Annett and Repatriation Commission

[2006] AATA 234

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 234

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No   A2005/68

VETERANS’ APPEALS DIVISION		)
Re		DAROLD GEOFFREY ANNETT

Applicant

And REPATRIATION COMMISSION

Respondent

DECISION

Tribunal Senior Member Allen

Date13 March 2006

PlaceCanberra

Decision The decision under review is affirmed.

(Sgd) M.D. ALLEN
  .............................
  Senior Member

CATCHWORDS

VETERANS’ ENTITLEMENTS – Federal Court remittal – whether the applicant is entitled to the General or the Special Rate of pension – whether applicant ceased work because of his war-caused incapacities alone – Tribunal finds cessation of work was due to both war-caused incapacities and unprofitability of the applicant’s company – decision under review affirmed.

Veterans Entitlement Act (1986) s 5Q, 24, 120(4) and (6)

Repatriation Commission v Smith (1987) 15 FCR 327

Casarotto v Australian Postal Corporation (1989) 86 ALR 399

Repatriation Commission v Fox [1997] 737 FCA

REASONS FOR DECISION

Senior Member Allen

1.      The Applicant is a former member of the Australian Regular Army who on 10 January 2003 applied to the Respondent to have accepted as a war-caused disease the condition of ischaemic heart disease.  Prior to that application, the Applicant had had his post-traumatic stress disorder amongst other incapacities excepted as being war-caused.

2.      On 7 April 2003 a delegate of the Respondent accepted the Applicant’s claim regarding ischaemic heart disease and increased the rate of pension payable to him for incapacity occasioned by all war-caused injuries and diseases to 100 per cent of the General Rate of pension.

3.      On 29 October 2004 the Administrative Appeals Tribunal set aside that part of the decision that assessed pension at 100 per cent of the General Rate and substituted its decision that the Applicant was entitled to the Special Rate of pension pursuant to s 24 of the Veterans Entitlement Act (1986 (“VEA”).

4.      That decision was the subject of an appeal to the Federal Court by the Repatriation Commission and on 7 March 2005, by consent, the appeal was allowed and the matter remitted to the Tribunal for re-hearing.  That re-hearing came on before me at Canberra on 20 and 21 February 2006.

5.      The standard of proof in this matter is that prescribed by ss 120(4) VEA namely that to the Tribunal’s “reasonable satisfaction”.  As was pointed out in Repatriation Commission v Smith (1987) 15 FCR 327 the term “reasonable satisfaction” equates to the civil standard of proof namely that of proof on the balance of probabilities. Ss 120(6) VEA provides that neither party to this review bears any onus of proof. As was pointed out by Hill J in Casarotto v Australian Postal Commission (1989) 86 ALR 399 at 413, there is a responsibility upon an Applicant to ensure that there is laid before the Tribunal all the material which it will be necessary for the Tribunal to have before it to enable it to come to a decision.

6.      As stated above, the Applicant’s claim was lodged with the Respondent on 10 January 2003.  S 19 VEA states inter alia that the Repatriation Commission, if it accepts the claim to have a disease or injury recognised as being war-caused, must assess the rate of pension to be paid during the assessment period, which period commences on the day specified from which the entitlement to pension is granted (in this case 10 October 2002) and ends on the day the said application is determined.

7.      Taking into account the exhibits and transcript reproduced in the appeal book and the copy of the transcript of the original AAT hearing, the Applicant’s evidence before me and the comprehensive Statement of Facts and Contentions lodged by the Respondent it is possible to make the following findings.

8.      The Applicant was born on 8 February 1935 and retired from the ARA with Senior Warrant rank.  When the Applicant retired from the ARA he commenced a business together with his wife and son, of making and selling donuts.  This business originally operated as a partnership but on 24 June 1981 Oephelia Pty Ltd was incorporated and on 29 June 1981 the Annett Family Trust was settled with Oephelia Pty Ltd as the Trustee.

9.      Per medium of Oephelia Pty Ltd the Applicant opened or licensed to other operators, outlets for the sale of donuts and other food items in various shopping centres in and around Canberra.  This business met with success, such that by 1993 the Applicant per medium of Oephelia Pty Ltd owned five food outlets.  Difficulties then arose in the food business primarily with regard to location and exorbitant rents so that by 1998, Oephelia Pty Ltd had disposed of all food outlets.

10.     Originally the Applicant had drawn a salary from Oephelia Pty Ltd.  His tax return for the tax year ending 30 June 1997 shows that in that year the Applicant did not receive income from any source other than superannuation and bank interest.  Also on 15 August 1997 the Applicant received a payout of superannuation from Oephelia Pty Ltd.  The Applicant in these proceedings conceded that the last financial year in which he engaged in paid work for Oephelia Pty Ltd was the tax year 1995-1996.

11.     In about 1992 the Applicant together with his wife and a person by the name of Bowden, acquired a company known as Fishwick Nominees Pty Ltd.  Originally the purpose of this company was to conduct a proposed business called “Woofers Hot Dogs”.  The proposed hot dog business did not eventuate but the Applicant, his wife and Bowden purchased an arts and crafts business being run from premises in the industrial suburb of Fyshwick.  Fishwick Nominees Pty Ltd had changed its name to Woofers Hot Dog Company Pty Ltd and this company then became Artisan Arts & Crafts Pty Ltd (“Artisan”).

12.     The business of Artisan involved:

·Arts and craft retailer and wholesaler.

·Conducting art and craft courses.

·Ceramic manufacturer.

13.     In addition to the activities outlined above the Applicant conducted, as part of the business of Artisan, a ceramic repair business.  This business commenced between 1993 and 1995 (the Applicant’s evidence is unclear) and work was obtained originally from the Department of Administrative Services and later from Toll Transitions after the then Department of Administrative Services outsourced its removalist operations.  Apparently the Applicant’s work involved inspecting and then quoting on the cost of repairs for Objet d’art that had been damaged during removals and then carrying out repairs.  Some work of this nature was also obtained from the general public.

14.     When Artisan commenced business, the Applicant and his wife made a loan to the company to help establish the company, as did the other director Mr Bowden.

15.     While Artisan was trading, the ceramic repairs carried out by the Applicant were carried out in his capacity as an employee of Artisan.

16.     In his Statement of Facts and Contentions the Applicant claimed that the ceramic repairs were undertaken in a personal role as a “consultant”.  I reject this submission.  In cross examination the Applicant stated “my estimate for when Artisan was in operation its earnings from repairs would be $2,000.00 a year”.  Also, no income from contracted repair work is shown in the Applicant’s tax returns.

17.     Having regard to the company returns it is clear that Artisan was not viable as a business and that it accumulated losses.  As the Applicant conceded in cross examination, business became less profitable due to the loss of a distributorship, other wholesalers to whom Artisan had supplied goods going bankrupt leaving Artisan with bad debts and what the Applicant termed “fly-by-nighters” entering into territory to which Artisan had exclusive rights to retail products.

18.     At the commencement of its business the Applicant drew a wage from Artisan and was a PAYE tax payer.  However, the Applicant’s income tax returns commencing for the tax year 1996-1997 do not show the payment of any wages or salary or even directors fees from Artisan.

19.     The Applicant claimed that post 1995-1996, instead of payments to him (and his wife) by Artisan, monies were directed to repayment of the loan from him and his wife to the company.

20.     The financial records of Artisan do not specifically show any amounts directed to the repayment of the loan but do reveal in the years 1994 to 2001 borrowings by the company were reduced annually.

21.     By the year 2000 the Applicant had made the decision to downsize the business of Artisan.  To this end in 2001 the equipment for manufacturing ceramics was sold and part of the premises in which the business was conducted was sublet.

22.     Artisan ceased trading on 30 June 2002.  On 25 November 2002 instructions were given to the company’s accountants to have the company deregistered and this occurred in May 2003.  The last GST return filed by the company was dated 28 October 2002.

23.     The Applicant’s evidence was that he intended to continue work in ceramic restoration after Artisan ceased trading and also to sell art materials and conduct lessons and to that end had built a home studio and a kiln.  A new business name Artisan Art Gallery & Company was obtained and a website constructed.

24.     In December 2003 the Applicant suffered an ischaemic attack and was hospitalised.  In the years 2002-2003 he did some repair work but this is not reflected in his tax returns.  He stated that but for incapacity occasioned by his PTSD, he would be in receipt of remuneration from his arts and craft activities carried on under the business name.

25.     At the first hearing of this matter the Respondent conceded that it was war‑caused incapacity alone that rendered the Applicant incapable of undertaking remunerative work aggregating more than eight hours a week.

26.     In these proceedings the Respondent resiled from that concession.  Having heard the uncontested evidence of the Applicant’s treating psychiatrist Dr White, I am reasonably satisfied that the only reason the Applicant is not undertaking remunerative work is because of incapacity from his war‑caused injuries and diseases alone.

27.     As at the application day, namely 10 January 2003, the Applicant was aged in excess of 65 years, the exclusionary provisions of ss 24(2A) VEA apply to him. S 24 VEA reads inter alia:

“(1)     this section applies to a veteran if:

(aa)…

(aab)…

(a)either:

(i)the degree of incapacity of the veteran from war-caused injury or war-caused disease, or both, is determined under s 21A to be at least 70% or has been so determined by a determination that it is in force; or

(ii)...

(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;

(c)…

(d)…

(2)…

(2A)This section applies to a veteran if:

(a)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 pension that he or she is receiving; and

(b)the veteran had turned 65 before the claim or application was made; and

(c)paragraph (1)(a) and (1)(b) apply to the veteran; and

(d)the veteran is, because of incapacity from war-caused injury or war-caused disease or both, alone, prevented from continuing to undertake the remunerative work (last paid work) that the veteran was last undertaking before he or she made the claim or application; and

(e)because the veteran is so prevented from undertaking his or her last paid work, the veteran is suffering a loss of salary or wages, or of earnings on his or her own account, that he or she would not be suffering if he or she were free from that incapacity; and

(f)the veteran was undertaking his or her last paid work after the veteran had turned 65; and

(g)when the veteran stopped undertaking his or her last paid work, the veteran:

(i)if he or she was then working as an employee of another person – had been working for that person, or for that person and any predecessor or predecessors of that person; or

(ii)if he or she was then working on his or her own account in any profession, trade, employment, vocation or calling – had been so working in that profession, trade, employment, vocation or calling;

for a continuous period of at least 10 years that began before the veteran turns 65; and

(h)section 25 does not apply to the veteran.

(2B)For the purposes of paragraph (2A)(e), a veteran who is incapacitated from war-caused injury or war-caused disease or both, is not taken to be suffering a loss of salary or wages, or of earnings of his or her own account, because of that incapacity if:

(a)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

(b)the veteran is incapacitated, or prevented from engaging in remunerative work for some other reason.”

28.     It is not disputed that paragraph 24(1)(a) applies to the Applicant.  I found as a fact that paragraph 24(1)(b) applies to him.  However, the provisions of ss (2A) are conjunctive and if the Applicant fails to meet any one of the stated criteria then his claim for the special rate must be refused.

29.     The last paid work the Applicant undertook before he made his claim was that of an employee of Artisan Arts & Crafts Pty Ltd.  The Applicant was last paid by that company in the tax year 1995-1996.

30.     Contrary to the Applicant’s submissions the repayment of a loan by the company cannot constitute the undertaking of remunerative work by the Applicant.  The definition of remunerative work in s 5Q VEA includes “any remunerative activity” that term is qualified in paragraph 24(2A)(d) by the words “last paid work”.  In this matter there was no remuneration, howsoever defined, flowing to the Applicant from Artisan Arts & Crafts Pty Ltd nor was there any payment to or on behalf of the Applicant by or from Artisan Arts & Crafts Pty Ltd post the 1995-1996 tax year but there was the repayment of a debt by the company.

31.     Although the Applicant may be prevented from undertaking remunerative activity due to his war-caused injuries and diseases, that incapacity did not prevent him from carrying out his last paid work or suffering a loss of salary or wages on his own account.  He ceased being paid wages because the company could not afford to pay him.

32.     I am reasonably satisfied that when Artisan Arts & Crafts Pty Ltd ceased trading on 30 June 2002 it was because the company was unprofitable and that the Applicant, because of his war-caused PTSD, was unable to continue to apply himself to the affairs of the company.  In other words I am satisfied that as at 30 June 2002 any cessation of remunerative activity by the Applicant as an employee or director of Artisan Arts & Crafts Pty Ltd, that is to say his last paid work, was not because of war‑caused incapacity alone but because of a combination of incapacity and economics.

33.     Paragraph 24(2A)(f) requires that the Applicant be undertaking his last paid work after he turned 65.  The Applicant turned 65 on 8 February 2000.  His last paid work was in the 1995-1996 tax year.

34.     Further, as the Applicant ceased his last paid work in 1995-1996 he had not, contrary to paragraph 24(2A)(g), been working for Artisan Arts & Crafts Pty Ltd for a period of 10 years prior to ceasing his last paid work.

35.     At page 23 of Exhibit 1 is a copy of an application the Applicant made to the Department of Veterans’ Affairs on 27 November 2002 for income support.  At questions 11 and 12 of that form the Applicant states that he will be ceasing work and retiring in December.  Although the Applicant was not cross examined on that document, I see no reason not to accept what he has there written at face value namely, that he had made the decision to cease work in December 2002.

36.     This statement by the Applicant together with the small amount of work actually undertaken by him post 2002, reasonably satisfies me that the ceramic repair work undertaken by him after that date was no more than a hobby and was not, in the terms used by Tamberlin J in Repatriation Commission v Fox [1997] 737 FCA substantial remunerative work.

37.     So far as the food retailing business engaged in by the Applicant, it is quite clear that those activities had ceased by 1998.  No directors fees or other remuneration was received from the holding company Oephelia Pty Ltd nor the Annett Family Trust from at least 1 July 1996.  Consequently, there had been no paid work from that activity after the Applicant turned 65.

38.     As I am satisfied that the Applicant cannot meet all the criteria set forth in ss 24(2A) VEA, in particular paragraphs (d), (e), (f) and (g), the decision under review is affirmed.

I certify that the 38 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen

Signed:         (E.Pope)        
  Associate

Date of Decision  8 March 2006

Counsel for the Applicant            Mr Anforth

Solicitor for the Applicant             Capital Lawyers

Counsel for the Respondent    Ms McDonnell

Solicitor for the Respondent        Australian Government Solicitor