Bell & Nahos
[2016] FamCAFC 244
•30 November 2016
FAMILY COURT OF AUSTRALIA
| BELL & NAHOS | [2016] FamCAFC 244 |
| FAMILY LAW – APPEAL – CHILD SUPPORT – LEAVE TO APPEAL – Where the appellant mother seeks leave to appeal pursuant to s 102A of the Child Support (Assessment) Act 1989 (Cth) – Where the trial judge in finding that the respondent father satisfied s 117(7B)(b)(ii) of the Child Support (Assessment) Act 1981 (Cth) appeared to rely on annexures to his affidavit which she had ruled inadmissible – Where it is not clear what weight the trial judge gave to these annexures in making her finding and thus the finding must be considered unsafe and cannot stand – Where there is merit in one of the appellant mother’s grounds of appeal – Leave to appeal granted and the appeal allowed – Proceedings remitted to the Federal Circuit Court of Australia for rehearing by a judge other than the trial judge. FAMILY LAW – APPEAL – COSTS – Where the appellant mother should have costs certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) in respect of the costs incurred by her in relation to the appeal and for the rehearing – Where the respondent father should have a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) in relation to the rehearing. |
| Child Support (Assessment) Act 1989 (Cth) – ss 102A, 117, 123A(1) and 123A(6) Family Law Act 1975 (Cth) |
Federal Proceedings (Costs) Act 1981 (Cth) – ss 8 and 9
Income Tax Assessment Act 1997 (Cth) – Division 115
Family Law Rules 2004 (Cth)
| Forbes & Bream [2010] FamCAFC 6 |
| APPELLANT: | Ms Bell |
| RESPONDENT: | Mr Nahos |
| FILE NUMBER: | MLC | 10071 | of | 2012 |
| APPEAL NUMBER: | SOA | 67 | of | 2015 |
| DATE DELIVERED: | 30 November 2016 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 11 February 2016 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 21 August 2015 |
| LOWER COURT MNC: | [2015] FCCA 2259 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Stanley |
| SOLICITOR FOR THE APPELLANT: | Farrar Gesini Dunn |
| THE RESPONDENT: | In person |
Orders
Leave to appeal be granted.
The appeal be allowed.
The orders made on 21 August 2015 be set aside.
The child support proceedings be remitted to the Federal Circuit Court of Australia for rehearing by a judge other than Judge Small.
Each party bear their own costs.
The Court grants to the appellant mother a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant mother in respect of the costs incurred by her in relation to the appeal.
The Court grants to the appellant mother and the respondent father costs certificates pursuant to s 8 of the Federal Proceedings (Costs) Act 1981 (Cth) being certificates that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant mother and the respondent father in respect of the costs incurred by each of them in relation to the rehearing.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bell & Nahos has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SOA 67 of 2015
File Number: MLC 10071 of 2012
| Ms Bell |
Appellant
And
| Mr Nahos |
Respondent
REASONS FOR JUDGMENT
Introduction
By Further Amended Notice of Appeal filed on 11 January 2016 Ms Bell (“the mother”) seeks leave to appeal, and if leave is granted, to appeal child support orders made by Judge Small on 21 August 2015.
Those orders dismissed the mother’s application for a child support departure order pursuant to s 117 of the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”); provided for Mr Nahos (“the father”) to pay to the mother lump sum child support of $13,853.88 pursuant to s 123A(1) of the Assessment Act; and, provided that that payment be credited 100 per cent against any liability of the father for an administrative assessment in relation to X (“the child”) for the period 11 June 2014 to 10 June 2017.
The application for leave to appeal, and if leave is granted, the appeal, are opposed by the father.
Background
The parties were in a relationship between approximately August 2008 and November 2010. The child of the relationship was born in 2011 and is currently aged five years.
At the time of separation the father worked as a teacher and was earning approximately $90,000 per annum. The mother was not employed and relied on Centrelink benefits and child support payments as her sole sources of income.
Property settlement and parenting proceedings were instituted by the mother on 1 November 2012, and on 3 September 2013 orders were made by consent in relation to property settlement. Final parenting orders were made by consent on 11 November 2013.
On 31 March 2014 the father filed an Initiating Application in relation to parenting. He amended this application on 15 June 2014, but on 18 June 2014 it was dismissed on the basis of the principle in Rice and Asplund (1979) FLC 90-725.
By her response filed on 11 June 2014, the mother sought that there be a departure order made pursuant to the Assessment Act, and that the father pay lump sum child support equivalent to seven years of child support payments.
The trial in relation to the child support orders was heard on 16 and 17 April 2015.
At the time of trial the father gave evidence that he was studying for a tertiary qualification in Building and Construction Management and intended to obtain a builder’s license. He asserted that his only source of income was irregular payments from buying and selling properties. The mother deposed to being employed part time as a teacher and earnt irregular payments from tutoring.
Leave to appeal
In her Further Amended Notice of Appeal the mother correctly sought leave to appeal pursuant to s 102A of the Assessment Act.
To obtain leave the mother must establish that there has been an error of principle and/or a substantial injustice (Rutherford and Rutherford (1991) FLC 92-255, Gilmour and Gilmour (1995) FLC 92-591, Hendy v Deputy Child Support Registrar (2001) 27 Fam LR 641 and Forbes & Bream [2010] FamCAFC 6). In that regard the mother relied on her proposed grounds of appeal, in the event that leave is granted, as demonstrating the basis for that leave. Thus, it is necessary to address those proposed grounds of appeal, not only from the point of view of whether leave should be granted, but if it is, whether the appeal should be allowed or dismissed.
Discussion
Ground 1
That the learned Trial Judge in reaching her conclusion that the requirements of s. 117(7B)(b)(ii) of the Child Support (Assessment) Act 1989 had been met did so by relying upon evidence that had been struck out as inadmissible.
The primary issue before her Honour was whether the father’s earning capacity was greater than was reflected in his declared estimated income utilised by the Child Support Agency to assess the father’s child support payments. In particular, the mother’s case was that the father “deliberately stopped working as a teacher and reduced his income so as to avoid paying child support at an appropriate rate” (at [86]).
The father’s income as a teacher was $84,056 per annum, and his declared estimated income as a property developer was approximately $45,000.
In order to determine this issue her Honour was required to apply s 117(7B) of the Assessment Act. That section provides as follows:
(7B)In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:
(a)one or more of the following applies:
(i) the parent does not work despite ample opportunity to do so;
(ii) the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full‑time work for the occupation or industry in which the parent is employed or otherwise engaged;
(iii) the parent has changed his or her occupation, industry or working pattern; and
(b)the parent’s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:
(i) the parent’s caring responsibilities; or
(ii) the parent’s state of health; and
(c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.
There is no issue that the father changed his occupation (s 117(7B)(a)(iii)), but his reasons for that were very much in issue. The father’s case was that he left teaching “due to a high level of stress that was severely impacting on [his] mental health and physical well-being” (at [58]).
The onus of course was on the father to establish that his state of health justified his change of occupation. In that regard he relied on his own evidence of how he felt and what he says happened, a medical certificate signed by a general practitioner, and a letter and a report from a psychologist (all annexed to his affidavit of 25 March 2015), and the fact that he received “compensation … as a result of his WorkCover claim based on his experience of the deterioration in his mental health” (at [142]). However, on the first day of the hearing the mother’s counsel objected to the admissibility of the annexures, and her Honour ruled that they were not admissible saying that she would “take no further notice of them” (transcript 16.4.2015, page 20, line 21).
Despite this ruling, in finding that the father had satisfied s 117(7B)(b)(ii) of the Assessment Act, her Honour referred to and appeared to rely on the very annexures that she had ruled inadmissible (at [140] and [141]).
Plainly her Honour did not rely solely on this evidence, and her Honour referred to the other evidence that went to the father’s state of health, but it is unclear what weight her Honour gave to the annexures in making this finding, and it cannot be said that she did not rely on the inadmissible evidence. Thus, the finding at [143] that the evidence, “when taken together” was “compelling”, and led to her Honour being “satisfied, on the balance of probabilities, that it meets the requirements of s.117(7B)(b)(ii)” must be considered unsafe and it cannot stand.
This ground of appeal has merit.
Ground 2
That the learned Trial Judge erred in consideration of s. 117(7B)(b)(c) [sic] if the Child Support Assessment Act 1989 by misapplying the relevant onus
The way in which her Honour expressed herself in this context was confusing, but I find that there is no merit in this ground of appeal.
The relevant part of s 117(7B), for the purposes of this ground, provides as follows:
(7B)In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:
…
(c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.
Thus, the onus was on the father here to demonstrate that it was not a major purpose of his decision to change occupations to affect the administrative assessment of child support.
Her Honour accurately described that as the position in [134] and also in [154] where tellingly her Honour said this:
154.The question is whether [the father] has “not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child”. The onus is on him to show that that decision was not made with the major purpose of reducing his child support liability.
Then, after considering the evidence, her Honour concluded as follows at [163]:
I am not satisfied, on the balance of probabilities, that the evidence before me demonstrates that a major purpose of his decision to change his occupation was to affect his child support liability. I am therefore not satisfied that the provisions of s.117(7B)(c) are met.
It is in this latter paragraph where the language her Honour uses is not in strict accordance with s 117(7B)(c), but there can be no doubt that the effect is the same, and her Honour has not reversed the onus.
Ground 3
The learned trial Judge failed to consider or engage with the Mother’s arguments in relation to s.117(7B)(b)(c) [sic].
The complaint here is that in her reasons for judgment her Honour failed to refer to all of the evidence of the mother when considering s 117(7B)(c) of the Assessment Act.
Plainly that is the case, but it is not necessary in reaching a decision for a trial judge to refer to every piece of evidence or argument that is presented during a trial. That principle is well established in a number of authorities; I will mention two:
a)In Whisprun Pty Ltd v Dixon (2003) 200 ALR 447 at [62], Gleeson CJ, McHugh and Gummow JJ said this:
…A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party’s case.
b)In Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltdand Penrith Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 385 – 386, Mahoney JA said this:
It is not the duty of the judge to decide every matter which is raised in argument.
…
Nor is it necessary for a judge who is exercising a discretionary judgment to detail each factor which he has found to be relevant or irrelevant, or to itemize, for example, in the assessment of damages for tort, each of the factual matters to which he has had regard … Nor is a judge required to make an explicit finding on each disputed piece of evidence. It will be sufficient, if the inference as to what is found is appropriately clear…
I can see no error here in her Honour’s failure to refer to all of the evidence of the mother in relation to this issue. Her Honour plainly considered the evidence that she needed to in order to reach her decision.
It is also said that this failure by the trial judge results in a lack of adequate reasons, but it is not explained to what finding or conclusion this complaint relates. In any event, I am satisfied that the pathway to the relevant finding, that it was not a major purpose of the father’s decision to change occupations to affect his child support assessment, is amply exposed in her Honour’s reasons, and there is no merit in this argument.
Ground 4
The learned Trial Judge erred in determining that she was bound to accept the Father’s estimate of income he had given to the Child Support Agency.
The complaint here is that her Honour erred by referring to s 117(6) of the Assessment Act in [178] when that sub-section does not stand for the proposition identified by her.
There is no doubt that her Honour was incorrect in referring to s 117(6), and it is plain that the sub-section that her Honour should have referred to is s 123A(6). However, although there is error by her Honour in mis-describing the relevant sub-section, that cannot result in appellate interference, because it is the proposition which is relevant, and her Honour was correct in identifying that.
In addition, the mother appears to complain that her Honour should have still assessed the father’s income for child support purposes. However, that is what her Honour did. The father estimated his annual income at approximately $45,000, and her Honour accepted that that was his earning capacity, and in accordance with s 123A(6) found no basis for departure from the child support assessment once her Honour determined that she was not satisfied that the father’s earning capacity was greater than was reflected in his declared estimated income.
Ground 5
The learned Trial Judge’s decision miscarried by failing to identify reasons why she set the Father’s income at $45,000 and failed to consider the Mother’s arguments about how the Father’s income should be set.
The complaint here is that her Honour failed to refer in her reasons for judgment to the mother’s counsel’s submissions that the effect of Division 115 of the Income Tax Assessment Act 1997 (Cth) meant that the father’s income for child support purposes was $90,000.
There are of course the same obstacles in the way of this ground as I identified earlier in relation to Ground 3. There is also an obvious reason why her Honour would not have referred to the mother’s counsel’s submission, and that is, it is unsound.
The evidence of the father was that the proceeds of sale of a property at R provided the basis for his estimate of income. Separately, he referred to that sale triggering a capital gains event.
However, there was no evidence to say that the capital gain was $90,000, and that the $45,000 was the taxable amount. It was not open to the mother’s counsel to submit to her Honour that that was what the father was told by his accountant; that simply was not the evidence.
What Division 115 does is provide a 50 per cent capital gains tax exemption where a property is held for at least 12 months. In other words, if the capital gain is, for example, $90,000 then the effect of the Division is to reduce that to $45,000 for the purpose of assessing capital gains tax. To repeat though there was no evidence that the $45,000 was calculated in that way.
Further, as the father says in his written summary of argument, the evidence was that he was still building the residence on the R property in early December 2014, and he sold it later that month. Thus, the 50 per cent exemption did not apply.
Conclusion
I have found merit in Ground 1. The error there identified renders not only her Honour’s finding as to the father’s state of health unsafe, but given that that finding was a necessary step in her Honour’s ultimate conclusion that the father’s earning capacity is not greater than is reflected in his declared estimated income, that conclusion is also unsafe. As a result, leave to appeal should be granted and the appeal allowed.
During the hearing of the appeal the father’s counsel conceded that if the appeal was allowed then her Honour’s orders should be set aside and the proceedings remitted to the Federal Circuit Court of Australia for rehearing before a judge other than Judge Small. I agree that that is the appropriate course of action given that the father would want to present further evidence at least as to his state of health, and the relationship between that state and his decision to change occupations. The mother of course may then want to present her own evidence on this issue.
Costs
At the conclusion of the hearing I sought submissions from the parties as to the question of costs depending on the result of the appeal.
If the appeal was successful, the mother did not seek an order for costs, but sought costs certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) for the hearing of the appeal and the rehearing. In the circumstances it is appropriate that that should occur.
For the father’s part he indicated that he had not incurred any legal costs, and that he did not seek a costs certificate for the hearing of the appeal, but, of course, he should have a costs certificate for the rehearing.
I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland Court delivered on 30 November 2016.
Associate:
Date: 30 November 2016
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