Bond v Child Support Registrar & Anor
[2018] FCCA 422
•23 February 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BOND v CHILD SUPPORT REGISTRAR & ANOR | [2018] FCCA 422 |
| Catchwords: CHILD SUPPORT – Application seeking judicial review of child support decision of the Administrative Appeals Tribunal – question of law – departure order made on basis of financial resource attributable to one parent – financial resource consists of monies paid to parent by his father – sum characterised as a loan by payee and not financial resource – legal error – allegation of breach of principles of natural justice – procedural unfairness – no legal error found – appeal dismissed. |
| Legislation: Child Support (Assessment) Act 1989, ss.4, 4(2), 2S, 43(1), pt.6A, 98B, 98C, 117(2) Administrative Appeals Tribunal Act 1975, ss.44AAA, 33, 66 |
| Cases cited: Humphries & Berry (SSAT Appeal) [2008] FMCA 409 Walker & Fielding (SSAT Appeal) [2010] FMCAfam 320 Henriques & Hatzis (SSAT Appeal) [2014] FCCA 1194 Collector of Customs v Pressure Tankers Pty Ltd and Pozzolanic Enterprise Pty Ltd [1993] 43 FCR 280 Apthorpe v Repatriation Commission (1987) 13 ALD 656 Minister for Immigration & Multicultural Affairs v Yusuf (2001) 206 CLR 323 Htun v Minister for Immigration & Multicultural Affairs (2001) 194 ALR 244 LDME & JMA [2007] FMCAfam 712 Child Support Registrar & Crabbe and Anor [2014] FamCAFC 10 Minister for Immigration & Multicultural Affairs v Al Miahi (2001) 65 ALD 141 Minister for Immigration & Ethnic Affairs v Wu Shan Ling [1996] 185 CLR 259 S395/2002 v Minister for Immigration & Multicultural Affairs (2003) 216 CLR 473 Minister for Immigration & Citizenship v Li (2013) 297 ALR 225 SZUWX v Minister for Immigration & Border Protection [2015] FCA 1389 Hall & Hall [2016] HCA 23 In the marriage of Kelly and Kelly (No 2) (1981) FLC ¶91-108 at 76,803. Re Minister for Immigration & Multicultural Affairs ex parte Durairajasingham (2000) 168 ALR 407 | ||
| Applicant: | MR BOND | |
| First Respondent: | CHILD SUPPORT REGISTRAR |
| Second Respondent: | MS BOND |
| File Number: | ADG 115 of 2017 |
| Judgment of: | Judge Brown |
| Hearing date: | 22 August 2017 |
| Date of Last Submission: | 22 August 2017 |
| Delivered at: | Adelaide |
| Delivered on: | 23 February 2018 |
REPRESENTATION
| Counsel for the Applicant: | Ms Horvat |
| Solicitors for the Applicant: | DW Fox Tucker Lawyers |
| Counsel for the First Respondent: | Mr Bishop |
| Counsel for the Second Respondent: | In person |
| Solicitors for the First Respondent: | Miles Oakley |
ORDERS
The notice of appeal filed on 27 March 2017 is dismissed.
The applicant pay the first respondent’s costs fixed in the sum of $5,000.00.
IT IS NOTED that publication of this judgment under the pseudonym Bond v Child Support Registrar & Anor is approved pursuant to s.110X(4)(h) of the Child Support (Registration and Collection) Act 1988 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 115 of 2017
| MR BOND |
Applicant
And
| CHILD SUPPORT REGISTRAR |
First Respondent
| MS BOND |
Second Respondent
REASONS FOR JUDGMENT
Introduction
This is an appeal, from a decision of the Administrative Appeals Tribunal,[1] in respect of a child support matter. The relevant decision was made on 13 February 2017.
[1] Hereinafter referred to as either “the AAT” or “the Tribunal”
The decision in question set aside an earlier determination of a senior case office within the Child Support Agency and subsequently confirmed by an objections officer, to fix the applicant’s adjustable taxable income for the purposes of calculating child support at an amount of $127,500.00 for the period from 28 April 2016 to 27 April 2018.
The salient issue for the court is whether the Tribunal properly acquitted the jurisdiction conferred upon it or fell into legal error when it characterised sums of money advanced to the applicant concerned to be a financial resource within the ambit of the Child Support legislation.
Background
Pursuant to the provisions of section 44AAA of the Administrative Appeals Tribunal Act 1975 (Cth)[2] a party to the proceedings before the AAT, which can be characterised as a child support first review[3] may appeal to this court in respect of a decision made by the AAT, in a child support matter. However, the only ground on which such an appeal can be based is “on a question of law”.
[2] Hereinafter referred to as the “AAT Act”
[3] Defined by section 3 of the AAT Act as meaning a proceeding that is an application in the social services and child support division of the AAT for first review as provided by part VIIIA of the Child Support (Registration & Collection) Act 1988
The identity of the appellant and the second respondent in these proceedings have been anonymised, in both these proceedings and the resulting reasons for judgment, as a consequence of the provisions of section 66 of the AAT Act. They are the parents of a child who was born on (omitted) 2006, so is accordingly ten years of age and attending a private school. I will refer to her as “[X]”.
The appellant is the child’s father; whilst the second respondent is her mother. For the sake of convenience, I will refer to the appellant as “the father” or “Mr Bond” and the second respondent as “the mother” or “Ms Bond”.[4]
[4] These are pseudonyms in each case and indeed in the case of the paternal grandfather. However, in my view, they are easier to utilise than the mechanically derived combination of letters and numbers, which the court administration has utilised to anonymise the proceedings.
The father is a director of a company, “(business omitted)”,[5] which has recorded significant losses over the past several financial years. However, his income tax return has disclosed a trust distribution of $37,000.00 for the financial years ending in 2015 and 2016 respectively. It is the father’s case that he has survived financially as a consequence of loans provided to him by his company.
[5] Also a pseudonym.
The source of the moneys received by the father is a discretionary trust operated by his father. For the sake of convenience and to preserve his anonymity, I will refer to him as the “paternal grandfather” or “Mr Bond Senior” in these reasons for judgment and the trust as the “Bond Family Trust”. The sole shareholder in (business omitted) is (business omitted) Pty Ltd., which is also the trustee for the Bond Family Trust.
The mother is employed as a (occupation omitted). She is a PAYG tax payer. In the 2015 financial year her taxable income was $19,409.00; whilst in the 2016 financial year it was $29,474.00. The mother has another dependent child, who was born on (omitted) 2013.
The father and mother were previously married but are now divorced. The mother brought an application for child support payable by the father for their child, which was registered with the Child Support Registrar for collection on 12 September 2011.
There is no controversy that the child at relevant times has been in the predominant care of the mother, whilst spending significant periods of time in the care of her father. In percentage terms at relevant times, the child was in the care of the mother for 85% of the time and with her father for 15% of the time.
In early February of 2016, on the basis of their respective adjusted taxable incomes, which in turn are based on their respective taxable incomes,[6] and the respective levels of care each provided for the child, the father was assessed to pay the mother an amount of $2,352.00 per annum in child support for the child which equated to a sum of $45.00 per week.
[6] See Child Support (Assessment) Act 1989 (Cth) at section 43(1)
On 28 April 2016, the mother applied to the first respondent[7] for a change of assessment on the basis that the then current assessment did not properly reflect the father’s income, property and financial resources and his earning capacity.
[7] Hereinafter referred to as “the Child Support Registrar” or “the Registrar”
It was the mother’s position that during the course of her marriage to the father, he received regular payments from the paternal grandfather, who also paid mortgage payments and other household expenses incurred by the father.
The father’s position was that the business operated by him provided no income as it had operated at a loss. He asserted that the sole shareholder in his business was a proprietary company, which was the trustee for a discretionary trust operated by the paternal grandfather.
The father characterised the payments made to his business by the trustee as loans which enabled the business to continue. In these circumstances, the father maintained that there was a significant discrepancy between his income and that of the mother. As a consequence, he cross-claimed for a departure on the basis of the mother’s earning capacity.
A senior case officer was delegated to deal with the mother’s application for departure. The senior case officer found that the father received significant financial benefits from entities controlled by the paternal grandfather. These benefits were assessed to be a weekly amount of $1,330.00 together with an additional amount of $2,709.00. In addition, it was found that corporate entities related to the paternal grandfather provided the father with a company motor vehicle.
On the basis of these findings, the senior case officer concerned found that a conservative estimate of the income and financial resources available to the father was a gross amount in excess of $108,000.00. As a consequence, the senior case officer set the father’s adjusted taxable income at an amount of $108,000.00 for the period between 28 April 2016 and 27 April 2018.
The father objected to this decision. His objection was subsequently disallowed by an objections officer. As a consequence of these decisions, the father applied to the Social Services and Child Support Division of the AAT for a review of the child support determination.
The AAT considered the father’s application and determined, on 13 February 2007, to set aside the decision under review and, in substitution determined that the father’s adjustable taxable income should be varied upwards to $127,500.00 for the period 28 April 2016 to 27 April 2018. It is this decision which is subject to review in these proceedings.
The legal provisions applicable to departure applications
Part 6A of the Child Support (Assessment) Act 1989 (Cth)[8] provides the process by means of which both a liable parent and a carer may apply to the child support registrar for a departure from an administrative assessment of child support. Pursuant to section 98B, special circumstances must exist before any such application is made.
[8] Hereinafter referred to as “the Assessment Act”
In addition, pursuant to the provisions of section 98C, the child support registrar must be satisfied as to each of the following matters:
·a ground for departure is established pursuant to section 117(2) of the Assessment Act.
·it would be just and equitable vis-a-vis the child, the liable parent and the carer entitled to child support, to depart from the applicable child support determination;
·it would be otherwise proper to so depart.
The provisions of section 117(2), which are relevant to the current proceedings, are contained in subparagraph (c), which reads as follows:
“(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(i)…
(ia)because of the income, property and financial resources of either parent; …”
The major issue in this appeal concerns the manner in which the AAT characterised the moneys provided to the father by entities controlled by the paternal grandfather, particularly (business omitted) Pty Ltd and the Bond Family Trust, for the purposes of section 117(2)(c)(ia) of the Assessment Act. As previously indicated, the AAT regarded the sums as being a financial resource of the father and therefore amenable to a child support assessment.
On the other hand, the father asserts that the AAT erroneously characterised the moneys in this way and, in so doing, fell into legal error. It is his position that the evidence available to the AAT demonstrates that the sums in question are to be regarded as loans, which are subject to repayment rather than as a financial resource.
In addition, the father asserts that the proceedings before the AAT are vitiated because the Tribunal failed to accord him natural justice and, in so doing, fell into legal error. The applicant’s notice of appeal to this court identifies two such legal errors which are as follows:
“1. Whether the Tribunal incorrectly included as financial resources of the Applicant amounts that may in future be lent or given to him directly by his father or indirectly from a source his father alone controls as a financial resource of the Applicant.
2. Whether in the conduct of its review the Tribunal failed to comply with the principles of natural justice.”
In these circumstances, the applicant seeks that the decision of the AAT be set aside and the application be remitted back to the AAT for reconsideration. The grounds of appeal are as follows:
“1. The Tribunal incorrectly included in the prospective financial resources of the Applicant loans expected to be provided to him by his father or [(omitted) Pty Ltd], a company in which the Applicant was not a director or shareholder and which was controlled by his father.
2. The financial circumstances of the Applicant showed his sole personal financial resources were limited to income distributed to him from a family trust controlled by his father. He had no capacity to borrow money as his income and expenses were such as to provide him with no ability to meet the costs of or repay any borrowing. He had no personal capacity to pay the amount ordered from borrowings or the receipt of gifts.
3. The Tribunal incorrectly concluded that the amount of the loans were not disclosed to it because no ledger for loans between the Applicant and his father had been disclosed to it in response to its directions. In doing so the Tribunal, without due enquiry, incorrectly concluded that such a ledger existed and was not disclosed. This conclusion was against evidence that the amount of loans made through [(omitted) Pty Ltd] to the Applicant was annually calculated by Mr Bond Senior and debited to him by [(omitted) Pty Ltd].
4. The Tribunal was not able at law on the evidence before it to conclude that loans or amounts, described by his father as compassionately provided to the Applicant, would continue to be made to the Applicant. The evidence from the Applicant's father was that he would endeavour to see the payments continue as long as he was able, but he expressed concerns about his ability to do so which were inappropriately disregarded.
5. The Tribunal denied the Applicant natural justice in:
5.1 giving to him directions referring to ledgers of an entity without further explanation, assuming that he would understand this terminology, also in assuming that a ledger of loans made as between his father and himself would have been prepared and exist and be within his capacity to produce in response to its Directions;
5.2 failing to indicate to the Applicant that loans he might obtain and to his father that loans or payments he might make or cause to be made in the future were an important issue in its assessment of the Applicant's financial resources and, while accepting that there was no obligation on his father to make or cause to be made such loans or payments, failing to make due enquiries of his father as to the prospects of such amounts continuing to be made beyond eliciting a response from him, against concerns he expressed about his ability to do so, that he would continue to do so as long as he was able; and
5.3 making an order requiring the payment of monies which the Applicant has no capacity from his own resources to pay and the only guarantee of payment of which is the prospect or possibility of further loans from his father or a source controlled by his father upon whom there is no obligation to provide any such monies.”[9]
[9] See Notice of Appeal filed 28 March 2017 at page [3]
The hearing before the AAT
The central issue for the Tribunal was how the various sums advanced to the father and which supported his recurrent living expenses were to be categorised for child support purposes. The father asserted that the sums constituted loans which necessarily would have to be paid back at some stage or other. On the other hand, it was the mother’s position that the father regularly received money, which she asserted was not reflective of a person who was in straitened financial circumstances.[10]
[10] See Transcript of proceedings of 13 February 2017 at page 17
I have been provided with a transcript of the proceedings before the AAT. This transcript indicates that the father, paternal grandfather (by telephone) and mother provided evidence to the Tribunal. In its reasons for decision, the AAT described the paternal grandfather as a lawyer and tax specialist.
It further found that the paternal grandfather controlled a company which was the trustee of a discretionary trust which bore his name. As previously indicated, I have elected to refer to these entities as (omitted) Pty Ltd and the Bond Family Trust respectively.
Neither the father nor Mr Bond Senior disputed the existence of either the company or the trust or that the company had regularly advanced monies to the father. The controversy centres on the characterisation of the sums in question.
The Tribunal had available to it the bank account of (business omitted), which is the business operated by the father. This account showed regular payments form (business omitted) Pty Ltd. The father’s evidence was that his business had previously been profitable but had not been so for the past two years, which was largely attributable to his (the father’s) ill health.
His evidence was that, at relevant times, the business’ main focus had been on the marketing of a product called (product omitted). He described the business as being at a fragile stage in its development of the sale and marketing of this product. He indicated that he was the sole person engaged in this activity as the company did not have any other employees. He was a director of the company but not a shareholder. He did not draw a wage in respect of his activities. In this context it was his evidence that, without a capacity to borrow, the business would not have been viable.
For obvious reasons, the provenance of the regular deposits ($500.00 & $830.00 respectively) appearing in the bank statement of (business omitted) was germane to the Tribunal’s inquiry. The convening member quoted from the statement, which characterised the sums as being from (business omitted) Pty Ltd and thereafter had the following discussion with the father:
MS MILLER: So first of all looking at those amounts, those two amounts that say 500 and 830, can you tell me about those.
MR BOND: They're loans that I've been able to take against the equity of the house for us to be able to have our living expenses covered. That isn't reflective of the - if there had been a wage the position that I'm in a wage would not be reflected as that because the business is losing money. As it - as I've said all along, I mean, that's quite a self-explanatory listing because it is a loan. Those loans are documented - - -
MS MILLER: Can I just ask -yes. Well, tell me about them.
MR BOND: There is a documented loan there agreement with my father which we've tidied up so as to the questions being raised on that. I've signed a loan agreement with him which effectively covers me to the extent of the equity in my home. The only - - -
MS MILLER: Just - I have some more questions - specific questions on that.
MR BOND: Yes.
MS MILLER: First of all, how long has this been the case that you 're getting these payments of 500 and then 830? When did that start?
MR BOND: I can't tell you that off the top of my head. I'm sorry, I don't .....
MS MILLER: Years? Months?
MR BOND: It would be some time after the divorce settlement. MS MILLER: And when was that?
MR. BOND: Well, it goes back some six years or five years.”[11]
[11] Ibid at page 7 - 8
Accordingly, the import of the father’s evidence was that the various sums concerned were in the nature of loans to cover his living expenses and were taken or secured against the equity held by him in his home. It was also asserted by him that these loans were documented. The amounts paid and the regularity of their payments were matters which appeared to have been conceded, as was the fact that they had been made for a number of years.
The Tribunal reasons indicate that the father had been directed by it to provide ledgers of any loans other than bank loans made to him pursuant to the provisions of section 33 of the AAT Act. This section prescribes the procedures applicable to the Tribunal and authorises it to issue directions, including a direction requiring a party to proceedings before it to provide further information.
Mr Bond Senior formally responded to this direction on the father’s behalf. He wrote as follows:
“No loans have been made to [Mr Bond] from any other entity (that expression being taken to refer to a company or trust) in the financial years 2014 – 2016. Accordingly there are no ledgers for any such loans.”[12]
[12] Ibid at [33]
The AAT indicated that Mr Bond Senior in his evidence, had indicated that the letter, written by him in response to the section 33 request made by the Tribunal for documentary evidence in respect of the amounts so advanced, and the statement contained in the letter concerned had “been carefully made”.
The Tribunal further indicated that Mr Bond Senior had deposed he had provided the father with loans to an amount of $200,000.00, which it found to be incongruent with other evidence indicative of the fact that (employer omitted) had received around $100,000.00 from (business omitted) Pty Ltd each year since the parties separated, which was closer to five years than two.
The member also expressed herself to be curious at the apparent inconsistency between the first component of this statement and the father’s evidence that he was regularly receiving what he ascribed as being loans, into (business omitted)’s bank account, which were recorded as coming from (business omitted) Pty Ltd.
The father expressed himself as being confused about the issue. In the relevant reasons the member also expressed some surprise that the paternal grandfather, given his (omitted) qualifications, did not consider “a loan from a natural person [to be] a loan from an entity.”[13]
[13] See reasons for decision at [34]
The father further deposed that the loans were secured against his home, as in effect, as the only means available to repay these loans was the net equity in his home, at least until such time as his business came good and he would presumably be able to start repaying the various sums advanced to him, the home was his only substantial asset.[14] He did not dispute that he had not as yet paid back any of the sums so advanced.
[14] Ibid at page 11
In answer to questions regarding potential hardship arising to him if the child support was increased, the father indicated that he might have to declare bankruptcy, which would necessitate the immediate sale of his home and what he described as the instant repayment of any loans for which he was responsible to (business omitted) Pty Ltd in its capacity as trustee of the Bond Family Trust.
It was further the father’s evidence that he was not directly privy to what was the precise amount of the various loans advanced to him, as his father was the holder of that information and it was his prerogative whether it was released or not. The father further deposed that he fully intended to repay the sums and indeed was under some pressure to do so from his father, as he (the paternal grandfather) was in ill health and wished to retire from full-time work. However his efforts at repayment had been delayed by his own recent ill health.
The Tribunal member specifically put to the father that the sums in question were open to being characterised as a financial resource available to the father. To which he responded as follows:
“Well, I believe it's a loan and it's described as a loan in every term.
It's called a loan. It is a loan. There is a - if there had been another entity that was providing that loan, I wonder whether there would be questions about that, and it's the ability to -to borrow that money has been a responsibility that I've taken on on the basis that it's the best for the family ongoingly and support the longer term - for a couple of years there we've had a very rough run with the business for a range of reasons, you know, due in no undue part, but not blaming directly, my breakdown of the marriage. So when we - now put ourselves in a position where we're back on track to be able to do that. Without a facility to be able -to be able to borrow that money, we would be in a far worse financial situation which really is only at the discretion of the lender that we're not, and in that situation then there would be no family support benefit that I would be able to pay whatsoever, so I guess my -my comment has been all the way this process, a loan - it says it's a loan because it is a loan, and a loan is a loan. It's not income.”[15]
[15] Ibid at page 14
The AAT further indicated that it had directed the father to provide evidence regarding the manner in which [X]’s school fees were paid. Ms Bond indicated that the fees were around $8,000.00 per annum and were shared equally between the parents. The Tribunal found that the father’s half of the fees were paid directly to [X]’s school by means of amounts advanced from an account held by (business omitted) Pty Ltd. The relevant account was marked as being loan (omitted). The Tribunal calculated these amounts to include extracurricular activities for [X] and to amount to $4,611.00 in 2015 and $3,962.00 in 2016.
The Tribunal further summarised the oral evidence of the father as indicating that the paternal grandfather paid the council rates and levies on the property owned by the father in which he lived and the cost of his health insurance. Again, each such sum was characterised as being a loan. These sums totalled $1,924.00 per annum.
In summary, the father expressed himself as being grateful to the paternal grandfather that, through the provision of the loans to him, he (the father) had been able to continue to operate his business, support his family, whilst maintaining the ownership of his home, which would have otherwise been impossible without the loans in question, which he further indicated would have to be repaid. [16]
[16] Ibid at page 24
In this context, the AAT put both to the father and later to the paternal grandfather, a copy of an agreement on the letterhead of the paternal grandfather’s (employer omitted), which it was said constituted the loan agreement between the father and the Bond Family Trust, through (business omitted) Pty Ltd. I have not been provided with a copy of this document but it is quoted in the Tribunal’s decision.[17] It terms can be summarised as follows:
·The whole or any part of any amount lent is repayable within three months of a written demand being made of the father by (business omitted) Pty Ltd;
·The loans bear interest at a rate to be stipulated by Mr Bond Senior but not to exceed the rate payable by the father in respect of his home loan;
·The father has the right to repay all or part of the loans at any time;
·(business omitted) Pty Ltd has a discretion to set off any amounts distributed to the father from the Bond Family Trust against the amount of any loan advanced by (business omitted) Pty Ltd to him;
·The paternal grandfather may by his will, direct that any money to be inherited by the father pursuant to that will be applied to repay the loans outstanding by the father at the time of the paternal grandfather’s death.
[17] Ibid at [39]
The AAT said as follows in its decision in respect of the paternal grandfather’s financial situation:
“[the paternal grandfather’s] income, property and financial resources are not relevant to these proceedings. What is relevant to these proceedings is whether amounts provided by these entities, in particular amounts provided to [the father by (business omitted) Pty Ltd are a financial resource to the father].”[18]
[18] See reasons for decision at [24]
I agree that this was the central issue in the review proceedings before the Tribunal. In this context, I do not consider that it can be said that the Tribunal posed for itself the wrong question. I will return to this issue in due course when considering whether there has been any failure of jurisdiction on the Tribunal’s part.
In this context of this question, and from its access to the father’s bank accounts for the period from December 2015 to December 2016, the Tribunal recorded the following finding:
·The father received $1,330.00 per week, in two sums of $500.00 and $830.00 respectively, which were marked in the relevant statement as being periodical payment from [(business omitted) Pty Ltd] Loan [Mr Bond Senior][19];
·The father received $2,709.00 per month, which was noted as deposit online PYMT [(business omitted) Pty Ltd] - Mortgage.[20]
These sums added up to $101,668.00 per annum. Mr Bond Senior did not dispute that these sums were paid.
[19] Also a pseudonym referring to the father.
[20] See Reasons for decision at [25]
The Tribunal also found that (business omitted) provided the father with the use of a motor vehicle and a mobile telephone, which he largely used in running the business but which also provided him with some private use. The motor vehicle was also used by other family members, including Mr Bond Senior.
Given the contents of the father’s evidence, arrangements were made for Mr Bond Senior to give evidence before the Tribunal by telephone. The first question he was asked centred on the payments made to the father, which he later accepted came from him via (business omitted) Pty Ltd from the Bond Family Trust and which he characterised as being “personal loans from me to him”. He deposed as follows:
“The payments that are made to him are lent to him to help him overcome his current financial difficulties and in the hope that he will soon re-establish himself and be able to support himself completely.”[21]
[21] See Transcript of proceedings of 13 February 2017 at page 50
In response to a question as to whether the paternal grandfather had sought security in respect of the various advances, Mr Bond Senior indicated that his son had promised to repay the sums and he (the father) owns the house. Mr Bond Senior later characterised this, in conjunction with the written agreement, which he and the father had executed as amounting to an equitable charge over the house.
Mr Bond Senior was not in a position to indicate what was the exact amount which had been advanced to the father. He indicated that the last time it had been calculated it had been around $200,000.00. He further indicated that none of this amount had been repaid as yet, and no demand for repayment had been made.
In this context, after the terms of the terms of the Tribunal’s directions to the father had been discussed with him and after he had conceded that he had assisted in prepared the response to it, he was asked specifically whether he kept records of the loans, which he had advanced to the father. He answered as follows:
“Yes. Sure. Well, I don't know that there were any ledgers established for him for these particular loans.
So how do you know, as ultimately the person controlling the trust, etcetera, how much he owes?---1 know because I just make that addition each year and advise the accountants that that's what -that's the total of the amounts that have been advanced to him. That's in - for their preparation of the financial statements for the trust.”[22]
[22] Ibid at page 54
The Tribunal specifically asked the paternal grandfather to comment on how he would categorise the payments being made to the father, particularly in the context of whether they were to be considered a financial resource for child support purposes. He said as follows:
“Well, they are entirely at my discretion, and they're only made to him because he doesn't have any resources with which to sustain himself at the present time. So - so I would regard them as compassionate loans. Not really a financial resource of his except if he's able –to the extent he's able to create income for himself the payments would reduce and - or he's able to modify his lifestyle in some way that - or worst-case scenario, if I can't sustain him, he will - can't assist him, then he will have to realise the only asset he has.”[23]
[23] Ibid at page 55
Mr Bond Senior, in his evidence to the Tribunal, emphasised that the payments advanced to the father occurred at his (the paternal grandfather’s) discretion and, as such, could not be regarded as being permanent in nature. He deposed as follows:
“Well you might know that the payments that do derive from [(business omitted) Pty Ltd] are very dependent on my capacity to earn income and I am 73 years old, and that capacity is rapidly diminishing, for a variety of reasons…but those payments are reasonably precarious…I have a life threatening disease at the present time which will cause me to change my work pattern from the beginning of the month…I will try not to affect [the loans] for as long as possible but inevitably [they will be affected].”[24]
[24] Ibid at page 56
The AAT summarised the father and paternal grandfather’s evidence in respect of the payment of the various sums in question to the father as having commenced after the father and mother had reached a settlement of their matrimonial property issues, approximately five years earlier. This settlement had required the father to re-finance his home mortgage. The father indicated that he had received approximately the same sum each year from (business omitted) Pty Ltd, since this re-financing had occurred.
The evidence of the father and Mr Bond Senior was that neither the latter nor (business omitted) Pty Ltd holds a formal mortgage on the father’s home. The father held equity in the home amounting to approximately $250,000.00, which he believed was a lesser amount than the sum which he owed either to his father or (business omitted) Pty Ltd.
The findings of the Tribunal
The Tribunal found that the father had not made any repayments to either (business omitted) Pty Ltd or the paternal grandfather and had not been required to do so. It further found that amounts of around $100,000.00 per annum had been advanced to the father since he and Ms Bond had reached their financial settlement. The Tribunal indicated as follows:
“[Mr Bond] has not been required to make any repayment of the amounts paid. While both [Mr Bond and Mr Bond Senior] state [Mr Bond Senior] is looking forward to retirement and currently has health concerns, [Mr Bond Senior] said he would continue to provide those amounts to [the father] for as long as he could do so.”[25]
[25] Ibid at [32]
The Tribunal rejected the contention that the monies advanced by (business omitted) Pty Ltd were secured against the father’s home for the following reasons:
·The only reference to the property in the loan agreement was that any interest stipulated by the paternal grandfather could not exceed the interest calculated in respect of the actual mortgage on the property;
·The amount loaned exceeded the amount of this mortgage;
·The absence of any specific reference to the paternal grandfather holding security over the property.
The Tribunal expressed concern that the agreement in question was expressed to be between the paternal grandfather and the father but (business omitted) Pty Ltd actually made the advances in question. It also indicated that it found it difficult to see how the company could make a demand for repayment of the father or set off distributions made by the Bond Family Trust against the loans in the absence of any ledger or record of the loans having been made.
The absence of direct financial records memorialising the amounts said to have been advanced by the paternal grandfather to the father was a subject of comment by the Tribunal, which noted authority placing the onus on the father to disclose his financial circumstances to the Tribunal. It indicated that if it was not satisfied there had not been such complete disclosure, it need not be unduly cautious about making findings in favour of the opposing party.[26]
[26] See Humphries & Berry (SSAT Appeal) [2008] FMCA 409 at [31] per Slack FM
In this context, the Tribunal found that the father had not been fully candid about his financial affairs, particularly in regards to his financial relationship with his father. It noted that it had only discovered that (business omitted) Pty Ltd had advanced money to the father as a consequence of the Agency obtaining his bank account statements rather than through the direct actions of the father. It found as follows:
“[The father] has failed to provide detailed information on the amount he has purportedly borrowed from his father and the entities associated with his father. This means it is difficult to determine the amounts he has received other than the amounts discovered through the Child Support Agency obtaining his bank account statements and from specific questions put to him. In these circumstances, I am not satisfied he has made full disclosure of his financial circumstances and I need not be unduly cautious about making findings in favour of Ms Bond.”[27]
[27] See Reasons for decision at page 7 [43]
The Tribunal considered the meaning of financial resource as contained in section 117(2)(c)(ia) of the Assessment Act. In so doing it considered the following passage from Slack FM in Walker & Fielding (SSAT Appeal):[28]
“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.”
[28] Walker & Fielding (SSAT Appeal) [2010] FMCAfam 320 at [71] & [78]
The late learned judge also noted that the expression itself was not defined in the Assessment Act and therefore its meaning should take its colour from the objective and principles of the Act overall. In the case, Slack FM was dealing with monies which a party utilised to fund living expenses. In this context, he found as follows:
“The issue for the SSAT was not to determine what if any proprietary right he had in those funds. The SSAT were simply obliged to consider whether those monies represented a financial resource and if so what would be a just and equitable determination of the level of his child support having regard to the fact that he had that resource available to him.”
The Tribunal found that the sums advanced by (business omitted) Pty Ltd to the father amounted to $107,168.00 per annum. It further found that for a taxpayer “to earn an equivalent amount, a taxpayer would have to earn approximately $127,500” resulting in an annual child support liability of $11,368.00.
Overall, the Tribunal made the following findings:
“I find that the amounts paid to his account, the payments of [X]’s school fees on his behalf, the payment of his council rates and the use of a car and mobile phone are all financial resources of Mr Bond. These payments are longstanding and ongoing. He has not been required to repay any of these amounts. While Mr Bond Senior is looking towards retirement and has current health issues, he also said these payments will continue as long as he is able to make them.
In this case, payment to Mr Bond's bank account amount to approximately $101,668 per year. School fees paid on his behalf amount to approximately $4,000 per year. Payment of his council rates are $1,924 per annum as listed on his Statement of Financial Circumstances, less the emergency services levy amount of $393 leaving approximately $1,500 per year.
Mr Bond has the use of a car and mobile phone, as well as having health insurance paid for him however the value of these to him is difficult to calculate. As a result instead of adding these to his financial resources, I will disregard these amounts but will not make any other allowance for tax deductions.
This results in Mr Bond's financial resources equating to approximately $107, 168. To earn an equivalent amount, a taxpayer would have to earn approximately $127,500.
Using the child support calculator, this would result in a child support liability of approximately $11,368. In the absence of any departure from the administrative assessment Mr Bond is liable to pay approximately $1,500 per annum.
Mr Bond has significant financial resources at his disposal, and this is a special circumstance as contemplated by the Act. The application of the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by Mr Bond for [X].”[29]
[29] See Reasons for decision at page 7 [45] – [50]
As indicated above, the departure process to be conducted firstly by the Child Support Registrar and subsequently by its delegates and on review by the Tribunal entails a three step process involving an assessment of whether a specific ground for departure is made out and then turning to considerations of equity and propriety.
The Tribunal considered issues of justice and equity in its reasons for decision, by reference to a number of criteria, including [X]’s individual needs and the fact that the legal obligation to maintain her resided with her parents and not her paternal grandfather. In this context, the Tribunal indicated that it had disregarded Mr Bond Senior’s income, property and financial resources “other than the extent to which those entities provide a financial resource to [the father]”.[30]
[30] Ibid at page 9 [59]
The Tribunal, in this context, also considered direct hardship arising to the parties concerned, including [X], if the child support assessment was changed. It noted Mr Bond’s evidence that, if the child support assessment was increased, he personally was at risk of losing both his home and business; [X] was at risk of having her education and extracurricular activities curtailed; and he might have to declare bankruptcy.
In the context of hardship, the Tribunal considered the evidence of both the father and paternal grandfather regarding the characterisation of the monies advanced by Mr Bond as being loans, subject to repayment, rather than a financial resource, as it had characterised them. The Tribunal said as follows:
“[Mr Bond] he may lose his house or the business as [(business omitted) Pty Ltd] can request instant repayment of the loans. On the basis of the longstanding conduct of [(business omitted) Pty Ltd] in not seeking repayment of the loans, and the express ability to address the loans in distributions under [Mr Bond Senior’s] will, I do not consider it likely in the immediate future that [(business omitted) Pty Ltd] will require repayment or any or all of the loans…
[Mr Bond Senior] gave evidence that despite his intention to reduce his work and his current state of health he would try not to affect his payments to [Mr Bond] for as long as possible. As a result, I do not consider the stated effect on [Mr Bond] of losing his house or bankruptcy is a realistic concern if these payments continue at the current rate for the foreseeable future.”[31]
[31] Ibid at page 11 [78] – [79]
Counsel for the father is critical of these findings, asserting that there was no evidentiary basis to support them and, in effect, the Tribunal has transferred the responsibility for supporting [X], from the parents as the Assessment Act stipulates to the paternal grandfather and Ms Bond. Essentially, there was no evidence to indicate the monies would continue for the foreseeable future.
Ultimately, the Tribunal concluded that it was both just and equitable and otherwise proper to vary Mr Bond’s adjustable child support income to $127,500.00 for a period of two years form the date of Ms Bond’s application on 28 April 2016.
The Tribunal indicated that it had considered how long the period of departure should be in the light of Mr Bond Senior’s evidence of ill health and a desire to change his work patterns and whether there should be any retrospectivity in respect of it. In this context, the Tribunal considered as follows:
“While the financial resources provided to [Mr Bond] have been ongoing for a considerable period of time, there is little to show that he would have the capacity to pay a retrospective increase to his child support liability…
While [Mr Bond Senior] is looking at changing his work pattern and has current concerns, there is little before me to show how this would affect the amounts provided to [Mr Bond]. [Mr Bond Senior] said he would try to maintain these payments for as long as possible. A period of two years provides some certainty for the parties, but is not so long as to ignore the potential effects of a change to the amounts provided to [Mr Bond].”[32]
[32] Ibid at page 13 [92] – [93]
Legislative framework
The principle object of the Assessment Act is to ensure that children receive a proper level of financial support from their parents.[33] This object is supported by the following particular objects set out in section 4(2) as follows:
a)that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and, in particular, that parents with a like capacity to provide financial support for their children should provide like amounts of financial support; and
b)that the level of financial support to be provided by parents for their children should be determined in accordance with the costs of the children; and
c)that persons who provide ongoing daily care for children should be able to have the level of financial support to be provided for the children readily determined without the need to resort to court proceedings; and
d)that children share in changes in the standard of living of both their parents, whether or not they are living with both or either of them; and
e)that Australia is in a position to give effect to its obligations under international agreements or arrangements relating to maintenance obligations arising from family relationship, parentage or marriage.
[33] See Assessment Act at s.4(1)
The objective that the level of child support, payable by parents for their children, should be readily determined is, at least in part, achieved by the application of the child support formula to the circumstances of the parents concerned.
The formula itself is informed by regular statistical research undertaken by agencies of the Australian Government, relating to the actual costs of provided for children within the context of wages paid to average salary earners within Australia.
The intention of the legislature is that the formula should be transparent and provide fairly for the financial support of children based on an objective assessment of their needs. The formula is also intended to be responsive to the care provided by separated parents for their children.
Pursuant to section 25 of the Assessment Act, separated parents of a child living in Australia may apply to Child Support Registrar for an administrative assessment to be made in respect of the child concerned. Ms Bond has done so, so far as [X] is concerned.
In Henriques & Hatzis (SSAT Appeal)[34] I endeavoured to summarise the distinction between an appeal on its merits and one on a question of law alone. I noted that an appeal to this court from an administrative tribunal in a child support matter does not constitute a re-hearing of the case on its merits.
[34] Henriques & Hatzis (SSAT Appeal) [2014] FCCA 1194
In this context, I made reference to what was said by the Full Court in Collector of Customs v Pressure Tanker Pty LtdandPazzolanic Enterprises Pty Ltd,[35] where the distinction between the task of the Administrative Appeals Tribunal – a fact finding and decision making tribunal – and a court, such as this one – judicial review on a question of law – was made as follows:
“… the nature of the task of this court is clear. It is to leave to the tribunal of fact decisions as to the facts and to interfere only when the identified error is one of law.”
[35] Collector of Customs v Pressure Tankers Pty Ltd and Pozzolanic Enterprise Pty Ltd [1993] 43 FCR 280
I also attempted to summarise what amounted to an error of law, indicating that an administrative tribunal exceeds its powers and thus commits a jurisdictional error, which is correctable on appeal in respect of a question of law if it:
·fails to construe properly the legislative provisions applicable;
·identifies the wrong issues or asks itself the wrong questions;
·ignores relevant material or relies on irrelevant material;
·fails to accord procedural fairness to the party before it or otherwise breaches principles of natural justice;
·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.[36]
[36] See Apthorpe v Repatriation Commission (1987) 13 ALD 656 at 666
The classical definition of jurisdictional error was provided by the High Court in Minister for Immigration & Multicultural Affairs v Yusuf.[37] It described an error, which leads to the vitiation of the jurisdiction of an administrative body, in the following terms:
“What is important, however, is that identifying a wrong issue, asking a wrong question, ignoring relevant material or relying on irrelevant material in a way that affects the exercise of power is to make an error of law. Further, doing so results in the decision-maker exceeding the authority or powers given by the relevant statute. In other words, if an error of those types is made, the decision-maker did not have authority to make the decision that was made; he or she did not have jurisdiction to make it.”
[37] Minister for Immigration & Multicultural Affairs v Yusuf (2001) 206 CLR 323
Accordingly, it is the function of this court to determine whether the decision of the AAT was within its legal powers. That is what is meant by a question of law. It is not the function of this court to examine the merits of that decision if the decision was made within the parameters of jurisdiction. Essentially, it is not the function of this court to reappraise the evidence led before the AAT and re-determine the case, according to the conclusions it draws from the evidence available to the Tribunal.
As such, I should be cautious to approach the decision of the AAT with “an eye [which is] too keenly attuned to perception of error [or to read it] over-finely”. [38]Rather I should take a common sense approach to what the ATT was saying in its decision and the reasons provided by it as to why it said what it said. The function of the AAT is not to produce reasons of “jurisprudential excellence”.[39] It is to provide an informal and expedient level of independent review.
[38] See Htun v Minister for Immigration & Multicultural Affairs (2001) 194 ALR 244 at 258
[39] See LDME & JMA [2007] FMCAfam 712
In Child Support Registrar & Crabbe and Anor[40] the Full Court of the Family Court provided a summary of principles (and applicable authorities), which is relevant to the review of administrative decisions in the child support area, particularly what matters can constitute an error of law and those which did not necessarily do so. I have attempted to encapsulate them as follows:
·The question of whether there is evidence to support a finding of fact or an inference drawn from a finding of fact is a question of law;
·The making of a finding of fact or the drawing of an inference in the absence of evidence is an error of law;
·However, a wrong finding of fact is not necessarily an error of law if it was based on evidence available to the decision maker;
·As a consequence, a finding of fact based on a faulty process of reasoning is not an error of law;[41]
·Judicial review is not to be over zealous in seeking to find inadequacy or reasoning and so inadvertently turn of an administrative decision maker into a reconsideration of the merits of the relevant decision;[42]
·An administrative tribunal is required to do no more than set out the findings which it did make on facts which it considered material to the decision made;[43]
[40] Child Support Registrar & Crabbe and Anor [2014] FamCAFC 10 at [54]
[41] See Minister for Immigration & Multicultural Affairs v Al Miahi (2001) 65 ALD 141 at [34]
[42] See Minister for Immigration & Ethnic Affairs v Wu Shan Ling [1996] 185 CLR 259 at [271]
[43] See Yusuf (supra)
The grounds of appeal
Although the application contains five discrete grounds of appeal in her written submissions to the court, counsel for the father, Ms Horvat has focussed on the two questions of law raised by her client’s notice of appeal. I propose to follow the same course.
a)The financial resource argument
It is the applicant’s contention that the significant sums of money advanced to him by Mr Bond senior via (business omitted) Pty Ltd, as trustee of the Bond Family Trust cannot, as a matter of law, be regarded as a financial resource available to him for the purposes of assessing child support under the Assessment Act.
The argument is based on the following propositions as I understand it:
·The father has no control over when any payments are made to him or not;
·The fact that payments were made in the past does not necessarily mean they will be made in the future;
·In these circumstances, the Tribunal acted on a false premise that the father would continue to receive payments into the future, merely because they had been made in the past;
·As such, it cannot be found that the father has either income, property or financial resources to meet the prospective assessment of child support as assessed by the Tribunal;
·In particular, the evidence patently indicated that the father had no potential source of income apart from (business omitted), which was running at a loss and no capacity to borrow;
·In any event, given the nature of the agreement between the father and the paternal grandfather, all previous moneys paid to the father constituted loans which were to be repaid to Mr Bond Senior;
·In these circumstances, the advances in question could not be said to “enhance” the father’s capacity to pay child support.
In her written submissions, Ms Horvat contended as follows:
“In increasing the Appellant's child support income amount, a circular situation has been created whereby the Appellant now finds himself in a position of having to borrow further loans from Mr Bond Senior (or from entities controlled by Mr Bond Senior) to meet the increased child support payments. There is no guarantee that the Appellant's father will continue to provide loans to the Appellant nor is there any obligation upon the Appellant's father to do so.
The Tribunal member states at paragraph 24 of the decision Mr Bond Senior's income, property and financial resources are not relevant to these proceedings. What is relevant to these proceedings is whether amounts provided by these entities, in particular amounts provided to Mr Bond by (omitted) are a financial resource to Mr Bond.[44]
[44] See Appellant’s submission filed 21 August 2017 at [33]-[34]
The evidence available to the Tribunal indicated that the father received regular periodic amounts of money from (business omitted) Pty Ltd, which were described in his bank statement as being periodical payment … loan. The father’s own evidence was that he utilised these sums to pay his own recurrent living expenses; pay his regular mortgage instalments; and pay his half share of [X]’s school expenses.
Although it is a matter of conjecture, without those payments – on which Mr Bond depended and as a consequence of which he made decisions as to how he would continue to conduct his affairs – it seems a reasonable inference to draw that Mr Bond would have had to make significantly different arrangements in respect of both his business and the manner in which he elected to support [X] financially.
These decisions would have had implications, not only for him, but also for Ms Bond. Although it is a matter once again of conjecture, without those payments Mr Bond may have had to consider winding up his business and seeking alternative employment or, if reasons of ill health precluded him from seeking paid employment, he might have had to consider applying for social security. Again, these decisions would have had implications for the calculation of child support affecting not only him, but also [X] and her mother.
It is in this context that the Tribunal was called upon to categorise the payments received by Mr Bond within the statutory confines of section 117(2) of the Assessment Act. This task required it to consider the manner in which the payments had been utilised in the past and their potential prospective implications, particularly in terms of their continuity and how Mr Bond would apply them.
In so far as the past history of the payment was concerned, the Tribunal noted their regularity; the fact that they had been made for a reasonably extended period – approximately five years; and significantly, that no repayments had been made or demanded by Mr Bond Senior. By necessary implication, the Tribunal found that as I have observed above without the payments, Mr Bond would have had to have made significantly different arrangements for his personal support and that of [X].
In respect of the assertion that the payments were a loan, the Tribunal noted the apparent lack of any degree of formality surrounding the payment of the moneys so advanced, particularly the lack of security and the only reference to interest accruing on the alleged loan being that any such interest could not exceed the rate applicable to the father’s home loan. There was no evidence to indicate that any interest had in fact been calculated.
It also noted the provision within the agreement between the father and paternal grandfather that the loans could be set off in the event of Mr Bond Senior’s death against any moneys to be received by Mr Bond, by way of bequest, from his father’s estate. The implications of this provision would be to convert the so-called loan into a testamentary gift.
Accordingly, what the father and paternal grandfather currently characterised as being loans had the potential to be transformed into something else so far as the father was concerned. In addition, as the Tribunal found, the moneys so advanced up to the point of decision did not hold the usual characteristics associated with loans, other than that both Mr Bond and Mr Bond Senior called them so.
It was the evidence of Mr Bond Senior that he could cease payment of the moneys at any stage and, at least in theoretical terms call in the debts. Given the structure of the Assessment Act, the Tribunal was called upon to assess the effect of this evidence in prospective terms. Necessarily, this task required a degree of prediction.
As the High Court observed in a very difficult context, when a decision-maker is called upon to make a prediction, he/she will find it useful to examine what has happened in the past in respect of its consideration as to the likelihood of the same thing occurring in the future.[45] Part of this task may involve the assessment of whether some possibility is far-fetched or improbable or otherwise.
[45] See S395/2002 v Minister for Immigration & Multicultural Affairs (2003) 216 CLR 473 at [478]
In my view, the reasons of the Tribunal indicate that it did undertake this predictive task. It saw that Mr Bond Senior had been willing to advance moneys to Mr Bond for a period of five years. It noted the terms of the agreement, which had the potential to convert the moneys advanced into a bequest to Mr Bond. It noted further that Mr Bond had indicated that he would continue to make the payments in question, whilst he was able to do so and whilst Mr Bond’s business continued to run at a loss.
In these circumstances, the Tribunal concluded both that Mr Bond would be reliant for his financial support on the moneys continuing to flow from the paternal grandfather and that Mr Bond Senior was likely to continue to provide them at least until April of 2018. In this context, the Tribunal also recognised that it was open to Mr Bond to apply for a departure at some stage of the future if the payment ceased.
In my view the decision in question, based on a finding that Mr Bond Senior was more likely than not to continue the payments in question as he had indicated he would do, subject to his health and the continuance of his (business omitted), was one legally open to the Tribunal and is not one which can be characterised as legally unreasonable in the sense characterised by the High Court in Minister for Immigration & Citizenship v Li.[46]
[46] Minister for Immigration & Citizenship v Li (2013) 297 ALR 225
In Li, Gageler J considered that the authority conferred on a decision-maker by statute was subject to the deeply rooted common law principle that such authority be exercised both according to law and reason. In the case, under the heading Judging Unreasonableness His Honour said as follows:
“Review by a court of the reasonableness of a decision made by another repository of power ‘is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process’ but also with ‘whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law’.”[47]
[47] Li (supra) at 256 [105]
Essentially, an administrative decision maker is required to provide an intelligible and reasonable explanation as to why a particular decision has been reached. I am satisfied that the Tribunal in this case has provided an intelligible and reasonable explanation as to why it considered the monies advanced by Mr Bond Senior were a financial resource accessible by the father.
In SZUWX v Minister for Immigration & Border Protection [48] Griffith J summarised the High Court’s decision in Li. His Honour said as follows:
“…with the bounds of legal unreasonableness, there ‘is an area within which a decision-maker has a genuinely free discretion’. It is critical that, in exercising a judicial review function, the courts not exceed ‘their supervisory role by undertaking a review of the merits of an exercise of discretionary power’. Application of a standard of legal unreasonableness ‘does not involve substituting a court’s view as to how a discretion should be exercised for that of a decision-maker’.”
[48] SZUWX v Minister for Immigration & Border Protection [2015] FCA 1389 at[ 68]
The High Court discussed the concept of what is a financial resource, in family law proceedings, albeit in respect of spousal maintenance, in Hall & Hall[49]. The plurality of the court (French CJ, Gagler, Keane & Nettle JJ) held as follows:
“The reference to ‘financial resources’ in the context of s 75(2)(b) has long been correctly interpreted by the Family Court to refer to ‘a source of financial support which a party can reasonably expect will be available to him or her to supply a financial need or deficiency’[50]. The requirement that the financial resource be that ‘of’ a party no doubt implies that the source of financial support be one on which the party is capable of drawing. It must involve something more than an expectation of benevolence on the part of another. But it goes too far to suggest that the party must control the source of financial support. Thus, it has long correctly been recognised that a nominated beneficiary of a discretionary trust, who has no control over the trustee but who has a reasonable expectation that the trustee's discretion will be exercised in his or her favour, has a financial resource to the extent of that expectation[51].
Whether a potential source of financial support amounts to a financial resource of a party turns in most cases on a factual inquiry as to whether or not support from that source could reasonably be expected to be forthcoming were the party to call on it.”
[49] See Hall & Hall [2016] HCA 23 at [54] – [55]
[50] In the marriage of Kelly and Kelly (No 2) (1981) FLC ¶91-108 at 76,803.
[51] In the marriage of Kelly and Kelly (No 2) (1981) FLC ¶91-108 at 76,803.
In my view, the evidence available to the Tribunal indicated that Mr Bond could reasonably expect to continue to receive moneys from his father to supply his personal financial deficiencies. It is not necessary for Mr Bond personally to control the source of the funds. Rather, the evidence available must demonstrate he has a reasonable expectation that the advances will continue to be made.
As the High Court noted, these are issues which turn on a factual inquiry. It is not the role of this court to embark on such a factual inquiry in respect of the financial relationship between the father and the paternal grandfather. That is the role of the Tribunal. In all the circumstances, I am satisfied that the Tribunal did embark on such an inquiry and its various findings were capable of being supported by the evidence.
Mr Bond Senior himself characterised the moneys advanced as being “compassionate loans”. Given the close relationship between Mr Bond Senior and his son, in my view, it was open to the Tribunal to conclude that the father would be able to call on the paternal grandfather for financial support for the reasonably foreseeable future and that Mr Bond Senior himself would not require the repayment of any such moneys.
In this context, the Tribunal was entitled to view what had happened up to that point, as being a reliable predictor for the future. As such, in my view, there is no legal error arising in the Tribunal categorising the so-called loans as a financial resource of the father for child support purposes. In my view, the Tribunal correctly acquitted the jurisdiction conferred upon it and it cannot be said that any of its conclusions were unsupported by evidence available to it.
Mr Bond Senior is not likely to sue his son in order to recover any amounts advanced to him. In addition, he is not in a position to enforce any security against the father’s home. In these circumstances, the Tribunal concluded that the more likely outcome would be that Mr Bond Senior would continue to pay the sums involved to Mr Bond as he indicated he would do in his evidence for the remaining period of the assessment.
In its task of assessing the true nature of the monies advanced by Mr Bond Senior to the father was the Tribunal entitled to examine extraneous evidence relating to the assertion that the sums in question were a loan. In this context it noted, as it was entitled to do, the absence of any extensive process of formally recording the so-called loans. In my view, this is of some significance given the close personal relationship between Mr Bond Senior and the father and indeed [X].
The Tribunal also found that Mr Bond had not been particularly forthcoming about his financial affairs and as a consequence it drew some adverse credit findings about him. In this context, as McHugh J pointed out in re Minster for Immigration & Multicultural Affairs: Ex-parte Durairajasingham[52] a finding as to credibility is a function of a primary decision- maker par excellence.
[52] See Re Minister for Immigration & Multicultural Affairs ex parte Durairajasingham (2000) 168 ALR 407
In any event, the matter did not turn on findings as to credit. Although the Tribunal found that Mr Bond had not been particularly cooperative in regards to its inquisitorial processes, the evidence of the regularity of the payments concerned; their quantum; and their source; was not in contention. They were each recorded in the father’s bank statements and noted as coming from (business omitted) Pty Ltd. In addition, Mr Bond Senior and the father each conceded the payments in question, whilst asserting they were loans. In my view, the Tribunal was entitled to assess the reliability of this assertion within this factual matrix.
In my view, in all these circumstances, the decision of the Tribunal was a legally reasonable one within the jurisdiction conferred upon it. Accordingly, to utilise the terminology of Griffiths J, it is not open to this court in exercising its supervisory jurisdiction to substitute its own findings of fact.
The father has a more nuanced criticism of the Tribunal findings. He asserts that the Tribunal, in effect, has transferred the financial responsibility to support [X] from her parents to Mr Bond Senior, which it has no jurisdiction to do, given the content of section 3 of the Assessment Act (the section conferring responsibility on to parents for providing financial support for their children) and the fact that section 25 of the Act authorises a parent to apply for both the parents of an applicable child to be assessed in respect of the costs of supporting that child, not some other of the child’s relatives.
By necessary implication, the father is further critical of the Tribunal’s findings that, although it said it was ignoring Mr Bond Senior’s financial assets and resources, it has in effect, taken those into account and, in a de facto manner, directed Mr Bond Senior to continue to make payments to his son in order to allow him to make child support payments to Ms Bond.
I acknowledge that the evidence indicates that Mr Bond would be unable to pay child support to Ms Bond if he remains operating (business omitted) in its current loss making situation as his sole source of employment, unless Mr Bond Senior continues to pay his mortgage and provide his living expenses, together with half of [X]’s school fees. Undoubtedly, Mr Bond Senior’s largess funds the father’s lifestyle.
As indicated above, Mr Bond Senior’s generosity to his son also provides the father with options. These options enable Mr Bond to remain employed by (business omitted) and to refinance his home mortgage and make the necessary recurrent mortgage repayments.
On any view, these options have significant value to Mr Bond personally, as they subsidise his preferred lifestyle. The question for the Tribunal was whether these significant benefits were ones which were relevant to the calculation of financial support for [X]. It concluded that they were.
Underpinning the assertions of the father is the assumption that Mr Bond Senior should be free to benefit his son as he sees fit whilst negating the implications of his generosity, so far as [X] and her mother are concerned. Essentially, Mr Bond Senior would wish to be able to ameliorate his son’s position but not that of [X] and Ms Bond.
In my view, it is only necessary to put the contrary position to see the flaw in the logic of this submission. In the event Mr Bond had not received any moneys from his father, and as a consequence of his ill health, had not been able to undertake paid employment, his resulting adjusted taxable income would have been minimal for child support purposes, resulting in a reduction, if any at all, of his liability to provide financial support for [X]. As a consequence, both the mother and the child would have shared the implications of Mr Bond’s financial vicissitudes.
In my view, as the Tribunal found it is equally applicable that [X] and Ms Bond should benefit from Mr Bond’s financial advancement. In this context, the Tribunal had reference to section 4 of the Assessment Act and what had been said in Walker & Fielding, particularly that the expression financial resource should be defined as “any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children”.
In my view, the Tribunal was entitled to apply this authority to the factual circumstances prevailing. The payments to Mr Bond clearly enhanced his personal living circumstances and therefore it was both just and equitable and proper that this enhancement of his personal circumstances should be extended to include those of [X], including during periods of time [X] was not living with her father, but rather with her mother.
In these circumstances, in my view, the Tribunal properly acquitted the jurisdiction conferred upon it when it concluded that it was just and equitable for there to be a departure from the applicable administrative assessment of child support on the basis of the regular payments, which had hitherto been received by Mr Bond from the paternal grandfather and which it found were likely to continue for the period of the relevant assessment.
b)The denial of natural justice argument
As I understand the grounds of appeal advanced by the applicant it is his position that he was not accorded procedural fairness by the Tribunal. In particular,
·he was not informed of the significance which the Tribunal might attach to the absence of formal ledgers recording the monies advanced to him by his father;
·he was not told that the monies advanced to him by his father, which he and Mr Bond Senior characterised as loans, were likely to be an important factor in the case;
·he was called upon to meet a case involving his father’s financial situation rather than his own.
In my view, there is no substance to any of these complaints. The applicant was well aware as a consequence of the proceedings within the Agency that the central issue was how the sums of monies received by him, from his father, were to be characterised.
In addition, whether there was or was not any formal recording of the amount so advanced, there was no dispute between the parties concerned as to the quantum of these amounts, which could be tabulated by reference to the father’s bank records to which the AAT had access.
It has been the applicant’s case throughout both these proceedings and before the AAT that the monies advanced to him by Mr Bond Senior were a loan. In these circumstances, in my view, it was not unreasonable for the Tribunal to direct that any formal documents in existence to support this contention should be produced to it. The applicant was given ample notice of this requirement.
No documents were produced and the applicant was given an opportunity to explain why this was so, as was Mr Bond Senior. Thereafter, in my view, it was open to the Tribunal to make whatever it wished of the non-production of the ledgers, including concluding that their absence rendered it more likely than not that there was no stringent requirement for repayment attaching to the sums in question.
In any event, there is no factual controversy about the existence of the payments in question and their quantum. The controversy arose in respect of how the payments were to be characterised. In this context, in my view, the applicant was given an ample opportunity to put his case – the sums were a loan. However, as it was entitled to do, the Tribunal did not accept that this was the case.
The existence or otherwise of the ledgers was not calculated to change how the Tribunal elected to treat the sums in question, particularly whether there should be a departure from the applicable administrative assessment of child support. The Tribunal’s decision to characterise the payments as a financial resource to which the father had regular access to provide for his and [X]’s financial support, did not turn on the existence or production of ledgers.
The central issue in the case concerned how these payments were to be characterised for the purposes of section 117(2) of the Assessment Act. In my view, there can be no doubt that there was a meeting of the minds, so far as the applicant and the Tribunal were concerned, in regards to this issue. In particular, the applicant was well aware of what was the salient issue so far as the Tribunal was concerned – how were the regular and significant sums received by him to be characterised for child support purposes.
In my view, there is no substance to any suggestion that the applicant attended at the Tribunal anticipating he would have to meet one particular kind of case but in fact met another one, which had the potential to unfairly take him by surprise. In my view, in this sense, the proceedings were procedurally fair.
The rules of natural justice are required to be flexible to accommodate the particular circumstances of the hearing concerned. Essentially, they are directed to the object of achieving a fair hearing for all concerned. In re Minister for Immigration & Multicultural Affairs: Ex-parte Lam[53] the High Court (McHugh & Gummow JJ) observed that:
“… the particular requirements of compliance with the rules of natural justice will depend upon the circumstances. Different procedures may be required, even of the same repository of power, from one situation to the next … ”
[53] See re Minister for Immigration & Multicultural Affairs: Ex-parte Lam (2003) 195 ALR 502 at [48]
In the same case, Gleeson CJ spoke of a concept he nominated as practical injustice. He said as follows:
“Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice.”
In Minister for Immigration & Border Protection v Singh[55] the Full Court of the Full Court identified two distinct areas in which a tribunal may fail to discharge the jurisdiction conferred upon it by acting in a manner which is legally unreasonable.
[55] Minister for Immigration & Border Protection v Singh (2014) 231 FCR 437 at [44]
Firstly, such a tribunal discharges its reasoning functions in a way which is unreasonable in the sense that it is illogical or otherwise lacking in intelligibility, causing the tribunal in question to fail to exercise the jurisdiction conferred upon it.
Secondly, the outcome of the proceedings, although ostensibly within jurisdiction, is coloured by caprice or arbitrariness. This second area is outcome focussed and arises as a consequence of the court’s supervisory role in judicial review proceedings. It is convenient to refer to it as procedural fairness.
Again, the Full Court emphasised that whether there was any grounds arising for questioning a particular decision, on the grounds of procedural unfairness, would “inevitably be fact dependent” and turn on the “purpose of the particular statutory provisions in issue.” [56]
[56] Ibid at [48]
In this case, one of the relevant objects of the statutory provision in question is directed to ensure that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support. This in turn is picked up by the specific provision relevant to the case – section 117(2)(c)(ia) – which speaks of the income, property and financial resources of either parent.
Accordingly, in my view, the issue of whether there has been any procedural unfairness accorded to the applicant must be considered in this statutory context in which considerations relevant to the characterisation of the monies received by Mr Bond were of central relevance.
It was the applicant’s case that the monies advanced by his father were loans. In this context, the Tribunal issued the notice to produce requiring production of ledgers in respect of these alleged loans. In the notice of appeal, the applicant contends that he was denied natural justice because this direction was made without explanation and failing to indicate to him that such loans might be an important issue in [the Tribunal’s] assessment of the applicant’s financial resources.
With respect, it was not for the Tribunal to make the applicant’s case for him. Accordingly, it was not necessary for the direction to be made with any form of explanation. Similarly, it was not necessary for the Tribunal to put the applicant on notice that the monies being advanced to him were of central importance. These monies, after all, had been the focus of the proceedings before the senior case officer and objections office to which Mr Bond had taken objection.
In Commissioner for ACT Revenue v Alphaone Pty Ltd[57] the Full Court of the Federal Court said as follows:
“Where the exercise of a statutory power attracts the requirement for procedural fairness, a person likely to be affected by the decision is entitled to put information and submissions to the decision-maker in support of an outcome that supports his or her interests. That entitlement extends to the right to rebut or qualify by further information, and comment by way of submission, upon adverse material from other sources which is put before the decision-maker. It also extends to require the decision-maker to identify to the person affected any issue critical to the decision which is not apparent from its nature or the terms of the statute under which it is made. The decision-maker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material. Subject to these qualifications however, a decision-maker is not obliged to expose his or her mental processes or provisional views to comment before making the decision in question.”
[57] Commissioner for ACT Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 591-592
Clearly the rules of procedural fairness do apply to proceedings before the AAT. Mr Bond had the potential to be directly affected by any decision to be made by the Tribunal. As such, he had an entitlement to be heard and present evidence. In addition the rules of procedural fairness “would ordinarily require the party affected to be given the opportunity of ascertaining the relevant issues and to be informed of the nature and content of adverse material.”[58]
[58] See Alphaone (supra) at 590-591
In Minister for Immigration and Citizenship v SZGUR[59] French CJ and Kiefel J summarised the applicable principles as follows:
“Procedural fairness requires a decision-maker to identify for the person affected by any critical issue not apparent from the nature of the decision or the terms of the statutory power. The decision-maker must also advise of any adverse conclusion which would not obviously be open on the known material. However a decision-maker is not otherwise required to expose his or her thought processes or provisional views for comment before making the decision.”
[59] Minister for Immigration and Citizenship v SZGUR (2011) 241 CLR 594
In this case, Mr Bond was aware (or should have been aware) of what the major issue arising in the case before the AAT given both the contents of the directions made to him and the legislative basis of the decision which had been made. The issue was the extent of financial resources arising from his father available to him and the likely extent of those in future.
In this context, Mr Bond complains that he was denied natural justice because it was assumed his father would continue to make the payments and he had no personal capacity himself to make them. I acknowledge that the applicant disagrees with the conclusion reached by the Tribunal in respect of this issue. However, I do not consider that he was denied procedural fairness in respect of the canvassing of the issue. Both he and the paternal grandfather were given an opportunity to present evidence in respect of the matter.
Conclusions
Accordingly, I do not consider that that applicant has established any of the grounds of appeal asserted by him. The Child Support Registrar seeks costs.
As this is a matter arising under the AAT Act, the principles contained in section 117 of the Family Law Act 1975 (and the corresponding provisions in the Child Support legislation) do not apply. Accordingly, the general rule, in civil proceedings that costs follow the event is applicable.
The court has a wide discretion as to the calculation of costs. Pursuant to Rule 21.02(2) of the Federal Circuit Court Rules:
“In making an order for costs in a proceeding the Court may:
(a) set the amount of costs; or
(b) set the method by which the costs be calculated; or
(c)refer the costs for taxation under Part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or
(d)set a time for payment of costs which may be before the proceedings is concluded.”
However, pursuant to Rule 21.10:
“Unless the Court otherwise orders a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to:
(a) costs in accordance with Parts 1 and 2 of Schedule 1 and
(b) disbursements properly incurred.”
Division 2 of Part 2 of Schedule 1 deals with costs in appeals from a Tribunal decision in child support proceedings. It sets an amount of $7066.00 as the amount to be paid for proceedings concluded at a final hearing. The hearing in this matter occupied approximately half a day. Counsel was retained by both the Registrar and Mr Bond.
Ms Bond has appeared on her own behalf throughout these proceedings and, as such, been generally content to adopt the submission put forward by counsel for the Child Support Registrar. In these circumstances, I do not propose to make an award of costs in her favour.
The Registrar was entitled to intervene in these proceedings and has assumed responsibility for the carriage of the matter, not only on its behalf but also on behalf of Ms Bond. The subject of the appeal was not without controversy and complexity. It was hard fought and both sides submitted extensive written submissions.
In these circumstances, I assess the Registrar as being entitled to costs, which I assess in the sum of $5,000.00 by reference to the applicable scale. I have reduced the sum because a full day was not taken up.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and sixty two (162) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 23 February 2018
[54] Ibid at [37]
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