John Beezley and Repatriation Commission
[2014] AATA 495
•18 July 2014
[2014] AATA 495
Division VETERANS' APPEALS DIVISION File Number(s)
2013/1143
Re
John Beezley
APPLICANT
And
Repatriation Commission
RESPONDENT
DECISION
Tribunal Mr John Handley, Senior Member
Date 18 July 2014 Place Melbourne The Tribunal affirms the reviewable decision dated 11 September 2012.
..............................[sgd]..............................
John Handley, Senior Member
VETERANS’ ENTITLEMENTS – Special Rate – applicant engaged in electroplating initially as a sole trader from 1980 – business incorporated in 1991‑ Applicant and his wife were directors of the company until 11 May 2011 when it was placed into liquidation – applicant turned 65 on 23 May 2011 – claim for special rate pension made on 31 May 2011 – applicant paid income for month in advance from first week of May 2011 – the applicant completed orders between 11 and 19 May 2011, assisted the liquidator and attended the creditors meeting on 26 May 2011 – statutory responsibilities assisting the liquidator was not last paid work ‑ applicant not prevented from continuing to undertake last paid work by war-caused injuries alone after turning 65 – decision under review affirmed.
Legislation
Veterans’ Entitlements Act 1986 ss 24(2A) and 24(2B)
Cases
Cavell v Repatriation Commission (1989) 9 AAR 534
Grant v Repatriation Commission (1999) 57 ALD 1REASONS FOR DECISION
Mr John Handley, Senior Member
Mr Beezley, the applicant in this review, was engaged in operational service in Vietnam between November 1967 and July 1968. He has a number of disabilities accepted by the respondent as war-caused, the most significant being post traumatic stress disorder (PTSD).
Prior to enlistment, the applicant commenced an electroplating apprenticeship with a firm to which he ultimately became the manufacturing supervisor. He returned to that employment, after he was discharged from service and remained in that position until 1977.
He was then employed for about 2 ½ years as a sales executive with a chemical company until 1980 when he acquired an electroplating business – All-Brite Plating. Thereafter, he has been in self-employment.
In 1991, the business was incorporated and thereafter traded as All-Brite Plating Pty Ltd (All-Brite). That entity conducted the electroplating operations and employed persons. He also incorporated another company, All Bright Plating (Australia) Pty Ltd which was engaged only in research and development. The applicant and his wife were the sole directors of both companies.
A number of events occurred in May 2011 which were significant in the context of this review. Those events were:
(a)on 11 May 2011, All-Brite entered into a creditors voluntary winding up;
(b)on 23 May 2011, the applicant turned 65 years; and
(c)on 31 May 2011, the applicant made a claim for an increase in pension.
At the date of this review, the applicant was receiving pension at 90% of the general rate. His application was to seek pension at the special rate.
The applicant had turned 65 before he applied for an increase in the rate of the pension he had been receiving. Therefore, he must satisfy s 24(2A) of the Veterans’ Entitlements Act1986 (the Act). The relevant parts of s 24 are as follows:
(2A) …
(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) …
(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 turned 65;…
The applicant gave evidence in this review. No other witnesses were called. A number of documents were received as exhibits, some being medico-legal reports and copies of clinical files of the applicant’s treating doctors.
At the conclusion of the applicant’s evidence, his solicitor requested an adjournment for 2 weeks to obtain additional material in relation to issues which emerged during the hearing and which had not been obtained. With the consent of the respondent, I allowed the request. The applicant lodged additional material and both parties subsequently lodged written submissions (and the applicant also lodged a reply). The discussion which follows and the decision I have made reflects the evidence heard in this review, the documents received into evidence and the written submissions of both representatives.
The evidence concerning the date the applicant last worked was not consistent, for example:
(a)in his evidence to the Veteran’s Review Board, the applicant said the last day he worked was 11 May 2011 (Exhibit R5, page 3);
(b)a letter from the liquidator, Mr Howlett, recorded that All-Brite ceased trading upon his appointment on 11 May 2011; he assumed control of the company and its assets; the applicant was not employed by All-Brite after the date of his appointment nor was he paid salary after that date and he had no involvement with the company other than to assist him pursuant to his obligations under the Corporations Act2001 (Exhibit R3);
(c)the applicant said in evidence that he was instructed by the liquidator to complete outstanding work which he commenced on 12 May 2011 and completed within 7 days. He then secured and stored chemicals as part of the closing down process over a period of half a day. He said that was the last work he undertook in the factory;
(d)Dr Farnbach, a consulting psychiatrist provided a medico-legal report to the respondent dated 30 December 2013 and recorded a history Mr Beezley told me that he has not worked since May 2011 (Exhibit R2, page 3);
(e)John Kaleske, a former employee of All-Brite provided a statement (Exhibit A4) and recorded that he and another employee continued working under John Beezley until the factory was closed on 25th May 2011;
(f)the applicant recorded in a statement lodged in this review:
I was still employed by the company and paid until 6 June 2011. My work after 11 May 2011 consisted of in (sic) completing the company’s outstanding orders and shutting down the factory. The factory officially closed down on 25 May 2011 (Exhibit A3, paragraph 9);
(g)the minutes of the creditors meeting held on 26 May 2011, recorded:
…The chairman advised that the company ceased trading immediately following the appointment of the Liquidators’ mainly due to the Occupational Health and Safety (OH&S) concerns identified by the Liquidators’ OH&S expert. The OH&S expert had advised that the general state of the business premises was unfit to continue trading operations (Exhibit R4 – Minutes of creditors meeting, page 5).
THE EVIDENCE
The All-Brite business
After he purchased the business in 1980, the applicant said he had 2 employees. Eventually the business grew and at one stage it was operating out of 6 factories, it had 35 employees and was operating 24 hours per day. However, the business slowly lost customers, resulting in a reduction of work and therefore income, because of his attitude towards customers which he understood was a consequence of PTSD. When the company was placed into liquidation on 11 May 2011 it had 2 employees, John Kaleske and Mark Tramontana.
The applicant said the advice given by his accountant, Mr Allan, during the creditors meeting on 26 May 2011, of a turnover of between $80,000 and $120,000 per month in the 2010 income year, reducing to between $20,000 and $40,000 per month in the 2011 year, was accurate.
The applicant’s income tax return for the 2010 year declares unfranked, franked and imputation credits in the sum of $143,192 of which $141,571 was paid to him from All‑Brite. In the 2011 year of income, the applicant did not declare dividend or any other income from All-Brite but a modest sum of income, only, from other investments (Exhibits A12 and A13).
The applicant agreed that the business of All-Brite plummeted in the 2011 income year. The Australian Taxation Office (ATO) was recorded in documents completed by the liquidator as an unsecured creditor of All-Brite in the sum of $127,387.42. The minutes of the creditors meeting record the representative of the ATO asking whether outstanding PAYG and GST monies had been used to fund the operations of the business. Mr Allan is recorded as advising that the taxation liability had been quantified 9 months after the end of the 2010 year, when the monthly income was between $20,000 and $40,000 and there were inadequate funds to meet that liability.
The applicant read a statement to the creditors meeting, which he said was prepared by Mr Allan (Exhibit R4, page 15) and is as follows:
There were 3 factors that made the business unsustainable.
The closure of SPS Fasteners in Australia. Even though the work was resourced locally the products were imported.
The general downturn in manufacturing.
The increase of imported products mainly China.
The applicant said that SPS was the equal biggest customer of All-Brite prior to liquidation. He said, had the business not been closed down, he was confident that it could have continued to trade. His explanation of a general downturn in manufacturing was based on his observations. He said there had been an increase in products imported from China but he did not think it was a huge part of the reason his business being unsustainable.
The liquidator
Mr Howlett of the firm Sellers Muldoon Benton was the liquidator. The applicant said Mr Howlett attended his factory on the morning of 11 May 2011 where he stayed for about 20 minutes. He said he next saw him at the creditors meeting on 26 May 2011. In the interim, Ms Aline Palloure, an employee of the liquidator attended the premises on a regular basis. The applicant said he assisted her in the administration of the company after 11 May 2011 and was also given permission, by her, to complete outstanding orders for 2 customers (who he said were desperate to have the work completed) being A.N. Cook and ITW.
Income and salaries
The applicant said All-Brite paid him monthly in advance. The payments were usually made in the first week of each month. He said a payment was made in the first week of May which would have covered the period expiring in the first week of June. He contended that he was paid remunerative income for a period which extended beyond the date of liquidation (and after he turned 65).
Each monthly payment was either made by him or by his bookkeeper. He said he could not remember the amount that was paid to him in May 2011 because the monthly amount varied depending on cash flow.
The history of deposits and withdrawals associated with All-Brite and the purpose of some of its bank accounts were largely unexplained during the hearing. Bank statements from 2 accounts – the Beezley Superannuation Fund (the superannuation account) and All-Brite Plating Pty Ltd (the All-Brite account) were received as Exhibits A6 and A7, respectively.
The applicant said that his monthly salary was paid, by electronic transfer, under a salary sacrifice arrangement into the superannuation account. However, for the period 1‑10 May 2011, 2 deposits were received into the superannuation account in the sum of $40,000 and $14,200 but are not shown in the bank statement of the All-Brite account as withdrawals from it. An examination of the bank statement shows that those 2 payments were made from accounts other than the All-Brite account. There was no evidence about other accounts. The applicant could not recall which of the accounts paid his salary and he was unable to explain why the 2 payments were made into the superannuation account.
On 11 May 2011 the sum of $1350 was paid into the superannuation account by electronic transfer from the All-Brite account. The applicant said he did not know why that payment was made. He also said he did not know on that day – 11 May 2011 – that there was a problem with the company. He said the transfer must have been made before the liquidator arrived on that day at about 10 or 11 am.
On that day, I assume before the liquidator arrived, the applicant went to his bank and withdrew approximately $1500 in cash to pay wages owing to John Kaleske and Mark Tramontana. The bank statement of the All-Brite account does not show any cash withdrawal on 11 May 2011. The applicant supervised the work that was undertaken by John Kaleske and Mark Tramontana and, having regard to his earlier evidence of the work that was on hand and undertaken after 12 May 2011, he said it was likely that those persons last worked on or about 19 May 2011.
The applicant said that he was receiving income prior to All-Brite being liquidated and he has subsequently lost significant income.
CONCLUSION AND REASONS FOR DECISION
The applicant applied for an increase in his pension after he turned 65. Therefore, he must satisfy the requirements in s 24(2A) of the Act. Relevantly, paragraph (d) provides that his war-caused injury or disease, alone, must have prevented him from continuing to undertake the remunerative work (the last paid work) that he was last undertaking before he made his application. The words remunerative work, found within s 24(2A)(d) are succeeded by the words (last paid work). Those words (which are also found in subsections (e), (f) and (g)), are intended to give meaning to the words remunerative work which are defined at s 5Q as includes any remunerative activity. The Macquarie concise dictionary (5th edition) defines remunerate as to pay, recompense, or reward for work. On an ordinary construction of paragraph (d), it is clear that the provision is concerned with the paid work the applicant was undertaking before he lodged his application for an increase in the rate of his pension.
Section 24(2A)(f) of Act requires that the applicant was undertaking his last paid work after he turned 65. The applicant contends that he did work beyond the date of his 65th birthday and was also remunerated beyond that date because:
(a)the company paid him salary for one month in advance from the first week of May; and
(b)he worked with the liquidator assisting in the winding up of the company.
I am satisfied that the applicant was paid monies by the company for one month in advance from the first week of May 2011. Those monies were intended to be his recompense or reward for work that was anticipated that he would undertake by working for the company.
On the evidence in this review, especially the evidence of the applicant, I am satisfied the applicant did undertake work beyond 11 May 2011 (when the company was placed into liquidation) but no later than 19 May 2011 (the date he completed outstanding orders for the company). I make that finding because the applicant said that he worked for up to 7 days from 11 May 2011 with his 2 employees, when they ceased working and then worked for half a day, alone, securing chemicals. I therefore, do not accept the second last paragraph of the statement of Mr Kaleske (who was not called to give evidence) who recorded that he and Mark Tramontana continued working under John Beezley until the factory was closed on 25th May 2011.
The work undertaken after the date of liquidation was to complete orders and, on the applicant’s evidence, with the permission of Ms Palloure. Even if the work between 11 and 19 May 2011 was capable of entitling the applicant to remuneration, which I doubt, given that the company was in liquidation from 11 May, he did not work for the company after 19 May 2011.
It follows, that despite being paid monies in anticipation of the applicant undertaking work until the first week of June, the component of the monthly payment representing the period 19 May 2011 to the first week of June was not a payment as recompense or reward for work. Put another way, the applicant did not work after 19 May 2011 and he thereafter, had no entitlement to remuneration.
Mr Howlett, the liquidator confirmed in a letter dated 31 January 2014 that the applicant ceased employment with All-Brite and did not receive a salary after 11 May 2011 when he was appointed (Exhibit R3). There was no evidence that Mr Howlett was aware of the practice of payment of salary in advance nor was there evidence that he was aware that Ms Palloure had given permission to the applicant to complete orders after 11 May 2011.
It was submitted on behalf of the applicant that he worked beyond 23 May 2011, on which date he turned 65, because he worked, with the liquidator assisting in the winding up of the company, including attending the creditors meeting on 26 May 2011. Having regard to the evidence, I am satisfied that this contention has no merit.
The submission is contrary to the documented evidence of the liquidator, Mr Howlett, who recorded in a letter of 31 January 2014 (Exhibit R3) that the applicant was not employed by the company after the date he was appointed (on 11 May 2011), the applicant was not paid a salary after that date (although he had been paid previously for a period beyond 11 May and had no involvement with the company apart from his obligations under s 530A(3)) of the Corporations Act to assist him.
Even if the applicant assisting the liquidator was work, he had no entitlement, nor was he remunerated for undertaking his statutory obligations.
In the applicant’s submissions of 16 June 2014 (paragraph 9) it was contended that:
...there is no qualitative distinction to make between work that is remunerated before or after that work is performed. In the present context, the statutory test simply requires some remuneration for the relevant work. In other contexts, the absence of a distinction has been explicitly recognised.
With respect, the submission ignores the capacity in which the work is undertaken by the veteran after the age of 65. Section 24(2A)(g) of the Act states that a veteran must cease working in the profession, trade, employment, vocation or calling that he had been undertaking for a continuous period of 10 years that began before turning 65 (Grant v Repatriation Commission (1999) 57 ALD 1 at [9]).
The combined effect of paragraphs (f) and (g) amount to a requirement that there was an undertaking of the last paid work for 10 continuous years before turning 65 and that last paid work was being undertaken after turning 65.
It is not in dispute that the applicant had been engaged in self-employment as an electroplater from about 1980. For the reasons set out above, he did not undertake that work after 19 May 2011. He turned 65 on 23 May 2011. He did not cease work as an electroplater after that date and even if his assisting the liquidator and attending the creditors meeting constituted work (which is doubtful), it was not work that he had been previously undertaking for at least 10 years.
The applicant’s submission recorded above, together with a submission found at paragraph 10 contends that the work of the applicant, prior to liquidation also involved his directorship of the company for which he was remunerated.
Those submissions with respect are also without merit because from 11 May 2011, before the applicant achieved his 65th birthday, All-Brite was placed into liquidation. From that date, the applicant, consistent with the letter received from Mr Howlett, was not paid any remuneration for any work nor would the Corporations Act permit the applicant being paid any remuneration for work, as a director, from 11 May 2011. Additionally, the applicant did not work as a director of the company, after that date, because its affairs were under the liquidator’s control. The applicant could not work as a director of a company in liquidation.
Whether the applicant’s last paid work was as a company director or as an electroplater of All-Brite, that worked ceased on 11 and 19 May 2011, respectively.
I also dismiss the contention of the applicant’s representative found at paragraph 18 of the reply (advanced in support of the applicant’s loss of earnings on his own account) that no distinction should be drawn between the applicant’s statutory responsibilities as a director/proprietor of All-Brite before and after liquidation. The distinction does exist because subsequent to 11 May 2011, his responsibilities as a manager, directing All-Brite ceased. Thereafter, s 530A(3) of the Corporations Act compelled him to do whatever the liquidator reasonably requires him to do in the winding-up.
I am satisfied that the respondent’s submissions of 24 June 2014, in relation to the relevant provisions of s 24(2A), which is constructed conjunctively, are to be preferred. The applicant does not satisfy:
(i)paragraph (d) because his last paid work as a director ceased on 11 May 2011 and as an electroplater on 19 May 2011. Any work after that date was not paid work and was not work undertaken a director or electroplater. His report to the creditors meeting of the business being unsustainable (refer paragraph 16 earlier) were the reasons for the company being placed into liquidation. He was not prevented from continuing to undertake his last paid work before he made his application for an increase in pension because of incapacity from his war‑caused injuries, alone. The word alone in the context of s 24 does not mean sole, unique and absolute cause. The Tribunal is entitled to make a practical decision of whether loss of remunerative income is attributable to war-caused illness but it must also keep an eye to reality (Cavell v Repatriation Commission (1989) 9 AAR 534 at 539). The statements of the applicant’s wife and Mr Kaleske, and the reports of the doctors (none of whom were called) point to the applicant being a person who was agitated and irritable and displaying signs of an illness diagnosed as PTSD. However, the explanations given by the applicant at the creditors’ meeting of the business being unsustainable are all associated with economic and market forces, unrelated totally with his illness. I therefore, cannot find on the probabilities that he satisfies the alone test;
(ii)paragraph (e) because his loss of salary, wages or earnings on his own account subsequent to 19 May 2011 did not result from incapacity by war‑caused injuries. That loss occurred because the company of which he was a director and which paid him income was placed into liquidation. By All-Brite being placed into the hands of the liquidator, the applicant did not suffer a loss of earning on his own account by incapacity by war-caused injury;
(iii)paragraph (f) because the applicant was not undertaking his last paid work after he turned 65;
(iv)paragraph (g) because when the applicant ceased working his last paid work – irrespective of whether it was 11 or 19 May 2011 ‑ the affairs of the company were managed by the liquidator extending also to disclaiming property, managing and taking charge of all financial records and even changing the locks on the doors of the premises. For the reasons given above, the applicant ceased his last paid work on 11 or 19 May 2011 both dates being before his 65th birthday.
DECISION
The decision under review is affirmed.
I certify that the preceding 44 (forty‑four) paragraphs are a true copy of the reasons for the decision herein of John Handley, Senior Member ................................[sgd]...............................
Associate
Dated 18 July 2014
Date(s) of hearing 2-3 June 2014 Date final submissions received 8 July 2014 Advocate for the Applicant Mr D. De Marchi Solicitors for the Applicant De Marchi & Associates Advocate for the Respondent Mr K. Rudge Solicitors for the Respondent Department of Veterans' Affairs Review Section
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