Stanhope and Repatriation Commission

[2007] AATA 1916

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1916

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  Q 2006/738

VETERANS’ APPEALS DIVISION		)
Re		Hugh Stanhope

Applicant

And Repatriation Commission

Respondent

DECISION

Tribunal Senior Member B J McCabe

Date2 November 2007

PlaceBrisbane (heard in Mackay)

Decision The Tribunal affirms the decision under review. 

..................[Sgd......................

SENIOR MEMBER

CATCHWORDS

VETERANS’ AFFAIRS – Veterans’ Entitlements – special rate pension – loss of earnings – no loss on comparison of projected and actual earnings – decision affirmed

Veterans’ Entitlements Act 1986 s 24

Repatriation Commission v Hendy [2002] FCAFC 424

Counsel v Repatriation Commission (2002) 122 FCR 476

REASONS FOR DECISION

2 November 2007 Senior Member B J McCabe         

1. Mr Hugh Stanhope suffers from war-caused post traumatic stress disorder (PTSD) and several other service-related conditions. He applied for a disability pension paid at the special rate – a higher rate of pension payable where a veteran is totally and permanently incapacitated as a result of a war-caused condition. Applications for special rate pensions are assessed under s 24 of the Veterans Entitlements Act 1986.

2.      The core of the dispute between the parties can be explained as follows: where a veteran is forced to give up an occupation because of his war-caused conditions, how does one go about comparing earnings from his (marginally profitable) business activities with an estimate of what the applicant would now be earning in his former occupation if he were not prevented from working?

3.      This question arises because:

(i) s 24(1)(c) of the Act requires the decision-maker to consider whether the veteran is suffering a loss of salary or wages or earnings on his own account that he would not be suffering if he were free of his war-caused incapacity; and

(ii) there is evidence suggesting the applicant would be better off if he were still engaged in his former occupation given there has been a mining boom in the local region resulting in much higher salaries for truck drivers and others involved in the mining industry.

4.      I am satisfied the decision not to pay Mr Stanhope a pension at the special rate should be affirmed. I explain my reasons below.

the facts

5.      The applicant was 59 years of age at the time of the hearing. He was born on 25 March 1948. He is currently in receipt of a service pension paid at 100% of the general rate. He applied for the special rate pension and was 53 years of age on the application date.

6.      Mr Stanhope worked full-time as a truck driver until about 1998. He left full-time work but continued working part-time as a truck driver until 3-4 years ago. The respondent accepts the applicant left that work because of his accepted conditions. He has not worked for anyone else since that time. He continues to breed and sell cattle. He has been engaged in cattle the trade since he returned from Vietnam. He runs a herd on his own property. He acquired the property two years ago. He also has cattle on agistment (ie, he grazes his cattle on properties owned by other people under a commercial arrangement). The size of his herd varies according to seasonal factors and cattle prices.

7.      The respondent prepared a summary of the applicant’s income from his farming activities between 1997 and 2005 (exhibit 2). The farming operations traded as follows:

Year               Farming gross          Net profit (loss)        Trucking income

1997              $35,834  ($3,227)  $25,377

1998              $60,863  ($64,751)                   $48,445

1999              $98,003  ($22,826)                   $0

2000              $119,839                   ($4,058)  $8,505

2001              $149,905                   $36,498  $9,228

2002              $207,098                   $88,577  $1,330

2003              $244,688                   $32,531  $580

2004              $441,053                   $261,717                   $0

2005              $126,578                   $12,914  $210

8.      The higher profits in 2004 were explained by the drought; the applicant was forced to sell more cattle. But the drought also resulted in higher expenditure on fodder and agistment, which affected net profits. The applicant added that the net figures were legitimately adjusted in some years as the tax office permitted farmers to account for forced sales over several years of income. Those adjustments do not affect the analysis I must undertake, and I accept the figures as an accurate statement of the applicant’s earnings.

9.      The Commission analysed these figures and concluded the applicant’s average income from truck driving in 1997 and 1998 (the last two years during which he was employed as a truck driver on a full-time basis) was $48,349. The respondent said Mr Stanhope’s average gross income from farming in the years 1999 to 2005 was $190,715. By my calculation, his average net profit from farming over the same period was $57,908.

10.     At the Tribunal’s request, Mr Stanhope obtained evidence from trucking companies about salaries that are being paid to truck drivers following the mining boom in the central Queensland region. (I note the Commission conceded in its further written submissions that the applicant’s former employment was properly characterised as truck driving, which included driving trucks for mining contractors and mining companies. I am satisfied that the concession was appropriately made, and I accept it.) That evidence is relevant because the Tribunal is required to consider “what the veteran probably would have done, if he had none of his service disabilities during the assessment period”: Repatriation Commission v Hendy [2002] FCAFC 424 at [36] per Whitlam, Emmett and Stone JJ. That is inevitably a hypothetical exercise: at [37].

11.     The evidence of Mr Wayne Cruickshank, a former supervisor of Mr Stanhope, is relevant to the question of what Mr Stanhope would have done but for his condition. Mr Cruickshank deposed that Mr Stanhope was a well-regarded driver. He added:

Mr Stanhope would have been able to get a job anywhere and would have been able to demand the top dollar for working for any transport company.

12.     There is no reason to believe changes in technology, the applicant’s age or the labour market would have caused Mr Stanhope to give up truck driving if his war-caused conditions did not prevent him from working. Indeed, the evidence of Mr Cruickshank suggests the applicant’s service would have been in high demand. I accept that evidence.

13.     What would the applicant be earning if he had stayed with truck-driving? Mr Cooper, the applicant’s solicitor, swore an affidavit in which he recorded information obtained from employers in the transport industry. One of Mr Stanhope’s former employers said drivers on road trains currently earned a gross income of around $70,000 per annum; another employer estimated its drivers currently earned around $83,000. While the affidavit did not make clear how those figures were calculated, I accept the figures I extracted are accurate for present purposes.

14.     I was not provided with a longitudinal study of changes in the income of truck drivers over the period 1999-2005. Even so, I am satisfied from the evidence before me that the applicant would be earning more if he were still a truck driver than he netted from his farming operations – but he would be earning less from truck-driving if he were still driving than the gross receipts from his farming activities. In other words, he has suffered a loss of earnings if one compares his net receipts from farming after he finished full-time truck driving with his likely income if he were still driving, but not if one compares his likely income from trucking with his gross income from the farming operations.

15.     Intuition suggests the comparison should be between the net profits from the farming operations and the projected income from driving a truck. But the cases indicate that is not the correct approach. The Full Court considered the meaning of the expression earnings on his or own account which appears in both ss 24(1)(c) and 24(2A)(e) in Counsel v Repatriation Commission (2002) 122 FCR 476. The Full Court was dealing with s 24(2A)(e) in particular. Carr J said the expression meant gross earnings before deductions: at 488. His Honour acknowledged the term was ambiguous but opted for an interpretation which favoured the veteran in that case because the Act is beneficial legislation. The situation is different here: defining the expression as gross earnings will disadvantage the applicant. But I cannot see any basis for distinguishing the Full Court’s decision, and I do not think it makes sense to interpret the same expression in s 24(1)(c) differently. Goldberg J agreed with Carr J, although Goldberg J noted the veteran in that case was trading through a partnership structure which was difficult to reconcile with the legislation: at 491.

16.     If I accept the relevant comparison is between the gross earnings from the farming operations and the income the applicant would still be deriving if he were driving a truck, it is apparent the applicant has not suffered a loss of earnings on his own account.

conclusion

17.     The decision under review is affirmed.

I certify that the 17 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe.

Signed:         .....................................................................................
  Stephen A O’Grady, Associate

Date of Hearing  9 July 2007
Date for further submissions     4 September 2007
Date of Decision  2 November 2007
For the applicant  Mr Cullinane, of counsel
For the respondent                   Mr Douglass, a departmental advocate