2000, at which point in time he was 64 years of age.
In arriving at this conclusion the Tribunal has taken into account the inconsistent evidence whereby the applicant claims to have ceased all work activities towards the end of 1999; where the applicant's wife states the applicant last did car detailing in about April 2001; where the applicant ceased to be a director of Faymar Pty Ltd in mid 2001; where the medical evidence shows the applicant reporting ceasing all work approximately mid 2001 (Exhibit R5) and having difficulty in continuing with his duties at Faymar as at December 1999 (Exhibit A1); and where Dr Grant as at 15 March 2000 assessed the applicant's combined impairment at sixty points.
On the evidence before it, the Tribunal is reasonably satisfied that the applicant's age was not a factor in his ceasing work. With respect to the economics of the firm, the Tribunal accepts that the company has financial difficulties, however these difficulties were not the reason the applicant ceased to work. In arriving at this conclusion, the Tribunal is mindful that at all relevant times the company maintained proper financial records and that the company, albeit after consolidation with another car rental business, continued to trade after the applicant ceased to work for the company.
After careful consideration of all of the material before it and the submissions of both parties, the Tribunal is reasonably satisfied that the applicant meets the first limb of section 24(1)(c) of the Act in that it is his incapacity from war-caused injuries or diseases, or both, alone which has prevented him from continuing to undertake remunerative work that he was undertaking. In so finding, the Tribunal is mindful that remunerative work is defined broadly in the Act and should be read as a reference to the type of work which the applicant had been undertaking and is not to any particular job (see Banovich v Repatriation Commission (1986) 69 ALR 395 at 402). In this case the applicant's remunerative work was in the car rental business.
With respect of the second limb of section 24(1)(c), the respondent contends that the loss criterion is not satisfied in that the company always made a loss and the small wage paid to the applicant only compounded the loss. It was further submitted that the company was not viable for reasons unrelated to the applicant's war caused disease and that non payment of wages after 1998 was due to economic factors.
In considering this matter the Tribunal is mindful that the loss referred to in the Act is not only the financial loss suffered because of loss of existing employment, but also includes the loss caused by the inability to obtain employment. And that the loss must be real in the sense that the applicant cannot rely on any remunerative work that he has undertaken in the past and the loss can be demonstrated by diminution of salary, wages or earnings: see Banovich v Repatriation Commission(supra) at 402; and Re Cavell and Repatriation Commission (1986) 10 ALN 233 at 234-235.
In this case the evidence clearly indicates that the applicant was in receipt of modest earnings from Faymar Pty Ltd for the financial years ending 1996, 1997 and 1998. The fact that the company made a loss does not alter this fact. Within the context of the authorities cited above, the fact that there was no payment of salary, wages or earnings to the applicant after 1998 does not, in the Tribunal's view, stand in the way of a conclusion that the applicant has suffered a loss of earnings, that he would not be suffering if he was not free of his war-caused incapacity. In arriving at this conclusion the Tribunal notes that Faymar Pty Ltd has remained viable and continues to engage in the care rental business. The Tribunal is reasonably satisfied that the applicant satisfies the second limb of section 24(1)(c) of the Act.
It follows from the reasons given above that the Tribunal is reasonably satisfied that the applicant should be paid pension at the Special Rate with effect 1 January 2001.
The remaining issue is whether the applicant's pension was correctly assessed at 90% of the General Rate at the date of the original decision. Based on Dr Grant's evidence as stated in paragraph 23, the Tribunal is reasonably satisfied that the applicant should be paid pension at 100% of the General Rate with effect 27 January 2000 and until the commencement of payment of pension at the Special Rate. In making this determination the Tribunal is satisfied that the rate of pension of 90% of the General Rate was correct at the date of the original decision.
For the reasons given above, the Tribunal determines that the decision under review is varied, so that:
(a)the respondent's decision to increase the applicant's disability pension to 90% of the General Rate with effect from 12 February 1997 is affirmed;
(b)the applicant's disability pension is increased to 100% of the General Rate with effect 27 January 2000; and
(c)the applicant's disability pension is to be paid at the Special Rate with effect 1 January 2001.
I certify that the 53 preceding paragraphs are a true copy of the reasons for the decision herein of Mr I R Way, Member
Signed: ........................................................................
AssociateDate of Hearing 23 April 2002
Date of Decision 14 June 2002
Solicitor for the Applicant Mr G Mylne
Solicitor for the Respondent Mr M Smith
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