Ashcroft & Ashcroft (SSAT Appeal)
[2008] FMCAfam 1250
•17 December 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ASHCROFT & ASHCROFT (SSAT APPEAL) | [2008] FMCAfam 1250 |
| CHILD SUPPORT – Appeal from decision of SSAT – treatment of business expenses of the payer. |
| Child Support (Assessment) Act 1989 Child Support (Registration and Collection) Act 1988 |
| LDME & JMA (SSAT Appeal) [2007] FMCAfam712 Tasman & Tisdall [2008] FMCAfam126 |
| Applicant: | MR ASHCROFT |
| Respondent: | MS ASHCROFT |
| File Number: | BRC 5200 of 2008 |
| Judgment of: | Slack FM |
| Hearing date: | 10 November 2008 |
| Date of Last Submission: | 10 November 2008 |
| Delivered at: | Brisbane |
| Delivered on: | 17 December 2008 |
REPRESENTATION
The Applicant appeared on his own behalf.
The Respondent did not appear.
ORDERS
That the Appeal from the decision of the Social Security Appeals Tribunal dated 29 July 2008 be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Ashcroft & Ashcroft is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 5200 of 2008
| MR ASHCROFT |
Applicant
And
| MS ASHCROFT |
Respondent
REASONS FOR JUDGMENT
In this appeal from the decision of the Social Security Appeals Tribunal (hereafter “the SSAT”) dated 11 August 2008, the applicant (conducting the appeal in person) relies on three grounds of appeal in the Notice of Appeal, namely:
1.That the SSAT erred as a matter of law by treating [K] Pty Ltd “Reduction of Loan Account” as Income Benefit.
2.That the SSAT erred as a matter of law by adding back “Depreciation” in [K] Pty Ltd by failing to take into account the actual “Capital Costs of Finance”.
3.That the SSAT erred as a matter of law in the matter of omitting available annual earnings from Ms Ashcroft’s Investment Property.
Background
The respondent does not appear on the appeal.
The following background facts from the reasons of the SSAT are not in dispute:
1.Mr Ashcroft and Mr Ashcroft are the parents of [X] born in 1997, [Y] born in 1999 and [Z] born in 2003. The Child Support Agency (“CSA”) currently records the children as being in the shared care of the parents.
2.The administrative assessments of child support for the period from 23 August 2007 to 22 November 2008 was based on a child support income for Mr Ashcroft of $6,500 and for Mr Ashcroft of $25,294. As a result Mr Ashcroft had no liability for the payment of child support.
3.On 29 October 2007, the Child Support Registrar initiated a departure application under Part 6A of the Child Support (Assessment) Act 1989 (“the Act”) because it considered that the financial circumstances of the parents were not reflected in their child support income amounts. A senior case officer allowed the application and fixed the child support assessment for the period from 23 August 2007 to 31 October 2008 to be based on a child support income amount for Mr Ashcroft of $103,600. This was calculated as being $41,600 annually from [A] Pty Ltd; $58,500 annually from the [I] Store at [M]; and a director’s salary from “[K] Pty Ltd” of $3,500. The assessment fixed Mr Ashcroft’s child support income amount at $25,294 annually, as used in the administrative assessment.
4.Mr Ashcroft objected to that decision on 11 January 2008. On 10 March 2008, an objections officer disallowed the objection.
Mr Ashcroft appealed to the Tribunal on 2 April 2008 and the matter was heard in Brisbane on 23 June 2008.
The decision of the Tribunal made on 29 July 2008 was to set aside the decision of the objections officer and to substitute a decision:
For the period 29 October 2007 to 30 June 2009 Mr Ashcroft and Ms Ashcroft be assessed for the payment of child support based on:
·
an annual child support income amount of $55,000 for
Mr Ashcroft; and
·
an annual child support income amount in accordance with the formula assessment of child support for
Ms Ashcroft from 29 October 2007 to 30 September 2008, and $30,000 from 1 October 2008 to 30 June 2009.
The applicant, Mr Ashcroft, appeals to this Court from the decision of the SSAT.
His appeal is largely based upon the findings made by the SSAT about his financial position.
It is not in dispute that:
Mr Ashcroft operates a [omitted] business. Largely, Mr Ashcroft is engaged by his parents. They own a shopping centre in which they conduct a variety of businesses at [M] including a [businesses omitted] as well as other rented shops, through a company [A] Pty Ltd which engages Mr Ashcroft through his company [K] Pty Ltd.
Mr Ashcroft receives $800 per week from [A] Pty Ltd. His duties include unloading trucks at the [I] store using his forklift, as well as [omitted] work. In addition, Mr Ashcroft performed some additional work for his parents in June 2007 where he was paid wages for two weeks, of $2,250. That is not expected to be recurring. He also does some other additional [omitted] activities for third parties from which he derives some income.
Mr Ashcroft is the sole director and shareholder of [K] Pty Ltd. The profit and loss statement for the company for the period ended 11 June 2008 discloses that the business had a net profit of $3,698, but had accumulated losses from previous years resulting in an ultimate net loss.
The applicant’s arguments
The applicant does not challenge the finding made by the SSAT that there were special circumstances of the case that resulted in an unjust and unequitable determination of the level of child support because of the income earning capacity, property and financial resources of both parents (see paragraph 42 of the Reasons for Decision).
The applicant contends that, in summary and in effect, the Tribunal erred in finding that Mr Ashcroft’s income should be taken to be $55,000 annually.
How the Tribunal came to fix that amount is discussed in the Reasons for Decision from paragraph 24 to 35.
Mr Ashcroft argues that in coming to that conclusion the Tribunal:
a)inappropriately and wrongly took into account some amounts as benefits from the business; and
b)failed to take into account other expenses incurred by him in earning that income in particular the cost of replacing his equipment;
c)wrongly took into account the fact that on the financial records produced by him that the loan account was reduced by $28,309 over the relevant period.
He also contends that, as a result, the Tribunal erred in law.
Principles
The principles relating to “appeals” from decisions of the SSAT have been concisely stated in the decision of FM Halligan LDME & JMA (SSAT Appeal) [2007] FMCAfam 712, paras 17 to 33 of the Reasons. On the question of discerning an error of law in the Reasons of the SSAT, FM Halligan said (and I adopt):
It is well settled then that when reviewing an administrative decision for error, a Court should not be ‘concerned with looseness in language nor with unhappy phrasing’ and, the reasons for the decision under review are not to be construed minutely and finally with a eye keenly attuned to the perception of error” (Collector of Customs v Pozzolanic Enterprises Pty Ltd, above, at 287, cited with approval in Minister for Immigration and Multicultural Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272 per Brennan CJ, Toohey, McHugh and Gummow JJ, and see the comments of Kirby J to similar effect at 291).
The SSAT is an administrative tribunal, not a Court of law, and is bound to pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick (s.88, Registration Act, and compare s.141, Social Security (Administration) Act 1999). It is not afforded the luxury of lengthy deliberation on the reasons for its decisions, but must give the parties written notice of its decision on the review and written or oral reasons for that decision within 14 days of making the decision (s.103X, Registration Act). The function of the SSAT is not to deliver judgments of jurisprudential excellence when delivering its reasons. In my view, therefore, the above authorities apply to a s.110B appeal, and the court reviewing the reasons for decision of the SSAT in such an appeal to discern legal error should not adopt an overly pedantic approach.
Powers of Court in appeals
I also agree with the principles enunciated by Halligan FM in relation to the power of Courts concerning appeals of this type:
The Court “must” hear and determine an appeal from the SSAT, and “may” make such order as it thinks appropriate by reason of its decision (s.110F(1), Registration Act). The orders a Court may make on a s.110B appeal include an order affirming or setting aside the decision of the SSAT, or an order remitting the case to be heard and decided again by the SSAT, either with or without the hearing of further evidence, in accordance with the directions of the Court (s.110F(2)).
Three points may be made about the Court’s powers in a s.110B appeal.
First, the use of the word “may” clearly signifies that the power is discretionary. The fact an error of law by the SSAT is found does not inevitably lead to the decision being set aside. For example, if it is clear there would be no purpose served by having the case heard again, the Court may, in the exercise of its discretion, decline to remit the matter to be heard and determined again, and affirm the decision under appeal (see Clements v Independent Indigenous Advisory Committee, above, at [41]).
Second, the power to make such order as the Court thinks fit is qualified by the words “by reason of its decision”. The “decision” in this context is the decision on the hearing and determination of the appeal (s.110F(1)), the appeal being “on a question of law” (s.110B). Thus, the orders made must flow from a finding in favour of the Applicant on an identified question or questions of law.
Third, the particular power under s.110F(2) to make the orders specified in that subsection does not limit the general power under s.110F(1) to make such order as the Court thinks appropriate by reason of its decision on the appeal.
In Tasman & Tisdall [2008] FMCAfam126 FM Brown said (at paragraph 44):
An Administrative Tribunal exceeds its powers and thus commits jurisdictional error, which is correctable on appeal in respect to the question of law, if it:
(i)fails to construe properly the legislative provisions applicable;
(ii)identifies the wrong issues or asks itself the wrong questions;
(iii) ignores relevant material or relies on irrelevant material;
(iv) fails to accord procedural fairness to the party before it;
(v)makes an erroneous finding of such a magnitude that it goes to the very jurisdiction which it purports to exercise rendering its decision perverse or unreasonable or otherwise offending logic.
Decision – Discussion and conclusions
It does not appear that the applicant challenges the finding to the conclusion that a ground for departure set out in sub-paragraph 117(2)(a)(i) of the Assessment Act was established.
He does challenge the finding that resulted in the conclusion that he had an income for the purposes of assessment of his child support of $55,000.
After having concluded that a ground for departure existed, it was then necessary for the Tribunal to consider that it would be:
Just and equitable as regards to the child, the carer entitled to child support and the liable parent and for that purpose necessary to consider the matters contained in section 117(4) of the Assessment Act.
Those considerations include:
(d)the income, property and financial resources of each parent who is a party to the proceedings; and
(e)the commitments of each parent who is a party to the proceedings that are necessary to enable the parent to support:
(i) himself or herself; or
(ii)any other child or another person that the person has a duty to maintain.
In the course of this matter, the applicant did not dispute that he predominantly derives his income via his own company and his company contracts to his parents’ company for the undertaking of work in the operation of their business.
On the evidence available to the Tribunal, it appears:
Mr Ashcroft and his parents assist each other financially when required. For example, Mr Ashcroft has assisted his parents by withdrawing funds from his own account to stock their ATM machine on a Sunday, and on another occasion, transferred funds back to [A] Pty Ltd because it was over the overdraft limit. Similarly, his parents appear to have provided Mr Ashcroft with an excavator that he uses in the business. They have also, through [A] Pty Ltd, transferred amounts in excess of the interest repayable in respect of the loan to assist in the further loan application by Mr Ashcroft for the purposes of the property settlement.
During the course of these proceedings Mr Ashcroft purported to rely upon a profit and loss statement from his company that was different from the profit and loss statement that he placed before the Tribunal. In particular, the new statement addresses the finding made by the Tribunal that there had been a reduction in his loan account of $28,309.
In essence the applicant applies his labour during normal business hours in the conduct of his parents’ various businesses between Tuesday and Saturday. For that work, according to him, his company receives a contract income of $800 per week. For that contract income his company supplies all of the plant and equipment necessary to carry out the work.
The result is that, after deducting the costs of operating the business, the applicant receives little or no income.
In other words and according to the accounts of the applicant’s company, the applicant applies his labour between Tuesday and Saturday in each week in the operation of his parents’ business and receives no significant net return for his labour.
Both the CSA and the SSAT were entitled to be concerned about the true nature about the applicant’s financial circumstances.
The principle object of the Assessment Act is to ensure that children receive a proper level of support from their parents. Although the application of the Assessment Act creates monetary obligations which will likely be significant to the payer, nevertheless, the essential intention of the Act is to ensure that a child receives a proper level of child support and the contributions of that support between the parents is determined according to their respective abilities to meet those needs.
When the applicant appeared before the SSAT he was well aware that the true state of his financial affairs was to be a significant subject of enquiry before the Tribunal. His financial circumstances, and in particular the nature of his arrangements with his parents, were the subject of proper and appropriate enquiry.
Whilst it may be legitimate for citizens to organise their financial affairs to minimise the taxation liability, it has long been recognised that the obligation to provide proper financial support for children is both a moral and legal obligation that all parents must bear to the best of their ability. It is appropriate to examine the financial affairs of parents to ensure that their obligation to pay child support is not accorded less priority than obligations other than those reasonably necessary to support the payer.
I consider that it was entirely appropriate for the SSAT to deal with the expenses and benefits of the applicant in the way that it did. In the circumstances it is clear that the applicant personally gains a number of benefits from [K] Pty Ltd which include rent for housing equipment.
I also consider that the SSAT was entitled as it did to consider that certain expenses should not be given greater priority over his obligation to meet his child support obligations. The applicant and his parents have not only a close working relationship but they also have significant financial ties. The applicant uses his machinery in the work that he does for the businesses operated by his parents and depreciates that machinery for taxation purposes. It is simply not credible to suggest that he works five days per week, and uses his own machinery to achieve a net income that is less than what he would receive if he were unemployed.
In relation to the treatment of the loan account, the obligation and onus is upon the applicant to provide accurate and clearly understandable statements of financial circumstances to the SSAT. If he produces a document which purports to be a true statement of the accounts of the company he cannot then complain that the document was in fact not correct.
One issue of concern to me which was not the subject of any ground of appeal was the fact that the SSAT determined the application until
30 June 2009. The decision under review was for the child support period from 23 August 2007 until 31 October 2008. It is not clear from the reasons that the applicant was made aware that the decision would be for a period beyond the period under review. In the circumstances it would seem that the applicant was not accorded procedural fairness for the decision regarding the period 31 October 2008 until 30 June 2009.
Notwithstanding that lack of procedural fairness I am not satisfied that the decision should be set aside. The evidence does not indicate that there would likely be any significant change in the applicant’s circumstances and the applicant does not challenge the decision on that basis in his Grounds of Appeal. For the reasons I have already given it would seem likely that the decision would be the same if the matter were remitted to another Tribunal.
For the reasons I have given I consider that the Appeal should be dismissed and I will order accordingly.
I certify that the preceding thirty five (35) paragraphs are a true copy of the reasons for judgment of Slack FM
Associate: Karen Smith
Date: 17 December 2008
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