Doyle v Repatriation Commission

[2011] AATA 876

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION

[2011] AATA 876

ADMINISTRATIVE APPEALS TRIBUNAL      )          

)          No 2010/5035

VETERANS’ APPEALS DIVISION		)
Re		Laurence Doyle

Applicant

And Repatriation Commission

Respondent

DECISION

Tribunal Mr R P Handley, Deputy President
Dr H Haikal-Mukhtar, Member

Date12 December 2011

PlaceSydney

Decision The decision under review is set aside and a decision substituted that Mr Doyle is qualified for the payment of pension at the Special Rate.

..................[sgd]............................

Mr R P Handley
  Deputy President

CATCHWORDS

VETERANS’ AFFAIRS – disability pension – qualification for special rate – whether applicant is suffering a loss of earnings on his own account – decision under review set aside

Veterans’ Entitlements Act 1986 s 24

Counsel v Repatriation Commission (2002) 122 FCR 476

Repatriation Commission v Greenwood (1990) 22 ALD 289

Re Jones and Repatriation Commission [2011] AATA 631

Re Nelson and Repatriation Commission (2007) 96 ALD 765

Re Stanhope and Repatriation Commission [2007] AATA 1916

Re Thurlow and Repatriation Commission (2002) 74 ALD 455

REASONS FOR DECISION

12 December 2011	Mr R P Handley, Deputy President
Dr H Haikal-Mukhtar, Member

1.Laurence Doyle has applied for a review of a decision made by the Repatriation Commission to refuse to increase his pension from 100% of the General Rate to the Special Rate.

Background

2.Mr Doyle was born in 1945 and is aged 66.  He undertook National Service in the Australian Army, serving from 2 June 1965 to 14 June 1967.  On discharge, Mr Doyle resumed farming and, in 1972, he and his wife purchased the family farm from his parents.  The farm is a mixed farming enterprise – mainly grain production and growing sheep both for wool and meat.  Grain production involves the use of tractors and other large machinery and many hours of driving.  Working with sheep involves heavy work including pushing, pulling, lifting and shearing sheep.  Other general farm work includes the maintenance of machinery, farm buildings and fences, which involves standing, walking and lifting.

3.The farm has always been run as a partnership between Mr and Mrs Doyle.  However, on 14 November 2008, Mr Doyle ceased remunerative work on the farm because of his war-caused Lumbar Spondylosis and Post Traumatic Stress Disorder (PTSD), his having found work increasingly difficult over the previous 10 years.  Since 14 November 2008, the business has continued to operate because the work Mr Doyle used to perform on the farm has been progressively taken over and carried out by his wife and two of his sons.  The two sons both have farms within the area and, in exchange for their labour on their parents’ farm, they have the full use of all the Doyles’ plant and equipment on their own farms, thereby obviating the need for them to buy or lease such plant and equipment.  They are not otherwise paid for the work on their parents’ farm.

4.Mr and Mrs Doyle’s partnership has not suffered a loss of gross income as a result of Mr Doyle ceasing remunerative work and still manages to produce a substantial gross income. 

5.On 28 January 2009, Mr Doyle, then aged 63, lodged an application for an increase in his pension from 100% of the General Rate.  On 1 June 2009, the Commission refused Mr Doyle’s application.  He sought a review of this decision by the Veterans’ Review Board which, on 11 October 2010, affirmed the Commission’s decision.  On 18 November 2010, he applied to the Tribunal for a further review.

Relevant Legislation

6.For a person to be qualified for the payment of a disability pension at the Special Rate the requirements of s 24 of the Veterans’ Entitlements Act 1986 (the Act) must be satisfied.  Relevantly, the parties agree that Mr Doyle satisfies requirements that he was under 65 at the time of making an application (s 24(1)(aab)), his degree of incapacity from war-caused injury or war-caused disease was at least 70% (s 24(1)(a)(i)), and he was totally and permanently incapacitated such that he was incapable of undertaking remunerative work for periods aggregating more than 8 hours per week (s 24(1)(b)). The parties also agree that by reason of his war-caused injuries and diseases alone, Mr Doyle is prevented from continuing to undertake remunerative work as a farmer (the first limb of s 24(1)(c)). The outstanding issue about which the parties do not agree is whether by reason of ceasing remunerative work as a farmer, he is suffering a loss of earnings on his own account (the second limb of s 24(1)(c)).

7.To be qualified for payment of pension at the Special Rate, s 24(1)(c) of the Act requires that:

(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;

8.Section 24(2A)(e) relevantly states:

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

…

(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;

9.The Commission contends that Mr Doyle has not suffered a loss of earnings on his own account as a result of ceasing his remunerative work as a farmer because the partnership operating Mr and Mrs Doyle’s farm, and therefore Mr Doyle, has not suffered a loss of gross income. The Applicant contends that the reference in s 24(2A)(e) to “earnings on his or her own account” is concerned with the product of remunerative work and relies on the decision of the Full Federal Court in Counsel v Repatriation Commission (2002) 122 FCR 476 (Counsel).

Submissions

10.Mr Colborne, for Mr Doyle, submitted that it is clear from the decision in Counsel that the words “earnings on his or her own account” refer to the product of a veteran’s physical or mental labour and not to income generally.  The decision in Counsel followed a line of decisions including that in Repatriation Commission v Greenwood (1990) 22 ALD 289 (see especially at 293-294). Without reference to the decision in Counsel, the Tribunal reached the same conclusion in Re Thurlow and Repatriation Commission (2002) 74 ALD 455 (Thurlow).  Mr Colborne said that in the period since he ceased work, Mr Doyle has suffered a consequent loss of earnings on his own account and has only been receiving a return on capital.

11.Mr Colborne said the decision in Re Stanhope and Repatriation Commission [2007] AATA 1916 (Stanhope), referred to by the Commission should be distinguished because the applicant continued with other remunerative activities as a result of which he did not suffer a loss of earnings on his own account.

12.Mr O’Reilly, for the Commission, noted that the Applicant concedes that he has not suffered a loss of gross income. Mr O’Reilly contended that if the Applicant’s submissions are accepted, the second limb of s 24(1)(c) would have no work to do. He noted that this limb is more difficult to apply in situations where a veteran is self-employed but suggested it should, nevertheless, focus on whether the veteran is suffering a financial loss. Amongst other decisions, he referred to the Tribunal decisions in Stanhope and Re Nelson and Repatriation Commission (2007) 96 ALD 765 (Nelson) as being supportive of the Commission’s contentions. 

Discussion

13.The Tribunal agrees with the Applicant that the relevant authority in this case is the decision of the Full Federal Court in Counsel. In that decision, at 482, Gray J said:

19It is clear that the words “salary or wages” and “earnings on his or her own account” are intended to encompass the full range of ways in which people can make money from their own efforts. …

20… I agree with what his Honour [Goldberg J] says about the application of “earnings on his or her own account” to the income of a partnership business. … In the case of a partner, such as the appellant, whose physical and mental labour produced or contributed to the generation of that income, it is appropriate to regard that income as "earnings on his or her own account" within the meaning of s 24(2A)(e).

14.Carr J also agreed with his fellow judges’ “observations about how partnership revenue should be characterised for the purposes of the VE Act” (at 486). At 489, he referred to receipts of the partnership that “were the product of the labours of the appellant and his wife” and to the appellant’s share of those receipts constituting ‘earnings’ within the meaning of s 24(2A)(e). Goldberg J, at 492, referring to s 24(2A)(e), said:

… the reference to “earnings”, in a partnership context, is a reference to the money brought into the partnership, that is its cashflow, through the personal exertion of the veteran, that is, “on his or her own account”. 

15.In Re Jones and Repatriation Commission [2011] AATA 631, to which Mr O’Reilly drew our attention, the Tribunal applied the decision in Counsel and found that earnings received from the income of a company produced in significant part by the personal exertion of the applicant, should be treated in the same way as those derived from the earnings of a partnership.  In Thurlow, the Tribunal said, at 459, that it is clear from the cases cited that “the earnings derived by the applicant must relate to remunerative work”.  

16.The Tribunal agrees with Mr Colborne that the decision in Stanhope should be distinguished on its facts because the applicant was still deriving earnings from his personal exertion.  While the applicant was no longer working as a truck driver, he had become more involved in the breeding and sale of cattle, and the Tribunal said it was “apparent the applicant has not suffered a loss of earnings on his own account”.  In our view, the decision in Nelson can also be distinguished.  The applicant in that case was receiving payments under an income protection policy.  The Tribunal said, at [5]:

If a veteran receives payments under an insurance policy explicitly intended to replace payments he would otherwise receive, the replacement payments must be treated in like the original payments.

Essentially, the payments were a substitute for the income earned by the applicant from his former business partnership and should, therefore, be compared with his share of the gross income of the partnership.

17.In the present case, the Tribunal is satisfied that because of his incapacity, Mr Doyle suffered a loss of earnings from his personal exertion on his own account and that this is a situation contemplated by the decision in Counsel by which the Tribunal is bound. The fact that Mrs Doyle and their two sons have stepped into the breach to enable the partnership business to continue to operate and generate a gross income does not affect the fact that Mr Doyle has suffered a loss of earnings from his personal exertion on his own account. Thus, he satisfies the second limb of s 24(1)(c) of the Act and is qualified for the payment of pension at the Special Rate.

Decision

18.The decision under review is set aside and a decision substituted that Mr Doyle is qualified for the payment of pension at the Special Rate.

I certify that the 18 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R P Handley, Deputy President, and Dr H Haikal-Mukhtar, Member.

Signed:.......[sgd]........................................................................
           Associate

Date of Hearing  2 December 2011
Date of Decision  12 December 2011
Counsel for the Applicant  Mr C Colborne
Solicitor for the Applicant  KCI Lawyers
Representative for the Respondent:         Mr T O’Reilly, Department of   Veterans’ Affairs