Burns and Grint (SSAT Appeal)
[2012] FMCAfam 347
•20 April 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BURNS & GRINT (SSAT APPEAL) | [2012] FMCAfam 347 |
| CHILD SUPPORT – SSAT – Judicial review – tribunal set aside decision then under review and substituted a new decision – alleged grounds lacking in particulars – applicant seeks impermissible merits review. |
| Child Support (Assessment) Act 1989, Part 6, s.117(4) Child Support (Registration and Collection) Act 1988, Division 3 Part VIII, ss.103S, 110B |
| Annetts v McCann (1990) 170 CLR 596 Associated Provincial Picture Houses Ltd v Wednesbury Corp [1948] 1 KB 223 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Craig v State of South Australia (1995) 131 ALR 595 Ebner v Official Trustee (2000) 205 CLR 337 Johnson v Johnson (2000) 201 CLR 488 Kopalapillai v Minister for Immigration and Multicultural Affairs (1998) 86 FCR 547 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 Minister for Immigration and Citizenship v SZIAI [2009] HCA 39 Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex Parte Lam (2003) 214 CLR 1 |
| Applicant: | MR BURNS |
| Respondent: | MS GRINT |
| File Number: | BRC 8404 of 2010 |
| Judgment of: | Burnett FM |
| Hearing date: | 10 June 2011 |
| Date of Last Submission: | 10 June 2011 |
| Delivered at: | Brisbane |
| Delivered on: | 20 April 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr A. McLean |
| Solicitors for the Applicant: | Sutton's Law |
| The Respondent appeared on her own behalf |
ORDERS
That the application filed 9 September 2010 be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Burns & Grint (SSAT Appeal) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 8404 of 2010
| MR BURNS |
Applicant
And
| MS GRINT |
Respondent
REASONS FOR JUDGMENT
The applicant applies for review of a decision made 9 August 2010 pursuant to s.103S of the Child Support (Registration and Collection) Act 1988. By its decision the Tribunal had decided to set aside a decision then under review, substitute a new decision for the period 20 April 2008 to 31 October 2012 and set the applicant’s adjusted taxable income at $167,000.00.
Background
The applicant and respondent are parents of two children. An administrative assessment of child support for those children in respect of the period 31 October 2009 to 26 November 2009 resulted in the applicant having a child support liability of $3,988.00 per annum. That outcome was consequent upon a change of assessment decision which set the applicant’s adjusted taxable income at $32,000.00 and applied the respondent’s 2007/2008 taxable income of $4,650.00. An administrative assessment of child support for the period from 27 November 2009 to 28 February 2010 resulted in the applicant having a child support liability of $692.00 per annum. The assessment was based on both parents’ adjusted taxable incomes for 2007/2008 of $20,639.00 for the applicant and $4,650.00 for the respondent.
On 28 October 2009 the respondent made a departure application under Part 6A of the Child Support (Assessment) Act 1989. By a decision made 20 December 2009, the applicant’s adjusted taxable income for the period 27 November 2009 to 31 October 2011 was set at $141,064.00. The applicant objected to that decision and on 19 March 2010 an objections officer decided to set the applicant’s adjusted taxable income at $204,960.00 for the period 28 October 2009 to 31 May 2010 and $240,700.00 for the period 1 June 2010 to 31 March 2012.
The applicant appealed the objection officer’s decision of 19 March 2010 to the Social Security Appeals Tribunal (the Tribunal) following which it determined, by its decision dated 9 August 2010, to set aside the 19 March decision and substitute a new decision, that being for the period 28 April 2008 to 31 October 2012 the applicant’s adjustable taxable income is set at $167,000.00.
Grounds of Appeal
The amended notice of appeal identifies 10 grounds. Those grounds were supplemented by additional grounds detailed in a written outline and informed by oral debate. Before considering the specific grounds of appeal it is appropriate to set out the legislative and legal framework governing these appeals.
The nature of an appeal to this Court from a decision of the SSAT is governed by the provisions of Division 3 Part VIII of the Child Support (Registration and Collection) Act 1988 (Registration Act) and in particular s.110B which relevantly provides:
“A party to a proceeding before the SSAT under Part VIIA may appeal to a court having jurisdiction under this Act, on a question of law, from any decision of the SSAT in that proceeding.”
It does not appear to be in contention that the independent process of review of a decision maker’s decision provided by the SSAT is administrative in nature. It follows that the customary principles of administrative law are to be adopted in the review of such decisions. However, in this case the force of the argument advanced by the applicant is upon both the matter of judicial review and the manner in which the Tribunal expressed itself in its reasons. Accordingly, it is appropriate at the outset to briefly touch upon these issues.
In Minister for Immigration and Ethnic Affairs v Wu Shan Liang[1] the majority (Brennan CJ, Toohey, McHugh and Gummow JJ) discussed the proper role of a court reviewing the decision of an administrative tribunal. In observing that a “beneficial construction” should be applied to the decision of a Tribunal, the majority continued at 271:
When the Full Court referred to “beneficial construction,” it sought to adopt an approach mandated by a long series of cases, the best exemplar of which is Collector of Customs v Pozzolanic Enterprises Pty Ltd. In that case, a Full Court of the Federal Court (Neaves, French and Cooper JJ) collected authorities for various propositions as to the practical restraints on judicial review. It was said that a court should not be “concerned with looseness in the language … nor with unhappy phrasing” of the reasons of an administrative decision-maker. The court continued:
“The reasons for the decision under review are not to be construed minutely and finely with an eye keenly attuned to the perception of error.”
These propositions are well settled. They recognise the reality that the reasons of an administrative decision-maker are meant to inform and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed. In the present context, any court reviewing a decision … must beware of turning a review of the reasons of the decision-maker upon proper principles into a reconsideration of the merits of the decision. This has been made clear many times in this court. For example, it was said by Brennan J in Attorney-General (NSW) v Quin:
“The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power. If, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone.””
[1] (1996) 185 CLR 259
It is worthwhile highlighting that matter at the outset, as it is apparent, for reasons which follow, that the applicant in this instance seeks to adopt such an over-zealous approach.
The other matter I noted is the matter of jurisdictional error. In Craig v State of South Australia[2] where the majority (Brennan, Deane, Toohey, Gaudron, McHugh JJ) in discussing jurisdictional error in the context of review of a decision of an inferior court observed, commencing at page 179:
“At least in the absence of a contrary intent in the statute or other instrument which established it, an administrative tribunal lacks authority either to authoritatively determine questions of law or to make an order or decision otherwise than in accordance with the law … If such an administrative tribunal falls into an error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal's exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. Such an error of law is jurisdictional error which will invalidate any order or decision of the tribunal which reflects it.”
[2] (1995) 131 ALR 595
Unhelpfully, the applicant’s written outline does not follow the grounds of appeal identified in the amended notice of appeal. I will deal with each ground of appeal separately and integrate submissions as appropriate.
Ground 1
This ground was abandoned prior to the appeal.
Ground 2 – No SSAT error in law based upon unreasonableness
The applicant’s complaint is that no Tribunal properly advised as to the law, in light of the evidence, could reasonably have reached the same conclusion, particularly the conclusion that the evidence supports the finding that the applicant earns an income of approximately $167,000.00 per annum before tax. Although not developed as such in the submissions, it appears that the applicant complains of Wednesbury Corporation unreasonableness.[3] In that sense, it is well accepted that unreasonableness means that the decision is one that “no reasonable authority could have come to.”[4] However, in making that observation Lord Greene also noted that “to prove a case of that kind would require something overwhelming.”[5] In that sense, Wednesbury invites a qualitative assessment of the impugned discretionary decision, but it does not allow an appeal to the judicial review judge’s subjective sense of reasonableness.[6] In his submissions Counsel for the applicant contended that the findings of the Tribunal were so erroneous as to offend logic. In that regard, he submitted that the Tribunal chose to ignore verified losses made by the applicant’s trust, of which the applicant did not propose to adjust the income to take account (of the issues), and “rather it proposed to regard this taxation benefit as an element of financial capacity available to the (applicant).”[7]
[3] Associated Provincial Picture Houses Ltd v Wednesbury Corp [1948] 1 KB 223
[4] Op.cit. at 230.
[5] Op.cit. at 230.
[6] Judicial Review of Administrative Action 4th Edition, Aronson Dyer & Groves, Thompson Reuters Law Book at 376
[7] Tribunal decision at para [38].
On that matter, the applicant relied upon the evidence of his accountant, included in his report dated 24 May 2011. However, that material was not placed before the decision maker and accordingly it is not available to be considered in the context of an application for judicial review without leave: s.110G (Registration Act).[8]
[8] The applicant seeks to rely upon financial material produced for this appeal. It takes issue with the factual findings of the Tribunal. However such material can only be received if that material satisfies s.110G(1) which in this case it does not because, contrary to s.110G(1)(a), it is inconsistent with the findings of fact made by the Tribunal.
The applicant bears the onus of proof of the application. Accordingly, for it to succeed in demonstrating that the Tribunal’s decision on this matter was so unreasonable as to constitute a failure by the Tribunal to exercise its jurisdiction, it is incumbent upon the applicant to demonstrate the manner in which it maintains the Tribunal’s decision was unreasonable by reference to the material. None of the material which was before the Tribunal was placed before the Court. Accordingly, the Court is only able to review the Tribunal’s decision by reference to the matters identified in its reasons for decision. From paragraph [25] to paragraph [34] the Tribunal explained in broad terms the logic leading to its conclusion that the applicant’s adjusted taxable income is $167,000.00. He has failed to demonstrate that there is anything about that analysis that is “so unreasonable that no reasonable person could adopt it.”[9] Notwithstanding the Tribunal’s analysis, the applicant contends that the Tribunal made an erroneous finding of a magnitude offending logic in respect of the financial evidence before it. His primary submission was that the Tribunal chose to ignore verified losses made by the applicant’s trust, of which his company was the sole trustee. However this cannot be so, for, as the applicant has noted in his submissions, the Tribunal expressly dealt with the matter, noting that it “did not propose to adjust the income to take account of [the losses] rather it proposes to regard this taxation benefit as an element of financial capacity available to [the applicant].”[10] It is a trite fact that, pursuant to the accounting standards which are incorporated into law by operation of s.334 of the Corporations Act, tax losses are treated as an asset for accounting purposes; see Australian Accounting Standard AASB 1020, Accounting for Income Tax (Tax-effect Accounting). The plain inference to be drawn from the Tribunal’s determination was that it was alive and considered, as required by AASB 1020, whether the circumstances warranted the past tax losses being measured as a “future income tax benefit” and being treated accordingly.
[9] Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 626.
[10] Decision at [34].
The second submission made by the applicant on this point is that the Tribunal “perversely ignored the evidence which points to the 2008 financial years being an anomaly.”
Again, not only is this submission demonstrably incorrect, but the applicant’s own submissions rely upon the very observations by the Tribunal which prove to the contrary the very point advanced by the applicant. At paragraph 36 of his submissions the applicant’s Counsel observed:
“The SSAT acknowledged the submission by the applicant that the 2008 figures was skewed by the acquisition of stock. It then said, “this appears (from an examination of the inventory adjustments) to be the case. It then proceeded to say the problem could be easily addressed by smoothing the profits of the 2008 and 2009 financial years together.”
The real point of the applicant’s submission is that he is unhappy with the manner in which the Tribunal sought to “smooth the profits of the 2008 and 2009 financial years.” Plainly, the applicant’s submissions on this point were misconceived. The thrust of his submission is more accurately distilled from paragraph 38 where he complains that the Tribunal “ignored the evidence of the applicant.” Ultimately the question was one of fact open for the Tribunal. It was open to the Tribunal to get the facts right as much as it was open for the Tribunal to conclude the facts incorrectly as such a matter was within its jurisdiction: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 341. Irrespective, it was open to the Tribunal to make a finding of fact which it did and the thrust of the applicant’s submissions on this point simply seek impermissible merits review as exemplified in Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30 per Kirby J at [114].
This ground is dismissed.
Ground 3 – The SSAT failed to consider relevant evidence
The applicant complains that the Tribunal failed to consider the evidence or make findings of fact in relation to the evidence and, in particular, his individual taxation returns and the returns of the accounts of [Mr Burns] Pty Ltd (in his own capacity, not as trustee) for the financial years 30 June 2007 to 30 June 2009.
The only material before the Court addressing this complaint is the material incorporated in the decision of the Tribunal and the transcript of the Tribunal proceedings. In that regard, the Tribunal’s decision only averts to a limited part of the material which was before it. That other material was not placed before the Court and accordingly the Court is unable to go beyond that which is provided in the written reasons of the Tribunal and the transcript.
The classic contemporary statement for commencing analysis on this kind of point is the often cited judgment of Mason J in Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, where at 39 his Honour said:
“Not every consideration that a decision-maker is bound to take into account but fails to take into account will justify the court setting aside the impugned decision and ordering that the discretion be re-exercised according to law. A factor might be so insignificant that the failure to take it into account could not have materially affected the decision (see, for example, the various expressions in Baldwin & Francis Ltd v Patents Appeal Tribunal [1959] AC 663; Hanks v Minister of Housing and Local Government [1963] 1 QB 999 at 1020; R v Chief Registrar of Friendly Societies; Ex parte New Cross Building Society [1984] QB 227 at 260. A similar principle has been enunciated in cases where regard has been had to irrelevant considerations in the making of an administrative decision (R v Bishop of London (1889) 24 QBD 213 at 226–7; R v Rochdale Metropolitan Borough Council; Ex parte Cromer Ring Mill Ltd [1982] 3 All ER 761 at 769–70).
The limited role of a court reviewing the exercise of an administrative discretion must constantly be borne in mind. It is not the function of the court to substitute its own decision for that of the administrator by exercising a discretion which the legislature has vested in the administrator. Its role is to set limits on the exercise of that discretion, and a decision made within those boundaries cannot be impugned (Wednesbury Corporation, at 228).”
It is difficult to understand the basis of the applicant’s complaint. He contends the Tribunal failed to consider his individual taxation returns and the returns of the accounts of [Mr Burns] Pty Ltd in its own capacity and not as trustee. However, at paragraph 33, the Tribunal noted that the applicant had provided it “the complete financial statements for the business to June 2009.”
The table in paragraph 33 indicated a review of figures for each of the financial years ending June 2007, June 2008, June 2009. The Tribunal was plainly aware of the presence of [Mr Burns] Pty Ltd, although not expressly named, for in paragraph 26 it referred to the applicant conducting business through the structure of a corporate trustee of a trading trust which he agreed was also the alter ego for child support purposes. See also paragraph 29.
In any event the applicant’s complaint does not proceed on the premise that the wrong entity has been identified, but rather that the Tribunal failed to consider the evidence concerning the returns and accounts of [Mr Burns] Pty Ltd in its own capacity and not as trustee. As to whether that distinction has any material consequence is a matter which is not addressed by the material except for the observations made in the transcript that the company was the applicants and like evidence demonstrating the applicant’s business structure comprised a basic discretionary trust administered by a corporate trustee which he controlled. For instance, if the applicant was the sole beneficial shareholder of [Mr Burns] Pty Ltd, the distinction could be entirely academic and relevant only to the ease with which distributions could be made. Ultimately however, the question as to the basis on which and how the facts were assessed was a matter for the Tribunal itself. Plainly it was alert to the distinction between [Mr Burns] Pty Ltd as a corporate entity and its position as trustee and acted upon the information provided to it. The applicant sought to contend that the Tribunal failed to adequately explain its conclusions on such financial matters and accordingly such failure gave rise to jurisdictional error. However as noted earlier the long accepted statement of the High Court in Minister for Immigration and Ethnic Affairs v Wu Shan Liang addresses the approach to be adopted to the construction of decisions of administrative Tribunals.
In this instance it is, in my view, tolerably plain that the Tribunal has considered all the financial evidence relevant to the applicant and, in particular, was acutely aware of the significance of the structural arrangements by which he ordered his “financial resources.”[11] The applicant has not demonstrated that the Tribunal failed to consider any relevant material. Insofar as any relevant matter may not have been considered, it is my view that such would have been so insignificant that any such oversight would not have materially affected the decision.
[11] s.117(4)(c) (Assessment Act).
The applicant’s complaint on this ground fails.
Ground 4 – The SSAT failed to apply the correct law
This broad ranging ground is so lacking in particulars as to be meaningless. Insofar as any issue has been generally articulated by the applicant it is disposed of in these reasons.
Ground 5 – The SSAT erred in the method it used in calculating the applicant’s child support income
This ground too is so lacking in particulars as to be meaningless. Any complaint made by the applicant relevant to this ground is also addressed within the body of the specific allegations raised on the grounds of appeal.
Ground 6 – The SSAT failed to give proper consideration to the matters set out in s.117(4) of the Child Support (Assessment) Act
The applicant’s complaints concerning this ground are that the Tribunal failed in determining whether it would be just and equitable in making its orders, in particular by failing to give proper consideration to:
a)The income and financial resources of the applicant;
b)The commitments of the applicant to support himself including those into the future;
c)The hardship that would be caused to the applicant by making the order.
I have earlier identified the approach to the consideration of complaints concerning findings of fact and a failure to take into account relevant considerations. Looking to the decision of the Tribunal, it is apparent that the Tribunal has not failed to consider:
a)The income and property and financial resources of the applicant – see Tribunal’s decision, especially at paragraphs 26 to 38 and paragraphs 48 and 49;
b)The commitments of the applicant to support himself. This matter was also considered by the Tribunal particularly at paragraph 49;
c)The hardship that would be caused to the applicant by making the order. This matter was considered by the Tribunal in general terms at paragraphs 48 to 52.
Although not expressly addressed as “hardship,” it is plain that the Tribunal weighed the competing factors. In addition the applicant complains in respect of this particular point that the Tribunal failed to give particular consideration to hardship occasioned through the commencement of the departure order on 28 April 2008, meaning that, as at the date of lodging of the appeal, the applicant, by reason of the order, would have child support arrears immediately payable in the sum of about $60,000.00. It is evident from the Tribunal’s decision at paragraph 66 particularly when applying a beneficial construction.[12]
[12] Minister for Immigration and Ethnic Affairs v Wu Shan Liang supra at 271.
Ultimately what the applicant seeks in respect of this ground is impermissible merits review. This ground is dismissed.
Ground 7 – The SSAT failed to address itself to evidence or misinterpreted evidence
The applicant complains that the Tribunal failed to address itself to evidence or misinterpreted evidence before the Tribunal which constituted an error of law by:
a)Failing to take account of relevant considerations;
b)Failing to place any or proper weight upon proper considerations;
c)Taking account of irrelevant considerations;
d)Coming to a determination which no reasonable decision making in the circumstances would have reached upon the same facts;
e)Failing to state or give any or any adequate reasons for its decisions to disallow particular expenses where corresponding liabilities were allowed.
The applicant contends that the errors caused the Tribunal to misdirect itself in law as to the allowances and expenses properly made in favour of the applicant. As a consequence, the Tribunal formed an erroneous view of the applicant’s capacity to meet and pay child support liabilities, and thus his proper legal liability for child support from the period 28 April 2008 to 31 October 2012.
These broad ranging allegations were particularised by eight instances which it is contended were occasioned by one or more of those five fundamental errors. Each of the five fundamental errors is best addressed by consideration of the complaints which are specifically particularised.
a)Particular i: It is alleged the Tribunal erred in its approach to evidence that the business suffered income and capital losses as a result of the separation agreement entered into with his former spouse, Ms J and her partner Mr M. Further it was incorrect in law for the Tribunal to simply dismiss those losses as irrelevant to the current earning capacity of the applicant or his earning capacity during the period 28 April 2008 to 31 October 2012. At paragraph 28 of the reasons for decision the Tribunal identified the relevant history concerning the applicant and his former partner Ms J. At paragraph 29 the Tribunal specifically addressed the losses in the trading company following the disposition of his interests in it to Ms J. Given the Tribunal’s recognition of those matters, the applicant’s complaint that the Tribunal failed to take account of that as a relevant consideration is simply not borne out. Likewise, nothing is identified as demonstrating consideration of any irrelevant consideration. The real issue with the decision taken by the applicant is the weight afforded that matter by the Tribunal. Ultimately that was a matter for the Tribunal and in the absence of any material to demonstrate that the Tribunal’s approach to its consideration of this material was unreasonable such that it would satisfy the Wednesbury Corporation test this complaint merely reflects unhappiness on the part of the applicant with the ultimate decision made by the Tribunal and seeks impermissible merits review.
b)Particular ii: The applicant complains that, by reason of the five primary complaints, the Tribunal misinterpreted the sales figures for the six months ending 30 June 2007 as $137,449.00, when in fact the figures were $151,467.00 with the gross profit for the same period being $120,045.00, when it ought to have been $129,063.00, finding a net profit of $69,532.00, which should have been $25,580.00. The applicant complains it ought to have been clear to the Tribunal that, on sale of stock of $22,404.00, the business could not have made a profit of $129,063.00 and thus the Tribunal should not have relied upon that and the subsequent years balance sheets as a true reflection of the applicant’s earning capacity.
In terms of the five primary complaints the applicant appears to take issue with the reasonableness of the outcome.
At the outset it is necessary to state that, as a matter of general principle, when it comes to matters of fact, provided the Tribunal is acting within its jurisdiction, it is as much open for the Tribunal to get the facts right as it is to get the facts wrong; Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (supra).
No material was provided by the applicant addressing the question of mark up. However, as a matter of standard accountancy policy the cost of goods sold is deducted from sales in order to achieve a net profit figure.[13] On that basis, on sales of $137,440.00 with a gross profit of $120,045.00, the cost of goods sold was $17,404.00. The applicant’s complaint appears to confuse mark up, which in this case appears to be eight times cost price, with profit. That is the only reasonable construction to be applied to the assertion that it should have been clear to the Tribunal that, on the sale of stock of $22,404.00, the business could not have made a profit of $129,063.00. It should be noted that the sum of $122,404.00 is the difference between sales of $151,467.00 and gross profit of $129,063.00. Respectfully, the submission simply reflects the drafter’s lack of understanding of accounting principle. More significantly, the material does not indicate whether or not this matter was raised before the Tribunal and thus whether the Tribunal’s failure to consider it expressly in the terms articulated by the applicant in its notice of appeal, or at all, constitutes any failure on the part of the Tribunal. In the absence of any such submission before the Tribunal (of which none was placed before the Court) the Tribunal cannot be found to have acted unreasonably or ignored what might otherwise be contended to be relevant consideration. This ground is dismissed.
[13] AASB – Framework for the Preparation and Presentation of Financial Statements
c)Particular iii: The applicant complains the Tribunal “failed to accord any or any proper weight to the evidence of the applicant that the net profit figure for the financial year ended 30 June 2008 was not a true reflection of the net profit of the business and that the applicant had paid approximately $[sic] business could not claim as a deduction for the financial year ended 30 June 2008 meaning that in effect the net profit of the business was overstated by approximately $180,000.00.” The applicant’s contention is entirely meaningless and is not even capable of being afforded some construction which would enable it to be addressed. It is dismissed.
d)Particular iv: It is complained that the Tribunal, by reason of the five primary complaints, erroneously attempted to address the applicant’s evidence referred to in paragraph (b) above; “34. … While this appears (from an examination of the inventory adjustments) to be the case, it is easily addressed by smoothing the profit over the two years to the end of 2008/09.” Given that the departure order covers the period 28 April 2008 – 31 October 2012 any “smoothing” (if indeed it is appropriate for the Tribunal to smooth over) should have taken into account the financial year ended 30 June 2007 in which the net profit was $25,580.00 and should take into account sales and profit figures for the financial year ended 30 June 2010.”
In its notice of appeal, the applicant indicated that it would seek leave to introduce accounts and returns of the trust for the financial year ended 30 June 2010. As noted earlier, the applicant sought to introduce later material which was inconsistent with the Tribunal’s findings on this issue. Such a notation demonstrates the fundamental misconception of the applicant concerning the nature of this application.
In terms of the five primary complaints the applicant appears to complain about the weight afforded to the evidence adduced by him and also to the reasonableness of the decision maker in “smoothing” the profit over the two years. Ultimately these were all matters of fact which were well within the jurisdiction of the decision maker to determine in the manner that he saw appropriate. Nothing from the matters detailed in his decision would suggest that his decision was so unreasonable as to render it a failure by him to exercise his jurisdiction. Nor did his decision reflect any failure by him to afford proper weight in terms of the relevant considerations.
e)Particular v: The applicant contends that, on the basis of the five primary complaints, it should have been clear to the Tribunal that during the financial year ended 30 June 2008 on sale of stock of $378,701.00 the business could not have made a profit of $609,716.00 and thus the Tribunal should not have relied on this and the subsequent years balance sheets as a true reflection of the applicant’s earning capacity. As addressed earlier concerning sub-particular (b) above, this submission by the applicant simply misconceives proper accounting principle as provided for in the Accounting Standards proscribed by the Corporations Act. The matter was one of fact entirely open to the Tribunal and ultimately what is now sought by the applicant is impermissible merits review. This ground is dismissed.
f)Particular vi: It is contended that the Tribunal offended the five primary complaints and erred in that “it attributed all of the financial profit distributed by the Business during the notional year 30 June 2008 of $250,099.00 as income, sum of $224,719.00 was distributed to separate legal entity [Mr Burns] Pty Ltd which company as the company 2008 tax return shows had deductions and expenses other than carried forward losses.” This contention is entirely meaningless but underlying it is a complaint by the applicant as to a matter of fact. For reasons that I have earlier advanced it is not for the Court to review findings of fact made by the Tribunal within its jurisdiction. Plainly the applicant seeks impermissible merits review. This ground is dismissed.
g)Particular vii: The applicant contends that the Tribunal breached the five primary complaints in paragraph 35 of its decision by deciding that “… the Tribunal does not propose to add back the depreciation amounts claimed. In interpreting the net profit figure for the financial year ended 30 June 2009 the Tribunal has added back depreciation of $85,628.00 meaning the net loss for this financial year was in fact $4,102.00 rather than a net profit of $81,616.00 as stated. The depreciation related to the purchase of two vehicles purchased to replace assets of the business.”
To understand the applicant’s complaint on this ground it is necessary to look closely at paragraphs 34 and 35 of the decision. At paragraph 34 the Tribunal explains its “smoothing” process. Arithmetically it is readily discernable that what the Tribunal did was add the net profit for 2007/08 and 2008/09 and divide that figure by two. That is $252,899.00 + $81,616.00 = $334,515.00 divided by 2 = $167,257.00. That figure was noted to be before any adjustment for depreciation. In paragraph 35 the Tribunal then proceeded to address the matter of depreciation. It noted that the nature of assets subject to depreciation reasonably required accounting against profit and concluded: “accordingly the Tribunal does not propose to add back the depreciation amounts claimed.” In other words the Tribunal was indicating that it did not propose to measure the applicant’s income by reference to “cash profit” as noted in its table but rather by reference to net profit which ordinarily would permit allowance for depreciation. Again, the applicant’s submission on this matter demonstrates a fundamental lack of understanding of the decision which, in my view, is plainly open upon a fair and careful reading of it.
Indeed, if anything, the Tribunal’s decision demonstrates the care that it took to properly consider in a fair and appropriate way the applicant’s case. For instance, while as a matter of accounting policy depreciation is properly allowable, in many instances it can be used to distort financial outcomes as depreciation is often a matter of accounting judgment, particularly when determining the matters of rate and useful economic life. Here the Tribunal plainly recognised the appropriateness of depreciation at the full rate proposed by the applicant in his accountant’s figures. Apart from the applicant’s failure to appreciate and correctly interpret the table in paragraph 33, the applicant also adopts a puzzling figure of $85,628.00 as the depreciation figure. No basis for this figure arises. Nor can it be distilled by arithmetic analysis of the relevant figures. Its origin is a mystery. In any event, for reasons which I have identified at subparagraph 35(b) above, this ground also fails.
h)Particular viii: The applicant contends for the five primary complaints that his child support liability up to October 2009 was determined by the Tribunal to be based on an income increasing from $32,700.00. He contends that prior to the Tribunal’s decision of 20 April 2007 he had been paying approximately $430.00 per month for both children. He contended the assessment that he now pay $3,428.00 is “so far removed from the history evidence and actual learning capacity of the applicant as to constitute an error of law.”
It is difficult to distil from this complaint which of the particular primary complaints the applicant alludes to in support of his overall submission. This paragraph appears to largely assert matters of fact which are not in dispute save for the fact of the current assessment. Perhaps the only primary complaint which is being alluded to concerns the reasonableness of the decision. However, the decision is not based upon a mere subjective assessment comparing one period with another. The Tribunal’s decision was based upon an application of the relevant part of the Assessment Act to the facts of the case resulting in the reasons for the decision provided. This ground appears to be largely meaningless and rather broadly seeks to encompass the earlier matters contended on the part of the applicant. It is dismissed.
Ground 8 – The Tribunal failed to take into account relevant considerations concerning the [omitted] business purchased by him for the respondent
The applicant complains that the Tribunal did not take into account the fact that the applicant had purchased for the respondent a [omitted] business in 2002 which at the hearing the respondent acknowledged was in substitution for child support. Three particulars were provided. They were:
a)“I had – well sort of, co-owned a [business omitted] that my ex husband [Mr Burns] bought me instead of paying child maintenance. We agreed that I would – because he said it would be better for him tax-wise because it was losing money to have that instead of just paying me money.”;
b)“The applicant paid child support for the child [X] for approximately five years between the period 1999 to 2004 when it was or should have been known that [X] was not a child of the applicant ([X] was withdrawn by the respondent as a child in respect of which the applicant had a liability in or about 2004).”;
c)“The respondent has either not disclosed or understated the income she receives from her business as a [omitted] being the business the applicant purchased for her in 2002.”
It is apparent from the decision that no mention was made to a [omitted] business that was purchased by the applicant for the respondent in 2002 and which was said by the respondent at the hearing on 20 September 2004 to be in substitution for child support. Perhaps this is not surprising given evidence of the respondent’s occupation.
As at the date of decision the Tribunal noted her occupation as “part time tertiary student.” It noted she was entirely dependent on her husband[14] who earns approximately $1,231.00 per week in child support payments. From this it is to be inferred that she is not in receipt of any income from the conduct of any business. Section 117 of the Assessment Act required the Tribunal to take into consideration, inter alia, “(4)(d) the income, property and financial resources of each parent …”. If the applicant no longer conducts business as a [omitted] then the historical fact may or may not be relevant, but even if relevant it might be “so insignificant that the failure to take into account could not have materially affected the decision.”[15] Given the treatment of the issue at the hearing on 12 July 2010 and the consideration by the Tribunal in its decision of only the applicant’s actual income at the time of application, it is to be inferred that the Tribunal did not regard that history as relevant. Nothing in the facts placed before the Court give ground to any suggestion that the Tribunal’s approach on that matter was such that it would have given rise to jurisdictional error. This ground is dismissed.
[14] The respondent had remarried by the time of the decision under review.
[15] Minister for Aboriginal Affairs v Peko-Wallsend Ltd (supra)
Ground 9 – The extension by Registrar of the Tribunal’s determination to November 2009
The applicant complains that the Registrar by decision made
1 February 2008 effectively extended the Tribunal’s determination of 20 April 2007 until November 2009. The applicant contends that, given the respondent did not appeal the decision of 1 February 2008, it is unfair and inequitable to the applicant and a jurisdictional anomaly for the Tribunal to backdate its decision to a date shortly after the Registrar’s decision of 1 February 2008.
What the applicant complains of is essentially what followed the initial assessment by an earlier Tribunal differently constituted. The earlier constituted Tribunal had assessed the applicant’s income as at 12 July 2007 at $32,700.00 and set that income until November 2007. None of the financial information before the latter Tribunal had been available at that time and was plainly not taken into consideration. The respondent did not appeal that assessment but later made a further change of assessment application which resulted in that assessment being extended until November 2009. As the Tribunal noted at paragraph 63 of its decision, the respondent could have but did not appeal that decision if she felt that the applicant’s income was being incorrectly assessed.
Plainly, until events giving rise to the departure application the subject of review by the Tribunal, the respondent was content that the applicant’s circumstances were consistent with the earlier administrative assessment. No doubt the respondent’s suspicion was aroused when the applicant’s adjusted taxable income for the three month period November 2009 to February 2010 fell on an annualised basis from about $32,000.00 to about $20,000.00. That resulted in a departure application by the respondent which in turn saw the production to the delegate of the income and taxation records of the applicant and his associated entities.
It is plain from comparison between the assessments identified in paragraph 2 and 3 of the reasons for decision compared to the assessments conducted by the Tribunal as identified in the table at paragraph 33 that there was a significant disparity between the two assessments by reason of the additional material. The Tribunal noted at paragraph 64 that the respondent had relied upon the Tribunal’s assessment and the CSA’s investigations and because of that made no objection to the original decisions. The applicant’s true financial position only became apparent after the appeal from the objection decision under review. Indeed, it was on that basis that the Tribunal considered 28 April 2008 to be an appropriate commencement date for the departure.
The applicant now complains that this is unfair and inequitable. He contends that there is a “jurisdictional anomaly” which permits the Tribunal to backdate its decision to a date shortly after the Registrar’s decision of 1 February 2008.
In the course of oral submissions the applicant’s counsel did not take issue with the power of the Tribunal to make such an order. What he really contended for was that the applicant be permitted the benefit of the decision made from the earlier imperfect information; a state for which he was responsible. That is to say he led the original decision-maker to make a wrong decision by withholding material (whether done innocently or otherwise is immaterial) and he now seeks the benefit of such an administrative decision. He claims, in effect, that the decision-maker ought be estopped from recanting on his earlier decision and be held to it, or to use the words discussed by the High Court in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex Parte Lam, he claimed a basis for a “legitimate expectation” that such a case would follow.[16]
[16] (2003) 214 CLR 1 at 21.
In the judgment of McHugh and Gummow JJ, their Honours noted:
“The doctrine of “legitimate expectation” has been developed in England so as to extend to an expectation that the benefit in question will be provided or, if already conferred, will not be withdrawn or that a threatened disadvantage or disability will not be imposed. This gives the doctrine a substantive, as distinct from procedural, operation.”
At page 22 their Honours observed, applying Annetts v McCann (1990) 170 CLR 596 that no doctrine of administrative estoppel has emerged in Australia, noting with approval observations of the Supreme Court of the United States, where it was stated:
“The court has come close to saying that the government can never be equitably estopped based on a false or misleading statement of one of its agents no matter how much an individual has relied on that statement to her detriment or how reasonable her reliance..”[17]
[17] Op.cit. at [69] page 22, footnote 49.
Other members of the Court shared the views of McHugh and Gummow JJ in separately expressed reasons.[18]
[18] See Gleeson CJ at page 10; Hayne J at page 37; Callinan J at page 48.
As the Court concluded, the only rights arising from an administrative decision are procedural, not substantive. For reasons addressed above each of the applicant’s complaints were about process. However I consider the Tribunal did afford him procedural fairness. That was what it was required to do. The earlier decision was not conclusive giving rise to a substantive right. The appellant’s complaint that that decision did give rise to substantive rights is in my view a complaint without legal foundation. This ground is dismissed.
Ground 10 – The applicant did not agree as alleged that the “business is the alter ego for child support purposes”
It is apparent from an examination of the transcript of proceedings before the Tribunal that there was discussion between the applicant and the Tribunal concerning the structure of his business affairs and in particular the issue concerning the company and his discretionary trust. Although the applicant now cavils with the Tribunal’s finding that the business was his alter-ego for child support purposes so much was open to be inferred by the applicant’s statement that “the company is me.”[19] Ultimately the matter was one of fact but in any event was a fact well open to be drawn from other evidence of the applicant whether or not he now seeks to recant from the import of his admission evidenced in the transcript. The applicant’s business structure is a fairly elementary business structure involving the creation of a discretionary trust administered by a corporate trustee. The material demonstrates the applicant was both the controller of the corporate trustee and a principal beneficiary under the trust. Given the broad mandate provided by s.117(4)(d) to permit a consideration of a party’s “financial resources,” it seems the matter was well open and relevant for the Tribunal on the material. This ground is dismissed.
[19] Transcript page 42 line 8.
Ground 11 – The finding of $1,700.00 per month gambling is unsupported by evidence
Although this ground remained in the notice of appeal, this matter was not expressly addressed in submissions either orally or in writing. As I have earlier noted the applicant did not place before the Court any of the material which was before the Tribunal. The basis upon which this ground is advanced is unclear. For instance, is the applicant submitting that further allowance ought to have been made for his reasonable recreational requirements (if that be what it is)? It is unclear how it is contended that this matter, if indeed it is correct, has contaminated the decision of the Tribunal. In the absence of any argument addressing this matter this ground is dismissed.
Bias
Although not advanced as a ground of appeal in the amended notice of appeal, a further ground advanced by the applicant is that the Tribunal was biased. In particular, the applicant relied upon exhibit 3, a diary note made of a conversation on 19 May 2010 (that is about one month before the relevant decision) when an officer of the Tribunal had a telephone conversation with the respondent. Relevantly the diary note records as follows:
“[Respondent] advised that [applicant] did not answer his phone for the SSAT hearing that was scheduled. [Respondent] wanted me to know that she has been told by SSAT that it is likely that [applicant’s] arrears will increase by possibly $50,000.00 and that his liability will remain the same. [Respondent] stated that COA and the SSAT did not have information about the family trust that [applicant] was the sole director of and received an income of AUD$250,000.00 in 07/08. [Respondent] stated that if the $50,000.00 was added to his arrears [Applicant] would definitely move overseas as [Applicant] had various companies overseas.”
First it needs to be observed that the basis for the allegation of bias is not only a diary note by a junior officer (the note is prepared by a call centre officer) but also that it purports to record the effect of a conversation she had with “the SSAT.” In the course of that correspondence, the respondent in turn purported to report something told to her by the SSAT. That raises two matters. Firstly, the accuracy of the record of the respondent’s restatement of matters she was informed of. Secondly, what is meant by SSAT? Was she reporting something advised to her by the Tribunal itself; that is a Tribunal member acting in his capacity as a member of the Tribunal, or, was she simply reporting something advised to her by a member of the Tribunal’s staff acting for instance in an administrative capacity such as would be expected by a member of the Tribunal’s registry staff.
In addition to the diary note it was also submitted that the Tribunal’s “demonstrated bias toward the applicant in the manner and tone of their questioning of the applicant at the hearing on 12 July 2010. It is submitted that the questioning reveals that the SSAT had formed a particular view of the applicant and cast the members in a position of adversary of the applicant.”
Although the Court had the benefit of the transcript of proceedings no audio of the proceedings was provided. It is customary in instances of this kind when such allegations are made that an audio would be provided. While I do not draw any adverse inference by reason of the failure to provide an audio it is plain that a matter of tone in questioning is difficult to discern from transcript. In any event, the transcript itself does not reveal the Tribunal doing any more than what would be expected by a Tribunal which is required to conduct proceedings in a manner consistent with its inquisitorial responsibilities cast in an adversarial context.[20]
[20] Minister for Immigration and Citizenship v SZIAI [2009] HCA 39
The thrust of the applicant’s contentions concerning bias relate to the manner in which it is submitted that the Tribunal was said to have assisted the respondent. It is accepted that the principles governing bias also govern administrative decision makers; Ebner v Official Trustee (2000) 205 CLR 337 at 343. The leading observations on the question of the conduct of proceedings and whether or not they give rise to a perception of bias are to be found in the High Court’s observations in Johnson v Johnson (2000) 201 CLR 488 where the majority (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) observed commencing at page 493 paragraph 12:
“[12] “[the test being whether a fair minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprincipled mind to the resolution of the question the judge is required to resolve] has been adopted, in preference to a differently expressed test that has been applied in England, for the reason that it gives due recognition to the fundamental principle that justice must both be done, and be seen to be done. It is based upon the need for public confidence in the administration of justice. “If fair-minded people reasonably apprehend or suspect that the tribunal has prejudged the case, they cannot have confidence in the decision.” The hypothetical reasonable observer of the judge’s conduct is postulated in order to emphasise that the test is objective, is founded in the need for public confidence in the judiciary, and is not based purely upon the assessment by some judges of the capacity or performance of their colleagues. At the same time, two things need to be remembered: the observer is taken to be reasonable; and the person being observed is “a professional judge whose training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial.”
[13] While the fictional observer, by reference to whom the test is formulated, is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation. At the trial level, modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx. In Vakauta v Kelly Brennan, Deane and Gaudron JJ, referring both to trial and appellate proceedings, spoke of “the dialogue between Bench and Bar which is so helpful in the identification of real issues and real problems in a particular case.” Judges, at trial or appellate level, who, in exchanges with counsel, express tentative views which reflect a certain tendency of mind, are not on that account alone to be taken to indicate prejudgment. Judges are not expected to wait until the end of a case before they start thinking about the issues, or to sit mute while evidence is advanced and arguments are presented. On the contrary, they will often form tentative opinions on matters in issue, and counsel are usually assisted by hearing those opinions, and being given an opportunity to deal with them.”
From my review of the transcript of the proceedings, there is nothing in the manner in which this application was disposed of before the Tribunal to suggest the manner in which the Tribunal conducted itself demonstrated bias to the requisite standard, that being that of a reasonable and fair-minded person witnessing the proceedings of an administrative Tribunal.
This ground is dismissed.
Conclusion
The applicant in this instance seeks to appeal against the decision of the Social Security Appeals Tribunal. The decision concerned its review of a decision concerning child support liability. No error of law has been demonstrated. No other error has been established. The application is dismissed.
I certify that the preceding fifty-eight (58) paragraphs are a true copy of the reasons for judgment of Burnett FM
Date: 19 April 2012
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