Garcia and Repatriation Commission
[2005] AATA 1097
•4 November 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 1097
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2004/971
VETERANS’ APPEALS DIVISION )
Re RAYMOND GARCIA Applicant
And
REPATRIATION COMMISSION
Respondent
DECISION
Tribunal Ms M J Carstairs, Member Date 4 November 2005
Place Brisbane
Decision The Tribunal sets aside the decision under review and substitutes the decision that Mr Garcia is entitled to the special rate of pension with effect from 22 June 2004.
...................[Sgd]......................
M J Carstairs
Member
CATCHWORDS
VETERANS’ AFFAIRS - veterans’ entitlements - special rate of pension - remunerative work - whether prevented from continuing remunerative work
Veterans’ Entitlements Act 1986 s 5Q, 19, 24
Repatriation Commission v Hendy (2002) 76 ALD 47
Flentjar v Repatriation Commission (1997) 48 ALD 1
Repatriation Commission v Smith (1987) FCR 327REASONS FOR DECISION
4 November 2005 Ms M J Carstairs, Member 1. Raymond Garcia has applied for an increase in the rate of his disability pension. The respondent has assessed Mr Garcia as eligible for payment at the 100% general rate of pension and he now seeks the higher, loss-of-earnings related payment, known as special rate. Mr Garcia’s last work was in a delivery business, Action Removals, which he operated in partnership with Ms E Prestney. The business was deregistered in 2000, after it effectively had ceased operating during 1999. Mr Garcia has not worked since.
2. Entitlement to the special rate of pension that Mr Garcia seeks requires, amongst other things, that a person is prevented from continuing to undertake remunerative work, and cannot work more than 8 hours per week, by reason of war-caused disability. The respondent says that Mr Garcia is not entitled to special rate for a number of reasons, chiefly that there were reasons other than war-caused disability that account for Mr Garcia ceasing remunerative work.
3. The respondent has accepted that Mr Garcia’s conditions of post traumatic stress disorder (PTSD), alcohol dependence, hypertension, lumbar spondylosis, and hearing problems arise from his war service. Mr Garcia otherwise suffers from no significant medical conditions. He fractured his ankle in 1998 when he was unloading a refrigerator and received sickness benefits while he recuperated. The respondent identified this injury as a reason that contributed to Mr Garcia’s loss of remunerative work and is one reason why he cannot qualify for special rate. Mr Garcia does not agree.He says that he recovered quickly from the ankle fracture and it was not the reason the business failed. He says that he was struggling with his psychiatric symptoms and that this was the real reason, and remains the reason why he is no longer able to work.
ISSUES
4. The procedure for determining claims for special rate of pension is set out in s19 of the Veterans’ Entitlements Act 1986 (the Act). Section 19(5C)(a) of the Act requires the rate of a pension to be determined during the assessment period. That term is defined in s19(9) of the Act as meaning:
….the period starting on the application day and ending when the claim or application is determined.
5. The application day in this case was 17 April 2003 and the assessment period runs from that day. At the application day, Mr Griffiths was fifty-eight years of age.
6. The provisions for special rate of pension are set out in s24 of the Act. Mr Garcia satisfies some of that section’s requirements. Firstly, he was aged under 65 years when he claimed for an increased rate of pension, so he satisfies s24(1)(aa) and s24(1)(aab) of the Act. He receives 100% of the general rate of pension, so he satisfies s24(1)(a) of the Act which requires that he receive at least the 70% rate of payment.
7. Section 24(1)(b) requires that war-caused disabilities, taken in isolation, must prevent Mr Garcia from undertaking remunerative work for more than 8 hours per week. The Veterans’ Review Board noted that there was only one medical report that dealt with Mr Garcia’s capacity to undertake work and they accepted that report. That was still the state of the evidence when I heard the matter – some two years later.
8. I was satisfied on the strength of the report of Dr I Holm, psychiatrist, dated 11 July 2002, that Mr Garcia is unable to return to paid employment, permanently, for periods amounting to 8 hours per week. If the respondent thought otherwise, as was submitted, it could have led other medical evidence, or required Dr Holms for cross-examination. The respondent did neither.
9. It seems to me that Dr Holms was in a good position by the time of writing his report in 2002, having been at that time Mr Garcia’s treating psychiatrist for some nine months, to comment on the effect of his psychiatric disorders on his capacity to work. I note that Dr Holms’ conclusion agreed with an earlier report, referred to in the Combined Impairment Report dated 29 March 2000 (T4, p103) which stated psych states veteran is incapable of working more than 8 hours per week. I also took into account that Mr Garcia has physical impairments accepted by the respondent in addition to two significant psychiatric disorders and that these physical impairments would affect his ability to work, as contemplated within s24(1)(b) of the Act. This is particularly so in relation to lumbar spondylosis, taking into account, as s28 of the Act requires, Mr Garcia’s background of vocational trade and other skills, and his limited education.
10. On 10 April 2000 (T4, p81) Mr Garcia’s general practitioner, Dr C Anderson, filled out a departmental form stating that Mr Garcia could work not at all. He chose that answer in preference to another option available on the form, namely could do some work but less than 8 hours per week. In the absence of any medical evidence to the contrary, and where Dr Anderson and Dr Holms are in agreement, I am satisfied that Mr Garcia satisfies s24(1)(b) of the Act.
11. The matters in s24(1)(aa), (aab), (a) and (b) being satisfied, the substantive issue in dispute is whether Mr Garcia satisfies s24(1)(c) of the Act. That sub-section deals with two issues:
§ whether a person’s loss of remunerative work is attributable to war-caused incapacities and not to something else as well; and
§ whether the person is suffering a loss of earnings that he would not be suffering in the absence of war-caused incapacities.
12. The Federal Court in Flentjarv Repatriation Commission (1997) 48 ALD 1 said that s24(1)(c) of the Act requires answers to the following questions :
1. What was the relevant "remunerative work that the veteran was undertaking" ..?
2. Is the veteran, by reason of war-caused injury or war-caused disease, or both, prevented from continuing to undertake that work?
3. If the answer to question 2 is yes, is the war-caused injury or war-caused disease, or both, the only factor or factors preventing the veteran from continuing to undertake that work?
4. If the answers to questions 2 and 3 are, in each case, yes, is the veteran by reason of being prevented from continuing to undertake that work, suffering a loss of salary, wages or earnings on his own account that he would not be suffering if he were free of that incapacity?
13. The operation of s24(1)(c) is ameliorated for those aged under 65 by the provisions of s24(2)(b) of the Act. Section 24(2)(b) permits veterans under 65 years old, who might not have met the special rate tests at the time they ceased working, to retain their eligibility if they are genuinely seeking work and their service-related incapacity remains the substantial cause of the inability to undertake remunerative work.
14. Section 24(2)(a) makes plain that loss of earnings referred to in s24(1)(c) will never be established where there are other reasons why a person has ceased to engage in remunerative work or other reasons prevent the veteran from engaging in remunerative work.
15. The analysis in Flentjar can be usefully applied to the considerations that arise in Mr Garcia’s case, providing the analysis on which to decide whether Mr Garcia meets the criteria in s24 of the Act.
BACKGROUND
16. Mr Garcia left school at the age of 13 having achieved a Grade 9 standard of education. There was little detail of his military service in the written materials, though it was recorded in one medical report that he served with the Australian Army in the Medical Corps in Vietnam in 1967. There was also little detail about his working life after his discharge from the army until the late 1980’s. His claim form for a service pension in 1998 referred to past training as a hairdresser. By the 1980’s he was working in the offshore oil industry, including on Bass Strait oil rigs as a rigger and trade assistant. He then was promoted to safety officer, although he had no formal Occupational Health and Safety qualifications for that role.
17. In the 1990’s work seems to have become less available to him and his documents show that several positions he held as a welder’s trade assistant ceased after short term contracts lasting about a year (exhibit R2). Mr Garcia’s partner Ms E Prestney obtained work in Mackay, so they moved to Queensland. In about 1995 they commenced operating a general delivery business in partnership. Action Removals delivered furniture and white goods for a number of major outlets in Mackay such as Chandlers, Errol Stewarts and Betta Electrical. In quiet periods, this work for retail outlets was supplemented with house removals, which was largely on a cash basis.
18. At certain stages the business employed two staff - one fulltime, one casual – and Mr Garcia and Ms Prestney were taking drawings from the business.
19. In 1998 Mr Garcia broke his ankle, and was off work for some six weeks. That year was diagnosed by Dr R Stanton, psychiatrist, as suffering from PTSD. Action Removals was deregistered in early 2000.
WHAT REMUNERATIVE WORK WAS MR GARCIA UNDERTAKING?
20. Remunerative work is broadly defined in sub-section 5Q(1) of the Act as including any remunerative activity, and the relevant remunerative work referred to in s24(1)(c) is not limited to that most recently undertaken: Repatriation Commission v Hendy (2002) 76 ALD 47. Mr Garcia identified the remunerative work he was undertaking as furniture and white goods deliveries and furniture removals, but he has worked in other occupations in the past including hairdressing, safety officer and welder’s trade assistant (exhibit R2). There was no indication in the documents when Mr Garcia worked as a hairdresser, and I have not taken that into account in identifying his remunerative work as it seems this was some time ago.
21. I was satisfied that remunerative work for Mr Garcia included his work as a welder’s trade assistant and his more recent self-employment in the deliveries and removals business.
DID WAR-CAUSED DISABILITY PREVENT MR GARCIA CONTINUING TO UNDERTAKE REMUNERATIVE WORK?
22. The evidence about Mr Garcia’s last work included his three statements (exhibits A1, A2 and A3). He said that under the partnership arrangement with Ms Prestney, they had agreed to a distribution ratio of 65:35 as she had employment outside the business as a sports instructor. They had purchased Action Removals in November 1995 (exhibit R2). At that time the business had delivery contracts in Mackay with Chandlers, Errol Stewarts and an antique business. Mr Garcia said that he expanded the business by securing a contract to deliver for Betta Electrical Stores.
23. Mr Garcia said that the delivery business was successful. The partnership tax returns (exhibit R2) confirmed this, though clearly it was not a large scale operation. The tax returns for the financial year ending 1996 showed the business operating without any salaries paid to outside employees. In that year the partners’ distributions were just over $10,000 each. The next two years of trading showed that the business had grown, and was making salary payments to employees - $16,950 in the year ended June 1997 and $14,293 in the year ended June 1998. The business ran at a loss in each of those years, but realised significant distributions to the partners in each year. Mr Garcia’s distributions were $11,034 in the 1997 financial year and $13,502 in 1998.
24. However Mr Garcia told me that he was suffering increasing personal stress and the business ran down substantially. He said that before he commenced operating his business he had thought that he would cope better with his long term symptoms relating to stress and alcohol consumption, but he said he came to learn that you cannot really be your own boss in business because you are answerable to customers. He said that about 18 months into the business’ operations (ie about mid-1997) he was drinking heavily. Mr Garcia stated that he noticed himself becoming increasingly intolerant in the business setting and lost the will to ensure customer and client satisfaction. He was easily irritated by the demands of customers, and found this nerve wracking. He considered that PTSD was his main problem. He said that he was able to work with his other conditions of lumbar spondylosis and high blood pressure, though he said that he has had a recent 5-day admission to hospital to stabilise high blood pressure.
25. His written statement to the Veterans Review Board dated 7 April 2003 (T4, p154) set out that the business started to become unprofitable because of the manner in which he treated retailers and customers. He said that there were numerous complaints lodged about the way he treated people or spoke to them and he realised that he was becoming unduly aggressive.
26. Mr Garcia described one incident where Betta Electrical started doing work themselves, except for the difficult jobs, which were left for him. He accused the manager of this and the argument ended with Mr Garcia quitting. Mr Garcia had told the Veterans’ Review Board that the Betta contract had accounted for between 40%-50% of Action Removals’ work. He said that if he had been feeling less strain from his psychiatric conditions he believed he would have been able to mediate the situation with Betta. He sought help from his general practitioner Dr Anderson. Mr Garcia said that Dr Anderson prescribed Cipramil but that medication only increased his problems, causing him difficulty staying awake. He acknowledged that he continued to consume alcohol and the “cocktail” of alcohol and the medication may have been too much. I noted a medical report dated 6 May 1999 recorded that Mr Garcia started drinking at 11am daily and consumed 8 to 10 stubbies of beer and at least 2-4 glasses of wine per day, along with occasional spirits.
27. Mr Garcia said that he had not realised that he was suffering from PTSD until diagnosed by Dr Stanton in 1998, though he had recognised in himself that he was short-tempered, aggressive, and drank too much alcohol. His general practitioner advised him to seek psychiatric help, so Mr Garcia contacted the Department of Veterans’ Affairs who organised the appointment with the psychiatrist. Mr Garcia attended Dr Stanton on some ten occasions. Mr Garcia told me that Dr Stanton prescribed medication, as well as advising him that he should stop work. The only written report from Dr Stanton was one dated February 1999 (T4, pp 45-47) which was a medico-legal assessment for the Department of Veterans’ Affairs and predated the time when Mr Garcia became Dr Stanton’s patient. Unfortunately Dr Stanton left Mackay suddenly and is no longer in practice. Mr Garcia was unable to obtain any reports from him.
28. Late in 1999 (Mr Garcia recalled this as being before the business was de-registered but when he was no longer actively trying to run it) the Department of Veterans’ Affairs flew Mr Garcia to Brisbane so that he could participate in a six-week drug and alcohol rehabilitation programme conducted at the Toowong Private Hospital. Mr Garcia said that there was nothing of this kind available to veterans in the Mackay area. He said:
Looking back, having completed the course at Toowong Private Hospital for PTSD, I can recognize that my lack of ability to cope with the business and manage my employees because of my lack of tolerance and bad temper was due in part to my PTSD symptoms and also resulted from the medication that I was on to deal with my PTSD and other accepted conditions.
29. In material that he filed with the respondent dated 21 July 1998 (exhibit R2) he had said:
In recent months I have been suffering from worsening depression and anxiety which I have had for many years.
30. Dr Stanton’s report stated that he diagnosed Mr Garcia in December 1998 with PTSD and alcohol disorder and possibly major depression though he declined to diagnose depression because of Mr Garcia’s excessive alcohol intake, which might account for those symptoms. He commented that Mr Garcia had told him that he was unable to work for the last six months as a result of his… psychiatric symptoms (T4, pp45-46).
31. In his claim for service pension in August 1999, Mr Garcia said that he believed that he could not train for another job because of his psychiatric and other medical conditions and because of the effects of the medication he was prescribed for PTSD. He then referred also to his stress levels. I regard the statements in 1998 and 1999 as important. They present a consistent history of symptoms, described by Mr Garcia at or around the time that he last worked.
32. Mr Garcia said that the business only ceased when it was deregistered and this seems to have taken place in early 2000. Mr Garcia has given a number of dates for when effective operations came to a halt. There was evidence that the trucks were advertised for sale in about October 1999 and bank accounts were closed in November 1999 (exhibit A2). Mr Garcia said, however, that by about December 1998 or January 1999 the business was not operating effectively, because he could not carry out its management, and he states that he ceased work finally in August 1999 (exhibit A2).
33. In looking at the question of whether war-caused disability prevented Mr Garcia continuing in remunerative work, I was struck by the consistency of what he had said to doctors and when he has reported what happened in his business, long before he made this claim for special rate of pension. It was suggested that there are real issues of credit in this case, because of the different dates that Mr Garcia has given for ceasing work. He has filled out forms for Centrelink in the past and when claiming service pension from the Department of Veterans’ Affairs, stating that he ceased work in June 1998. However I accept his evidence that he struggled on with the business in 1998 and 1999 with the assistance of Ms Prestney and because he paid staff who could keep the deliveries going. I accept that he returned to driving the Action Removals truck within a short period of sustaining the ankle fracture in mid-1998. This was entirely consistent with what Dr Megson, orthopaedic surgeon, said about Mr Garcia’s recovery from the ankle injury (T4, p112-113).
34. The taxation records for Action Removals end at the financial year 1997/1998. I was not provided with tax returns for the business for the following financial year. Despite the lack of financial records to show an operating business, I accept Mr Garcia’s evidence that he tried to struggle on through 1998/1999; was going to the office; doing some driving; but generally not coping with the management of the business. I note that correspondence to secure delivery work with Super-A-Mart was signed by Ms Prestney in October 1998 (exhibit A2). This was evidence which I accept that the business in which he was a partner was still attempting to expand its operations late in 1999.
35. It seems to me that there was no real inconsistency in dates provided by Mr Garcia from time to time concerning when he stopped working. He acknowledged that he was not holding the business operations together in 1999 and had stopped work in August 1999; and it is recorded that the business assets were up for sale after that. Until the business was actually deregistered it was a possibility that the business could be revived, and it is often difficult for self-employed people to finally acknowledge that a business cannot carry on. He would have been looking at his options and it is hardly surprising that he would be exploring his entitlements to social security payments and service pension, and putting the best case forward to support those entitlements. I do not see Mr Garcia’s answers provided in those forms as either being untruthful or showing such inconsistency that Mr Garcia’s honesty is placed in question. I accept his evidence as honestly given.
36. I concluded that the second of the Flentjar questions must be answered “yes”. It is more probable than not that Mr Garcia’s combined conditions of PTSD, alcohol dependence and lumbar spondylosis would prevent him from undertaking any of the remunerative work that he has undertaken in the past. It is noteworthy that the reason that he gave for going into his own business reflected that he had difficulties working for others. This would be consistent with his now diagnosed condition of PTSD. However it seems to me that it would have been unlikely that a person such as he, having the combined disabilities of lumbar spondylosis and alcohol dependence, would have been employed as a removalist, except that the business was his own. It is difficult to imagine two disabilities less suited to this remunerative work. His combined disabilities would prevent him from continuing in any of the remunerative work he has undertaken in the past.
IS WAR-CAUSED DISABILITY THE ONLY FACTOR PREVENTING MR GARCIA UNDERTAKING REMUNERATIVE WORK?
37. I was referred to a number of documentary materials dealing with the circumstances surrounding Mr Garcia’s last years of employment. Some of these have been mentioned, including his first claim for service pension (exhibit R2) in which he stated that he retired on 10 June 1998, and that his business was not then operating.
38. I accept Mr Garcia’s evidence that he was only incapacitated for work by the fractured ankle for a few weeks and was then able to return and participate in the business, including driving the trucks. As I noted above this was consistent with what Dr Megson said. Dr S Megson stated in a report dated 1 September 2000 (T4, p112-113), that there was an initial disability but Mr Garcia ended up with a good clinical result, and he had no limitations with walking, climbing stairs or carrying objects. Dr Megson said the fracture alignment was excellent, and would not prevent him from doing any sort of occupation through to even a fairly heavy manual type of job or a job such as truck driving.
39. Mr Garcia acknowledged that he had some discomfort from pins that were inserted in his ankle and had these removed in February 1999 in a simple procedure, involving day surgery only. Mr Garcia strongly disputed that the ankle injury had been a factor in his giving up work. He said that Ms Prestney managed the business and the two staff maintained the deliveries during his convalescence. He said that he was still able to attend the office, and was not unduly impeded because the caste was removable. He was walking on the ankle after three weeks and he returned to truck driving soon after. He accessed Centrelink sickness benefits for a period after he sustained the fractured ankle (exhibit R2). Mr Garcia said however that when he was receiving Centrelink payments he was working part-time and simply advising Centrelink of his earnings.
40. In contrast to this were other documentary materials that suggested a more significant impact from the ankle injury. Mr Garcia had relied on the ankle injury in his first claim for service pension, dated 8 July 1998 (exhibit R2). Dr Anderson supported his claim, stating that the ankle injury was permanent and would lead to degenerative arthritis. Dr Anderson also commented in a report to Centrelink in early 1999 (T4, pp36-38) that Mr Garcia was limping with a painful swollen left ankle, and in August 1999, Dr Anderson attributed a significant functional impact to Mr Garcia’s ankle injury (T4, p50). By 2000 Dr Anderson had modified his views and attributed a lesser impact to the ankle injury (T4, p81). In medical forms at that time Dr Anderson identified PTSD, alcohol abuse and lumbar spondylosis as the medical conditions preventing Mr Garcia working – that is, all conditions that have been accepted as related to Mr Garcia’s service.
41. Mr Garcia explained some of the circumstances of his claim for service pension. He said that at that time an advocate in Mackay suggested that he apply for a service pension and he went along with that claim, though he seems to have had little involvement with the process.
42. I accept that Mr Garcia would have required some time to recover from the fractured ankle in 1998, and that injury led to his needing to access Centrelink benefits for a time. But I also accept Mr Garcia’s evidence that this was an interim measure, and I take account of the fact that sickness benefit is provided as a short term payment for people in the workforce who sustain injury or illness. No doubt having that injury would have led Mr Garcia to consider his other options including applying (unsuccessfully in the first instance) for service pension.
43. However I was mindful that Mr Garcia must satisfy the test for special rate from early 2003, when he made his claim. By 2003 it is very clear on the medical evidence, and from Mr Garcia’s evidence about the impact of the ankle injury on his capacity to work, that the fracture was a minor, albeit traumatic, event that had no ongoing impact on his work capacity. I was satisfied, accepting the evidence of Dr Megson, that the ankle injury was not a factor preventing Mr Garcia continuing to undertake remunerative work in the assessment period.
44. Other factors apart from the accepted war-caused conditions were referred to in various documents, including that certain contracts with retailers were lost over time. Mr Garcia’s evidence to me on this was that his operations were not affected by stores changing location or other factors, but that he lost important contracts because of his attitude and short temper. I accept his evidence on these matters. His evidence not seriously challenged in cross-examination.
45. In respect of the third Flentjar question I also took into account that Mr Garcia was only fifty-eight at the start of the assessment period and was fifty-four when he stopped working in the business. The kind of remunerative work that he was most recently undertaking did not require frequent updating of skills and I did not consider that his age or time out of the workforce presented impediments to securing further employment, particularly as he was relatively young throughout the assessment period, and below normal retirement age.
46. The application of s24(1)(c) involves a hypothetical excise which involves consideration of what Mr Garcia probably would have done in the assessment period in the absence of his accepted disabilities. In Repatriation Commission v Smith (1987) FCR 327 the Court said:
As has been said the question posed by s24(1)(c) is one of hypothetical facts. The Tribunal must attempt an assessment of what the respondent probably would have done if he had none of his service disabilities.
47. I was satisfied that if Mr Garcia did not have his accepted disabilities he would have continued in his business. He has had an active and varied working life, and despite leaving school at a young age had achieved a range of skills over the years. I accept his evidence that he has always been a committed worker who battled on as long as he could with his psychiatric problems. He continues to do what he can in his neighbourhood, mowing lawns for others for no remuneration.
48. Mr Garcia said that he tried to obtain work after he moved to Brisbane as he wanted to do something, perhaps part-time. Mr Garcia told me that he went to the Cleveland office of Centrelink on 12 June 2002 (he had retained the appointment card) to obtain assistance in seeking work to supplement his pension income. He said that when he told the interviewing officer at Centrelink about his disabilities she dissuaded him from making the attempt. I accepted his evidence that Dr Stanton had told him not to work. In the context of the respondent accepting him for treatment for his psychiatric conditions it seems to me that this is a case where Mr Garcia satisfies the requirements of s24(2)(b). Having not been in remunerative work on the advice of his medical practitioner, I was satisfied that his incapacity is the substantial cause of his inability to obtain remunerative work during the assessment period.
DID MR GARCIA SUFFER A LOSS OF EARNINGS BY REASON OF HIS WAR-CAUSED DISABILITIES?
49. Mr Garcia said that business dropped off substantially from about 1998, though he gave evidence that the cash side of the business was not necessarily reflected in the financial statements prepared by his accountant. He said that a number of jobs, particularly for house removals, were done for cash and not recorded in the books of the business.
50. As I read the financial statements the loss of earnings is established. The business went from one that was steadily expanding its operations and taking on staff in the financial years ended 1997 and 1998 to one that had foundered and closed its doors. I was satisfied that the only reason for this loss was war-caused injury or disease, and that there were no other reasons: s24(2)(a) of the Act.
DECISION
51. The Tribunal sets aside the decision under review and substitutes the decision that Mr Garcia is entitled to the special rate of pension with effect from 22 June 2004.
I certify that the 51 preceding paragraphs are a true copy of the reasons for the decision herein of Ms M J Carstairs, Member
Signed: Denise Burton
Administrative AssistantDate/s of Hearing 18 August 2005
Date of Decision 4 November 2005
Counsel for the Applicant Mr N Jarro
Solicitor for the Applicant Sciaccas Lawyers
For the Respondent Mr M Smith, Departmental Advocate
0
4
0