Child Support Registrar & Crabbe & Anor

[2014] FamCAFC 10

FAMILY COURT OF AUSTRALIA

CHILD SUPPORT REGISTRAR & CRABBE AND ANOR [2014] FamCAFC 10

FAMILY LAW – APPEAL – CHILD SUPPORT – Where the Child Support Registrar sought leave to appeal, and if leave granted, to appeal orders of a Federal Magistrate upholding an appeal by the respondent to this appeal against a decision of the Social Security Appeals Tribunal (SSAT) which increased the respondent’s child support liability – Where appeals from the SSAT are confined to questions of law – Where the Child Support Registrar argues that the Federal Magistrate erred in his interpretation of s 103X(3)(b) of the Child Support (Registration and Collection) Act 1988 (Cth) – Where the Child Support Registrar argues that the Federal Magistrate’s interpretation of s 103X(3)(b) allowed a review of the adequacy of the SSAT’s reasons and therefore transgressed “the dichotomy between an appeal on a question of law and an assessment of the merits of the case” – Where the Full Court found that the Federal Magistrate had so erred – Where the Full Court also sets out the statutory process governing appeals from the SSAT – Leave granted because the matters raised on appeal are of considerable general importance – Appeal allowed – No order for costs.

Child Support (Assessment) Act 1989 (Cth)
Child Support (Registration and Collection) Act 1988 (Cth)

Federal Circuit Court of Australia Act1999 (Cth)
Migration Act 1958 (Cth)

Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Minister for Immigration and Multicultural Affairs v Al-Miahi (2001) 65 ALD 141
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259
Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323

APPELLANT: Child Support Registrar

FIRST RESPONDENT:	Mr Crabbe
SECOND RESPONDENT:	Ms Crabbe

FILE NUMBER: BRC 10444 of 2009

APPEAL NUMBER: NA 28 of 2012

DATE DELIVERED:: 6 February 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Brisbane

JUDGMENT OF: Bryant CJ, Finn and Kent JJ

HEARING DATE: 30 April 2013

LOWER COURT JURISDICTION: Federal Magistrates Court (as it then was)

LOWER COURT JUDGMENT DATE: 9 March 2012

LOWER COURT MNC: [2012] FMCAfam 205

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Niall SC with
Dr Brasch

SOLICITOR FOR THE APPELLANT: DLA Piper

COUNSEL FOR THE FIRST RESPONDENT: Mr McGregor

SOLICITOR FOR THE FIRST RESPONDENT:	Doyle Family Law
COUNSEL FOR THE SECOND RESPONDENT:	In person

Orders

1. Leave to appeal the orders made by Federal Magistrate Coates on 9 March 2012 be granted.

2. The appeal against the orders made by Federal Magistrate Coates on 9 March 2012 be allowed.

3. The orders made by Federal Magistrate Coates on 9 March 2012 be set aside and in their place Order 4 of these orders be made.

4. The appeal by Mr Crabbe against the decision of the Social Security Appeals Tribunal dated 16 June 2011 be allowed to the extent necessary to set

   
   

   Mr Crabbe’s adjusted taxable income at $158,177 for the period from 1 July 2010 to the end of the child support case.

5. There be no order for costs in relation to the appeal.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Child Support Registrar & Crabbe and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 28 of 2012
File Number: BRC 10444 of 2009

Child Support Registrar

Appellant

And

Mr Crabbe

First Respondent

And

Ms Crabbe

Second Respondent

REASONS FOR JUDGMENT

introduction

1. This is an application for leave to appeal, and if leave be granted, an appeal by the Child Support Registrar against orders made by Federal Magistrate Coates (as his Honour then was) on 9 March 2012. By those orders his Honour upheld an appeal by Mr Crabbe against a decision of the Social Security Appeals Tribunal (“the SSAT”) which was dated 16 June 2011 and which increased

   
   

   Mr Crabbe’s liability to pay child support. By his orders his Honour also set aside the decision of the SSAT and remitted the matter, which had been the subject of the decision, to the SSAT for re-hearing. There were also certain consequential orders made by his Honour which will be referred to at the conclusion of these reasons.

2. We propose to grant leave in relation to this proposed appeal because the matters it raises are of considerable general importance. (Aarons & Co v Knowles (1995) FLC 92-627; Bruce F McLaren Holdings Pty Ltd v McLaren (2000) FLC 93-030. See also Optiver Australia Pty Ltd v Tibra Trading Pty Ltd (2008) 169 FCR 435 at [30].)

3. We begin these reasons for judgment with a brief explanation of the statutory basis for the current application for leave to appeal.

Statutory provisions concerning appeals to and from the SSAT

1. Part VII (ss 79D to 87A) of the Child Support (Registration and Collection) Act 1988 (Cth) (“the Registration and Collection Act”) contains procedures for objections to, and internal reconsideration of, certain decisions of the Child Support Registrar made under the Registration and Collection Act or under the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”), being the decisions specified in s 80 of the former Act.

2. Part VIIA (ss 87 to 103ZA) of the Registration and Collection Act then provides for applications to the SSAT for the review of certain decisions of the Registrar under Part VII, being the decisions specified in s 89 of that Act.

3. Section 103S(1) provides that in relation to such an application for review, the SSAT must:

   (a)affirm the decision; or

   (b)vary the decision; or

   (c)set the decision aside and:

   (i)substitute a new decision; or

   (ii)send the matter back to the Registrar for reconsideration in accordance with any directions or recommendations of the SSAT.

4. Part VIII of the Registration and Collection Act is entitled “Court Review of Certain Decisions”. Included in Division 3 (Sub-Division B) of Part VIII is

   
   

   s 110B which provides that:

   A party to a review by the SSAT under Part VIIA may appeal to a court having jurisdiction under this Act, on a question of law, from a decision of the SSAT on that review under section 103S.

   (Emphasis added)

5. The courts which have jurisdiction under the Registration & Collection Act are specified in s 104 of that Act, and include the Family Court and the Federal Circuit Court (formerly the Federal Magistrates Court). Thus, an appeal on a question of law from the SSAT can, at least in theory, be brought in either the Family Court or the Federal Circuit Court; however, as a matter of practice such appeals are brought in the Federal Circuit Court.

6. Section 110F of the Registration and Collection Act sets out the powers of a court hearing appeals from decisions of the SSAT under Sub-Division B of Division 3 of Part VIII in the following terms:

   (1)The court must hear and determine an appeal under this Subdivision and may make such order as it thinks appropriate by reason of its decision.

   (2)Without limiting subsection (1), the orders that may be made by the court on an appeal include:

   (a)an order affirming or setting aside the decision of the SSAT; or

   (b)an order remitting the case to be heard and decided again, either with or without the hearing of further evidence, by the SSAT in accordance with the directions of the court.

7. An appeal then lies under s 107A(1) of the Registration and Collection Act to the Family Court from a decision of the Federal Circuit Court in relation to the determination of an appeal from the SSAT brought under s 110B of the Registration and Collection Act – the determination of such an appeal by the Federal Circuit Court being within the original jurisdiction of that court

   
   

   (s 10(2) of the Federal Circuit Court of Australia Act1999 (Cth)).

8. Under s 107A(2)of the Registration and Collection Act the jurisdiction of the Family Court in relation to such appeals is to be exercised by the Full Court, unless the Chief Justice considers that it is appropriate for the jurisdiction to be exercised by a single judge. As a matter of practice, the jurisdiction in relation to such appeals is exercised by the Full Court.

9. The powers of a court hearing an appeal under s 107A are defined in s 107A(5) as follows:

   (5)On an appeal under subsection (1) or (1A), the Family Court may affirm, reverse or vary the decree or decision the subject of the appeal and may make such decree or decision as, in the opinion of the court, ought to have been made in the first instance, or may, if it considers appropriate, order a re-hearing, on such terms and conditions (if any) as it considers appropriate.

The course of the present proceedings

1. Although, as appears from the material before us, Mr Crabbe has had a liability for child support for many years, the presently relevant proceedings commenced on 6 January 2010 when Mr Crabbe applied to the SSAT for a review of the Registrar’s disallowance of an objection, which he had lodged, to decisions by the Registrar (made on 29 September 2009) in relation to his “adjusted taxable income” for periods between 1 December 2008 to “the date the child support case ends” for purposes of the assessment of his child support liability.

2. On 19 April 2010 the SSAT heard the review and set aside the Registrar’s decisions; it substituted its own decision for the period of 1 July 2008 to

   
   

   31 December 2010.

3. On 20 May 2010 Mr Crabbe filed an appeal against that decision of the SSAT in the Federal Magistrates Court. On 14 January 2011 Coker FM (as he then was) allowed that appeal, set aside the decision of the SSAT and remitted the matter to the SSAT for re-hearing.

4. The re-hearing was conducted by the SSAT on 30 May 2011. On 16 June 2011 the SSAT delivered its decision (which was dispatched to the parties on 23 June 2011) in which it set aside the Registrar’s decision made on 29 September 2009 and substituted a new decision in relation to Mr Crabbe’s “adjusted taxable income” for the periods from 1 July 2008 to “the end of the child support case”.

5. On 21 July 2011 Mr Crabbe filed an appeal in the Federal Magistrates Court against that decision of the SSAT. That appeal was allowed on 9 March 2012 by Coates FM, with the SSAT decision being set aside and the matter remitted to the SSAT for re-hearing.

6. On 10 April 2012 the Registrar filed a notice of appeal against the orders made by Coates FM on 9 March 2012, thereby instituting the present appeal.

The parties to this appeal

1. It should be explained in connection with the position of the Registrar as the appellant in the present appeal, that s 101(1) of the Registration and Collection Act provides that the Registrar is a party to a review by the SSAT under

   
   

   Part VIIA. The transcript of the re-hearing before the SSAT on 30 May 2011 indicates that the Registrar was not represented at that hearing. However, the first cover page of the printed decision of the SSAT (dispatched to the parties on 23 June 2011) records the Registrar as a party, but also records that there was no attendance at the hearing by the Registrar, although paragraph 3 of the printed decision records that the Registrar did provide written material to the SSAT.

2. By virtue of s 110D of the Registration and Collection Act, the parties to a review by the SSAT are also parties to an appeal under s 110B from the decision of the SSAT on the review.

3. In the present case, a written outline of argument was filed on behalf of the Registrar prior to the hearing of the appeal by Coates FM. It was submitted in that outline that the appeal should be dismissed essentially because

   
   

   Mr Crabbe’s grounds of appeal failed to identify an error of law (which is the only basis on which an appeal can be brought from the SSAT to a court under

   
   

   s 110B). Counsel for the Registrar appeared at the hearing before Coates FM on 4 November 2011 and made submissions to similar effect.

4. As already recorded earlier, on 9 March 2012 Coates FM delivered reasons for judgment and made orders upholding Mr Crabbe’s appeal against the decision of the SSAT, setting aside that decision and remitting the matter for a

   
   

   re-hearing by the SSAT.

5. As a party both to the SSAT review and to the appeal to the Federal Magistrates Court, the Registrar brings the present appeal against the orders of the Federal Magistrates Court.

6. Mr Crabbe, as the first respondent to the present appeal, opposes the Registrar’s appeal and seeks to uphold the decision of Coates FM. The second respondent to the appeal is the mother of the children for whom Mr Crabbe pays child support. She adopted the Registrar’s submissions in support of the appeal.

The SSAT decision made in June 2011

1. In order to consider the issues raised by the present appeal, it is necessary to provide some explanation of the decision of the SSAT, which was the subject of the appeal to the Federal Magistrate from whose decision the present appeal is brought.

2. The substance of the Registrar’s decision, which was the subject of the presently relevant SSAT review, was that for five separate periods from

   
   

   1 December 2009 to “the end of the child support case”, Mr Crabbe’s adjusted taxable income for purposes of the calculation of his child support liability was set for each such period at a separate amount in the range of $80,000 to approximately $91,000.

3. In its decision the SSAT introduced six periods for the setting of Mr Crabbe’s adjusted taxable income, with the first such period commencing on 1 July 2008 and with each period then equating to the financial year periods through to

   
   

   1 July 2013, but with that last period being until “the end of the child support case”. For the first period (1 July 2008 to 30 June 2009) the adjusted taxable income was set at $367,097, and for each of the remaining five periods, at a separate figure in the range of approximately $158,000 to approximately $185,000. Thus, Mr Crabbe’s liability for child support would be substantially increased.

4. In its reasons for its decision the SSAT made the following initial findings and observations about the evidence before it:

   ·

   Mr Crabbe had separated from the mother of his three children “around 1998, 1999 or 2000” and commenced a de facto relationship with

   
   

   Ms W “around 1998, 1999 or 2000” [5];

   ·

   in February 2001 Mr Crabbe and Ms W bought a house at B for $310,000, with Mr Crabbe “apparently having a ¼ share”, although

   
   

   Mr Crabbe said “he contributed nothing” towards the purchase [7];

   ·in 2005 Mr Crabbe and Ms W started a business partnership under the name “[S & Associates]” which provided training; Mr Crabbe said he did not contribute any funds to the partnership and that is why he only received a 20 per cent interest in the partnership [10].

5. After referring to Mr Crabbe’s evidence concerning a visa card debt, the SSAT continued:

   15.On 31 August 2005, ‘[Mr Crabbe] and [Ms W] trading as [S & Associates]’ obtained a loan of $125,000, secured by a mortgage over their … house [at B]. Incredibly, [Mr Crabbe] said he did not know what the loan was for. The Tribunal draws the obvious inference that the loan was used to finance the partnership.

   16.The Tribunal finds that [Mr Crabbe] did contribute financially to the partnership by incurring a personal debt via his VISA card on behalf of the partnership, and through the loan he and [Ms W] obtained via a mortgage over their … house [at B].

   …

   19.… [Mr Crabbe’s] work history at the time would not have suggested that he should receive a lesser interest in the partnership, let alone only a 20% interest, due to a reduced work capacity.

   20.In 2006/07 the partnership had a gross income of $291,364.

   21.In January 2008, the partnership acquired a lucrative training contract with [Department E]. The Tribunal has not been provided with the partnership’s statement statements [sic] for 2007/08 but in July 2008 the business of the partnership was acquired by [S & Associates Pty Ltd] (‘the company’) and in 2008/09 the [Department E] contract provided income of $635,787, which was in addition to the company’s other training income of $722,594, making a total gross income of $1,358,381.

   22.The company’s sole director and shareholder was [Ms W].
   [Mr Crabbe] said he commenced working for the company for an average of 20 hours per week for $30,000 per annum. He said he accepted the job on those terms because of his reduced work capacity due to his medical conditions. [Mr Crabbe] said he did not receive any consideration for relinquishing his interest in the partnership. He explained that while many people invariably demand what they may be entitled to, he is not like that. He said he had gone into the partnership with nothing and it was therefore appropriate that he walk away from the partnership with nothing.

   23.[Mr Crabbe] did not explain why the business structure was changed from a partnership to a company but his counsel,
   Mr Paratz, submitted that if it was apparent that the business’s income was increasing significantly, it would make sound commercial sense to utilise the tax benefits of a company structure. The Tribunal agrees, but that simply makes it all the more improbable that [Mr Crabbe] would have relinquished his interest in the partnership for nothing.

   (Footnotes omitted)

6. The SSAT then referred (at [24] to [33]) to the terms of a separation agreement executed (pursuant to Queensland law) by Mr Crabbe and Ms W on

   
   

   26 November 2008 following a separation stated to have been “on or about

   
   

   1 September 2008”. (According to Mr Crabbe’s evidence, as recorded by the SSAT, he and Ms W “reconciled in about late February 2009”.) The SSAT then referred to inconsistencies between the terms of the agreement in relation to the ownership of a car and an airplane and other evidence before it.

7. After referring to various communications between Mr Crabbe and the Child Support Agency (“CSA”), the SSAT made the following findings concerning Mr Crabbe’s credibility:

   41.In assessing all of the evidence in this matter, a central issue is
   [Mr Crabbe’s] credibility. The Tribunal found [Mr Crabbe] to be an unreliable witness. He claimed no knowledge of matters he must have known about. For example, he must have known why he and [Ms W], trading as [S & Associates], obtained a loan for $125,000 in the year they started their business partnership. He must have known that in 2008/09 his earnings had varied by more than between $1,500 and $2,500 per month and that in July 2008 he had earned more than between $1,100 and $1,400.

   42. [Mr Crabbe’s] version of events is not simply unlikely, it is unbelievable. He and [Ms W] started a partnership in 2005. They both claimed that [Mr Crabbe] had a 20% interest in the partnership but they gave different explanations for why his interest was so low. The Tribunal rejects both their explanations for the reasons already given. In 2006/07 the partnership had a gross income from training of $291,364 and by 2008/09 the company had a base income from training of $635,787. In the middle of 2007/08 the partnership obtained a lucrative contract with [Department E] which, in 2008/09, delivered an additional income of $722,594. [Mr Crabbe] claims, in effect, that he gifted his interest in his partnership’s business at the end of 2007/08 to the company which was controlled by [Ms W]. At that time he owed child support arrears of just over $5,000. He commenced employment with the company for $30,000 per annum on the basis that he could only work 20 hours per week due to his medical conditions but then immediately agreed to run the company on a full-time basis for three months while [Ms W] travelled overseas. At the second hearing he said he agreed to run the company for about six months. From 1 July 2008 to 1 August 2008 he was paid wages of $7,000 but when subsequently questioned by the CSA he falsely stated that he was only paid between $1,100 and $1,400 for that month. He subsequently tried to exculpate himself by falsely stating that he advised the CSA at the time he was earning $7,000 per month that he was earning that amount.

   (Emphasis in original and footnote omitted)

1. Importantly for present purposes, the SSAT went on in the following paragraphs to find that “the legal structure created by Mr [Crabbe] and Ms [W] is a sham”:

   43.[Mr Crabbe] has been unable to provide a satisfactory explanation for his transition from partner to part-time employee to full-time acting manager to part-time employee. He has an incentive to reduce his taxable income in order to reduce his administratively assessed child support liability. The only plausible explanation for why he would agree to relinquish his interest in the partnership is that he and [Ms W] agreed he would not have a legal entitlement to the profits of the company but he would continue to have access to the profits of the company. The Tribunal rejects [Mr Crabbe’s] evidence that, in effect, his financial position vis-à-vis [Ms W] and the company is entirely explained by the legal relationships. The overwhelming inference, and the one that the Tribunal draws, is that the legal structure created by Mr [Crabbe] and Ms [W] is a sham.  The Tribunal is mindful of the seriousness of such a finding.

   …

   45.There is no direct evidence of the arrangement between
   Mr [Crabbe] and Ms [W] which exists behind the sham.
   Mr [Crabbe] and Ms [W] started the partnership together, they both brought expertise to the partnership, they both contributed financially to the partnership, they were in a de facto relationship when they started the partnership and they remained in a de facto relationship throughout the partnership and after Mr [Crabbe] effectively gifted his interest in the partnership to Ms [W]. All those matters would suggest that they agreed to share in the profits equally.

   (Footnote omitted and emphasis added)

2. The SSAT then considered (at [46] to [53]) whether Mr Crabbe’s reduced work capacity might have caused him to receive less than half of the company’s profits; but having set out evidence on the matter, concluded:

   52.… It is unclear what the true extent of Mr [Crabbe’s] reduced work capacity was or is, but it is not necessary to form a precise view.

   …

   54.Mr [Crabbe] has not disclosed the true nature of the arrangement between himself and Ms [W] concerning the distribution of the company’s profits. While Mr [Crabbe’s] reduced work capacity could form the basis for a lower distribution of profits, the many other factors already mentioned point towards an equal distribution. In the absence of any evidence directly on point, the Tribunal finds that Mr [Crabbe] and Ms [W] arranged for an equal distribution.

3. The SSAT then returned to the provisions of s 98L of the Assessment Act, which it had set out earlier in its reasons (at [4]) and which specifies the matters about which the Registrar must be satisfied before there can be a departure from an administrative assessment:

   98L  Matters as to which Registrar must be satisfied before making determination

   (1)Subject to this Part, the Registrar may make the determination if:

   (a)the Registrar is satisfied that, in the special circumstances of the case, application in relation to a child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of the income, earning capacity, property and financial resources of either parent; and

   (b)      that it would be:      

   (i)just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   (ii)      otherwise proper;

   to make a particular determination under this Part.

   (2)Subsections 117(4) to (9) (inclusive) apply to the Registrar in the exercise of his or her powers under this section as if:

   (a)any reference in those subsections to the court were a reference to the Registrar; and

   (b)any reference to an order were a reference to a determination.

4. In concluding that “special circumstances” (as required in s 98L(1)(a)) existed in this case, the SSAT said:

   55.In 2008/09 the company made a profit of $609,195 after paying
   Mr [Crabbe] wages of $30,000 and [Ms W’s] director’s fees of $95,000. Mr [Crabbe] and Ms [W] were in a position to share approximately $734,195. One half of that amount is $367,097.

   56.In 2009/10 the company made a profit of $191,355 after paying
   Mr [Crabbe] wages of $25,000 and Ms [W] a director’s fee of $100,000. Mr [Crabbe] and Ms [W] were in a position to share approximately $316,355. One half of that amount is $158,177.

   57.The CSA’s administrative assessments have been based on
   Mr [Crabbe’s] adjusted taxable incomes which have been calculated from his tax returns. His access to additional financial resources constitutes special circumstances that have made the administrative assessments unjust and inequitable determinations of the level of financial support to be provided by Mr [Crabbe]. As a result, the Tribunal concludes that a ground for departure exists.

   (Footnotes omitted)

5. The SSAT then concluded (at [58] to [74]) that it would (pursuant to

   
   

   s 98L(1)(b)) be “just and equitable” and “otherwise proper” for there to be a departure from the administrative assessment. That departure was to be as follows:

   78.For the period from 1 July 2008 to 31 August 2009, Mr [Crabbe] was administratively assessed to pay child support of $339 per annum. The disparity between Mr [Crabbe’s] capacity to provide for his children and his administratively assessed child support liability, coupled with his creation of a sham in an attempt to evade his financial responsibilities, makes it appropriate to depart from the administrative assessment from 1 July 2008.

   79.The Tribunal will set Mr [Crabbe’s] adjusted taxable income at $367,097 from 1 July 2008 to 30 June 2009 and $158,177 from
   1 July 2009 to 30 June 2010. No evidence has been provided about the company’s current financial circumstances. The Tribunal will assume an increase of 4% per annum thereafter.

   80.The Tribunal will set Mr [Crabbe’s] income until the end of the child support case on the basis that he will continue to have access to the profits of the company. If his circumstances do change, he can lodge a departure application with the CSA and provide it with the information it needs to get to the truth of the matter.

   81.Mr [Crabbe’s] child support liability for 2008/09 will be approximately $38,634. His child support liability for 2009/10 will be approximately $33,550. He has estimated his weekly expenses to be $535 per week, which leaves him with a significant capacity to meet his ongoing child support liability and pay arrears over time. To the extent that the creation of arrears causes him hardship, it is hardship which has resulted from his persistent non-disclosure of his true financial position and it is not hardship that makes the Tribunal’s decision unjust or inequitable.

The appeal against the SSAT decision and an overview of the Federal Magistrate’s decision on that appeal

1. Mr Crabbe filed his appeal against the decision of the SSAT on 21 July 2011. In the written outline of argument filed on his behalf in support of the appeal, it was submitted by way of overview that the SSAT:

   … made numerous errors of law in its decision, in that it failed to have proper regard to the evidence, to the requirements of the Act and to ordinary principles of law; failed to accord Natural Justice to the Appellant; and made findings that are unreasonable, unsustainable and unsupported by the evidence properly before it.

2. Mr Crabbe’s written outline then grouped the nineteen grounds of appeal (contained in paragraphs 3 to 21 of the notice of appeal) into eleven groups. These groups of grounds will be explained more fully later in these reasons.

3. In the Registrar’s responding written outline of argument, it was submitted at the outset that the appeal against the SSAT decision should be dismissed because: the grounds of appeal failed to state or identify a question of law; the grounds of appeal impermissibly invited a broad review of the SSAT’s decision and impermissibly raised questions of fact or mixed fact and law; to the extent that any question of law did arise from Mr Crabbe’s material, it did not disclose any error of law that would justify the orders sought. (The orders sought being, as summarised at the conclusion of Mr Crabbe’s written outline of argument, that the SSAT decision should be set aside and “the usual administrative decision made, based upon Mr [Crabbe’s] actual earnings as disclosed in his Income Tax Returns”.)

4. In upholding Mr Crabbe’s appeal, Coates FM acknowledged at the commencement of his reasons for judgment (at [4]) that under s 110B of the Registration and Collection Act the only ground on which there could be an appeal to the court from the SSAT was on a question of law. His Honour also acknowledged (at [15]) that the Registrar’s submissions in opposition to the appeal concerned the competency of the appeal.

5. Importantly for present purposes, his Honour then observed (at [16]) that in examining “the stated grounds of appeal and the evidence, it is appropriate to state the specific requirements placed on the SSAT when it makes a decision, as set out in s.103X(3)(b) of the [Registration and Collection] Act.” His Honour then set out that sub-section which is as follows:

   (3)The SSAT must, within 14 days after making the decision, either:

   (a) … or

   (b)give to each party a written notice (whether or not as part of the notice under paragraph (1)(a)) that:

   (i)sets out the reasons for the decision; and

   (ii)sets out the findings on any material questions of fact; and

   (iii)refers to evidence or other material on which the findings of fact are based.

6. His Honour observed with reference to s 103X(3)(b):

   18.Because of the wording requiring reasons, findings on questions of fact and the evidence supporting the findings, it is not only important that the Tribunal provides adequate reasons, it must do as a matter of law. If it does not, then such is, in my view, an error of law because the Act mandates that the SSAT act in accordance with s.103X(3)(b). ...

   19.I accept the general proposition that there does not have to be exhaustive reasons, but they have to be presented in such a way to show how the decision was arrived at because of the mandate to show findings on questions of fact and a reference to the evidence supporting the findings. …

   (Emphasis in original)

7. A little later in his reasons, his Honour set out in full each of the nineteen grounds of appeal in the groupings in which they had been placed in the written outline of argument on behalf of the appellant, Mr Crabbe. After setting out each ground, or group of grounds, his Honour indicated his conclusion, which in relation to all grounds was that an error of law had been established. We will return in due course to those grounds of appeal and to his Honour’s conclusions in relation to them.

Grounds of this appeal and an overview of the submissions directed to them

1. As was submitted in the Registrar’s written outline of argument in support of the present appeal (at [16]), it is clear that pervading the reasons for his Honour’s conclusion on each group of grounds was the approach he took to the obligation imposed on the SSAT by s 103X(3)(b). It is this approach to

   
   

   s 103X(3)(b) that is the subject of each of the Registrar’s five grounds of appeal in the present appeal. These grounds assert that his Honour erred in holding that s 103X (more particularly, s 103X(3)(b)):

   ·obliged the SSAT to set out findings that it should have, but did not make (Ground 1);

   ·entitled the court to set aside the decision of the SSAT on the basis that in the view of the court the reasoning process undertaken by the SSAT was inadequate to support the decision (Ground 2);

   ·required the SSAT to set out reasons for the findings of fact that it made when, properly construed, s 103X only required reasons for the decision made to be set out (Ground 3);

   ·required the SSAT to analyse the evidence rather than simply refer to the evidence on which its decision was based (Ground 4); and

   ·required more detailed reasons for decision in circumstances in which the SSAT made a finding that a financial arrangement was a sham (Ground 5).

2. Before us little was put orally or in writing by senior counsel for the Registrar or by counsel for Mr Crabbe in support of, or in opposition to, the specific grounds of the present appeal. Indeed the written submissions on behalf of

   
   

   Mr Crabbe did not address the actual grounds of this appeal at all, but rather referred only to the conclusions of the Federal Magistrate in relation to certain of the matters that had constituted the grounds of appeal against the SSAT decision, with the assertion being that the conclusions of the SSAT lacked

   
   

   “a logical basis”. The oral submissions of counsel for Mr Crabbe were to similar effect.

3. In his oral submissions in support of this appeal, senior counsel for the Registrar identified the critical issue in the appeal as being the manner in which the Federal Magistrate treated the obligation of the SSAT to give reasons under s 103X in that his Honour treated s 103X as allowing a review of the adequacy of the SSAT’s reasons when no more is required than a setting out of the reasons. In doing so, his Honour had transgressed, it was submitted,

   
   

   “the dichotomy between an appeal on a question of law and an assessment of the merits of the case” (appeal transcript, 30 April 2013, p 3, lines 19-21).

4. In order to determine if there is substance in these submissions, and thus in the appeal, it is necessary for us to examine his Honour’s approach to and/or conclusions in relation to the grounds of appeal brought against the SSAT decision.

5. Before doing so it will be instructive to set out the principles which governed his Honour’s review of the SSAT decision.

principles relevant to the review of the SSAT’s decision

1. Those principles are, in our view, most usefully and relevantly for present purposes stated in the judgment of the Full Court of the Federal Court (Sundberg, Emmett and Finkelstein JJ) in Minister for Immigration and Multicultural Affairs v Al-Miahi (2001) 65 ALD 141 at [34] (which closely follows what was said by Mason CJ in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355-6), and where it was first explained that:

   The question whether there is any evidence of a particular fact is a question of law. Likewise, the question of whether a particular inference can be drawn from facts found or agreed is a question of law. That is because, before the inference is drawn, there is a preliminary question as to whether the evidence reasonably admits a different conclusion.

2. Their Honours then continued:

   Accordingly, in the context of judicial review, the making of findings and the drawing of inferences in the absence of evidence is an error of law. On the other hand, there is no error of law simply in making a wrong finding of fact. Even if the reasoning whereby the [decision maker] reached its conclusion of fact were demonstrably unsound, that would not amount to an error of law. A party does not establish an error of law by showing that the decision-maker inferred the existence of a particular fact by a faulty process, for example by engaging in an illogical course of reasoning. Thus, at common law, want of logic is not synonymous with error of law. So long as the particular inference is reasonably open, even if that inference appears to have been drawn as a result of illogical reasoning, there is no place for judicial review because no error of law has taken place – Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355-6…

3. Also of assistance in relation to the approach that a court should adopt in reviewing a decision of an administrative tribunal is the following passage from the judgment of Brennan CJ, Toohey, McHugh and Gummow JJ in Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at 271-2:

   … [In] Collector of Customs v Pozzolanic … 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 upon refugee status 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.”

4. Specifically in relation to the requirements placed on the SSAT by

   
   

   s 103X(3)(b), senior counsel for the Registrar relied on certain passages in the judgment of McHugh, Gummow and Hayne JJ in Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323, where reference was made to s 430 of the Migration Act 1958 (Cth) which is in virtually identical terms to s 103X(3)(b) in that it provides:

   (1)Where the Tribunal makes its decision on a review, the Tribunal must prepare a written statement that:

   (a)sets out the decision of the Tribunal on the review; and

   (b)sets out the reasons for the decision; and

   (c)sets out the findings on any material questions of fact; and

   (d)refers to the evidence or any other material on which the findings of fact were based.

   (Emphasis added)

5. The passages relied on from Yusuf on behalf of the Registrar were as follows:

   68… In its terms [section 430] requires no more than that the Tribunal set out the findings which it did make. Neither expressly nor impliedly does this section require the Tribunal to make, and then set out, some findings additional to those which it actually made. … A requirement to set out findings and reasons focuses upon the subjective thought processes of the decision-maker. All that
   s 430(1)(c) obliges the Tribunal to do is set out its findings on those questions of fact which it considered to be material to the decision which it made and to the reasons it had for reaching that decision.

   …

   75… If the Tribunal … does not make findings about those claims, the statement of its reasons and findings on material questions of fact may well reveal error. The error in such a case will most likely be either an error of law … or a failure to take account of relevant considerations. … It is not accurate, however, to say that the Tribunal is, therefore, under a duty to make all material findings of fact, if, as seems probable, that formulation of the duty is intended to extend the ambit of judicial review beyond accepted and
   well-established limits. If it is not intended to have that effect, it is not useful to formulate the duty in that way. Rather, the relevant inquiry remains whether the Tribunal has made an error of law, has failed to take account of relevant considerations, or has taken account of irrelevant considerations.

   …

   77… it may greatly be doubted that an obligation to set out findings could be said to be a procedure which is to be observed in connection with the making of the decision in question, as the setting out of the decision and reasons assumes that the decision has already been made. It is, however, enough to say that the conclusion that, so far as now relevant, s 430 requires only the recording of what was found and does not impose any duty to make findings, means that an asserted failure to make findings is not a breach of
   s 430. …

   (Emphasis in original)

1. The following principles emerge from these authorities and have relevance to our decision as to whether the Federal Magistrate erred in his review of the SSAT decision in a manner which requires our intervention:

   ·The question of whether there is evidence to support a finding of fact or an inference drawn from findings of fact is a question of law (Al-Miahi).

   ·The making of a finding of fact or the drawing of an inference in the absence of evidence is an error of law (Al-Miahi).

   ·A wrong finding of fact is not an error of law (Al-Miahi).

   ·A finding of fact based on reasoning that is “demonstrably unsound” or on an “illogical course” or a “faulty process” of reasoning is not an error of law (Al-Miahi).

   ·Judicial review is not to be over-zealous in seeking to find inadequacy of reasoning by an administrative decision maker; the review of the reasons of an administrative decision maker must not be turned into a reconsideration of the merits of the decision (Wu Shan Liang).

   ·Section 103X(3)(b) of the Registration and Collection Act (by analogy with s 430 of the Migration Act) requires the SSAT to do no more than set out the findings which it did make on facts which it considered material to the decision which it made (Yusuf).

Consideration of the Federal Magistrate’s conclusions in relation to the SSAT decision

1. Against the background of these principles we now turn to consider his Honour’s reasons for his decision that Mr Crabbe’s appeal against the SSAT decision should be allowed, that decision set aside, and the matter of

   
   

   Mr Crabbe’s adjusted taxable income remitted to the SSAT for re-hearing. In so doing, particular attention has to be paid to his Honour’s conclusions in relation to the eleven groups of grounds of appeal against the SSAT decision.

2. In order to give adequate consideration to his Honour’s conclusions in relation to the grounds of appeal against the SSAT decision, it will be necessary to set out in full each ground of appeal directed to that decision. We will do so in the groupings of the grounds and under the headings provided in his Honour’s reasons for judgment. It will also be necessary in some instances to make some reference to the submissions that were made to his Honour.

3. It will be seen that the first of these groups of grounds is particularly significant in that not only did his Honour’s conclusions in relation to these grounds influence his conclusions in relation to later grounds, but it is also to those conclusions that the Registrar’s grounds of appeal in the present appeal are for the most part directed.

First group of grounds: “a sham company was formed”

“3.The Tribunal erred in law in finding that the legal structure created by the Applicant and Ms [W] is a sham.

4. The finding of the Tribunal that the legal structure created by the Applicant and Ms [W] is a sham, is not founded upon, or supported by evidence properly before the Tribunal, but only upon opinion and suspicion, and is not a proper or sustainable finding.”

1. The submission of Mr Crabbe before his Honour in support of these grounds was that the finding by the SSAT (at [43]) that the legal structure created by

   
   

   Mr Crabbe and Ms W is a sham was unsupported by any evidence, with reliance being placed on the SSAT’s statement (at [45]) that: “There is no direct evidence of the arrangement between Mr [Crabbe] and Ms [W] which exists behind the sham.” It was thus submitted that the finding of a sham, being unfounded on the evidence, constituted an error of law.

2. In response, the Registrar submitted (at [22] to [26] of its written outline) that the following findings of fact, which were supported by “ample evidence”, provided “ample support” for the inference that the legal structure of the company was a sham, and that this was particularly so in light of other findings by the SSAT, including its adverse view of Mr Crabbe’s credibility:

   (a)in 2005, Mr [Crabbe] and Ms [W] started a business partnership providing training;

   (b)the partnership traded under the name [“S & Associates”];

   (c)Mr [Crabbe] contributed financially to the partnership by incurring a personal debt via his Visa card on behalf of the partnership, and through a joint loan of $125,000 taken out by himself and
   Ms [W];

   (d)Mr [Crabbe] worked in the partnership and brought expertise to the partnership;

   (e)Mr [Crabbe] and Ms [W] were in a de facto relationship throughout the time the business partnership was operated;

   (f)in July 2008, the business of the partnership was acquired by the company without any consideration passing to Mr [Crabbe];

   (g)Ms [W] was the sole director and shareholder of the company;

   (h)Mr [Crabbe] had the following taxable incomes:

   1.        2005/2006 – $5,136;

   2.        2006/2007 – $14,800;

   3.        2007/2008 – $20,000 (estimated).

3. Thus, it was submitted for the Registrar that the finding of a sham was reasonably open on the evidence and no error of law was therefore disclosed.

4. Notwithstanding the Registrar’s submissions, his Honour concluded that these grounds had merit. As we have some difficulty in understanding his Honour’s reasons for so concluding, we will not attempt to summarise his reasons; rather we will set out exactly those words used by him which appear to us to encapsulate his reasons for finding merit in these grounds. In his discussion of these grounds, his Honour made specific reference to [41], [42], [43] and [45] of the SSAT decision – all of which paragraphs we have earlier set out when referring to that decision.

5. After setting out [43] of the SSAT decision (at [32] above), which his Honour described as being “of vital importance in this issue”, his Honour continued:

   29.The decision sets out a number of findings in this paragraph and states that it has arrived at its decision by what it calls an overwhelming inference. That complied with the requirement that it set out findings of fact. …

   30.I was taken to the Tribunal’s statement at paragraph 45 of the decision where the Tribunal stated there was no direct evidence of an arrangement between the appellant and
   Ms [W] of a sham, which to my mind means that any inference drawn must be based on identified evidence.

   31.It is not a case of having overwhelming evidence, although the evidence may be overwhelming, it is a case of stating the evidence and linking it causally and/or proximally and logically so that on the balance of probability it can be seen that the inference drawn, that a sham arrangement has been concocted, can be seen.

   32.… At paragraph 41 the Tribunal identified as an issue the Appellant’s credibility. From what was said the Tribunal is stating it had concerns about credit in the sense that a lie had been told, rather than mere unreliability, although there is an element of unreliability. …

   (Emphasis added)

6. His Honour then set out [42] of the SSAT decision (at [31] above) and went on to say:

   34.The legislation requires that supporting the findings there be reference to the evidence, that is an analysis of the evidence, upon which the tribunal concludes that the Appellant’s story is unbelievable. I have read the decision carefully, and what constantly comes through is the Tribunal’s view that there is an unexplained financial link between the Appellant and Ms [W]. The Tribunal refers to the Appellant relinquishing his interest in the partnership for no consideration, that he did not explain why a company structure took over the work of the partnership, that the couple executed a deed of separation property settlement under Part 19 of the Property Law Act 1974 (Qld) – later reconciling, that he had an aeroplane and a [car] vehicle which went to the company and that he did not know of the company’s financial arrangements.

   35.I can understand that a suspicion arises as to the Appellant’s capacity to earn or access to income, but the words of the Tribunal are that there was no direct evidence that the company set up was a sham, and the Tribunal referred to lucrative government contracts would be better managed by a company, in terms of taxation structure rather than the partnership. It was incumbent on the Tribunal in view of that statement to piece together the inferential chain of evidence, in such a way so that it was clear how it weighted what it said were the links in the inferential chain, to come to the decision.

   36.To my mind, the application of the evidence to come to the finding is not clear. …

   37.

   I want to point out, I am only concerned to see that the Tribunal states the supporting evidence, not that its decision on evidence is one I would have made. I return to the statement about credibility, and here it is based on both unreliability and a lie. In paragraph 41, in context of the statement in paragraph 42 that the Appellant’s version of events was unbelievable, the Tribunal states that a false statement was made about his wage over

   
   

   a month in July – August 2008. If this was a lie relevant to credit, it must be seen to relate to the finding of a sham operation. If there are other elements going to this issue of credit and the inference drawn, the evidence must be stated so the reasoning can be seen to meet the legal requirement set out in s.103X(3)(b). If it is not, then there has been an error of law.

   38.The evidence stated in paragraph 43 seems to go to unreliability of the evidence, from which it appears the Tribunal concluded a sham company structure was put in place. 

   (Emphasis in original)

7. We note that the SSAT did not express a finding that there was no direct evidence of a sham. Having concluded on the evidence as a whole that the legal structure created by Mr Crabbe and Ms W is a sham, the SSAT recorded the finding that “there is no direct evidence of the arrangement between
   Mr [Crabbe] and Ms [W] which exists behind the sham.” The Federal Magistrate's references to the SSAT's decision in [30] and [35] of his reasons are mistaken in this respect and this misapprehension seems to have pervaded his Honour’s discussion of the SSAT's approach and conclusions on the sham issue.

8. His Honour next referred to various authorities governing the making of allegations of fraud, and he acknowledged (in [43] of his reasons) that the SSAT had (in [43] of its reasons) been “mindful of the seriousness” of making a finding of sham. He then continued:

   44.I am mindful that a finding on credibility is an issue of fact, see
   Re Minister for Immigration and Multicultural Affairs; Ex parte Durairajasingham (2000) 168 ALR 407 at 67. It is not the finding that I am concerned with, but the pathway to the finding. Despite submissions to the contrary, the Tribunal has fallen into error. Because of the finding that the company set up was a sham, s.103X(3)(b) required the setting out of findings and a referral to the evidence the facts are based on.

   45.While generally, a reference and short analytical comment on the evidence would suffice, the reference to facts upon which the finding that a sham had been orchestrated needs to have more precision, because the finding goes to reputation, where both the courts and consequently government administrative agencies, must strive to ensure that no careless allegation is made. I can understand the scepticism of the Tribunal in relation to the Appellant’s position, but that cannot mean that such a finding of a sham is made without proper basis. It is a fact of life that many married couples keep their finances and business interests separate from each other, and there is no reason apparent on the evidence as to why the Appellant and
   Ms [W] and the company ought to be treated as a single entity. They are in fact three separate legal persons and because of the finding that a sham, a fraud, has been perpetrated, a better statement of the evidence relied on is required to determine whether a sham structure has been created. I could not determine the chain of connection to the evidence referred to in paragraph 43 and the finding of a sham company…

   …

   47.This is not then only a matter of making the wrong finding, an error of fact, it is fundamental that a decision of such magnitude follows the legislative command set out in s.103X(3)(b), to avoid the question of error of law here and when fraud is alleged, more than usual precision is required. …

Discussion of and conclusion in relation to finding of a sham

1. In the Registrar’s written submissions in support of the specific grounds of this appeal, particular reliance is placed in support of the first, second, fourth and fifth grounds on statements made by his Honour in certain of the above quoted passages of his discussion of the first group of grounds. It is therefore convenient for us to discuss those four grounds at this point.

2. In support of the first ground of this appeal, being that his Honour erred in holding that s 103X(3)(b) required the SSAT “to set out findings that it should have, but did not make”, reference was made to [30] of his Honour’s reasons (see [62] above). In that paragraph his Honour referred to [45] of the SSAT’s decision where the Tribunal stated there was “no direct” evidence of the arrangement between Mr Crabbe and Ms W of a sham.

3. The Registrar’s written submission (at [33]) then was that in [30] his Honour had concluded “that further or different findings of fact should have been made in order to justify the conclusion reached by the SSAT” (that “conclusion” presumably being that the existing legal arrangements between Mr Crabbe and Ms W involving a company were a sham).

4. We are not necessarily persuaded that that is what the Federal Magistrate was actually saying in [30] of his reasons. He may well have only been saying that the SSAT itself had stated that there was no evidence from which the existence of a sham could be inferred, although that would have been a misunderstanding of what the SSAT was saying because, as the Registrar had submitted to his Honour, the SSAT in fact referred to “direct” evidence. Thus, this ground would not of itself have any great merit.

5. The second ground of the present appeal is that his Honour erred in holding that s 103X(3)(b) entitled the court to set aside the decision of the SSAT on the basis that, in the view of the court, the reasoning process undertaken by the SSAT was inadequate to support the decision. In support of this ground reference was made in the Registrar’s written submissions to the following passages from his Honour’s reasons (which it is convenient to repeat):

   43.The Tribunal was aware of the importance in making a finding of a sham stated in paragraph 43 above, where it said in the decision: “The Tribunal is mindful of the seriousness of such a finding.”

   44.… It is not the finding that I am concerned with, but the pathway to the finding. … Because of the finding that the company set up was a sham, s.103X(3)(b) required the setting out of findings and a referral to the evidence the facts are based on.

6. It was submitted (at [33] of the written submissions) that these passages indicate that his Honour was “concerned to assess whether the SSAT’s pathway to the finding” (presumably being the finding of a sham) “was sound”, when, as was further submitted, there is no obligation on the SSAT under

   
   

   s 103X(3)(b) to disclose the process of reasoning leading to its decision, nor the adequacy of that reasoning process, but rather only the basis of the decision.

7. This submission must be correct in light of the authorities referred to above, and thus this second ground of appeal has merit.

8. The fifth ground of appeal

   appears to make a similar, or at least related, assertion to the second ground. It asserts that his Honour erred in holding that

   
   

   s 103X required more detailed reasons for decision in circumstances in which the SSAT made a finding that a financial arrangement was a sham.

9. There is little doubt that his Honour’s reasons could be read as requiring a greater level of satisfaction on the part of the SSAT for its conclusion that a sham existed because of the nature of that finding. We agree with the Registrar that nothing in s 103X(3)(b) required that approach. In any event, and as his Honour acknowledged in [43] of his reasons, the SSAT was aware of the seriousness of such a finding. Ground 5 therefore also has merit.

10. The fourth ground of appeal

    asserts that his Honour erred in holding that

    
    

    s 103X “required the SSAT to analyse the evidence rather than simply refer to the evidence on which its decision was based”.

11. It was submitted in the Registrar’s written outline of argument (at [41]) that in [19], [34] and [35] of his reasons, his Honour implied an obligation on the SSAT in s 103X(3)(b) to analyse the evidence before it. We do not need to repeat those particular paragraphs from his Honour’s reasons; [34] and [35] have just been set out in our discussion of his Honour’s reasons in relation to the SSAT’s finding of a sham and [19] appears in our earlier overview of his Honour’s reasons. We agree that these three paragraphs can all be read as requiring an analysis of the evidence. The passages from the authorities cited above, particularly from Yusuf, indicate that an analysis of the evidence is not required. Section 103X(3)(b) requires only that the SSAT “refers to the evidence … on which the findings of fact were based.” His Honour can thus be said to have misdirected himself in this regard, and thus Ground 4 also has merit.

12. We have thus found Grounds 2, 4 and 5 of this appeal to have merit and therefore support the Registrar’s overall complaint that his Honour has erroneously interpreted s 103X(3)(b) as permitting a review of the adequacy of the SSAT’s reasons. By analogy with what was said by members of the High Court in Yusuf, and having regard to the principles in Bond, Al-Miahi, and Wu, such a review as to adequacy of reasons is not permissible.

13. In the present case, there were sufficient facts found by the SSAT, as were set out in the Registrar’s written outline of argument before the Federal Magistrate (see [59] of these reasons), on the basis of the evidence before it to support the inference which the SSAT drew, being that the financial arrangements between Mr Crabbe and Ms W were a sham, and to render that inference immune from interference by a court reviewing the decision of the SSAT.

14. We return now to the Federal Magistrate’s consideration of the other grounds of appeal against the SSAT decision.

Second group: “company interests, profit sharing”

“5. The Tribunal erred in law in finding that the legal structure created by the Applicant and Ms [W] is a sham, is not founded upon, or supported by evidence properly before the Tribunal, but only upon opinion and suspicion, and is not a proper or sustainable finding.

6. The Tribunal repeatedly failed to adequately distinguish between [S & Associates Pty Ltd] and the partnership [S & Associates], and in particular the Tribunal has failed to give any or any proper regard to the evidence that:

(a)      The Appellant is an employee of and has no interest in [S & Associates Pty Ltd];

(b) The Appellant had a 20% interest in the partnership of [S & Associates], which does not trade.

7. The Tribunal disregarded the distinction between the entities [S & Associates], and [S & Associates Pty Ltd], and treated the Appellant as if he had an equal interest in [S & Associates Pty Ltd], notwithstanding clear evidence that:

(a) The Appellant had only a 20% interest in the partnership of [S & Associates];

(b) [S & Associates Pty Ltd] assumed the full assets and liabilities of [S & Associates] in fact and in practice, and with the understanding of each, and without any agreement for or requirement of payment of any consideration.

(c) The Appellant had and has no shareholding or interest in [S & Associates Pty Ltd];

(d) The Appellant’s capital contribution to the establishment of [S & Associates] was minimal and in any case significantly less than 50%;

(e) The Appellant’s contribution of entrepreneurial skill to
[S & Associates] and to [S & Associates Pty Ltd] was minimal and in any case significantly less than 50%;

(f) The Appellant’s contribution of labour skill to [S & Associates] and to [S & Associates  Pty Ltd] was minial [sic] and in any case significantly less than 50%;

(g) The Appellant’s health prevented him from making an equal contribution;

(h) The Appellant served in the RAAF Reserve, as well as working in [S & Associates] and for [S & Associates Pty Ltd], rendering him unable to make an equal contribution.

(i) Ms [W] was the entrepreneur driving both [S & Associates], and [S & Associates Pty Ltd], and it was her managerial skill, and professional competence, that built, guided and directed the activities of the entities.

(j) The Appellant was at all material times subject to the directions and influence of Ms [W] in the conduct of the business of [S & Associates].

(k) The Appellant at all material times assumed a subservient managerial role to Ms [W] in the conduct of the business of [S & Associates], and Ms [W] was the Principal Manager of the business.

(l) The Appellant was at all material times an employee of [S & Associates Pty Ltd] in fact and in law, and acted accordingly.

8. The Tribunal found without any, or without any adequate evidence, that the appellant had a joint and equal interest in both [S & Associates] and in [S & Associates Pty Ltd] and / or that the Appellant and Ms [W] had agreed to share the profits equally.

9. The finding of the Tribunal that the Appellant and [Ms W] had agreed to share equally in the profits of [S & Associates], and [S & Associates Pty Ltd], is unfounded in law or fact, and is based upon mere suggestion, suspicion and conjecture, and is unsustainable.”

1. It appears from [49] and [50] of his reasons that his Honour also found merit in these grounds on the basis that the SSAT had “misconstrued” the evidence:

   49.Apart from what I have stated, the complaint here is that the Tribunal found that the Appellant and Ms [W] “agreed to share in the profits equally”, see paragraph 45 [of the SSAT decision]. The Tribunal came to this conclusion, because the Appellant and Ms [W] had formed the partnership, both brought expertise to the partnership, both contributed financially to the partnership, they were in a de facto relationship and the Appellant effectively gifted his interests to Ms [W].

   50.

   In my view, the Tribunal has misconstrued the evidence, and again, it seems to be based particularly on the de facto relationship of the couple. In submission, counsel for the Registrar submitted that the findings I referred to in paragraph 42 above [presumably of the SSAT decision] were soundly based. They are not. The decision on the findings, that there was a profit sharing agreement, is not one based on that evidence. The cases point to the need for evidence, not what would otherwise be a reasonable arrangement. The experience of the courts since the

   
   

   de facto legislation became operative on 1 March 2009 is that

   
   

   de facto relationships can be even more tenuous than that of a married couple and coming to the conclusion that it did required the Tribunal to give an explanation of the evidence it relied on, by way of, under the s.103X(3)(b), findings on material questions of fact and the evidence supporting the findings.

   (Emphasis in original)

2. Again the inference that Mr Crabbe and Ms W had agreed to share the profits of the business conducted by the company which the SSAT drew at [45] and repeated at [54] of its reasons was open to it on the basis of the evidence which was before it and which it identified in the context of drawing this inference as well as when drawing the inference of the sham arrangement.

Third group: “Separation Agreement”

“10. The Tribunal failed to have any or any proper regard to the nature and effect of a Recognised Separation Agreement under Part 19 of the Property Law Act 1974 (Qld) between the Appellant and his then former de facto partner dated 26 November 2008 and in particular:

(a)Failed to appreciate that the Appellant and Ms [W] were seeking to thereby clarify and determine their financial relationship, and

(b)Failed to appreciate that it was evident from the Separation Agreement that the financial relationship between the Appellant and Ms [W] was not upon the basis of joint and equal ownership or entitlement to, the assets described therein, but upon other particular considerations in regard to each item.”

1. After recording the submission (presumably in support of the ground) that the SSAT failed to take into account that the separation agreement gave

   
   

   Mr Crabbe and Ms W unequal interests in separate assets, his Honour concluded:

   54.The Tribunal has treated the Appellant and Ms [W] as one entity, as it did previously. It is not a matter of what decision I would have come to on the evidence, it is a matter of the Tribunal taking into account what the Appellant had by way of resources, which it did. Unfortunately, the Tribunal did not separate Ms [W] from the equation, and so there was an error of law by failing to take into account a relevant fact.

2. We have some difficulty in understanding his Honour’s discussion of this matter. As we read the SSAT’s decision, the focus of its discussion (at [24] to [33]) of its reasons) of the terms of the separation agreement between

   
   

   Mr Crabbe and Ms W was to draw attention to inconsistencies in the evidence before it concerning Mr Crabbe’s assets and financial position. This it was entitled to do.

3. In so far as his Honour concluded that an error of law existed because the SSAT failed “to take into account a relevant fact”, it has to be noted that Mr Crabbe has not sought to uphold the Federal Magistrate’s decision by the filing of a notice of contention directed to matters other than those raised by the Registrar’s appeal.

Fourth group: “Assessment of Income”

“11. The Tribunal determined without any or any adequate evidence, and set, the appellant’s adjusted taxable income at one half of the past and anticipated gross taxable income of [S & Associates Pty Ltd], notwithstanding that:

(a) The appellant does not have and never has had an interest in S & Associates Pty Ltd].

(b) The appellant does not have and never has had any interest in or entitlement to any profits of [S & Associates Pty Ltd].

(c) There is no proper basis in law for [S & Associates Pty Ltd] to make a distribution of profits to the Appellant.

12. The Tribunal failed to have any, or any proper, regard for the taxable and financial situation of [S & Associates Pty Ltd] in:-

(a) assessing it’s profit without regard to any tax liability, and

(b) failing to have regard to it’s [sic] after-tax situation, and

(c) in failing to consider the implications and tax effect of any distribution that it might make to the Appellant, or

(d) failing to inquire as to, or to properly consider any arrears of tax that it might have as a current or contingent liability, despite evidence before the Tribunal from the Appellant as to such liability.

(e) assessing the anticipated future profits of [S & Associates Pty Ltd] as increasing at 4% per annum after the 30 June 2010 without any or any adequate basis, and basing the Appellant’s anticipated adjusted taxable income on such anticipated future income.”

1. In relation to these matters, his Honour said:

   56.The Tribunal set the appellant’s income at $367,097 from
   1 July 2008 to 30 June 2009 and at $158,177 from 1 July 2009 to
   30 June 2010 and stated, at paragraph 79: “No evidence has been provided about the company’s current financial circumstances. The Tribunal will assume an increase of 4% per annum thereafter”.

   57.Why?

   58.In submissions, counsel for the Appellant submits that the Tribunal would have to rely on some guide, whether relating to the company, industry figures or national economy figures, obviously published by reputable sources. Given that the Tribunal is not bound by the rules of evidence, I agree with this submission.

   ...

   60.… the Registrar’s submission was that the decision was justified because the Tribunal had found that the company was a sham, that behind the sham there was an arrangement between the appellant and Ms [W] to share the profits equally and so the appellant had access to financial resources. I have already made determinations on the sham and the profit sharing issues.

2. Then after setting out again (in [62]) the requirements in s 103X(3)(b), his Honour concluded (in [63]) that an error of law was established.

3. We agree with his Honour that the SSAT’s assumption of a four per cent increase in the income of the company, and thus of Mr Crabbe’s share of that income, after 30 June 2010, was indeed an error of law. This is because there was no evidence to support that finding of fact. Senior counsel for the Registrar was unable to dissuade us from this conclusion. We will return later to the consequences of it.

Fifth group: “Health”

“13. The Tribunal substituted its own conclusions about the appellant’s health and working capacity for the documented opinion of the appellant’s medical practitioner without any or any adequate evidence.”

1. This complaint was directed to the following passage in the SSAT decision:

   51.… On the basis of Mr [Crabbe’s] evidence concerning his current work capacity, the Tribunal rejects Dr [H’s] evidence that he was unable to work from 3 May 2011 to 14 June 2011. It does not follow that the Tribunal automatically accepts Mr [Crabbe’s] evidence that he can only work 10 to 15 hours per week, but the Tribunal finds that he can work at least that amount of time.

2. His Honour found (at [66]) this statement “confusing”. He concluded it amounted to an error because the doctor’s evidence had “not been taken into account or explained as to how it ha[d] been taken into account, as required.”

3. With respect to his Honour, it is difficult to see how, given that the SSAT expressly rejected the doctor’s evidence, it could then be said that the doctor’s evidence “had not been taken into account” at least in the sense of it having been overlooked. There could, of course, be no criticism of the SSAT for rejecting the doctor’s evidence on the basis that it considered that such evidence was in conflict with Mr Crabbe’s own evidence.

4. To the extent that his Honour found error because the Tribunal had not “explained” how it took the doctor’s evidence into account, it should emerge from what we said earlier about the Tribunal’s obligations under s 103X(3)(b), that it was not required to explain how it had dealt with particular evidence.

Sixth group: “Costs of contact”

“[14]The Tribunal incorrectly disregarded the evidence of the appellant in relation to the high costs of spending time with children by confusing the requirements for initiating an application (at section 98B(1) of the Child Support (Assessment) Act 1989 with the matters relevant to determining an application after it has been properly commenced on other grounds.”

1. His Honour’s conclusion about this ground was:

   69.But for the questions of law arising in relation to the decision on the Appellant’s resources, and the subsequent errors of the decision-making process, I would not have considered this to be anything but a decision on the facts, one which was not open on appeal as a question of law.

2. Given that we have determined that there was no error of law on the part of the SSAT in relation to Mr Crabbe’s resources (save for the four per cent annual adjustment from 30 June 2010), it is unnecessary that we concern ourselves further with this issue of the costs of contact, given his Honour’s own conclusion in [69] of his reasons.

Seventh group: “Income debt and Capacity”

“15. The Tribunal wrongly disregarded relevant matters in determining what is just and equitable, in particular the Appellant’s :

(a) income, property and financial resources;

(b) legal obligation to repay debt;

(c) lack of capacity to pay the arrears and hardship caused to the appellant by the creation of substantial arrears.”

1. His Honour recorded (at [17]) that the submission in support of this ground was that if the SSAT had apportioned 50 per cent of the company profits to

   
   

   Mr Crabbe, then it should have (but did not) apportion the same proportion of liabilities.

2. His Honour concluded that:

   72.The decision is tainted by the view of the Appellant’s relationship and lack of reference to evidence.

   73.The question of law arises and error has occurred.

3. It is unclear to us whether his Honour’s reference to the “decision” in [72] was to the SSAT’s overall decision or only to the decision in relation to the sharing of company profits. But be that as it may, we do not have to consider this matter further because of our conclusions on the sham issue.

Eighth group: “Natural Justice”

“16. The Tribunal failed to accord the appellant natural justice by:

(a) Accepting information contained in the records of the Child Support Agency and the Tribunal in preference to information provided on oath by the Appellant in circumstances where:

i. The identity of the person or persons who recorded the information is not known to the Tribunal;

ii. The person or persons who recorded the information was not called by the Tribunal for cross-examination;

iii. The Tribunal did not place any recorded information in context;

(b) Making a finding of credit against Ms [W] in circumstances where the Tribunal did not see, hear or question Ms [W], despite the Tribunal’s capacity and power to require such evidence.

(c) Making findings of credit and making inferences adverse to the Appellant in circumstances where the Appellant was not given the opportunity to explain or clarify the relevant issue.”

1. His Honour explained (in [75]) that this ground “returns to the connection between Mr [Crabbe] and Ms [W] as adopted by the Tribunal, as well as reliance on the CSA’s findings.”

2. Again we have some difficulty in understanding his Honour’s conclusion on this issue; it was expressed as follows:

   76.… The Tribunal is charged under the Act with making decisions of an administrative nature, stating those decisions within the confines of s.103X. It has made a decision on Ms [W’s] credibility which it is not entitled to do in the circumstances. This is an error. As to mere reliance on the CSA’s findings, that an agency may record or not record contact with a client should be treated with care, to ensure that recordings or non-recordings of claims are in fact likely to be correct. There needs to be explanation of notice to the Appellant if an adverse finding is going to be made so he can specifically give a statement on any document which contradicts his position and that is not recorded as having occurred on some occasions. I come back to the fundamental errors upon which the question of law is based, the view of the relationship.

3. However, given that his Honour’s conclusion about this matter was based on the SSAT’s findings about the relationship between Mr Crabbe and Ms W, and given that we have concluded that his Honour was not entitled to have interfered with the SSAT’s findings about that matter, it is unnecessary for us to say more about the issues raised by this group of grounds.

4. To the extent that these grounds raise an issue of natural justice, we repeat our earlier observation that Mr Crabbe has not sought to uphold his Honour’s decision on any other basis on which a court’s intervention with the SSAT decision would be warranted.

Ninth group: “[Child support payee’s] Financial [position]”

“17. The Tribunal failed to properly consider the needs and financial resources of the Respondent, and in particular made the subject orders when the evidence before the Tribunal revealed that the Respondent had materially understated her income and assets and failed to show any significant shortfall in her financial position.

18. The Tribunal failed to have proper regard for the comparable financial positions of the Appellant as against the Respondent, and in particular failed to have regard to the superior asset position of the Respondent.

19. The Tribunal failed to have sufficient regard to the earning capacity and contributions actually being made by the children….”

1. His Honour’s observations and conclusion in relation to these grounds were as follows:

   78.This allegation is one where the Tribunal is said to have misconstrued the facts, by stating at paragraph 65 that the respondent mother struggles to meet her expenses. The evidence from the transcript at page 87 is that in answer to this question: On the income you are currently getting, which includes the current amount of child support that [the Appellant] is paying, you are able to meet your current debts?”. The respondent mother replied yes.

   79.Later she said she was breaking even.

   80.While I accept that the evidence at page 64 shows the respondent mother failed to properly record contributions made by her children to her financial position, her answers do not indicate that she was struggling in the sense that she did not have enough to pay her bills. Further, she admitted that the sale of her house was more likely to realise $375,000, about one hundred thousand more than her estimate of $270,000 in her Statement of Financial Circumstances. It is a financial resource. There is an error of law because findings were not in accordance with the evidence.

2. We note that in the Registrar’s written outline of argument, which was before his Honour, it was submitted essentially that these complaints went to factual matters and thus could not raise questions of law. We agree with that submission.

Tenth group: “Hardship”

“20. The Tribunal made an order which it acknowledged would cause the Appellant hardship, and which was in the circumstances unjust and unfounded.”

1. His Honour said about this ground:

   82.The decision stated at paragraph 81: “To the extent that the creation of arrears causes him hardship, it is hardship which has resulted from his persistent non-disclosure of his true financial position and it is not hardship that makes the Tribunal’s decision unjust or inequitable.” The submission is that the Tribunal failed to consider hardship according to and as required by the Act. There is an error of law here, and that is, the hardship was based on the assumption that the Appellant has persistently failed to disclose his financial position.  Given what I have said, the persistent non-disclosure is not supported by the evidence. It seems to be a preformed view of the relationship. If there was evidence that such was the case, then I would conclude that the Tribunal had correctly applied the law.

2. Again, his Honour’s conclusion about this ground appears to flow from his earlier conclusion that the SSAT had erred in its approach to the arrangements between Mr Crabbe and Ms W. As we have found his Honour’s approach to that matter to be erroneous, we need say no more about this ground.

Eleventh group: “Unsustainable”

1. In his reasons for judgment his Honour did not set out the terms of the ground, or grounds, which were included under the heading “Unsustainable”. However, reference to Mr Crabbe’s notice of appeal to the Federal Magistrates Court reveals that paragraph 21 under the heading “Grounds of Appeal” read as follows:

   21.The Tribunal made an order without having due or any regard to the capacity of the Appellant to pay the resulting arrears, and such order is capricious and unsustainable.

1. His Honour included the following comments in his reasons apparently in relation to this ground:

   84.On the whole, the Tribunal’s decision is unsustainable as it goes to jurisdictional error of law, not just error of law which would otherwise not affect the decision. In other words, in applying the provisions of s.103X it may produce a different result. Again, I want to be clear, application of s.103X to the facts may not produce a different result, but that it is a matter of following the requirements of the section, particularly when there is evidence of apparent wealth in all of the circumstances here.

2. Again, we have some difficulty, with respect, in understanding what his Honour was saying in that paragraph. But that probably matters little given our conclusions in relation to his approach to the grounds of appeal before him and our conclusions in relation to the present appeal.

Conclusion in relation to this appeal

1. We have so far discussed all grounds of the present appeal other than the third ground. That ground asserts that his Honour erred in holding “that s 103X required the SSAT to set out reasons for the findings of fact that it made when properly construed s 103X only required reasons for the decision to be set out.”

2. The written submission in support of this ground asserts that his Honour treated s 103X(3)(b) “as requiring the SSAT to set out reasons for every finding of fact.” (Emphasis in original).

3. Reference to s 103X(3)(b) shows that the sub-section only requires “reasons for the decision” and findings on any “material questions of fact” (as well as reference to the evidence on which the findings of fact are based), as is confirmed by the passages from the High Court decision in Yusuf, cited above, concerning identical requirements in s 430 of the Migration Act.

4. However, we are not necessarily persuaded that his Honour did hold that the SSAT was required under s 103X to hold that reasons were required for every finding of fact, although we acknowledge that such an interpretation might be open in relation to his Honour’s observations in [18] and [19] of his reasons (see [42] above). However, it is unnecessary to reach a concluded view on this ground, given that we have found substance in other grounds.

5. Put simply, it follows from our consideration of this appeal that the Federal Magistrate was wrong in concluding that he was entitled to interfere with the SSAT’s decisions that the financial arrangements between Mr Crabbe and

   
   

   Ms W were a sham, and that accordingly, Mr Crabbe should be treated as entitled to a 50 per cent share of the company’s profit for purposes of calculating his adjusted taxable income for child support purposes.

6. However, his Honour was correct in concluding that the SSAT’s assumption of a four per cent increase of the company’s profits beyond 30 June 2010 could not stand – there being no evidence to support that assumption.

7. At the conclusion of the hearing of this appeal, we were able to canvass with both counsel the question of what form our orders should take if we were to reach the conclusions which we have.

8. Senior counsel for the Registrar submitted that in this situation there would be three courses open to this court, being that it could:

   ·    pay no regard to the SSAT’s error in relation to the four per cent assumption and leave it to Mr Crabbe to approach the Registrar with all the relevant material to enable the assessment to be corrected (as was suggested by the SSAT in [80] of its reasons – see [36] above);

   ·    set aside that part of the SSAT’s decision which was based on a four per cent increase (which we understood to be the Registrar’s preferred position); or

   ·    remit to the SSAT for re-consideration that part of its decision based on the four per cent adjustment (although it was suggested that there might be difficulties with a partial remitter).

9. Although we understood counsel for Mr Crabbe to concede that these three courses were open to us, his strong submission was that if we found any merit in the appeal, the entire matter should be remitted to the SSAT for

   
   

   re-consideration (appeal transcript, 30 April 2013, p 42, line 43 to p 43, line 6).

10. It is obviously desirable that these protracted proceedings should be brought to an end as soon as possible. We will endeavour to do this by amending the decision of the SSAT to the extent that that decision was based on the assumed four per cent increase in company profits. In this regard, we note, as the SSAT observed in [80] of its decision, that it is always open to Mr Crabbe to seek a re-determination of his child support liability on the basis of satisfactory evidence from him about his financial circumstances.

11. We are empowered under s 107A(5) of the Registration and Collection Act to vary the decree or decision of the Federal Magistrates Court to that which, in our opinion, should have been made in that court.

12. On hearing and determining an appeal from a decision of the SSAT, the Federal Magistrates Court was empowered under s 110F of the Registration and Collection Act to “make such order as it thinks appropriate by reason of its decision”, including but not limited to “affirming or setting aside the decision of the SSAT” or “remitting the case to be heard and decided again” by the SSAT.

13. We are thus satisfied that we can vary the SSAT decision in order to reflect the decision which, in our opinion, the Federal Magistrate should have made.

14. We will therefore, as foreshadowed at the commencement of these reasons, give leave to the Registrar to appeal, and we will allow the appeal against the Federal Magistrate’s orders. We will then set aside all of his Honour’s orders, and in their place make an order that Mr Crabbe’s appeal against the decision of the SSAT be allowed to the extent necessary to set his adjusted taxable income at the same level for all subsequent periods to the end of the child support case as it was for the last period in relation to which there was evidence before the SSAT (being $158,177).

15. His Honour’s orders which we will set aside, include consequential orders (being Orders 4, 5 and 6) which relate to the staying of certain of Mr Crabbe’s child support liabilities pending the further SSAT hearing which his Honour had ordered. Given that as a result of our orders there is to be no further hearing by the SSAT, it seems appropriate to also set aside the consequential orders made by his Honour.

Costs of this appeal

1. The Registrar did not seek an order for costs in relation to the appeal.

2. Mr Crabbe sought costs against the Registrar in the event that the appeal was unsuccessful; in the event that it was successful he sought a certificate under the Federal Proceedings (Costs) Act 1981 (Cth).

3. Given that the appeal has only been partially successful, we do not consider that there should be any order for costs, nor any costs certificate granted.

I certify that the preceding one hundred and twenty five (125) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Bryant CJ, Finn and Kent JJ) delivered on 6 February 2014.

Associate:  S

Date: 6 February 2014