Weeks and Repatriation Commission (Veterans' entitlements) - [2019] AATA 4421

Weeks and Repatriation Commission (Veterans' entitlements) [2019] AATA 4421 (31 October 2019)
Division:VETERANS' APPEALS DIVISION
File Number(s): 2018/2900
Re:Roger Weeks
APPLICANT

AndRepatriation Commission
RESPONDENT

DECISION
Tribunal:Deputy President J Sosso
Date:31 October 2019
Place:Brisbane

The decision under review is affirmed.
..................................[SGD]......................................
Deputy President J Sosso
CATCHWORDS
VETERANS’ AFFAIRS’ – military compensation – Veterans’ Entitlements Act – application for an increase in the rate of pension – disability pension – special rate of pension – war-caused injury or war-caused disease – claim for post-traumatic stress disorder – Flentjar methodology – alone test – suffering a loss of salary, wages or earnings – decision under review affirmed
LEGISLATION
Veterans’ Entitlements Act 1986 (Cth)
CASES
Banovich v Repatriation Commission (1986) 6 AAR 113
Birtles v Repatriation Commission (1991) 33 FCR 290
Cavell and Repatriation Commission (1986) 10 ALN N233
Chambers v Repatriation Commission (1995) 55 FCR 9
Counsel v Repatriation Commission (2002) 122 FCR 476
Flentjar v Repatriation Commission (1997) 26 AAR 93
Forbes v Repatriation Commission (2000) 101 FCR 50
Fox v Repatriation Commission (1997) 45 ALD 317
Repatriation Commission v Butcher (2007) 94 ALD 364
Repatriation Commission v Deledio (1998) 83 FCR 82
Repatriation Commission v Hendy (2002) 76 ALD 47
Repatriation Commission v Richmond (2014) 226 FCR 21
Repatriation Commission v Watkins (2015) 228 FCR 573
Sheehy v Repatriation Commission (1996) 66 FCR 569
Smith v Repatriation Commission (2014) 220 FCR 452
Starevich v Repatriation Commission (1987) 18 FCR 221
Watkins v Repatriation Commission (2014) 142 ALD 106
Wright and Repatriation Commission (2005) 144 FCR 302
SECONDARY MATERIALS
Approved Guide to the Assessment of Rates of Veterans’ Pensions
Statement of Principles No. 34 of 2001 – Chondromalacia Patellae
Statement of Principles No. 6 of 2006 – Spondylolisthesis and Spondylolysis
REASONS FOR DECISION
Deputy President J Sosso
31 October 2019
INTRODUCTION

Mr Roger Weeks (the veteran) seeks a review of a 8 May 2018 decision of the Veterans’ Review Board (VRB) which continued the veteran’s disability pension at 100% of the General Rate – Exhibit 1 T114 pp. 588 – 594.
At the date of the Hearing, the veteran was 64 years old. He enlisted in the Royal Australian Air Force (RAAF) on 10 September 1974 and was discharged on 26 August 1988, having rendered eligible service as a Member of the Forces during this period – Exhibit 1 T106 p. 562.
The veteran enlisted as a radio technician, but initially rendered service as a general hand and subsequently as a safety equipment operator and photographer – Exhibit 1 T93 p. 478.
The veteran performed duties as a general hand for the first twelve months of his service. This entailed “anything from sweeping the floors to anything. Anything that someone wanted something done, I did it” – Transcript (Tr.) 10 June 2019 p. 17.
Subsequently, the veteran performed duties of a safety equipment officer, which entailed packing parachutes and life rafts as well as duties involving sewing machines. The veteran performed these duties for approximately five years – Tr. 10 June 2017 pp. 17 – 18.
Whilst serving as a RAAF photographer, the veteran experienced a number of traumatic events, including – Exhibit 1 T93 p. 478:
(a)attending at the crash site of a Mirage Aircraft at Nelson Bay in the 1980s where he assisted in the retrieval of the wreckage and a pilot’s body parts;
(b)attending at the crash site of a F18 aircraft on an island off Townsville which was described as “total carnage”;
(c)witnessing the crash of a Pitt Special Aircraft at RAAF Williamtown only 800 metres from the veteran’s position;
(d)flying in a Winjeal twin seat propeller driven aircraft when it almost collided with another aircraft;
(e)photographing numerous injured and deceased RAAF members;
(f)witnessing the fatal collision of a push bike rider with a mini-moke vehicle at RAAF Williamtown; and
(g)attending on his RAAF Richmond neighbour who attempted to commit suicide by cutting his wrists.
The Repatriation Commission (the Commission) has accepted the following conditions afflicting the veteran as being service-related:
(a)Osteoarthrosis of the left knee - 10 November 2006 (Exhibit 1 T27 pp. 115 – 122);
(b)Pterygium in the right eye – 10 November 2006 (Exhibit 1 T27 pp. 115 – 122);
(c)Lumbar spondylosis – 10 November 2006 (Exhibit 1 T27 pp 115 – 122);
(d)Sensorineural hearing loss – 17 December 2010 (Exhibit 1 T67 pp. 346 – 352);
(e)Tinnitus – 17 December 2010 (Exhibit 1 T67 pp. 346 – 352);
(f)Post-traumatic stress disorder (PTSD) – 16 December 2016 (Exhibit 1 T100 pp. 543 – 552);
(g)Major depressive disorder – 16 December 2016 (Exhibit 1 T100 pp. 543 – 552); and
(h)Alcohol use disorder – 16 December 2016 (Exhibit 1 T100 pp. 543 – 552).
The Commission has not accepted the following claimed conditions as being service-related:
(a)Chondromalacia patellae of the left knee – 12 September 2008 (Exhibit 1 T38 pp. 221 – 228;
(b)Spondylolisthesis L5-S1 – 12 September 2008 (Exhibit 1 T38 pp. 221 – 228).
The Commission also contends (Respondent’s Submissions (RS) p. 2 para 10) that the medical records disclose that the veteran has also suffered from time to time and to varying degrees, other medical conditions including a right knee condition and atrial fibrillation.
It is important to outline the reasons that were given by the Commission for not accepting the two conditions outlined above on 12 September 2008.
First, with res   pect to chondromalacia patellae of the left knee the Delegate of the Commission gave the following reasons for not accepting this condition was service related – Exhibit 1 T38 p. 224:
“Mr Weeks has contended that his chondromalacia patellae of the left knee was caused by playing organised sport.
I have determined chondromalacia patellae of the left knee using Statement of Principles, Instrument number 27 of 2005, which sets out the factors known to contribute to this condition.
In investigating this claim I have referred to a medical report from Dr J Khursandi, Orthopaedist dated 19 February 2008, Mr Weeks’ departmental and service medical records.
·     Direct trauma to the patella
The Repatriation Medical Authority has defined direct trauma to the patella as a blow to the kneecap causing immediate patellar pain that persists for at least 24 hours unless alleviated by analgesia.
A review of Mr Weeks’ service medical records indicates there is no history of having suffered this type of trauma to the left knee during eligible service.
·     Other factors
The evidence before me indicates that the other factors contained in the Statement of Principles do not apply in Mr Weeks’ case.
The other factors involve:
Abnormal tracking of the patella; inability to obtain appropriate clinical management for chondromalacia patella; knee injury resulting in meniscal damage or permanent ligamentous instability; or running for a specified time on operational service.
Mr Weeks’ contention of playing service sport is not a causal or aggravating factor identified in the Statement of Principles as, in the opinion of the RMA, it is not supported by sound medical-scientific evidence. As such, I am unable to relate chondromalacia patellae of the left knee to service through this factor.
I have considered all relevant evidence and am reasonably satisfied that chondromalacia patellae of the left knee is not related to Mr Weeks’ eligible service.”
It should be noted that the Delegate incorrectly referred to Instrument 27 of 2005 as constituting the relevant Statement of Principles (SoP). The SoP containing the factors referred to above were found in SoP 34 of 2001 and not 27 of 2005, which amended SoP 34 of 2001, but not in a manner germane to the veterans’ claim. However, the Delegate did correctly refer to the factors outlined in SoP 34 of 2001, and, ostensibly, made no error in her application of the SoP to the evidence before her.
The condition “chondromalacia patellae” was defined in Clause 2(b) of SoP 34 of 2001 to mean:
“softening, fibrillation or erosion of the articular cartilage of the patella associated with recurrent or chronic patellofemoral pain, attracting ICD-10-AM code M22.4, but excluding osteoarthrosis of the patellofemoral joint.”
Second, as noted, the Delegate did not accept claimed condition of spondylolisthesis L5-S1 was service related. The Delegate correctly referred to SoP 6 of 2006 as being the applicable SoP at that time. Clause 3(b) of SoP 6 of 2006 defined both spondylolisthesis and spondylolysis as follows:
“‘spondylolisthesis’ means forward displacement of one vertebra over another; and
‘spondylolysis’ means a defect or fracture, unilateral or bilateral, involving the pars interarticularis of a vertebra. The pars interarticularis is that part of the vertebral arch that extends between the superior and inferior articular processes.”
The Delegate gave the following reasons for not accepting the claimed spondylolisthesis of L5-S1 was service-related – Exhibit 1 T38 p. 225:
“Mr Weeks has contended that his spondylolisthesis L5-S1 was caused by lumbar spondylosis affecting the facet joints.
I have determined spondylolisthesis L5-S1 using Statement of Principles, Instrument number 6 of 2006, which sets out the factors known to contribute to this condition.
· Lumbar spondylosis affecting the facet joints
The radiology report which identified this condition reported ‘mild grade 1 spondylolisthesis. This is probably due to L5 pars defect’.
The report made no indication of degenerative lumbar spondylolisthesis being present.
This factor only applies where lumbar spondylolisthesis is of a particular type known as degenerative lumbar spondylolisthesis. This is not so in this case and therefore this factor does not apply.
· Other factors
The evidence before me indicates that the other factors contained in the Statement of Principles do not apply to Mr Weeks’ case.
The other factors involve:
A high impact trauma to the spine; destructive bone lesion involving the affected vertebra; engaging in competitive sport; no appropriate clinical management for the spondylolysis or spondylolisthesis; posterior lumbar spinal decompression surgery; posterior spinal lumbar fusion; or rheumatoid arthritis affecting the cervical spine.
I have considered all relevant evidence and am reasonably satisfied that spondylolisthesis L5-S1 is not related to Mr Weeks’ eligible service.”
(bolding and emphasis in the original)
After his discharge from the RAAF, and for the next decade, the veteran worked predominantly in the real estate industry in Brisbane, ceasing work in late 1998 – Exhibit 1 T93 p. 479. The veteran began experiencing problems with his left knee resulting in him not managing certain tasks required of a real estate agent, such as climbing stairs – Exhibit 1 T114 p. 591.
In 2003, the veteran and his wife moved to Hervey Bay – Exhibit 1 T93 p. 479.
The veteran received the Disability Support Pension from 20 August 1998 – Exhibit 1 T28 p. 123. The impairment the veteran was initially diagnosed as suffering from was unstable right knee for which he was assigned an impairment rating of 20 points – Exhibit 1 T28 p. 124.
The veteran’s pension was re-assessed in October 2003, and a recommendation was made to continue to pay the pension. At that time, the following inability to work assessment was made – Exhibit 1 T28 p. 125:
“There is verified evidence that this customer has a continuing inability to work under s94(5) of SSA. The customer is unable to perform their usual work for more than 30 hours per week within the next two years.
Even with retraining/reskilling the customer will not be able to work for more than 30 hours per week within the next two years.”
In addition, the following notes were made – Exhibit 1 T28 p. 125:
“Total L knee replacement – pain and swelling, giving way, instability, unable to walk up and down stairs, unable to stand or walk for prolonged periods.”
The veteran provided an undated statement which was forwarded to the Tribunal on 1 April 2019 in which he outlined his post-service employment history – Exhibit 5:
“After being medically discharged from the air force in 1988 I was employed in the real estate profession up until 1998. The arthritis in my left knee prohibited me from easily traversing stairs and slopes forcing me to leave the job I loved. I worked in several different agencies as I was head hunted a few times and became manager for some of the agencies I worked in. Agencies included Ray White, Century 21, Stockdale and Lego as well as the Professionals. Many of the agencies I worked in are no longer trading or have been sold to new owners. I was also instrumental in the setting up of the Brisbane agency Yong Realty.
It has been said that I ceased work in Real Estate due to a non-accepted condition however this is simply a word game where reference was made in a claim to the original condition suffered called Chondromalacia patellae. During my service in the Air Force, I was given a partial replacement of the left knee which then resulted in my developing arthritis which has been accepted as a service related condition.
Since leaving real estate, I have studied web development and other computer studies at university and worked in my wife’s business helping with computer set up, web design and accounting. Initially this was a landscape design and construction business which was very successful and grew to employ 7 staff before being closed, so she could look after me following my back surgery which we were told could have a recovery period of at least 12 months.
We decided to travel Australia in our caravan while I was convalescing and established our home as an investment property in the holiday accommodation sector. This was set up as a business and I took on the role as web designer, administration, marketing and maintenance as well as accounting for the business as we travelled.
Tax returns for the business do not show the business as making a great deal of profit as we reinvested as much as we possibly could to grow the business and complete extensive renovations. Today the business sees ownership of 2 properties in Hervey Bay that are very successful holiday rental properties receiving many awards from the industry. Added to this, a third property is managed for someone else as they saw how successful the business had become and wanted Angie to help them get a better rate of return on their investment.
During the time I was assisting in the business, the pressure of working with clients and being the administration person invoicing and all accounting and bill paying, proved to be too much for me and we endeavoured to sell both properties along with the business (management of 3^rd property) but this has not proved easy and my psychiatrist (Anthony Balkin) advised me to resign from the company which I duly did in 2016. Regretfully decisions made and poor accounting had cost the business financially. This was not established until Angie my wife took over the accounting and bill paying.
Since my resignation, Angie has had to employ the services of outside help to complete all the tasks I once did especially web design and maintenance, marketing material, even changing accountants so as to afford the extra support and despite this burden on finances the business has continued. As I have not been in a position to support or help Angie, even on simple things like changing a tap.
If it was not for my inability to deal with people in an appropriate manner and be able to think clearly for written contracts, driving and just working out what I need to do, I could return to real estate as since leaving real estate I have had a total knee replacement which means my knee no longer prevents me from using stairs. Given that I was very proficient in the past, there is no reason to believe that I would not be capable of achieving an income more than $100,000 through real estate however this is not an option because of my PTSD.”
When affirming the decision of the Commission to continue the veteran’s pension at 100% of the General Rate, the VRB was reasonably satisfied, based on the report of Dr Anthony Balkin, Consultant Psychiatrist, that the veteran met the requirements of s 24(1)(b) of the Veterans’ Entitlements Act 1986 (Cth) (the Act). In short, the VRB was satisfied that the veteran’s incapacity from service-related conditions alone rendered him incapable of undertaking work for more than eight hours per week – Exhibit 1 T114 p. 592.
Dr Balkin interviewed the veteran on 30 and 31 May 2016 and prepared a report for Department of Veteran’s Affairs (DVA) dated 2 June 2016 – Exhibit 1 T93 pp. 477 – 483.
In the section “Ability to Undertake Remunerative Work”, Dr Balkin provided the following opinion – Exhibit 1 T93 p. 482:
“In my opinion, his Post Traumatic Stress Disorder, Major Depressive Disorder and Alcohol Use Disorder of themselves alone are so severe as to render him totally and permanently incapacitated for any kind of remunerative work. That is, his Post Traumatic Stress Disorder, Major Depressive Disorder and Alcohol Use Disorder of themselves alone are of sufficient severity as to render him permanently incapable of working more than eight hours per week.
Throughout the time he has been attending my practice, it has been abundantly clear that Mr Weeks has substantial occupational impairment from his psychiatric conditions. His difficulties with work in the holiday property rental business with his wife culminated in February 2016 when he was no longer able to cope in assisting his wife to run their business. When I reviewed him on 29 February 2016, he was anxious, stressed and unable to cope with work. Mr Weeks and his wife provided a history that he was making costly mistakes in their business due to concentration impairment and forgetfulness. He was making double bookings and over-refunding deposits. He was not coping with bookkeeping and was entering wrong information onto their computer system. He was forgetting to notify guests regarding their booking arrangements. He was having explosive outbursts towards clients over relatively small issues. His wife had stopped him from dealing with clients because ‘if he spoke to clients, he would tell them to fuck off…he would lose it with them.’ His wife stated that work was causing a substantial increase in his psychological distress, anxiety, sleep disturbance and alcohol consumption. Work was making him more irritable which would then compound their relationship difficulties….”
The VRB, however, was not satisfied that the veteran met the requirements of s 24(1)(c), namely that he, by reason of his service-related conditions, was alone prevented from continuing to undertake remunerative work that he was undertaking and, by reason thereof, was suffering a loss of salary, wages or earning that he would not be suffering if he was free of that incapacity. The focus of the VRB decision was the requirement that a veteran must be suffering a loss of salary, wages or earnings. The VRB made the following finding – Exhibit 1 T114 p. 593:
“27. The issue the Board identified preventing Mr Weeks satisfying all the requirements of s 24(1)(c) is evidence that he has suffered a loss of salary or wages, or of earnings on his or her own account due to his inability to work due to accepted conditions. Notice of Assessment forms from the Australian Taxation Office are included in the section 137 report but not for the period after Mr Weeks ceased working. While the Board could accept that Mr Weeks ceasing work would potentially have resulted in financial loss there is no information available that would indicate this was the case. The Notice of Assessment for the year ending 2015 indicates his taxable income is $20,021 and this amount appears to be derived from a pension. There is no income reported from the business he was engaged in with his wife in 2015. There is no financial information that addresses the period of time since Mr Weeks resigned on 22 February 2016.
28. For the purposes of subsection 24(1)(c) the Board is not reasonably satisfied that Mr Weeks’ has suffered a loss of salary or wages, or of earnings on his own account.”
LEGISLATIVE FRAMEWORK

A veteran who is in receipt of a pension can apply for an increase in the rate of pension on the ground that the incapacity has increased since the rate of pension was last assessed – s 15(1).
Section 19 prescribes the way in which, inter alia, an application for an increase in the rate of pension is determined. Subsection 19(5B) directs that an assessment of such an application must be made in accordance with whichever of s 22 (general rate of pension), s 23 (intermediate rate of pension) or s 24 (special rate of pension) applies. Further, s 19(5B) directs attention to ss 25, 27 and 30; which provisions are not relevant to the disposition of this matter.
Section 22 makes provision for the extreme disablement adjustment. However, the extreme disablement adjustment is only payable when a veteran has attained the age of 65 – s 22(4)(b).
The veteran attained the age of 65 after the Hearing, but prior to a determination being made. In these circumstances I convened a Directions Hearing on 25 September 2019 and drew to the attention of the Parties the potential applicability of s 22. Mr Gordon Blake, who represented the veteran, was asked if he could obtain instructions on or before 1 October 2019 whether the veteran wished to pursue this additional course of action. If the veteran did wish to avail himself of this alternative, Mr Peter Crethary, on behalf of the Commission, agreed that he would obtain instructions from the Commission on what course of action it chose to adopt.
On 30 September 2019, Mr Blake informed the Tribunal and Mr Crethary that he had “failed to obtain any clear directions from the Applicant”. He attached to his email, correspondence he had received from the veteran.
Clarification was sought from Mr Blake, and in an email of 2 October 2019 he provided the following response:
“I have not received any instructions to advance the contention of EDA. I can also confirm that the Applicant has not provided me or the Respondent with a Lifestyle Questionnaire since the initial lodgement of the claim which now dates back some years.”
On 3 October 2019, Ms Rachel Blake, on behalf of the Commission, wrote to the Tribunal in the following terms:
“We note at the Telephone Directions Hearing on 25 September 2019 that the Respondent agreed to advise the Deputy President on or before 4 October 2019 whether the Respondent was prepared to make a favourable assessment in terms of any request by the Applicant for the Extreme Disablement Adjustment (‘EDA’).
In light of the content of the below email, the Respondent has proceeded on the basis that the Applicant does not wish to advance a contention for the EDA as part of the current Application for Review before the Tribunal.”
The Tribunal, therefore, has proceeded on the advice of Mr Blake that the veteran does not wish to advance a contention, in the alternative to s 24, that he is entitled to be paid the pension at the General Rate with the extreme disablement adjustment.
In assessing eligibility, a veteran’s entitlement is determined in respect of any circumstance within the “assessment period”. This period starts on the “application day” and ends when the claim or application is determined – s 19(9), definition of “assessment period”.
An application is “made” on the day on which the claim or application is received by the DVA – s 19(9), definition of “application day”.
The veteran’s “Application for Increase in Disability Pension” was received by the DVA on 9 March 2016 (Exhibit 1 T73 pp. 380 - 390) and, accordingly, that is the application day for the assessment period.
In Smith v Repatriation Commission (2014) 220 FCR 452 (Smith), Buchanan J made the following observations about the assessment period – at 462/[40]:
“The assessment period commences on the date an application is made and concludes when the decision is made. This means that the entitlement of the veteran is not to be judged only at the time that the application is made. The position must be assessed by reference to any relevant circumstance which occurs up to the time of decision. The entitlement may increase or decrease during that period, but provided that a pension was payable at some time during the assessment period a veteran will receive either the intermediate rate or the special rate, whichever is applicable, or in the case that both are applicable, whichever is the most recently applicable. Because this arrangement applies to applications for increase in pension, it commences from the premise that some level of pension at the general rate is already being paid.”
Subsection 120(4) requires that a veteran’s entitlement to an increased pension be decided on the decision-maker’s reasonable satisfaction, which, as explained in Repatriation Commission v Smith (1987) 15 FCR 327, is the civil standard of proof. Subsection 120(6) provides that no onus of proof is imposed on either party.
The central concept for determining the amount of pension payable is the degree of incapacity. Section 21A provides for the determination of the degree of incapacity by reference to the relevant provisions in the Approved Guide to the Assessment of Rates of Veterans’ Pensions (GARP).
The degree of incapacity is determined as 10% or a multiple of 10%, not exceeding 100%. In this matter, as previously noted, the veteran’s incapacity has been assessed at 100%.
In this matter, the question to be determined is whether the veteran is entitled to payment of a service pension at the special rate.
The intermediate rate is prescribed by s 23, and, as its nomenclature indicates, is mid-way between the general and special rates of pension. It is payable when a veteran, due to service-related causes, is unable to engage in remunerative work except on a part-time basis or intermittently.
Consistently with s 23 being focused on veterans who are not totally and permanently incapacitated, but capable of performing part-time or intermittent work, s 23(2) excludes a veteran who is capable of, or is actually undertaking, remunerative work for more than 50% of the ordinary time for that type of work for 20 or more hours per week.
In this matter, however, the veteran has not sought to rely on s 23 in the alternative to s 24. No written submissions were provided to the Tribunal on s 23. At the Hearing, Mr Crethary confirmed that s 23 was not an issue for the Tribunal to consider – Tr. 10 June 2019 pp. 4 – 5. Mr Blake, on behalf of the veteran, was also quite clear in his submissions that the veteran’s focus was his entitlement to the special rate of pension. Indeed, as previously pointed out, the veteran also disavowed any intention to pursue s 22. The focus of this determination, therefore, will be on the applicability of s 24.
Subsection 24(1) provides that a veteran is entitled to a pension at the special rate if:
·a claim has been made under s 14 for a pension, or under s 15 for an increase in the rate of pension being received – s 24(1)(aa);
·the veteran had not turned 65 when the claim or application was made – s 24(1)(aab);
·either:
othe degree of the veteran’s incapacity from war-caused injury or disease or both, is at least 70% - s 24(1)(a)(i); or
othe 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 – s 24(1)(a)(ii); and
·the veteran’s incapacity from war-caused injury or disease, or both, is, of itself alone, of such a nature to render the veteran incapable of undertaking remunerative work for periods aggregating more than eight hours per week – s 24(1)(b); and
·the veteran is, by reason of incapacity from war-caused injury or 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 wages, or earnings on his or her own account, that the veteran would not be suffering if the veteran were free from that incapacity – s 24(1)(c); and
·s 25 does not apply to the veteran – s 24(1)(d).
Subsection 24(2) provides that for the purpose s 24(1)(c):
(a)a veteran who is incapacitated from a 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 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 remunerative work and that that the 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.
Attention needs to be given to the operation of s 28 which provides that when determining for the purposes of s 24(1)(b) whether a veteran, who is incapacitated from a war-caused injury or disease (or both), is incapable of undertaking remunerative work, regard must be had only to the following matters:
(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 experiences 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).
“Remunerative work” is defined in s 5Q to include “any remunerative activity.”
The Full Federal Court in Banovich v Repatriation Commission (1986) 6 AAR 113 at 120 (Banovich) held that the phrase “remunerative work which the member was undertaking” in the Repatriation Act 1920 (Cth) “should be read as a reference to the type of work which the member previously undertook and not to any particular job.”
The criteria in ss 24(1)(a)-(c) are separate and complementary. In order for a veteran to succeed he or she must satisfy each of the mandated criteria. A failure at any point to satisfy a criteria results in the claim not succeeding – see, for example, Watkins v Repatriation Commission (2014) 142 ALD 106 at 109/[15].
These provisions were carefully considered by Buchanan J in Smith. His Honour made the following observations (465 – 466):
“47 Section 24(1)(b) and (c), when read together, state a composite test containing a series of conditions. First, s 24(1)(b) requires that a veteran be rendered, by the war-related incapacity alone, incapable of working more than eight hours per week. Secondly, s 24(1)(c) requires that the veteran be prevented, by that incapacity alone (ie not for other reasons) from continuing earlier remunerative work. Thirdly, s 24(1)(c) requires that prevention for that reason from continuing that work be the cause of a loss of earnings. Fourthly, s 24(1)(c) requires that the loss of earnings would not be suffered but for the incapacity.
48 The operation of s 24(1)(c) is capable of being informed by the provisions of s 24(2). The overall effect of s 24(1)(c) may be summarised as one which requires a demonstrated loss of earnings as the direct result of the war-related incapacity, and only for that reason. Section 24(2)(a) supplements the requirements of s 24(1)(c) by identifying specific circumstances which will cause it not to be satisfied. Those circumstances, in effect, state the opposite to the conditions in s 24(1)(c) itself. Thus, there is no established loss of earnings by reason of the incapacity if remunerative work was ceased for other reasons (s 24(2)(a)(i)), or if the veteran is also incapacitated or prevented from doing remunerative work for some other reason (s 24(2)(a)(ii)). In this assessment, of course, it continues to be accepted that the veteran is actually incapacitated in any event (‘a veteran who is incapacitated’). The purpose of the enquiry is to see whether, nevertheless, there are other explanations for economic loss so that the incapacity is not the only reason for it.
49 Section 24(2)(b) provides some relief from the potentially harsh consequences of this arrangement. It applies where remunerative work is not being done. In my view, it accommodates a cessation of earlier remunerative work, as well as a circumstance where a veteran has not worked since injury, or since the development of the incapacity. In all those circumstances, in my view, a veteran may demonstrate genuine efforts to obtain work, which are made fruitless by the incapacity. That is, the efforts would continue but for the incapacity and the incapacity is the substantial cause of the inability to obtain work. Those circumstances are taken to satisfy the basic test in s 24(1)(c) of being actually prevented by the incapacity from continuing remunerative work. Economic loss (ie loss of the opportunity for economic gain by way of income) follows naturally enough from this scenario. The search is for remunerative work. The economic consequence of failure to obtain it is the result of the incapacity.”
(emphasis in the original)
ISSUES
It is not contested (RS p. 22 paras 6 – 7) that:
(a)the veteran made a valid application under s 15 for an increase in the rate of the pension he is receiving – s24(1)(aa); and
(b)the veteran had not yet turned 65 years of age when the application was made – s 24(1)(aab);
(c)the veteran is being paid the disability pension at 100% of the general rate, and, therefore, exceeds the 70% of the general rate threshold – s 24(1)(a)(i).
The primary issues that call for consideration are as follows:
(a)is the veteran totally and permanently incapacitated, that is unable to work more than eight hours a week, due to service-caused incapacity alone – s 24(1)(b);
(b)if a positive response is evinced to the s 24(1)(b) inquiry, is the veteran by reason of incapacity from his service-caused conditions, alone, prevented from continuing to undertake remunerative work that he was undertaking;
(c)if a negative response is evinced, has the veteran, despite not having engaged in remunerative work, been genuinely seeking to engage in such remunerative work and that incapacity is the substantial cause of the veteran’s inability to obtain remunerative work – s 24(2)(b); and
(d)if a positive response is evinced either at (b) or (c), is the veteran, by reason of being prevented from continuing to undertake remunerative work, suffering a loss of salary or wages, or of earnings, that he would not be suffering if he was free of that incapacity.
HEARING
Prior to the Hearing, the veteran provided to the Tribunal his initial contentions in a document entitled “Applicant’s Facts and Contentions” which was dated 4 April 2019 and admitted into evidence as Exhibit 4. The Commission likewise provided to the Tribunal its initial contentions in a document entitled “Respondent’s Statement of Facts, Issues and Contentions” (RSFIC) which was dated 3 May 2019.
A Hearing was convened in Brisbane on 10 June 2019.
The veteran was represented by Mr Blake of the Armed Services Assistance Centre Inc. and the Commission was represented by Mr Crethary of Moray & Agnew Lawyers.
The veteran appeared in person, gave evidence and was cross-examined by Mr Crethary. Apart from the veteran no other persons were called to give evidence by either Mr Blake or Mr Crethary.
At the conclusion of the Hearing, leave was given to the Parties to provide written submissions rather than an oral summing-up.
The veteran’s closing submissions were provided in a document entitled “Applicant’s Final Submissions” (AFS) which was dated 15 July 2019.
The Commission’s closing submissions comprised the previously mentioned RS which is dated 6 August 2019. As there is considerable overlap between the RS and RSFIC, in most instances reference will be made to the contentions appearing in the RS.
CONSIDERATION
Capacity for work – ss 24(1)(b) and 28
As Hill J observed in Wright and Repatriation Commission (2005) 144 FCR 302 at 308/[15] ss 24(1)(b) and (c) “pose different hurdles which the veteran must surmount”. His Honour explained that s 24(1)(b):
“… goes to the nature and level of incapacity by which ability to undertake remunerative work is to be assessed. If the character and effect of the incapacity is such as to render the veteran incapable of undertaking remunerative work for a period aggregating more than eight hours per week then s 24(1)(b) is satisfied.”
Rares J observed in Smith (455/[8]) the evident intention of s 24(1)(b) “is to define when a veteran is totally and permanently incapacitated for the purposes of determining whether he or she can qualify for an increase in the rate of pension.” Consequently s 24(1)(b) contemplates that a veteran is incapable of undertaking remunerative work for periods aggregating more than eight hours per week.
It is important to note that the task of the Tribunal is to make a determination on the veteran’s capacity to engage in remunerative work during the assessment period.
Reference must also be made to s 28 which provides that in determining whether a veteran is incapacitated from a service caused injury or disease, or both, is incapable 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).
Section 28 is relevant only to the application of s 24(1)(b) and not to an inquiry pursuant to s 24(1)(c) – Fox v Repatriation Commission (1997) 45 ALD 317.
It will be noted that s 28 requires a decision to only take into account the matters outlined in paragraphs (a) – (c). The Full Federal Court in Chambers v Repatriation Commission (1995) 55 FCR 9 held that s 28 operated to exclude matters made which might otherwise be relevant to an assessment under s 24(1)(b), such as depressed market conditions.
The Commission conceded (RSFIC para 13 p. 23, RS para 13 p. 5) that the veteran satisfies the requirements of s 24(1)(b).
In making this concession, the Commission noted (RS para 10 p. 5) that the veteran’s skills, qualifications and work experience allowed him to engaged in remunerative work including working in real estate and assisting in the management of rental properties. Further, for the purposes of s 28, these are, the Commission contended, considerations relevant to determining the extent to which the veteran’s accepted conditions have impaired his capacity to work.
It was not disputed (RS para 11 p. 5) that the veteran ceased remunerative work in February 2016, shortly prior to the commencement of the assessment period.
The Commission accepted (RS para 12 p. 5) that from the commencement of the assessment period, based on the medical evidence, particularly that of Dr Balkin, the veteran was prevented from working eight hours of more a week by reason of the disability arising from his accepted conditions.
Having considered the medical evidence contained in Exhibits 1 and 2, the Tribunal accepts that the concession made by the Commission is soundly based, and finds, accordingly, that the veteran meets the requirements of s 24(1)(b).
Prevented from undertaking remunerative work – ss24(1)(c)
Introduction

When applying s 24(1)(c) to a particular case, recourse is often made to the “Flentjar” methodology. This “methodology” is simply the answering of four question which were posed by Branson J in Flentjar v Repatriation Commission (1997) 26 AAR 93 (Flentjar) (at 95 – 97) namely:
(a)what was the relevant remunerative work that the veteran was undertaking within the meaning of s 24(1)(c)?;
(b)is the veteran by reason of a war-caused injury or disease, or both, prevented from continuing to undertake that work?;
(c)If the answer to the second question is in the affirmative, is the war-caused injury or disease, or both, the only factor or factors preventing the veteran from continuing to undertake that work?; and
(d)If the answer to the second and third question is in the affirmative, 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?
The Flentjar methodology provides a helpful tool for a decision-maker, but it does not have the force of law. Just as with the “Deledio” methodology (Repatriation Commission v Deledio (1998) 83 FCR 82), a decision-maker must apply the relevant statutory provision and not be distracted by a mechanistic application of methodologies that are aimed at assisting the application of the law rather than supplanting it – see Repatriation Commission v Richmond (2014) 226 FCR 21 at 34/[50] (Richmond).
Before turning to the Flentjar methodology, reference should be made to the clear and very helpful analysis of s 24(1)(c) by the Full Federal Court in Richmond.
The Full Court pointed out that s 24(1)(c) has two limbs – 34/[52] – [53]:
“52. The first limb, which is capable of being informed by s 24(2)(b) requires a causal connection between the veteran’s war-caused incapacity, alone, and the veteran’s inability to undertake the remunerative work he or she previously engaged in.
53. The second limb, which is amplified by s 24(2)(a) requires a causal connection between that inability to work and the veteran’s suffering of financial loss. The enquiry under this limb relates to whether the veteran’s financial loss is a result of his or her war-caused incapacity.”
Question 1 – nature of the remunerative work
The first question focuses on the requirement that the veteran is prevented from continuing to undertake remunerative work that the veteran was undertaking.
The Full Federal Court in Banovich considered a similar provision in the Repatriation Act 1920 (Cth). The Full Court provided the following guidance (at 120):
“The term ‘remunerative work’ is used in the Schedule in a context which indicates an intention to refer to work generally…Consistently with that use, the phrase ‘remunerative work which the respondent was undertaking’ should be read as a reference to the type of work which the member previously undertook and not to any particular job. It follows that a member’s loss of particular employment for a reason unrelated to a war disability would never destroy a member’s subsequent entitlement to claim a special rate pension; the question would remain, at the relevant date for determination of a claim whether the member was prevented by his or her war-related incapacity – and by that incapacity alone – from continuing in that field of remunerative activity.”
This approach was subsequently adopted by the Full Federal Court in its consideration of s 24 in Repatriation Commission vHendy (2002) 76 ALD 47. The Full Court made the following observations – at 54/[36]:
“The Tribunal’s task was to assess what the Veteran probably would have done, if he had none of his service disabilities during the assessment period. The requirement to consider ‘remunerative work that the veteran was undertaking’ does not mean a particular job with a particular employer but the substantive remunerative work that the Veteran had undertaken in the past. That is the exercise that the Tribunal undertook. The Tribunal was not bound to limit its consideration to the last employment that the Veteran actually undertook.”
The last mentioned point in the quotation above, follows the conclusion reached in Starevich v Repatriation Commission (1987) 18 FCR 221, which also involved a consideration of the Repatriation Act 1920 (Cth).
The Federal Court has also held that generally a decision-maker is to exclude from consideration work that was undertaken for only a short period and unsuccessfully.
As to the first of the two propositions, Hill J in Birtles v Repatriation Commission (1991) 33 FCR 290 identified the question to be answered as follows (at 299):
“…has the veteran by reason of his war incapacity been prevented from ‘continuing’ a type of remunerative work which he previously undertook (not being work undertaken only for a short period)?”
As to the second point, the Full Federal Court in Sheehy v Repatriation Commission (1996) 66 FCR 569 rejected a submission by Mr Sheehy that the notion of “undertaking” work signified nothing more than the undertaking the task of working, not necessarily successfully undertaking it.
The Full Court made the following observation (at 574):
“Although it is perhaps understandable that there have been references in the cases to a ‘short’ or ‘very short’ period of work, we would prefer to say that the ‘remunerative work that the Veteran was undertaking’ must have been ‘performed or successfully undertaken’ or ‘effectively undertaken’.”
The material highlights that immediately after leaving the RAAF and until 1998 the veteran was primarily employed in the real estate industry. In that field of endeavour the veteran not only engaged in the selling and rental of listed properties, but, over time, became a sales manager and finally managed some of the agencies he worked for – Exhibit 5, Tr. 10 June 2019 p. 13.
After ceasing work in the real estate industry, the veteran enrolled in Information Technology (IT) courses at university, focusing on web development. Subsequently, the veteran assisted his wife in her landscape design and construction business with computer set up, web design and accounting. The veteran was at no stage engaging in any physical construction work – Tr. 10 June 2019 p. 14.
In more recent times the veteran and his wife were involved in the holiday accommodation industry, with the veteran taking on the role of web designer, administration, marketing and bookkeeping – Tr. 10 June 2019 p. 14.
It is tolerably clear, then, that the field of remunerative activity the veteran was engaged in was primarily in the property industry, either as:
(a)a real estate agent selling or leasing premises;
(b)as a manager of such an endeavour; or
(c)as a co-manager of a business in the renting of holiday premises.
The veteran also has IT skills, both as a web designer and also general maintenance of computer hardware and software, and used those skills both in the holiday renting business and prior to that in a landscape design and construction business. Finally, the veteran has basic accounting skills, and in both the landscape design and construction business and the holiday rental business he was able to provide assistance in bookkeeping for taxation purposes.
In short, the veteran has worked in white collar jobs requiring interpersonal, managerial, IT and accounting skills primarily for the sale and rental of real estate and holiday rental properties. At no time since leaving the RAAF has the veteran been engaged in employment involving manual labour of any type – Tr. 10 June 2019 p. 19.
Question 2: prevented from continuing to undertake remunerative work
The proper construction of “prevented from” continuing to undertake remunerative work was provided by the Full Federal Court in Richmond.
The Full Court, first, broadly approved the findings on this point by the primary judge – 37/[70]:
“The learned primary judge held that the expression ‘alone, prevented from…work’ in the first limb of s 24(1)(c) excluded from consideration a factor acting as an incentive or influencing a decision by a veteran voluntarily to cease the relevant remunerative work. In her Honour’s view the prevented element of the alone prevented test could only be satisfied by factors which ‘prohibit, disable or restrain’ the veteran from continuing to engage in the remunerative work and not by factors which induce or provide the veteran an incentive to cease that work.”
After rejecting the submissions of the Commission, the Full Court then concluded as follows – 88/[77] – [78]:
“77. The enquiry under the first limb is therefore whether the veteran’s war-caused incapacity alone, prevented, the veteran from continuing to undertake the remunerative work he or she previously engaged in. It is factors that prevent the veteran from engaging in remunerative work that are relevant to the enquiry under the first limb of s 24(1)(c).
78. On a plain English approach to the provision we do not consider that a veteran is ‘prevented from’ engaging in remunerative work by the veteran’s voluntary or elective decision to cease work for a reason other than incapacity. The ordinary meaning of ‘prevented from’ does not include such voluntary or elective choices, and acceptance of the Commission’s argument would mean that ‘prevented from’ includes ‘chooses not to’. In our view this would give the expression an unjustifiable extended meaning.”
The veteran voluntarily ceased working on 22 February 2016. In an “Employment Questionnaire” dated 4 April 2016, the veteran gave as his reason for ceasing work as follows – Exhibit 1 T83 p. 401:
“Ongoing secondary effects associated with P.T.S.D, depressive disease + alcohol use disorder.”
As previously noted, Dr Balkin outlined at some length in his report of 2 June 2016 the nature of the veteran’s substantial occupational impairment from his psychiatric conditions, and how he had formally advised the veteran to cease work altogether on medical grounds due to his PTSD, major depressive disorder and alcohol use disorder – Exhibit 1 T93 pp. 482 – 483.
It is not contested that the veteran was, and remains, a very sick man, and that while his decision to cease remunerative work was of his own volition, it was based on formal medical advice and flowed from the ongoing effects of his service-related conditions.
In these circumstances, the “prevention” element of s 24(1)(c) is met.
Question 3: alone, prevented from continuing to undertake remunerative work
For a number of years there was conflicting Federal Court authority on the “alone” test. Any doubt about the proper construction of s 24(1)(c) was resolved first by the Full Federal Court decision of Richmond, which was subsequent endorsed by a differently constituted Full Federal Court in Repatriation Commission v Watkins (2015) 228 FCR 573.
In Richmond the Full Federal Court provided the following explanation of the “alone” test – at 35/[58]:
“The first limb provides that to qualify for the special rate, the preventative effect must arise from the veteran’s war-caused incapacity alone, and not from other non war-caused preventative factors as well. If other non war-caused factors contribute to the preventative effect, even if they are only of secondary importance and not of themselves sufficient to prevent the veteran from engaging in remunerative work, their presence will deny the veteran eligibility for the special rate.”
In reaching this conclusion, the Full Federal cited with approval a number of earlier Federal Court decisions. For present purposes, reference can be made to the following observations of R D Nicholson J in Forbes v Repatriation Commission (2000) 101 FCR 50 at 57/[40]:
“As in the case of the present applicant, it is possible that the war-caused condition will be by far and away the more dominant of the causes of the preventative effect where there is also present a non war-caused condition having such effect in combination. The result is that the presence of the latter will deny to a veteran qualification for the special rate of pension…”
The Commission contends (RS para 22 p. 7) that “other factors” preclude the veteran satisfying the “alone” test requirements of the first limb of s 24(1)(c). More particularly, the Commission submits (RS para 24 p. 7) that the veteran’s non-accepted disabilities, including his left knee chondromalacia patellae condition and lumbar spondylolisthesis condition were factors impacting upon his functional capacity and ability to work.
The Commission further contends (RS para 25 p. 7) that in the years preceding the assessment period the evidence before the Tribunal supports the proposition that the veteran’s non-accepted conditions:
(a)were the basis upon which he ceased work in 1998;
(b)formed the basis upon which he was determined to be eligible for the grant of a disability pension by the Department of Social Security; and
(c)impacted upon his ability to work thereafter.
In support of this proposition, the Commission contends (RS para 26 pp. 7 – 8) that the contemporaneous medical evidence supports a finding that:
(a)the veteran ceased work in 1998 on account of his non-accepted left knee chondromalacia patellae condition;
(b)the veteran was found eligible by the Department of Social Security for the payment of a disability pension in August 1998 on account of the non-accepted left knee chondromalacia patellae condition;
(c)subsequent to August 1998, the veteran’s ability to work was negatively impacted by a number of non-accepted disabilities, including his left and right knee chondromalacia patellae condition and lumbar spine conditions; and
(d)as a consequence of his non-accepted conditions, the veteran was unable to work more than on a part-time basis performing sedentary duties.
Importantly, the Commission contends (RS para 27 p. 8) that from the commencement of the assessment period, the veteran’s non-accepted disabilities continue to impact upon his functional capacity and ability to work.
The veteran drew (Exhibit 4 para 4.3, AFS para 4.3) the Tribunal’s attention to the diagnosis of Dr Balkin previously noted (Exhibit 1 T93 p. 482), wherein Dr Balkin opined that the veteran’s “Post Traumatic Stress Disorder, Major Depressive Disorder and Alcohol Use Disorder of themselves alone are so severe as to render him totally and permanently incapacitated for any kind of remunerative work.”
The veteran also contended (AFS para 4.3) that his non-accepted conditions of left “patelo” femoral joint prothesis with degenerative osteoarthritis and chondromalacia patellae of the left knee have no effect on his ability to undertake remunerative work as these conditions have been made redundant due to his total left knee replacement surgery which was performed by Dr Gary Nielsen, Consultant Orthopaedic Surgeon, in 2002.
Reliance was placed on a report of Dr Nielsen dated 12 April 2017 – Exhibit 1 T108 p. 576. Dr Nielsen made the following observations:
“Mr Weeks has been under my care in relation to his left knee since 2002. He gives a history of having had a number of surgeries during his service time in the Air Force leading to him having a patella-femoral replacement following the development of patello-femoral arthritis secondary to chondromalacia of his patella. This came to be converted into a total knee replacement in 2002 by myself. Subsequent to that surgery he was good until an episode last year where he developed a stress fracture related to the medial tibial plateau which subsequently settled without surgical intervention.
On my review today he is mobile without aid having a range of motion in that knee from 0 to 115 ^o with reasonable quadriceps bulk and no areas of tenderness. From my point of view he clearly had a knee replacement as a consequence of service related problems and recovered reasonably well from that such that he could return to part time sedentary work. He continues to be fit for that work and requires no other specific treatment for his left knee. I understand he has been on a part disability pension continuing to work in a sedentary occupation and from the knee point of view should be able to continue with that work practice. I understand he has other service related conditions which he tells me have led him not being able to work in any capacity. I presume these other service related conditions are contributing to his current inability to participate in his previous part time occupation. I trust you take due consideration to his suitability for sedentary work with his knee disability not stopping him from doing that.”
The veteran further contends (AFS para 4.4) that his non-accepted condition of spondylolisthesis of L5-S1 has, during the assessment period, no effect on his ability to undertake remunerative employment. Reliance is placed on a report of 22 May 2017 by Dr Simon Gatehouse, Spinal Surgeon – Exhibit 1 T109 p. 577. Dr Gatehouse made the following observations:
“I saw Roger for review today. I had last seen Roger in 2014. Prior to this, he had undertaken surgery in the lumbar spine, with a lumbar fusion secondary to spondylosis and stenotic change.
Roger had had done well following this and has had a steady return to activity.
More recently, he has been required to cease his employment and this appears to be attributable to his post traumatic stress disorder. This was relayed to me today by Roger. He states his back is reasonably well managed at present. He has intermittent symptoms. He would consider, however, that his back presently is at a state that would enable him to perform administrative type duties.
This would be a reasonable conclusion given his appearances today and lack of significant ongoing pain issues.
I have not obtained any x-rays today. This is due to him symptomatically being sound. If, however, there is any further deterioration, then I will have some up to date imaging and I am happy to review Roger.
In conclusion, I am, therefore, happy for this letter to be used in support of Roger’s claim and if any formal report or otherwise is required then this may be requested.”
It will be noted that Dr Gatehouse gave an opinion based entirely on the self-reporting of the veteran and his observations were not supported by radiology or other objective evidence which would support the veteran’s self-reporting.
The Tribunal had the benefit of copious medical records in the form of summons records of the following medical centres which, collectively, comprise Exhibit 3:
(a)Millmerran Medical Centre;
(b)Main Street Medical Centre;
(c)Condamine Medical Centre;
(d)Scarness Medical Centre;
(e)Murphy Street Medical Centre; and
(f)Hyperdome Medical Centre.
Exhibit 3 also contains the veteran’s medical records from the Princess Alexandra Hospital.
Mr Crethary cross-examined the veteran at length about various medical interventions during the assessment period. It was contended by the Commission (RS para 29 p. 9) that the veteran was unconvincing in his attempts, during the cross-examination, to play down the impact of what are contended to be significant non-accepted medical conditions.
Further, it was contended by the Commission (RS para 29 p. 9) that it is implausible that the veteran could not recall certain attendances at hospitals and his treating doctors and surgeons over the past three years in circumstances where he was able to provide the Tribunal with lengthy and precise details of his military service of more than 30 years ago.
Unfortunately, the Tribunal has to place on record that it found the oral evidence of the veteran to be less than ideal. Certainly it was obvious that the veteran is a sick man and in pain. Further, the very nature of his conditions would render him at a disadvantage when recalling events or generally giving lucid explanations. No doubt the pressure of appearing before the Tribunal and then being subject to cross-examination would have also placed a great strain on him and further negatively impacted his cognitive processes. However, even taking all these considerations into account, and, further, giving the veteran the benefit of the doubt wherever possible, it was obvious to the Tribunal that the veteran had selective memory lapses, was less than candid and was quick to downplay matters that were not in his favour.

It is appropriate to deal with each of the non-accepted conditions that the veteran was said by the Commission to be afflicted with during the assessment period.
First, Mr Crethary drew the veteran’s attention to a Work Ability Report which completed by his treating General Practitioner, Dr Chi-Tsung Yang and which is dated 28 April 2016 – Tr. 10 June 2019 pp. 20 – 22.
In response to a Question which required Dr Chan to list the medical conditions the veteran suffers from, he listed under “Major Diagnosis/es and Duration”: PTSD for years, alcohol dependence for years and major depression for years – Exhibit 1 T90 p. 464. Under “Minor diagnosis/es and duration” he listed: spinal fusion in 2009, chronic lumbar back pain and subclinical hyperthyroidism – Exhibit 1 T90 p. 464.
After drawing this document to the veteran’s attention, the following exchange between Mr Crethary and the veteran occurred – Tr. 10 June 2019 p. 21:
“So this document was prepared after the assessment, so we’re in the assessment period now, so we’ve got Dr Yang here saying that there are those conditions, the major diagnosis but there’s also these other three conditions that we want to talk about, so he is, in effect, my reading of that document is that he is saying ‘You are still suffering from the effects of the spinal fusion in 2009, chronic lumbar back pain and subclinical hypothyroidism.’ Do you agree with that?---No I don’t. I would contend that that’s – he has just looked at my medical record and said, ‘These are there’ so – because he’s put them as minor, so he’s just covering his own backside saying these conditions are there on my records so they can’t be ignored.”
Dr Yang also noted that the veteran suffered from atrial fibrillation in the past – Exhibit 1 T90 p. 465. This condition was put to the veteran by Mr Crethary and it evinced the following response – Tr. 10 June 2019 p. 22:
“No, no it was a one-off event. It was something – I’m not 100 per cent on what it was but it was something happened when I was having a procedure done and yes, it’s noted on my documents from there.”
The Tribunal accepts the explanation given by the veteran concerning the atrial fibrillation and notes that in the medical records of the Scarness Medical Centre (Exhibit 3 p. 143) of 23 July 2018 atrial fibrillation is recorded as an inactive condition. Accordingly, the Tribunal proceeds on the basis that this condition did not negatively impact on the veteran during the assessment period.
In contradistinction, the Tribunal does not accept the veteran’s explanation that Dr Yang listed three non-accepted conditions as impacting upon him as being a case of “covering his own backside”. Unfortunately, Dr Yang was not called to give evidence, and in these circumstances the Tribunal proceeds on the assumption that during the assessment period the veteran was suffering from the three specified conditions outlined above.
Second, Mr Crethary drew the veteran’s attention to a referral letter dated 7 April 2016 from Dr Prasanth Chandy, General Practitioner, to the Emergency Department of the Princess Alexandra Hospital. Dr Chandy gave the following referral – Exhibit 3 p. 25:
“With reference to my patient Mr Roger Weeks, I would like to refer them to you for assessment and advice on management. Roger has been having pain in his proximal tibia 2 days tender to touch, had a large cyst (golf ball size) which was filled with bone grafts and coral.no trauma.valgus varus negative drawer negative pivot negative, CT shows Just beneath the medial tibial tray, there is an irregular cystic structure seen within the medial tibial condyle which has some peripheral bone graft within it. It would be in keeping with the previous surgery. Comparison with any previous imaging would be helpful to assess if this is stable and longstanding. Adjacent cortical thickening and irregularity seen which may be postsurgical and needs to be confirmed with previous imaging. Some cortical thickening is seen along the anterior tibia which also may be related to previous surgery. No evidence of any acute periprosthetic fracture. Joint space is preserved. Subcutaneous oedema seen along the anterior aspect of the proximal tibia. No other significant abnormality on this examination.”
(bold in the original)
When this referral was drawn to the veteran’s attention by Mr Crethary his immediate response was as follows – Tr. 10 June 2019 p. 22:
“I can’t recall what that was about. Dr Chandy was not my regular doctor, I’ve seen him, something has obviously happened when I was in Brisbane visiting.”
Mr Crethary then drew the veteran’s attention to a report of Dr Lisa Major Orthopaedic Principal House Officer of the Princess Alexandra Hospital which was electronically signed on 8 April 2016 - Exhibit 3 p. 39. The report details the results of X-ray and CT scans of the veteran’s left knee which disclosed evidence of a medial tibial cyst and with the pain he was experienced representing “irritation pes anserine bursa”.
When asked by Mr Crethary if he remembered this examination, the veteran responded – Tr. 10 June 2019 pp. 22 - 23:
“I don’t recall that in that time frame…reference to a cyst doesn’t sound right. The only cyst I can recall was back in ’99 I think it was, I had a cyst and about that size – a golf ball size. I had a cyst removed back then.”
As the veteran’s responses were implausible, I then sought some clarification from him – Tr. 10 June 2019 p. 23:
“DEPUTY PRESIDENT: You don’t remember any of this, Mr Weeks?---Not enough to recall what is going on, no. I do know that the only cyst - - -
It’s only three years ago though?---Sorry?
This is only three years ago?---But this is confusing because it talks about having a cyst which I didn’t have, the only - - -.”
The Tribunal was presented with extensive evidence of the veteran’s treatment at the Princess Alexandra Hospital in April 2016 for the severe problems he was experiencing with his left knee. The Tribunal accepts the accuracy of the reports that form part of the summonsed records in Exhibit 3. The Tribunal also notes that the veteran’s attempts to either deny or deflect what the clear medical records disclose did not help either his contentions or his credibility as a witness.
Third, the medical records of the Scarness Medical Centre, Hervey Bay, disclose that as at 23 July 2018, the “active” medical conditions of the veteran were recorded as – Exhibit 3 p. 143:
“Active
Date               Condition – Comment
Alcohol use disorder
20 standard drinks per day
Depression – Major
PTSD (post-traumatic stress disorder)
Dr Anthony Balkin 3/12 review
2009               Spinal Function – Lumbar L4/L5/S1
Spondylosis – Lumbosacral
2016               subclinical hypothyroidism
(+) abti-thyroid peroxidase Ab (+) 1200 (<60)”.
When Mr Crethary drew this material to the attention of the veteran (Tr. 10 June 2019 p. 24), he denied that any of the conditions outlined above impacted on him. The veteran stated that he did not know what hypothyroidism was and that the spinal fusion operation he underwent had no ongoing impact on his work capacity.
It should also be noted that the veteran’s “Patient Health Summary” of the Bayswater Family Practice, Urraween, of 18 March 2016 also notes under the heading “Active Past History” that he was then suffering from depression, osteoarthritis of the right hip, atrial fibrillation, spondylosis lumbosacral, spondylolisthesis grade 1 L5-S1 and spinal fusion L4/L5/S1 – Exhibit 3 p. 169.
Again, the veteran’s blanket rejection of the proposition that any of these non-accepted conditions may have adversely impacted on his state of health, and consequent work capacity, is implausible.
Fourth, the medical records contain correspondence between a Ms Antonella Frainer, Claims and Assistance Officer of InsureandGo Australia, and Dr Yang of the Scarness Medical Centre dated 8 July 2016 regarding a claim by the veteran wherein it is stated – Exhibit 3 p. 167:
“Mr Weeks had cancelled his trip due to pain in left leg, stress fracture upper medial tibia.”
When making this claim the veteran signed a “Medical Release Form” which contained the following admonition – Exhibit 3 p. 168:
“I confirm that in the event of a claim related to a pre-existing medical condition, which has not been declared for and accepted in writing that I shall be liable for any costs paid by, or agreed to by, INSUREANDGO AUSTRALIA or their agents.”
In response to questions asked by Mr Crethary, the veteran stated that he recalled having a minor fall and that he had suffered some minor fractures. The following exchange then occurred – Tr. 10 June 2019 p. 25:
“Did you know what the – can you describe for the tribunal the impact of those stress fractures on your leg?---It just meant that for a couple of weeks I had to rest my leg and I think I was on crutches…
And do you believe that that – those stress fractures – prevented you from undertaking any work?---No.
And do they currently prevent you from undertaking work?---No, they healed up very quickly.”
The Tribunal accepts the testimony of the veteran that the impact of the fall and consequent stress fractures was transitory and had no significant impact on his work capacity during the assessment period.
Fifth, the Commission (RS para 28(g) p. 9) drew the Tribunal’s attention to correspondence from Dr Gatehouse to Dr Yang of 14 December 2017. Earlier, reference was made to a letter of Dr Gatehouse of 22 May 2017 which, it would appear, was written in support of the veteran’s pension claim – Exhibit 1 T109 p. 577.
In his letter of 14 December 2017, Dr Gatehouse made the following observations – Exhibit 3 p. 150:
“I saw Roger back for review today. He has been having some issues in the back itself. He had some intermittent leg symptoms. These had come on about a month ago. He had tightness about that area. For this reason he arranged further follow up with me today.
Roger has had x-rays performed and these demonstrate the fusion between L4 and S1 to remain sound. This looks to have consolidated and I am not able to see any areas of failure.
The adjacent segment looks reasonably well preserved within the limits of x-ray imaging. There is however, likely some facet changes about the level of L3/4.
Roger is also having an MRI scan but unfortunately we hadn’t had this done prior to his appointment. I will review this when at hand.
Given however, that his leg symptoms have settled and he has a persistence of back pain, then my likely recommendation will be selective facet blocks at L3/4. Prior to doing this however, I will await the MRI scan result.
Thanks again and I will see Roger back after he has had the injections done.”
In the summonsed records of the Scarness Medical Centre are short progress notes prepared by the veteran’s General Practitioner, Dr Yang. The notes of 17 November 2016, 18 April, 19, 23 May and 14 November 2017 and 28 February, 6 March 2018 all include a reference to surgery consultation – Exhibit 3 pp. 143 – 146. In particular, the notes of 28 February 2018 refer to – Exhibit 3 p. 144:
“ongoing DR Gatehouse review
for lumbar cortsione injection pending…”
The veteran was asked a series of questions by Mr Crethary regarding the letter of Dr Gatehouse and the progress notes – Tr. 10 June 2019 pp. 25 – 26:
“So he’s identified a reason for the back problem that you are suffering, the back pain that you are experiencing and he’s recommended some selective facet blocks at 3-4?---Yes.
Have you had that procedure?---Yes, that’s – if it’s what I’m thinking it is, that’s where they inject a local anaesthetic into the spine.
A cortisone injection?---Right, yes.
So that ends up happening later in 2018?---Right.
All right, so your remember Dr Gatehouse talking to you about that?---Yes.
All right, now would you agree with me that that is something that is not routine, it’s usually reserved for people suffering from quite significant back problems?---He – I believe that was an investigative thing to – to assess how L3-L4 was going because they say there’s a natural progression if you have a fusion done at the lower levels then it progresses up the spine from there…
All right, so you’ve got pain travelling down your leg as a consequence of that?---It wasn’t so much pain as a tingling sensation…
All right. So if you go to page 144 then, so this is Dr Yang’s notes, and this is him reporting. At the top you will see an entry for Wednesday February 28, it looks like that was contemplated, that lumbar cortisone injection?---Right.
Do you know when you had that injection?---No. It would’ve been somewhere around that time.
Do you recall whether you got any relief as a result of that?---Limited.
What do you say to the proposition that you were suffering from some back pain also leading to referred leg pain which of itself contributed to you not being able to work?---No, I – yes, I had some pain but it wouldn’t have stopped – well it didn’t stop me from sitting at a desk.”
It is very clear from the medical evidence before the Tribunal that the veteran, during the assessment period, was and is suffering from a range of ailments that, cumulatively, have had a very deleterious impact on his state of health, his capacity to work and his lifestyle. The evidence discloses that his service-related conditions play a major role in this state of affairs. In that regard, the Tribunal notes the diagnosis of Dr Balkin of 2 June 2016 that his accepted conditions of PTSD, major depressive disorder and alcohol abuse disorder “of themselves alone are so severe as to render him totally and permanently incapacitated for any kind of remunerative work” – Exhibit 3 p. 165.
The diagnosis of Dr Balkin, however, is not determinative of the issue before the Tribunal. With due respect to Dr Balkin, the “alone” test in the first limb of s 24(1)(c) is specific and has been settled over the years after numerous Federal Court decisions. The formulation expressed by Dr Balkin fails to take into account the other non-psychological ailments that the veteran suffers from, and involves questions of medical analysis and law that fall outside Dr Balkin’s area of specialty.
The medical records disclose that throughout the assessment period the veteran was afflicted with numerous ailments requiring medical interventions ranging from visits to his general practitioner to surgical interventions. The focus of many of those interventions and check-ups were non-accepted diseases and injuries. The veteran attempted to deflect Mr Crethary’s questions about these non-service related ailments by either downplaying them or testifying that he had little or no recollection of them. As previously stated, the Tribunal observed the veteran when he was being questioned by Mr Crethary and formed the view that he was, at times, evasive and some of his answers were unconvincing.
The Full Court in Richmond (35/[58]) held that if non service-caused factors contribute to the preventative effect, even if they are only of secondary importance and not of themselves sufficient to prevent the veteran from engaging in remunerative work, their presence will deny the veteran eligibility for the special rate of pension. The Tribunal is reasonably satisfied, based on the medical evidence set out above, that the veteran’s non service-related conditions had throughout the assessment period a significant impact on the veteran’s capacity to work. In these circumstances the Tribunal is reasonably satisfied that the veteran has not satisfied the “alone” test in first limb of s 24(1)(c).
This finding does not exhaust the inquiry required of the Tribunal. The otherwise harsh operation of the “alone” test is somewhat ameliorated by the operation s 24(2)(b) which provides that where a veteran, who is under 65 years of age, and has not been engaged in remunerative work satisfies the Commission that:
(a)he or she has been genuinely seeking to engage in such work; and
(b)would, but for a service-caused incapacity, be continuing to engage in remunerative work; and
(c)the service-caused incapacity is the substantial cause of the veteran’s inability to obtain such work;
(d)the veteran is deemed to have been prevented from continuing to undertake remunerative work by reason of the service caused incapacity.
The proper construction of s 24(2)(b) was provided by the Full Federal Court in Smith. For the purpose of this matter, reference can be made to the judgment of Rares J. His Honour provided the following guidance to the application of s 24(2)(b) (458 – 459):
“21. Section 24(2)(b) is facultative. It can apply both to a veteran who has never been engaged in remunerative work and to one who had, but for any reason, subsequently ceased work, and later sought to obtain remunerative work. Section 24(2)(b) does not connect the loss of income to the veteran’s inability to continue remunerative work under s 24(1)(c). Yet, one way that a veteran could demonstrate that he or she was unable to engage in remunerative work, after a period in which the veteran had not been engaged in such work, would be to show that he or she had been seeking to do so and could not obtain such work (see s 28). A sympathetic or loyal employer who ceased, for any reason, to employ a veteran suffering a war-caused injury, may have been the only person willing to employ someone with such an injury to perform that kind of remunerative work. For example, the employer may no longer be able to afford the cost of employing the veteran or may have ceased business. Once that source of employment has ceased to be available, the veteran may be able to satisfy s 24(1)(c) merely because no other person would engage him or her in remunerative work by reason only of the incapacity from the war-caused injury. It may not be necessary to show that the veteran has sought such work because in the particular circumstances of the now former employer make it clear that that person had treated the veteran in an exceptional or unique way. But, the veteran could also seek to bring himself or herself within s 24(2)(b) by demonstrating attempts to seek remunerative work.
22. The veteran can make an application under s 15 if he or she has already tried to seek and failed to obtain remunerative work within the meaning of s 24(2)…
23. The veteran must sincerely or honestly do something to attempt or try to engage in remunerative work: Leane v Repatriation Commission (2004) 81 ALD 625 at [28] per Emmett, Conti and Selway JJ. Their Honours held that the word ‘genuinely’ in s 24(2)(b) referred to the subjective intention of the veteran. They said that the way in which a veteran might establish his or her case to satisfy the requirement in s 24(2)(b), that ‘he or she has been genuinely seeking to engage in remunerative work’, was a practical issue. Their Honours held that it was not essential that there be objective signs of active pursuit of remunerative work, although, in the ordinary course, it may be difficult for the veteran to establish the requirement in the absence of such objective material. They gave an example of a veteran who honestly wished to engage in remunerative work, had made a reasonable assessment of his or her disabilities, had reasonably concluded that he or she could only be employed in a particular type of work, was checking employment advertisements on the look-out for such work, but had not yet identified any such employment prospects (at [29]).”
It will be noted that s 24(2)(b) only applies to a veteran who has not attained the age of 65 years. However, as s 24(2A) highlights, this only applies to a veteran who had turned 65 before the claim or application is made. In this matter, although the veteran has now attained the age of 65 years, he was not 65 years of age when he first made his claim. Consequently, s 24(2)(b) is potentially applicable to him.
It is clear that s 24(2)(b) has no operation in this matter. The focus of this provision is a veteran who either has not been engaged in remunerative work or who, because of his or her service-related condition(s), cannot obtain remunerative work. In either case, the emphasis is on a veteran genuinely seeking remunerative work, and the satisfaction of this test necessarily involves questions that focus on the particular circumstances of a veteran. In short, the focus of s 24(2)(b) is to ensure that an unemployed veteran who may have been out of the workforce for some period of time is not precluded from seeking the special rate of pension.

In this instance, the veteran was engaged in remunerative work until 2016. He voluntarily ceased engaging in such work on the advice of Dr Balkin and has not subsequent sought to obtain remunerative work. His conscious decision to not seek remunerative work persisted throughout the assessment period. In short, the basis for the operation of s 24(1)(c), namely the long/medium-term unemployment of a veteran, is absent in this matter.
Although the Tribunal is not satisfied that the veteran meets the “alone” test, in the event that the Tribunal is in error, consideration will be given to the second limb of s 24(1)(c).
Question 4 – suffering a loss of salary, wages or earnings
This Question focuses on the second limb of s 24(1)(c) and involves a consideration of whether the veteran, by reason of being prevented from continuing to undertake remunerative work, is suffering a loss of salary, wages or earnings on his own account that he would not be suffering if he were free of his incapacity. In short, the focus of the second limb is whether the veteran is suffering a resulting financial loss.
The Full Federal Court considered the equivalent provision to the second limb of s 24(1)(c) (s 24(2A)(e) in Counsel v Repatriation Commission (2002) 122 FCR 476 (Counsel)). In that case, the veteran carried on a farming business in partnership with his wife, but was forced to sell the farm because of his war-caused conditions. The veteran’s claim for the disability pension at the special rate was rejected by the Tribunal, because in all but one year the farming business had shown a net loss after expenses had been deducted from the partnership income. At first instance, the Federal Court upheld the Tribunal.
In setting aside this first instance Federal Court decision, the Full Court held that s 24(2A)(e) and, by analogy, s 24(1)(c), looks to the loss of income, revenue or cash flow stream available to a veteran, and that “earnings” means gross earnings before deducting the cost of goods sold.
Second, where a member of a partnership through their mental or physical effort contributes to the generation of partnership income, such income is to be regarded as “earnings on his or her own account” within the meaning of (in this matter) s 24(1)(c).
Reference can be made to the reasons given by Gray J as to the meaning of “earnings” – at 482/[18]-[19]:
“In construing the word ‘earnings’, the statutory context is the most important factor. The VE Act is beneficial legislation, establishing a system whereby those who rendered war service have their financial and other needs look after, to the extent to which hose needs are not met because of war-caused disabilities. It is to be expected that those suffering such disabilities will find that their earning capacity diminishes. The scheme of the VE Act is to compensate them, depending upon the degree of their disabilities and the diminution in their earning capacity. The amount of the compensation is not be calculated by reference to the amount of any actual loss. Rather, the various rates of pension are fixed. While these depend, to a degree, on the extent of the incapacity of the veteran to earn, there is no provision linking the assessment of entitlement to an intermediate rate or a special rate by reference to the actual amount of earnings lost. For the special rate to be applicable, as s 24(2A) shows, it is sufficient for there to be ‘a loss of salary or wages, or of earnings on his or her own account’ that the veteran would not be suffering in the absence of the incapacity.
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 expression ‘salary or wages’ encompasses a relatively small part of that range. A loss of salary or wages is a fact that can be ascertained with relative ease. This suggests that no narrow meaning should be given to ‘earnings on his or her own account’, which must encompass the rest of the range. Authorities on other statutory provisions using similar words should be treated with care because the context may be different.”
His Honour then went to discuss the particular circumstances pertaining to a partnership – at 482-483/[20]-[21]:
“…There may be various reasons why accounts compiled after the end of a financial period may show that a partnership business that was receiving income during that period made a loss in that period. This does not detract from the fact that, during the period, each of the partners as a member of the partnership was entitled to income according to the terms of the partnership agreement. In the case of partner, such as the appellant, whose physical and mental labour produced or contributed to the generation of that income, it is appropriate to regard that income as ‘earnings on his or her own account’ within the meaning of s 24(2A)(e).
It follows that the Tribunal made an error of law in holding that he appellant had not suffered a loss of earnings on his own account because the partnership accounts showed a net loss in all but one year after the expenses had been deducted from the partnership income. The Tribunal had before it evidence of the gross earnings of the partnership in each year in which it traded. Assuming that it accepted the evidence, it should have held that the loss of that gross income was a loss of earnings on the appellant’s own account. It also follows that the learned primary judge erred in holding that the Tribunal had not made an error of law.”
It has long been accepted that the word “loss” in s 24(1)(c) should be given its ordinary meaning, in short a diminution in what such a veteran would otherwise be expected to earn if she or he was not incapacitated – Cavell and Repatriation Commission (1986) 10 ALN N233. The degree of such loss is a matter on which there are different interpretations given. In Smith, for example, Rares J referred to a loss in the nature of a reduction as opposed to a total or substantial loss ([24]). This however seems to be at odds with the approach of the Full Federal Court in Repatriation Commission v Butcher (2007) 94 ALD 364.
However, for the disposition of this matter it is not necessary to form a view about the preferable approach for the issue to be determined here is whether the evidence discloses that the veteran has suffered any loss within the meaning of s 24(1)(c).
The veteran submits (AFS paras 4.5, 4.3, 4.4, 4.5) is suffering a loss of income because of his service-related conditions:
“4.5 The applicant contends that from the date he resigned his directorship on ceasing work for Raw Trading Pty Ltd on 22 February 2016, it was unreasonable for him to seek other remunerative employment this was based on the opinions of Dr Anthony Balkin. ‘folio 482’.
4.3 The Applicants 2017/18 Tax Statement (Attachment A) shows income from his Military Superannuation as $22486.00 and his tax free Veterans’ Affairs Disability Pension as $24536.00. The Applicants 2015/16 Tax Statement showed similar incomes as well as a gross income from the holiday rental business of $14000.00.
4.4 The Applicants wife Mrs Angela Weeks’ Tax Statement for 2017/2018 (Attachment B) shows a gross income for Allowances earnings, tips, director’s fees etc of $15078.00 and income form Tax-free government pensions of $12013.00 as well as
4.5 The 2017/2018Taxation statement (Attachment C) for holiday rental business that the Applicant had to reign his interest and employment with, shows no gross rent and other leasing and hiring income.”
Attached to the Exhibit 4 are the veteran’s income tax returns for the 2012/2013, 2013/2014, 2014/2015, 2015/2016 and 2016/2017 tax years.
Under cross-examination, the veteran agreed that the income tax returns disclosed that his income in each of those years comprised his disability pension plus income derived from the rental properties – Tr. 10 June 2019 p. 28.
A perusal of the income tax returns discloses that the gross and net rental income in each of the tax years was as follows:

Gross Rent Net Rent Interest Deductions

2012-2013 $21,200 $4,555 $14,452

2013-2014 $20,250 $4,555 $11,793

2014-2015 $13,512 -$445 $12,031

2015-2016 $14,000 $108 $12,171

2016-2017 $12,000 -$1,532 $11,903

In each of these years, interest deductions comprised more than 50% of the gross rent.
It will be seen that immediately prior to the commencement of the assessment period, the veteran was either making a paper loss or an income of slightly over $100 per annum.
Attached to the AFS are copies of the veteran’s income tax return for 2017/2018 as well as that of his wife and Raw Trading Pty Ltd.
At the Hearing, the veteran testified that he was no longer receiving any income from Raw Trading Pty Ltd and his 2017/2018 discloses that he received no income from the rental business in that financial year.
The Commission made the following submissions (RS paras 39 – 44):
“39. Prior to the Hearing, the Applicant provided copies of his income tax returns for the financial years ended 30^th June 2013 through to 30^th June 2017. In cross-examination, the Applicant agreed that these returns follow the same pattern in that they document the Applicant’s income for each financial year to comprise of rental earnings and Disability Pension payments made by both the Respondent and Centrelink. (Transcript p. 28, lines 26-32)
40. The Applicant in his evidence confirmed that he and his wife owned rental properties. The Respondent notes the Applicant’s evidence regarding the structural arrangements he and his wife had in place relevant to their rental property business operations, including Raw Trading Pty Ltd, to maximise any available financial and tax advantage. (Transcript p. 29, lines 46-47)
41. The Applicant’s position would appear to be that his accepted disabilities alone forced him to resign from the business on 22 February 2016, thereby concluding his active involvement with the business. However, in complete contrast to this, the Applicant’s income tax returns for the financial years ended 30^th June 2016 and 2017 continued to show him receiving rental income.
42. The Respondent therefore submits that the ‘resignation’ was nothing more than a token position adopted by the Applicant, given that he continued to be an owner of the rental properties.
43. Further, it would seem that he and his wife continued to maintain the business and company structures which had been implemented in the previous years. This is evidenced by the income and tax return evidence which documents the Applicant’s rental revenue and associated deductions and expenses to be equally apportioned between himself and his wife both prior to and during the assessment period.
44. Subsequent to the Hearing, the Applicant provided his income tax return for the year ended 30^th June 2018, along with the return for his wife and for Raw Trading Pty Ltd. The Respondent notes that the Applicant has declared the information contained in the return for Raw Trading Pty Ltd as true and correct in his capacity as the Public Officer of the company. The Respondent submits that the absence of rental income distribution to the Applicant in the latest return is likely to be a result of a deliberate act designed to procure a financial and/or tax advantage to the Applicant and his wife and/or Raw Trading Pty Ltd.”
The Tribunal agrees, overall, with the submissions of the Commission.
The veteran testified that he and his wife owned the rental properties and that the loss generated on the rental properties was for an accounting purpose – Tr. 10 June 2019 p. 29.
The veteran also testified that, in effect, “the bank” owned the rental properties.
Two observations can be made. The first relates back to findings made by the three justices comprising the Full Federal Court in Counsel. His Honour Justice Goldberg made the following observation – at 492/[79]:
“The fact that at the end of the relevant accounting period the partnership might be showing a loss should not obscure the fact that during that year the appellant had access to the cashflow or earnings of the partnership which had been derived from his personal exertion. When the appellant was ultimately prevented by incapacity from continuing to undertake the work which he carried out in the course of the partnership, he thereby suffered a loss of earnings on his own account in the sense he was no longer able to have access to, or take advantage of, the cashflow or earnings of the partnership business. It is not to the point that at the end of a relevant accounting period the partnership was shown in its accounts to have carried on business at a loss.”
Clearly, then, the fact that a partnership is shown to have made a “paper” or “accounting” loss, does not mean that a partner has made no earnings or been placed at a financial disadvantage.
Second, as previously mentioned, the bulk of the gross rent (income) generated from the rental business was used to pay interest. Presumably, this was the interest payments on the property or properties owed to the lending institution. If that is the case, then the veteran was, in fact, using the income to pay for his and his wife’s mortgage obligations. Again, if that be the case, the veteran was obtaining a substantial and tangible benefit from the rental income to minimise his debt obligations and, further, to gain more equity (with his wife) in the rental property or properties they owned. It will be observed that despite the fluctuation in the gross rent in the 2012 – 2017 period, interest deductions remained fairly stable.
It is clear that the veteran and his wife have structured their business to ensure that they obtain maximum financial advantage and legitimately minimise their taxation obligations. It is also obvious that even though the veteran resigned from the business on 22 February 2016, this had no appreciable impact on his financial situation. As a partner he was still receiving the requisite amount of gross rental money that the properties were generating, and he was still able to make considerable interest payments from the gross rental moneys he was paid. In short, the veteran’s resignation does not appear to have resulted in him suffering a loss of income. Whilst the rental income generated from the partnership was less after 2014 than it was before that time, there is no indication of any sizeable change in the rental business around the time of the veteran’s resignation.
As the veteran testified at the Hearing, this is not the case for the 2017/2018 tax year. From the income tax returns provided to the Tribunal the veteran received no rental income from the partnership business that year. The veteran’s case is that he is now receiving no money from the rental business and is suffering a loss of earnings. Further, the causal link between his loss of earnings and his accepted service conditions is that he can no longer assist his wife in the running of the business, and this has resulted in extra costs which have necessarily resulted in the business being placed at financial and operational disadvantage.
Whilst the Tribunal does not discount the fact that the veteran’s inability to assist his wife in the running of the rental business has resulted in extra strains and financial pressures, no logical or plausible reason has been advanced as to why the veteran’s financial situation suddenly changed in the 2017/2108 tax year.
Unfortunately, the Tribunal must agree with the Commission’s submission that the absence of any rental income for the 2017/2018 tax year credited to the veteran was a conscious decision designed to achieve a financial advantage.
The veteran, though a sick man who is afflicted by multiple ailments, both physical and psychological, presents as an intelligent individual who has many years of experience in managing businesses, mastering complex IT issues and doing the bookkeeping for the rental business. In short, the veteran has a keen appreciation of the nuances of running a business, including the financial and tax requirements.
The veteran’s testimony on the family partnership was marked by a degree of evasion and some of his answers suggested he was downplaying his knowledge of the business.
The Tribunal has, therefore, formed the view that the 2017/2018 income tax return which disclosed the veteran was receiving no rental income distribution, was deliberately designed to secure an advantage. It is not necessary for the Tribunal to go further and engage in speculation about what that advantage was. The Tribunal is, consequently, reasonably satisfied that the veteran has not suffered a loss of earnings on his own account.
In reaching this conclusion, the Tribunal does not doubt the sincerity of the veteran’s decision to resign from performing active duties for the partnership. The Tribunal does not agree with the Commission’s submission that this was a “token position”, but instead reflected his state of health at that time. However, whilst not casting doubt on the motives underpinning the veteran’s decision to cease assisting his wife in the running of the partnership, the Tribunal is reasonably satisfied, based on the material presented, that this action did not result in a loss of earnings for the veteran.
The Tribunal finds that the veteran has not satisfied the second limb of s 24(1)(c).
DECISION
The decision under review is affirmed.

I certify that the preceding 181 (one hundred and eighty -one) paragraphs are a true copy of the reasons for the decision herein of Deputy President J Sosso

....................................[SGD]....................................
Associate
Dated: 31 October 2019

Date of Hearing: 10 June 2019

Date final submissions received: 1 October 2019

Advocate for the Applicant: Mr Gordon Blake
Armed Services Assistance Centre Inc.

Solicitors for the Respondent: Mr Peter Crethary
Moray & Agnew Lawyers

Gross Rent	Net Rent	Interest Deductions
2012-2013	$21,200	$4,555	$14,452
2013-2014	$20,250	$4,555	$11,793
2014-2015	$13,512	-$445	$12,031
2015-2016	$14,000	$108	$12,171
2016-2017	$12,000	-$1,532	$11,903

Date of Hearing:	10 June 2019
Date final submissions received:	1 October 2019
Advocate for the Applicant:	Mr Gordon Blake Armed Services Assistance Centre Inc.
Solicitors for the Respondent:	Mr Peter Crethary Moray & Agnew Lawyers