Harrold and Harrold and Anor (SSAT Appeal) - [2011] FMCAfam 779

FEDERAL MAGISTRATES COURT OF AUSTRALIA

HARROLD & HARROLD & ANOR (SSAT APPEAL)

[2011] FMCAfam 779

CHILD SUPPORT – Appeal from SSAT – method of calculation of personal expenses paid by company on behalf of appellant – calculation of extent of income earned as cash in hand – no error of law established.

Child Support (Assessment) Act 1989, ss.98L, 110C(1)(a)(i), 117(4)(d)-(e), 117(4)(g)
Federal Magistrates Court Rules 2001, r.25A.06(2)

Australian Broadcasting Tribunal v Bond (1990) 21 ALD 1
Weir and Weir (1993) FLC 92-338

Appellant:

MR HARROLD

First Respondent:

MS HARROLD

Second Respondent:

CHILD SUPPORT REGISTRAR

File Number:

MLC 6406 of 2008

Judgment of:

Hughes FM

Hearing date:

8 April 2011

Date of Last Submission:

8 April 2011

Delivered at:

Melbourne

Delivered on:

5 August 2011

REPRESENTATION

Counsel for the Appellant:

Mr Grant

Solicitors for the Applicant:

Webb Korfiatis

Counsel for the First Respondent:

In person

Solicitors for the First Respondent:

Nil

Counsel for the Second Respondent:

Mr Boughton

Solicitors for the Second Respondent:

Australian Government Solicitors

ORDERS

The appeal filed on 8 November 2010, as amended on 24 January 2011 against the decisions of the SSAT on 11 May 2010 and 27 August 2010, is dismissed.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLC 6406 of 2008

MR HARROLD

Appellant

And

MS HARROLD

First Respondent

CHILD SUPPORT REGISTRAR

Second Respondent

REASONS FOR JUDGMENT

This is an appeal from two separate decisions of the Social Security Appeals Tribunal (SSAT) dated 11 May 2010 and 27 August 2010 respectively.
The appellant is the father of three children now aged 18, 16 and 12 years. He is the parent liable to pay child support in accordance with various child support assessments. The first respondent is the mother of the children and is the payee entitled to child support.
The events leading to both SSAT decisions began with a Registrar initiated a change of assessment. The process ended in a departure from the administrative assessment which increased the child support payable. The appellant conceded that a ground for departure existed for each relevant period because of financial benefits he derived from a company which was essentially his alter-ego. The dispute concerned the value attributed to those benefits by the Child Support Registrar and, subsequently, the SSAT.
The appellant also sought leave to appeal each of the SSAT decisions out of time.
Enforcement proceedings brought by the Child Support Registrar in relation to arrears of child support were finalised on 11 October 2010 on the basis that the appellant would pay a certain sum unless he was successful in reducing that sum through the current proceedings.

Application for leave to appeal out of time

An appeal from an SSAT decision is required to be made within

28 days of receipt of the written statement of reasons for the decision.[1] An extension of time may be granted pursuant to rule 3.05 of the Federal Magistrates Court Rules 2001.
[1] S.110C(1)(a)(i) Child Support (Assessment) Act1989 and Rule 25A.06(2) Federal Magistrates Court Rules
In this case the first SSAT decision was despatched to the appellant on 24 May 2010. Even allowing four days for the receipt of the decision, the appeal should have been lodged no later than the end of June 2010. The appeal was filed on 8 November 2010, more than five months late.
The second SSAT decision was despatched on 3 September 2010. Again allowing four days for the receipt of the decision, the appeal should have been lodged no later than the end of the first week of October 2010. It was filed on 8 November 2010, more than one month late.
On 9 November 2010, in support of the application to appeal out of time, the appellant lodged a one paragraph handwritten affidavit which reads as follows:
DELAYED LODGEMENT DOO [sic] TO STRESS UNABLE TO COPE MENTALLY & PHYSICALLY, OVERWHELMED BY THE TASK & THE INFORMATION REQUIRED, UNABLE TO PAY FOR LEGAL REPRESENTATION.
The appellant subsequently consulted a solicitor who prepared an Amended Notice of Appeal and an affidavit, both of which were filed on 24 January 2011. In that affidavit the appellant said he had been suffering from severe stress, anxiety and panic attacks. He said he had found it difficult to concentrate on tasks and had been unable to cope with many aspects of the legal proceedings, especially those with time constraints. He said he had consulted a psychiatrist who diagnosed him as having a depressive illness and provided some treatment.
An affidavit of Dr E annexing a brief report dated 21 January 2011 was filed on behalf of the appellant on 24 January 2011. Dr E said he had been treating the appellant for several months prior to preparing the report. In his report he said the following:
Mr Harrold saw me in the context of the separation which he was struggling with. He impressed as psychiatrically unwell and wasn’t coping. When I saw him he was not engaged in regular paid employment but nonetheless was being pressured by the Child Support Agency to provide payments to his wife whilst unemployed. Systematic review revealed signs of a depressive illness with poor sleep, low energy levels and impaired cognitive functioning.
Dr E went on to say the appellant was self represented because of his parlous financial circumstances, became disorganised with his paperwork and suffered anxiety and panic attacks which led him to procrastinate which, in turn, added to his difficulties with the legal process. He said he had advised the appellant to urgently obtain legal representation. At the end of his report Dr E said the following:
Until such time as Mr Harrold is able to resolve these matters it is likely that his depressive illness will continue. It is my firm professional opinion that Mr Harrold’ failure to provide the appropriate documentation to the Child Support Agency occurs as a result of his depressive illness and is not due to any wish not to comply with the process at a conscious level as such.
There may be many reasons why the appellant failed to provide documents. Dr E’s opinion about why that occurred is, in my view, beyond his medical expertise. Nevertheless, I accept his evidence that the appellant is likely to have been suffering a depressive illness which is relevant to the consideration of the application for leave to appeal out of time.
The second respondent, the Child Support Registrar, did not wish to be heard in support of or in opposition to the application for leave to appeal out of time.
The first respondent, the mother of the children, opposed the application to extend time for the filing of the appeal. Understandably, she wanted the proceedings to be concluded immediately which would be the case if leave was refused.
After listening to submissions on behalf of the appellant and the first respondent, leave was granted. In summary, the reasons for granting leave were as follows:
a)The delay in launching the appeals were just over five months and just over one month respectively;
b)The hearing of the substantive appeals had been listed on the same day as the application for leave to appeal out of time so no additional delay would be involved;
c)According to Dr E the appellant was likely to have been suffering a depressive illness at the relevant time which impeded his cognitive functioning. This may have affected his capacity to cope with the legal process and comply with time constraints;
d)During the relevant periods there were two other sets of proceedings on foot; one was enforcement of child support arrears and the other concerned property proceedings between the parties. The appellant said he had difficulty keeping on top of all the filing deadlines;
e)It was not apparent on the face of the appeal that the appeal had no prospects of success; and
f)Although there was some prejudice to the first respondent in granting leave, this was outweighed by a risk of serious prejudice to the appellant if leave was refused, especially when the substantive appeal was listed to be heard on the same day.

SSAT decision 11 May 2010

Procedural and child support history

On 16 November 2006 the first respondent applied for child support. An assessment was issued. For the period of 16 November 2006 to

15 February 2008 the rate of child support payable by the appellant was $320 per annum, or a little over $6 per week, for the three children. The assessment was based on the appellant having a taxable income of nil and the first respondent having a taxable income of $28,510 per year.
In mid-2007 the Child Support Registrar initiated a change of assessment process which resulted in a determination by a senior case officer on 8 August 2007 that for the period 11 July 2007 to

15 February 2008 the father’s taxable income was $92,000 per annum.
On 11 September 2007 the appellant lodged an objection to that decision. The decision was reviewed and, on 24 December 2007, the objection was disallowed.
On 5 June 2009, more than 15 months after the objection decision, the appellant sought a review by the SSAT of the objections officer’s decision. He also applied for an extension of time in which to do so.
On 21 August 2009 the appellant was granted leave to apply to the SSAT out of time.
The SSAT hearing occurred on 16 December 2009.
On 11 May 2010 the SSAT decided that, for the period 11 July 2007 to 15 February 2008, the annual rate of child support payable by the father was $12,000. This was based on a determination by the Tribunal that the appellant’s company had paid personal expenses of the appellant to the value of $55,000 per annum.
On 8 November 2010 the appellant appealed to this Court from that decision. The hearing occurred on 8 April 2011.

The appellant’s business

The appellant is a qualified [omitted]. On a date which is not apparent on the evidence, he set up a business, “[H]”, which [nature of business omitted]. The business operated through a company, [A] Pty Ltd. It appears that the appellant also used that corporate structure when doing [omitted] work as, in a loan application he completed in 2006, he stated he was employed by [A] Pty Ltd and described his occupation as “Self Employed – [details omitted]”.
[A] Pty Ltd was registered on 24 December 1986. The appellant and his father were both directors and the only shareholders of the Company. The appellant told the SSAT that he was the sole signatory to the Company accounts and that his father played no part in running the Company or the business. The Company was also the trustee of the [Mr Harrold] Family Trust.
The appellant told the Tribunal that the [omitted] business suffered a downturn over several years but kept operating until mid 2009. The appellant said that he did occasional [omitted] work during the downturn. The Company went into liquidation on 17 June 2009.
The appellant told the SSAT that he had never drawn a wage from the Company. His individual tax return for each financial year from 30 June 2004 to 30 June 2008 inclusive declared a taxable income of $5,000 per year. This is the amount attributed to “Directors fees” in the profit and loss statement of the Company each year. However, the appellant also conceded that he used Company funds to pay for his living expenses.
The appellant owns two properties which are the subject of the family law property proceedings. The first is the appellant’s home which is subject to a home loan with the ANZ bank. In his statement of financial circumstances dated 9 February 2010 and filed in the SSAT, the appellant declared his home was worth $560,000 and the mortgage $255,163, leaving a net equity of $304,837.
The second property owned by the appellant is a disused [business omitted]. The appellant declared it to be worth $314,000, although there is some uncertainty about that value as there has been soil contamination from [omitted]. The property is subject to a $150,000 mortgage held by [C] Limited.
The [C] loan secured against the appellant’s second property was taken out in August 2006. In his application for that loan the appellant declared his income to be between $85,000 and $95,000 per year. That document was relied upon by the senior case officer in determining on 8 August 2007 that the appellant had an annual taxable income of $92,000.
During the SSAT proceedings the appellant told the Tribunal that the [C] loan was arranged through a broker who made the declaration of income without examining the books of the business. The appellant said that he could not recall ever telling the broker he earned that much money. The Tribunal was not satisfied the appellant was ignorant of the fact the loan application contained misleading information. However it was satisfied on the evidence before it that the appellant did not, in fact, earn that level of income.
The appellant told the Tribunal that, at the time he took out the [C] loan in 2006, he lent $65,000 of the $150,000 he borrowed to a friend,

Mr W, at no interest. He said the amount was repaid over time with the full amount paid prior to the Company going into liquidation. The appellant said that, as the business faltered, he also borrowed $35,000 from his sister and $55,000 from his parents. He said he used those sums to support himself when the Company was making no money.
The first respondent alleged the appellant was working for undeclared cash income but, in the absence of any evidence to support that claim, the Tribunal did not find that was so.
In considering the appellant’s income, the Tribunal looked first to the Company accounts. It noted the sources of funds for the Company during the seven-month period under consideration were gross business sales, bank loans and loan repayments by Mr W. It was not possible to obtain an accurate sense of the expenses, however, as they included payments of personal expenses of the appellant. The Company recorded an operating loss for each of the 2007 and 2008 financial years but the loss was inflated by the appellant’s personal expenditure. The Company’s financial statements were, therefore, of little assistance in working out the income of the appellant.
The Tribunal instead tried to calculate the income of the appellant by looking at his personal expenditure, all of which he said was paid by the Company.
The appellant filed a Statement of Financial Circumstances dated

9 February 2010 which is contained at pages A205 to A213 of the documents before the SSAT. On the last page of his Statement of Financial Circumstances the appellant wrote:
“I do not now (sic) how to fill this in. It is hard to work out what I head (sic) spent between Jully (sic) 2007 and Feb 2008”.
It was even more difficult for the Tribunal to try to work out the appellant’s expenditure. The Tribunal expressed dissatisfaction at the lack of documentation provided by the appellant, noting he had not provided all of the bank statements for the business. The appellant told the Tribunal that relevant business documents were in the hands of the liquidator but he would do his best to obtain them. Some were eventually provided after the hearing.
The Tribunal ultimately made a calculation that the personal expenses paid by the Company had a value in excess of $55,000 per annum. The calculations are set out at paragraph 32 of the Tribunal’s reasons for decision. The sum was comprised of three elements:
i)mortgage payments made by the Company in relation to the ANZ home loan and the [C] loan which together had a value of approximately 36,000 per annum;
ii)average weekly expenditure declared at page 8 of the appellant’s statement of financial circumstances to be approximately $160 per week or $8,320 per year; and
iii)an amount of $10,680 for other expenses such as motor vehicle registration and insurance, household supplies and clothing which were not otherwise taken into account.
The first category was the primary focus in the appeal. It was argued on behalf of the appellant that the payment by the Company of the loans, and in particular the [C] loan, ought not to be characterised as payment of personal expenses. This argument in relation to the ANZ home loan is not at all persuasive. There is no evidence that the ANZ loan is anything other than a home loan in relation to the property in which the appellant lives. All of the payments of the ANZ mortgage in the relevant period were made by the business. The value of the payments in the 2007 financial year was $23,731.
Counsel for the appellant submitted that the [C] loan was a business loan and that the repayments were, therefore, a legitimate business expense and ought not to have been taken into account in calculating the personal benefit derived by the appellant.
The [C] loan documents are contained at pages 278 to 347 of the documents before the Tribunal. The Deed of Agreement was entered into by the appellant in his personal capacity, not by the Company. The loan summary at page 282 of the documents states the following about the purpose of the loan:
Mr Harrold has approached [omitted] to assist with gearing up his un-encumbered property that he owns in [N] [suburb omitted]. Client is only seeking $150,000 for some minor renovations and future investment.
Mr Harrold has been self-employed for about 25 years and is involved in the [omitted] industry, doing [omitted].
The subject property is zoned residential however Mr Harrold operates his business out of there. Mr Harrold gutted most of the walls and you can consider the premises as a warehouse/factory. [Mr Harrold] has his machinery on the premises for his work and for storage for his equipment and goods.
It appears from the documents that the loan had two purposes. The first was to renovate the property in [N]. There is no evidence about what renovations were done but, given the appellant retains ownership of the property in [N], any such renovations would presumably have increased the value of that personal asset. The second purpose of the loan was for “future investment”. There is no evidence about what investment was made with the money. It may be that a significant amount borrowed was invested in the appellant’s [omitted] business and is now lost. It may be that it was invested in his [omitted] business which he continues to operate. It may be that it was invested elsewhere and that the appellant will derive the benefit of the investment. Given the loan was in the personal name of the appellant, the finding by the Tribunal that the loan repayments constituted a personal benefit to the appellant was open on the evidence.
The second element of the calculation of the benefit derived by the appellant is taken directly from the appellant’s statement of financial circumstances for the relevant period. The Tribunal noted that the statement declared the appellant to have daily expenses amounting to $160 per week. Given the appellant conceded his personal expenses were paid by the Company, the Tribunal added this figure to its calculations.
In the third category of expenses the SSAT attempted to calculate the value of other personal expenditure not included in the daily expenses declared in the appellant’s statement of financial circumstances, such as household supplies, clothing, and medical and pharmaceutical expenses. The Tribunal did not nominate a particular sum for these items; rather it simply said that it was satisfied that the appellant had access to benefits in excess of $55,000 for the year. By deducting the amounts already accounted for, namely, $36,000 in mortgage payments and $8,320 for the daily expenses specified in the financial statement, it is apparent that the amount remaining and found by the Tribunal to have been spent on other personal expenditure is $10,680 or $205 per week in round terms.

The Tribunal noted the lack of precision in its calculations:
The Tribunal is conscious that there is some inexactness in dealing with the matter on this basis, but that inexactness stems from Mr Harrold’s inability or failure to adequately explain to the Tribunal his financial situation.[2]
[2] SSAT reasons for decision 11 May 2010 paragraph 33
The appellant was the only person who operated the business account. He alone was in a position to provide particulars about the expenditure from that account. He failed to do so. In those circumstances the Tribunal did not need to be unduly cautious about making findings against him.[3] Counsel for the appellant argued that a different approach ought to be taken to the duty of disclosure in circumstances in which the original change of assessment was initiated by the Child Support Registrar rather than one of the parents. I reject that argument as completely baseless. It also makes no sense in circumstances where the appellant was the one seeking the review by the SSAT.
[3] Weir and Weir (1993) FLC 92-338 at 79,593
The administrative assessment of child support for the relevant period was based on the appellant’s taxable income being nil. The Tribunal found the appellant had derived a financial benefit from his business estimated to be an annual amount of $55,000. In these circumstances a ground for departure from the administrative assessment of child support existed because, in the special circumstances of the case, application of the administrative assessment would result in an unjust and inequitable determination of the level of support to be provided by the appellant.
The Tribunal then addressed each of the legislative requirements and determined on the evidence before it that the departure was just and equitable and otherwise proper. This is set out in detail at paragraphs 39 to 58 of the decision.
The sum of $55,000 represented, in round terms, close to 70 per cent of the combined parental income. The Tribunal had regard to the average cost of the children for the period under consideration and allocated 70 per cent of the annual cost to the appellant. This amounted to $12,000 per annum. The resulting decision of the Tribunal was that the appellant's annual rate of child support for the relevant period was set at $12,000 per annum.

Grounds of Appeal

Grounds 1, 3 and 4 of the Amended Notice of Appeal relate to the decision of the SSAT of 11 May 2010.
Ground 1 is as follows:
The Tribunal erred in finding that the Applicant’s annual income should be set at $92,000 for the period of 11 July 2007 to 15 February 2008 in that:
(a) The Tribunal erroneously treated borrowing as income for child support purposes;
(b) There was no or insufficient evidence before the Tribunal to support the finding; and
(c) The Tribunal failed to give any or due and proper consideration to expenses properly and reasonably incurred to generate income;
At the commencement of the hearing in this Court, counsel for the appellant conceded that the first ground of appeal is simply wrong as the SSAT did not find that the appellant’s annual income should be $92,000 for the relevant period. An oral application was made for leave to further amend the Amended Notice of Appeal to reflect the actual decision. Leave was granted and the first ground was amended to read as follows:
The Tribunal erred in finding that for the period 11 July 2007 to 15 February 2008 the annual rate of child support payable by

Mr Harrold is set at $12,000 per annum.
The Tribunal did not treat borrowings as income in calculating the appellant’s child support obligations. The Tribunal noted the gross income of the Company came from different sources, including borrowings. However the Tribunal was unable to properly assess the Company’s income and expenditure because of a lack of evidence generally and because the evidence that was available showed the expenses were inflated by personal expenditure of the appellant. The Tribunal took a different approach and calculated the income of the appellant by assessing the level of his personal expenditure. It is true to say the Tribunal did not thoroughly assess the expenses incurred by the Company in generating its income. It was unable to do so for the reasons already stated but this is irrelevant because the income of the Company was not used to calculate the personal income of the appellant.
The reasoning was set out sufficiently clearly in the decision and the findings were open on the evidence. Accordingly, Ground 1 is not made out.
Ground 3 is as follows:
The Tribunal erred in finding that it was just and equitable to make the SSAT decisions (sic) in that:
(a) The Tribunal failed to make proper findings as to the actual income and expenses of the Applicant pursuant to s.117(4)(d) of the Child Support (Assessment) Act 1989;
(b) There was no or insufficient evidence before the Tribunal to support the findings made by the Tribunal in relation to the actual income and expenses of the Applicant;
(c) The Tribunal failed to make proper findings in relation to the hardship that would be caused to the Applicant and/or the children pursuant to s117(4)(g) of the Child Support (Assessment) Act 1989;
(d) There were no or insufficient evidence before the Tribunal to support any findings made by the Tribunal in relation to the hardship that would be caused to the Applicant and/or the children in making that decision.
The Tribunal correctly stated that, in determining whether the departure order was just and equitable, it was required to take into account the matters set out in section 117(4) of the Child Support (Assessment) Act 1989. The Tribunal set out the evidence in relation to each of the relevant considerations except for those in relation to s.117(4)(d) which required a consideration of the income, property and financial resources of each party. In relation to that consideration the Tribunal referred to, but did not repeat, its earlier findings in relation to the financial circumstances of the appellant. That was sufficient.
There were deficiencies in the evidence because the appellant had failed to provide all relevant documents; notwithstanding that he sought the review by the Tribunal. The Tribunal was required to do the best it could on the available material. The findings of the Tribunal were open on the evidence before it.
In relation to hardship, the Tribunal found at paragraph 51 that, given the difference in the income of each party, hardship would be caused to the first respondent and the children if there was no departure from the administrative assessment of child support. It found that an increase in child support would not cause hardship to the appellant “given the assets upon which he can draw if necessary”. Both findings were open on the evidence.
No error of law is established. Ground 3 is not made out.
Ground 4 is as follows:
The Tribunal erred in finding that it was just and equitable to make the decision on 11 May 2010 in that:
(a) The Tribunal failed to make proper findings in relation to the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support himself or herself, pursuant to s.117(4)(e) of the Child Support (Assessment) Act 1989.
The Tribunal stated very clearly that, on the available evidence, it was unable to make findings in relation to the commitments of each party. It said at paragraph 48 the following:
After consideration of the documentary evidence and oral evidence that was available, the Tribunal was not satisfied that the evidence before the Tribunal was sufficient, or sufficiently reliable or accurate, to provide any meaningful guidance as to the commitments of each parent.
The Tribunal was not required to make specific findings about the commitments of each party. It was required to take into account as best it could on the available evidence each of the considerations relevant to the determination of whether a departure from the administrative assessment would be just and equitable. No error of law arises from the inability of the Tribunal to make specific findings in relation to one or more consideration. Ground 4 is not established.
In his outline of argument, counsel for the appellant set out two primary arguments: firstly, that the SSAT treated repayment of borrowings as income and, secondly, that the Tribunal failed to give adequate and proper reasons for the decision such that it became impossible to follow. Neither argument is persuasive. As previously discussed, the Tribunal did not treat borrowings as income. The Tribunal calculated the income of the appellant by reference to his personal expenditure. The reasons for the decision are in writing. They set out the evidence before the Tribunal, the method adopted in calculating the income of the appellant for the relevant period and the considerations in relation to whether a departure from the administrative assessment would be just and equitable and otherwise proper. The reasons for decision are apparent in the document and able to be followed.
In the outline of argument other “supplementary errors” are listed as follows:
(a) Failing to adequately distinguish between corporate and personal income
(b) Failing to adequately distinguish between corporate and personal expenses
(c)Treating the disbelief of the Applicants evidence as positive evidence for the CS Registrar
(d) Finding that the applicant did not make a loan to Mr W contrary to the evidence
(e) Failing to adequately take account of monies received from family members by way of loan
(f) Failing to have regard to the fact that the applicant provided all the documents asked of him (by the time of the SSAT hearing)
(g) Failing to have regard to the fact that the review was at the initiation of the CS Registrar who had to bear the onus of proof not only as to whether a ground existed but as to the proper outcome that followed any departure.
Although these are not formal grounds of appeal and some overlap the grounds of appeal, I will address each of them in turn.
The first two of the supplementary errors allege that the Tribunal failed to distinguish between corporate and personal income and expenditure. For the reasons already stated, I disagree.
There is no evidence to support the assertion (in the third alleged supplementary error) that evidence of the appellant rejected by the Tribunal was then used as positive evidence for the second respondent.
The fourth supplementary error alleged is that the Tribunal found the appellant did not make a loan to Mr W. The Tribunal said it found it “quite irreconcilable” that the appellant would lend $65,000 to Mr W at a time when he had just borrowed $150,000 from [C] and when, according to the appellant, the business was suffering a downturn. The finding was open to the Tribunal but had no impact on its decision in any event as the purported repayments of that loan by Mr W were not used to calculate the income of the appellant.
The fifth supplementary error is said to be that the Tribunal failed to take account of family loans. The Tribunal at paragraph 31 of the decision noted that the first respondent was very sceptical about the loans but said that it “has no basis upon which to conclude that such borrowing has not occurred”. The Tribunal commented that it was “unable to understand Mr Harrold’s approach to the borrowing and lending of money”. The appellant said he used the borrowed money to pay for living expenses. It is apparent that The Tribunal placed little or no weight on that evidence. The Tribunal was satisfied the appellant used Company funds to meet his living expenses. That was a finding of fact open on the evidence before it.
The sixth supplementary error alleged is that the Tribunal failed to have regard to the fact the appellant provided all documents asked of him. This is simply wrong. At paragraph 28 of the decision the Tribunal commented that not all of the requested documents were provided by the appellant by the time of the hearing, although some additional documents were subsequently provided.
The last supplementary error is said to be that the Tribunal failed to have regard to the fact that the Child Support Registrar bears the onus of proof for establishing that a ground of departure exists and that the outcome of a departure order was proper. The Tribunal set out the relevant law and correctly applied it. There is no evidence that it misapplied the onus of proof.
None of the “supplementary errors” are made out.
To overturn the Tribunal’s decision the appellant must establish the Tribunal made an error of law. A finding of fact in the absence of any evidence to support it can amount to an error of law.[4] In this case, however, the findings of the Tribunal were open on the evidence before it and no error of law is established. Accordingly, the appeal from the Tribunal’s decision of 11 May 2010 is dismissed.

SSAT decision 27 August 2010

[4] See for example the discussion by Mason CJ in Australian Broadcasting Tribunal v Bond (1990) 21 ALD 1 at page 23

Background

The period to which the previous SSAT decision related ended on

15 February 2008.
The appellant continued to declare taxable income of $5,000 per annum reflecting “Directors fees” from [A] Pty Ltd. From 16 February 2008, therefore, the appellant’s child support income amount reverted to nil and the rate of child support payable by him was $339 per annum.
On 25 March 2008 the Child Support Registrar initiated another change of assessment process. On 23 June 2008 a senior case officer determined that for the period 25 March 2008 to 31 December 2009 the appellant’s child support income amount should be set at $46,852. As before, the ground of departure pursuant to section 98L of the Child Support (Assessment) Act 1989 was that the application of the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided for the children because of the income, earning capacity, property and financial resources of the appellant.
On 30 June 2009 the appellant objected to the decision and applied for an extension of time in which to lodge the objection. An extension of time was granted on 21 December 2009. On 4 February 2010 the objection was disallowed.
On 25 February 2010 the appellant applied to the SSAT for a review of the decision.
The SSAT heard the matter on 27 August 2010. It decided that day to set aside the decision of the Senior Case Officer and substitute the following:
a)the assessment of child support payable in the period 25 March 2008 to 30 June 2008 be based on a child support income amount of $46,852 for Mr Harrold;
b)the assessment of child support payable in the period 1 July 2008 to 24 March 2009 be based on an adjusted taxable income of $46,852 for Mr Harrold; and
c)the assessment of child support payable in the period 25 March 2009 to 31 August 2011 be based on an adjusted taxable income of $58,056 for Mr Harrold
That decision is the subject of the appeal filed on 8 November 2010 and for which leave to appeal of time was granted on 8 April 2011.
The same “supplementary errors” contained in the appellant's outline of argument and set out above were relied upon in relation to this decision.
As in the previous proceedings, the Tribunal had difficulty establishing the appellant’s income. As before, the appellant conceded to the Tribunal that he used the business account to pay for all his personal expenditure. Again the Tribunal attempted to calculate the value of that personal expenditure.
The Tribunal firstly examined the Company bank statements from

1 January 2007 to 31 July 2008. The deposits for the 2007 calendar year came to $84,501. The deposits for the seven months from 1 January 2008 to 31 July 2008 came to $61,076. The appellant told the Tribunal that the deposits into the business account were not income of the business but “deposits from the [C] loan”. This was clarified by the appellant to mean that they were payments into the business account by Mr W to whom the appellant had loaned $66,000 when he took out the [C] loan in 2006. [5]
[5] SSAT reasons for decision 27 August 2010 paragraph 17. In the previous decision the appellant said the amount was $65,000 but the difference is immaterial.
Deposits into the account from Mr W were clearly identifiable and the Tribunal disregarded them for the purpose of its calculations. The deposits into the account other than those from Mr W amounted to $42,501 in the 2007 calendar year and $56,076 in the first seven months of 2008.
The Tribunal then looked at expenditure from the business account for the same period for the purpose of trying to ascertain what was personal rather than business expenditure. The appellant had annotated the bank statements with comments identifying various personal transactions. They included groceries, gifts, photos, school books and some cash withdrawals. The inference was that all transactions which were not annotated should be taken to be business expenditure. The Tribunal did not consider the annotations helpful or credible.[6]
[6] Ibid paragraph 29
The relevant business bank statements are at pages A216 to A254 of the documents before the Tribunal. An examination of them suggests that not all of the personal expenditure was specifically identified by the annotations. For example, an ATM withdrawal of $400 from the account at the “[omitted] Bar” on 24 December 2007 is annotated as being for “Christmas presents”. A $300 withdrawal from the same ATM on 22 January 2008 is not annotated but is unlikely to have been for a legitimate business expense. Similarly, there are many EFTPOS transactions made at Coles supermarkets in various locations. Only some of those transactions are annotated as being for groceries. Given the appellant said he paid all of his living expenses through the Company account, if the annotations are correct it appears the appellant bought no groceries between 16 July and 23 August 2007; between

30 August and 9 October 2007; and between 20 November and

18 December 2007. This seems unlikely.
The Tribunal noted that the situation of the Company changed in early 2009 and that a liquidator was appointed in June 2009 to wind up the company. The appellant said he increased his work as a [omitted] from that time. The first respondent had asserted during the previous SSAT hearing that the appellant was working as a [omitted] for cash in hand. That was denied at the time but during the second SSAT hearing on

27 August 2010 it was conceded by the appellant.[7] He said, however, that he was not doing much of that work and estimated he had worked for only two weeks in total during the eight weeks prior to the hearing. He told the Tribunal he found it hard to do the work because of his age and physical condition and because of the current stresses in his life. He said that, once the child support litigation was over, he hoped to return to full-time work as a [omitted].
[7] Ibid, paragraph 18
The first respondent asserted that the appellant worked six or seven days a week, leaving his house early in the morning and not returning until late at night. She said he drove a Holden Rodeo utility vehicle loaded with tools and two “lock boxes” on the back. She asserted he was earning up to $300 a day. She said she knew this because he had done some work for friends of hers but said they were not prepared to give evidence in the proceedings. The appellant agreed he was gone from his house for long periods every day but said he was simply visiting his parents and having coffee with friends. He said the Holden Rodeo was not his but was loaned to him by “a friend” whom he did not name.
Because the appellant was paid cash in hand the Tribunal had to look at other evidence of income than what passed through the business account. The Tribunal noted that repayments continued to be made on the ANZ loan and the [C] loan. Between October 2009 and February 2010 those repayments were made by bank transfers from a company called [S] Pty Ltd. It was suggested to the appellant that he had done work for [S] who paid him indirectly through payment of his loans. The appellant denied that. He said the loan repayments were actually an interest-free loan from a friend who had sympathy for his plight and who paid through the friend’s company. The appellant said there were no documents to evidence the loan. He refused to name his friend, saying he did not want him involved in the proceedings for fear he may stop making the loan payments.[8] Not surprisingly, the Tribunal did not believe him. The Tribunal found the appellant was generating sufficient income to service his two loans.
[8] Op cit paragraph 21

The minimum payment on the ANZ home loan as at February 2010 was $806 per fortnight or $20,956 per year. The minimum payment on the [C] loan was $1233 per month or $14,796 per year. The annual payment on the two loans was, therefore, $35,752.
The Tribunal then considered other personal expenditure. It noted that, in his statement of financial circumstances dated 3 September 2009, the appellant had declared weekly household expenditure (excluding loans) of $735 per week. Although the appellant filed another statement of financial circumstances in August 2010 stating his household expenditure had fallen to $120 per week, the Tribunal did not accept there had been such a drop. However, the Tribunal gave him the benefit of the doubt to some extent and deemed him to have household expenditure of $200 per week or $10,400 per annum. This combined with the loan payments amounted to an annual personal expenditure of over $46,000.
The Tribunal then used a gross pay estimator on the Australian Taxation Office website to calculate that, in order to achieve personal expenditure of $46,000, the appellant must have earned a taxable income of $58,056. This is the basis of the finding that the appellant’s adjusted taxable income for the period 25 March 2009 to 31 August 2011 is $58,056.
Given the taxable income of the appellant for the purpose of the administrative assessment of child support had been nil, the Tribunal found the ground of departure was made out. The Tribunal then addressed all of the relevant requirements under the Act and determined that the departure would be just and equitable and otherwise proper.

Grounds of appeal

Paragraphs 2 and 3 of the Amended Notice of Appeal filed on 24 January 2011 relate to the decision of the Tribunal made on 27 August 2010.
Ground 2 is as follows:
The Tribunal erred in finding that the applicant’s annual income should be set at $46,852 for the period 25 March 2008 and 24 March 2009 and $58,056 for the period 25 March 2009 to 31 August 2011 in that:-
(a) the Tribunal erroneously treated borrowings as income for child support purposes;
(b) There was no or insufficient evidence before the Tribunal to support the finding; and
(c) the Tribunal failed to give any or due and proper consideration to expenses properly and reasonably incurred to generate income;
In calculating the expenditure (and hence the income) of the appellant, the Tribunal disregarded the deposits into the business account which were said to be the repayments of a loan made to Mr W. However, the Tribunal did not accept the appellant’s evidence that the payments of his ANZ and [C] loans were made by an anonymous friend through the friend’s business. To that extent the Tribunal used alleged borrowings in its calculation of the appellant’s income but that was a finding of fact open to the Tribunal.
The Tribunal did not need to have regard to expenses incurred to generate income because the calculation of the appellant’s income was based squarely on evidence of his personal expenditure, rather than on the net income of the business. There was ample evidence to support the finding. Ground 2 is not made out.
Ground 3 is as follows:
The Tribunal erred in finding that it was just and equitable to make the SSAT decisions in that:
(a) The Tribunal failed to make proper findings as to the actual income and expenses of the Applicant pursuant to s.117(4)(d) of the Child Support (Assessment) Act 1989;
(b) There was no or insufficient evidence before the Tribunal to support the findings made by the Tribunal in relation to the actual income and expenses of the Applicant;
(c) The Tribunal failed to make proper findings in relation to the hardship that would be caused to the Applicant and/or the children pursuant to s117(4)(g) of the Child Support (Assessment) Act 1989;
(d) There were no or insufficient evidence before the Tribunal to support any findings made by the Tribunal in relation to the hardship that would be caused to the Applicant and/or the children in making that decision.
In relation to sub-paragraphs (a) and (b), given the lack of appropriate evidence by the appellant, the Tribunal was unable to make findings in relation to the appellant’s income except by reference to his expenditure. The Tribunal made proper findings which were supported by the evidence.
In relation to sub-paragraphs (c) and (d), the Tribunal correctly addressed the issue of hardship at paragraphs 49 to 51 and 58. It found that the first respondent would suffer hardship regardless of the outcome of the proceedings because of her parlous financial circumstances and the low rate of child support payable in any event. Although the appellant alleged he would suffer hardship if the departure determination was made, the Tribunal declined to make such a finding because of the appellant’s “almost total lack of credibility in relation to his financial situation”. Both findings were findings of fact open on the evidence. Ground 3 is not made out.
Counsel for the appellant relied on the same outline of argument in relation to this decision of the SSAT as the previous decision. The two primary arguments were, firstly, that the SSAT treated repayment of borrowings as income and, secondly, that the Tribunal failed to give adequate and proper reasons for the decision such that it became impossible to follow. Again, neither argument is persuasive. The only borrowings taken into account for the purpose of calculating the appellant’s income were the alleged borrowings from the unnamed friend of the appellant. The Tribunal rejected that evidence and was entitled to do so. The reasons for the decision of 27 August 2010 are clear, comprehensive and able to be followed.
The same “supplementary errors” were relied upon. They were alleged to be as follows:
(a) Failing to adequately distinguish between corporate and personal income
(b) Failing to adequately distinguish between corporate and personal expenses
(c)Treating the disbelief of the Applicants evidence as positive evidence for the CS Registrar
(d) Finding that the applicant did not make a loan to Mr W contrary to the evidence
(e) Failing to adequately take account of monies received from family members by way of loan
(f) Failing to have regard to the fact that the applicant provided all the documents asked of him (by the time of the SSAT hearing)
(g) Failing to have regard to the fact that the review was at the initiation of the CS Registrar who had to bear the onus of proof not only as to whether a ground existed but as to the proper outcome that followed any departure.
The first two of the supplementary errors allege that the Tribunal failed to distinguish between corporate and personal income and expenditure. The argument is misconceived. The Tribunal did not rely upon corporate income or expenditure to calculate the income of the appellant. It made an assessment of the personal expenditure of the appellant and, from that, calculated his income.
The Tribunal rejected various parts of the appellant’s evidence, finding he lacked credibility in relation to his financial circumstances. However that did not translate into positive evidence justifying a departure from the administrative assessment of child support. The Tribunal made a careful calculation of the appellant’s income on the evidence before it and found the income to be at a level sufficient to establish a ground for departure.
The fourth supplementary error alleged is that the Tribunal found the appellant did not make a loan to Mr W. This is wrong. In attempting to calculate the income to the business account the Tribunal specifically excluded from its calculations the money coming into the account which was identified as transfers from Mr W. In any event, the income of the business was not ultimately used in calculating the income of the appellant.
The fifth supplementary error alleged the Tribunal failed to take account of family loans. The appellant told the Tribunal that the loans had been made to the Company. At paragraph 23 of the decision the Tribunal noted the appellant’s father and sister were listed as unsecured creditors of the Company and the loans were therefore a liability of the Company rather than a personal liability. The appellant said he nevertheless intended to repay them. The Tribunal was entitled to place such weight as it saw fit on the appellant’s evidence in relation to the loans.
The sixth supplementary error alleged is that the Tribunal failed to have regard to the fact the appellant provided all documents asked of him. At paragraph 8 of the decision the Tribunal commented that both parties to the proceedings had substantially complied with the filing directions. The particular relevance of the production of documents is not apparent. The Tribunal still had difficulty calculating the appellant’s income and resorted to an examination of his expenditure to calculate his income.
The last supplementary error is said to be that the Tribunal failed to have regard to the fact that the Child Support Registrar bears the onus of proof for establishing that a ground of departure exists and that the outcome of a departure order was proper. Once again, the Tribunal set out the relevant law and correctly applied it. There is no evidence that it misapplied the onus of proof.
None of the “supplementary errors” are made out.
The findings of fact by the Tribunal on 27August 2010 were open on the evidence before it. The appellant has failed to establish any error of law and the appeal is dismissed.

I certify that the preceding one hundred and eleven (111) paragraphs are a true copy of the reasons for judgment of Hughes FM

Date: 5 August 2011