Costa & Fairbank (SSAT Appeal)
[2010] FMCAfam 39
•22 February 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| COSTA & FAIRBANK (SSAT APPEAL) | [2010] FMCAfam 39 |
| CHILD SUPPORT – Appeal from decision of SSAT – whether the SSAT erred in finding special circumstances for departure – whether SSAT erred in its considerations of the income and expenses of the applicant. |
Child Support (Assessment) Act 1989
Child Support (Registration and Collection) Act 1988
Family Law Act 1975
| LDME & JMA (SSAT Appeal) [2007] FMCAfam 712 Tasman & Tisdall [2008] FMCAfam 126 Kennon v Spry (2008) FLC 93-388 |
| Applicant: | MR COSTA |
| Respondent: | MS FAIRBANK |
| File Number: | BRC 5095 of 2007 |
| Judgment of: | Slack FM |
| Hearing date: | 17 December 2009 |
| Date of Last Submission: | 17 December 2009 |
| Delivered at: | Brisbane |
| Delivered on: | 22 February 2010 |
REPRESENTATION
| Solicitors for the Applicant: | Madsen Law |
| Solicitors for the Respondent: | Sica & Co Solicitors |
ORDERS
That the Amended Notice of Appeal (Child Support) from the decision of the Social Security Appeals Tribunal filed on 16 October 2009 be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Costa & Fairbank is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 5095 of 2007
| MR COSTA |
Applicant
And
| MS FAIRBANK |
Respondent
REASONS FOR JUDGMENT
This is an appeal from a decision of the Social Security Appeals Tribunal (hereafter “the SSAT”) dated 17 July 2009.
There are essentially four grounds of appeal in the Amended Notice of Appeal:
1. As a question of law, did the Tribunal’s failure to satisfy itself that special circumstances existed permitting the Tribunal to reduce the Applicant’s wife’s income by $7,023 and increase the Applicant’s income by that same amount, rendered the Tribunal’s decision unsafe or erroneous.
2. As a question of law, was the Social Security Appeals Tribunal correct in including or permitted to include the Appellant’s compulsory employer superannuation contributions as part of the Appellant’s taxable or Child Support income.
3. As a question of law, do the Social Security Appeals Tribunal erroneous findings that:
a. the Applicant and his wife have claimed their mortgage payments as a business expense (para.60) when in fact they have not; and
b. the Applicant’s wife has rental property (Victoria) expenses of $22,375 (para.59 - $15,600 for gross rent (sic) plus $6,775 for other rental income) when her tax return clearly does not state this; and
c. that ½ of this miscalculated sum of $22,373 (ie $11,187) should be added back to the Applicant’s income as the Applicant’s mortgage payments (for his and his wife’s Queensland home) are the subject of a claimed business expense deduction, which it never was
render the Social Securities Appeals Tribunal decision concerning the Applicant’s adjusted taxable income sufficiently unsound or erroneous so as to thereby warrant the granting of the Orders sought.
4. As a question of law, was it open to the Social Security Appeals Tribunal (as it did as para.46 of the Decision) to disregard entirely the travel costs of the Appellant in spending time with his children on the grounds that there existed a Federal Magistrate Court Order which provided for the Appellant to meet those costs.
Child support assessments and the decision of the SSAT
The annual amount of child support payable by the applicant to the respondent, pursuant:
a)to an assessment issued on 21 July 2009 for the period 13 August 2008 to 30 September 2008 was $5,772 (weekly rate of $110.62);
b)
to an assessment issued for the period 1 October 2008 to
31 October 2009 was $5,740 (weekly rate of $110.01).
The assessment came as a result of the decision of the SSAT to set the adjusted taxable income for the applicant, for the purposes of child support assessment, at $51,595 for the relevant assessment periods.
In reaching that decision the SSAT sat in review of the decision made by an objections officer made on 28 October 2008 to fix the adjusted taxable income of the applicant for the relevant period at $32,496.
Under the assessments, the applicant is liable to pay child support to the respondent for the children [X] born [in] 2000 and [Y] born [in] 2003.
Principles
In this appeal, the applicant relied upon the comments of Brown FM in Tasman & Tisdall [2008] FMCAfam126 (at para.44):
An Administrative Tribunal exceeds its powers and thus commits jurisdictional error, which is correctable on appeal in respect to the question of law, if it:
(i) fails to construe properly the legislative provisions applicable;
(ii) identifies the wrong issues or asks itself the wrong questions;
(iii) ignores relevant material or relies on irrelevant material;
(iv) fails to accord procedural fairness to the party before it;
(v) makes an erroneous finding of such a magnitude that it goes to the very jurisdiction which it purports to exercise rendering its decision perverse or unreasonable or otherwise offending logic.
It is important for the purposes of this appeal to also recognize the principles enunciated by Halligan FM in LDME & JMA (SSAT Appeal) [2007] FMCAfam 712 at para.54:
The Court “must” hear and determine an appeal from the SSAT, and “may” make such order as it thinks appropriate by reason of its decision (s.110F(1), Registration Act). The orders a Court may make on a s.110B appeal include an order affirming or setting aside the decision of the SSAT, or an order remitting the case to be heard and decided again by the SSAT, either with or without the hearing of further evidence, in accordance with the directions of the Court [s.110F(2)].
Three points may be made about the Court’s powers in a s.110B appeal.
First, the use of the word “may” clearly signifies that the power is discretionary. The fact an error of law by the SSAT is found does not inevitably lead to the decision being set aside. For example, if it is clear there would be no purpose served by having the case heard again, the Court may, in the exercise of its discretion, decline to remit the matter to be heard and determined again, and affirm the decision under appeal (see Clements v Independent Indigenous Advisory Committee, above, at [41]).
Second, the power to make such order as the Court thinks fit is qualified by the words “by reason of its decision”. The “decision” in this context is the decision on the hearing and determination of the appeal (s.110F(1), the appeal being “on a question of law” (s.110B). Thus, the orders made must flow from a finding in favour of the Applicant on an identified question or questions of law.
Third, the particular power under s.110F(2) to make the orders specified in that subsection does not limit the general power under s.110F(1) to make such order as the Court thinks appropriate by reason of its decision on the appeal.
The grounds of appeal and the applicant’s argument
The applicant argues, in summary, that the SSAT erred in the approach it took to coming to the finding that special circumstances existed for departure from the administrative assessment pursuant to s.117(2)(c)(ia) particularly when regard is had to the provisions of s.117(7A) of the Child Support (Assessment) Act 1989 (hereafter “the Assessment Act”).
In particular, the applicant argues that having reached a conclusion (as it was entitled to do according to the applicant) that it was not satisfied that there was any ground for departure under s.117(2)(c)(ib) based on the applicant’s capacity to earn, the SSAT erred by then treating the income of the applicant’s wife as his income or coming to the conclusion that her income represented a financial resource to the applicant.
In the event the SSAT did not err in reaching that conclusion, then it erred in the way that it took into account (or failed to take into account) both the income of the applicant’s partner and certain expenses.
In particular, the applicant further submits that, even if the SSAT were entitled to reach the conclusion that special circumstances exist, the SSAT erred in:
a)its findings about the applicant’s income or benefits from the business;
b)its failure to take into account mortgage expenses payable by the applicant towards the matrimonial home;
c)its failure to take into account the costs associated with the applicant having contact with the children.
Decision – Discussion and conclusions
The SSAT reached the conclusion (para.62):
….as a result of the benefits that Ms Costa’s company structure provides to Mr Costa, and the fact that the value of these resources are not properly reflected by his taxable income, there are special circumstances in this case that makes the administrative assessment unjust and inequitable. The ground for departure in subparagraph 117(2)(c)(ia) does exist in this case.
On this ground of appeal, the argument of the applicant, as I understand it, is that there is no basis in law to treat both the profits of the business, [A] and/or the income of the applicant’s partner as his income, his property or as a financial resource from which he gained a benefit and the SSAT was therefore in error.
The argument also relies on the provisions of s.117(7A) of the Assessment Act in that the SSAT was precluded from taking into account the income of his partner: a person who does not have a duty to maintain the child.
Importantly though the essential question that confronted the SSAT was whether in the special circumstances of the case, the applications 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 child support to be provided by the liable parent for the child.
The following evidence was given by the applicant to the SSAT:
a)The applicant is an employee of [A], a business owned and operated by the applicant’s partner.
b)The business is a labour hire business and the applicant is the only employee of the business. In other words, it is his labour only that is available for hire by the business.
c)The income that the applicant receives from his employment is $677 per week.
d)The applicant is employed fulltime and if he is not there the business may lose clients and then he would have no income.
e)The applicant works between 30 and 35 hours per week and is paid a set wage as if he is working a full week.
f)His wife finds the work. He did not know how she found the work and the work varies each month.
g)The business is conducted from the home at which the applicant and his partner reside. The applicant has access to a company vehicle.
h)The taxable income of the applicant in the relevant child support year was $28,786.
The SSAT, after obtaining the BAS statements for the business for the first three quarters of the 2008/2009 taxation year, found that the gross earnings for the business were about $111,000.
The SSAT did not accept the evidence of the applicant that he be considered to be just an employee of the business working on a full time basis for a wage of just over $32,496 or that he has no control over the day to day running of the business.(see para.52 of the Reasons). The SSAT did not accept that the applicant’s partner who has no apparent experience in the industry, has a construction company which she runs alone, with one employee who is not involved in the business (see para.58 of the Reasons). The SSAT considered that the applicant did receive a financial benefit from the business (see para.62 of the Reasons).
The term financial resource is not defined in the Assessment Act.
A financial resource, in my consideration, refers to something which is not property but from which a financial benefit is or may be gained [see Kennon v Spry (2008) FLC93-388, Gummow and Hayne JJ (@ 83035)].
The principle object of the Assessment Act (ss.4) is to ensure the children receive a proper level of financial support from their parents.
A particular object of the Assessment Act includes ensuring:
a. That the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and in particular, the parents with a like capacity to provide financial support for their children should provide like amounts of financial support.
The term financial resource in the light of the objects of the Assessment Act should be broadly defined and would in my consideration refer to any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children.
In this matter the applicant asked the SSAT to accept that from a business in which he was the sole employee; which relied exclusively on his labour and skill for the income of the business; in which he undertook all of the work and which operated in an industry in which the owner of the business (who happened to be his partner) had no prior experience; and that he would be paid less than $20 per hour and the owner (his partner) would be paid over $40,000 per annum and that he had no interest in or received no further financial benefit from the business other than his income; and/or that he had no capacity to earn more by seeking an increase in his income from his employment to reflect his true involvement in the business. His evidence to the SSAT was inherently unbelievable and the SSAT was entitled to consider it so.
Relevantly the SSAT was also entitled to find that the facts of the case established something which is special or out of the ordinary to warrant the finding:
62. That Mr Costa’s true income and financial resources from his employment in the 2007/08 financial year exceed $29,786 per annum. Having considered the documentary and other evidence, the Tribunal is of the view that as a result of the benefits that
Ms Costa’s company structure provides to Mr Costa, and the fact that the value of these resources are not properly reflected by his taxable income, there are special circumstances in this case that makes the administrative assessment unjust and inequitable. The ground for departure in sub-paragraph 117(2(c)(ia) does exists in this case…
Grounds 2, 3 and 4 of the appeal – Treatment of the applicant’s expenses and financial circumstances – whether it was just and equitable as regards the child, the liable parent and the carer entitled to child support, to depart from the administrative assessment
Having concluded that one of the grounds for departure was established, the SSAT then necessarily needed to consider the other factors in s.98C of the Assessment Act.
The applicant submits that the finding by the SSAT that it was just and equitable to depart from the basic formula assessment was wrong in law and the order that the child support income of the applicant be set at $51,595 was wrong at law.
There is no challenge to the finding that the departure was otherwise proper.
In this appeal, there is no challenge to the findings made by the SSAT about the financial circumstances of the respondent.
In this matter the applicant claimed costs and living expenses of $1,153.59 per week as the weekly expenses for his family including his partner. That figure included the child support that he was already paying ($47.30 per week approximately) and the costs of the airfares for the children to fly from Melbourne for contact.
His stated income was $677 per week. His taxation deduction for the relevant period was $68 per week. The income of his partner, as claimed by him, was $700 per week. The total household income was therefore $1,309 per week. The logical conclusion of a finding that the business was a financial resource of the applicant is that the income his wife derives is available for the household expenses and his income is available to meet an appropriate level of child support. This was never a case about the application of the income of the applicant’s partner towards his child support obligation. It was always a case about how much of his own income ought to be applied to his obligation to pay child support. The financial benefit he obtained from the structure of the business was to minimise his taxation. The financial benefit that he and his partner obtained was for her to earn an income from the labour and skills of the applicant. It is not unjust to expect her to contribute that income to the household expenses including those of her partner. On his own case, accepting all of his claimed expenses including the costs of contact means that there is an excess of income over expenses for the household of $155 per week.
The SSAT assessment resulted in a child support assessment of $110 per week ($62.70 more than he was assessed to pay). He could pay that amount from his income and there would be no substantial effect on his household.
Whilst I have some concerns about the manner in which the SSAT set about arriving at the conclusion that it did and its treatment of various claimed expenses, the fact is that the conclusion resulted in an assessment for the applicant of child support of $110 per week or 46% of the costs of maintaining the children. There could not be said to be any significant difference between the relative financial circumstances of the parents and a conclusion that each parent should be more or less equally responsible for the financial costs of the children could not be said to be unjust or inequitable.
The applicant argued that the SSAT erred in the way that it treated certain of his expenses. Insofar as I need to, I consider that the following expenses should not have been given priority over the obligation of the applicant to pay child support (and in that regard I agree with the findings of the SSAT):
a)Any expenses that he or his partner incurred on the investment property that she owned in Melbourne.
b)The costs of transporting the children from Melbourne to Brisbane. It is clear that the applicant chose to move away from Melbourne and the parenting orders gave him the responsibility to meet that commitment.
Taking that into account there was an even greater capacity for the applicant to contribute to the support of the children.
Hence, even if the SSAT made some errors in the way it approached the matter, I am not satisfied given the unsatisfactory nature of the applicant’s evidence that there was any error of law. Even if I were so satisfied, this is not a matter where I would exercise the discretion to set aside the decision, for the reasons I have given.
The appeal is therefore dismissed.
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Slack FM
Associate: Karen Smith
Date: 22 February 2010
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