Re Jones and Repatriation Commission
[2011] AATA 631
•7 September 2011
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2011] AATA 631
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2010/1713
VETERANS' AFFAIRS DIVISION ) Re JOHN CLIFFORD JONES Applicant
And
REPATRIATION COMMISSION
Respondent
DECISION
Tribunal Egon Fice, Senior Member Date7 September 2011
PlaceMelbourne
Decision The Tribunal sets aside the decision of the Veterans’ Review Board dated 7 April 2010 and in substitution decides that Mr John Clifford Jones is eligible to receive the pension at the special rate. In accordance with
s 21(1) of the Veterans’ Entitlements Act 1986, the date of effect for the grant of the pension at the special rate shall be 21 November 2008, which is the date on which Mr Jones’ application was received at the office of the Department of Veterans’ Affairs...........[sgd] Egon Fice...............
Senior Member
VETERANS’ AFFAIRS – General Rate – Intermediate Rate – Special Rate – Disability pension – Remunerative work – War-caused injuries – War-caused injuries alone – Permanently incapacitated – Loss of salary, wages or earnings – Internal derangement left knew – Lumbar Spondylosis – Australian Army – Fitter and Turner – Draftsman
PRACTICE AND PROCEDURE – Statutory Interpretation – Extrinsic Materials
Acts Interpretation Act 1901 ss 15AA, 15AB
Veterans’ Entitlements Act 1986 (Cth) ss 5Q, 14, 15, 23, 23(1)(b), 23(1)(c), 23(2), 24, 24(1)(b), 24(1)(c), 24(2A), 24(2A)(e), 28, 31,
Banovich v Repatriation Commission (1986) 6 AAR 113
Cooper Brookes (Wollongong) Pty Ltd v The Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297
Counsel v Repatriation Commission (2002) 122 FCR 476
Flentjar v Repatriation Commission (1997) 48 ALD 1
Grant v Repatriation Commission (1999) 57 ALD 1
Repatriation Commission v Van Heteren (2003) 37 AAR 533
Re Repatriation Commission and Peter Thorpe [2011] AATA 491
Starcevich v Repatriation Commission (1987) 18 FCR 221
Minister’s Second Reading Speech for the Veterans’ Entitlements Bill 1985, Hansard, 17 May 1985, 2646-2647
Veterans’ Affairs (1994/1995 Budget Measures) Legislation Amendment Act 1994
Veterans’ Entitlements Law 2nd Edition, Robin Creyke and Peter Sutherland, The Federation Press, 2008
The Shorter Oxford English Dictionary (3rd ed, 1983)
REASONS FOR DECISION
7 September 2011 Egon Fice, Senior Member 1. Mr John Clifford Jones has a number of medical conditions which the Repatriation Commission (the Commission) has accepted as being war-caused. The relevant conditions for the purposes of this application are:
(a)internal derangement left knee; and
(b)lumbar spondylosis.
2. On 21 November 2008 Mr Jones lodged with the Department of Veterans’ Affairs (DVA) a further claim for a Disability Pension and an application for increase in the Disability Pension.
3. On 23 April 2009 DVA decided to accept Mr Jones’ claim for lumbar spondylosis and other medical conditions. It decided to continue his pension at 60 per cent of the general rate. Although Mr Jones lodged an application to the Veterans’ Review Board (VRB) seeking a review of that decision, exercising its powers under s 31 of the Veterans’ Entitlements Act 1986 (the VE Act), the Commission decided on 5 May 2009 to increase Mr Jones’ pension to 70 per cent of the general rate with effect from 21 August 2008. Although Mr Jones subsequently sought a further review under s 31 of the VE Act, the Commission notified Mr Jones that he should proceed with his application to the VRB.
4. On 7 April 2010 the VRB decided that Mr Jones’ pension be paid at 70 per cent of the general rate with effect from 21 August 2008 until 15 July 2009. It should then increase to 90 per cent with effect from 16 July 2009 until 22 February 2010, and then at 100 per cent from 23 February 2010. Mr Jones seeks a review of that decision by this Tribunal claiming that his pension should be paid at either the special rate or the intermediate rate in accordance with ss 24 and 23 of the VE Act respectively.
5. Mr G Purcell of counsel, who appeared on behalf of the Commission, submitted that Mr Jones’ claim was solely pursuant to s 24 of the VE Act. However, as the Full Court of the Federal Court said in Grant v Repatriation Commission (1999) 57 ALD 1, at 6:
An inquisitorial review conducted by the AAT, is one in which the tribunal is required to determine the substantive issues raised by the material and evidence advanced before it and, in doing so, it is obliged not to limit its determination to the “case” articulated by an applicant if the evidence and material which it accepts, or does not reject, raises a case on a basis not articulated by the applicant.
In my opinion, the material before this Tribunal raises a case under s 24 of the VE Act and, if that section does not apply, s 23. The two sections are identical except for the fact that to satisfy s 23, the applicant needs to establish by evidence that he or she is incapable of undertaking remunerative work otherwise than on a part time basis or intermittently, as opposed to undertaking remunerative work for periods aggregating more than eight hours per week. Therefore, if the material before me results in my finding that Mr Jones is capable of undertaking remunerative work for periods aggregating more than eight hours, but only on a part time basis or intermittently as that expression is determined by s 23(2) of the VE Act, then I should make a determination in accordance with that section.
6. The issues which I must determine are:
(a)whether Mr Jones is totally and permanently incapacitated such that he is incapable of undertaking remunerative work for periods aggregating more than eight hours per week; or whether his incapacity results in him being incapable of undertaking remunerative work otherwise than on a part time basis or intermittently;
(b)whether Mr Jones’ incapacity arises solely from his war-caused injuries; and
(c)if the answers to (a) and (b) are in the affirmative, whether Mr Jones is suffering a loss of salary or wages or of earnings on his own account which he would not be suffering if he were free of his incapacity.
THE RELEVANT PROVISIONS IN THE VE ACT
7. The rates of pensions payable to veterans are dealt with under Division 4 of Part II of the VE Act. A pension payable to a veteran may be paid at the general rate, the intermediate rate or the special rate. There is also provision under the general rate for adjustment due to extreme disablement. In this case, we are only concerned with the intermediate rate and the special rate. The relevant sections of the VE Act are sections 23 and 24 which, insofar as they are relevant to this matter, provide:
23 Intermediate 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’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
(c)the veteran is, by reason of incapacity from 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 from that incapacity; and
(d)section 24 or 25 does not apply to the veteran.
(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.
(3)For the purpose of paragraph (1)(c):
(a)a veteran who is incapacitated from war‑caused injury or war‑caused disease, or both, to the extent set out in paragraph (1)(b) shall not be taken to be suffering a loss of salary or wages, or of earnings on his or her own account, by reason of that incapacity:
(i) if the veteran has ceased to engage in remunerative work for reasons other than his or her incapacity from that war‑caused injury or war‑caused disease, or both;
(ii) if the veteran is incapacitated, or prevented, from engaging in remunerative work for some other reason; or
(iii) if the veteran has been engaged in remunerative work on a part‑time basis or intermittently for reasons other than his or her incapacity from that war‑caused injury or war‑caused disease, or both; and ...
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…
(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 …
(2)For the purpose of paragraph (1)(c):
(a) a veteran who is incapacitated from war-caused injury or war-caused disease, or both, shall not be taken to be suffering a loss of salary or wages, or of earnings on his or her own account, by reason of that incapacity if:
(i) the veteran has ceased to engage in remunerative work for reasons other than his or her incapacity from that war-caused injury or war-caused disease, or both; or
(ii) the veteran is incapacitated, or prevented, from engaging in remunerative work for some other reason;..
8. The overlap between s 23 and s 24 is immediately apparent on reading. The differences between the two provisions essentially lie in differences found in s 23(1)(b) and s 24(1)(b). In essence, the difference is simply the extent to which the veteran is incapable of undertaking remunerative work.
9. In Mr Jones’ case, there is no issue about the fact that he has made claim under s 14 for a pension and in fact an application under s 15 for an increase in the rate of pension he had been receiving. He had not turned 65 years of age when the claim application was made. The degree of incapacity determined by the Commission at that time was at least 70 per cent as a result of a determination made pursuant to s 31 of the VE Act on 5 May 2009 increasing his degree of incapacity to 70 per cent with effect from 21 August 2008. Mr Jones therefore satisfies the preliminary requirements for the grant of the pension at either the intermediate or special rate.
10. When applying the provisions in s 24(1)(c) of the VE Act, the Full Court of the Federal Court in Flentjar v Repatriation Commission (1997) 48 ALD 1 explained the four issues which arise. There seems to be no reason why the same approach should not apply to s 23(1)(c). It does not apply to ss 23(1)(b) or 24(1)(b). Branson J, with whom Beaumont and Merkel JJ agreed, set out the following steps which the legislation requires be taken, at 4-5:
1.What was the relevant “remunerative work that the veteran was undertaking” within the meaning of s 24(1)(c) of the Act?
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?
REMUNERATIVE WORK
11. The expression remunerative work occurs in s 24(1)(b) and (c) as well as s 23(1)(b) and (c). That expression is defined in s 5Q of the VE Act as follows:
remunerative work includes any remunerative activity.
12. The word remunerative is defined in The Shorter Oxford English Dictionary as:
2. that remunerates or rewards 3. that brings remuneration; profitable.
To remunerate generally means to reward or to pay a person for services rendered or work done. It should be immediately apparent that the adjective remunerative qualifies the noun work and therefore the expression is simply a reference to the type of work for which remuneration might be paid, but it does not necessarily mean the person has in fact been remunerated for the particular work done.
13. I am also aware that where the expression is used in s 23(1)(b) and s 24(1)(b) of the VE Act, the remunerative work referred to is not work which the veteran has necessarily undertaken at any time in the past. In fact, by referring to s 28 of the VE Act, it is immediately apparent that the reference to remunerative work in s 23(1)(b) and s 24(1)(b) is simply a reference to the veteran’s capacity to perform remunerative work having regard to the matters set out in s 28. By way of contrast, the reference to the expression remunerative work in ss 23(1)(c) and 24(1)(c) of the VE Act includes the words that the veteran was undertaking.
14. The meaning of the expression remunerative work that the veteran was undertaking has been given substantial attention by the courts. Finn J in Repatriation Commission v Van Heteren (2003) 37 AAR 533 summarised its application in respect of s 24(1)(c) of the VE Act in the following way:
First, the "remunerative work" to which the paragraph [s 24(1)(c)] refers is the remunerative work undertaken by the veteran before he or she was prevented from continuing to undertake that work. The term, though, does not refer simply to a particular job with a particular employer (Banovich v Repatriation Commission (1986) 69 ALR 395 at 402); nor merely to the last remunerative work undertaken before the veteran's inability to work became complete: Starcevich v Repatriation Commission (1987) 18 FCR 221 at 225. It signifies the type of work which the veteran previously undertook but which because of war-caused incapacity alone he or she can no longer undertake: Banovich at 402. The Act requires identification of that type of work as part of the veteran's demonstration that he or she has suffered a real and substantial loss consequent alone upon war-caused incapacity: see Starcevich's case, at 225. It is that remunerative work and not remunerative work at large with which s24(1)(c) is concerned.
15. In order to answer the question regarding the remunerative work Mr Jones was prevented from continuing to undertake, I need to examine more closely his work history. Although this does not appear to be controversial, the conclusions drawn by the Commission regarding the nature of work that Mr Jones is prevented from continuing to undertake are different to that contended by Mr Jones.
16. Mr Jones completed Form 6 secondary level of education at a technical school and then commenced an apprenticeship as a fitter and turner. He completed his apprenticeship and was then called up for National Service with the Australian Army.
17. After completing National Service, he resumed his employment with his former employer as a fitter and turner and remained in that position for about six months. He had a number of employment positions, also as a fitter and turner, over a twelve month period before obtaining employment with W Granowski Pty Ltd, as a draftsman. The company manufactured sand blasting equipment. He explained his duties as a detail draftsman. He undertook these duties by hand on a drawing board. He did not use and has never used a computer as a draftsman. He was employed by Granowski Pty Ltd for about two years and then obtained employment with National Valve and Engineering Pty Ltd as a detail draftsman. He worked with National Valve and Engineering Pty Ltd as a draftsman for about 14 years and then another six or seven years as a subcontractor. As well as undertaking drafting work, he also supervised other draftsmen. He was primarily involved in the overall design and drafting of working documents which would then be finalised by others under his supervision. National Valve and Engineering Pty Ltd manufactured aircraft refuelling equipment.
18. In the late 1980s, Mr Jones established his own premises for the purpose of undertaking the manufacturing or aircraft refuelling equipment for National Valve and Engineering Pty Ltd as well as other clients. The business was incorporated on 2 April 1993 under the name J and G Jones Engineering Pty Ltd (the company). Mr Jones and his wife were the Directors of the company. In addition to the corporate entity, Mr Jones and his wife also established a partnership under the name of J and G Jones Engineering and Technical Services. The partnership owned the premises and machinery used in the business and rented those assets to the company to enable it to conduct its design and manufacturing business. The company’s business involved solely the design and manufacture of various forms of aircraft refuelling equipment. Its clients were not restricted to those in Australia but also included clients in the Pacific Islands such as Tonga, Cook Islands, Guam, Micronesia and New Guinea.
19. The company employed two full time employees in addition to Mr Jones and his wife. His wife did the administrative tasks, such as book work, payroll, banking and the like, and the two employees were engaged to undertake hands-on manufacturing duties. Neither of those employees had qualifications as a fitter and turner although one was a qualified boilermaker. Mr Jones described the manufacturing duties as including the use of lathes, milling, drilling and grinding. Welding and cutting was also carried out, mainly by the employees. He said that when necessary, he was involved in manufacturing tasks including welding and cutting steel.
20. In his oral evidence, Mr Jones also said that he did work on the lathes and the milling machines as well as fabrication work. Accepted into evidence were a number of colour photographs depicting the equipment manufactured by the Company. The equipment ranges from relatively small pumping units to large mobile tankers up to 10,000 litre capacity. There are also smaller sundry items used in the process of refuelling aircraft which were manufactured by the company.
21. Mr Purcell submitted that the remunerative work which Mr Jones was undertaking prior to ceasing work was that of a self-employed draftsman and an engineering manager. In my opinion, that description is inaccurate. That is because it does not take into account the fact that Mr Jones, as a qualified fitter and turner, was also involved in a number of aspects of the manufacturing work itself. As one would reasonably expect in a small company conducting engineering manufacturing works, the duties conducted by Mr Jones were more extensive than those described by Mr Purcell. Taking into account Mr Jones’ formal training as a fitter and turner and many years’ experience as a draftsman designing only aircraft refuelling equipment, it seems to me that the remunerative work which Mr Jones was undertaking is more accurately described as the design, manufacture and sales of aircraft refuelling equipment. Although this may appear to be a restrictive view of what is in fact a broader question, it was not obvious to me from the evidence that Mr Jones’ engineering skills either as a draftsman or as a fitter and turner were able to be used in any industry other than in the manufacture of aircraft refuelling equipment. It is this specialised area of engineering in which Mr Jones has worked for approximately 37 years.
22. As for the expression remunerative work in ss 23(1)(b) and 24(1)(b) of the VE Act which deals with the capacity of a veteran to undertake remunerative work for particular periods of time, in determining Mr Jones’ capacity for remunerative work, I must only have regard to the factors set out in s 28 of the VE Act. Section 28 provides:
28 Capacity to undertake remunerative work
In determining, for the purposes of paragraph 23(1)(b) or 24(1)(b), whether a veteran who is incapacitated from war‑caused injury or war‑caused disease, or both, is incapable of undertaking remunerative work, and in determining for the purposes of section 24A whether a veteran who is so incapacitated is capable of undertaking remunerative work, the Commission shall have regard to the following matters only:
(a)the vocational, trade and professional skills, qualifications and experience of the veteran;
(b)the kinds of remunerative work which a person with the skills, qualifications and experience referred to in paragraph (a) might reasonably undertake; and
(c)the degree to which the physical or mental impairment of the veteran as a result of the injury or disease, or both, has reduced his or her capacity to undertake the kinds of remunerative work referred to in paragraph (b).
23. Section 23(1)(b) and s 24(1)(b) each contain a number of limbs. The first is that there must be an incapacity which results from a war-caused injury or war‑caused disease or both. The second limb is that the incapacity so caused must of itself alone render the veteran incapable of undertaking remunerative work. The third limb deals with the number of hours which the veteran is capable of working, although couched in negative terms. It varies depending on whether the reference is to s 23 or s 24 of the VE Act. Section 23(1)(b) refers to work other than on a part-time basis or intermittently. What is meant by the expression part-time or intermittently is explained in s 23(2). As for s 24(1)(b), the third limb refers to a veteran being incapable of undertaking remunerative work for periods aggregating more than eight hours per week.
INCAPABLE OF UNDERTAKING REMUNERATIVE WORK – SECTION 24(1)(B)
24. In his claim for an increase in the rate of disability pension, Mr Jones said that increasing pain in his back and his leg alone resulted in his inability to continue working. He said that he had to cease working and to close his business.
25. In a medical report prepared for the DVA, Dr Peter Rodway, Mr Jones’ general practitioner of many years, recorded that Mr Jones first suffered low back pain in 1966 and has had persistent lower back pain since the early 1970s. Dr Rodway said that a CT scan of Mr Jones’ lumbar spine in 2003 confirmed that Mr Jones suffered from lumbar spondylosis affecting the discs at L4/5 and L5/S1. He also reported that a CT scan done in March 2005 disclosed disc prolapses. Dr Rodway also reported that Mr Jones retired from his employment due to its manual labour requirement as he was unable to continue due to his chronic lumbar spine problems. He said Mr Jones was unable to perform any manual or heavy duties due to his chronic lower back pain and dysfunction. He said Mr Jones was unable to stand for longer than 20 minutes and to sit for longer than 30 minutes.
26. Dr Rodway ordered a further CT scan which was done on 7 April 2009. The report following that scan made by Dr George Kukawski stated:
Mild disc degenerative changes are present at L3/4, L4/5 and L5/S1 levels where there is mild dorsal degenerative disc bulge, with minimal thecal compression. ...
Moderately severe osteoarthritic changes involve the L3/4, L4/5 and L5/S1 apophyseal joints bilaterally. There are no signs of foraminal or lateral recess stenosis. Alignment is normal.
27. When asked in his oral evidence whether the findings on the CT scan were consistent with Mr Jones’ complaints about back pain, Dr Rodway said they were and that they showed some progression of his disease. In cross-examination Dr Rodway was asked if Mr Jones also suffered seriously from gout. Dr Rodway agreed that he did but that treatment with medication, particularly Zyloprim, was of significant assistance to Mr Jones.
28. The clinical notes from the Swansea Road Clinic, where Dr Rodway practices, disclosed Mr Jones complaining of low back pain as early as 2003. Mrs Geraldine Jones, Mr Jones’ wife, also provided a statement regarding her husband’s condition. She said that she had watched him stand for hours under hot showers so that he could straighten up to go to work. She said that she put shoes and socks on him and cut his toe nails because he was physically incapable of doing so. She has been married to Mr Jones for some 43 years. It is also clear from the clinical notes that Mr Jones has been prescribed non-steroidal anti-inflammatory agents (Celebrex) for many years which, according to Dr Rodway, certainly assisted his symptoms. There is also a report in the clinical notes in November 2006 indicating Mr Jones had serious ongoing pains and was unable to lift items. Although not expressly stated, it is reasonable to infer this was also related to his lower back problem. From 2007 onwards, there are increasing references to Mr Jones experiencing lower back pain and disability as a consequence of that pain.
29. Mr Jones was examined by Dr David Barton, an occupational physician, on 3 March 2009. He prepared a report dated 4 March 2009 which was taken into evidence. I had also taken into evidence Dr Barton’s clinical notes made in the course of examining Mr Jones on 3 March 2009. The report was prepared at the request of the Commission.
30. At the time he examined Mr Jones, Mr Barton agreed that he did not have the benefit of any x-ray or CT scan films or reports. Dr Barton also agreed that the examination lasted some 30 to 40 minutes.
31. Dr Barton recorded from the history he took from Mr Jones that he had a series of flare-ups with the left knee for which he would take anti-inflammatory tablets. He also described Mr Jones playing squash which he said ceased two to three years ago. As far as his back was concerned, Dr Barton recorded that Mr Jones said he had chiropractic treatment from about the age of 26 and then had occasional physiotherapy and massage treatment. He also described a number of spasms in the back for which he would normally go to bed for a short period of time. He said that Mr Jones told him the last spasm attack was about eight years ago. Dr Barton also agreed that he did not have any clinical notes before him from the Swansea Road Clinic. Dr Barton recorded that Mr Jones continued to take Celebrex and that he had done so for the past few years. In his clinical notes, Dr Barton recorded Celebrex 200 mg/day -- approximately – 2.3y. This is inconsistent with the clinical notes from the Swansea Road Clinic.
32. In summary, Dr Barton said that the symptoms described by Mr Jones in respect of his left knee and lower back have persisted since the problems occurred while he was in the Army. However, he said that neither problem prevented Mr Jones from undertaking normal work until he started to wind down his business in the past 18 months. However, I cannot find any basis for this statement in Dr Barton’s report or in his clinical notes. The evidence of Mrs Jones would strongly suggest the contrary was the case. It also does not account for the fact that Mr Jones had been prescribed Celebrex from at least as early as January 2002 according to the Swansea Road Clinic notes. Dr Barton concluded that while his knee and back may be producing some discomfort, he did not see these as being an impediment to him working. In answer to a question regarding how severe Mr Jones’ condition was, Dr Barton answered:
I do not believe that there is much in the way of a severe problem in either area.
Also, in answer to a question regarding Mr Jones’ ability to undertake remunerative work, Dr Barton said:
I do not believe his ability to undertake community work has been affected to any significant extent by these claimed problems.
With respect to Dr Barton, his answer is not responsive to the question put. It may simply be a typographical error. He also found that there was no reason why Mr Jones could not work full time.
33. Dr Barton was taken to the two reports prepared following a CT scan of Mr Jones’ lumbar spine in March 2003 and subsequently in April 2009 and asked what he had to say about those reports. Dr Barton simply responded that the two reports indicated a minor progression of the disease.
34. Mr Jones was subsequently examined by Dr Robyn Horsley, an occupational physician, on 7 December 2009. This was at the request of Mr Jones’ representative at that time, Mr Newton Reynolds. She provided a report of the same date which was admitted into evidence. Dr Horsley provided a second report to Mr Reynolds dated 6 January 2010 which was also taken into evidence. Subsequently, Dr Horsley was asked to prepare a third report at the request of the Commission and she re-examined Mr Jones on 10 November 2010. She provided a third report of that date which was also taken into evidence.
35. In preparing her 7 December 2009 report, Dr Horsley had available to her a number of medical documents including Dr Barton’s report of 4 March 2009. Dr Horsley clearly took a far more detailed history than Dr Barton. She described the level of discomfort Mr Jones experienced with his left knee indicating that the discomfort can range from 0/10 up to 7/10. He explained that he experienced occasional swelling and that when the discomfort was severe he had to hop or limp. His knee did not give way but he described a sensation of instability at times. There was no locking. He expressed being cautious when walking over uneven surfaces and was particular about the footwear that he wore. He said that if he was kneeling, he would feel the discomfort in the knee for up to a day later. He was unable to squat, run or jump. As for his lumbar spine, Dr Horsley reported Mr Jones as stating he had chronic back pain which varied from 3-10/10 and at most of the time, it remained at 6/10. He also suffered from left leg discomfort which radiates from the lumbar spine. He also occasionally experienced thoracic discomfort. He described his sitting tolerance as 20 to 30 minutes and his static standing tolerance at five minutes. He said his dynamic standing tolerance was one hour. His walking tolerance was about 500 metres which was affected by his left knee and his back condition. His driving tolerance is about one hour. In fact the Swansea Road Clinic notes of 6 April 2009 also describe his difficulties when driving and the need to stop and stretch. Mr Jones also described the repetitive climbing and descending of stairs in the factory environment as aggravating his knee and back.
36. Dr Horsley concluded that Mr Jones’ capacity to continue work in his business as the designer and manufacturer of aircraft refuelling components diminished as the staff levels in his business decreased. This was because it required him to move from a 20 per cent hands-on role to a 50 per cent hands-on role and that he was physically unable to cope with increasing physical demands. Dr Horsley said Mr Jones would have great difficulty finding similar work in the private sector because of his lack of computer skills and despite his obvious design skills, he could not undertake draftsman work on a computer based system.
37. Dr Horsley’s second report dated 6 January 2010 resulted from questions raised by Mr Reynolds as a result of her first report. It appears that this report was designed to address the third limb of s 23(1)(b) and s 24(1)(b). Dr Horsley said that Mr Jones was unlikely to find suitable employment in his area of metal manufacturing. This was despite the fact that he had significant design skills but without computer skills, she opined that his opportunities for redeployment, at 64 years of age, were negligible outside self-employment. She said:
I don’t believe that he is likely to be able to work in the area for which he has been trained for more than eight hours of remunerative work per week.
38. Dr Horsley prepared a third report dated 10 November 2010 for the Commission. There is of course no property in a witness and therefore it is entirely proper for Dr Horsley to provide opinions in her category of expertise as an objective expert witness. This can be at the request of either or both parties. It would not be unreasonable for an expert in such a position to provide answers which may appear contradictory simply because of the nature of the questions which were posed by the person requesting the report. I do not suggest that this is the case with Dr Horsley’s report but merely indicate the possibility of such an outcome.
39. Dr Horsley re-examined Mr Jones on 10 November 2010. On that review, Mr Jones apparently told Dr Horsley that his knee condition had improved somewhat since ceasing work and she described that as compatible with the previous history. He also told Dr Horsley that his back pain varied from 2-7 or 8/10. He said that most of the time it is 2/10 but he lives with it, although at times it is severe and he cannot get out of bed. At the end of the day, he can experience discomfort of 5 to 6/10 for several hours depending on the level of activity during the day. Mr Jones apparently said that the discomfort experienced from his back condition was less severe than it was previously. He said that outside the work environment, he was able to self-pace and self-manage his activities. He described his walking tolerance as 300 – 500 metres but that was restricted more by his feet rather than his knee or back. He suffered from ingrown toe nails and degenerative changes to his feet. His sitting tolerance was about 60 minutes and his dynamic standing tolerance 20 minutes. His static standing tolerance was 15 to 20 minutes. Mr Jones and his wife had moved to a new house five years ago and while there were stairs at the factory which caused him some difficulty previously, the home in which he now lives in is entirely at ground level. Dr Horsley said that clinically, there was little change from her last review. On this occasion, Dr Horsley had the benefit of clinical notes from Mr Jones’ general practitioner at Swansea Road Clinic.
40. In answer to the specific question posed by the Commission, that is whether Mr Jones’ accepted physical disabilities alone prevented him from working more than eight hours and more than 20 hours per week, Dr Horsley said, after setting out a list of work restrictions:
On the basis of his back and left knee condition alone, with the restrictions outlined above, Mr Jones would have difficulty working on a full time basis in a role with a significant manual component. Without a significant manual component, I believe that his capacity for work would be greater than eight hours or greater than 20 hours per week. However with a manual component, working outside the restrictions outlined above, I believe that his capacity for work would be less than 20 hours per week.
41. While this report may seem to be inconsistent with her previous report where she stated that Mr Jones was not likely to be able to work in the area for which he has been trained for more than eight hours of remunerative work per week, the different answers appear to result from the different questions asked in each case. In the previous report given to Mr Reynolds, the question asked was whether Mr Jones was able to perform more than eight hours of remunerative work per week. The question asked by the Commission was whether Mr Jones’ accepted disabilities alone prevented him from working more than eight hours and more than 20 hours per week. While Dr Horsley was of the view that Mr Jones’ capacity for work would be greater than eight hours per week without a significant manual component, with a manual component, it would be less than 20 hours per week. She did not resile from the opinion she gave in her 6 January 2010 report.
42. In my opinion, the evidence provided by Dr Rodway and Dr Horsley should be preferred over Dr Barton’s report and his oral evidence. Dr Rodway has had the benefit of 9 or 10 years as Mr Jones’ treating doctor and he necessarily has a more thorough understanding of the problems Mr Jones has experienced over that period of time with his lower back and left knee. Dr Horsley’s reports are thorough and made with the benefit of clinical notes and radiological reports. She conducted a very thorough examination of Mr Jones’ capacity for remunerative work as well as the remunerative work which he had been undertaking. By comparison, Dr Barton’s report is superficial. It was made without the benefit of clinical notes or radiological reports and the entire consultation lasted some 30 to 40 minutes. Dr Barton simply expressed the belief that neither Mr Jones’ back nor his knee were particularly disabling. This was despite the fact that his report contains no account of the precise nature of the physical work which Mr Jones did in his engineering business.
43. The evidence provided by Dr Rodway and Dr Horsley leads me to find that Mr Jones does have incapacity from a war-caused injury which affects his ability to undertake remunerative work. In coming to that conclusion, I have considered the factors set out in s 28 of the VE Act. Mr Jones’ vocational, trade and professional skills, and qualifications and experience are focused in a very narrow engineering and manufacturing area, namely that of aircraft refuelling equipment and sundry components. He has manual drafting skills in respect of that kind of equipment only. There was no evidence that those drafting skills are capable of being transported into some other form of engineering work. In fact Dr Horsley was of the opinion that they were not. Without compelling evidence, I am not prepared to draw any such inference. Furthermore, as Mr Jones testified, most drafting for engineering applications are now completed on computer using a program commonly described as CAD (computer aided design). He has no skills or qualifications in drafting using CAD.
44. Mr Jones also has qualifications in the nature of trade and professional skills as a fitter and turner. Therefore, arguably, one would need to examine whether Mr Jones is capable of obtaining employment as a fitter and turner. However, the reports of both Dr Rodway and Dr Horsley make it clear that he would have considerably difficulty, if capable at all, of undertaking remunerative work as a fitter and turner due to the manual components in that role. That is because of his back and knee problems alone.
45. An alternative form of remunerative work which it might be suggested Mr Jones was qualified to undertake as a result of his experience in managing his own engineering business is that as a manager of another engineering business where the role was confined to management work. However, I also see difficulties in accepting that Mr Jones’ left knee and back problems would permit him to undertake such a role if it were available. He has limited static sitting and standing tolerances. These would impose limits on his ability to perform that kind of role. However, and more significantly, Mr Jones’ evidence regarding the use of CAD in engineering workshops would, in my opinion, require the manager of an engineering workshop to be familiar and competent in the use of CAD. Without that qualification, I cannot accept that a managerial role in an engineering workshop is remunerative work which Mr Jones might reasonably be able to undertake.
46. Both Dr Rodway and Dr Horsley were of the opinion that Mr Jones’ war-caused injuries, those being his left knee and lower back, were responsible for rendering him incapable of undertaking remunerative work for periods aggregating more than eight hours per week in the industry in which he had appropriate professional skills, qualifications and expertise. Although Dr Horsley also referred to Mr Jones’ age as a factor and that he had, by 2010, been out of the work force for two years, she described these as barriers in her third report. In her second report she simply referred to his age as limiting alternative career opportunities. She did not say those factors rendered him incapable of doing remunerative work. There was no evidence before me that any other factor, war-caused or otherwise, played a part in preventing Mr Jones from undertaking remunerative work. Although Dr Barton was of a contrary opinion, for the reasons I have stated above, I prefer the conclusions reached by Dr Rodway and Dr Horsley.
47. The third limb which must be addressed in determining whether a veteran satisfies s 23(1)(b) or s 24(1)(b) is the extent to which any incapacity limits the hours which a veteran is capable of working. I have already indicated above that the kinds of remunerative work which Mr Jones might reasonably undertake are limited by his manual drafting skills and his physical limitations regarding the manual work required if he were to work as a fitter and turner or fabricator of general metal components in an engineering workshop. The only medical practitioner who examined this question in any detail was Dr Horsley. Although in her first report Dr Horsley was of the opinion that Mr Jones would have great difficulty working in his previous role as a metal manufacturer, in her second report Dr Horsley went so far as to say that she did not believe Mr Jones was likely to be able to work in the metal manufacturing business for more than eight hours of remunerative work per week. This was due to his left knee and lower back problem alone. Although Dr Horsley said in her third report that if he was required to work manually, his capacity for work would be less than 20 hours per week, as I have said above, that opinion was given in answer to a question dealing with more than eight hours and more than 20 hours work per week. There was no evidence that Dr Horsley had changed the opinion she gave in her report of 6 January 2010. In fact, in her examination-in-chief, Dr Horsley indicated she was attempting to distinguish between employability and capacity for work. Be that as it may, that distinction is not clear to me from her final report although I accept that she was not attempting to alter the opinion she arrived at regarding Mr Jones’ capacity to work in an engineering manufacturing workshop where manual work was a significant component. Accordingly, I find that Mr Jones does satisfy the requirements set out in s 24(1)(b) of the VE Act. Having found that Mr Jones satisfies s 24(1)(b) of the VE Act, I need not refer any further to s 23.
48. The next question which I must determine is whether Mr Jones satisfies s 24(1)(c) of the VE Act. As I have explained above in paragraphs 13-14, the expression remunerative work that the veteran was undertaking is distinct from the expression remunerative work used in s 24(1)(b). It is a reference to the nature of the work which Mr Jones was undertaking but is prevented from continuing to undertake due to incapacity caused by a war-caused injury or war-caused injuries alone. I have already referred to the decision of Finn J in Van Heteren’s case. Also, I have found that the type of work which Mr Jones previously undertook but is prevented from continuing to undertake is that of a draftsman and a fitter and turner involved in engineering work producing aircraft refuelling components and accessories. My task in dealing with s 24(1)(c) is to determine whether Mr Jones’ war-caused injuries alone prevent him from continuing to undertake the remunerative work which he was undertaking and was therefore suffering a loss of salary, wages or earnings on his own account that he would not be suffering if he was free of that incapacity. When considering whether Mr Jones is suffering a loss of salary, wages or earnings on his own account, I must have regard to s 24(2)(a) of the VE Act.
PREVENTED FROM CONTINUING TO UNDERTAKE REMUNERATIVE WORK THAT HE WAS UNDERTAKING – SECTION 24(1)(c)
49. Although I have already examined whether Mr Jones was capable of undertaking remunerative work for periods aggregating more than eight hours per week, that is not the same thing as determining whether he is prevented from continuing to undertake the remunerative work that he was undertaking by reason of incapacity from war-caused injuries alone. This is a narrower question than that posed in s 24(1)(b) of the VE Act. I am also mindful that the reference to remunerative work in s 24(1)(c) is not a reference to a particular job with a particular employer (see Banovich v Repatriation Commission (1986) 6 AAR 113 at 119). Nor is it merely the last remunerative work undertaken before the veteran’s inability to work became complete (see Starcevich v Repatriation Commission (1987) 18 FCR 221 at 225).
50. I have already described the type of work which Mr Jones was prevented from continuing to undertake when he ceased working. That type of work is producing detail drawings and the manufacture of aircraft refuelling devices and components. It involves Mr Jones exercising his skills as a draftsman and as a fitter and turner. Although Mr Jones told Dr Barton that about 80 per cent of his work time when working for the company was taken up utilising his drafting skills, and 20 per cent of his time using manual skills acquired as a fitter and turner in the manufacture of equipment, he also explained to Dr Horsley that when one of his employees, who was a boilermaker/welder, left the company in about 2000, he was not replaced and that required Mr Jones to move to a 50 per cent role in manufacturing and 50 per cent in drafting. According to Mr Jones, it was this increased level of physical demand on his work which led to him finally accepting that he could not continue with his business manufacturing aircraft refuelling components. Dr Horsley said she was of the view that Mr Jones’ back and knee condition alone prevented him from continuing to work in his aircraft refuelling manufacturing business. Therefore, I find that Mr Jones was prevented from continuing to undertake the remunerative work which he was undertaking by reason of incapacity from his war‑caused injuries alone. There was no evidence of any other physical or mental injury or disease, whether war-caused or otherwise, which played any part whatsoever in preventing Mr Jones from continuing to operate his aircraft refuelling components manufacturing business. Although Dr Horsley said that his opportunities for redeployment were impacted upon by his age, his very specific skills and the fact that he had been out of the workforce for two years, these factors have nothing to do with preventing him from continuing to undertake the remunerative work that he was undertaking. Dr Horsley also said in her second report that the reasons for Mr Jones winding up and closing his company were multifactorial. While that may be so, it does not alter the fact that he may have been prevented from continuing to undertake remunerative work that he was undertaking by reason of incapacity from war-caused injuries alone. The winding up of the manufacturing business and the sale of the factories and equipment was likely a consequence of him not continuing with that remunerative work. Although Dr Horsley also referred to Mr Jones’ business failing, with respect, that statement seems to be purely speculative. Although Mr Jones referred to problems in the airline industry following the event in the USA in September 2001, and increasing expenses resulting in him having to work increasing hours, there is no apparent basis for Dr Horsley’s conclusion that the business was failing.
51. Mr Purcell submitted that Mr Jones’ accepted war-caused injuries were not the only factor which caused him to cease to undertake the remunerative work that he was undertaking. This was, as I understood it, a reference to the requirements set out in s 24(2)(a) of the VE Act. Mr Purcell submitted that an additional factor which played a part in Mr Jones not continuing with the remunerative work which he was undertaking was his age. Mr Jones was 63 years of age at the time of his application. Mr Purcell referred me to the textbook Veterans’ Entitlements Law 2nd Edition, Robin Creyke and Peter Sutherland, The Federation Press, 2008 at page 283, where the authors have set out what they claim to be the Minister’s Second Reading Speech for the Veterans’ Entitlements Bill 1985. The particular part of the Second Reading Speech referred to by Mr Purcell stated:
It was never intended that the TPI rate would become payable to a veteran who, having enjoyed a full working life after war service, then retires from work possibly with whatever superannuation or other retirement benefits are available to the Australian workforce. ... If a person has had the usual span of a working life or has retired voluntarily or has left employment for reasons other than accepted disabilities, a TPI pension is not payable. It would be in only very rare cases that any veteran beyond the normal retirement age could be eligible for this pension.
52. The first thing that must be said about the passage quoted from the textbook is that while taken from a Second Reading Speech, it was not the speech delivered in relation to the Veterans’ Entitlements Bill 1985 (see the decision of Deputy President S A Forgie in Re Repatriation Commission and Peter Thorpe [2011] AATA 491, FN 40). Furthermore, as DP Forgie pointed out at paragraph 54 of her decision, the passage quoted is in any event qualified by the paragraph which immediately follows it in the Second Reading Speech. That paragraph was not quoted by Creyke and Sutherland in their text. Although I pointed out to Mr Purcell the hazards of attempting to use a text as authority in proceedings, whether before the courts or before this tribunal, he nevertheless persisted.
53. As DP Forgie pointed out in Thorpe’s case, following the introduction of the VE Act, there were a number of cases which considered applications for pension at the special rate by veterans who exceeded 65 years of age. This resulted in further amendment to the VE Act, the amendments being contained in the Veterans’ Affairs (1994/1995 Budget Measures) Legislation Amendment Act 1994. In the Explanatory Memorandum to that Amendment Bill, it was stated:
The second initiative, which relates to changes to the eligibility criteria for special and intermediate rate pension, will mean that these pensions will not normally be granted to veterans’ who are over the age 65. An exception to this rule will apply if the veteran was engaged in remunerative work after the age of 65 and that work was in the same business or employment which the veteran had been working for 10 continuous years. This would include, for example, many in the farming community...
54. There was no evidence in this case that Mr Jones’ age played any part in his decision to cease his manufacturing business. In fact, given that he was self-employed and had been for over 20 years, he would nevertheless satisfy the age related requirements in s 24(2A) of the VE Act if he had turned 65 before making his claim.
55. There is a further problem with Mr Purcell simply proffering the Second Reading Speech on the basis that I should have regard to it for the purposes of determining Parliament’s intention in enacting the legislation dealing with the intermediate and special rates of pension. Although it appears to be common practice in the tribunal for counsel to go immediately to an Explanatory Memorandum or the Second Reading Speech in order to do this, that is not my understanding of the use to which extrinsic materials may be put. In fact, I understand the basic principle to be that enunciated by Gibbs CJ in the High Court of Australia decision Cooper Brookes (Wollongong) Pty Ltdv The Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297, where he said, at 304:
It is an elementary and fundamental principle that the object of the court, in interpreting a statute, “is to see what is the intention expressed by the words used”: River Wear Commissioners v Adamson (1877) 2 App Cas 743 at 763. It is only by considering the meaning of the words used by the legislature that the court can ascertain its intention. And it is not unduly pedantic to begin with the assumption that words mean what they say: cf Cody v J H Nelson Pty Ltd (1947) 74 CLR 629 at 648. Of course, no part of a statute can be considered in isolation from its context — the whole must be considered. If, when the section in question is read as part of the whole instrument, its meaning is clear and unambiguous, generally speaking “nothing remains but to give effect to the unqualified words”: Metropolitan Gas Co v Federated Gas Employees’ Industrial Union (1925) 35 CLR 449 at 455. ...
and further at 305:
... However, if the language of a statutory provision is clear and unambiguous, and is consistent and harmonious with the other provisions of the enactment, and can be intelligibly applied to the subject matter with which it deals, it must be given its ordinary and grammatical meaning, even if it leads to a result that may seem inconvenient or unjust. To say this is not to insist on too literal an interpretation, or to deny that the court should seek the real intention of the legislature. ...
56. I am of course also mindful of s 15AA of the Acts Interpretation Act 1901(the Acts Interpretation Act) which provides:
15AA Regard to be had to purpose or object of Act
(1)In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.
57. Section 15AB of the Acts Interpretation Act provides for the use of extrinsic material in the interpretation of an act. It states:
15AB Use of extrinsic material in the interpretation of an Act
(1)Subject to subsection (3), in the interpretation of a provision of an Act, if any material not forming part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:
(a)to confirm that the meaning of the provision is the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act; or
(b)to determine the meaning of the provision when:
(i) the provision is ambiguous or obscure; or
(ii) the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable. ...
58. Therefore, it seems to me that resort to extrinsic material, whether or not for the purpose of determining the object or purpose underlying a statutory provision, is only permissible in the circumstances set out in s 15AB of the Acts Interpretation Act. In my opinion, none of those circumstances apply to either s 23 or s 24 of the VE Act.
59. Regardless, nothing turns on the fact that Mr Jones was 63 years of age when he made his application for an increase in the rate of pension. It should be remembered that his employment was through a company in which he and his wife held equal shares. Effectively, he was self-employed. Putting to one side for the moment any commercial reasons for ceasing that operation, it seems to me that provided Mr Jones remained in reasonable health, as he said in evidence, he intended to continue the business operation until he was about 70 years of age. Because he had not reached 65 years of age at the time of his claim or application for an increase in the rate of pension, the provisions in s 24(2A) do not apply to him.
60. Mr Jones testified that his business was going well up until he reached the decision, jointly with his wife, to cease manufacturing at the end of June 2006. Mr Jones said that the reason for making that decision was that he could no longer cope with the physical demands of the work due to his lower back pain. He said that he did suffer pain and limitation of movement in the left knee but it did not interfere with his duties and did not cause him to cease manufacturing operations. Mr Jones testified that the company was making good profits right up until the decision to cease manufacturing.
61. I had in evidence the company tax return for 2004, a profit/loss statement for the financial year ended 30 June 2005 and a profit/loss statement for the year ended 30 June 2006. I have set out below the sales achieved by the company in those three years as well as the operating profit after subtracting expenses directly related to its operations.
SALES
OPERATING PROFIT
2004 - $767,665
$65,491
2005 - $503,657
($25,824)
2006 - $331,730
$50,603
62. While the documents referred to above show a steady decline in sales between 2004 and 2006, and varying operating profits including a loss for the year 2005, despite the reduced sales in the 2006 financial year, the operating profit was not significantly down from that recorded in the 2004 year. In my opinion, while the accounts and tax return show a decline in the manufacturing activity over the three year period, the position as at 30 June 2006 nevertheless shows, as Mr Jones submitted, an operating profit for the year. The operating loss recorded in the 2005 financial year appears to be attributed to a number of expense items which were significantly higher in the 2005 year. They include customs, shipping and freight; materials; and subcontractor expenses. While I agree that the financial statements indicate a winding down of the overall manufacturing business, they by no means disclose a business which had ceased to be viable. For that reason, I accept Mr Jones’ evidence that the business continued to make good profits up until early June 2006 when it decided to cease manufacturing. On the evidence before me, I find that the viability of the company’s manufacturing business was not a reason why Mr Jones ceased to continue the remunerative work which he was undertaking.
63. Mr Purcell also submitted that Dr Horsley identified factors in addition to Mr Jones’ war-caused injuries which he claimed were evidence that Mr Jones’ war‑caused injuries alone did not prevent him from continuing to undertake the remunerative work which he was then undertaking. Mr Purcell referred to all three of Dr Horsley’s reports.
64. In her first report dated 7 December 2009, Dr Horsley said, that in her opinion:
He was unable to continue on history, because of the increasing physical nature of the work and the increasing irritability in his lumbar spine.
As I understood that statement, this was Dr Horsley’s opinion based on the history given to her by Mr Jones. Furthermore, Dr Horsley said:
I believe that Mr Jones’ capacity to continue to work in his self-employed role diminished as his staff levels decreased, secondary to external issues related to his business. He went from a 20 per cent ‘hands on’ role to a 50 per cent ‘hands on’ role and physically was unable to cope with the increase in physical demands. He ceased employment at that time. ... From the physical perspective, he would have great difficulty working in his previous role as a metal manufacturer.
65. In her brief report dated 6 January 2010, Dr Horsley said:
On that basis, I don’t believe that he is likely be able to work in the area for which he has been trained for more than 8 hours of remunerative work per week.
That statement was made by Dr Horsley after referring to Mr Jones’ increasing requirement for hands on work which he was finding difficult because of his back condition.
66. In answer to the question whether his accepted conditions preventing Mr Jones from performing remunerative work were permanent in nature, Dr Horsley said that Mr Jones’ back condition was permanent. She also said:
The reasons for the wind up and closure of his company were multi factorial.
67. With respect to Dr Horsley, the company has not been wound up; it simply ceased manufacturing aviation refuelling equipment. The company was not closed as suggested by Dr Horsley. It is not clear what Dr Horsley had in mind when she referred to the reasons being multi factorial. She provided no explanation of this statement but I take it to mean that having decided to cease manufacturing, the reasons for deciding to sell the factory premises and manufacturing equipment were commercial and related to that decision. In fact, Mr Jones said that he decided not to put on further employees because they are headaches. In his evidence-in-chief he said that he did consider selling the business as a going concern but it might take some time to find a buyer and he would need to keep working in the business during that period of time. He said that he could not physically do that.
68. In her third report, Dr Horsley noted that clinically, there was little change from her last review of Mr Jones. She said that the clinical history and examination findings were compatible with her last review. Although Dr Horsley also mentioned the barriers confronting Mr Jones if he wished to return to work, including his age and his time out of the workforce, in my opinion, these factors played no part in the decision to cease work. Dr Horsley did not change the opinion she gave on 6 January 2010 that Mr Jones was not likely to be able to work in the remunerative work in which he was trained when he ceased in 2006, for more than eight hours per week. That statement is equally applicable to s 24(1)(c). She was also of the opinion that from a physical perspective, Mr Jones would have great difficulty working in his role as a metal manufacturer.
69. For the reasons I have set out above, I reject the Commission’s submissions that other factors preventing Mr Jones from continuing to undertake the work that he was undertaking included matters such as external economic pressures and Mr Jones’ own specialised and non-transferable design skills. In any event, the second factor referred to does not go to the question posed by s 24(1)(c) of the VE Act. The Commission also contended that Mr Jones had a number of known accepted disabilities which affected his capacity for employment. Again, there was no evidence at all before me that any other injury or disease, whether war-caused or otherwise, played any part in Mr Jones being unable to continue to undertake the work that he was undertaking. Accordingly, I find that Mr Jones does satisfy the alone test set out in s 24(1)(c) of the VE Act.
70. In its written Statement of Facts and Contentions, the Commission referred to the fourth question in the Flentjar case and said: if the answer to question three posed by that case was in the affirmative, there was evidence that Mr Jones ceased to engage in remunerative work for reasons other than his incapacity from war-caused disabilities, including an intention to retire from the workforce. I understood this to be a reference to s 24(2)(a). The Commission pointed to taxation returns and the apparent gradual winding down of Mr Jones’ business. In fact, the Commission contended that it was open to this Tribunal to find that the applicant was still engaged in remunerative work. With respect to the Commission’s contentions, in my opinion, they are misconceived.
71. The final limb of s 24(1)(c) which a veteran is required to satisfy in order to meet the criteria for the payment of the special rate of pension under s 24 of the VE Act is that the veteran is suffering a loss of salary or wages, or of earnings on his or her own account because they are prevented from continuing to undertake remunerative work that they were undertaking. The loss of salary, wages or earnings would not be suffered by a veteran were he free from that incapacity. This requires me to consider the matters referred to in s 24(2)(a) of the VE Act.
72. Although the Commission referred to the taxation returns, it did not state precisely whose taxation returns it had in mind. The company itself of course was required to submit tax returns as was the partnership. Furthermore, both Mr and Mrs Jones submitted tax returns. There were no tax returns lodged with the Tribunal amongst the s 37 documents.
73. However, I had in evidence various tax returns for the 2004, 2005, 2006 and 2007 years. There were also two notices of assessment relating to Mr Jones for the years ending 30 June 2006 and 30 June 2007. Although Mr Jones’ taxable income for the 2006 year was $41,721, and his taxable income for the 2007 year was $25,323, that decline does not support what the Commission contends about Mr Jones’ intention to retire from the workforce.
74. The uncontroverted evidence was that Mr Jones ceased manufacturing on 30 June 2006 and therefore, consistent with that evidence, his taxable income had declined in the 2007 year. In any event, it was Mr Jones’ uncontradicted evidence that neither he nor his wife were paid a salary by the company. In fact they received annual dividends paid by the company at the end of each financial year. Furthermore, the company invested its profits in Treasury Bonds and the interest earned on those provided additional income to the company which was subsequently paid to Mr and Mrs Jones by way of dividends. Mr Jones’ evidence was that the partnership owned the two premises from which the business was conducted and it leased those premises to the company. The company paid rent to the partnership. Although the partnership is required to lodge tax returns, it does not pay tax on the earnings of the partnership but rather, the individual partners pay tax upon a distribution being made to them. Therefore, the individual tax returns of Mr Jones disclose income from investments as well as rental income which, on any interpretation, are not earnings from his personal exertions. Mr Jones’ individual tax returns for 2005 and 2006 disclose no wages or salary income but rather, income from interest and dividends amounting to $38,959 in 2005 and $41,735 in 2006. They do not evidence a gradual winding down of the applicant’s business as is contended by the Commission. The dividends paid to Mr Jones in 2004 amounted to $35,000 and $25,000 in 2005 and 2006. In 2007 the dividend was reduced to $15,000.
75. There was no evidence before me that Mr Jones continued to be engaged in remunerative work. The fact that he continued to receive dividends from the company and/or drawings from the partnership for as long as the lease of the factories continued, is certainly not evidence of continued remunerative work. The fact that Mr Jones continued to attend the premises of the company after June 2008 for the purpose of closing down the business by attending to prior contractual commitments with clients is also not evidence of continued remunerative work. It was, in my opinion, simply fulfilment of prior contractual obligations for which the company was liable. It did not result in additional earnings to the company as is shown by the financial statements for the following two years (see para 81).
76. Because Mr Jones was not paid a salary or wages, the only question which arises is whether he has suffered a loss of earnings on his own account which he would not have suffered were he free of his incapacity. The meaning of the expression earnings on his or her own account was discussed at some length by Goldberg J in Counsel v Repatriation Commission (2002) 122 FCR 476. Although his Honour in that case was dealing with the income or receipts of a partnership, in my opinion, the principle is nevertheless applicable to a corporation. That is because, like a partnership, the property and assets are the property and assets of the company and not directors or shareholders. And, like Counsel’s case, income, receipts or cashflow of a company are not, strictly speaking, earnings on account of a particular director or employee of the company even though one of the directors or both of them have undertaken activities which have brought about that income or cashflow. Quite plainly, a company is a legal fiction and it needs real persons to undertake some activity on its behalf which will produce earnings. Although the Court in Counsel’s case was dealing specifically with s 24(2A)(e) of the VE Act, it is couched in terms not dissimilar to those set out in s 24(1)(c).
77. Goldberg J said, at 492:
Section 24(2A)(e) contemplates that because a veteran may be prevented from continuing to undertake remunerative work he or she may thereby suffer one of two types of loss. First, a loss of salary or wages in circumstances where the veteran is employed under a contract of service. Secondly, a loss of earnings or money received as a result of or by reason of the veteran's own personal exertion in circumstances where the veteran is not receiving the money as salary or wages. The common thread running through these two situations is that an income, revenue or cashflow stream available to the veteran is lost.
78. In this case, Mr Jones’ circumstances are not dissimilar to that of Mr Counsel. Mr Jones’ evidence, supported by his income tax returns, was that he was not paid wages or salary for his work but rather, he was paid an annual dividend out of the company’s profits. In addition to that, he received a distribution from the partnership as a result of the partnership earning rental income from the two premises on which the engineering manufacturing work was conducted. Although I accept that the rental income received by the partnership and distributed to its partners does not fit the description earnings on his or her own account, the same cannot be said of the annual dividend payment paid to Mr Jones and his wife. It is similar to Mr Counsel’s position where he also was not receiving salary or wages. He was, however, in receipt of a distribution from partnership earnings. Goldberg J said, at 492:
When s 24(2A)(e) is viewed in this way it can be said that the reference to ``earnings'', in a partnership context, is a reference to the money brought into the partnership, that is its cashflow, through the personal exertion of the veteran, that is, ``on his or her own account''.
79. In the same way as Mr Counsel received earnings, Mr Jones received earnings from the income of the company which was clearly produced by, at least in a significant part, his personal exertion. In fact, were he not involved in the day to day activities of the company, it is highly unlikely it could have conducted the business that it did.
80. As I understood Mr Purcell’s submissions about loss of earnings, he maintained that the company continued to derive earnings because the company now describes its main business activity as financial asset investing. This was recorded in its 2010 income tax return. Mr Purcell also referred to the fact that there was little change from 2006 until the present time in the income available to Mr Jones between 2006 and 2010.
81. However, and with respect to Mr Purcell, the only relevant income or earnings are those which Mr Jones has acquired, indirectly through the earnings of the company or the partnership through his personal exertion. If in fact the company or the partnership has invested profits in Treasury Bonds, as Mr Jones claimed the company had, the interest acquired by the company or the partnership from such an investment is plainly not earnings brought about through Mr Jones’ personal exertions. Those earnings will continue irrespective of any personal activity. Therefore, in my opinion, in order to determine whether Mr Jones has suffered a loss of earnings on his own account as a consequence of his incapacity to continue doing the remunerative work which he was doing prior to becoming so incapacitated, I need to examine the accounts of the company and the partnership to see whether in fact there has been any such loss of earnings. The following are the figures for the company for the financial years 2007 to 2010:
YEAR SALES OPERATING PROFIT (LOSS) 2007 $32,038 ($37,664) 2008 $53,999 ($94,406) 2009 0 0 2010 $1,031 0
82. The figures I have referred to above are taken from the profit and loss account prepared by the company’s accountants and also from the business activity statements lodged in the 2010 financial year. They support what Mr Jones said about what happened after the decision was made in June 2006 to cease the manufacturing business. He testified that it was not possible to simply stop the business without any further ongoing activity which arose out of prior contracts and sales. He said that contracts needed to be completed, warranties met and parts exchanged or replaced as a consequence of warranty claims. Mr Jones’ testimony was that he worked approximately 20 hours per week until he sold the second of the company’s two factories in about December of 2008. However, this was all part of winding up the entire manufacturing operation. He said he had to sell stock and the company’s machinery to supply spare parts to clients, handle warranty issues and generally assist former clients. He arranged for other companies to manufacture spare parts for clients and assisted former clients by trouble shooting and providing them with general advice. The nature of this work is reflected in the financial statements from 2007 on.
83. Mr Purcell nevertheless maintained that Mr Jones had not suffered any loss of earnings, if one were to look at his individual tax returns for the years following the cessation of manufacturing by the company. I cannot agree. As I have already indicated, for the purposes of s 24(1)(c) of the VE Act, I am only concerned of earnings derived by Mr Jones through his personal exertion. Mr Jones made it clear in his evidence, which is supported by all of the financial records in question, that the company’s earnings which were due in substantial part to his personal exertion declined substantially in 2007, eventually reaching zero in 2009. He admitted that he continued to receive dividends as a result of monies invested by the company, some rental income until the factories were sold and the distribution of monies following the sale of the factories by the partnership. None of these earnings were the result of his personal exertion. The dividends paid by the company declined from $35,000 in 2004 to $15,000 in 2007. Accordingly, I find that Mr Jones suffered a loss of earnings on his own account which he would not have suffered were he free of his war‑caused injury which prevented him from continuing to undertake remunerative work which he was undertaking. Because Mr Jones did not cease to engage in remunerative work for reasons other than incapacity from war-caused injuries, nor was he prevented from engaging in remunerative work for some other reason, s 24(2)(a) does not apply to him. I find he satisfies the requirements of s 24(1)(c) of the VE Act.
CONCLUSION
84. Mr Jones claimed that he was entitled to be paid a pension at the intermediate or special rate because he satisfied the provisions set out in s 23 or s 24 of the VE Act. There was no dispute that Mr Jones satisfied ss 24(1)(aa) and (a) of the VE Act.
85. I have found that Mr Jones is totally and permanently incapacitated. His incapacity from his left knee and back injuries, both of which are war-caused, alone, render him incapable of undertaking remunerative work for period aggregating more than 8 hours per week. I have only considered the matters referred to in s 28 of the VE Act in coming to this decision. Mr Jones’ trade skills, qualifications and work experience are confined to a very specialised form of engineering involving the design and manufacture of aircraft refuelling equipment. They are not skills, qualifications and experience which are readily transferable to general aspects of metal fabrication and other engineering businesses. This is particularly so in Mr Jones’ case because his draftsman skills are limited to manual drawing. He is unable to use computers in performing this role which is now standard in the design industry. His physical limitations prevent him from performing the manual tasks associated with metal fabrication work.
86. I have also found that Mr Jones satisfies the provisions set out in s 24(1)(c) of the VE Act. His incapacity from war-caused injuries alone prevent him from continuing to undertake the remunerative work that he was undertaking before he was forced to cease manufacturing aircraft refuelling equipment. This resulted in him suffering a loss of earnings on his own account. I have found that he did not cease to engage in remunerative work for reasons other than incapacity from his war-caused injuries.
87. Therefore, I find that the decision made by the VRB on 7 April 2010 was incorrect. I set aside that decision and instead determine that Mr Jones is eligible to receive the pension at the special rate. In accordance with s 21(1) of the VE Act, the date of effect for the grant of the pension at the special rate shall be 21 November 2008, which is the date on which Mr Jones’ application was received at the office of the Department of Veterans’ Affairs.
I certify that the eighty-seven [87] preceding paragraphs are a true copy of the reasons for the decision herein of
Senior Member Egon FiceSigned: ..........[sgd]...............................................................
Elise Montalto, AssociateDates of Hearing 5-6 July 2011
Date of Decision 7 September 2011
Counsel for the Applicant Mr A. Larkin
Solicitor for the Applicant Mr M. Jorgensen, Williams Winter
Counsel for the Respondent Mr G. PurcellSolicitor for the Respondent Ms R. Casamento, Repatriation Commission
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