Carlson & Acuff & Anor (SSAT Appeal)
[2010] FMCAfam 677
•30 June 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CARLSON & ACUFF & ANOR (SSAT APPEAL) | [2010] FMCAfam 677 |
| CHILD SUPPORT – Appeal regarding child support – SSAT. |
| Child Support (Assessment) Act 1989, s.117 Child Support (Registration and Collection) Act, ss.101, 103H, 103N(2) |
| Acuff & Carlson [2006] FMCAfam 14 DJM & LNM [1998] FamCA 97; (1998) FLC ¶92-816; (1998) 23 Fam LR 396 Tyagi & Meares [2008] FMCAfam 886; (2008) 39 Fam LR 604 |
| Appellant: | MR CARLSON |
| First Respondent: | MS ACUFF |
| Second Respondent: | CHILD SUPPORT REGISTRAR |
| File Number: | HBC 1208 of 2008 |
| Judgment of: | Riethmuller FM |
| Hearing date: | 25 January 2010 |
| Date of Last Submission: | 25 January 2010 |
| Delivered at: | Melbourne |
| Delivered on: | 30 June 2010 |
REPRESENTATION
| Counsel for the Appellant: | The Appellant appearing in person |
| Solicitors for the First Respondent: | Mr Blissenden |
| Solicitors for the Second Respondent: | Blake Dawson |
ORDERS
The appeal be allowed.
That the matter be remitted to the Social Security Appeals Tribunal to be heard and determined according to law.
The Second Respondent to provide written submissions on the issue of the costs of the SSAT transcript within 14 days.
The Appellant to provide a response within 14 days.
Liberty be reserved to the parties to mention this matter to me, by arrangement with my Associate [contact details omitted] in relation to an oral hearing.
IT IS NOTED that publication of this judgment under the pseudonym Carlson & Acuff is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
HBC 1208 of 2008
| MR CARLSON |
Appellant
And
| MS ACUFF |
First Respondent
| CHILD SUPPORT REGISTRAR |
Second Respondent
REASONS FOR JUDGMENT
This is an appeal from a decision of the Social Security Appeals Tribunal (‘SSAT’) dated 29 October 2008 with respect to the child support assessment of the appellant and the respondent.
In the Notice of Appeal and a supporting affidavit the appellant raises many grounds of appeal. In the Notice of Appeal it is claimed that the SSAT:
a)erred in law in that no tribunal properly advised as to the law in light of the evidence could reasonably have reached the same conclusions;
b)failed to consider the evidence or make findings of fact in relation to the evidence;
c)failed to apply the correct law in relation to its findings;
d)refused to admit S’s affidavit evidence relevant to the issues before the Tribunal;
e)failed to give effect to their finding that Reason 3 has been established;
f)failed to consider the evidence in reaching its conclusions and held itself bound to the Federal Magistrate’s findings made in 2006 in respect of different evidence and circumstances.
In the affidavit the appellant set out further grounds of appeal. While some grounds elaborated those set out in the Notice of Appeal, the following appear to be separate grounds of appeal:
a)The SSAT erred in the method used in calculating the respondent’s child support income;
b)The SSAT did not give effect to the principle that each parent should contribute to the costs of educating the child in the manner expected by the parties;
c)The appellant later adds that the SSAT failed to apply the principle that parents should share equally in their children’s care. However, this appears to be a generic claim associated with the above;
d)The SSAT failed to give proper consideration of matters set out in s.117(4) of the Child Support (Assessment) Act 1989 in determining whether it would be just and equitable in making the orders; and
e)There was no proper exercise by the SSAT of the discretion imposed under s.117. In particular, the appellant claimed there was ‘an insufficient analysis of the facts and the circumstances and an insufficient statement of reasons for the decision’.
Unfortunately the grounds of appeal do not clearly identify the real complaints of the appellant. However, in the supporting material and argument those complaints are apparent. As a result I propose to deal with the issues raised by the appellant, rather than the abstract appeal grounds as pleaded.
Background
The parties have three children the subject of the child support assessment: S born 1989, R born 1993 and N born 1996. The parties divorced in 1999. The children’s care is shared between the parties.
On 6 February 2007 the respondent applied for a change to the administrative assessment of the appellant’s child support liability. On 26 July 2007 a senior case officer of the Child Support Agency (‘CSA’) decided to depart from the administrative assessment. The change was on the basis that the administrative assessment did not take into account the appellant’s income, earning capacity, property or financial resources. The respondent had also claimed that the administrative assessment did not take into account the extra costs of the children’s care, training and education in the manner as intended by the parties, however, the senior case officer did not find this ground established.
On 28 November 2007 an objections officer of the CSA partly allowed the appellant’s objection.
On 16 October 2008 the SSAT granted an extension of time for the appellant to apply for a review of the objections officer’s decision.
The SSAT’s reasons and findings
The SSAT set aside the objections officer’s decision and directed a departure from the administrative assessment such that:
a)For the period 6 February 2007 to 30 June 2008 the appellant’s child support income is set at $64,786 per annum; and
b)For the period 1 July 2008 to 30 September 2009 the appellants’ adjusted taxable income is set at $67,495 per annum.
The decision required consideration of the income and earnings of each parent, the children’s school fees, and the support the appellant provides for the oldest child, S, who is now 18 and attending university.
The appellant’s earning capacity
The appellant is employed in the public service. The appellant’s actual income amount is easily determined. The issue before the SSAT was whether the appellant should be assessed on the basis of half-time employment, or full time employment. Both employment options were open to the appellant. The appellant’s case was that the half time employment option was taken as a result of having shared care of the children.
The Tribunal considered formal paid child care was a reasonable alternative open to the appellant, and therefore concluded the appellant’s caring responsibilities did not justify half time employment as described in s.117(7B)(b).
The Tribunal also concluded that the appellant had ‘not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child’ as described in s.117(7B)(c).
The appellant’s financial resources
The appellant incorporated a company called [L] Pty Ltd. The company arranges [omitted]. The SSAT found that the appellant’s loans to this company were a financial resource which should be taken into account when assessing the appellant’s child support liability, although does not appear to have adjusted for this ‘resource’ in its final determination. The loans appear to have been loans from the appellant to the company financed by a home mortgage.
The respondent’s earning capacity
In 2007 the respondent was working 20 hours per week for a charity. However, this became too physically demanding. The respondent then took an office position for 15 hours per week, however after a 3 month trial the position came to an end. The respondent was then granted a disability pension. The respondent has not worked since that time. The Tribunal accepted that the respondent had no earning capacity.
School fees and extra-curricular expenses
The Tribunal accepted that the parties incurred expenses for school fees for the children, but found that the respondent had no capacity to meet those expenses. The Tribunal said it declined to alter the assessment to reflect the school fees expenses incurred by the applicant, although it appears to have taken them into account when considering the appellant’s commitments.
There remains some dispute about the amount of the school fees. The respondent provided a schedule of school fees showing:
a)2007 - $8664;
b)2008 - $6024; and
c)2009 - $6024.
Costs of caring for S
The Tribunal concluded that ‘there was no evidence of [S’s] circumstances and why she is not able to support herself’: see para.[200]. As a result the Tribunal found that it ‘was unable to make a considered determination on whether or not [the appellant] having full care of [S] impacted on [the appellant’s] ability to provide financial support for [R] and [N].
Just and equitable
The SSAT made the following findings:
a)In light of the respondent’s limited income, property and resources, the respondent had no capacity to contribute to the costs of the children’s private education;
b)Refusing a departure application that would have increased the amount of child support the respondent receives would cause the respondent financial hardship while the children are in the respondent’s care;
c)A departure determination that would require the respondent to bear some of the costs of the children’s private education would similarly cause financial hardship;
d)The appellant received a financial resource in the form of loan repayments that the company made.
e)Given the appellant’s income, financial resources and earning capacity, a departure determination that increases the appellant’s child support liability would not cause the appellant hardship while the children are in the appellant’s care.
f)That the appellant’s income (if working full time) exceeded necessary commitments by $10,628 in 2007 and $13,330 in 2008.
Effective outcome
The actual rate of child support that would result from the decision of the SSAT is not set out in the reasons. This leads to a logical difficulty: how did the SSAT come to the conclusion that the rate was just and equitable if they did not first identify the rate that would flow from the decision.
The parties advised on the appeal that the practical outcome of the SSAT decision was annual rates of child support as follows:
a)06/02/07 – 31/03/07 $9526 per annum;
b)04/04/07 – 14/11/07 $9261 per annum;
c)15/11/07 – 30/06/08 $7594 per annum;
d)01/07/08 – 06/07/09 $5404 per annum;
e)07/07/09 – 30/09/09 $5928 per annum.
Substantive issues on Appeal
Credit cards
At para.[201] of the decision, the SSAT found the credit card repayments were not a necessary expenditure over and above the amount of the household expenses.
The appellant claims it is illogical for the SSAT to find that access to credit cards is a financial resource yet decline to include credit card repayments as legitimate expenses. The reasons of the Tribunal do not state that the credit card is a resource of the appellant.
Including both the credit card repayments and his obligations of meeting household outgoings as expenses would have allowed the appellant to ‘double-dip’, unless the credit card purchases were expenses in excess of the expenses listed in his financial statement. The appellant argued that his credit card debt continued to increase. At para.[62] of the decision, the SSAT noted that the appellant was unable to make payments on the credit cards.
It seems that the reason the credit card expenses are increasing is that the appellant’s income is less than the appellant’s expenses, which is reflected in the credit card debt and the spending of capital repayments on a loan made to a company.
This issue does not demonstrate an error of law on the part of the Tribunal
Borrowing funds
The appellant claims it was not open to the SSAT to assume that the appellant can borrow funds and accordingly can pay more child support. This arises from findings that the appellant’s company repaid monies that were lent to it by the appellant. The Tribunal found:
[177]…[the appellant] had been repaid moneys owed to [the appellant] by [L] in the amounts of $72,779 in 2005/06 and $12,426 in 2006/07. The Tribunal took into account that these funds had, albeit by a circuitous route, been raised by [the appellant] borrowing against [the appellant’s] house. However, having borrowed the fund and used them as loans to the company, they were in the Tribunal's opinion a financial resource of [the appellant] which should be taken into consideration when determining [the appellant’s] child support liability. The Tribunal concluded that [the appellant] had access to funds of $72,779 in 2005106 and $12,426 in 2006/07, which were not taken into account in the assessment of [the appellant’s] child support liability.
The appellant referred to Wright & Wright & Anor (SSAT Appeal) [2009] FMCAfam 979 at [21]-[22]:
[21] The artifice of finding that a person can pay child support at a far greater level on the assumption that they could borrow money, when they have no assets for security, nor any other financial resources, was simply not open to the Tribunal in this case. The rejection of such a reasoning process occurred long ago in the Family Court where the Court made clear that ‘a capacity to borrow is not property’: per Lindemayer J in Walters & Walters [1986] FamCA 8; (1986) FLC ¶91-733; [1986] FamCA 8; (1986) 10 Fam LR 1006 at [17]. This has been confirmed recently by the Full Court of the Family Court in Gollings & Scott [2007] FamCA 397, and in La Costa & La Costa [2007] FamCA 1176 where Bryant CJ, May and Boland JJ said:
70. We are conscious of numerous decisions ... from which it is obvious that there is no power to make orders for the payment of moneys when there is neither property available from which such a sum could be raised nor any fund of money.
[22] The judgement of Coker FM, in Magee & Magee [2008] FMCAfam 856 provides a good example of the application of the principle, where his Honour said:
[97] ... there is obviously no borrowing capacity, particularly if all of the existing matrimonial property is transferred to the wife. But what does exist is the prospect or possibility of further loans or gifts from the husband's parents, but there is, of course, no obligation upon them to provide such monies and it would be, in my assessment, a nonsense to make an order requiring the payment of monies which there is no guarantee of or capacity to pay. (emphasis added)
However, this case is not identical to that of Wright’s case. There were borrowings, supported by an underlying asset. It appears that the appellant borrowed for the business and that the business repaid. The real question in this case was whether borrowings against the home should be applied to payment of child support – that is, was this a case where the appellant would be expected to deplete assets in order to make child support payments. This issue is discussed in Parrish & Torrey (SSAT Appeal) [2009] FMCAfam 274; (2009) 41 Fam LR 236 where it is said:
[13] … A person’s residence, at least to the extent that it is commensurate with their economic resources, would not ordinarily be expected to be sold or rented as it is where the party lives. Similarly the social security legislation does not require applicants for pensions to first sell their homes and exhaust the proceeds before providing relief. Thus a person’s home would not usually be considered an asset yielding less than an ordinary rate of return.
Similarly, it would be a rare case where a person was expected to borrow against a modest home in order to pay child support. There is nothing in the facts of this case to indicate that it would be appropriate to require a parent with shared cared (and now full care of an adult child at university) to borrow against a modest home to make child support payments. It appears to me that on the findings of the Tribunal it was not open to them to conclude that these loan repayments were a financial resource upon which one could justify an increase in child support.
However, the Tribunal do not appear to have relied upon this as a basis for increasing child support and therefore it is difficult to see how this error affects the outcome in the decision.
Failure to consider studies on the costs of children
The appellant complains that the SSAT failed to consider the published studies on the costs of children in order to determine the reasonable income needed to support S. However, in this case the Tribunal did not need to resort to published studies as it had the evidence of the actual contributions that the appellant was making to S’s support from the appellant’s evidence.
In this case I find no error on the part of the Tribunal in this regard.
S’s evidence
At the SSAT hearing the appellant sought to rely upon a sworn statement by S. S is the eldest child of the parties, having attained 18 years before swearing her statutory declaration. The Tribunal refused to admit S’s evidence.
Section 103H of the Child Support (Registration and Collection) Act prohibits a child of a party to the review from giving evidence:
103H [Children of parties not to give evidence]
A person may not give evidence for the purposes of a review of a decision if:
(a)the person is a child of a party referred to in paragraph 101(1)(a), (c) or (d); or
(b)a party referred to in paragraph 101(1)(a), (c) or (d) is a non‑parent carer of the person. (emphasis added)
The parties to the review are listed in s.101:
101 [Parties to reviews] (1) The parties to a review under this Part are:
(a)the applicant; and
(b) the Registrar; and
(c) any other person who was entitled to apply for review of the decision under section 89; and
(d) any other person who has been made a party to the review under subsection (4). (emphasis added)
The term ‘child’ is not defined in the Act. The word can refer to a person under 18 years of age, and to a person who is the immediate biological descendant of another (or a person deemed to be so). The argument that S is now 18 years of age and therefore not a child for the purposes of s.103H cannot be sustained on the wording of the provision. Section 103H refers to ‘a person’ when defining the persons who may not give evidence. The section can be compared to s.100B of the Family Law Act which prohibits ‘a child’ rather than ‘a person’. The SSAT’s interpretation of s.103H was correct.
In cases such as this it creates a difficult restriction upon the appellant when before the SSAT, however the relevant evidence can still be given by the appellant as the strict rules of evidence do not apply in proceedings before the SSAT.
I therefore find against the appellant with respect to this ground of appeal.
Costs of the adult child S
Evidence was given by the appellant as to S (an adult child of the parties) studying at university. S lives full time with the appellant, and has part time work. The appellant gave evidence of what S uses her income for (see transcript pp.26-27): running a car, discretionary expenses and saving for future travel.
It appears that the Tribunal’s findings in this regard must be limited to the question of S’s capacity to support herself as the Tribunal go on to identify the expenses that the appellant incurs for S’s care on a weekly basis in para.[201]. Why the Tribunal made no findings as to whether S could be reasonably expected to contribute financially for the household is not apparent. It seems more likely that the parents do not expect S to contribute more than her own car and discretionary expenditure as she is studying and hoping to travel (travel often being seen as an integral part of a well rounded education).
In submissions, the solicitor for the respondent recalculated expenses including S. This is appropriate. The Tribunal’s failure to fully deal with the issues relating to S was an error. There is little doubt that the parents have an obligation to S under s.66L of the Family Law Act 1975, the real question being the amount of the obligation, in light of the parents’ expectations about whether S should contribute to household expenses. In many households parents would not expect a child studying at university to contribute to household expenses.
The Respondent’s income
At the hearing the appellant claimed that the SSAT incorrectly found s.117(7B)(c) of the Child Support (Assessment) Act did not apply as given that the respondent was not working, and there was no employment to cease in the first place.
This does not accurately reflect the SSAT’s finding. At para.[184] of its decision, the SSAT found that given the respondent’s child support income was below the threshold and did not affect the administrative assessment while the respondent was working, a reduction in the administrative assessment was not a major purpose for the respondent’s decision to cease work.
As the Tribunal accepted that the respondent was incapacitated it is difficult to see how the Tribunal would make relevant findings of earning capacity, before needing to consider s.117(7B).
This issue does not give rise to a basis for allowing the appeal.
Appellant’s reduction of working hours
The appellant, a [occupation omitted], had chosen to work half time, rather than full time. There was no dispute that it was the appellant’s choice, and that full time work was available. There was evidence that work between half time and full time was discussed with the employer and not a real option. As it is a [omitted] position the rates of pay were not in dispute. The real question was whether the appellant should be assessed on the basis of a full time earning capacity.
Findings of the Federal Magistrate Court in 2006
The Tribunal considered the findings of FM Roberts in earlier court proceedings, before the Act was amended to add s.117(7B). As the Tribunal noted, the amendments changed the law (indeed, the Parkinson Report that formed the foundation for the amendments was very critical of the decision in DJM & LNM [1998] FamCA 97; (1998) FLC ¶92-816; (1998) 23 Fam LR 396, which FM Roberts had referred to in his decision).
The earning capacity of the parties was previously considered in Acuff & Carlson [2006] FMCAfam 14. FM Roberts found that the appellant’s decision to reduce working hours on the basis of caring responsibilities was not reasonable, on the basis that the appellant could have made alternative arrangements for the children’s after-school care which did not involve the mother or require the children to attend the appellant’s workplace.
The SSAT found that ‘the doctrine of estoppel does not apply in Tribunal proceedings’ and instead ‘considered it appropriate to place considerable weight on the findings of FM Roberts’: see para.[147]. Instead, the SSAT noted that s.103N(2) of the Child Support (Registration and Collection) Act allows the Tribunal to inform itself as it sees fit.
The Tribunal noted that in some respects it was a dispute between the same parties on the same issues under the same Act as in the case before the Tribunal. On other issues the Tribunal noted it:
‘…was cognisant of the fact that different legislative provisions apply to the assessment of [the appellant]’s earning capacity than those that applied when FM Roberts considered the matter. The Tribunal concluded, therefore, for it to adopt without question FM Roberts’ conclusions may lead this Tribunal to the incorrect application of the current law.’ (emphasis added)
The relevant findings of FM Roberts were:
[70] The [appellant’s] evidence was that, prior to [the appellant’s] application to this Court to vary Orders of the Family Court of Australia, it was necessary for the children to go to [the respondent] after school during the weeks that they were with [the appellant] and for [the appellant] to collect them from [the respondent] after work. Clearly, [the appellant] did not like that.
[71]. When [the appellant] was cross-examined further, it became apparent that [the appellant] could have made alternative arrangements for the care of the children after school which did not involve care by [the respondent] or them attending at [the appellant’s] place of employment. On occasions [the appellant’s spouse] had been available to assist, as had [the appellant’s] parents.
[72] When I consider the reasoning in DJM & LNM and Spinks, I come to the conclusion that for the purposes of the child support legislation, it was not reasonable for [the appellant] to reduce [the appellant’s] hours to 50%. While that may have been convenient to [the appellant] in relation to … care of the children (and it has certainly allowed [the appellant] to invest significantly more time in [the appellant’s] business), it has resulted in a significant reduction in the child support available for the children when they are in [the respondent’s] care.
…
[75] The evidence before the Court was that [the respondent] moved the children from one Christian School to another and I accept the [the appellant’s] evidence that it was a joint decision to have the children enrolled at such a school. It is therefore clear that the children are being educated in the manner in which both parties would like them to be educated. In my view it is therefore not appropriate to make any orders requiring [the appellant] to be solely responsible for those fees. If [the respondent’s] contribution to those fees is the result of a NAP (‘non agency payment’) then that is appropriate.
I am not persuaded that the Tribunal is correct in not considering itself bound by the principles of issue estoppel, with respect to decisions of the court. However, it is not necessary for me to decide this point as the Tribunal did not deviate from the findings of fact of FM Roberts in the previous decision. Whilst the Tribunal decisions do not create an issue estoppel, court decisions do, and the parties are bound by them.
In this case the Tribunal was right to note that the law had altered with respect to the earning capacity decision, since the judgement of FM Roberts. To the extent that the Tribunal were required to exercise their discretion in determining what was ‘reasonable’, there does not appear to be an estoppel created by the judgement as the findings of ‘reasonableness’ were under a differently worded provision and relates to the circumstances as they unfolded after FM Robert’s decision.
Thus, I am not persuaded that the treatment of the decision of FM Roberts founds a ground of appeal that should be upheld.
Findings on earning capacity
In light of the circumstances of this case it was important for the Tribunal to make careful findings as to the facts at the relevant time, upon which to base the findings as to earning capacity and the factors set out in s.117(7B).
The Tribunal identified changes in circumstances since the decision of FM Roberts:
a)the appellant was no longer living with, nor had the support of the appellant’s spouse;
b)the appellant’s parents were now often away travelling and therefore not available to assist with care arrangements;
The Tribunal also found that:
a)reasonable child care would be available (although the cost of same was not identified);
b)that during the marriage there was an agreement that the children would be cared for within the family;
c)that the respondent did not have a problem with utilising the services of paid child care now; and
d)court orders did not prohibit care outside the family
The Tribunal noted that the appellant ‘advised that the children had requested a change in the care arrangements such that they did not have to go to [the respondent’s] house after school’ and ‘that after some time a consent order was made’ to that effect: see para.[102]. However, the Tribunal does not seem to have made a finding with respect to this issue. This must be considered an important matter in the context of this case. Children’s needs are difficult to balance, and within reasonable bounds a parent’s genuine assessments are respected. In a finely balanced case requests by the children as to care arrangements in a separated family must be carefully considered in determining the reasonableness of a parent’s decision as to working arrangements.
The circumstances of this case are such that reasonable minds may differ as to the outcome. For this reason the Tribunal’s failure to make a finding as to whether the children requested the change in care arrangements must be considered a failure to take into account an important consideration for the purpose of deciding the appellant’s earning capacity and the considerations under s.117(7B)(b).
The appellant also raises arguments as to the operation of s.117(7B)(c), which relevantly provides:
117 [Matters as to which court must be satisfied before making order]
…
(7B) In having regard to the earning capacity of a parent of the child, the court may determine that the parent's earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:
…
(c) the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child. (emphasis added)
The use of the double negative in a provision with a positive requirement of satisfaction makes the provision very hard to read.
The Tribunal’s reasoning on this issue is set out in paras.[162] to [164] as:
[162] The Tribunal agrees with [the respondent’s solicitor’s] submission that the provision creates a rebuttable presumption that affecting child support was a major purpose of [the appellant’s] decision to reduce … working hours, and that the existence of another “ major purpose” does not rebut the presumption.
[163] [The appellant] is a well-educated person who plainly has a good working understanding of the child support system and a regard for [their] financial circumstances. At the time of [the appellant’s] voluntary reduction of working hours, [the appellant] had had child support collected by the Registrar for more than four years. In these circumstances, the Tribunal inferred that [the appellant] cannot have failed to consider that [the] contemplated reduction in wages would markedly reduce the child support that [the appellant] was obliged to pay.
[164] It accepted that [the appellant] had at least one other major purpose, but having considered all the evidence before it the Tribunal does not find that [the appellant] has rebutted the presumption set out above.
The appellant’s submissions were to the effect that the SSAT’s interpretation of s.117B(c) created an irrebuttable presumption if a person was paying child support when they reduced their working hours, saying:
‘The mere fact that I cannot have failed to consider a reduction would occur, elevates it to a purpose, a major purpose, in fact. That means, that no one can ever change work leading to a reduction because it always then becomes a major purpose…’
Whether s.117(7B)(c) creates a rebuttable presumption must be answered by reference to the provision itself. The Tribunal referred to the Explanatory Memorandum of the Child Support Legislation Amendment (Reform of the Child Support Scheme- New Formula and Other Measures) Bill 2006 which states:
Paragraph 117(7B)(c) provides that the court must also be satisfied that the parent has not demonstrated that affecting the administrative assessment of child support was not a major purpose of his or her decision about work changes. Paragraph 117(7B)(c) is a rebuttable presumption but the onus to rebut the presumption is on the parent. That is, the parent must demonstrate that there are good reasons why he or she has changed his or her working behaviour. For example, a parent working in a low-skill manufacturing position may decide that there are better long-term employment prospects if he or she undertakes retraining to enable him or her to work in information technology. This may result in lower, or no, earnings for a period of time, but he or she would not be subject to a capacity to earn decision because the decision about changing work was made for a reason other than affecting the child support assessment. (emphasis added)
If the section contains a ‘presumption’, it is important to first identify the terms of the ‘presumption’ and when it arises. When reviewing the words in this light it is difficult to see that there is a presumption created – the section does not say that a court or tribunal must presume that the person’s work choice was for the purpose of affecting the rate of child support. Rather, it casts the onus of proving the major purposes for the decision on the person who made the choice.
The section refers to a relevant state of mind. Thus, in referring to ‘a major purpose’ the section is addressing the subjective reasons upon which a person has acted. It is very difficult to prove a person’s subjective intentions, particularly in an area such as child support where emotions run high, and the underlying reasons for actions are often a complex amalgam of motivations, not all of which are necessarily logical. In this context it is understandable that the section reverses the onus of proof, requiring the person whose intention is at issue to provide the proof of their state of mind. In all cases where this is a serious issue there will be an impact upon child support. If this impact always results in a finding that the impact on child support is a major purpose, then the section can never be satisfied. In this regard the appellant is correct in his argument.
The very technical and convoluted wording of the section hides its practical meaning. The section can be seen in a simplified or practical form as requiring consideration of the question of whether the person has proved that their major purposes did not include a desire to simply affect child support. That is, to reframe the consideration into loose colloquial language: was the person’s action motivated (wholly or significantly) by a desire to shirk their child support obligations. If the Tribunal is not satisfied one way or the other, the person with the onus fails. It is important to note that my colloquial reframing of the section is to illustrate the focus of the provision, and not intended to be a precise restatement of the actual provisions of the section which must be carefully applied.
The Tribunal must assess the evidence starting from a blank canvas, not an assumption that the person acted with a major purpose of simply affecting child support. If the Tribunal is unable to be satisfied whether or not a major purpose was to affect child support, then the onus has not been discharged, not a finding of shirking in accord with a presumption.
Failure to give proper consideration of matters set out in s.117(4)
The appellant claims that the SSAT failed to consider the effect the order would have on the appellant’s ability to support the appellant and those the appellant had a duty to maintain. In particular, the appellant said that the Tribunal failed to have regard to the appellant’s duty to support the daughter, S, who was living with the appellant at the time. The appellant also points out s.117(4)(e) requires the court to consider the commitment of each parent that are necessary to enable them to support themself or any other person they have a duty to maintain.
In this case the Tribunal did identify the income and expenses of the households. It is unfortunate that it did not identify the result that would flow (in terms of a weekly rate of child support) from its proposed decision in this section, although on the calculations of the Tribunal, the rates of child support that flowed form the decision were able to be met by the appellant.
At para.[209] the Tribunal found the appellant’s necessary expenditure to support the appellant and the children in the appellant’s care in 2007 was $54,158 whereas the appellant’s income, financial resources and earning capacity was at least $64,768. In light of these considerations, the appellant had the resources and earning capacity available during 2007 to pay child support. The SSAT made a similar finding for the year of 2008. At para.[211] the Tribunal concluded that a departure order to increase the appellant’s child support liability would not result in any hardship to the appellant and the children.
The appellant submitted the appellant had forgone half of the appellant’s gross salary, approximately $30,000 per annum, to care for the children. In its decision at [156] the Tribunal concluded that the appellant ‘would have ample funds, in the Tribunal’s opinion, from which to meet the costs of reasonable care for the children while they were in [the appellant’s] care.’
However, the costs of child care that are referred to are never quantified or estimated. As a result, the Tribunal failed to have regard to the costs of child care (after school care) if the appellant was working full time when making its calculations. The costs are a necessary part of the expense of the appellant working full time: just as a full time income was imputed to the appellant, in doing so the Tribunal also had to impute the additional expenses involved in earning such an income, which sounded in child care expenses in this case. This is an error of reasoning on the part of the Tribunal.
Another additional expense is the extra taxation that the appellant would have to pay. Nowhere in the decision is there consideration of the additional tax that would be payable by the appellant if working full time. The marginal rate of taxation relevant in this case was 30¢ per dollar. This is a necessary expense that must be taken into account. The additional taxation (without regard to the medicare levy) was at least $9,000: almost all of the surplus that the tribunal identified in its reasons.
S is over the age of 18 and the appellant’s liability towards her under the Act has terminated. The Tribunal was required to consider the appellant’s obligations to S and her capacity to support herself. While the SSAT stated at para.[200] there was no evidence to suggest S is unable to support herself, there was evidence that she is a full-time university student. The tribunal did not mention s.66L of the Family Law Act, which regulates the circumstances when the appellant’s duty to maintain S would be enforced. In this case S appears to fall squarely within s.66L(1)(a).
The solicitor for the respondent provided revised calculations of the impact of the decision, showing modest deficits (less than $100 per month) for the appellant, after accounting for S. However, these did not account for any additional tax payable, nor after school care costs. Thus, even on the submissions of the respondent, the assessment levels that flow from the decision exceeded the expenses accepted by the Tribunal by more than the extra tax and child care expenses.
In the circumstances, the appeal should be allowed on the basis that the Tribunal failed to have regard to relevant considerations under s.117(4).
The costs of educating the child in the manner expected by the parties
The SSAT found there was mutual intention by the parties for the children to be educated at C School. There was no suggestion that in this case that the children should be placed in a state school. Thus, it was not a case where the obligation to provide private school was in issue, simply the apportionment of the costs of the school fees.
At para.[195] of its decision, the Tribunal concluded that the respondent’s income, property and resources from November 2007 were negligible, and therefore the respondent had no capacity to contribute to the fees. The Tribunal was entitled to make that finding based on the evidence before it.
After the Tribunal considered what was a just and equitable and otherwise proper determination under ss.117(4) and (5) it then went on to consider school fees in paras.[231] to [234]. At para.[231] the Tribunal said that it:
… declined to make a departure determination which resulted in shifting any part of the cost of school fees borne by [the appellant] to [ the respondent].
The Tribunal correctly identified that the objection officer was in error in considering income tested pensions or benefits received by the respondent (para.[232]), referring to Tyagi & Meares [2008] FMCAfam 886; (2008) 39 Fam LR 604. However, the Tribunal reasoned that as the respondent had no income, the Tribunal should ‘not have its departure determination reflect the existence of the “Reason 3” [the school fees] ground’: see para.[233].
This reasoning highlights an ongoing difficulty seen in many decisions of the Tribunal: a fixation upon the formula, even after special circumstances have been established. Once a special circumstance is established under s.117(2), the formula no longer governs the outcome. Rather, consideration must be given to the actual income and financial resources of the parties and the actual costs of the children in order to determine the amount of child support that should be paid.
The school fees were a part of the children’s expenses in this case. It was never suggested that they should not be met. The appellant is meeting them. The only real question was that of assessing the extent of the appellant’s capacity to contribute to the costs of the children in the respondent’s household, after the appellant met the school fees and living expenses.
However, in this case the Tribunal did take into account the school fees when considering what was just and equitable in para.[210] by having regard to the amount of the school fees, referring to the amount by which the appellant’s income exceeded expenses ‘after taking the payments for school fees into consideration’. It appears that the comments in the latter part of the decision, would have only caused an error in the outcome if they had of resulted in a further change beyond that contemplated earlier in the decision.
It may have been necessary in this case for the Tribunal to consider whether it was ‘otherwise proper’ to take into account school fees if that resulted in an impost on the public purse. That is, if school fees reduced the child support payable by the appellant, and therefore the social security received by the respondent was greater than it otherwise would have been, the propriety of the adjustment may need to be considered under s.117(5). However, that was not an issue raised in this appeal.
Conclusion
This was a difficult child support case on earning capacity, with complex overlays relating to school fees, an adult child and after school care. Ultimately the appeal must be allowed and the matter remitted for rehearing according to law.
I certify that the preceding eighty-seven (87) paragraphs are a true copy of the reasons for judgment of Riethmuller FM
Date: 30 June 2010
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