Richardson and Repatriation Commission

[2004] AATA 295

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 295

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2003/265

VETERANS'     APPEALS       DIVISION

Re:         ROBERT IRVING RICHARDSON

Applicant

And:       REPATRIATION COMMISSION

Respondent

DECISION

Tribunal:       G.D. Friedman, Member

Date:             24 March 2004

Place:            Melbourne

Decision:The Tribunal sets aside the decision under review and substitutes a decision that the applicant is entitled to pension at the special rate with effect from 30 September 2002.

(sgd) G.D. Friedman

Member

VETERANS' AFFAIRS ‑ veterans’ entitlements ‑ post traumatic stress disorder - small business - remunerative work - loss of earnings on own account - whether special rate applies

Veterans’ Entitlements Act 1986 s 24

Chambers v Repatriation Commission (1995) 129 ALR 219

Counsel v Repatriation Commission (2002) 122 FCR 476

Flentjar v Repatriation Commission (1997) 48 ALD 1

Re Martin and Repatriation Commission (2001) 68 ALD 397

Sheehy v Repatriation Commission (1996) 41 ALD 205

REASONS FOR DECISION

24 March 2004  G.D. Friedman, Member

1.      This is an application by Robert Irving Richardson (the applicant) for review of a decision of the Veterans’ Review Board (VRB) dated 14 January 2003.  The VRB affirmed a decision of a delegate of the Repatriation Commission (the respondent) dated 18 July 2002 to continue the applicant’s disability pension at 100 per cent of the general rate.

2.      At the hearing of this matter on 26 November 2003, 23 February 2004 and 9 March 2004 Mr A. Larkin of counsel represented the applicant.  On 26 November 2003 Mr G. Purcell, of counsel, represented the respondent and, on 23 February 2004 and 9 March 2004, Ms J. McCulloch, an advocate with the Department of Veterans’ Affairs, represented the respondent.

3. The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1 to T11), plus eight exhibits (Exhibits A1 to A8) lodged by the applicant and nine exhibits (Exhibits R1 to R9) lodged by the respondent.

BACKGROUND

4.      The applicant was born on 13 March 1945.  He left school at the end of Year 10 and obtained an apprenticeship with the then Postmaster General’s Office as a technician.  After completing his apprenticeship he enlisted in the Australian Army, and served from 7 February 1968 to 26 February 1970, including service in Vietnam as a radio technician from 10 December 1968 to 8 June 1969.

5.      After his discharge the applicant obtained employment with the then Australian Broadcasting Commission (ABC) as a technician and later as an Operational Officer (Grade 2).  He left the ABC in 1979 on medical grounds.  In about 1989 he commenced his own business (Lilydale TV Services) repairing video cassette recorders and television sets (the business).  He ceased work in May 2002 as a result of health problems, and has not worked since.

6.      The applicant was first granted disability pension in 1971.  On 21 November 2000 the respondent increased the rate of pension to 100 per cent of the general rate.  On 28 June 2002 the applicant lodged a claim for an increase in his pension and on 18 July 2002 the respondent refused the claim.  The respondent accepts the following disabilities of the applicant as war-caused: corn left fifth toe, functional dyspepsia, sensorineural hearing loss of the left ear, bilateral tinnitus, tinea and post traumatic stress disorder (PTSD).  The respondent does not accept the following disabilities of the applicant as war-caused: intertrigo, nervous dyspepsia and nervous condition, costal costochondritis, mouth ulcers and corn on right foot.

7.      On 30 September 2002 the applicant applied to the VRB for review.  Following the decision of the VRB to affirm the decision, the applicant lodged an application with the Tribunal on 11 March 2003 for review of the decision.

8.      The issue before the Tribunal was whether the applicant should be assessed as eligible for pension at the special rate.

EVIDENCE

9.      In a written statement dated 3 March 2003 (Exhibit A1) the applicant outlined his employment history.  He said that in 1979 his doctor advised him to cease work with the ABC because he was suffering from nervousness, anxiety and depression, which affected his concentration.  He also developed a painful left foot as a consequence of a fracture sustained in Vietnam. He said that he developed a limp in  that foot.  The applicant stated that in the 1980s he developed pain in his left knee and subsequently the right knee, which he attributed to repeated squatting and kneeling and heavy lifting of radio parts in Vietnam.  He said that he drank alcohol to excess as a result of his anxiety and his marriage ended in about 1980.  The applicant stated that he was referred to a psychiatrist but ceased attending after about six months because of unpleasant memories of his service in Vietnam. The applicant stated that he remarried in 1986 and his second wife assisted him to reduce his alcohol consumption.

10.     He said that in 1989 he felt well enough to commence the business, involving the repair of appliances at local schools and in private homes.  He said the business grew after about two years and by the mid-1990s was showing signs of success.  However, his mental health began to deteriorate in early 2001, and he began to feel more anxious and depressed, and experienced more frequent flashbacks of unpleasant events from his service in Vietnam.  He started drinking to excess and was unable to cope with the business.

11.     The applicant stated that the business ceased trading in October 2001 and was wound up in  May 2002.  He said that his treating psychologist supported the decision. The applicant was adamant that his physical difficulties were not relevant to the decision to close the business, but factors such as a lack of concentration, restlessness, volatile disposition and difficulty in sleeping were the cause.  He emphasised that the pain in his legs played no part, because he was able to sit while working, and there was no heavy lifting involved.

12.     In oral evidence the applicant said that prior to 1997 the business was more than a hobby and he earned about $4000 to $5000 per year, which greatly improved his standard of living.  He said that his tools of trade cost about $1000.  He produced tax returns for the business prepared by his accountant for 1989/90 (Exhibit A6) and for  1995/96,  1996/97,  1997/98,  1998/99  and  2000/01 (Exhibit  A8).   Under cross-examination he referred to documents relating to the financial affairs of the business,  and agreed that the approximate financial position of the business was as follows:

Year                  Sales ($)  Gross Profit ($)        Net Profit/(Loss) ($)

1990  11,033  4371  (4708)

1991  11,867  3444  (6837)

1992  19,026  7979  (4159)

1993  17,070  6680  (9500)

1994  9516  9516  245

1995  9696  9696  (11,151)

1996  8010  8010  (9662)

13.     The applicant said that in October 1997 his accountant advised him to amend his tax return (Exhibit R9) to show that the business was more a hobby than a business because of the losses incurred and the limited time devoted by him to its activities.

14.     In a written report dated 12 May 2003 (Exhibit A4) Dr C. Wong, general practitioner, stated:

…I believe that the accepted war caused injuries are themselves alone preventing him from undertaking remunerative work for periods in excess of eight hours per week.  I do not believe he has any other disabilities that would prevent him from working as a technician or any other remunerative employment.

15.     In a written report dated 29 May 2003 (Exhibit A2) Dr M. Epstein, psychiatrist, stated:

His accepted war caused injuries are themselves alone preventing him from undertaking remunerative work for periods aggregating more than eight hours per week.  There appear to be no other significant disabilities preventing him from engaging in employment.

16.     In a written report dated 25 July 2001 (T5, p33) Dr D. Baron, consultant psychiatrist, stated:

The veteran presents with a clear history of Post Traumatic Stress Disorder dating from his experiences in Vietnam…Related to this has been premature retirement on medical grounds since 1979 and inability to do any meaningful work since that time.

His condition is 100% related to his war service.

17.     In a written report dated 10 June 2003 (Exhibit A3) Dr C. Thomas, consultant in rehabilitation and pain medicine, stated:

I would accept, on the basis of all the documentation that you have forwarded to me and in the absence of anything else significantly contributing to an incapacity, that the nature of the War Caused Injuries are in themselves alone, preventing him from undertaking remunerative work for periods aggregating more than 8 hours per week.  

18.     In a written report dated 21 August 2003 (Exhibit R5) Dr R. Horsley, occupational physician, stated that the applicant’s primary incapacity at the time he ceased work with the ABC in 1979 was his psychiatric state.  She said that the primary non-accepted disability that has an impact on his ability to work is the degenerative change in his knees, which would limit the type of work available to him. In oral evidence Dr Horsley outlined the severe work restrictions that would apply to the applicant.  Under cross-examination she suggested that he might be capable of performing sedentary work, although there would be problems such as walking, bending, carrying objects and driving.     

CONSIDERATION OF THE ISSUES

19.     The Veterans’ Entitlements Act 1986 (the Act) provides for a special rate of pension for a veteran who satisfies the criteria laid down in s 24:

24(1)   This section applies to a veteran if:

(aa)the veteran has made a claim under section 14 for a pension, or an application under section 15 for an increase in the rate of the pension that he or she is receiving; and

(aab)the veteran had not yet turned 65 when the claim or application was made; and

(a)either:

(i)the degree of incapacity of the veteran from war-caused injury or war-caused disease, or both, is determined under section 21A to be at least 70% or has been so determined by a determination that is in force; or

(ii)the veteran is, because he or she has suffered or is suffering from pulmonary tuberculosis, receiving or entitled to receive a pension at the general rate; and

(b)the veteran is totally and permanently incapacitated, that is to say, the veteran’s incapacity from war-caused injury or war-caused disease, or both, is of such a nature as, of itself alone, to render the veteran incapable of undertaking remunerative work for periods aggregating more than 8 hours per week; and

(c)the veteran is, by reason of incapacity from that war-caused injury or war-caused disease, or both, alone, prevented from continuing to undertake remunerative work that the veteran was undertaking and is, by reason thereof, suffering a loss of salary or wages, or of earnings on his or her own account, that the veteran would not be suffering if the veteran were free of that incapacity; and

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

(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; and

(b)where a veteran, not being a veteran who has attained the age of 65 years, who has not been engaged in remunerative work satisfies the Commission that he or she has been genuinely seeking to engage in remunerative work, that he or she would, but for that incapacity, be continuing so to seek to engage in remunerative work and that that incapacity is the substantial cause of his or her inability to obtain remunerative work in which to engage, the veteran shall be treated as having been prevented by reason of that incapacity from continuing to undertake remunerative work that the veteran was undertaking.

20.     Mr Larkin noted that there was no dispute between the parties that the applicant satisfied s 24(1)(a) and (b) of the Act.

21.     In relation to s 24(1)(c) Mr Larkin said that the evidence from the applicant was consistent that the pain in his knees caused difficulties in walking, standing and kneeling, but that the physical disabilities did not prevent him from working.   He noted that although Dr Horsley identified a number of work restrictions, she did not believe that these restrictions in themselves prevented the applicant from working.

22.      In Flentjarv Repatriation Commission (1997) 48 ALD 1 the Federal Court set out the issues in a series of questions:

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?

23.      Mr Larkin submitted that the applicant satisfied the first three questions outlined in Flentjar..  The relevant remunerative work he was undertaking was the business, he was prevented from continuing to undertake the work by reason of his war-caused PTSD; and the PTSD was the only factor preventing him from continuing to undertake the work.  In relation to question 4, Mr Larkin referred to Counsel v Repatriation Commission (2002) 122 FCR 476 in which Gray J noted the beneficial nature of the Act and held that loss of salary, wages or earnings on his own account was gross earnings less cost of goods sold.  Mr Larkin submitted that this case falls within the principles set out in Counsel, as the business received gross earnings and the applicant wrote off depreciation of vehicles and equipment, so the business provided remuneration for him.

24.      As an alternative argument Mr Larkin referred to Re Martin and Repatriation Commission (2001) 68 ALD 397 and submitted that the applicant undertook remunerative work through the business as a consequence of his inability to derive income from the ABC. He said that the applicant’s PTSD was not diagnosed until 1998, and this condition was the sole reason for him discontinuing his employment in 1979. Mr Larkin said that there was no need for the applicant to quantify his loss.

25.      Ms McCulloch submitted that the applicant ceased working at the ABC for reasons other than his accepted disabilities.  She said that in view of the applicant’s description of the business as a hobby, his failure to declare the business for taxation purposes and the small amount of time he spent on the activities of the business, this does not constitute remunerative work.  She submitted that it was not successfully undertaken as required in Sheehy v Repatriation Commission (1996) 41 ALD 205, and any loss has been inconsequential. Ms McCulloch stated that the business was a part-time activity with a negative cash flow, and that the applicant’s last employment was with the ABC.

26.      Ms McCulloch submitted that there were significant inconsistencies in the applicant’s evidence.  She noted that the applicant had said he discarded documents in 1999, and he had to withdraw his 1997 tax return on advice from his accountant.  She noted that on numerous documents the applicant had referred to the business as a hobby, and had stated that in 1997 he had earned a small profit, when in fact he had not.  Ms McCulloch said that Counsel was not relevant on its facts, as that case concerned a partnership in which the applicant lost access to the cash flow of the business, whereas in the matter before the Tribunal the applicant had to inject funds into the business.

27.      In respect of the applicant’s alternative argument, Ms McCulloch stated that Re Martin was decided on its particular facts and was not applicable.  She said that the medical evidence showed that in the 1970s the applicant suffered from various physical conditions including functional dyspepsia, but did not suffer from a psychiatric incapacity.

28.      In reaching its decision the Tribunal takes into account the written and oral evidence and submissions made at the hearing.  The Tribunal finds the applicant to be a credible witness who gave evidence to the best of his ability.  The Tribunal notes that there was no disagreement between the parties that the applicant satisfies s 24(1)(a) and (b) of the Act.  

29.      In respect of the first question identified in Flentjar, the Tribunal notes that in Chambers v Repatriation Commission (1995) 129 ALR 219 the Full Federal Court said at 231:

The phrase ‘remunerative work’ is defined in the widest terms, to mean ‘any remunerative activity’.

The Tribunal takes into account that on occasions the applicant has referred to his business as a hobby.  However, on balance the Tribunal is satisfied that after ceasing work with the ABC the applicant established and operated the business in an effort to rehabilitate himself and also to receive remuneration in an area in which he had considerable expertise.  The figures listed in respect of sales and gross/net profit demonstrate that from 1990 to 1996 the business received considerable sums as income.  Therefore the remunerative work that the applicant was undertaking was the business, until the applicant accepted advice from his accountant to withdraw his 1997 business tax return because the applicant’s deteriorating health caused the business to become more like a hobby.

30.      In respect of the second question, the Tribunal accepts the evidence that the applicant’s lack of concentration and his inability to complete the work involved in operating the business as a result of his PTSD prevented him from continuing that work.

31.      In respect of the third question, the Tribunal finds that the applicant’s physical disabilities such as his knee problems, while painful, did not prevent him from working in the business, so the war-caused conditions were the only factors preventing him from continuing that work.

32.      In respect of the fourth question, the Tribunal notes that in Counsel Gray J stated at 169:

In construing the word “earnings”, the statutory context is the most important factor.  The VE Act is beneficial legislation…It is clear that the words “salary or wages” and “earnings on his or her own account” are intended to encompass the full range of ways in which people can make money from their own efforts.

The Tribunal considered the figures relating to sales and gross/net profit of the business from 1990 to 1996, which show a loss for each year except 1994.  Although Counsel involved a partnership, the Tribunal accepts Mr Larkin’s submission, that a loss on gross income of a business of the kind operated by the applicant should be considered to be loss of earnings on the applicant’s own account.

33.      For these reasons the Tribunal finds that the applicant, by reason of being prevented from continuing that work, suffered a loss of salary, wages or earnings on his own account that he would not have suffered if he were free of that incapacity.  He therefore satisfies s 24(1)(c) of the Act and meets the requirements for eligibility for special rate of pension.

DECISION

35.      The Tribunal sets aside the decision under review and substitutes a decision that the applicant is entitled to pension at the special rate with effect from 30 September 2002.

I certify that the thirty-five [35] preceding paragraphs are a true copy of the reasons for the decision of:

G.D. Friedman, Member

(sgd)       C.L. Lake

Clerk

Date of hearing:  26 November 2003, 23 February 2004 and 9 March 2004

Date of decision:                   24 March 2004

Counsel for applicant:           Mr A. Larkin

Solicitor for applicant:           Williams Winter

Counsel for respondent:        Mr G. Purcell (26 November 2003)

Advocate for respondent:      Ms J. McCulloch (23 February 2004 and 9 March 2004)

Solicitor for respondent:        Advocacy Section, Department of Veterans’ Affairs