Dja22 v Child Support Registrar
[2023] FedCFamC2G 863
•16 June 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
DJA22 v Child Support Registrar [2023] FedCFamC2G 863
File number(s): SYG 1483 of 2022 Judgment of: JUDGE STREET Date of judgment: 16 June 2023 Catchwords: CHILD SUPPORT – no question of law – no jurisdiction – evidence to support findings of fact – appeal dismissed with fixed costs Legislation: Administrative Appeals Tribunal Act 1975 (Cth)
Child Support (Assessment) Act 1989 (Cth)
Evidence Act 1995 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited: Rawson Finances Pty Ltd v Commissioner of Taxation [2013] FCAFC 26
Hall & Hall (2016) 257 CLR 490
Division: Division 2 Family Law Number of paragraphs: 35 Date of hearing: 16 June 2023 Place: Sydney Counsel for the Applicant: Mr W Tregilgas Solicitors for the Applicant: Conditsis Lawyers Counsel for the First Respondent: Mr K Eskerie Solicitors for the First Respondent: Sparke Helmore Second Respondent: Appeared in person ORDERS
SYG 1483 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: DJA22
Applicant
AND: CHILD SUPPORT REGISTRAR
First Respondent
DJB22
Second Respondent
ORDER MADE BY:
JUDGE STREET
DATE OF ORDER:
16 JUNE 2023
THE COURT ORDERS THAT:
1.The amended notice of appeal is dismissed.
2.The applicant pay the first respondent’s costs fixed in the amount of $8,500 within 60 days of today’s date. Interest will run on the set amount if not paid within the 60‑day period in accordance with the Rules from today’s date.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
Section 110X(4)(h) of the Child Support (Registration and Collection) Act 1988 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in child support review proceedings.
REASONS FOR JUDGMENT
JUDGE STREET
These are child support proceedings that were commenced on 7 October 2022 and were fixed for hearing today.
The Court admitted into evidence two affidavits by the applicant and one by the third respondent, all subject to relevance, in accordance with s57 of the Evidence Act 1995 (Cth). That ruling preserved to the Court the issue of relevance in relation to the material that was not before the Tribunal and which was objected to by the first respondent. This is not a case where there has been raised any denial of procedural fairness facts of a kind that might permit material that was not before the Tribunal to be admitted into evidence. The Court now rejects the content of the affidavits and annexures that were objected to by the first respondent and admitted subject to relevance. The Court finds that the rejected material is not relevant and could not rationally affect the assessment of the probability of a fact in issue in the proceedings within the meaning of s55 of the Evidence Act 1995 (Cth). The Court has before it the material that was before the Tribunal which was marked exhibit A, being pages 1 to 905. Insofar as the affidavits, or their annexures, contained content that was not in the material marked exhibit A which was all before the tribunal, the balance is objected to by the first respondent and is rejected. The court also admitted into evidence Exhibit B being pages A1 to A216 and Exhibit C being pages B1 to B79. The court also admitted into evidence the transcript of the proceedings as Exhibit D.
The jurisdiction of this court depends upon there being a question of law as a threshold requirement, under s44AAA of the Administrative Appeals Tribunal Act 1975 (Cth). The questions sought to be raised in the amended initiating application are as follows:
(1)That the Tribunal erred in finding as a fact that the “Father” had an estimated income of $184,288 per year net or $263,269 gross (paragraphs 20, 22, 23 and 35 thereof) as that fact and that inference was not supported by the evidence before the tribunal.
(2)That the Tribunal erred in finding as a fact that the “Father” would not have to repay the directors loans (paragraph 22 thereof) as that fact and that inference was not supported by the evidence before the Tribunal.
(3)That the Tribunal erred in finding as a fact that the “Father” had by these shareholder’s loans a “financial resource” available to him (paragraph 22 thereof) as that fact and that inference was not supported by the evidence before the Tribunal.
(4)That the Tribunal erred in finding as a fact that the “Father” had an adjusted taxable income of $263,270 and that this may be an underestimate of the Father’s true financial position (paragraph 35 thereof) as that fact and that inference was not supported by the evidence before the Tribunal.
(5)That the Tribunal erred in the finding as a fact that the Father’s income and financial resources would not place the Father in a position of “undue hardship” (paragraph 35 thereof) as that finding and that inference was not supported by the evidence before the Tribunal.
(6)That the Tribunal erred in finding as a fact:
(a)That the variation of the assessment should be from 1 January 2021; and
(b)That the father could meet this liability and these arrears from his income and financial resources
(Paragraph 37 thereof)
As these facts and those inferences were not supported by the evidence before the Tribunal.
(7)That the Tribunal erred in finding as a fact that:
(a)The Father’s income and financial resources is not accurately reflected by his adjusted taxable income into the foreseeable future (paragraphs 39 and 41 thereof)
(b)That the administrative assessment is unfair based on the Father’s income and financial resources and that this result in an unjust and inequitable level of child support (paragraphs 40 and 41 thereof).
As these facts and those inferences were not supported by the evidence before the Tribunal.
The amended application also then sought to raise the following grounds alleged to be referable to the above 1-7 questions:
(1)That the assessment of the Father’s income and financial resources both estimated and adjusted taxable income was wrong.
(2)That these director’s loans of the entity to the Father would have to be repaid by the Father to the entity.
(3)That these director’s loans were not a financial resource of the Father.
(4)That the assessment would result in the Father suffering undue financial hardship.
(5)That the Tribunal should not have made a retrospective order.
(6)That the Father could not meet this assessment and these arrears from his income and financial resources.
On the face of the respective questions, they are framed in a way that seek to challenge a finding of fact, in contending the inference is not supported by the evidence before the Tribunal. The alleged questions 1 to 7 are not framed as questions and the grounds 1 to 6 are propositions not ground of error. Mr Tregilgas, on behalf of the applicant, contended that those questions should be read as being no evidence. The questions do not say no evidence and, on their face, do not disclose proper questions of law engaging this court’s jurisdiction. The court is alive to what was said in relation to question of law in Rawson Finances Pty Ltd v Commissioner of Taxation [2013] FCAFC 26, relevantly, at [83] – [88]. Mr Tregilgas contended that the respective questions should be read as referring to a proposition of no evidence.
It is apparent, however, from the Tribunal’s reasons, as the court will identify, that there was clearly evidence to support the findings referred to in questions 1 to 7 made by the Tribunal in relation to which the findings were open, based on that evidence, to which the court will shorty refer. For the reasons that follow the propositions in grounds 1 to 6 are also flawed and not made out.
The court does not accept that the amended notice of appeal should be read in a way that changes the appellate challenge in the formula to each question that uses the language “finding as a fact” and language that inference, finding or fact was not supported by the evidence before the Tribunal as being read as if a reformulated ground that there was no evidence to support the fact before the tribunal. Nor, indeed, even if read in such a fashion, would such a contention be correct or make out any proper question of law or error, as is apparent from the reasons of the tribunal, to which the court will shortly refer. In these circumstances, where there is no proper question of law at a jurisdictional level, the amended notice of appeal fails to engage this court’s jurisdiction and should, for that reason alone, be dismissed.
The court now turns to the decision of the Tribunal and the respective questions identified in the paragraphs of the notice of appeal being 1 to 7 above. The Tribunal, in its reasons, identified the background to the review, in which on 24 August 2022, the Tribunal set aside the decision under review and, in substation, decided that for the period 1 January 2021 to 30 November 2024, the applicant’s adjusted taxable income is varied to $263,270 per annum. In the background, the Tribunal identified the two children in respect of which there had been an assessment, in circumstances where the mother has the greater level of parental responsibility, in terms of time, with the children.
The Tribunal identified the departure application lodged by the mother on 16 June 2021 and the lodgement of objections on 23 September 2021 and that, on 13 December 2021, the objections were partly allowed and identifying the determination adjusting the father’s taxable income being varied to $223,712, for the period 16 June 2021 to 15 June 2024. The Tribunal identified the seeking of a review application on 13 January 2022, by the applicant. A hearing took place on 24 August 2022.
The Tribunal identified the issues correctly, in relation to s98C of Child Support (Assessment) Act 1989 (Cth) (“the Act”) and proceeded to address the relevant considerations. The Tribunal first turned to the grounds for departure under s117(2)(c)(ia), and identified the second respondent’s position and then turned to the applicant’s position, in which he contended his income and financial resources were based on unreasonable and unfair assumptions and no allowance was made for his business tax liability. Reference was made by the Tribunal to the applicant’s statement that, in order to meet his expenses, he must borrow money from the business, which is why there is a substantial shareholder loan account. That is evidence from the applicant identifying borrowing from his business, which is a concept that falls within the breadth of meaning of financial resource in Hall & Hall (2016) 257 CLR 490 at [53 to 55]. That, alone, suffices to rebut the proposition sought to be advanced that this was a no evidence case.
The tribunal, in paragraph 14, relevantly identified that the applicant is the sole director and shareholder of his business and referred to by becoming the sole owner thereof about seven years ago. The tribunal referred to the financial statements for the business and the payment of gross wages of approximately $1,000 a week to the applicant. There was a reference to the applicant also receiving franked dividends and franking credits and reference was made to his payslips.
The Tribunal then set out, from the material in exhibit A, for the financial year 2019 through to 2022, with a draft, the gross income, the gross expenses, profit/loss and also identified shareholder loans. Those shareholder loans were supported by other evidentiary material it is apparent, in exhibit A, that there had been some steps taken to start reducing some of the shareholder loans, by the applicant. The Tribunal identified the change in the business’s gross income being explored with the applicant and reference to the evidence as to alleged modest business profits and there being hard times, whereas the applicant had good business contacts in 2019.
The Tribunal, at [18], identified that the father did not dispute that the shareholder loans reflected the funds that were available to him, for his personal use, during the relevant periods. That confession is further evidence upon which the adverse finding in respect of financial resource was open to the tribunal. The Tribunal referred to the applicant’s contention that he must repay the loans and that he has obtained some tax benefit in relation to the same and contending he needed to reimburse his business, but given his low income, it is unlikely that he will be able to do so. Reference was made to consideration about increasing his wage and that he had decided that the shareholder loans would be a good thing.
The shareholder loans have all been taken out, since the applicant became the owner of the business, as identified by the Tribunal. The Tribunal referred to the taxable income not necessarily being an accurate reflection of the earning capacity and financial resources of a person, in relation to a child support assessment. The Tribunal correctly identified that, for self‑employed people, consideration has to be given to their deriving additional benefits from the business, in addition to wages. The tribunal also correctly identify that, in relation to the business, the expenses and deductions which may be legitimate for tax purposes may not be considered to take precedence over child support obligations.
The Tribunal referred, in paragraph 20, to the applicant’s statement of financial circumstances and his gross salary of $1,000 a week. The Tribunal identified the other assets and liabilities and identified the weekly expenses and household expenses exceeding the applicant’s gross salary and identifying an amount of $645 per week relating to care of his children. The Tribunal, from this information, identified that the father would require a net income of $184,288, reflecting a gross income of $263,269, to meet his declared expenses. No criticism of the maths in that regard has been identified.
It was a logical and open finding, in respect of which there was evidence, contrary to the contention raised in question 1, to support the adverse finding made by the tribunal in respect of the applicant’s income and financial resources. The Tribunal correctly identified that the actual benefits the father receives from the business are greater than his declared expenses. The Tribunal identified, from the evidence, that it is apparent that the applicant’s costs are indeed met from regular transfers from the business to his personal accounts, including a reference to Mastercard. That is further evidence that supports the findings made by the tribunal in respect of the alleged questions on which it is contended there was no evidence. Reference is also made to the increasing of the mortgage by the applicant and borrowing funds from his brother.
In paragraph 22, the Tribunal critically found that the business financial statements and payslips indicate the income and financial resources available to the applicant. The Tribunal, accordingly, found the applicant’s adjusted taxable income, and his assertions regarding current income, as outlined in the payslips in evidence, do not reflect his actual income and financial resources. That was a finding open, given the Tribunal’s reference to the declared expenses and the requirement of a net income of $184,288 or a gross income of $263,269, from the evidence to which the Tribunal has referred.
The Tribunal then referred to the shareholders loans and the contended evidence of the applicant that he had to repay the same. It is apparent that he had been making repayments. The Tribunal said that that is strictly not correct, both in logic and reason. That proposition by the Tribunal was patently open. In circumstances where the applicant is the owner of the corporate entity, it is patent that the applicant can withdraw funds and create loans as he sees fit or, indeed not repay the same. Indeed, the applicant identified it was unlikely that he would be able to pay the same. The tax nature on the business records of the company did not prevent the identification of the ability of the applicant to drawdown shareholder loans against his own business as being a financial resource, falling within the scope of same in Hall & Hall. The proposition that the applicant had to pay the same was not strictly correct and such a finding was neither central to the reasoning of the tribunal, nor was it one that was in any way in error.
The Tribunal also identified correctly that it was possible the business may forgive the loans. Given that the business is, in essence, run by the applicant, that proposition was logical and rational and, to the extent relevant, open on the material that was before the tribunal, albeit not determinative of the real question that the tribunal had identified, which was that the declared expenses required an income that reflected the applicant using shareholder loans to meet those expenses in a way which clearly identifies the same as a financial resource. The tribunal correctly reasoned that the shareholders loan represents a financial resource available to the applicant for the support of his children. That was a finding made on the evidence that the Tribunal identified. The contention that there was no evidence has no substance.
The Tribunal continued to identify the applicant’s contention in relation to his income as simply being his taxable income and identified the impact of the applicant’s actual income and financial resource in relation to the assessments that were to be made in respect of contribution towards the cost of his children. The tribunal found the father’s income and financial resources are not properly reflected in a child support assessment and found that there were special circumstances, such that the assessment would result in an adjust and inequitable determination of the child support payable. The Tribunal, accordingly, found that the ground provided in s117(2)(c)(ia) was established.
The Tribunal then turned to the issue of whether it was just and equitable and turned to considering what would be fair to the parents and referred to the mother’s adjusted taxable income and referred to the mother’s earning capacity, including the three tests set out in s117(7B) and found that s117(7B)(c) was not established and that the second respondent does not have an unexercised earning capacity, for the purpose of the child support assessment. The Tribunal was not persuaded that the older child’s part‑time employment income results in an unjust or inequitable determination of child support payable by the father. The Tribunal identified the children being at a public school. The Tribunal concluded that the applicant’s income and financial resources are most accurately reflected by an adjusted taxable income of $263,270. The Tribunal was satisfied that varying the applicant’s adjusted taxable income on this basis reflects the most reasonable conclusion to be drawn on the available evidence regarding his income and financial resources.
The Tribunal had, in its reasons earlier, identified the evidence concerning those resources and it was not a finding made without evidence or on which there was no available evidence to support the finding. The Tribunal, in fact, identified that this may understate the applicant’s true financial position. The Tribunal identified the consequence of the proposed decision and the arrears that would be created and found, in view of the findings regarding the father’s income and financial resources. The Tribunal was not persuaded that this would put him in a position of undue hardship and the Tribunal identified that it would otherwise result in a disproportionate amount of the children’s costs being borne by the mother.
The Tribunal referred to the applicant’s contentions that he simply could not afford his liability increased and backdated but had conceded he thought that there was a private arrangement, that was supposed to start in about January 2021. It was in these circumstances the Tribunal was satisfied it was appropriate to vary the father’s income and financial resources on 1 January 2021, so five months before the mother has lodged the change in assessment application. The Tribunal identified the amount of arrears that would be created and the Tribunal was satisfied the applicant can meet this liability and his ongoing necessary expenses. The Tribunal also found these funds are necessary for the second respondent to adequately provide for the children.
The Tribunal found that the applicant’s income and financial resources will not be accurately reflected by this adjusted taxable income into the foreseeable future. Taking into account the age of the children, it was satisfied it is appropriate to depart from the administrative assessment on this basis until 30 November 2024. The Tribunal identified that it was satisfied the assessment under review was unfair, given the father’s income and financial resources and resulted in an unjust and unnatural level of child support, given the circumstances of each parent. It was in these circumstances the Tribunal found, for all of the reasons identified by the Tribunal, it is just and equitable to depart from the administrative assessment.
The Tribunal then turned to the last criteria, as to whether it was otherwise proper and took into account the burden that would otherwise be identified as being placed on the community, rather than the parents, and found that the determination was proper and, accordingly, made the decision referred to above.
Mr Tregilgas, on behalf of the applicant, took the court through the Tribunal’s decision and referred to certain material in exhibit A, as well as the content that was marked exhibit B and the evidence given by the applicant in relation to the shareholder loans, at 16, 17, 24, 35, 44 and 54, as well as on the transcript marked exhibit D, as well as the evidence of the applicant at page 30 of the transcript. The applicant’s evidence at page 30 is evidence also that supports the ability of the company to forgive the loans. It, of itself, would be evidence to support such a proposition, even if it were otherwise necessary. The court is of the view that such a proposition flows rationally and logically, as a matter of inference, from the control over the company that the applicant had admitted. In any event, the evidence at page 30 further supports there being evidence in respect of the ability to forgive the loans from the second respondent. The observation made by the tribunal does not remove the efficacy of the evidence given as to the ability to extinguish loans by the second respondent.
Mr Tregilgas, in substance, contended that the court should find there was no evidence to support the loans being treated as a financial resource. The reasoning at the core of the submission was that they were loans of the company that the company would have to pay and, accordingly, should not be treated as a financial resource. As was identified in Hall & Hall, the question of whether something is a financial resource will have to turn on the evidence in a particular case. In this particular case, it is apparent the shareholder loans have been treated in a way, by the applicant, to assist in meeting his expenses. In those circumstances, the adverse finding by the tribunal was clearly open on the evidence and this cannot be said to be a no evidence case.
Mr Tregilgas’s submissions, to the effect that because there was a loan and the loan had to be repaid, in essence, assumed that, in those circumstances, it could not be characterised other than as something that was not a financial resource. That assumption is without force. The company’s taxation treatment of loans is entirely different from the question to be determined by the Tribunal, as to what the applicant’s financial resources were. It was open to the Tribunal to take into account the expenses that he was actually meeting, in determining that, effectively, those shareholder loans reflected a financial resource available to the applicant and that the business, in those circumstances, was one that permitted the applicant to use those loans to meet his expenses and, accordingly, the adverse finding was supported by the evidence. Mr Tregilgas contended that the questions should all be read as there being no evidence and that that was how he intended the questions to be framed. For the reasons I have already given, the court does not accept that the questions should be so read. But, even if they were, for the reasons the court has already given, the proposition of those questions reflecting a no evidence case, in respect of each of the questions, is without substance.
The Court accepts the first respondent’s submissions, in relation to the first and fourth questions, that the Tribunal arrived at the adjusted taxable income on the basis of the inference of the applicant being able to meet his declared weekly expenses, which reflected the income of $184,288, to which the court has earlier referred. The respondent correctly identified that the Tribunal used the expense figures taken from that information provided by the applicant in the reasoning adopted and that the evidence identified in the payslips, the financial profit and loss and balance sheets of the engineering business, from 2019 to 2022, and the statement of financial circumstances of the applicant, and, in particular, his weekly personal expenses and household expenses, were evidence that were available for the tribunal to support the findings and the inferences drawn by the tribunal and that this is not a case of no evidence, as contended in relation to the first and fourth questions of law and the first ground of the appeal. No such error, as I mentioned, in the first ground, accordingly, is made out.
In relation to the second question of law, on the second ground, the Court accepts the respondent’s submissions that there was, in fact, no finding that the applicant would not have to repay the loans, but, rather, an observation as to it not being strictly correct that he had to do so. That proposition was correct and open, as already identified. The Court accepts the respondent’s submissions that the reasoning in relation to the ability of the business to forgive the loans was clearly open and I did not require specific evidence. In any event, for the reasons the court has given, there was evidence from the second respondent, at page 30 of the transcript, to support the same. The reasoning of the Tribunal in relation to the ability to forgive the loans was not, in any event, determinative of the tribunal’s reasons in respect of the adjusted taxable income, but, in any event, reflects no error, as alleged, and, accordingly, the second ground fails to make out any relevant error.
In relation to the third question of law and the third ground of appeal, the Court accepts the respondent’s submissions that Hall & Hall, in fact, support, in the present case, a finding that the shareholders loans do reflect there was a financial resource available to the applicant, in the circumstances of this case, that had been available to the applicant during the relevant periods. There was, clearly, evidence of those shareholder loans, as was identified by Mr Tregilgas in his opening. Accordingly, this is not a case where there could be said to be no evidence and no errors alleged in the third ground is made out.
In relation to the fifth question and fourth ground, the Court clearly took into account the applicant’s contentions in relation to alleged undue hardship, but, in light of its findings in relation to the income and financial resources, it was open to the Court not to accept the applicant’s assertion of financial hardship. The adverse finding was logical and rational and open to the Court in rejecting the applicant’s alleged undue hardship. Therefore, no error as alleged in ground 4 is made out.
In relation to the sixth question of law and the fifth ground, challenge was made to the finding that the applicant could meet the liability from the amended assessment and the arrears. Given the findings by the Tribunal in relation to the financial resources, that adverse finding was clearly open and there was evidence to support the same, as identified above. The Tribunal provided cogent reasoning in relation to the adjusted taxable income so varied by the Tribunal and no error as alleged in ground 5 is made out, nor is there any error in the Tribunal varying the period, as such falls within the scope of construction of s98S in relation to an application made under s98B. Section 98S(3) expressly permits the decision maker to make a different provision in relation to different child support periods and in relation to different parts of a child support period and s98S(4) only requires the court’s leave for a determination to be made in respect of a day in a child support period which is more than 18 months earlier than the departure application day. Accordingly, it was plainly within the Tribunal’s power to vary the applicant’s adjusted taxable income from a date prior to departure application, as identified in the present case, with retrospective effect. It was also open to the tribunal to find the applicant could meet the liability from his necessary expenses, in light of his evidence as to his financial resources and income. This is not a case where there was no evidence and no error as alleged in the fifth ground is made out.
In relation to the seventh question of law and sixth ground, for the reasons the tribunal has already identified, it was open, as a matter of fact, for the tribunal to find that the applicant’s income and financial resources were not accurately reflected in the earlier assessment and that the administrative assessment was unfair. The assertion of the adverse finding being unsupported by evidence is, for the above reasons, without substance and no error as alleged in ground 6 is made out.
Accordingly, the Court finds that even if its jurisdiction had been engaged, none of the grounds contended for in the amended notice of appeal are made out. In these circumstances, the Court makes the above orders.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Street. Associate:
Dated: 25 September 2023
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