Reidlinger and Repatriation Commission (Veterans’ entitlements)

[2016] AATA 646

Reidlinger and Repatriation Commission (Veterans’ entitlements) [2016] AATA 646 (26 August 2016)

Division	VETERANS' APPEALS DIVISION
File Number(s)	2015/0237
Re	Robin Reidlinger
APPLICANT
And	Repatriation Commission
RESPONDENT

DECISION

Tribunal	Deputy President Dr P McDermott RFD
Date	26 August 2016
Place	Brisbane

I affirm the decision under review insofar as that decision determined that the applicant was not eligible for pension at the special rate. I remit to the respondent the question of whether and from what date the applicant is entitled to the Extreme Disablement Adjustment rate of pension provided by s 22(4) of the Veterans’ Entitlement Act 1986 (Cth).

............................[sgd].......................................

Deputy President Dr P McDermott RFD

CATCHWORDS

VETERANS’ AFFAIRS – application for pension at the special rate – applicant was not prevented from continuing to undertake remunerative work because of incapacity from war-caused injury or war-caused disease alone – financial considerations found to be a factor – injury that was not war-caused not found to be a factor – decision affirmed under review

Applicant may be entitled to the Extreme Disablement Adjustment rate of pension – deterioration of accepted conditions – decision remitted for reconsideration

LEGISLATION

Veterans’ Entitlement Act 1986 (Cth) ss 19, 22, 23, 24, 120

CASES

Repatriation Commission v Watkins (2015) 228 FCR 573
Repatriation Commission v Richmond (2014) 226 FCR 21
Repatriation Commission v Hendy (2002) 76 ALD 47
Repatriation Commission v Butcher (2007) 94 ALD 364
Davis and Repatriation Commission (1990) 20 ALD 798
Smith v Repatriation Commission (2014) 220 FCR 452

SECONDARY MATERIALS

Guide to the Assessment of Rates of Veterans’ Pensions (last updated 24 November 2014)

REASONS FOR DECISION

Deputy President Dr P McDermott RFD

26 August 2016

INTRODUCTION

1. On 15 May 2014 Mr Robin Reidlinger (“the applicant”) lodged a claim for an earnings-related rate of pension.[1] On 29 July 2014 a delegate of the Repatriation Commission (“the respondent”) determined that the disability pension of the applicant be increased to 100% of the general rate with effect from 15 February 2014.[2] On 18 December 2014 the Veterans’ Review Board (“the VRB”) affirmed the decision.[3] On 13 January 2015 the applicant lodged an application to this Tribunal for a review of the decision of the VRB.[4]

   [1] Exhibit A, T-Documents, T4.

   [2] Exhibit A, T-Documents, T15.

   [3] Exhibit A, T-Documents, T2.

   [4] Exhibit A, T-Documents, T1.

   BACKGROUND

2. The applicant seeks a pension at a special rate for conditions that are attributable to his service in the Royal Australian Air Force. In his statement dated 19 March 2014, he explained that he and his wife under a family company took over a newsagency business on 13 November 2000.[5] Initially, they received remuneration from the company in the form of directors’ fees and in later years they were paid wages. The applicant and his wife made a decision to cease trading with effect on 31 May 2014.[6]

   [5] Exhibit A, T-Documents, T5 at p. 19.

   [6] Exhibit B, Statement of duties prepared by applicant (undated).

   LEGISLATION

3. To be eligible for pension at the special rate, the applicant must satisfy the requirements of s 24(2A) of the Veterans’ Entitlement Act 1986 (Cth) (“the Act”) which provides:

   (2A)  This section applies to a veteran if:

   (a)  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

   (b)  the veteran had turned 65 before the claim or application was made; and

   (c)  paragraphs (1)(a) and (1)(b) apply to the veteran; and

   (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)  if he or she was then working as an employee of another person--had been working for that person, or for that person and any predecessor or predecessors of that person; or

   (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; and

   (h)  section 25 does not apply to the veteran.

4. Section 19(5C)(a) of the Act provides that the rate of pension payable to the applicant has to be determined during the “assessment period”. For the applicant, this period commenced on 14 October 2011 when he made his claim and ends when the claim is determined.

5. I am required by s 120(4) of the Act to determine any issues to my reasonable satisfaction.

   CONSIDERATION

6. I have to determine whether the applicant is eligible for a pension at the special rate. The applicant applied to the respondent to have his pension increased in accordance with s 24 of the Act, which provides for a "[s]pecial rate of pension" to be paid where the applicant satisfies certain criteria.

7. The applicant satisfies s 24(2A)(a) of the Act in that he has made a claim for a pension under s 14 of the Act on 15 May 2014 (“the claim”). He also satisfies s 24(2A)(b) of the Act in that he had turned 65 before he made the claim.

8. The applicant satisfies s 24(2A)(c) of the Act in that paragraphs (1)(a) and (1)(b) apply to him. Paragraph (1)(a) applies if he is in receipt of pension at least 70% of the general rate. This paragraph is satisfied in that he is in receipt of disability pension at 100% of the general rate. The unchallenged report of Dr Rees, psychiatrist, dated 24 June 2014 supports the contention that paragraph (1)(b) is satisfied in that his incapacity by reason of war-caused disease is of such a nature that he is unable to undertake remunerative work for periods aggregating eight hours per week.[7] 

   [7] Exhibit A, T-Documents, T10 at p. 44.

9. What is in contention is whether the applicant satisfies s 24(2A)(d) of the Act. There are a number of conditions in that paragraph that need to be met.

10. The first requirement of s 24(2A)(d) of the Act is to identify the remunerative work that the applicant was last undertaking before he made the claim. I accept the submission of the applicant that his last remunerative work was that of a business manager. The applicant in his statement that was filed on 29 August 2015 indicated that he took over responsibility for all administrative aspects of the business. When the applicant was last undertaking his remunerative work he was, as indicated by Mr Marmotta, on wages from the company that ran the business.

11. The second requirement of s 24(2A)(d) of the Act is that the applicant is prevented from undertaking that remunerative work by reason of his incapacity from war-caused injury or war-caused disease alone. I have to consider whether the decision of the applicant to close the business was made because of his war-caused mental condition or whether there was any other factor which influenced his decision such as financial considerations or his orthopedic conditions.

12. Recently, in Repatriation Commission v Watkins,[8] the Full Court of the Federal Court of Australia referred to decisions of Repatriation Commission v Richmond,[9] Repatriation Commission v Hendy,[10] and Repatriation Commission v Butcher[11] and reaffirmed the settled principle that:

    “if non war-caused factors play a part in or contribute to preventing a veteran from engaging in remunerative work, even if those preventative factors are of secondary importance and not of themselves sufficient to prevent remunerative work, the “alone” requirement will not be satisfied”.

    [8] (2015) 228 FCR 573 at 580-581.

    [9] (2014) 226 FCR 21.

    [10] (2002) 76 ALD 47.

    [11] (2007) 94 ALD 364.

13. It is fair to say that the applicant has provided differing explanations for the closure of the business. In his statement of 19 March 2014 the applicant remarked:[12]

    “My wife and I made the decision, because of my continuing inability to cope, to close the doors and cease trading with effect 31 May 2014”.

    [12] Exhibit A, T-Documents, T5 at p. 20.

14. However, earlier on 5 January 2014 the applicant stated:[13]  

    “…because of health and financial issues I will be forced to close the business down and wind up the family company as quickly as possible”.

    [13] Exhibit A, T-Documents, T2.

15. For a number of years the turnover of the business was in excess of $2 million.[14] The income of the business had decreased. Following the Global Financial Crisis in 2008, Mr Marmotta, their accountant, had advised that the business should focus on lines which would improve profitability. The business was placed on the market in around 2010.

    [14] Exhibit E, Report prepared by Mr S Marmotta dated 11 April 2015.

16. There has been some discussion of whether the business was viable at the time it was closed. For example, Mr Marmotta in his statement of 5 November 2015 gave the opinion that the business would have remained viable notwithstanding the fact that its profit would have shrunk. Mr Marmotta confirmed that the trading figures for the last five years indicated a decline in sales. Mr Marmotta confirmed that the opening of the nearby IGA store in 2010 did affect the profitability of the business. This is apparent in the summary of account of the business.

17. Having regard to the whole of the evidence before me I am reasonably satisfied that the financial downturn of the business was an important factor which influenced the decision of the applicant to cease trading even though the business was making a profit. The opening of the nearby IGA in 2010 certainly affected the sales of groceries. Mr Marmotta indicated that in the last year of trading the applicant and his wife received wages of $7,000 each and groceries and that they lived on other income. On 24 April 2014 the wife of the applicant stated that they had made withdrawals from their superannuation fund to prop up the business.[15] This statement is consistent with the statement of the applicant on 5 January 2014 who then stated that there were financial reasons for the decision to cease trading. These statements are cogent evidence that one reason why the applicant ceased trading was because of financial considerations.

    [15] Exhibit A, T-Documents, T2 at p. B5.

18. I have considered the submissions of the respondent who has asked me to make an inference that the business was unprofitable before the closure of the business, if only for a period of 16 days. However, it would not be fair for me to make such a finding when no such contention was put to Mr Marmotta in cross-examination.

19. Apart from financial matters there were other reasons for ceasing trading. The applicant had a difference of opinion with his son about the direction of the business. The son did not want to sell takeaway food even though the wife of the applicant had indicated that this was a profitable part of the business.

20. I have given careful consideration to whether the business ceased trading because the orthopedic conditions of the applicant restricted his activities. There are certainly restrictions on his activities which are apparent from his lifestyle questionnaire.[16] In a report dated 27 June 2014 the treating doctor of the applicant has provided a functional rating of three to four for a number of conditions.[17] A rating of three indicates a severe effect on certain functions whereas a rating of four indicates a severe disability effect on many functions.[18] However, in a letter dated 28 April 2015 the treating doctor opines that whilst the orthopedic conditions of the applicant did cause him functional limitations he was able to operate his business despite those conditions. The respondent has conceded that the non-accepted conditions of the applicant did not contribute to his inability to continue remunerative work. I consider that this concession is appropriate having regard to the fact that in his last month of operating the business the applicant was able to work for 44 hours a week.

    [16] Exhibit A, T-Documents, T7.

    [17] Exhibit A, T-Documents, T11, p. 51.

    [18] Ibid at p. 52.

21. I am not reasonably satisfied that the applicant was, because of incapacity from war-caused injury or disease alone, prevented from continuing to undertake the remunerative work that he was undertaking on 31 May 2014. I cannot be reasonably satisfied that the applicant ceased trading because of his accepted conditions alone at that time because in that month he was still able to work 44 hours a week.[19] I place some reliance upon the statement of the wife of the applicant who stated in evidence that the decision to cease trading was taken in late 2011 when the applicant was engaged in remunerative work. She was then a director of the family company and in a position to know about such a major decision. In fact I have concluded that the decision was made earlier in about 2010 when the business was placed on the market. I also rely upon the statement of the applicant dated 5 January 2014 that financial issues “forced him” to close the business and wind up the family company. For these reasons I consider that the applicant does not satisfy s 24(2A(d) of the Act.

    [19] Exhibit A, T-Documents, T4 at p. 12.

22. I also do not consider that the applicant satisfies s 24(2A)(e) of the Act because I do not consider that the applicant is suffering a loss of salary or wages or earnings on his own account that he would not be suffering if he was free from the incapacity referred to in s  24(2A)(d) of the Act. Having regard to my finding in the previous paragraph of these reasons I consider the financial downturn of the business is one substantial reason why the applicant ceased trading. For the purposes of s 24(2B) of the Act, the decision by the applicant to cease trading in late 2011 when he was able to engage in remunerative work meant that the cessation of trading in May 2014 was for reasons other than his incapacity from war-caused injury or war-caused disease. I have earlier referred to the statement of the applicant who stated on 5 January 2014 that because of financial issues he will be forced to close the business down and wind up the family company.

23. While the applicant did not make a claim for payment of the intermediate rate of pension, the applicant would not be entitled to pension at that rate. I have had regard to the circumstance that it was in late 2011 that a decision was made to close down the business. This decision was made at a time when the applicant was engaged in remunerative work. In view of the statement of the applicant on 5 January 2014 that he was “forced” to close down the business because of financial matters, I cannot be reasonably satisfied that the applicant could be taken to be suffering a loss of salary or wages or of earnings in terms of s 23(1)(c) of the Act when the family company ceased trading.

24. At the time when the delegate made the decision the applicant was assessed as not being eligible for the Extreme Disablement Adjustment rate of pension. The applicant is of an age that he satisfies s 22(4)(b) of the Act. The applicant also satisfies s 22(4)(d) of the Act as he is not entitled to a pension under ss 23 or 24 of the Act. There is also no evidence that suggests the applicant is entitled to a pension under s 25 of the Act. The applicant will be entitled to the Extreme Disablement Adjustment provided that he satisfies s 22(4)(c) of the Act which requires the applicant to have an impairment rating of at least 70 points and a lifestyle rating of six points as determined under the approved Guide to the Assessment of Rates of Veterans’ Pensions. The applicant was assessed as having not achieved those ratings at the time of the decision of the delegate.[20]

    [20] Exhibit A, T-Documents, T14-15.

25. The comprehensive report of Dr Rees, which was made after the decision of the delegate, indicates that there has been a deterioration of the accepted conditions of the applicant after he made his claim.[21] This report has been made during the assessment period.[22] The appropriate course of action is for this application to be remitted to the respondent to determine whether the applicant is now entitled to the Extreme Disablement Adjustment rate of pension. This would require a new assessment of all of the accepted conditions of the applicant. This would give the applicant the opportunity to make submissions on whether he now satisfies s 22(4)(c) of the Act.

    [21] Exhibit A, T-Documents, T10.

    [22] Veterans’ Entitlement Act 1986 (Cth) s 19(9).

26. While the applicant has not made a claim for the Extreme Disablement Adjustment, I consider that his entitlement to that benefit should now be assessed during this assessment period. This is required under s 19(5B) of the Act which enables the respondent to make an assessment of the appropriate rate of pension during the assessment period.[23] The applicant has rendered distinguished service to the Commonwealth and it is incumbent that his eligibility for the Extreme Disablement Adjustment be reassessed.

    [23] Davis and Repatriation Commission (1990) 20 ALD 798 at 799. See also, Smith v Repatriation Commission (2014) 220 FCR 452 at 467 at [55] per Buchanan J.

    DECISION

27. I affirm the decision under review insofar as that decision determined that the applicant was not eligible for pension at the special rate and remit to the respondent to determine whether and from what date the applicant is entitled to the Extreme Disablement Adjustment rate of pension provided by s 22(4) of the Act.

I certify that the preceding 27 (twenty-seven) paragraphs are a true copy of the reasons for the decision herein of Deputy President Dr P McDermott RFD

................................[sgd]........................................

Associate

Dated 26 August 2016

Date(s) of hearing	11 February 2016
Date final submissions received	21 March 2016
Counsel for the Applicant	Mr A Harding
Solicitors for the Applicant	Mr J Cockburn, Cockburn Legal
Solicitors for the Respondent	Mr A Crowe, Department of Veterans Affairs