Clark and Irvine and Anor

[2017] FCCA 531

FEDERAL CIRCUIT COURT OF AUSTRALIA

CLARK & IRVINE & ANOR [2017] FCCA 531

Catchwords:
CHILD SUPPORT – Appeal from a review by the Administrative Appeals Tribunal – no error of law established – appeal dismissed.

Legislation:

Administrative Appeals Tribunal Act1975 (Cth) ss.44AAA(1), 33(1)(c)
Child Support (Assessment) Act 1989 (Cth) ss.98C, 117(2), 117(4), 117(5)

Appellant: MR CLARK

First Respondent:	MS IRVINE
Second Respondent:	CHILD SUPPORT REGISTRAR

File Number: DGC 782 of 2010

Judgment of: Judge Hughes

Hearing date: 6 March 2017

Date of Last Submission: 6 March 2017

Delivered at: Canberra

Delivered on: 21 March 2017

REPRESENTATION

Counsel for the Appellant: In person

Counsel for the First Respondent:	No appearance
Counsel for the Second Respondent:	Ms Rayment

Solicitors for the Second Respondent: Mills Oakley

ORDERS

1. The Applicant is not permitted to rely on the annexures to his written submissions as they comprise documents which postdate the decision the subject of the appeal.

2. The Appeal from the decision of the Administrative Appeal Tribunal dated 22 July 2015 is dismissed.

3. The Applicant shall pay the Second Respondent’s costs fixed in the sum of $6,948.

THE COURT NOTES THAT:

A.Written Reasons for Decision will be delivered on a date to be advised.

IT IS NOTED that publication of this judgment under the pseudonym Clark & Irvine & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DANDENONG

DGC 782 of 2010

MR CLARK

Applicant

And

MS IRVINE

First Respondent

And

CHILD SUPPORT REGISTRAR
Second Respondent

REASONS FOR JUDGMENT

1. On 6 March 2017 I heard an appeal from a child support review by the Administrative Appeals Tribunal (AAT) dated 8 April 2016.  I dismissed the appeal and gave brief oral reasons for decision.  I indicated that written reasons for decision would be released on a later date. These are those reasons.

Background

1. The appellant is the father of two children born in 2004 and 2006 respectively. The first respondent is the mother of the children. She did not participate in the proceedings before me. The second respondent is the Child Support Registrar. In accordance with a child support case registered in November 2008, child support is payable by the appellant to the second respondent. Child support has been collected by the Child Support Agency (CSA) since 3 June 2009.

2. From 1 September 2014 the administrative assessment of child support resulted in a rate of child support payable by the appellant of nil. 

3. On 3 November 2014 the first respondent applied for a departure from the administrative assessment on the basis that the assessment did not accurately reflect the income and financial resources of the appellant.

4. On 23 January 2015 a senior case officer considered the departure application and determined that the appellant’s adjusted taxable income for the period 3 November 2014 to 31 October 2017 should be set at $60,000 per annum. This resulted in an increase in the rate of child support payable by the appellant from nil to approximately $5,000 a year.

5. On 10 February 2015 the appellant lodged an objection to that decision. An objections officer reviewed the decision and, on 10 April 2015, disallowed the objection.

6. On 13 April 2015 the appellant applied to the AAT for review of the objection officer’s decision.

7. The Tribunal heard the review on 22 July 2015.  It heard oral evidence from the appellant and the first respondent and considered documents provided by the Child Support Registrar, copies of which were provided to both the appellant and the first respondent.

8. On the same day, 22 July 2015, the Tribunal made its determination which was to confirm the decision under review. This means the appellant’s adjusted taxable income for the period 3 November 2014 to 31 October 2017 remained at $60,000 per annum. Written reasons for decision were provided by the Tribunal.

The AAT decision

1. Part 6A of the Child Support (Assessment) Act 1989 (“the Assessment Act”) permits a departure from the administrative assessment of child support if the Registrar (or the Tribunal standing in the shoes of the Registrar) is satisfied of the following three matters:

   (a)that one of the grounds for departure provided by the Assessment Act exists;

   (b)that it would be just and equitable to make a particular determination;  and

   (c)that it would be otherwise proper to make the determination.[1]

   [1] Section 98C Child Support (Assessment) Act 1989

2. The Tribunal correctly stated the law, made findings of fact on the evidence before it and applied the law to those facts.

3. The grounds for departure are set out in section 117(2) of the Assessment Act. The ground originally relied upon by the first respondent and accepted by both the senior case officer and the objections officer is as set out in s117(2)(c)(ia), namely, that in the special circumstances of the case, the application of the administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by the appellant to the first respondent because of the income and financial resources of the appellant.

4. In reviewing the decision the Tribunal took into account the following:

   a)The appellant said that a (omitted) business he operated for many years became increasingly unprofitable and was closed by him in July 2014.

   b)The appellant also sold his house in 2014 and received net proceeds of sale of $162,962.  He told the Tribunal he sold the house to pay debts.  He paid off his credit cards but at the time of the hearing before the Tribunal he still had an outstanding car loan and a debt to the Australian Tax Office which was accruing interest at a rate of $500 per month.  Despite that, the appellant said he loaned $130,000 of the proceeds of sale to a company owned by his adult son, Mr M, for the purpose of establishing a (business omitted). The loan was undocumented, no interest was being paid and there was no period specified for the repayment of the loan. 

   c)The appellant said that since closing his (omitted) business he had been working in the (omitted business) for four hours a day.  He said he was paid between $450 and $500 a week but there were no records to confirm this as he was paid in cash.  He declared an annual income of $20,000 for tax purposes.

   d)The appellant told the Tribunal that he did not know why his son, who works full time elsewhere, had decided to commence a business in an area in which he had no experience.

   e)The (omitted business) is open from 11:30am until approximately 11pm six days a week. There is only one other staff member who works from 4pm until closing and Mr M comes in each day after his full-time job to oversee the business.

5. The Tribunal rejected the evidence of the appellant.  It found that the appellant sold his house in order to buy the (omitted) business; that he paid for the purchase and fit out of the business; and that, although the business is in the name of his son, it is in reality owned and operated by the appellant.  Those findings of fact were open on the evidence before the Tribunal.

6. In the absence of any cogent evidence of the appellant’s income the Tribunal had regard to data available on an Open University website (omitted) which indicated that the average full-time salary for managers of similar (businesses omitted) is $53,000 a year. Given the hours the (omitted) business is open the Tribunal concluded that the appellant’s income was well in excess of $50,000 a year. An administrative assessment using $50,000 a year as the taxable income of the appellant would have resulted in an annual rate of child support of a little under $4,830 as at September 2014.  Given the rate of child support payable under the existing administrative assessment was nil, the Tribunal was satisfied the disparity in the rates of child support payable meant the application of the administrative assessment was unjust or inequitable.  Accordingly, the departure ground was made out.

7. The Tribunal then considered the second step in the three-step process required for a departure from the administrative assessment. That step involves consideration of whether it would be just and equitable to make a particular determination. Section 117(4) of the Act sets out the matters to be taken into account in making that determination. Those matters include the nature of the duty of a parent to maintain a child, the proper needs of the child, the financial circumstances of each parent and the child, the costs of providing care for the child and any hardship that would be caused to the child or to either party in making the determination. The Tribunal correctly identified those matters and considered the evidence relevant to them. The evidence in relation to the financial circumstances of the first respondent were uncontroversial. The Tribunal was satisfied that her household expenditure exceeded her income and that the application of the administrative assessment would cause significant hardship to her.

8. The Tribunal found that the appellant’s income was higher than the $53,000 indicated by reference to the Open University website because the appellant received his income in cash and only paid tax on the $20,000 he declared in his tax return. The Tribunal found that in those circumstances $60,000 was an appropriate amount to attribute to him as his taxable income. Although the Tribunal found that the appellant had not declared all of his expenditure, it concluded that the particular determination would not cause him hardship. Those findings of fact were open on the evidence before the Tribunal.

9. The Tribunal then considered the last of the three-step process which is whether it would be “otherwise proper” to make the particular determination. Section 117(5) of the Act sets out the matters which must be considered in making that determination. They include the nature of the duty of a parent to maintain a child and the effect a particular determination would have on any entitlement of the child or the carer entitled to child support to an income tested pension, allowance or benefit, or to the rate of any income tested pension, allowance or benefit. The Tribunal noted that the first respondent is entitled to an income tested benefit and that any increase in the rate of child support may reduce the amount payable to her from the public purse. It found, therefore, that it was otherwise proper to make the particular determination. Again, those findings were open to the Tribunal on the evidence.

The appeal

1. Section 44AAA(1) of the Administrative Appeals Tribunal Act 1975 (“the AAT Act”) permits an appeal to this Court from a decision of the AAT in relation to a child support first review but only on a question of law.

2. The Notice of Appeal filed on 27 August 2015 contains eight grounds of appeal.

3. The first three grounds relate to the Tribunal’s finding at paragraph 15 that the appellant would conservatively be able to earn $53,000 per year.  Ground 1 alleged the Tribunal had regard to “irrelevant” considerations, namely the Open University website data concerning the average income of managers of (businesses omitted).  Grounds 2 and 3 alleged the Tribunal wrongly found the appellant was capable of working for more than 40 hours a week and that he was earning the average income of people employed in similar positions.

4. It was open to the Tribunal to reject the appellant’s evidence about his employment circumstances, to conclude that he ran the (omitted) business and to find that he worked in it for more than 40 hours a week. As set out in the submissions of counsel for the second respondent, section 33(1)(c) of the AAT Act provides that the Tribunal is not bound by the rules of evidence and permits the Tribunal to “inform itself on any matter in such manner as it thinks appropriate.” Reference to the Open University website was a pragmatic course in circumstances where the evidence of the appellant about his income was entirely rejected. The findings of fact were open to the Tribunal. Grounds 1 to 3 raised no questions of law and are dismissed.

5. Ground 4 alleged that the Tribunal’s finding that the appellant should be taken to have a taxable income of $60,000 a year for the relevant period was made “without evidence”.  Again, in rejecting the appellant’s evidence the Tribunal was permitted to inform itself as it saw fit about the level of income to be attributed to the appellant. The Tribunal found that the appellant earned at least the average income for managers of similar businesses.  Given he was paid in cash, all income above $20,000 (which is what the appellant declared for tax purposes) was tax free and therefore warranted an increase in the income attributable to him for child support purposes.  This was a finding of fact open to the Tribunal.  Ground 4 raised no question of law and is dismissed.

6. Ground 5 alleged the Tribunal failed to take into account a relevant consideration, namely, the taxable income of the appellant. The Tribunal was under no obligation to take into account evidence it had rejected as unreliable, implausible or false.  Its findings of fact about the appellant being responsible for the day to day running of the (omitted) business and the income he earned from it were open on the evidence.  Ground 5 raised no issue of law and is dismissed.

7. Ground 6 alleged the Tribunal failed to take into account a relevant consideration, namely, the taxable income of the appellant’s son’s company, (omitted) Pty Ltd.  I accept the submission of counsel for the second respondent that it is not apparent that any evidence about the income of the company was before the Tribunal.  The evidence before the Tribunal is set out at paragraph 5 of the decision and there is no reference to the financial circumstances of the company.  The appellant did not provide a transcript of the proceedings before the Tribunal which is necessary to establish that the issue was raised by him and disregarded by the Tribunal. The Tribunal found in any event that the true owner of the business was the appellant so the circumstances of the Company may well have been irrelevant. This ground is not made out.

8. Grounds 7 and 8 alleged the Tribunal failed to take into account relevant considerations, namely, the “statistical fact” that start-up businesses struggle financially in the first three years and that start-up businesses do not earn the same income as established businesses.  To succeed on these grounds it is necessary for the appellant to establish that those issues were argued before the Tribunal and ignored.  There is no transcript of the proceedings before the Tribunal.  Accordingly those grounds are not established.

9. None of the grounds having been made out, the appeal is dismissed.

Costs

1. The appellant has been entirely unsuccessful. In accordance with Division 2 of Schedule 1 of the Federal Circuit Court Rules 2001 the appellant is ordered to pay the costs of the second respondent in the sum of $6,948.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Judge Hughes

Date: 21 March 2017