Gault and Repatriation Commission (Veterans’ entitlements) - [2016] AATA 622

Gault and Repatriation Commission (Veterans’ entitlements) [2016] AATA 622 (19 August 2016)

Division

VETERANS’ APPEALS DIVISION

File Number(s)

2015/5659 & 2015/5664

Re

James Gault and Sally Gault

APPLICANT

And

Repatriation Commission

RESPONDENT

DECISION

Tribunal
Mr S. Webb, Member

Date 19 August 2016

Place Canberra
The decision under review is varied only in so far as the effective dates of variations to the rates of Mr and Mrs Gault’s service pensions, as set out in the reviewable decision, are to be replaced with dates determined in accordance with these reasons. The applications are remitted to the Commission to recalculate the correct rates of Mr and Mrs Gault’s service pensions from these dates.
The decision in respect to company income amounts and attributable percentages is affirmed, without variation.
..................................[sgd]......................................
Mr S. Webb, Member
Catchwords
VETERANS’ ENTITLEMENTS – service pension – ordinary income – company income – attribution – notice requirement to provide company annual financial statements within 14 days of finalisation – meaning of ‘should’ – failure to comply with notice – company income not taken into account when determining rate of pension – reduction in rate of pension from date of event – overpayment – no jurisdiction in respect of overpayment debt, recovery or waiver – rate reduction decision varied
Legislation
Veterans’ Entitlements Act 1986 (Cth) ss 5H, 52ZZA, 52ZZC, 52ZZF, 52ZZK, 52ZZM, 52ZZN, 54, 54A, 56, 56B, 56D, 57, 57B, 175, Schedule 6
Cases
Collector of Customs (New South Wales) v Brian Lawlor Automotive Pty Ltd [2007] AATA 1069
Nelson and Repatriation Commission [1979] 2 ALD 1
REASONS FOR DECISION
Mr S. Webb, Member
19 August 2016

Sally and James Gault claimed and were paid service pensions. They were shareholders in two private companies. Retained company profits were not attributed as personal income of theirs when calculating the rate of service pension. When this was done in retrospect, the rate of service pension was reduced and the amount overpaid to Mr and Mrs Gault was raised against them as a debt. At their request, this decision was reviewed by the Commission. The Commission decided to change the attribution percentage and the start day of the reduced rate of pension. Mr and Mrs Gault are not happy with this result and they applied for further review.
Facts
Before considering the issues, it is helpful to briefly set out the facts.
On 26 June 2008, Mr and Mrs Gault lodged a claim for service pension.[1]
[1] T3 and T4.
At the time, Mr Gault held shares in two private companies – Virogard Pty Ltd (Virogard) and Galahad Distribution Pty Ltd (Galahad). Virogard had issued 2700 shares, of which Mr Gault held 700.[2] Galahad had issued 10 shares. Mr and Mrs Gault and each of their three adult children held two shares each in Galahad, being all of the shares on issue.[3] Information about these holdings and company financial statements were provided to the Department of Veterans’ Affairs (the Department).
[2] T6 folio 56.
[3] T4 folio 42.
On 29 July 2008, Mr…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] AATA 622
Decision Date: 19 August 2016

CaseChat Overview and Summary

This matter concerned an application for review by Mr and Mrs Gault regarding decisions made by the Repatriation Commission concerning their service pensions. The dispute arose from the attribution of retained company profits as ordinary income for the purposes of calculating the rate of their service pensions. The Gaults were shareholders in two private companies, and initially, retained profits were not attributed to their personal income. Following a review, the Commission altered the attribution percentages and the effective date for the reduction in pension rates, leading to the Gaults' application for further review.

The primary legal issues before the Tribunal were whether the Gaults had complied with their notification obligations under the *Veterans’ Entitlements Act 1986* (the Act) concerning company financial statements, and the correct effective dates for any adjustments to their service pension rates. Specifically, the Tribunal had to determine the meaning of "should" in the context of the notice requiring the provision of financial statements within 14 days of finalisation, and whether a failure to comply with this notice justified the retrospective reduction of their pension rates from an earlier date. The Tribunal also considered its jurisdiction in relation to any resulting overpayments or debts.

The Tribunal reasoned that the notice provided to the Gaults, which stated they "should" forward financial statements within 14 days of finalisation, imposed a mandatory obligation, not merely a suggestion. The use of "should" in this context, particularly within a statutory notice detailing notification requirements, was interpreted as requiring compliance. Consequently, the failure to provide the financial statements within the stipulated timeframe meant that the company income could not be disregarded when calculating the pension rate. The Tribunal affirmed the decision regarding the company income amounts and attributable percentages but varied the effective dates for the pension rate reductions, remitting the matter to the Commission to recalculate the correct pension rates from these revised dates. The Tribunal explicitly stated it had no jurisdiction to review decisions concerning the raising, recovery, or waiver of any resulting overpayments or debts.

Orders

Orders of the court

The decision under review is varied only in so far as the effective dates of variations to the rates of Mr and Mrs Gault’s service pensions, as set out in the reviewable decision, are to be replaced with dates determined in accordance with these reasons. The applications are remitted to the Commission to recalculate the correct rates of Mr and Mrs Gault’s service pensions from these dates.

The decision in respect to company income amounts and attributable percentages is affirmed, without variation.

Background

Background to the litigation

Sally and James Gault claimed and were paid service pensions. They were shareholders in two private companies. Retained company profits were not attributed as personal income of theirs when calculating the rate of service pension. When this was done in retrospect, the rate of service pension was reduced and the amount overpaid to Mr and Mrs Gault was raised against them as a debt. At their request, this decision was reviewed by the Commission. The Commission decided to change the attribution percentage and the start day of the reduced rate of pension. Mr and Mrs Gault are not happy with this result and they applied for further review.Facts Before considering the issues, it is helpful to briefly set out the facts. On 26 June 2008, Mr and Mrs Gault lodged a claim for service pension.[1] [1] T3 and T4. At the time, Mr Gault held shares in two private companies – Virogard Pty Ltd (Virogard) and Galahad Distribution Pty Ltd (Galahad). Virogard had issued 2700 shares, of which Mr Gault held 700.[2] Galahad had issued 10 shares. Mr and Mrs Gault and each of their three adult children held two shares each in Galahad, being all of the shares on issue.[3] Information about these holdings and company financial statements were provided to the Department of Veterans’ Affairs (the Department). [2] T6 folio 56.[3] T4 folio 42. On 29 July 2008, Mr and Mrs Gault were notified by the Department that service pensions were granted from 4 June 2008. The notice sent to Mr Gault is in Exhibit 1. As can be seen, this sets out information about his obligation to notify the Department of certain events or changes in circumstance. Attached to the notice was a booklet – ‘You and Your Pension’. This document was said to be a notice under s 54 of the Veterans’ Entitlements Act 1986 (the Act), setting out additional information that should be given to the Department in respect of certain events and changes in circumstance. Pages 48 and 49 are of present relevance in respect of the notification obligations in relation to companies.[4] Relevantly, the notice obligations include –“You need to tell us within 14 days… of the event if:- …- you start receiving income from a company…;- …- you cease receiving income from a company….…When you have finalised your financial statements for the year you should forward a copy within 14 days… to DVA. The financial statements include the … company tax returns, balance sheet, profit & loss statement, depreciation schedule and your personal income tax return.”[5][4] Exhibit 2.[5] Ibid, page 49. Information used to calculate the rate of service pensions for Mr and Mrs Gault is set out in an attachment to the 29 July 2008 notice. This information includes income from Galahad in the amount of $53.84 per fortnight.[6][6] Exhibit 1, page 9. Mr Gault provided the Department with Galahad financial statements for the 2008-2009 tax year on 20 June 2010, following a request. He provided the Galahad financial statements for the 2009-2010 tax year on 7 November 2010, once they had been finalised. Financial statements for Galahad for the 2011-2012 tax year were provided on 18 January 2013, following a request on 8 January 2013.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The Tribunal has no jurisdiction to review the raising, recovery or waiver of any resulting overpayment or debt.Decision The decision under review is varied only in so far as the effective dates of reductions to the rates of Mr and Mrs Gault’s service pensions as set out in the reviewable decision are to be replaced with dates determined in accordance with these reasons. The applications are remitted to the Commission to recalculate the correct rates of Mr and Mrs Gault’s service pensions from these dates. The decision in respect to company income amounts and attributable percentages is affirmed, without variation.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Division	VETERANS’ APPEALS DIVISION
File Number(s)	2015/5659 & 2015/5664
Re	James Gault and Sally Gault
APPLICANT
And	Repatriation Commission
RESPONDENT

Tribunal	Mr S. Webb, Member
Date	19 August 2016
Place	Canberra