Rosenthal and Repatriation Commission - [2002] AATA 906

DECISION AND REASONS FOR DECISION [2002] AATA 906

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N 2000/378

VETERANS' APPEALS DIVISION        )
           Re      Hans Walter Rosenthal
  Applicant
           And    Repatriation Commission
  Respondent

DECISION

Tribunal Ms S M Bullock, Senior Member Dr J Campbell, Member Mr M A Griffin, Member

Date 9 October 2002

PlaceSydney

Decision      The decision under review is affirmed.
  ..............................................
  Ms S M Bullock
  Presiding Member
CATCHWORDS
VETERANS' AFFAIRS – Special Rate – Over 65 years – Loss of Earnings on Own Account – Remunerative Work

LEGISLATION

Veterans' Entitlements Act 1986 ss 24, 120

AUTHORITIES

Hill v Repatriation Commission [2000] FCA 929
Counsel v Repatriation Commission [2001] FCA 1032
Counsel v Repatriation Commission [2002] FCAFC 201
Accident Compensation Commission v Alger [1993] 1 VR 379
Cage Developments Pty Ltd v Schubert (1983) 151 CLR 584
Re Maloney and Repatriation Commission (1989) 17 ALD 292; (AAT 5037, 20 April 1989)
Gauntlett v Repatriation Commission (1991) 32 FCR 73
Cavell v Repatriation Commission (1988) 9 AAR 534
Forbes v Repatriation Commission (2000) 58 ALD 394

REASONS FOR DECISION

9 October 2002 Ms S M Bullock, Senior Member Dr J Campbell, Member Mr M A Griffin, Member

This is an application for review to the Administrative Appeals Tribunal ("the Tribunal") made by Mr Hans Walter Rosenthal, the Applicant, of a decision of the Veterans' Review Board ("the Board") dated 2 February 2000 (T2) which assessed pension at 100 per cent of the General Rate to operate from and including 23 August 1995. The Board's decision set aside the decision of the Repatriation Commission ("the Commission") dated 11 June 1996, which accepted the condition of malignant neoplasm of the colon and chronic airflow limitation and assessed pension at 80 per cent of the General Rate with effect from 13 November 1995 (T13).
A Hearing was held before the Tribunal in Sydney on 23 January 2002 and was resumed on 7 May 2002. Mr Rosenthal provided oral evidence to the Tribunal and was represented by Mr R Davis, Advocate with the Returned Services League ("RSL") Welfare and Pensions. The Commission, the Respondent, was represented by Mr S Modder, Departmental Advocate. Concurrent oral evidence was also provided by Mr S Calfas, Public Accountant and Mr S Menzies, Chartered Accountant and Tax Agent. Documents were lodged and taken into evidence pursuant to Section 37 of the Administrative Appeals Tribunal Act 1975, in addition to the following exhibits:
Exhibit No.   Description Date
A1      Letter and Annexure A from Mr S Calfas, Accountant 21 January 2002
A2      Statement by Applicant, "To Whom It May Concern"    4 January 2002
A3      Applicant's Ledger Statements and 1992-1993 Income Tax Return Various
A4      Letter from Ms E Begg, "To Whom It May Concern"     17 January 2002
A5      Statement from the Applicant, "To Whom It May Concern"     6 May 2002
A6      Amended Analysis of the Applicant's Tax Returns by Mr R Davis, Advocate with the RSL           6 May 2002
R1      Letter from Mr S Menzies, Accountant    18 December 2001
R2      Letter…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Rosenthal and Repatriation Commission

Details

AGLC: Rosenthal and Repatriation Commission [2002] AATA 906
Case: [2002] AATA 906
Decision Date: 9 October 2002

CaseChat Overview and Summary

The parties involved in the case were Mr. Rosenthal and the Repatriation Commission. The dispute centred on the calculation of Mr. Rosenthal's Special Rate under the Repatriation Act, specifically whether he had lost earnings on his own account through remunerative work. The case was heard in the Administrative Appeals Tribunal (AAT).

The primary legal issue was whether Mr. Rosenthal's business, Europa Consultants, could be considered a remunerative enterprise capable of generating a net profit, particularly after it had operated for eight years without profitability. This hinged on the interpretation of what constituted a loss of earnings on one's own account. The tribunal had to weigh the conflicting expert opinions, namely that of Mr. Calfas, who believed the business could have become profitable, and Mr. Menzies, who concluded it would not.

The tribunal found that the business, Europa Consultants, had consistently operated at a loss for the years examined, despite Mr. Rosenthal's optimistic outlook. The tribunal noted that while new businesses may incur losses while establishing themselves, there was no evidence to suggest Europa Consultants would have turned a profit. Mr. Menzies' assessment, based on the financial records, was deemed more reliable and aligned with the statutory requirements for determining a loss of earnings on one's own account. Consequently, the tribunal decided that Mr. Rosenthal did not meet the criteria for a loss of earnings on his own account.

As a result, the tribunal dismissed Mr. Rosenthal's appeal against the Repatriation Commission's decision. The tribunal upheld the Commission's assessment that Mr. Rosenthal did not qualify for an adjustment to his Special Rate based on lost earnings from his business.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

In his statement, Mr Calfas strongly disagreed with the opinion of Mr S Menzies, Accountant, who, on 18 December 2001, noted that there was nothing in the information available to Mr Menzies which would indicate that Mr Rosenthal's business was ever going to produce a net profit, particularly as it had already been conducted for eight years, prior to 1993 and still was not profitable (Exhibit R1). Mr Calfas also disagreed with Mr Menzies' assertion that it was in Mr Rosenthal's interest to discontinue the business in 1996. Mr Calfas opined that it was important to note that in many new businesses, whilst fine tuning the product, the business continues to make losses for long periods of time. Mr Calfas noted that Mr Rosenthal had not been deterred from continuing his business and it was ludicrous for Mr Menzies to conclude that it was in Mr Rosenthal's best interest to cease operating. Mr Calfas noted that Mr Rosenthal's view was that the business losses were about to end and the expenditures incurred in the past were about to be converted into substantial profits, if not for his ill health. Mr Calfas opined that this may have happened in 1996 or 1997 but because of Mr Rosenthal's ill health, it was now impossible to determine. On the balance of probabilities, Mr Calfas concluded that Mr Rosenthal, having developed a sizeable market and built up an information database, would have lost a potential source of net income when he ceased trading in 1996. If Mr Rosenthal had been prepared to accept commercial advertising, then he would have considerably enhanced his potential net income, Mr Calfas concluded. DOCUMENTARY EVIDENCE OF MR S MENZIES In a letter to the Department of Veterans' Affairs dated 18 December 2001 (Exhibit R1), Mr Menzies noted he had reviewed the taxation records supplied and compiled for the period 1 July 1992 and 30 June 1993. The records supplied for the period prior to 1 July 1992 were incomplete. Mr Menzies noted that Mr Rosenthal's income for the financial years 1993 to 1998 inclusive, consisted of a pension, passive investment income including interest and dividends and net income (loss) from a business conducted as a sole trader called Europa Consultants. This business was noted by Mr Menzies to have commenced sometime prior to 1985 and ceased in 1996. The business was noted by Mr Menzies to have derived gross assessable income from sales of the medical information service, ranging from $6518.00 in 1993 down to $2155.00 in 1996. Mr Menzies noted that the expenses incurred in achieving these sales were considerably more than the sales, resulting in a net loss for the business in each of the financial; years examined. Mr Menzies concluded that there was nothing in the information supplied to him which indicated that the business was ever going to derive a net profit, particularly as it had already been going for eight years prior to 1993 and was still not profitable. Mr Menzies further concluded that it was in Mr Rosenthal's interests to discontinue the business in 1996. Although the business loss produced a benefit in a reduction of income tax payable, which was minimal due to low income levels, Mr Rosenthal was still out of pocket by the net after tax loss. When the business ceased, it is Mr Menzies' opinion that the expenses also ceased. He noted that the extent the expenses were not incurred in deriving sales, personal expenses are not legitimate tax deductions.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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