Charnock & Bullions (SSAT Appeal)
[2008] FMCAfam 36
•15 February 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CHARNOCK & BULLIONS (SSAT APPEAL) | [2008] FMCAfam 36 |
| CHILD SUPPORT – Appeal from decision of SSAT – whether approach adopted by the Tribunal in accordance with the Child Support (Assessment) Act – whether amounts to error of law. |
| Child Support (Assessment) Act 1989, s.98, 117 Child Support (Registration and Collection) Act 1988, s.110B |
| LDME & JMA(SSAT Appeal) [2007] FMCAfam 712, paras 17 to 44 PJ & Child Support Registrar(SSAT Appeal) [2007] FMCAfam 829 Gyselman & Gyselman (1992) FLC92-279 Ross & McDermott (1998) FLC98-003 |
| Applicant: | MS CHARNOCK |
| Respondent: | MR BULLIONS |
| File Number: | BRC 11861 of 2007 |
| Judgment of: | Slack FM |
| Hearing date: | 18 December 2007 |
| Date of Last Submission: | 18 December 2007 |
| Delivered at: | Brisbane |
| Delivered on: | 15 February 2008 |
REPRESENTATION
| Solicitors for the Applicant: | Legal Aid Queensland |
| The Respondent was self represented. |
ORDERS
That the Appeal be allowed.
That the decision of the Social Security Appeals Tribunal be set aside.
That the matter be remitted for rehearing to a differently constituted Social Security Appeals Tribunal.
IT IS NOTED that publication of this judgment under the pseudonym Charnock & Bullions is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 11861 of 2007
| MS CHARNOCK |
Applicant
And
| MR BULLIONS |
Respondent
REASONS FOR JUDGMENT
In this appeal from the decision of Social Security Appeals Tribunal (the “Tribunal”) dated 11 September 2007, there are four grounds in the Notice of Appeal which, in summary, are that the Tribunal erred:
a)in the method used in calculating the child support income of the respondent;
b)in not taking into account the costs of educating the child in the manner expected by the parties;
c)in failing to give proper consideration to the matters set out in s.117(4) of the Child Support (Assessment) Act1989 (hereafter “the Assessment Act”) in determining whether it would be just and equitable in making the orders made;
d)in failing to give due consideration to the duty of the father to maintain the child in its consideration as to whether it was otherwise proper to make the order.
The appellant is the carer parent in the matter.
The child support assessment is for the child B (born in August 1991).
In late 2006, an assessment issued for child support payable for the period 1 January 2007 to 31 December 2007. The assessment was based on the taxable income of the respondent for the 2005/2006 taxation year of $25,696 and the child support was assessed at $2,108 for the period.
The appellant sought a change of assessment. A Senior Case Officer decided on 31 January 2007 to increase the child support income of the payer for the period 1 January 2007 to 30 June 2008 to $44,443 and thereby increased the child support amount to approximately $5,483 per annum.
The respondent objected to the decision and his objection was “disallowed” on 27 April 2007.
The respondent then appealed that decision to the Tribunal.
The decision of the Tribunal dated 11 September 2007 was to “set aside the decision” and “substitute a new decision that the rate of child support income for the respondent for the period 1 January 2007 to 9 August 2007 is $29,651 and for the period 10 August 2007 to 30 June 2008 is $28,177.52”. The effect of the decision was to make the child support payable $235 per month (1 January 2007 to 9 August 2007) and $212.92 per month (10 August 2007 to 31 December 2007).
The following findings of the Tribunal do not appear to be in dispute.
The appellant cannot work due to a serious medical condition and her income is provided by a pension.
The respondent is self-employed and operates a transport business using his own vehicle. He leases the transport service licence from the owner of the licence.
In the income tax year ending 30 June 2006, the respondent had a gross income of $65,178. He claimed deductions for the business (which were allowed by the Australian Taxation Office) of $33,132. These included depreciation of $8,831; motor vehicle running costs of $15,941; lease of the transport service licence of $6,000 and interest for financing arrangements of $1,746. He claimed other personal deductions including superannuation contributions.
When the change of assessment was made by the Senior Case Officer to increase the child support income amount, a calculation was done adding back the depreciation and some superannuation to the net business profit (see paragraph 24 of the Reasons of the Tribunal).
The respondent appealed that decision to the Tribunal.
Decision of the Tribunal
The Tribunal identified that the “assessment of child support liability under appeal is based on an annual income of Mr Bullions’ of $44,443” (paragraph 17 of the Reasons).
In PJ & Child Support Registrar(SSAT Appeal) [2007] FMCAfam 829, Reithmuller FM in a discussion about the nature of the Tribunal process said:
“A person may apply to the Tribunal for review of a decision of the Child Support Registrar: Section 94. The SSAT stands in the shoes of the decision maker it is reviewing. Thus, it must answer the same questions that were before the Objections Officer. As a result, it is not limited to the issues raised by the applicant for the review”.
The Tribunal correctly identified the matters under s.117(1) of the Assessment Act that needed to be satisfied before making a “determination” to change the child support assessment.
Relevantly, the Tribunal made the following findings:
a)“The Tribunal therefore concludes there are grounds under sub-paragraph 117(2(c)(i)(a) of the Assessment Act to depart from the administrative assessment of child support. The child support income amount for Mr Bullions for the period 1 January 2007 to 9 August 2007 should be calculated as follows:
Income $25,696
Add back depreciation $ 8,831
Add back excess superannuation $ 3,566
Sub Total $38,093
Less capital costs of finance $ 8,441.16
Child support income amount $29,651.84
The capital costs of finance were decreased to $626.29 per month as from 10 August 2007 but the lease payments on the Transport Licence increased by $200 per month as from 1 August 2007. Taking those changes into account, the child support income amount as from 10 August 2007 is calculated at $28,177.52.” (see paragraphs 34 and 35 of the Reasons).
b)“It has been determined that Mr Bullions has a current child support income amount of $28,177.52, which the Tribunal has calculated as amounting to $2,070 per month after tax. On that basis, his child support liability would be just over $200 per month which, when taking a reasonable level of expense for his own support into account, is an amount that he could readily meet from his income.” (see paragraph 46 of the Reasons).
c)“The Tribunal does not consider that any hardship would be caused by assessing the child support liability of Mr Bullions on a child support income amount of $28,177.52. In the view of the Tribunal, it is just and equitable in the circumstances that
Mr Bullions pay child support assessed on an income of $28,177.52” (see paragraph 47 of the Reasons).d)“The Tribunal recognises that Mr Bullions’ primary duty is to maintain his child and, given Ms Charnock is in receipt of income-tested payments from Centrelink, increasing Mr Bullions’ rate of child support from the administrative assessment to a level commensurate with his financial resources will assist in reducing the burden on the public purse. In the view of the Tribunal, it is proper to increase the annual rate of child support payable by
Mr Bullions above the administrative assessment” (see paragraph 49 of the Reasons).
Principles
The appeal is brought under s.110B of the Child Support (Registration and Collection) Act1988 which provides:
“110B. 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.”
With regard to the principles and the relevant statutory provisions relevant to this appeal, I accept and rely upon the discussion of Halligan FM in LDME & JMA (SSAT Appeal) [2007] FMCAfam 712, paras 17 to 44.
Decision – discussions and conclusions
The Tribunal needed to be satisfied, before making a “determination”, of the matters set out in s.98C of the Assessment Act which takes up the provisions of s.117 of the Assessment Act.
The structure of s.98C identifies a clear three step process: that the Tribunal be satisfied:
i.that one, or more than one, of the grounds for departure referred to in ss.(2) exists; and
ii. that it would be:
A.just and equitable as regards to the child, the liable parent and the carer entitled to child support; and
B. otherwise proper;
to make a particular determination under this Part;
Section 98C(2) makes clear that for the purposes of ss.1(b)(i):
a.the grounds for departure from the provisions of this Act relating to administrative assessment of child support in relation to the child are the same as the grounds for departure as set out in s.117(2).
In Gyselman & Gyselman (1992) FLC92-279 the Full Court of the Family Court said (at 79,078) in the application of the provisions of s.117(2):
As we have already indicated, the exercise under s.117 involves three steps. The first, which we have already examined, is whether one or more of the grounds in ss.(2) has been made out. The legislation then requires the Court to consider whether any proposed order is “just and equitable” and “otherwise proper”.
Section 117(4) provides that in determining whether it would be just and equitable as regards to the child, the custodian entitled to child support and the liable parent to make a particular order under this Division, the Court must have regard to…“the matters set out in paragraph (a) to (g) of that sub-section. The legislature has made it clear that the Court is required to undertake that task. However, some of the matters listed in ss.(4) may overlap with matters already considered under ss.(2) and some of the paragraphs in ss.(4) may be more significant in one case than they would be in another or of little relevance in a particular case. It is an essential part of the s.117 exercise to carry out the obligation under ss.(4). However, that does not mean that it is necessary in every case to slavishly go through each of the paragraphs. The extent to which it is necessary to do so would depend upon the facts and conduct of the individual case and the analysis already performed under ss.(2).”
In Ross & McDermott (1998) FLC98-003, a differently constituted Full Court of the Family Court said (at 95,130 – paragraphs 36 and 37):
36.It has been accepted since the Full Court decision in Gyselman (supra) that if s.117(1) of the Assessment Act means what it says; that is, that before an order varying a child support assessment (or agreement) can be made, the Court must be satisfied:
(1) that a ground for departure exists;
(2)that it is just and equitable as regards the child, his or her carer and the liable parent to make the order; and
(3) that it is otherwise proper to make the order.
The concern in this matter is that the Tribunal appears to have made its determination after only having considered the first step in the process. At paragraphs 34 and 35 of the reasons, the Tribunal makes a determination about what should be the child support income amount of the respondent, after having decided that a “ground for departure” from the administrative assessment of child support was established.
After having determined what the Tribunal considered was an appropriate child support income amount, the Tribunal then appears to consider whether that determined child support income amount was just and equitable and otherwise proper. In particular in paragraph 36 of the reasons and following, the Tribunal considers “whether such a departure from the administrative assessment is just and equitable…”
At paragraph 47 of the reasons, “the Tribunal does not consider that any hardship would be caused by assessing the child support liability of Mr Bullions on a child support income amount of $28,177.52. In the view of the Tribunal, it is just and equitable in the circumstances that Mr Bullions pay child support assessed on an income of $28,177.52.”
This appeal raises a question about the approach that should be adopted by the Tribunal after having passed the threshold of s.117(2) (Savery and Savery 1990 FLC 92-131). In this matter, the Tribunal seems to have focussed its consideration on the income base of the respondent. The child support income amount, of course, forms an integral part of the formula and one of the objects of the Assessment Act is to ensure that the level of child support…should be determined in accordance with the legislatively fixed standards (s.4(2)(b)) but that is not the end of the considerations or the objects of the legislation to be taken into account.
The Full Court in Gyselman and Ross and McDermott seem to support the principle that a Court or Tribunal having reached a conclusion that a ground for departure was established to depart from the administrative assessment, must then consider the second and third steps in the process before coming to make a determination in the matter. In Savery (supra), Kaye J. said (@77,900-1) “ if it is demonstrated that the application of the formula results in an unjust and inequitable determination of the level of financial support, because of the financial circumstances that actually exist at the date of the application in the special circumstances that exist at the time of the application, then it is my view that the Court should endeavour to make orders which will do justice as between the parties, will provide appropriately for the child’s needs and will be proper vis-a-vis the community, rather than a reference back to some other set of figures which would be equally as artificial as the figures objected against in the first place.”
In approaching the matter in the way that it did, the Tribunal by reference to some figures which included some of the expenditure of the respondent, reached a child support income amount but in doing so I do not consider that the Tribunal gave proper consideration to the second and third steps in the three step process.
The consequences of the approach adopted by the Tribunal can readily be seen. In determining the child support income amount in the way that it did, the Tribunal effectively determined that the respondent was to pay an amount of approximately $2,555 per annum in child support.
Having decided to add back to the respondent’s income the depreciation allowance and part of the superannuation contributions to his taxable income the tribunal then made some findings about other expenses that were necessary to enable the respondent to support himself. Those expenses included the capital costs of finance. The Tribunal also found that the respondent’s other necessary expenditure was in the region of $1,753 per month. On the basis of those findings the respondent had income of $38,093 and expenses of $29,477 ($8,441-capital costs of finance and $21,036 reasonable other necessary expenditure). The respondent’s statement of financial circumstances reveals that he has a taxation liability of $2,600 per annum. Thus on the findings of the Tribunal the respondent has approximately $6,016 per annum ($115 per week) available to meet his child support obligations. There is no real explanation in the reasons for coming to a determination the effect of which was less than half of the amount that was available to the respondent to meet his child support obligation.
There was no consideration in the reasons of the proper needs of the child. He is being educated at a private school and is in his last school year. At its highest, the respondent can contribute approximately $115 per week to the needs of the child. There is no suggestion that that amount would be an unjust assessment of child support having regard to the needs of the child and I would be surprised if it could sensibly be argued that that amount would represent anywhere near half of the costs of the proper needs of the child.
It is not in dispute that the appellant is in receipt of a disability pension and is otherwise unable to work and earn other income.
For those reasons, I consider that the Tribunal did not properly exercise the discretion imposed by s.117 of the Assessment Act in reaching the determination and that constitutes an error at law. I am satisfied for the reasons given that grounds 3 and 4 of the Notice of Appeal have been made out. I consider that the appeal should be allowed and the determination made by the Tribunal on 11 September 2007 be set aside.
The next issue is whether I should re-exercise a discretion in the matter.
I agree with the finding that special circumstances exist to depart from the administrative assessment.
As I have already indicated, there is no assessment of the proper needs of the child.
In considering the commitments of the respondent father that are necessary to enable him to support himself, I agree with the Tribunal’s conclusions that the depreciation allowed by the Taxation Office ($8,831) and some of the superannuation that the respondent had paid ($3,566) be disregarded.
It concluded that he had income of $38,093 available (see paragraph 34 of the Reasons).
I agree with the Tribunal that the capital cost of finance was a commitment that was necessary for the respondent to support himself ($8,441.16).
The Tribunal then went on to make a finding that he had other expenses necessary to support himself “in the region of $1,753 per month” ($21,036 per annum) but it is not clear to me in the light of the mistake in the reasoning that I have identified that the Tribunal did give proper consideration to the respondent’s claimed expenses.
Having regard to the findings of the Tribunal, though, the respondent had an income of $38,093 per annum and commitments necessary to support himself of $29,477.16.
According to the statement of financial circumstances filed in these proceedings, the respondent had a taxation liability of $50 per week ($2,600).
On those findings of the Tribunal, the respondent had approximately $6,015.84 available to meet his child support obligations.
I am uncertain what role the respondent plays in the care of the child and whether he has further discretionary expenditure when the child has contact. It was not something that he outlined as a separate item in his expenditure.
Ultimately though, I consider that both parties are entitled to have a considered and proper assessment of the necessary commitments of the respondent before a conclusion about the child support that should be assessed can be reached. I am not in a position to come to that conclusion on the facts that I have.
Reluctantly therefore, I have determined that I should remit the matter back to the Tribunal for a rehearing by a differently constituted Tribunal.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Slack FM
Associate: Karen Smith
Date: 15 February 2008
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