Grant McCracken and Repatriation Commission
[2014] AATA 946
•19 December 2014
[2014] AATA 946
Division VETERANS' APPEALS DIVISION File Number
2013/1219
Re
Grant McCracken
APPLICANT
And
Repatriation Commission
RESPONDENT
DECISION
Tribunal Deputy President K Bean
Lt Col R Ormston (Rtd) (Member)Date 19 December 2014 Place Adelaide The decision under review is varied so as to provide that Mr McCracken is entitled to receive the intermediate rate of pension from 24 April 2013 to 31 December 2013, and the special rate of pension from 1 January 2014.
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Deputy President K Bean
CATCHWORDS
VETERANS' AFFAIRS - Rate of disability pension - Intermediate and special rates - Whether the applicant fulfils the “part-time” test - Whether the applicant fulfils the “8-hour” test - Whether the applicant suffered a loss of salary, wages or earnings - Decision under review varied.
LEGISLATION
Veterans' Entitlements Act 1986, ss 23 and 24
CASES
Bennett v Repatriation Commission (1997) 45 ALD 491
Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1
Re Petering and Repatriation Commission [1986] AATA 393; (1986) 11 ALN N278
Counsel v Repatriation Commission (2002) 72 ALD 204REASONS FOR DECISION
Deputy President K Bean
Lt Col R Ormston (Rtd) (Member)19 December 2014
INTRODUCTION
The applicant, Mr McCracken, served as a National Serviceman in the Australian Army from April 1970 to December 1971, which included operational service in Vietnam from 15 February 1971 to 16 October 1971.
As a consequence of his service, Mr McCracken suffers from lumbar spondylosis, post-traumatic stress disorder, depressive disorder, sensorineural hearing loss and tinnitus, all of which have been accepted as war-caused.
On 29 November 2011, Mr McCracken lodged a claim for a disability pension. The Repatriation Commission granted him a pension at 80% of the general rate effective from 29 August 2011. In April 2012, Mr McCracken applied to the Veterans’ Review Board (VRB) for payment at the special rate of pension. In February 2013, the VRB rejected that claim but agreed that Mr McCracken should be assessed at 90% of the general rate effective from 29 August 2011.
On 19 March 2013, Mr McCracken applied to this Tribunal seeking review of the decision of the VRB, and giving rise to these proceedings. Mr McCracken, who was represented at the hearing by Mr Miller of counsel, contends that he is entitled to the special rate of pension effective from 29 November 2011.
During the hearing, it was conceded by the respondent, represented by Mr Crowe, that Mr McCracken was entitled to 100% of the general rate of pension from 24 April 2013 based on a medical report of that date.[1] As we regard that concession as having been properly made, and we do not understand Mr McCracken to have asserted an entitlement to be paid that rate of pension from any earlier date, we accordingly propose to vary the decision under review at least to that extent. However, that still leaves the issue of whether Mr McCracken is entitled to the special or intermediate rates of pension and, if so, from what date(s).
[1] See Exhibit 10: a report of Dr Dan Short dated 24 April 2013.
LEGISLATION AND ISSUES
In broad terms therefore, the issues before us are as follows:
(a)Whether Mr McCracken is entitled to the special rate of pension pursuant to s 24 of the Veterans’ Entitlements Act1986 (the VE Act) from 29 November 2011 or some later date; or
(b)In the alternative, whether Mr McCracken is eligible for the intermediate rate of pension pursuant to s 23 of the VE Act from 29 November 2011 or some later date.
In order to establish that he is entitled to be paid disability pension at the special or intermediate rates of pension, Mr McCracken must demonstrate that he satisfied all of the requirements of ss 24 or 23 of the VE Act respectively at some point during the assessment period. For the purposes of this matter, the assessment period is the period between the date when Mr McCracken first lodged his application, being 29 November 2011[2], and the date of this Tribunal’s decision.[3]
[2] Exhibit 1, T8/101. See also T14/139 and T15/146.
[3] VE Act, subs 19(9).
Subsection 24(1) of the VE 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.
Subsection 23(1) of the VE Act differs only in relation to the number of hours able to be worked, as follows:
23 Intermediate rate of pension
(1) ...
(b) the veteran’s incapacity from war‑caused injury or war‑caused disease, or both, is, of itself alone, of such a nature as to render the veteran incapable of undertaking remunerative work otherwise than on a part‑time basis or intermittently; and
…
(2) Paragraph (1)(b) shall not be taken to be fulfilled in respect of a veteran who is undertaking, or is capable of undertaking, work of a particular kind:
(a) if the veteran undertakes, or is capable of undertaking, that work for 50 per centum or more of the time (excluding overtime) ordinarily worked by persons engaged in work of that kind on a full‑time basis; or
(b) in a case where paragraph (a) is inapplicable to the work which the veteran is undertaking or capable of undertaking—if the veteran is undertaking, or is capable of undertaking, that work for 20 or more hours per week.
As we have noted above, there was no dispute between the parties that the conditions suffered by Mr McCracken, and which have been accepted as being war-caused, include:
(a)Lumbar spondylosis;
(b)Post-traumatic stress disorder;
(c)Depressive disorder;
(d)Sensorineural hearing loss; and
(e)Tinnitus.
There was also no dispute between the parties that Mr McCracken satisfies subss 24(1)(aa), 24(1)(aab) and 24(1)(a), or the similar provisions in s 23, and we also accept that he satisfies those provisions.
In addition, Mr Crowe did not dispute that Mr McCracken met the “alone” test in subs 24(1)(c) and subs 23(1)(c), and we also accept that Mr McCracken met the “alone” test as we have not identified any other reasons, apart from his war-caused incapacity, for the reduction in the number of hours Mr McCracken was working, and his ultimate effective cessation of work during the assessment period. However, Mr Crowe contended that Mr McCracken did not satisfy the “8-hour” test prescribed by subs 24(1)(b) prior to 1 January 2014, or the “loss” test prescribed by subs 24(1)(c) (and subs 23(1)(c)) at any relevant time. Mr Crowe similarly contended that Mr McCracken did not satisfy the “part time” test prescribed by subs 23(1)(b) between 29 November 2011 and 1 January 2014.
It follows that the particular issues for our determination are:
(a)Whether pursuant to subs 24(1)(b), by reason of his war-caused incapacity alone, Mr McCracken was incapable of undertaking remunerative work for periods aggregating more than 8 hours per week at any time prior to 1 January 2014;
(b)Whether pursuant to subs 23(1)(b), by reason of his war-caused incapacity alone, Mr McCracken was incapable of undertaking remunerative work for 20 hours or more per week (or the “50 per centum or more” construct) at any time prior to 1 January 2014 and, if so, during what periods; and
(c)Whether pursuant to subs 24(1)(c), or the similar provision in s 23, by reason of his war-caused incapacity, Mr McCracken suffered a loss of salary, wages or earnings at any time during the assessment period.
DID MR McCRACKEN’S WAR-CAUSED INCAPACITY ALONE RENDER HIM INCAPABLE OF UNDERTAKING REMUNERATIVE WORK FOR PERIODS AGGREGATING MORE THAN 8 HOURS PER WEEK OR MORE THAN 20 HOURS PER WEEK?
We propose to first discuss the most salient aspects of the evidence before us, before turning to our analysis of this issue.
The Evidence
There was no factual dispute between the parties as to the broad nature of employment undertaken by Mr McCracken between his completion of National Service in 1971 and the present.
The key issue relates to Mr McCracken’s most recent employment in managing a slipway business at Coffin Bay, South Australia, which he purchased with his wife in December 2005 and still owns today,[4] although it is currently on the market. His earnings from that business were supplemented over the years by a range of casual but irregular jobs, including site manager for the State Government’s waste oil station, contract cleaning of public facilities for the local council, and caretaker of a vessel permanently moored at Coffin Bay.
[4] The Tribunal notes that the applicant is trying to sell the business and has had it listed on the market since at least December 2013. So far as the Tribunal is aware, as at the time of this decision, the business was still co-owned by the applicant and his wife.
In his statement, Mr McCracken said that a number of his work responsibilities were quite physically demanding. He said that by about 2007, the physical demands of his work were particularly aggravating his back condition, and he found himself becoming easily and increasingly frustrated when dealing with others.[5]
[5] Exhibit 2.
Mr McCracken said that by about 2011, he had got to a point “where I was unable to keep up with the all of the demands of the job. I was just doing the bare minimum … I could not keep on top of the paperwork and I was just not in the mindset to effectively run that business”. Mr McCracken said this situation was compounded by him experiencing a breakdown in November 2011, following a reunion with other Vietnam veterans in Canberra.
Mr McCracken said that from that time onwards, he and his wife increasingly needed to source outside help to run the slipway business, relying on friends for assistance as well as engaging a “local contractor” in 2012. In his statement, Mr McCracken said that he and his wife “muddled around … until about March 2013”, when their son took on the role of assistant Slip Master and started helping out around the business “because I was just not managing”.
Mr McCracken said that his son assisted in that role until August 2013 when he went to Western Australia. His son returned to Coffin Bay in early December 2013, at which point Mr McCracken said he decided “to leave the business … as it was causing me too much stress, worry and concern … and let [his son] manage it by himself”. Mr McCracken said he and his wife have not been actively working in the business since December 2013, although “I continue to oversee the bookwork”.
Mr McCracken said that he had not sought any other employment since. He said in his June 2014 statement that “In recent times, an opportunity has presented itself to me to become a Verifier Agent [in the Coffin Bay region]”.[6] However, he did not take it up because his treating psychiatrist at the Repatriation Hospital, Dr Claire McCarthy, “advised me against pursuing this line of work”.
[6] Exhibit 2.
In her statement and oral evidence, Mrs McCracken provided a similar account.[7] She did, however, provide additional information to the effect that the business “can put up a couple [of boats] in a week … but not that often”, and that the time taken to slip a boat varied from 15 minutes to an hour, typically with an hour’s preparatory work, but that it “normally was a bit quicker” to get them back into the water.
[7] Exhibit 5 and evidence to the Tribunal.
Mrs McCracken also said that her husband often spent “some time” in his home office each week, although she admitted she did not know whether he was actually doing work or “googling things”. She estimated that Mr McCracken spent about one hour per week on bookwork.
The Tribunal has also taken into account the medical report of Dr Short, an Adelaide-based psychiatrist, who has been treating Mr McCracken since April 2012.[8] In his report, dated 24 April 2013, Dr Short said “I am of the opinion that Mr McCracken is unfit to work as a result of his accepted psychiatric conditions … [which] at this point in time … are permanent”. Mr Crowe contended that this assessment needed to be taken in the context that Dr Short was aware that Mr McCracken was still working at the time of his report, suggesting that while it may have been ‘inadvisable’ for Mr McCracken to work, he was clearly not ‘incapable’ of doing so.
[8] Exhibit 10.
Mr Miller also drew the Tribunal’s attention to the report by Dr Marty Ewer, also an Adelaide-based psychiatrist, dated 14 February 2012, in which he concluded that “Mr McCracken cannot work eight hours per week because of his psychiatric problems” although, at that time, he rated Mr McCracken’s mental state as “temporary”.[9] Mr Miller contended that, in the absence of an employer able to distinguish between what Mr McCracken might have been ‘capable of’, against what was ‘advisable’, the Tribunal should rely on the opinion of relevant medical practitioners.
[9] Exhibit 1, T11/125 - 126.
In his cross-examination of Mr McCracken, Mr Crowe questioned why he had advised the VRB in early 2013 that he worked on average about 10 to 15 hours a week but had then submitted a statutory declaration in April 2013 declaring that “I have not been able to even do one day’s effective work in the business since November 2011”.[10] Mr McCracken said that his response to the VRB was in terms of what he should have been doing in “an obligatory sense”.
[10] Exhibits 8 and 4 respectively.
Mr McCracken said that his wording in the statutory declaration was meant to explain that his “effectiveness [was] lower than previously” because his “functioning ability [was] not the same”. Mr McCracken was adamant that he was actually working only 2-5 hours per week and that even during busier weeks, he would have been working 8 hours or less. However, he conceded that his contention in the statutory declaration regarding being unable to do even one day’s effective work was “probably another misstatement, bearing in mind where I’m at at the time”.
In his cross-examination of Mrs McCracken, Mr Crowe questioned why she had not corrected Mr McCracken’s statement to the VRB that he worked 10 to 15 hours a week. Mrs McCracken said she did not speak up at the VRB hearing because she felt intimidated by the proceedings. However, she was adamant – supported by her statutory declaration[11] – that Mr McCracken was doing “not anywhere near 8 hours per week”. By way of support for this, she said that Mr McCracken was typically “up with the motor”, operating the slipway winches, rather than engaged in the more physical tasks associated with getting boats onto the slipway cradle.
[11] Exhibit 6.
Analysis
In the absence of any form of business records, apart from taxation returns, it is difficult for the Tribunal to accurately assess the number of hours that Mr McCracken worked during the period in question, other than the evidence of both Mr and Mrs McCracken that it would not have been 8 hours in any week, and that Mr McCracken finally ceased work at some point in December 2013.
Mr Crowe has highlighted a number of seeming inconsistencies and contradictions in the evidence of both Mr and Mrs McCracken regarding the number of hours that Mr McCracken worked, particularly in relation to evidence given at the VRB hearing, as well as differing interpretations of what might constitute ‘remunerative work’. Mrs McCracken, in particular, was seemingly inclined to discount as ‘work’ the time spent by her husband in operating winches, or awaiting instructions to do so, as against the more physical tasks being undertaken by those responsible for getting a boat onto a slipway cradle.
Mr and Mrs McCracken also seemed unable to provide any accurate details as to how much work was undertaken by friends or casual workers, either on a daily or weekly basis, nor any assessment of what proportion of the overall workload was ‘outsourced’ to such individuals. Nor was the Tribunal able to assess how much work was undertaken by their son when he took on the role of assistant Slip Master between March and August 2013, either on the basis of hours per day or as a proportion of the overall workload.
On the limited material before us – including Mrs McCracken’s recollection of how many boats were slipped each week and the time taken to slip them – we consider that throughout the period the McCrackens have owned the slipway business, the total weekly workload of the business was probably not more than 20 hours. In addition, we have no evidence to suggest that other work undertaken by Mr McCracken, as cited at paragraph 16, would have added more than a few additional hours per week. It seems unlikely, therefore, that Mr McCracken’s remunerative workload, even before his health degenerated, would have exceeded 25 hours per week.
Once Mr McCracken’s health began to deteriorate, from 2007 onwards, we note that he was forced to give up the more physically-demanding aspects of his work, instead getting friends or casual workers to assist, and that his weekly workload reduced incrementally. By 24 April 2013, at the time of Dr Short’s report, we are satisfied that Mr McCracken’s war-caused incapacity, alone, rendered him incapable of undertaking remunerative work for 20 hours or more per week, or for 50 per centum or more of the time ordinarily worked by persons engaged in the kind of work that he was doing on a full-time basis.
We are not satisfied, however, that Mr McCracken’s war-caused incapacity rendered him incapable of undertaking remunerative work for periods aggregating more than 8 hours per week at any time before December 2013. Rather, we consider that he was actually doing more work than Mrs McCracken credited him with, albeit it was less physically-demanding than what he had done previously and what others were then doing within the business, either on a voluntary or paid basis.
However, we are satisfied that in the period since December 2013, Mr McCracken’s war-caused incapacity, alone, has rendered him incapable of undertaking remunerative work for periods aggregating more than 8 hours per week. We note this accords with Mr Crowe’s concession that Mr McCracken satisfies the terms of subs 24(1)(b) from 1 January 2014.
In summary, therefore, we conclude that Mr McCracken satisfies the “part-time” test of subs 23(1)(b) with effect from 24 April 2013. We also conclude that Mr McCracken fails the “8-hour” test of subs 24(1)(b) during the period from 29 November 2011 to 31 December 2013 but satisfies the test with effect from 1 January 2014.[12]
DID MR McCRACKEN, BY REASON OF HIS WAR-CAUSED INCAPACITY ALONE, SUFFER A LOSS OF SALARY, WAGES OR EARNINGS?
[12] For abundant clarity, we have chosen this date because it is unclear on the evidence precisely when in December 2013 Mr McCracken actually ‘left’ the business.
The evidence
Mr McCracken provided a ‘summary of income’ for himself and Mrs McCracken covering the period 2006 to 2012.[13] In essence, it shows that the income of the slipway business peaked at around $3,904 in 2006-07 before declining steadily to $1,048 in 2011-12.[14] The document, however, is a very simple tabulation, primarily showing taxable income, rather than a detailed profit-and-loss type statement relating to a business. Similarly, there are 95 pages of tax-related documents in the T Documents but no detailed business-related accounts.
[13] Exhibits 3 and 7.
[14] Exhibits 3 and 7.
In his evidence, Mr McCracken said that he and his wife took money out of the business on a regular basis to meet ongoing living expenses. Mr McCracken was vague as to how much was taken out or how often, but said he thought it was around $3,900 in 2006-07 and the high $3,000s over the next two years, before declining to the low $1,000s in the next few years. Mr McCracken conceded that the decline may have been because he and his wife were by then receiving pensions, which would likely have negated the need to take as much money out of the business. There were no financial records provided to substantiate any of the withdrawals.
Similarly, both Mr and Mrs McCracken gave evidence that “a few” locals were paid on a casual basis to assist at times with the running of the business. However, no records were provided and neither Mr nor Mrs McCracken was able to say how much was paid to any such casual worker. When their son joined the business as assistant Slip Master from March to August 2013, and then again from December 2013, Mr and Mrs McCracken both said that he was paid for his services, but could provide no financial details or records to substantiate the payments.
In his evidence, Mr McCracken conceded that income from the business gradually declined from 2009 onwards. He attributed this to reductions in the rock lobster quota (i.e. crayfish quota for “cray boats”), as well as increased costs in maintaining the business. He said that slipway charges were accordingly increased to offset these costs, although that unfortunately had the effect of deterring some potential users from slipping their boats. He also noted that the rock lobster quota had been “reinstated” in more recent years. But, again, Mr McCracken could provide no specific details to substantiate any of these matters.
Mr McCracken said that he is still doing the bookwork for the business and that “last season was an improved year”. However, he could offer no insight into its current viability nor produce any taxation records for 2012-13 or financial statements for the 2013-14 financial year. He said that he and his wife still take some money out of the business “if needed” to assist with ongoing household expenses – notwithstanding that his son is effectively running the business – although he was unable to quantify the amounts.
Analysis
The Tribunal received no evidence which directly supports the contention that Mr McCracken, by reason of his war-caused incapacity alone, suffered a loss of earnings, wages or salary. Indeed, the only documents tendered would suggest that the reduction in earnings from the slipway business began in 2009, and for reasons unconnected to Mr McCracken’s health.
As we have noted earlier, Mr and Mrs McCracken are trying to sell the slipway business and we understand it has been on the open market since December 2013. Until the business is sold, we will not know whether Mr and Mrs McCracken have sustained a loss or profit from the sale. For the purposes of this decision, we have had to assume that there has been no loss.
Nevertheless, we are cognisant that despite the absence of financial records, it is reasonable to assume – and in accordance with the oral evidence of both Mr and Mrs McCracken – that payments were made to their son during the period from March to August 2013, and again from December 2013 onwards, and to casual workers from August 2013 at the latest.
Mr Crowe has argued that any payments to the McCrackens’ son Ben may well have been cost neutral, suggesting that these expenses may have been offset by increased income, effectively resulting in no loss to Mr and Mrs McCracken. However, we think it unlikely that payments made for the services of others would have increased the profitability of the business.
We note that the applicable case law is to the effect that in the absence of direct evidence to support a proposition, it is open to us to draw an inference from the facts which are known, if “the combined weight of those facts supports the relevant inference, as a matter of probability”[15]. This is subject to the proviso that the known facts “do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is a matter of conjecture”.[16]
[15] Bennett v Repatriation Commission (1997) 45 ALD 491.
[16] Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1.
On the evidence, we have concluded that it is open to us to draw an inference from the fact that Mr and Mrs McCracken were required to pay their son and others to undertake work in the business which could not be undertaken by Mr McCracken, that the business was less profitable than it would otherwise have been, and that they suffered a loss as a result. Given that Ben first started working in the business in March 2013, we are satisfied that Mr McCracken suffered a loss by reason of the need to engage additional labour from at least that time on, and has therefore satisfied the “loss” test since April 2013, when he first satisfied the terms of subs 23(1)(b).
We have been influenced in reaching this conclusion by the fact that the potential alternative proposition advanced by Mr Crowe is not only inherently unlikely, but for practical purposes would probably be impossible to prove. As we understand the position, the income of the business fluctuated for a number of reasons outside the control of those operating the business, including the prevailing situation with respect to rock lobster or “cray” quotas. It follows that even if a period of increased profitability coincided with the McCrackens’ son Ben operating the business, it could not be assumed that this was due to his involvement. Therefore, even if further evidence was to be provided, it is difficult for us to envisage being satisfied that the wages paid to Ben were offset by additional income of the business attributable to his involvement. The inherent difficulty in making good that proposition therefore also makes us more willing to draw what we regard as the reasonable and natural inference that having to pay out more by way of wages made the business less profitable than it would otherwise have been.[17]
[17] We note this situation is analogous to others in which a veteran has been found to have suffered a loss in the relevant sense: see Re Petering and Repatriation Commission [1986] AATA 393 at [33].
Although we are not able to quantify the amounts involved, we therefore consider it reasonable to conclude that the payments made to casual workers and to his son Ben resulted in a “loss” to Mr McCracken, by reason of his war-caused incapacity alone.[18]
[18] We note that the expression “loss of salary or wages, or earnings on his or her own account” should be construed broadly: Counsel v Repatriation Commission (2002) 72 ALD 204 at [19].
We conclude, therefore, that Mr McCracken has satisfied the “loss” test since at least April 2013.
CONCLUSION
As we have concluded that Mr McCracken satisfies the “8-hour” test and the “loss” test with effect from 1 January 2014, it follows that he is qualified to receive disability pension at the special rate from that date. For the reasons we have indicated above, we have also concluded that Mr McCracken satisfied both the “part-time” test prescribed by subs 23(1)(b) and the “loss” test contained in subs 23(1)(c) from 24 April 2013. We have therefore also decided that the decision under review should be altered such that he is entitled to receive the intermediate rate of pension from 24 April 2013 to 31 December 2013.
We note that in light of our conclusions, it is unnecessary for us to specifically provide for Mr McCracken to be paid 100% of the general rate of pension from 24 April 2013. That is because his entitlement to pension at the intermediate rate supersedes the entitlement he would otherwise have had to be paid pension at 100% of the general rate.[19]
[19] See ss 21A and 22 of the VE Act.
DECISION
The decision under review is varied so as to provide that Mr McCracken is entitled to receive the intermediate rate of pension from 24 April 2013 to 31 December 2013, and the special rate of pension from 1 January 2014.
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