Farrens & Farrens
[2010] FMCAfam 325
•18 June 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FARRENS & FARRENS (SSAT APPEAL) | [2010] FMCAfam 325 |
| CHILD SUPPORT – Appeal from decision of SSAT – findings of fact and whether error of law established. |
| Child Support (Assessment) Act 1989 Child Support (Registration and Collection) Act 1988 |
| Tasman & Tisdall [2008] FMCAfam 126 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 Gyselman & Gyselman [1992] FLC92-279 Mee & Ferguson [1986] FLC91-716 |
| Applicant: | MR FARRENS |
| Respondent: | MS FARRENS |
| File Number: | BRC 1679 of 2009 |
| Judgment of: | Slack FM |
| Hearing date: | 11 March 2010 |
| Date of Last Submission: | 11 March 2010 |
| Delivered at: | Brisbane |
| Delivered on: | 18 June 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Laws |
| Solicitors for the Applicant: | Reardon & Associates Lawyers |
| Counsel for the Respondent: | Mr Galloway |
| Solicitors for the Respondent: | Wellners Lawyers |
ORDERS
That the Appeal from the Decision of the Social Security Appeals Tribunal dated 28 September 2009 be allowed in part.
That the following orders be in substitution for the determination of the Social Security Appeals Tribunal.
That from 20 December 2008 to 30 May 2009 the annual rate of child support payable by the applicant is to be $13,468.
That from 1 June 2009 to 31 December 2009 the annual rate of child support payable by the applicant is to be $14,248.
IT IS NOTED that publication of this judgment under the pseudonym Farrens & Farrens (SSAT Appeal) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 1679 of 2009
| MR FARRENS |
Applicant
And
| MS FARRENS |
Respondent
REASONS FOR JUDGMENT
This is an appeal from the decision of the Social Security Appeals Tribunal (hereafter “the SSAT”) dated 28 September 2009.
The grounds of appeal are:
1. The Tribunal, by:
a. disallowing the payee/appellant’s claims for the following weekly expenditures:
(i) $47 for private medical insurance (without which the disabled payees medical costs would be enormous);
(ii) $12 for internet expenses (as the means by which the disabled payee met and continues to meet his bills);
(iii) $26 house and contents insurance;
(iv) $14 for part of the payees total claimed incurred out-of-pocket costs of medical treatment; and
b. by failing to address itself to evidence before the SSAT of the respondent’s drawings in the 2008-2009 financial year from the business and in so doing has failed to address evidence in relation to the level of income of the respondent in the 2008-2009 financial year has erred in law in:
(i) failing to take account of relevant considerations; and/or
(ii) failing to place any, or proper weight upon relevant considerations; and/or
(iii) taking account of irrelevant considerations; and/or
(iv) coming to a determination which no reasonable decision maker in the same circumstances would have reached upon the same facts; and/or
(v) failing to state or give any, or any adequate, reasons for its decisions to disallow particular expenses where corresponding liabilities were allowed;
and which error or errors caused the Tribunal to misdirect itself in law as to the allowances and expenses properly made in favour of the payee/appellant in consequence of which the Tribunal formed an erroneous view of the payee/appellant’s capacity to meet and pay child support liabilities and this his proper legal liability for child support from 20 December 2008 to 31 May 2009 and from 1 June 2009 to 31 December 2009.
The respondent seeks an order that the appeal be dismissed.
The decision of the SSAT
The SSAT set aside the decision under review and substituted a new decision as follows:
a)From 1 June 2008 to 19 August 2008 the annual rate of child support payable by Mr Farrens is to be nil.
b)From 20 August 2008 to 26 November 2008 the annual rate of child support payable by Mr Farrens is to be $1,560.
c)From 27 November 2008 to 19 December 2008 the annual rate of child support payable by Mr Farrens is to be $6,760.
d)From 20 December 2008 to 31 May 2009 the annual rate of child support payable by Mr Farrens is to be $16,640.
e)From 1 June 2009 to 31 December 2009 the annual rate of child support payable by Mr Farrens is to be $17,420.
f)From 1 January 2010 to 31 December 2010 the adjusted taxable income for Mr Farrens is set at $85,000.
As I understand the appeal, the applicant only appeals the determination of the SSAT made for the child support periods between 20 December 2008 to 31 May 2009 and from 1 June 2009 to
31 December 2009.
Relevant background facts
The applicant and respondent separated on 8 March 2008. They lived under the same roof until the respondent and the three children of the marriage vacated the family home on 19 August 2008.
The applicant is the parent liable to pay child support to the respondent for the children R born [in] 1994, E born [in] 1996 and A born [in] 1998.
Findings of the SSAT
The SSAT concluded (para.36 of the reasons) that a ground for departure under s.117(2)(b)(1a) of the Child Support (Assessment) Act 1989 (hereafter “the Act”) does exist and (para.56 of the Reasons) that a ground for departure under s.117(2)(c)(ii) does exist.
The applicant in this appeal does not appear to challenge those findings by the SSAT.
Indeed as part of his appeal, the applicant submits that it was proper for the SSAT to reach a finding that a ground for departure existed based upon the income and financial resources of the respondent.
Having determined that special circumstances existed for a ground of departure, the SSAT then determined it was just and equitable to depart from the administrative assessment (para.88 of the Reasons) and otherwise proper (para.90 of the Reasons).
After making the determination that it was appropriate to depart from the administrative assessment, the SSAT went on to make the departure decision.
Relevantly in relation to that decision, (see para.65 of the Reasons) the SSAT found:
Using the information supplied by Mr Farrens in his financial statements provided to the Tribunal in April and July 2009 the Tribunal finds Mr Farrens has the following expenses of self-support:
Food - $150.
Utilities - $83.
Motor vehicle - $125.
Car parking - $40.
Medical - $48.
Chemist - $44.
Clothes/shoes - $15.
Incidentals - $20.
Total - $525.
The SSAT made allowances for tax and compulsory superannuation and they were satisfied that the interest payments both for credit cards and the line of credit were a necessary commitment for Mr Farrens’ self support.
After reaching a conclusion that the applicant had a net income of about $1,190 per week the SSAT subsequently reached a conclusion that since 20 December 2008 Mr Farrens had $335 per week available for child support (see para.86 of the Reasons).
As a consequence the SSAT set the rate of child support at $320 per week for the period 20 December 2008 to 31 May 2009. The available resources of both parents were taken into consideration and the proper needs of the children are met. Likewise if the SSAT sets the rate of child support at $335 per week from 1 June 2009 then Mr Farrens is, once again, contributing to the costs of maintaining the children at the upper limit of his capacity to pay. However the Tribunal is of the view that the needs of the children require him to do so and Mr Farrens has money in a term deposit that he can access if unforeseen contingencies should arise.
As I understand the appeal, it is against those findings of the SSAT that the applicant says that the SSAT fell into error in Ground 1 of the appeal.
The applicant, by his statement of financial circumstances dated 4 July 2009, alleged that his personal expenditure was as follows:
a)Total income tax – $298.
b)Superannuation – $85.
c)Maintenance payments child support – $310.
d)Visa/HSBC – $36.
e)Visa/CBA – $9.
f)Visa Gold/CBA – $30.
g)Health insurance premiums – $47.
h)Food – $105.
i)Household supplies – $20.
j)House repairs – $10.
k)Electricity – $9.
l)Telephone – $13.
m)Council rates and levies – $17.
n)Motor vehicle expenses/petrol – $26.
o)Motor vehicle maintenance – $34.
p)Motor vehicle registration/insurance – $26.
q)Fares/car parking – $40.
r)Clothing and shoes – $13.
s)Medical/dental/optical (not including health insurance premiums) – $48.
t)Insurance excluding health/life – $18.
u)Entertainment/hobbies – $10.
v)Holidays – $7.
w)Chemist/pharmaceutical – $44.
x)Repairs/furnishings/appliances – $28.
y)Books and magazines – $5.
z)Toiletries – $1.
aa)Other necessary commitments (Internet) – $9.
bb)Total – $1,298.
He also claimed expenses of the children when in his care or other contributions to the children of $334 per week and payments to the credit line debt associated with the respondent’s business of $260 per week.
Principles
The Child Support (Registration and Collection) Act 1988 (hereafter “the Registration and Collection Act”) makes clear that a party to a proceeding before the SSAT may appeal on a question of law.
Brown FM in Tasman & Tisdall [2008] FMCAfam 126 (at para.44) said:
An Administrative Tribunal exceeds its powers and thus commits jurisdictional error, which is correctable on appeal in respect to the question of law, if it:
(i) fails to construe properly the legislative provisions applicable;
(ii) identifies the wrong issues or asks itself the wrong questions;
(iii) ignores relevant material or relies on irrelevant material;
(iv) fails to accord procedural fairness to the party before it;
(v) makes an erroneous finding of such a magnitude that it goes to the very jurisdiction which it purports to exercise rendering its decision perverse or unreasonable or otherwise offending logic.
There are limits to the capacity of this Court to review findings of fact in any appeal from the SSAT. The mere fact that there has been a wrong finding of fact (even if established) does not necessarily amount to an error of law. It seems clear though that findings of fact, including inferences, may be reviewed to determine whether there has been an error of law.
The SSAT is obliged to give reasons but the Registration and Collection Act does not demand elaborate reasons.
On this obligation to provide reasons in Soulemezis v Dudley (Holdings) Pty Ltd 1987 10 NSWLR 247 McHugh JA (at 280) referred with approval to the statement made by Mahoney JA in Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd (supra) (at 386) that the extent of the duty to give reasons is related to the function to be served by the giving of those reasons and relevantly said further:
Thus more elaborate reasons are required where legislation gives a right of appeal against a decision than where no appeal lies. In the first class of case, unless the basis of the decision is properly articulated, the losing party may be effectively deprived of his right of appeal. In a case where a right of appeal is given only in respect of a question of law, different considerations apply from the case where there is a full appeal. An ultimate finding of fact, which is not subject to appeal and which is in no way dependent upon the application of a legal standard, can be treated less elaborately than an issue involving a question of law or mixed fact and law. If no right of appeal is given against findings of fact, a failure to state the basis of even a crucial finding of fact, if it involves no legal standard, will only constitute an error of law if the failure can be characterised as a breach of the principle that justice must be seen to be done.
In the case of the SSAT hearing appeals pursuant to the Registration and Collection Act [s.103X(3) of the Registration and Collection Act], the SSAT must:
b. Give to each party a written notice (whether or not as part of the notice under para 1A) that:
(i) sets out the reasons for the decision;
(ii) sets out the findings on any material questions of fact;
(iii) refers to evidence or other material on which the findings of fact are based.
The obligation by the SSAT to provide reasons therefore must be seen in the context of that statutory consideration. Having found that special circumstances existed to depart from the administrative assessment of child support, the SSAT was then obliged to consider whether it was just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order and in that regard, the SSAT was statutorily required to have regard to:
e. the commitments of each parent who is a party to the proceedings that are necessary to enable the parent to support one himself or herself or any other child or other person that the person has a duty to maintain (s.117(4)(e) of the Assessment Act).
In this matter it is difficult to discern from the reasons the basis for the findings of fact made by the SSAT or more particularly, why the SSAT excluded or disallowed certain expenses of the applicant in the context of this matter, particularly having regard to the finding that because of the needs of the children the parents should contribute to their upper limits for the support of the children.
In looking at the expenses claimed, it is legitimate, in the exercise of that discretion, to have regard to the compulsory and discretionary expenditure made by the carer or liable parent both in earning their income and in respect of their reasonable weekly living expenses.
The Full Court in Gyselman & Gyselman (supra) adopted the analysis of this particular issue of the Full Court in Mee & Ferguson [1986] FLC91-716 where the Full Court said (pages 75, 197-75, 198):
The important aspect in most cases and a matter of major contention in this case is the extent to which the expenditure of a party is to be deducted from his or her income before the maintenance contribution is ascertained. That is, where on the scale of priorities does child maintenance fit?
There appears to be three possible approaches, namely:
a. Having regard to the nature of the obligation, his liability to contribute to the support of his children is the nature of a pre-eminent obligation to be calculated from his income after the deduction only of unavoidable commitments such as taxation, Medibank levy, compulsory superannuation and the like.
b. The opposite view – that a party is entitled to meet all but clearly unreasonable expenses and maintenance is to be met out of any surplus.
c. The intermediate view which allows for the deduction only of necessary living expenses in addition to those in a. above.
But unfortunately the legislation itself does not provide the answer to this problem. In practice, it appears to us that the Court have tended to vary between b. and c. above.
To adopt b. is to allow the respondent to deduct from his income all of his expenditure except the extravagant or inappropriate and assess maintenance from what is left. The problem about that is that there is very little left and the consequences of that is that the amount of maintenance which is assessed in usually quite out of kilter with the actual needs of the child with further consequence that a disproportionate financial burden is placed on the shoulders of the custodian.
In the absence of any clearer legislative direction it appears to us that the present state of the law requires the Courts to approach the matter by adopting c. above, ie, in determining the financial capacity of the respondent to meet the claim for child maintenance, there is to be deducted from his income unavoidable or compulsory expenses together with necessary living expenses.
The Full Court in Gyselman said (@ 79,075):
It appears to us most likely that the legislature intended that the term “commitments of the parent necessary to enable the parent to support ‘himself’” should have the same meaning and approach. This gives consistency of interpretation of the whole of this area. There is, we think, nothing in the Assessment Act which should lead to a contrary view. The statement of the priorities of duty of parent to maintain a child compared with the other commitments of the parent set out in s.3 of the Assessment Act is in the same terms as s.66(B) of the Family Law Act. Although the objects of the Assessment Act in s.4 are stated somewhat more expansively than are those in Division 6 of Part VII of the Family Law Act (s.66A), there is no inconsistency in the two provisions. The same words appear in s.75(2)(d) relating to property and spousal maintenance and they have always been understood in the sense referred in Tucks case.
In determining the commitments of each parent, the SSAT should consider (and the reasons should provide some analysis of):
a)the level of the parties’ income compared to their claimed expenses;
b)what actual capacity they have to contribute out of income to the support of the children;
c)a consideration of the various items of expenditure (including that expenditure incurred to earn income) and consideration of:
i)the reasonableness both in nature and quantum of that expenditure;
ii)whether the expenditure should have priority over their child support obligation (having regard to the test referred to above).
I do not suggest that the reasons for accepting or rejecting an item of expenditure need to be elaborate. Indeed in this matter the SSAT did provide some reasons for accepting items of expenditure (see para.65 of the Reasons). The SSAT accepted that the applicant would be responsible for and would need to continue to pay $260 per week being interest on the business debt incurred by the respondent which was secured against the former matrimonial home.
Relevant to this appeal, though, the SSAT did not provide any reasons as to why it rejected the claimed expenses pertinent to this appeal.
Relevantly for example, the SSAT seemed to be satisfied that the applicant had significant ongoing health issues and special needs and allowed the gap costs of health costs and yet, for a reason it did not identify, it excluded the cost of his private health insurance.
These issues become relatively important, particularly when the SSAT concludes that the parents should contribute towards the maintenance of the children to the upper level of their ability.
I consider there is sufficient doubt as to how the SSAT came to its conclusions and whether it correctly considered the statutory imperatives. The consequences are sufficiently important for me to be satisfied that there was in this matter an error of law.
Ground 2 of the appeal – the income and financial resources of the respondent
The applicant argues that the SSAT misdirected itself or failed to take any proper account or give any proper weight or consideration to the income and financial resources of the respondent.
Relevant background
The following background, contained in the reasons, does not appear to be in dispute.
The parties separated on 8 March 2008 but continued to live separately and apart in the family home.
The respondent left the family home in 19 August 2008.
At the time of their separation the respondent was operating a business.
She continued to operate the business until it was sold in May 2009.
In May 2008 however she reduced her trading or working hours.
After the sale of the business (to which the applicant consented) during the relevant period, the respondent remained unemployed and was in receipt of Centrelink benefits.
It seemed (and this does not seem to be disputed by the parties) that the business, during its operation, did not generate any substantial profits and indeed after the respondent reduced her working hours, the business did not meet its running costs and it was necessary for the applicant to apply his income to meet outgoings for the business.
The balance sheet for the business, as at 24 June 2009, indicated that there had been drawings of $17,893.
Findings of the SSAT in relation to the respondent’s income
The SSAT found (at para.73) that Ms Farrens utilised some of the cash from the business to meet her own expenses. Those bank statements also showed that Ms Farrens received some $5,551.20 in wages (annualised to $7,402) or about $617 per month and $9,301.30 in Newstart Allowance (annualised to $12,402) or about $1,033.48 per month during the same period.
The SSAT then considered that Ms Farrens had the following net annual income for the period 1 September 2008 to 31 May 2009:
Personal benefit car and mobile phone $1,160
Unknown deposit $7,496
Wages $7,402
Newstart $12,402
Total net annual income $28,460
The SSAT then concluded that a ground for departure under sub-para 117(2)(c)(1a) does exist because the taxable incomes of Mr and
Ms Farrens used in the administrative assessment of child support do not reflect her actual financial resources.The SSAT decided that from 20 December 2008 to 31 May 2009
Mr Farrens had an income for child support purposes of some $85,500 and Ms Farrens had an income for child support purposes of $33,000 (grossed up).The applicant contends that the SSAT failed to give proper consideration to the income and or financial resources of the respondent.
It is not immediately clear how the SSAT arrived at the figure of $33,000 (grossed up) for the respondent’s income for child support purposes. The SSAT seems to have arrived at the figure by adding in her Newstart allowance.
However, it was the applicant’s case that the business did not generate significant income. Indeed, it was his evidence that the business barely covered costs and when the respondent reduced her working hours, he was required to contribute more of his own income to meet the costs of the business.
Even on the applicant’s case, the respondent did not earn any significant income from the business and there were not significant profits generated by the business. Indeed the applicant seemed to accept that the business was running at a loss after the decision of the respondent to reduce her hours in the business (see para.72 of the Reasons). I could not conclude that there was any error in the way that the SSAT approached its determination of the respondent’s income.
As I understand the submission of the applicant, the SSAT failed to take into account the drawings that the respondent had made from the business during the relevant child support year as a financial resource of the respondent. The fact that a party is able to draw down on a credit line (thereby increasing the debt level) should be treated cautiously and would not ordinarily be regarded as a financial resource available to meet child support obligations. To do so opens the prospect of, for example, credit card capacity being used for child support assessments and in my consideration, it was not the intention of the Assessment Act that the capacity of a parent to increase their debt level should be a factor that would ordinarily be taken into account in the assessment of their capacity to contribute to child support.
It would appear from the relevant balance sheet of the business that the respondent had drawn down approximately $18,000 from the business. It would appear that those drawings resulted in an increase in the debt levels of the business. The SSAT dealt with this issue (@ para.72 of the Reasons) by taking into account the amount paid by the applicant to reduce the credit line for the business ($260 per week). It is important to recognise that the SSAT was considering this child support period retrospectively and whilst the respondent may have had the benefit of drawings from the business, the applicant was allowed the repayments he was making with respect to the credit line for the business. It is also noted that the SSAT took into account from the bank statements that the respondent had deposits of $5,621 and deposits of $5,551 in wages.
I agree that it is difficult to understand how the SSAT came to the conclusion about the income it should attribute to the respondent but the conclusion it did reach that the income should be grossed up to $33,000 is not, to my mind, sufficiently attendant with error to be categorised as an error of law.
Re-exercise of discretion or remittal back to the SSAT for further consideration
This is a matter in which I consider that this Court is in a position to
re-exercise its discretion.
I have not been satisfied that the SSAT erred in its treatment of the respondent’s financial circumstances.
I have been satisfied that there was sufficient error identified in the treatment of the applicant’s costs of self support that the matter ought to be reconsidered.
To put the parties to the cost of a further hearing, albeit perhaps restricted to a reconsideration of these issues, is unnecessary and the likely further cost would not be in anyone’s interests particularly the children’s interests.
I also note that the relevant period is fairly discrete and that the circumstances of the parties have now changed to the point that the assessments are based on the income of the parties. Neither party seeks to amend the current assessments.
In the circumstances I consider it is appropriate to determine the application and that I have sufficient evidence upon which I can determine the matter.
In relation to the commitments that the applicant claims for
self-support, I accept, having regard to the findings of the SSAT, that the SSAT ought to have allowed the costs of maintaining his private health insurance policy, in the light of the SSAT being satisfied that he did have ongoing health issues and that the children had ongoing health issues. I accept that his claimed expenses for the additional medical costs for the children were appropriate to take into account given the findings about the special health needs of the children.
As for the internet connection and the insurances, I am not prepared to allow those costs. There did not seem to be any specific evidence put before the SSAT with respect to those issues and the submissions made by the applicant via his Counsel about the applicant’s need for the internet because of his health problems, was not evidence led by the applicant before the SSAT. The applicant has other resources available to him to meet the costs of the internet connection.
Insofar as the insurance costs are concerned, the SSAT found that the applicant did have other resources and the SSAT was aware there was a property settlement to be determined between the parties. Ordinarily I could accept that those expenses would fall into the category such as rates, etc, but in this case I do not consider it necessary to make the adjustment as presumably it can be made if necessary with respect to the property settlement between the parties. If, for example, the applicant is forced to meet those expenses from other savings, then the respondent will also contribute by having less in the property pool to distribute. In the circumstances I consider that results in a just and equitable adjustment between the parties on that particular expenditure.
In all therefore, I consider that the appeal should be allowed in part. I consider that the orders can be achieved by simply deducting the amounts allowed from the existing decision of the SSAT. The amount that should be deducted is $61 per week or $3,172 from the annual rate of child support.
I would substitute the following orders:
a)That the decision of the Social Security Appeals Tribunal, in part, be set aside.
b)That the following decision should apply:
i)From 20 December 2008 to 30 May 2009 the annual rate of child support payable by the applicant is to be $13,468.
ii)From 1 June 2009 to 31 December 2009 the annual rate of child support payable by the applicant is to be $14,248.
The reduction represents a sum of $3,172 being the private health insurance costs and the additional medical costs for the children paid by the applicant.
I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of Slack FM
Date: 18 June 2010
5