Crabbe and Crabbe and Child Support Registrar (SSAT Appeal)
[2012] FMCAfam 205
•9 March 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CRABBE & CRABBE and CHILD SUPPORT REGISTRAR (SSAT APPEAL) | [2012] FMCAfam 205 |
| CHILD SUPPORT – Appeal from decision of SSAT – second appeal of a decision – errors of law – remittal back to SSAT. |
| Child Support (Regulation and Collection) Act 1988, ss.103X, 110B, 111C Property Law Act 1974 (Qld), Part 19 |
| Crabbe & Crabbe [2011] FMCAfam 24 Agrippa & Horton(SSAT Appeal) [2010] FMCAfam 1144 Tasman & Tisdale [2010] FMCAfam 425 Oldfield v Keogh 41 NSWSR 206 Re Minister for Immigration and Multicultural Affairs; Ex parte Durairajasingham (2000) 168 ALR 407 Ridge v Baldwin [1964] AC 40 Waites & Lawson [2011] FMCAfam 42 |
| Applicant: | MR CRABBE |
| First Respondent: | MS CRABBE |
| Second Respondent: | CHILD SUPPORT REGISTRAR |
| File Number: | BRC 10444 of 2009 |
| Judgment of: | Coates FM |
| Hearing date: | 4 November 2011 |
| Date of Last Submission: | 4 November 2011 |
| Delivered at: | Brisbane |
| Delivered on: | 9 March 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr Paratz |
| Solicitors for the Applicant: | Family Law Doyle Keyworth & Harris Lawyers |
| Solicitors for the First Respondent: | Self represented |
| Counsel for the Second Respondent: | Mr Black |
| Solicitors for the Second Respondent: | Child Support Agency |
ORDERS
That the Appellant’s appeal against the decision of the Social Security Appeals Tribunal dated 16 June 2011 be upheld.
That the decision of the Social Security Appeals Tribunal dated 16 June 2011 be set aside.
That the matter be remitted to the Social Security Appeals Tribunal for re-hearing according to law.
That pursuant to s.111C of the Child Support (Registration and Collection) Act 1988 the collection and enforcement of child support arrears accumulated up to and including the date of this Order, payable by Mr Crabbe to Ms Crabbe for [X] born [in] 1991, [Y] born [in] 1994 and [Z] born [in] 1996 be stayed pending the determination of the re-hearing in the Social Security Appeals Tribunal.
That pursuant to s.111C of the Child Support (Registration and Collection) Act 1988 the operation of all child support assessments payable by Mr Crabbe to Ms Crabbe for [X] born [in] 1991, [Y] born [in] 1994 and [Z] born [in] 1996 be stayed pending the determination of the re-hearing in the Social Security Appeals Tribunal.
That during the period when the child support assessments are stayed under this Order, Mr Crabbe must continue to make payments of child support to Ms Crabbe in the sum of not less than $298.50 per month.
IT IS NOTED that publication of this judgment under the pseudonym Crabbe & Crabbe and Child Support Registrar is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 10444 of 2009
| MR CRABBE |
Applicant
And
| MS CRABBE |
First Respondent
| CHILD SUPPORT REGISTRAR |
Second Respondent
REASONS FOR JUDGMENT
This is an appeal against a decision made on 16 June 2011 by the Social Security Appeals Tribunal (the “SSAT” or “Tribunal”) and dispatched to the parties 23 June 2011. It is the second appeal pertaining to the same matters previously decided by the SSAT and overturned.
If the appeal is upheld, the appellant seeks that:
a)Any decision of the Child Support Agency from 1 July 2008 be set aside; and
b)“The respondent’s liability to pay child support be assessed in accordance with the administrative assessment under the Child Support (Assessment) Act 1989 for the period 1 July 2008 and be based upon the Appellant’s taxable income as disclosed in the Personal Income Tax returns lodged by him with the Australian Taxation Office and that the Child Support Agency shall issue assessments accordingly”.
An additional Application in a Case sought a stay of collection and enforcement of child support if the appeal is successful, until a rehearing by the SSAT.
There are 11 grounds of appeal which I will set out later. They allege identification of questions of law, as the subject matter of the appeal, under s.110B of the Child Support (Regulation and Collection) Act 1988 (the Act), the only ground which can be utilised to bring the matter before the court.
The appellant was represented by counsel, as was the Child Support Registrar (the Registrar). The respondent wife was not represented and her submissions were to the effect that the appeal should be dismissed. I accept she was not in a position to adequately represent her interests on questions of law, however, Mr Black for the Registrar, has adequately presented the case opposing the application.
By way of history, child support decisions concern three children [X] born [in] 1991, [Y] born [in] 1994 and [Z] born [in] 1996.
It is a fair observation to say that the parents have disputed child support decisions for many years although the impugned decisions date back to 2008.
The matter went to the Tribunal after the Child Support Agency, in a departure decision, increased the appellant’s income for child support purposes and his objection was subsequently disallowed. He took the matter to the SSAT and the Tribunal further increased his taxable income for the purposes of child support.
That was the decision overturned by Coker FM on 14 January 2011.
I will set out paragraphs 6 and 7 of His Honour judgment delivered 14 January 2011 (Crabbe & Crabbe [2011] FMCAfam 24), as those paragraphs adequately set out the administrative assessments still in dispute and the SSAT’s first decision:
“6. There has been a child support history provided in relation to this matter, and it is perhaps noteworthy that it should be recorded here:
a) Firstly, an administrative assessment for child support for the period 1 September 2008 to 31 August 2009 was provided on an adjusted taxable income of $14,546 for the appellant for the 2006/2007 taxation period, and an adjusted taxable income of $12,015 for the respondent, again relating to the 2006/2007 assessment period. The assessment was for a payment of $339 per annum.
b) A departure application was filed in relation to the matter, and on 4 August 2009, the Child Support Agency made a departure application under part 6A of the Child Support (Assessment) Act 1989.
c) On 29 September 2009, a senior case officer considered the application and made a number of decisions in relation to the income to be utilised for the purposes of assessment. The income was decided as follows:
· For the period 1 December 2008 to 30 November 2010, set Mr Crabbe’s adjusted taxable income at $80,000 per annum;
· For the period 1 December 2010 to 30 November 2011, set Mr Crabbe’s adjusted taxable income at $82,640 per annum;
· For the period 1 December 2011 to 30 November 2012, set Mr Crabbe’s adjusted taxable income at $85,367 per annum;
· For the period 1 December 2012 to 30 November 2013, set Mr Crabbe’s adjusted taxable income at $88,184 per annum; and
· For the period 1 December 2013 to the date the child support case ends, set Mr Crabbe’s adjusted taxable income at $91,094 per annum.
d) Subsequently, the appellant objected to that decision. However, on 23 December 2009, an objections officer disallowed the objection. It was this disallowance which led to the application being made for review of the objections officer’s determination.
7. The appellant applied to the Social Security Appeals Tribunal on 6 January 2010 to have the objection officer’s decision reviewed. The matter, as I said, was heard on 19 April 2010, and on that day, pursuant to section 103S of the Child Support (Registration and Collection) Act 1988, the Tribunal decided to set aside the decision of the objections officer made on 23 December 2009 and substituted a decision that, for the period 1 July 2008 to 31 December 2010, the appellant’s adjustable taxable income was set at $344,000.”
The decision by Coker FM remitted the matter back the Tribunal for errors of law.
The Tribunal constituted by different members reheard the matter in May 2011.
I have constructed the following table, from the decision under appeal, giving the Child Support Agency’s decisions reviewed on the left and the SSAT’s new decisions on the right.
For the period from 1 December 2008 to 30 November 2010, Mr Crabbe’s adjusted taxable income is set at $80,000 per annum.
For the period from 1 July 2008 to 30 June 2009, Mr Crabbe’s adjusted taxable income is set at $367,097.
For the period from 1 December 2010 to 30 November 2011, Mr Crabbe’s adjusted taxable income is set at $82,640 per annum.
For the period from 1 July 2009 to 30 June 2010, Mr Crabbe’s adjusted taxable income is set at $158,177.
For the period from 1 December 2011 to 30 November 2012 Mr Crabbe’s adjusted taxable income is set at $85,367 per annum.
For the period from 1 July 2010 to 30 June 2011, Mr Crabbe’s adjusted taxable income is set at $164,504.
For the period from 1 December 2012 to 30 November 2013 Mr Crabbe’s adjusted taxable income is set at $88,184 per annum.
For the period from 1 July 2011 to 30 June 2012, Mr Crabbe’s adjusted taxable income is set at $171,084.
For the period from 1 December 2013 to the end of the child support case, Mr Crabbe’s adjusted taxable income is set at $91,094 per year.
For the period from 1 July 2012 to 30 June 2013, Mr Crabbe’s adjusted taxable income is set at $177,927.
For the period from 1 July 2013 to the end of the child support case, Mr Crabbe’s adjusted taxable income is set at $185,044
It is this new decision(s) which are now appealed.
I will address all alleged questions of law, but it is the Registrar’s submission, supported by the wife, that there has been a failure to state a question of law, that the grounds of appeal merely invite a broad review of the SSAT’s decision and impermissibly raise questions of mixed fact and law and if an error of law arises, it does not disclose any error which would justify the orders sought. Having said that, it was the appellant’s counsel’s view that the SSAT has fallen into some of the same mistakes previously identified by Coker FM.
The Law relating to SSAT decisions
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 Act. It states:
“(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.”
While there is no single definition of what a question of law is, or in fact what amounts to an error of law, this section sets out the legal structure in which the Tribunal must explain its decision.
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). That is a different proposition from deciding what are the relevant facts after stating what the evidence is, and different members may have different views of the facts based on the evidence. An appellant cannot succeed merely because of a disagreement as to a factual finding.
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. A reference to the evidence means some analysis of the evidence, but as stated by Halligan FM in Agrippa & Horton(SSAT Appeal) [2010] FMCAfam 1144, “..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 (Collector of Customs v Possolanic Enterprises Pty Ltd (1993) 43 FCR 280, at 287, cited with approval in Minister for Immigration and Multicultural Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259 at 272 per Brennan CJ, Toohey, McHugh and Gummow JJ...”.
Errors of law come in other guises, they could be made because facts are mistaken, or facts not taken into account, or irrelevant facts are taken into account, or there is bias or there is a lack of reasons given or something of that nature. In Tasman & Tisdale [2010] FMCAfam 425, Brown FM described what is sometimes called jurisdictional error:
“85. In particular, I reiterate an administrative tribunal exceeds its powers and thus commits a jurisdictional error, which is correctable on appeal, in respect of a question of law, if it:
· fails to construe properly the legislative provisions applicable;
· identifies the wrong issues or asks itself the wrong questions;
· ignores relevant material or relies on irrelevant material;
· fails to accord procedural fairness to the party before it;
· 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.
86. In summary, an appeal on a question of law:
· is not a review on the merits or a rehearing;
· as such, an appeal on a question of law is not one in which findings of fact, per se, can be called into question;
· however, bearing in mind the statutory intent implicit in Part VIII of the Collection Act and the purpose of the Federal Magistrates Court itself, in dealing with SSAT appeals, the court should not be unduly legalistic or pedantic, particularly where the appellant concerned is self-represented;
· in reviewing a decision of the SSAT for error, the court should not examine the decision in question with an eye “keenly attuned to the perception of error.”
A range of questions of errors of law are alleged in this matter.
The central thrust of the appellant’s submission is that the Tribunal preformed adverse views of his financial relationship with his de facto partner Ms W and the errors of law contended occurred because the Tribunal then did not apply the law to the evidence. If this is so, then it is an important factor required to understand the case. Other errors were contended as well.
Of relevance, the appellant formed a relationship with Ms W in 2000.
Briefly, during material times, they operated a partnership called [Company A] in which the appellant held a 20 percent interest and Ms W an 80 percent interest. The partnership became the company [Company A], in which Ms W was the director and shareholder, with the appellant being an employee. It is the view of this connection which is said to be at the cause of the Tribunal’s alleged errors. From this point, the thread of the arguments against the Tribunal’s decision and the relevant factual history will be clear as I address the grounds of Appeal.
I intend now going to each ground in order stated in the Notice of Appeal filed 12 July 2011.
I will repeat the grounds verbatim because these particularise the complaint.
GROUND ONE – a sham company was formed, paragraphs 3 and 4 of the Notice of Appeal, which state:
“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.”
The Tribunal finding is stated within paragraph 43 of the decision. It is a long paragraph, but of vital importance in this issue. It states:
“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.”
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. But the submission was that the Tribunal formed a view and then sought to justify it. If that is the case, then there has been an error of law in that there would have been no evidence to form a view and there would have been a denial of natural justice, if the reasons do not set out the evidence supporting the findings.
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.
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.
I refer to paragraphs 41 to 55 of the decision. 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. At 41, the Tribunal said this: “He claimed no knowledge of matters he must have known about. For example, he must have known why he and Ms W trading as [Company A], 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 $1500 and $2500 per month and that in July 2008 he had earned more than between $1,100 and $1,400.”
Although lengthy, I need to produce paragraph 42 of the decision in full. It states:
“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 percent 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 DEWR 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.”
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 [omitted] vehicle which went to the company and that he did not know of the company’s financial arrangements.
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.
To my mind, the application of the evidence to come to the finding is not clear. The Tribunal refers to the lack of disclosure of the company records despite demand on Ms W, the Appellant’s statement to the Tribunal that his employment was terminated when Ms W received the demand for financial figures from the Tribunal and the issue of the Appellant’s credibility and unreliability, but even the Tribunal concludes there is no direct evidence of a sham. It is that conclusion which causes me concern, because of the legal status of the company and statements which have been made, such as the conclusion of the improbability of the Appellant relinquishing his interest in the original partnership and the linking of credit to the final conclusion of a sham company. At paragraph 45 the Tribunal made a statement that in the absence of evidence on the point a finding was made that the Appellant and Ms W “arranged for equal distribution”. A finding is allowable by inference, but mere reference to a call for the company financial statements, as occurred, is just too broad. Financial statements could mean anything. A particularised notice of all and any distributions or payments to the Appellant would have possibly served the purpose for the inference to be valid.
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.
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.
There is a basic rule, possibly a first principle of law, that allegations of fraud are not made without reasonable proof. I am going to refer to the rules as they apply to barristers in relation to allegations which affect reputation, because they are adequate in understanding a Tribunal’s position when making serious findings against reputation.
In the older, but useful text Harrison’s Law and Conduct of the Legal Profession in Queensland, the author, Justice Williams as he then was, referred to counsel’s duty not to impugn reputation without good cause. He quoted what was said in Oldfield v Keogh 41 NSWSR 206, the independent judgment counsel must exercise:
“Written pleadings are frequently sent to counsel for revisal containing serious allegations of fraud, dishonesty, or misconduct. The consequences of lodging such pleadings in Court may be to cause irreparable injury to the person thus publicly accused. For an advocate to allow such charges to be launched with his name attached to them without the fullest investigation would be to abuse the absolute protection against actions for slander which the law affords to counsel. Counsel is not worthy of that protection unless he justifies it by the most scrupulous care in his written or oral attacks on character. He must insist upon being supplied with all the information which is thought by his client to justify the attack, and then he must decide for himself whether the charges made are such as can be justifiably made. In exercising his judgment in such a matter the advocate is fulfilling one of the most delicate duties to society which his profession casts upon him. It is no small responsibility which the State throws upon the lawyer in thus confiding to his discretion the reputation of the citizen. No enthusiasm for his client’s case, no specious assurance from his client that the insertion of some strong allegations will coerce a favourable settlement, no desire to fortify the relevance of his client’s case, entitles the advocate to trespass, in matters involving reputation, a hair’s-breadth beyond what the facts as laid before him and duly vouched and tested will justify. It will not do to say lightly that it is for the Court to decide the matter. It is for counsel to see that no man’s good name is wantonly attacked. (“The Ethics of Advocacy” in Law and Other Things, pp. 191-192).”
The Queensland Bar Association rules, at r.38 states:
“38. A barrister must not draw or settle any court document alleging criminality, fraud or other serious misconduct unless the barrister believes on reasonable grounds that:
(a) factual material already available to the barrister provides a proper basis for the allegation if it is made in a pleading;
(b) the evidence in which the allegation is made, if it is made in evidence, will be admissible in the case, when it is led; and;
(c) the client wishes the allegation to be made, after having been advised of the seriousness of the allegation and of the possible consequences for the client if it is not made out.”
That coincides with what Williams J said, at page 83: “The duty not to attack a man’s reputation without good cause extends with special force to cases where issues between the parties involve allegations of reprehensible conduct”.
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.”
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.
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. It is a very similar finding made and overturned in the Tribunal’s first decision, where it did not adequately separate the status of the legal personages as between the appellant, Ms W and the company. The finding caused associated errors, which means that the appellant has not been given natural justice to explain the position.
It may appear that I am stating that the Tribunal could never come to the decision that the company set up was a sham. I need to be clearly understood, I am not stating that. As a guide, different questions may need to be asked or evidence assembled in a different manner to make such a finding whether it was a sham. I cannot be any more specific because that would be unfairly giving support to one party.
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. This is a difficult of law as to what an administrative decision-maker must do, because it is still clearly the case that there is not a duty to act judicially, the sentiment of Ridge v Baldwin [1964] AC 40, but there is a duty to act according to the prescription set out in s.103X(3)(b). When a fraud issue arises, the reasons, findings on questions of fact and the evidence supporting the findings are to be stated with more precision to show the causal and proximate relationship with the decision. Once that is achieved, the question of law disappears and the finding of fact cannot be questioned.
GROUND 2 – Company interests, profit sharing, paragraphs 5 to 9 of the Notice of Appeal, which states:
“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 the company [Company A] and the partnership [Company A], 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 [Company A];
(b) The Appellant had a 20% interest in the partnership of [Company A], which does not trade.
7. The Tribunal disregarded the distinction between the entities [Company A], and [Company A], and treated the Appellant as if he had an equal interest in [Company A], notwithstanding clear evidence that:
(a) The Appellant had only a 20% interest in the partnership of [Company A];
(b) [Company A] assumed the full assets and liabilities of [Company A] 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 [Company A];
(d) The Appellant’s capital contribution to the establishment of [Company A] was minimal and in any case significantly less than 50%;
(e) The Appellant’s contribution of entrepreneurial skill to [Company A] and to [Company A] was minimal and in any case significantly less than 50%;
(f) The Appellant’s contribution of labour skill to [Company A] and to [Company A] was minial 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 [omitted] Reserve, as well as working in [Company A] and for [Company A], rendering him unable to make an equal contribution.
(i) Ms W was the entrepreneur driving both [Company A], and [Company A], 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 [Company A].
(k) The Appellant at all material times assumed a subservient managerial role to Ms W in the conduct of the business of [Company A], and Ms W was the Principal Manager of the business.
(l) The Appellant was at all material times an employee of [Company A] 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 [Company A] and in [Company A] 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 [Company A], and [Company A], is unfounded in law or fact, and is based upon mere suggestion, suspicion and conjecture, and is unsustainable.”
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. 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.
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 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.
GROUND 3 – Separation Agreement, ground 10 of the Notice of Appeal states:
“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.”
The Appellant and Ms W separated on 1 September 2008 and executed a separation agreement under Queensland’s Property Law Act in late 2010. Schedules set out the property of the Appellant and Ms W. The Appellant retained the [vehicle] and the [omitted] aeroplane. They reconciled in February 2009. The Appellant’s income was subsequently adjusted and increased by the Child Support Agency.
The submission is that the Tribunal failed to take into account that the separation agreement gave the Appellant and Ms W unequal interests in separate assets.
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.
GROUND 4 – Assessment of Income, Notice of Appeal states:
“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 [Company A], notwithstanding that:
(a) The appellant does not have and never has had an interest in [Company A].
(b) The appellant does not have and never has had any interest in or entitlement to any profits of [Company A].
(c) There is no proper basis in law for [Company A] 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 [Company A] in:-
(a) assessing it’s profit without regard to any tax liability, and
(b) failing to have regard to it’s 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 [Company A] 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.”
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”.
Why?
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.
I was taken to the decision in Waites & Lawson [2011] FMCAfam 42, where Riethmuller FM commented on another SSAT decision wherein 50 percent of the net profit of a company after tax was attributed to an appellant. He said, at paragraph 33: “This method has serious difficulties. First it ignores the losses entirely. Unless the figures are not representative of the financial position of the company, losses must either deplete the working capital of the business, or be replaced by later profits. The only other explanation is that there are other aspects of the business that need to be considered, however nothing is set out in the decision”. The result was a finding that the Tribunal failed to have regard to relevant facts or to provide an explanation of the decision.
I agree.
Opposed to this, 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.
As to the Tribunal’s administrative decision-making, then I refer back to s.103X(3)(b) and the requirements on the Tribunal as set out in the Act. The section sets out exactly what is required of the Tribunal, that it:
“(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.”
There is an error of law established.
GROUND 5 – Health, paragraph 13 of the Notice of Appeal states:
“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.”
Evidence of a Dr H was before the Tribunal stating that the Appellant was unable to work from 3 May to 14 June. The Appellant made a statement that he worked during that time. On behalf of the Appellant the submission is that the Tribunal’s statement is bizarre. The decision, at paragraph 51 reads: “it does not follow that the Tribunal automatically accepts [the Appellant’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”.
I do not view the statement as being bizarre, although it is confusing. I think I know what the Tribunal is stating, but what must be clear is the actual meaning of the Tribunal’s statement in context of the matter litigated. If it means that the Appellant, despite his doctor’s view that he could not work, did work, and that he could work without limitation, then it should say so. I think the real issue, one which should have been addressed, is the nature of the doctor’s evidence. If that had been part of the reasons, then it could be understood what the decision was getting at. This is an error because evidence has not been taken into account or explained as to how it has been taken into account, as required.
GROUND 6 – Costs of contact, ground 14 states:
“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.”
In submission, it was said the Tribunal should have considered costs of contact.
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.
GROUND 7 – Income debt and Capacity – ground 15 states:
“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.”
It was submitted that if the Tribunal apportioned 50 percent of the company profits to the Appellant, then it should have apportioned the same proportion of liabilities – yet there was no inquiry into these matters.
The decision is tainted by the view of the Appellant’s relationship and lack of reference to evidence.
The question of law arises and error has occurred.
GROUND 8 – Natural Justice, ground 16 states:
“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.”
This ground returns to the connection between the Appellant and Ms W as adopted by the Tribunal, as well as reliance of the CSA’s findings.
Despite the decision stating that the Appellant did not ask Ms W to give evidence, this is not an onus of proof situation – it is an inquiry by the Tribunal. It is not even a reverse onus, as put in submission. 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.
GROUND 9 – Respondent’s Financial grounds 17, 18 and 19. state:
“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, [X] and [Y].”
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.
Later she said she was breaking even.
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.
GROUND 10 – Hardship ground 20 states:
“20. The Tribunal made an order which it acknowledged would cause the Appellant hardship, and which was in the circumstances unjust and unfounded.”
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.
GROUND 11 – Unsustainable.
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.
Although asked, I will not decide the issue or make the order sought that the child support be based on income stated in taxation returns. Despite its heavy workload and despite this being a particularly difficult set of circumstances, the Tribunal is well placed to consider an administrative decision of this type. I will remit the matter back.
I certify that the preceding eighty-five (85) paragraphs are a true copy of the reasons for judgment of Coates FM
Date: 9 March 2012
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