Baylden and Baylden and Anor (SSAT Appeal)
[2015] FCCA 2886
•29 October 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BAYLDEN & BAYLDEN & ANOR (SSAT APPEAL) | [2015] FCCA 2886 |
| Catchwords: WORDS AND PHRASES – “financial resources” is an ordinary English expression – the meaning of “financial resources” is a question of fact. |
| Legislation: Child Support (Assessment) Act 1989 (Cth), ss.98B, 98L, 117 Child Support (Registration and Collection) Act 1988, ss.82, 87, 110B, 110F Income Tax Assessment Act 1936 (Cth), ss.44, 109D, 109N |
| Catchwords: | ||
| Appellant: | MR BAYLDEN | |
| First Respondent: | MS BAYLDEN |
| Second Respondent: | CHILD SUPPORT REGISTRAR |
| File Number: | SYC 2887 of 2013 |
| Judgment of: | Judge Scarlett |
| Hearing dates: | 12 & 26 November 2013 |
| Date of Last Submission: | 26 November 2013 |
| Delivered at: | Sydney |
| Delivered on: | 29 October 2015 |
REPRESENTATION
| Counsel for the Appellant: | Mr Othen (direct brief) |
| First Respondent: | In person |
| Counsel for the Second Respondent: | Mr Kaplan |
| Solicitors for the Second Respondent: | Department of Human Services |
ORDERS
The Notice of Appeal filed on 27 May 2013 as amended by Amended Grounds of Appeal filed on 30 September 2013 is dismissed.
The decision of the Social Security Appeals Tribunal made on 23 April 2013 and despatched on 6 May 2013 is affirmed.
Written submissions in support of any application for costs and any affidavit setting out the way in which the costs sought are quantified are to be filed and served within 28 days of the date of these Orders.
Any written submissions in opposition to any application for costs are to be filed and served within a further period of 14 days.
IT IS NOTED that publication of this judgment under the pseudonym Baylden & Baylden & Anor (SSAT Appeal) is approved pursuant to s.110X(4)(h) of the Child Support (Registration and Collection) Act 1988 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 2887 of 2013
| MR BAYLDEN |
Appellant
And
| MS BAYLDEN |
First Respondent
| CHILD SUPPORT REGISTRAR |
Second Respondent
REASONS FOR JUDGMENT
Appeal
This is an Appeal from a decision of the Social Security Appeals Tribunal made 23 April 2013 and despatched on 6 May 2013. It is noted that the Tribunal stated that its decision was deferred to enable the parties to provide additional information in support of their claims and to enable the Tribunal to review that information.
The Tribunal set aside the decision under review and substituted a decision that:
a)From 17 May 2011 to 30 June 2011 the Appellant’s adjusted taxable income was set at $224,800.00 per annum;
b)From 1 July 2011 to 31 December 2011 the Appellant’s adjusted taxable income was set at $287,000.00 per annum;
c)From 1 January 2012 to 31 December 2012 the Appellant’s annual rate of child support was set at $30,000.00;
d)From 1 January 2013 to 31 December 2013 the Appellant’s annual rate of child support was set at $22,800.00; and
e)From 1 January 2014 to 31 December 2014 the Appellant’s annual rate of child support was set at $26,500.00.
The Appellant filed his Notice of Appeal on 27 May 2013. In his Notice of Appeal the Appellant sought the following orders:
1. That relief is sought in either:
a. The Federal Magistrates Court[1]hear an appeal; or
b. That the Federal Magistrates Court requests that the Social Security Appeals Tribunal (SSAT) appoint new members to rehear the appeal.
[1] The Name of the Court was changed to Federal Circuit Court of Australia on 12 April 2013
The Appellant set out Grounds of Appeal which were subsequently replaced by a Notice of Amended Grounds of Appeal filed on 30 September 2013.
The Appellant’s Grounds of Appeal are:
1. The SSAT erred at law by failing to provide the appellant procedural fairness when it:
a) adjourned the proceedings to require the provision of further material but failed to give the appellant opportunity to address the SSAT about that material; and
b) drew conclusions from the further material provided which were not available to the SSAT, wholly erroneous, and which had the SSAT provided the appellant procedural fairness, would have been avoided.
2. The SSAT made an erroneous finding of such a magnitude that went to the very jurisdiction it purported to exercise rendering its decision unreasonable and/or an offence to logic in that the SSAT concluded:
a) At paragraph 42 of its reasons, that during the period 1 July 2011 to 31 December 2011 the appellant received $15,000 per month from (business omitted);
b) That it was appropriate to treat $15,000 per month received at any time by the appellant as income when it was a loan which must be repaid;
c) That it was appropriate to “gross up” the $15,000 monthly payments to the equivalent of an annual salary of $287,000, since this had no regard to the fact that the loan was subject to interest and had to be repaid, and offended logic;
d) At paragraphs 34, 43-45, that from 1 January 2012 until 31 December 2014, it was appropriate to assess the child support liability based upon the appellant receiving throughout that period taxable income of $287,000 per annum.
3. The SSAT erred at law in relation to school fees in that:
a) The finding that the children were being educated in a manner expected by the parties was not available to the SSAT, wholly erroneous and this error went to the heart of the very jurisdiction the SSAT purported to exercise rendering its decision unreasonable.[2]
[2] There is no sub-ground 3 b)
4. That SSAT erred at law in relation to orthodontic expenses in that:
a) The finding that the children’s orthodontic expenses represented their reasonable needs was made failing to have regard to relevant material, in that when the respondent, when required to do by the SSAT during the deferred period, failed to provide alternate quotes for the orthodontic work she had told the SSAT existed, the only available finding was that those quotes would not have assisted the respondent’s case, and thus, the expenses incurred were not reasonable needs of the children.[3]
[3] There is no sub-ground 4 b)
There have been two preliminary decisions made in this matter.
On 3 September 2013 an Application for Review of a Registrar’s decision was decided in chambers. Orders were made that:
(1) The Application in a Case filed on 27 August 2013 is to be listed on Tuesday 15 October 2013 at 10:00 am.
(2) The Application and affidavit in support must be served on the Respondents by 4 October 2013.[4]
[4] Baylden & Baylden & Anor [2013] FCCA 1287
On 15 October 2013, an order was made for a stay in the following terms:
Enforcement of the collection of arrears of child support and the payment of ongoing child support in respect of the children, X and Y, is stayed until the hearing and determination of the appeal against the decision of the Social Security Appeals Tribunal made on 23 April 2013 and dispatched on 6 May 2013, on condition that the Applicant pay to the Respondent the sum of $500.00 per month by way of child support. The first payment to be made within 14 days.[5]
[5] Baylden & Baylden & Anor (SSAT Appeal) [2013] FCCA 2000
The First Respondent filed an affidavit sworn on 29 July 2013 in which she seeks to have the appeal dismissed on the grounds that there are no particulars of the errors of law identified, referring to s. 110B of the Child Support (Registration and Collection) Act 1988 (Cth) and the decision of Brown FM[6] this Court in Carrigan & Fredericks (SSAT Appeal)[7]. The Appellant subsequently filed a Notice of Amended Grounds of Appeal. The First Respondent later filed a lengthy affidavit on 22 October 2013, sworn the day before.
[6] As his Honour then was
[7] [2011] FMCAfam 544
Background
The background facts are succinctly set out in the Outline of Submissions of the Second Respondent.
The Appellant and the First Respondent are the parents of two children, X and Y. The First Respondent was assessed as having the primary care of both children.
On 3 March 2008 the Child Support Registrar accepted an application by the First Respondent for administrative assessment of child support for both children under the provisions of the Child Support (Assessment) Act 1989 (Cth).
For the period 17 August to 30 September 2010 the Appellant was assessed to pay an annual rate of child support of $16,920.00. The assessment was based on the parties’ 2009/2010 estimated incomes of $185,999.00 and $39,542.00.
For the period 1 October 2010 to 31 December 2011 the Appellant was assessed to pay an annual rate of child support of $6,992.00. This assessment was based on the parties’ 2009/2010 adjusted taxable incomes of $106,646.00 and $86,705.00.
On 17 May 2011 the First Respondent applied to the Child Support Registrar for a departure from the Appellant’s child support assessments under the provisions of s.98B of the Child Support (Assessment) Act 1989. The basis for this application was that the assessment was unfair or inequitable due to:
a)the cost of covering the child Y’s special needs;
b)the cost of private school fees for both children; and
c)the Appellant’s income, property and financial resources.
On 15 June 2011 a delegate of the Registrar found that the first and third grounds of the application (the cost of covering Y’s special needs and the Appellant’s income, property and financial resources) had been established, and that it was just and equitable and otherwise proper in the circumstances to depart from the administrative assessment. The delegate determined that:
a)the Appellant’s adjusted taxable income should be set at $198,687.00 for the period 10 May 2011 to 31 October 2012;
b)the First Respondent’s adjusted taxable income should be set at $100,000.00 for the period 1 July 2011 to 31 October 2012; and
c)the annual rate of child support should be increased by $3,341.00 for the period 1 May 2011 to 31 April 2013.
On 1 May 2012 the First Respondent lodged with the Registrar an application for extension of time to object to the Departure Decision of 15 June 2011, under the provisions of s.82 of the Child Support (Registration and Collection) Act 1988. The application was granted.
On 8 August 2012 a delegate of the Registrar disallowed the First Respondent’s objection under s.87 of the Child Support (Registration and Collection) Act.
The First Respondent applied to the Social Security Appeals Tribunal on 28 September 2012 for a review of that decision.
The Tribunal Decision
The Tribunal made its decision on 23 April 2013 and posted copies of the decision to the parties on 6 May.
In its decision, the Tribunal considered the parties’ evidence and their submissions. The Tribunal noted that the First Respondent had argued that the Appellant’s income was greater than that which was used in the administrative assessments and should therefore be increased, and also that he was self-employed and could manipulate his taxable income to reduce his child support liability.
The Tribunal also noted the Appellant’s submissions that:
a)the Departure Decision was improper as it failed to take into account the fact that the Appellant was not in receipt of an income after 1 July 2011;
b)the Appellant is self-employed and one of two directors of the company (business omitted);
c)the Appellant was not being paid a salary; and
d)the Appellant was paid $15,000.00 by the company under a loan agreement.
The Tribunal found at paragraph [20] of its Decision:
Given the terms of the loan agreement the Tribunal finds that Mr Baylden has an annual resource under the terms of that loan of $180,000 per annum tax free, or $287,000 grossed up (that is net income of $180,000, taxes of $107,002 including the Medicare levy of $4,305[8]. Whilst the Tribunal appreciates that Mr Baylden does not receive $287,000 he does get a net financial benefit from his association with (business omitted) which would require gross earnings of $287,000. While the loan agreement may be acceptable for the Commissioner of Taxation, the benefits under that loan have a different treatment for the purposes of the child support. It cannot be ignored that Mr Baylden is receiving $15,000 per month under a “loan” yet not receiving wages, despite being responsible for the day to day operation of (business omitted), a company that has grown from 2 employees to now over 10 in less than 12 months. The evidence that Mr Baylden cannot be paid a salary from (business omitted) whilst it is in its growth stages is unconvincing, especially given that he now employs 10 staff, that the turnover of the company as evidenced by its GST liability appears to be in the vicinity of $2 million per annum, and further the company is able to make payments to Mr Baylden under the loan with no pressure to repay.[9]
[8] Footnotes omitted
[9] Tribunal Decision paragraph [20]
The Tribunal went on to find at [23] and [24]:
23. Mr Baylden denies that he obtains financial benefit from his self-employment arrangement. The evidence suggests otherwise. While there is nothing untoward about how Mr Baylden has structured his company operations, it is clear that this structure serves to provide benefits to him which are not reflected in the taxable income ordinarily to be used in his child support assessment.
24. The Tribunal considers that Ms Baylden’s adjusted taxable income used in the formal assessment does not represent an accurate reflection of his ability to provide child support. To assess him on his estimated income of $185,999 or nil would be unjust and inequitable in light of his 2011 adjusted taxable income of $225,263 and the fact that since 30 June 2011 he has had the benefit of $15,000 net per month. Consequently, there are special circumstances and a reason to depart from the assessment has been established in relation to him. The legislative basis of this is sub-paragraph 98L(a) of the Assessment Act.[10]
[10] Ibid at [23]-[24]
The Tribunal then went on to consider whether it would be just and equitable to depart from the administrative assessment. In undertaking this task, the Tribunal first considered the resources of each of the parties and the children’s needs, including dental expenses for both children and matters relating to the child Y’s learning difficulties. The Tribunal noted that the costs of school fees for X amounted to $23,150 in 2012.
The Tribunal found that it was just and equitable to depart from the administrative assessment of child support.
The Tribunal then asked itself whether it was otherwise proper to depart from the administrative assessment, referring to the requirements of s.117(5) of the Child Support (Assessment) Act. The Tribunal found at paragraph [47]:
47. The amount of child support assessed by this decision is higher than the amount set by the previous administrative assessment. In a case such as this, a balance must be struck between personal and public responsibility. In the tribunal’s view, the outcome of its decision strikes that balance of[11] proper view of the relevant facts. It is appropriate that where parents have a greater capacity to meet the needs of their children that the burden on the public purse through social security payments be reduced. The net effect is that any reduction to family tax benefit will be replaced by child support payments. Thus it is otherwise proper to vary the existing assessment.[12]
[11] sic
[12] Tribunal Decision at [47]
The Tribunal decided to set aside the decision under review and substitute a decision that:
a)From 17 May 2011 to 30 June 2011 the Appellant’s adjusted taxable income would be set at $224,800 per annum;
b)From 1 July 2011 to 31 December 2011 the Appellant’s adjusted taxable income would be set at $287,000 per annum;
c)From 1 January 2012 to 31 December 2012 the Appellant’s annual rate of child support would be set at $30,000;
d)From 1 January 2013 to 31 December 2013 the Appellant’s annual rate of child support would be set at $22,800; and
e)From 1 January 2014 to 31 December 2014 the Appellant’s annual rate of child support would be set at $26,500.
The Appellant’s Submissions
The Appellant and the Second Respondent Child Support Registrar prepared comprehensive written submissions. The First Respondent filed a written submission in Court on the second day of the hearing. They spoke to those submissions at the hearing on 12 and 26 November 2013.
The Appellant also relied on an affidavit affirmed on 24 May 2013 and filed on 27 May.
Mr Othen of Counsel appeared for the Appellant. He submitted that a decision of the SSAT can be appealed on a question of law (Child Support (Registration and Collection) Act 1989, s.110B) and referred the Court to the decision of Brown FM[13] in Tasman & Tisdall (SSAT Appeal)[14] at [85]. His Honour held that an administrative tribunal exceeds its powers and thus commits a jurisdictional error in respect of a question of law if it:
a)fails to construe properly the legislative provisions applicable;
b)identifies the wrong issues or asks itself the wrong questions;
c)ignores relevant material or relies on irrelevant material;
d)fails to accord procedural fairness to the party before it; or
e)makes an erroneous finding of such magnitude that it goes to the very jurisdiction which it purports to exercise rendering its decision perverse or unreasonable or otherwise offending logic.
[13] Now Judge Brown
[14] [2010] FMCAfam 425
As to the Appellant’s first two grounds of appeal, Ground 1 going to a failure to provide procedural fairness and Ground 2 going to an erroneous finding of such magnitude that it went to the very jurisdiction it purported to exercise rendering its decision unreasonable and/or an offence to logic, Mr Othen submitted that underlying the errors complained by the Appellant was the failure by the Tribunal to understand properly the commercial arrangements between the Appellant and the company (business omitted). This failure of understanding led to the wrong conclusion at paragraph [19] of the Tribunal decision that the Appellant was self-employed.
The Appellant’s Ground 1 is in two parts:
a)Ground 1(a) - The SSAT erred at law by failing to provide the appellant procedural fairness when it adjourned the proceedings to require the provision of further material but failed to give the appellant opportunity to address the SSAT about that material;
b)Ground 1(b) - The SSAT erred at law by failing to provide the appellant procedural fairness when it drew conclusions from the further material provided which were not available to the SSAT, wholly erroneous, and which had the SSAT provided the appellant procedural fairness, would have been avoided.
Mr Othen made this submission at paragraphs 23 to 26 of the Appellant’s Summary of Argument:
23. The deferral itself was a proper mechanism to allow the parties to provide more material to the SSAT, but before drawing conclusions about it, basic rules of procedural fairness and natural justice required the SSAT to invite submissions about the material from the parties.
24. This was not done in the notice of deferral. Written submissions were not invited. Arrangements were not made to reconvene the hearing.
25. This was error enough to allow the appeal. The appellate Court does not need to enquire further as to whether the submissions, if invited, would have made any difference to the outcome. The appellate Court cannot except in the very clearest of cases form any conclusions about whether the submissions would or would not have made any difference.
26. In this case, however, the SSAT did go on to draw conclusions from the material which may well have been affected by submissions made.[15]
[15] Appellant’s Summary of Argument and List of Documents at paragraphs [23]-[26]
The Appellant’s Ground 2 was that:
The SSAT made an erroneous finding of such magnitude that went to the very jurisdiction it purported to exercise rendering its decision unreasonable and/or an offence to logic in that the SSAT concluded:
a) At paragraph 42 of its reasons, that during the period 1 July 2011 to 31 December 2011 the appellant received $15,000 per month from (business omitted);
b) That it was appropriate to treat $15,000 per month received at any time by the appellant as income when it was a loan which must be repaid;
c) That it was appropriate to “gross up” the $15,000 monthly payments to the equivalent of an annual salary of $287,000, since this had no regard to the fact that the loan was subject to interest and had to be repaid and offended logic;
d) At paragraphs 34, 43-45, that from 1 January 2012 until 31 December 2014, it was appropriate to assess the child support liability based upon the appellant receiving throughout that period taxable income of $287,000 per annum.
It was submitted that the Appellant received no income and no loans in the period 1 July 2011 to 31 December 2011 and yet the Tribunal’s decision was that the Appellant received income equivalent to $287,000. This, it was submitted, was an error of such gross magnitude that it cannot survive appellate review.
Whilst the evidence supported a finding that the Appellant received $15,000.00 by way of loans, and no other finding, it did not support a finding that the loan was a kind of sham and was never to be repaid. It was not open on the evidence to come to the conclusion that the $15,000.00 per month was income akin to remuneration.
Mr Othen also submitted that to find the $15,000.00 payments were income not loans, but then find that it was appropriate to add notional tax on top of what must be taxable income is illogical and perverse. If the advances were not loans, then they were income taxable in the Appellant’s hand.
The Appellant’s Ground 3 is:
The SSAT erred in law in relation to school fees in that:
a) The finding that the children were being educated in a manner expected by the parties was not available to the SSAT, wholly erroneous and this error went to the heart of the very jurisdiction the SSAT purported to exercise rendering its decision unreasonable.
The submission is that the Tribunal had relied on consent orders signed by the parties in proceedings in the Family Court in 2007 which contained a notation that the parties intended that X would be educated at (omitted) School until Year 12, and Y would attend (omitted) Prep until Year 6 then (omitted) School till the conclusion of Year 12. The Tribunal’s conclusion was that X’s attendance at (omitted) School in 2012 and 2013 represented the child being educated in a manner expected by both parents.
Ms Othen submitted that the Tribunal was bound to consider the evidence of what had actually happened since 2007. There were emails in 2008 to the effect that the parties still wanted X to remain at (omitted) School. She left that school in 2009.
The Appellant’s case was that the child’s enrolment back at (omitted) School in 2012 was done without his consent. Whilst the Appellant paid the child’s school fees in 2013 rather than have the child pulled out of school at short notice, this does not represent an agreement that for the whole of 2013 and 2014 the child was to be educated at (omitted) School. This finding was not available to the Tribunal.
Ground 4 was that:
That SSAT erred at law in relation to orthodontic expenses in that:
a) The finding that the children’s orthodontic expenses represented their reasonable needs was made failing to have regard to relevant material, in that when the respondent, when required to do so by the SSAT during the deferred period, failed to provide alternative quotes for the orthodontic work she had told the SSAT existed, the only available finding was that those quotes would not have assisted the respondent’s case, and thus, the expenses incurred were not reasonable needs of the children.
It was submitted that the Appellant had complained that the amounts charged for orthodontic expenses were exorbitant, the SSAT in the notice deferral required the First Respondent to provide alternate quotes. She did not do so.
No submissions were invited from the parties after the provision of the additional material.
Mr Othen submitted that the errors of law are:
a) The appellant was not afforded procedural fairness in that he was given no opportunity to comment on the failure by the respondent to produce the quotes;
b) The failure to produce the alternate quotes should have led to a conclusion that the quotes would not have supported the claim by the respondent the actual amounts paid represented the children’s proper needs. The SSAT failed to have regard to the failure in deciding the actual amounts incurred were proper needs.[16]
[16] Appellant’s Summary of Argument and List of Documents at [58]
The Appellant, as was mentioned earlier, also relied on his affidavit of 24 May 2013, filed at the same time as his Notice of Appeal and a Financial Statement.
The affidavit consists of a paragraph 1, divided into four sub-paragraphs marked (a) to (d), and a paragraph 2. Counsel for the Child Support Registrar, the Second Respondent, objected to sub-paragraphs 1(c) and (d) being read on the basis that they did not properly relate to the Appellant’s allegation of a denial of procedural fairness, whereas paragraphs 1(a) and (b) and paragraph plainly did. The objection was upheld.
The affidavit evidence was relied on as an important factor in the Appellant’s claim of a denial of procedural fairness. The paragraphs are set out in full:
1. The SSAT made findings of fact in circumstances outside the evidence available, which had a material impact on its decision.
a. Loans received for the financial year 2011/2012. I received 5 loan amounts each of $15,000 for the full 2011/2012 financial year totalling $75,000. The SSAT based their decision on me receiving 12 loan amounts of $15,000 each, totalling $180,000 for the same per5iod. Paragraph 42 of the SSAT “Reasons for Decision” is inaccurate. (business omitted) (‘(business omitted)’) was not formed until October 2011 and did not trade until December 2011. There were no loan payments received for this period. Annexed hereto and marked ‘A’ is a copy of (business omitted)’s completed tax return for the year 2011/2012. Annexed hereto and marked ‘B’ is (business omitted) Balance Sheet for2011/2012 showing the loan amounts outstanding. I planned on providing commentary on this when each party was allowed to comment on documents after the hearing. The Tribunal did not allow this to happen.
b. Loans Received for the Financial Year 2012/2013. I have received 9 loan amounts each of $15,000 each and no longer receive loan amounts from (business omitted). The loan payments ceased in March 2013. At no stage was evidence sought from me in relation to when the loan period would commence or cease. I planned on providing commentary on this fact when each party was allowed to comment on the documents after the hearing. The Tribunal did not allow this to happen.
…
2. There was substantive evidence and submissions were made where the parties were not allowed to test the integrity of the documents, which did not allow natural justice to occur.
a. During the hearing the SSAT Members deferred their decision and sought further documents from both parties. The SSAT Member set out a timetable and course of action that the hearing would take. Both parties agreed to provide documents after the hearing that would assist the Members in making a decision. The SSAT Member stated that once the documents were received from each party the Tribunal would provide copies to both parties and seek comment from each party in relation tom the documents they had received before making a final decision. Neither party was given the opportunity to test the integrity of the documents provided. Each party was provided with the other side’s documents after the Tribunal had made their decision and not before as stated at the hearing. Furthermore certain documents were sought by the Tribunal and it was agreed they would be provided, however these documents had not yet been provided when the decision was made. I maintain that there are claims in these documents that are incorrect and may have had an impact upon the Tribunal’s decision.[17]
[17] Affidavit of Mr Baylden 24.5.2013 at paragraphs [1]-[2]
Submissions on behalf of the Child Support Registrar
Counsel for the Second Respondent, the Child Support Registrar, submitted that none of the Appellant’s Grounds 2, 3 and 4 raises a question of law. In any event, they do not reveal an error of law in the Tribunal’s decision.
Mr Kaplan of Counsel, who appeared for the Registrar, submitted that appeals to this Court under s. 110B of the Child Support (Registration and Collection) Act are confined to pure questions of law. Neither questions of fact nor mixed questions of law and fact will be sufficient to obtain relief under s.110F of the Act. The only ground of appeal that raises a question of law is Ground 1. Grounds 2, 3 and 4, it was submitted, do not raise questions of law. They merely attempt to attack the merits of the Tribunal’s findings.
As to the Appellant’s Ground 2, Mr Kaplan, noting that the Ground complains that the Tribunal made “an erroneous finding” submitted that there is no error of law in making a wrong finding of fact (see Waterford v Commonwealth[18]), nor will a perverse finding of fact vitiate a decision of the Tribunal in an appeal on a question of law (Azzopardi v Tasman UEB Industries Limited[19]; Baranski v Comcare[20]). The Federal Court has, in Baranski, recently cast doubt as to whether “unreasonableness” has any room to operate in appeals on questions of law, but even if it does it would only apply to the exercise of a discretionary power.
[18] (1987) 163 CLR 54 at 77 per Brennan J
[19] (1985) 4 NSWLR 139 at 155-156
[20] (2013) 296 ALR 438 at 441 [19]
Mr Kaplan submitted that Ground 2(a) should be dismissed because the Tribunal was entitled to find from the Appellant’s evidence at the hearing that he received $15,000 per month from (business omitted). The Appellant’s submission that the Tribunal “wrongly concluded” that he was self-employed should not be accepted because:
a)the submission does not give rise to any question of law;
b)the Appellant gave evidence to the Tribunal in the form of his Statement of Financial Circumstances that he was self-employed; and
c)the Tribunal merely noted that the Appellant was self-employed, but only in the context of summarising his evidence and submissions.
It was submitted that Grounds (b) and (c) should be dismissed because they cavil with the Tribunal’s assessments of the Appellant’s financial resources. The evidence was sufficient to support the Tribunal’s observation that there was no pressure placed on the Appellant by (business omitted) to repay the amounts of $15,000 advanced to him.
Mr Kaplan referred to the use of the term “financial resources” as used in the Child Support (Assessment) Act, submitting that it is used in a non-technical sense and should therefore be given its ordinary English meaning. He referred the Court to the decision of Slack FM in Walker & Fielding (SSAT Appeal)[21], where his Honour held:
[21] [2010] FMCAfam 320
70. The term financial resource is not defined in the Assessment Act.
71. A financial resource, in my consideration, refers to something which is not property but from which a financial benefit is or may be gained [see Kennon & Spry(2008) FLC 93-388, Gummow & Hayne JJ @ 83035].
…
74. The term financial resource in the light of the objects of the Assessment Act should be broadly defined and would, in my consideration, refer to any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children.[22]
[22] [2010] FMCAfam 320 at [70]-[71] & [74]
The submission is that the phrase “financial resources” should not be given a narrow meaning, but it is not the court’s role to second guess the Tribunal’s assessment of the Appellant’s financial resources, since the meaning to be given to those words is a question of fact for the Tribunal.
Mr Kaplan argued that it was reasonable for the Tribunal to find that the money received under the Agreement was a financial resource, as it was clearly a financial benefit that enhanced the Appellant’s capacity to provide a proper level of financial support for his children.
It was submitted that the Appellant’s Ground 2(d) should be dismissed, because the underlying premise of the ground is flawed. Whilst the Ground claims that the Tribunal erred in law by considering that it was appropriate to assess the Appellant’s child support liability based on his receiving a taxable income of $287,000 per annum. Mr Kaplan submitted that the Tribunal did not make a finding in those terms, but rather that the Appellant’s annual income and financial resources ought to be used in the child support formula set out in the Assessment Act until 31 December 2014.
It was reasonable to use the figure of $287,000 for the purpose of the formula, based on the evidence. The fact that this was a matter where a differently constituted Tribunal may have reached a different conclusion does not reveal an error of law on the part of the Tribunal.
In relation to Ground 3, claiming an error in law in relation to the school fees, it was submitted that this ground is an appeal to the merits of the decision and should therefore be dismissed..
It was submitted that there was ample evidence before the Tribunal to support its finding that the parties had agreed that their children should be educated in private schools, including the Family Court Orders previously referred to. Mr Kaplan submitted that that in itself is sufficient objective evidence to support the Tribunal’s finding.
Turning to the Appellant’s Ground 4, relating to the children’s orthodontic expenses and the failure of the First Respondent to provide alternate quotes, Mr Kaplan submitted that this ground does not raise a coherent question of law and should be dismissed. It was submitted that the Appellant was actually submitting that he was denied procedural fairness in that he was not invited to make submissions on those invoices that the First Respondent did provide to the Tribunal.
The Appellant has already claimed a denial of procedural fairness in Ground 1.
It was submitted that Grounds 2 to 4 should be dismissed. Mr Kaplan also stated that the Registrar reserved his position in relation to the Appellant’s Ground 1, the procedural fairness ground, until he had an opportunity to consider material received from the Tribunal on 6 November 2013.
The material received from the Tribunal on 6 November 2013 consisted of three letters from the Tribunal to the Appellant and a file note recording telephone conversations between an officer of the Tribunal and the Appellant on 22 and 24 April 2013.
Mr Kaplan told the Court that he was relying on the following cases:
a)Pilbara Aboriginal Land Council Aboriginal Corporation Inc. v Minister for Aboriginal and Torres Strait Islander Affairs[23]; and
b)Minister for Immigration & Citizenship v SZGUR[24].
[23] [2000] FCA 1113; (2000) 103 FCR 539
[24] [2011] HCA 1; (2011) 241 CLR 594
He also tendered a bundle of provisions from the Income Tax Assessment Act1936 (Cth), namely sections 44, 109D and 109N.
Mr Kaplan also told the Court that he sought to rely on part of one of the affidavits of the First Respondent filed on 30 July and 22 October 2013.
The point that Mr Kaplan made, on both hearing days, is that the Appellant’s claim of a denial of procedural fairness in Ground 1 has not been made out. It was certainly the case that, as Mr Kaplan conceded on the first day, that the additional documents that the first Respondent provided to the Tribunal were not given to the Appellant for his comment, and the additional documents that the Appellant provided to the Tribunal were similarly not provided to the First Respondent.
Mr Kaplan submitted that an examination of the documents would show that it could not be said that those documents, having regard to the common law rules of procedural fairness, ought to have been provided to the Appellant for his comment. The questions to be asked were:
a)was the information contained in those documents adverse?
b)If so, was it credible, relevant and significant?
Those principles are derived from the High Court decision of Kioa v West[25]. It was submitted that none of the additional “A” documents that were provided to the Tribunal by the First Respondent had to be put to the Appellant for his comment “on the basis that that material was either not adverse, or not adverse and not credible, relevant or significant”.[26]
[25] [1985] HCA 81; (1985) 159 CLR 550
[26] Transcript 12.11.13 page 14 at lines 1-2
Mr Kaplan returned to this point on the second day of the hearing, referring to the decision of Merkel J in Pilbara Aboriginal Land Council Aboriginal Corporation Inc v Minister for Aboriginal And Torres Strait Islander Affairs[27], where his Honour held at 557 [70]:
While the general rule is that a decision-maker is not obliged to comment on his or her preliminary views before making a final decision or to enable a party that is likely to be adversely affected by those views to address them prior to a decision being made, on some occasions the line between the views and conclusions of a decision-maker and the material on which they are based may be a fine one. The overriding principle is that the decision-maker must bring to the applicant’s attention the critical issue or factor on which the decision is likely to turn so that he or she may have an opportunity of dealing with it…it is sufficient that the gravamen or substance of the issue or factor is brought to the applicant’s attention, or that the applicant is on notice of its “essential features”.
[27] supra
Mr Kaplan submitted that the Appellant was aware of the gravamen or substance of the issues on which the Tribunal decision was likely to turn.
There were three issues, he submitted:
a)That the parties’ children required dental treatment;
b)That the parties’ son Y had a learning difficulty and required treatment; and
c)That it was the parties’ intention that their children be educated at private schools.
Those three issues were all dealt with at length during the Tribunal hearing.
The second aspect of the Appellant’s claim of a denial of procedural fairness was that he said that he was not given an adequate opportunity to explain his relationship with (business omitted) and explain that he had received fewer loans than the Tribunal said that he did. Mr Kaplan submitted that the latter part of the complaint, the question of fewer loans, is an appeal to the merits of the decision.
As to the first part of the claim, the procedural fairness point, Mr Kaplan submitted that:
a)It was reasonably open to the Tribunal, based on the Appellant’s evidence, that he was receiving loans of $15,000.00 per month;
b)The information that the Appellant could have been put before the Tribunal was not put, and it is the case that procedural fairness does not require that a person be given every opportunity to put their case before a decision-maker, but only a reasonable opportunity;
c)At one stage during the hearing it was put to the Appellant by a Tribunal member that he was being advanced “roughly $180,000 a year”[28] which the Appellant accepted;
d)The First Respondent gave evidence at paragraph [5](a) of her affidavit of 21 October 2013, filed on 22 October, that the Appellant had been advised in a telephone conference prior to the Tribunal hearing and in writing by Ms Benk, the Tribunal Member, to bring the commercial loan agreement to the hearing.
[28] Transcript 26.11.13 page 30 line 40
Mr Kaplan submitted that it is not the Registrar’s position that the Tribunal’s fact finding process can never be impugned in this Court. A question as to whether there is any evidence for a finding of fact will give rise to a question of law. In this case, a “no evidence” ground has not been pleased. Even if there were, such a ground can only succeed “if there is not even a skerrick of evidence to support the impugned finding”.[29] In this case, there was ample evidence for the Tribunal’s findings as to the Appellant’s financial resources in paragraphs [19], [20] and [24] of the Tribunal Decision.
[29] Transcript 26.11.13 page 34 lines 33-34
Finally, Mr Kaplan addressed the point made by the Appellant in his written submission about Ground 2 that if the advances were not loans they were income taxable in the Appellant’s hand. He submitted, with respect, that that statement was wrong. If the moneys were paid by the company to the Appellant under s.109N of the Income Tax Assessment 1936, which the loan agreement said they were, then those payments are not treated as dividends paid by the company. He referred to sections 109D of the act, which treats as dividends for the purposes of the Act, certain loans made by a private company to shareholder.
However, he submitted, section 109N creates an exception to the deeming provision of section 109D. The loan agreement in respect of the loan to the Appellant, he submitted, complied with section 109N. By virtue of section 44, the loans to the Appellant were not dividends and therefore did not form part of the Appellant’s assessable income. Therefore, no tax was required to be paid on the loans to the Appellant. Mr Kaplan referred the Court to the decision of Jessup J in Lawrence v Commissioner of Taxation[30] at [67]-[69], [99] and [101].
[30] [2008] FCA 1497
I am satisfied that the reasoning in the above submission is correct.
The Submission of the Second Respondent Child Support Registrar is that the Appeal should be dismissed, as none of the four grounds of Appeal discloses an error of law.
The First Respondent’s Submissions
The First Respondent prepared a written submission, which she read onto the record. The submission was filed in court after it was read.
The First Respondent’s submitted that the information that she forwarded to the Social Security Appeals Tribunal after the hearing was information that had been viewed and reconsidered several times in many separate applications before the agencies. The documents that she submitted were primarily duplicates of documents already held by the SSAT and by the Appellant and “could hardly be considered relevant or significant in persuading the SSAT decision”. The document that was new before the SSAT after the hearing on 19 March was the Appellant’s own Loan Facility Agreement. The Appellant had been advised to bring this document to the hearing in a telephone conference prior to the hearing but failed to do so “and arrived at the SSAT hearing with nothing”.
The First Respondent’s submissions go on to address factual matters relating to the parties. However, she referred the Court to the decision of Judge Halligan in Myers & Myers & Anor (SSAT Appeal) (No.2)[31].
[31] [2013] FCCA 1426
The First Respondent submitted that the Appellant relies on his assertion that the decision and certain findings by the SSAT were wrong, but he has failed to demonstrate any error otherwise on a question of law and has failed to show that the SSAT ignored relevant material or considered irrelevant material. There is nothing demonstrated by the First Respondent to impugn the integrity of the SSAT decision.
It is the position of the First Respondent that the Appeal should be dismissed.
Conclusions
The grounds of the Appeal essentially are that:
a)The SSAT failed to provide procedural fairness when it:
i)adjourned the proceedings for the provision of further material but failed to allow give the Appellant the opportunity to address the Tribunal about the material produced;
ii)drew conclusions from the material that were not available and wholly erroneous;
b)The SSAT made a finding of such magnitude that went to the very jurisdiction it purported to exercise rendering its decision unreasonable and/or an offence to logic;
c)The SSAT erred at law in relation to school fees that was wholly erroneous and this error went to the heart of the very jurisdiction the SSAT purported to exercise rendering its decision unreasonable; and
d)The SSAT erred at law in relation to the children’s orthodontic expenses by failing to have regard to relevant material.
I am not satisfied that the Tribunal made an error of law in respect of any of those grounds, whether by failing to provide procedural fairness, making a factual decision that was unreasonable, or failing to have regard to relevant material.
The Appellant relies on four main grounds of appeal, one of which has two sub-grounds and another of which has four sub-grounds. I will deal with the grounds and sub-grounds in order.
Ground 1 – The SSAT erred in law by failing to provide the appellant procedural fairness when it:
a)adjourned the proceedings to require the provision of further material but failed to give the appellant opportunity to address the SSAT about that material; and
b)drew conclusions from the further material provided which were not available, wholly erroneous, and which had the SSAT provided the appellant procedural fairness, would have been avoided.
The Tribunal asked the parties to submit further material but did not call on the parties to make submissions about that material or reconvene the hearing. The Appellant submitted that this alone was error enough to allow the Appeal.
In my view, that submission is not necessarily correct. It has to be shown that the information contained in those documents was adverse and, if so, was it credible, relevant and significant. If not, there was no requirement for the documents to be shown to the parties or for them to be asked to make submissions about it.
In Kioa v West[32], Brennan J held at 628-9:
A person whose interests are likely to be affected by an exercise of power must be given an opportunity to deal with relevant matters adverse to his interests which the repository of the power proposes to take into account in deciding upon its exercise…The person whose interests are likely to be affected does not have to be given an opportunity to comment on every adverse piece of information, irrespective of its credibility, relevance or significance. Administrative decision-making is not to be clogged by inquiries into allegations the repository of the power would not give credence, or which are not relevant to his decision or which are of little significance to the decision which is to be made. Administrative decisions are not necessarily to be held invalid because the procedures of adversary litigation are not fully observed…Nevertheless in the ordinary case where no problem of confidentiality arises an opportunity should be given to deal with adverse information that is credible, relevant and significant to the decision to be made.
[32] supra
The documents were not relevant and significant to the Tribunal’s decision and thus there was no requirement for the parties to be given an opportunity to make submissions about them, let alone to reconvene the hearing.
As to sub-ground 1(b), I am not satisfied that the Appellant has shown that the Tribunal in fact drew conclusions from the further material at all. Even if that were the case, the submission that such conclusions were “wholly erroneous” is couched in terms of merits review, which is impermissible.
I am in agreement with the submission of the Child Support Registrar that there is no error of law by the Tribunal and Ground 1 of the Appeal fails.
Ground 2 – The SSAT made an erroneous finding of such a magnitude that went to the very jurisdiction it purported to exercise rendering its decision unreasonable and/or an offence to logic in that the SSAT concluded:
a) At paragraph 42 of its reasons, that during the period 1 July 2011 to 31 December 2011 the appellant received $15,000 per month from (business omitted);
b) That it was appropriate to treat $15,000 per month received at any time by the appellant as income when it was a loan which must be repaid;
c) That it was appropriate to “gross up” the $15,000 monthly payments to the equivalent of an annual salary of $287,000, since this had no regard to the fact that the loan was subject to interest and had to be repaid, and offended logic;
d) At paragraphs 34, 43-45, that from 1 January 2012 until 31 December 2014, it was appropriate to assess the child support liability based upon the appellant receiving throughout that period taxable income of $287,000 per annum
This ground is clearly based on one of the grounds set out in Tasman & Tisdall (SSAT Appeal)[33] at [85]. However, as Counsel for the Child Support Registrar submitted, there is no error of law in making a wrong finding of fact, nor will a perverse finding of fact vitiate a decision of the Tribunal in an appeal on a question of law.
[33] supra
Mr Kaplan also submitted that in Baranski v Comcare[34] the Federal Court has cast doubt as to whether “unreasonableness” has any room to operate in appeals on questions of law.
[34] supra
In Baranski, the third ground of appeal was based on unreasonableness:
3. Was the tribunal’s decision reviewable for Wednesbury unreasonableness, that is, was the decision so unreasonable that no reasonable decision-maker could have reached it (Associated Provincial Picture Houses Limited v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223 at 230)?
In dealing with that ground, Katzmann J, with whom Allsop CJ and Tracey J agreed, held at [19]
It follows that the third and final ground of appeal must also fail. Even if Wednesbury unreasonableness has any application in an appeal limited to a question of law and one which is not concerned with the exercise of a discretion…the error is not of this kind. The tribunal’s decision was not unreasonable, let alone so unreasonable that no reasonable decision-maker could have reached it…Even if the decision were perverse, the argument would face the hurdle imposed by cases such as Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139.
I am satisfied that Ground 2 does not rise to a question of law. I am not of the view that the Tribunal decision was unreasonable, let alone Wednesbury unreasonable. I agree with the submission that the Tribunal was entitled to find from the Appellant’s evidence at the hearing that he received $15,000.00 per month from (business omitted).
Grounds 2(b) and 2(c) are, to my mind, a cavilling at the Tribunal’s assessment of the Appellant’s financial resources. As to the term “financial resources”, I am satisfied that I should follow the decision of Slack FM in Walker & Fielding (SSAT Appeal)[35]. Grounds 2(b) and 2(c) are essentially in the way of merits review.
[35] supra
I am not satisfied that it was unreasonable of the Tribunal to make the finding that it did, which was that the Appellant’s annual income and financial resources should be used in the child support formula set out in the Child Support (Assessment) Act until 31 December 2014.
In general, I accept the submissions of Counsel for the Child Support Registrar. Ground 2 will be dismissed.
Ground 3 – The SSAT erred in law in relation to school fees in that:
a)The finding that the children were being educated in a manner expected by the parties was not available to the SSAT, wholly erroneous and this error went to the heart of the very jurisdiction the SSAT purported to exercise rendering it decision unreasonable.
Ground 3 is clearly a challenge to the merits of the Tribunal decision. There was evidence before the Tribunal to support its finding that the parties had agreed that the children should be educated at private schools. It does not matter that there was other evidence to the contrary. The Tribunal was entitled to come to the decision it did based on the evidence.
Ground 3 fails and will be dismissed.
Ground 4 – That SSAT erred at law in relation to orthodontic expenses in that:
a)The finding that the children’s orthodontic expenses represented their reasonable needs was made failing to have regard to relevant material, in that when the respondent, when required to do so by the SSAT during the deferred period, failed to provide alternate quotes for the orthodontic work she had told the SSAT existed, the only available finding was that those quotes would not have assisted the respondent’s case, and thus, the expenses incurred were not reasonable needs of the children.
There is no error of law in Ground 4. Counsel for the Child Support Registrar has submitted, correctly in my view, that this ground does not raise a coherent question of law. It appears to be framed in the form of merits review but has been argued as if it were a denial of procedural fairness.
The Appellant was aware that one of the issues before the Tribunal was that the children required treatment from an orthodontist. The issue was that the Appellant disagreed that the fees claimed by the First Respondent were unreasonably high. The fact that the First Respondent did not provide alternative quotes did not preclude the Tribunal from making a decision based on the material that was before it. It was entirely a matter for the Tribunal whether it accepted or rejected that evidence.
The argument that the Appellant should have been given the opportunity to comment on the failure of the First Respondent to produce alternative quotes does not lead to a finding of a denial of procedural fairness.
The Appellant has made a Jones v Dunkel[36] type submission in saying:
b) The failure to produce the alternate quotes should have led to a conclusion that the quotes would not have supported the claim by the respondent the actual amounts paid represented the children’s proper needs. The SSAT failed to have regard to the failure in deciding the actual amounts incurred were proper needs.[37]
[36] (1959) 101 CLR 298
[37] Appellant’s Summary of Argument and List of Documents at [58]
However, procedural fairness does not require that such a submission be put to the Tribunal. As was held in Kioa v West, administrative decisions are not necessarily to be held invalid because the procedures of adversary litigation are not fully observed (at 629).
The Ground was not argued as a procedural fairness ground or framed in that way. In any event, there is no denial of procedural fairness. The Ground appears to be couched in terms or a challenge the merits of the Tribunal’s factual finding, in other words, merits review, which is impermissible.
As the Child Support Registrar has submitted, no question of law arises. Ground 4 fails and will be dismissed.
Orders
All of the Appellant’s Grounds of Appeal have been unsuccessful. The Appeal will be dismissed and the decision of the Social Security Appeals Tribunal will be affirmed.
The Child Support Registrar seeks an order that the Appeal should be dismissed with costs. I will order that any party wishing to pursue an order for costs may do so by way of a written submission accompanied by an affidavit setting out the way in which the amount costs sought is quantified. Rule 21.02 prescribes that an application for costs may be made:
a)at any stage in a proceeding;
b)within 28 days after a final decree or order is made; or
c)within any further time allowed by the Court.
Any written submission and supporting affidavit seeking costs should be filed and served within 28 days. Any submission in reply should be filed and served within a further period of 14 days.
I certify that the preceding one hundred and sixteen (116) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Associate:
Date: 29 October 2015
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