Dawson and Dawson (SSAT Appeal) - [2010] FMCAfam 221

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DAWSON & DAWSON (SSAT APPEAL)

[2010] FMCAfam 221

CHILD SUPPORT – Appeal from decision of SSAT – whether error of law in considering just and equitable requirement.

Child Support (Assessment) Act 1989

Tyagi & Meares (SSAT Appeal) [2008] 39 FAMLR604

Applicant:

MS DAWSON

Respondent:

MR DAWSON

File Number:

BRC 4536 of 2009

Judgment of:

Slack FM

Hearing date:

9 February 2010

Date of Last Submission:

9 February 2010

Delivered at:

Brisbane

Delivered on:

1 April 2010

REPRESENTATION

The Applicant appeared on her own behalf.

The Respondent appeared on his own behalf.

ORDERS

That the Appeal from the Decision of the Social Security Appeals Tribunal dated 10 June 2009 is allowed.
That it be ordered that the assessment of child support for the child J payable by the Respondent to the Applicant for the relevant child support periods be as follows:
(a)for the period 26 February 2008 until 30 June 2009 the sum of $70 per week;
(b)for the period of 1 July 2009 until 30 June 2010 the sum of $95.56 per week;
(c)for the period of 1 July 2010 until 30 June 2011 the sum of $91.48 per week.
That it is intended by these orders that there be no payment of child support for the child L from the Applicant to the Respondent and if it is required the Child Support Register should record the assessment as nil.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRC 4536 of 2009

MS DAWSON

Applicant

And

MR DAWSON

Respondent

REASONS FOR JUDGMENT

This is an appeal from a decision of the Social Security Appeals Tribunal (hereafter “the SSAT”) dated 10 June 2009.
The applicant, representing herself, sets out two grounds of appeal, namely:
1. As per Chapter 13 of Family Law Rules 2004, “Mr Dawson has not followed his duty of disclosure fully with regard to financial matters”. He has also not followed his duty of disclosure with regard to his work status and family situation.
2. As per Section 4(d) of the Child Support Act, children should share in the standard of living of both parents, whether or not they are living with both parents.
The applicant relies on her affidavit filed on 3 July 2009 which, for the purposes of these reasons, I have regarded as a submission.
The respondent, representing himself, asks that the application be dismissed.

The decision under appeal

The SSAT set aside a decision under review and decided that:
1.     For the period 26 February 2008 to 30 June 2009, the assessment of child support payable be assessed on the basis of a child support income amount and adjusted taxable income for

Mr Dawson of $36,700.
2.     For the period 1 July 2009 to 30 June 2010, the assessment of child support payable be assessed on the basis of an adjusted taxable income for Mr Dawson of $36,700, with the annual rate of child support payable by Mr Dawson to be increased by an additional amount of $1,342.
3.     For the period 1 July 2010 to 24 April 2011, the assessment of child support payable be assessed on the basis of an adjusted taxable income for Mr Dawson of $36,700, with the annual rate of child support payable by Mr Dawson to be increased by an additional amount of $1,130.
The decision under review was a decision of an objections officer in the Child Support Agency dated 9 February 2009, as follows:
For the period 13 August 2008 to 30 June 2009 the adjusted taxable income for Mr Dawson be set at $30,300.
For the period 1 July 2009 to 30 June 2010 the adjusted taxable income for Mr Dawson be set at $40,000.
For the period 1 July 2010 to 30 June 2011 the adjusted taxable income for Mr Dawson be set at $50,000.

The approach of the SSAT to the application

This was an application for departure from the administrative assessment of child support and the SSAT correctly identified the statutory considerations under Part 6A of the Child Support (Assessment) Act1989 (hereafter the “Assessment Act”).
The SSAT concluded that there were special circumstances in that a formula assessment would not take into account orthodontic expenses.
The applicant does not challenge that finding. Although the respondent challenged that finding before the SSAT, there was no challenge to that finding in this appeal. It seems it was open on the evidence before the SSAT (see paras.19 to 27 of the reasons).
The SSAT was also satisfied (see para.48) that a ground for departure was established on the basis that an assessment based on the taxable income of the respondent would result in an unjust and inequitable determination of the level of financial support to be provided by
Mr Dawson.
I can find no error in the way in which the SSAT approached the consideration in s.98C (b)(i) of the Assessment Act to determine that there were special circumstances that warranted a departure from the administrative assessment.
Having determined that special circumstances did exist, the SSAT then went on to consider whether it would be just and equitable and otherwise proper to make an order (s.98C (1) (b) (ii) of the Assessment Act.
The SSAT reached a conclusion that it was just and equitable and otherwise proper to depart from the administrative assessment. Again the applicant does not quarrel with those findings and although the respondent challenged those findings in the hearing before the SSAT, he does not challenge that finding in this appeal.
As I understand the applicant’s argument in this appeal, it is that the SSAT fell into error in the way in which the SSAT came to its determination having regard to the various factors that need to be considered pursuant to s.117(4) of the Assessment Act.

Relevant findings of the SSAT on the determination that the SSAT ultimately made

The reasons indicate that the SSAT made a number of findings relevant to the consideration of its particular determination that do not appear to be in dispute.
At the time of the hearing before the SSAT the actual care arrangements for the children were that the applicant had the greater and primary care of the child J and the respondent had the greater and primary care of the child L. In fact, L lives with her father and spends little or no time with her mother. It seems to be an accepted fact that during the relevant child support periods J lived with the mother and spent little time with his father.
It also did not appear to be in dispute that during the relevant child support period the father was responsible for the financial support for L.
The SSAT did consider the proper needs of the children as required by s.117(4)(b) of the Assessment Act.
The SSAT seemed to accept the father’s evidence that he and L have total weekly expenses of $407, excluding any contribution of the mortgage (see para.75 of the reasons). The respondent’s claimed expenses for L were $231 per week.
The SSAT also seems to have accepted the mother’s evidence that her weekly expenses for herself and J were $547. There was no further particularisation of the independent expense of the child J. The SSAT accepted that in addition to his other needs, the child J had orthodontic expenses for the 2009/2010 and 2010/2011 taxation year.
The SSAT considered the matters required in s.117(4) (c) and (d). The SSAT accepted that the income from the applicant’s salary for 2009 could be expected to be $22,908 (see para.79 of the reasons). The SSAT found that she would have a net weekly income of $396. The SSAT accepted that she had a shortfall of income over expenses of $151 per week not including the proposed orthodontic expenses (see para.81 of the reasons).
The SSAT then gave consideration to the respondent’s financial circumstances.
The respondent’s evidence to the SSAT was that he had resigned from his employment as at 31 March 2009.
His Statement of Financial Circumstances dated 31 March 2009 indicated that he had income of between $250 and $480 per week.
The SSAT did not accept his evidence about his earnings or his earning capacity.
The SSAT then made a finding on the best evidence available to them that they should assess his income for the purposes of child support assessment as $36,000 per annum (that being the income that he earned during a period when he was operating his business). Whilst the applicant may disagree with such a finding, that finding would appear open having regard to the available evidence.
It is not clear from the reasons, that the SSAT considered the hardship to the applicant of such a decision.
More significantly it is not clear to me that having made those various findings as the SSAT was required to do, that the SSAT considered what determination would be just and equitable as regards the child, the care entitled to child support and the liable parent to make a particular determination based upon those findings.
There is, for example, no indication in the reasons that the SSAT attempted to quantify the amount of support that would be payable by the respondent by virtue of their finding that he should be assessed as having a child support income of $36,000 per annum.
I adopt the comments of FM Riethmuller in Tyagi & Meares (SSAT Appeal) [2008] 39 FAMLR604:
The fact that both parties have a duty to meet their children’s needs does not mean that the duty must be discharged equally. It is to use the common law phrase, “joint and several liability”; if one party has no financial resources, the other must meet the whole of the children’s financial needs. Indeed, in many cases, the difference in income of the parties (often impacted on the need to care for children) means that one parent simply does not have the income to meet half of the children’s financial needs, and thus those needs must be apportioned having regard to the financial capacity of the parents.
The legislation makes it clear that after having reached a conclusion about the factors in s.117(4), the SSAT must then consider what determination would be just and equitable as regards the child, the care entitled to child support and the liable parent. They do not appear to have done so in this case.
The evidence of the respondent was that the expenses for himself and for the child L were $407 per week. The child support formula allowed him a self-support amount of $18,252 ($351 per week) which was greater than his own claimed expenses.
The SSAT did not accept that he only had earnings of $480 per week (or that that was the extent of his earning capacity). Whilst the SSAT considered the earning capacity of the respondent it seems clear from the reasons that the SSAT did not accept his evidence that he only had limited involvement in his wife’s business. In this case it is easy to see how they would reach that conclusion given the SSAT was extremely sceptical about the arrangement that existed between the respondent and his wife. His evidence was that he ceased operation of a business that he had operated for a significant number of years [in the motor vehicle industry] and his wife, who had no prior experience in the industry and was working full-time [in the healthcare industry], would commence the same business and continue in her employment and then conduct the business and her employment with little or no involvement of her husband. The evidence was inherently unbelievable.
The SSAT accepted the expenses as claimed by the respondent. They also found that he had earning capacity of approximately $36,000 per annum. On that analysis, there is surplus income over his expenses of $284 per week. The SSAT did not go on to consider what contribution was appropriate to the mortgage but it seems that the property is owned by his partner and the business which, in part operated from the respondent’s home, was not paying any rent. It is also noted that the respondent did not claim any contribution to the mortgage in his Statement of Financial Circumstances. Hence it is not clear that the mortgage expense would in these circumstances be a commitment necessary to enable him to support himself.
There was no analysis in the reasons about how much of that he should be called upon to contribute to the support of his son. The SSAT arrived at a child support income amount and seemed to rely upon the formula to provide a just and equitable outcome. The SSAT seemed to consider that that would result in the payment of approximately $3,627 per year by the respondent and added to that should be the cost of one half of the orthodontic expenses (see para.86 of the reasons). The use of the formula though, in fact, resulted in an assessment of child support, for example, for the period 27 July 2009 until 31 December 2009 of $41.80 per week. The resultant application of the formula is not even what the SSAT intended as being a just and equitable outcome.
The issue is further exacerbated by the fact that the SSAT had already reached a conclusion that there was a shortfall of $155 per week between the expenses of the applicant and her income. The reasons do not articulate that the SSAT did consider the provisions of s.117(4)(g) beyond accepting that the applicant had a shortfall of $155 per week. The applicant had income of $396. If her own expenses were half of the total she had commitments necessary to support herself of $273.50. She was therefore contributing $122.50 (her remaining income) to the support of J. The assessment of the expenses for the child did not include the orthodontic expenses.
This is a case where the SSAT considered the application of the formula ought to be departed from because of the high needs of the child.
It is also a case where the SSAT found that there was a shortfall in the applicant’s ability to provide for the support of herself and her son to the extent of $155 per week.
In my consideration this is a matter where there ought to have been careful consideration of the capacity of the respondent to contribute to the needs of his son, particularly in circumstances where the SSAT held serious reservations about the evidence that he gave about his earning capacity and his financial circumstances. To simply rely upon the formula was not, in this matter, the correct approach and indeed, it seems that reliance upon the formula resulted in an outcome that was not intended by the SSAT itself. According to the assessment as issued the weekly child support payable for the period 27 July 2009 to

31 December 2009.
I do consider that the SSAT fell into error in the approach that was adopted to the considerations in s.117(4) of the Assessment Act.

I consider that Ground 2 of the appeal has merit.
Having allowed the appeal, I need to consider whether I can or should re-exercise the discretion or whether I ought to remit the matter for further hearing before the SSAT.
This is a case in which I consider I can re-exercise the discretion.
There is no real dispute about the care arrangements for the children during the relevant period. The respondent has provided greater than primary care for the child L and the applicant has provided greater than primary care for the child J.
I accept and adopt the findings made by the SSAT with respect to the financial circumstances of the applicant.
The manner in which the SSAT approached the financial circumstances of the respondent and the conclusions reached were, in my consideration, open on the evidence.
Indeed the conclusion that the SSAT did reach (in para.86 of the reasons) did result, in my consideration, in a just and equitable determination of the child support to be payable by the respondent to the needs of the child J.
That assessment would result in the respondent paying $3,627 per year plus an additional sum for the orthodontic expenses when those expenses become payable. In all, that would be represented by a payment by the respondent for the child support of the child J as follows:
a)for the period 26 February 2008 until 30 June 2009 the sum of $70 per week;
b)for the period of 1 July 2009 until 30 June 2010 the sum of $95.56 per week;
c)for the period of 1 July 2010 until 30 June 2011 the sum of $91.48 per week.
To be clear, there should not be any payment by the applicant to the respondent for the child support of the child L. There would be a corresponding assessment, if that is required, for the relevant period that the amount payable by the applicant to the respondent for the support of the child L is nil.
The reasons that I have reached such a conclusion are as follows.
Such an outcome would appear to be consistent with the findings of the SSAT and I consider that those findings were open on the evidence. Indeed as I read the reasons of the SSAT, that was the outcome that was intended.
Although that would represent an outcome whereby the respondent will meet the greater proportion of the needs of the children, it accords with the findings of the relative circumstances of the parties and both parties are contributing to the best of their ability.
I have considered whether the resultant change in assessment will result in hardship to either party. The change in assessment may result in the creation of a liability of the respondent but until the decision of the SSAT the assessment had resulted in an overpayment to the applicant of $1,800. The increase for the child support year 2009/2010 will result in an increase of approximately $30 per week. The consequent debt that will arise would not, in my consideration, result in hardship to the respondent.
The consequences of that outcome are that the respondent would be meeting all of the financial costs of the child L and a contribution of the ordered sum towards the child J.

I certify that the preceding fifty three (53) paragraphs are a true copy of the reasons for judgment of Slack FM

Associate: Karen Smith

Date: 1 April 2010