He v Secretary, Department of Education, Skills and Employment
[2024] FCA 819
•26 July 2024
FEDERAL COURT OF AUSTRALIA
He v Secretary, Department of Education, Skills and Employment [2024] FCA 819
Appeal from: He v Secretary, Department of Education, Skills and Employment FedCFamC2G [2023] 356 File number(s): QUD 246 of 2023 Judgment of: COLLIER J Date of judgment: 26 July 2024 Catchwords: ADMINISTRATIVE LAW – construction of s 44(1)(c) of A New Tax System (Family Assistance) Act 1999 (Cth) – meaning of “liability” in context of particular legislation – whether synonymous with responsibility at law – previous orders for payment of childcare support – whether proposed consent orders in Family Court of Australia enforceable as contract Legislation: A New Tax System (Family Assistance and Related Measures) Act 2000 (Cth)
A New Tax System (Family Assistance) Act 1999 (Cth) s 44(1)(c)
Child Support (Assessment) Act 1989 (Cth)
Family Law Act1975 (Cth)
Income Tax Assessment Act 1936 (Cth)
Queensland Law Society Act 1952 (Qld)
Legal Practice Act 2003 (WA)
Legal Practitioners Act1898 (NSW)
Law Reform (Married Women and Tortfeasors) Act 1935 (UK)
Cases cited: Oakey Coal Action Alliance Inc v New Acland Coal Pty Ltd (2021) 272 CLR 33
Selwood v Selwood [2016] FamCAFC 40
Selwood v Selwood [2014] FamCA 531
Membrey v Hall [2019] FamCA 857
Re B v J (1996) 21 Fam LR 186
He v Secretary Department of Education, Skills and Employment [2023] FedCFamC2G 356
Hall v Bonnett [1956] SASR 10
Andrew Koh Nominees Pty Ltd v Receiver & Manager of The Balneum Joint Venture [2007] WASCA 152
Debney v Semerdziev [1982] 2 NSWLR 391
Deputy Commissioner for Taxation v Moorebank Pty Ltd [1987] 1 Qd R 414
Equuscorp Pty Ltd v Short Punch & Greatorix [2001] 2 Qd R 580; [2000] QCA 407
Legal Services Commissioner v Wright [2012] 2 Qd R 360
Re Barber (1845) 14 M & W 720; 153 ER 665
Littlewood v George Wimpey & Co Ltd and British Overseas Airways Corpn [1953] 2 QB 501
Division: General Division Registry: Queensland National Practice Area: Administrative and Constitutional Law and Human Rights Number of paragraphs: 61 Date of hearing: 18 October 2023 Counsel for the Appellant: Ms J Murr Solicitor for the Appellant: Fisher Dore Lawyers Counsel for the Respondent: Mr A Hartnett Solicitor for the Respondent: Mills Oakley ORDERS
QUD 246 of 2023 BETWEEN: JIAN HE
Appellant
AND: SECRETARY, DEPARTMENT OF EDUCATION, SKILLS AND EMPLOYMENT
Respondent
ORDER MADE BY:
COLLIER J
DATE OF ORDER:
26 JULY 2024
THE COURT ORDERS THAT:
1.The appeal be dismissed.
2.The appellant pay the costs of the respondent, to be taxed if not otherwise agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
COLLIER J:
Before the Court is an appeal from a decision of the Federal Circuit and Family Court of Australia Division 2 (FCFCOA) in He v Secretary Department of Education, Skills and Employment [2023] FedCFamC2G 356. The primary Judge held that the earlier decision of the Administrative Appeals Tribunal (Tribunal) made on 19 November 2021, wherein the Tribunal had found that the appellant had not incurred liability to pay for the sessions of child care for the 2016/2017 period in respect of his child, and therefore did not satisfy the eligibility criterion for the Child Care Benefit (CCB) as set out in s 44(1)(c) A New Tax System (Family Assistance) Act 1999 (Cth) (the New Tax Act), was not attended by legal or jurisdictional error.
I understand that, as of the date of this judgment, s 44(1)(c) of the New Tax Act has been repealed. It was however in force at the time of commencement of these proceedings, and is the relevant legislation to which I should have regard.
Section 44(1)(c) relevantly provides as follows:
44 When an individual is eligible for child care benefit for a past period for care provided by an approved child care service
(1) An individual is eligible for child care benefit for a past period for a session of care provided by an approved child care service to a child if:
…
(c) the individual, or the individual’s partner, has incurred a liability to pay for the session (whether or not the liability has been discharged); and
BACKGROUND
The appellant was at one time married to Ms Zhou. The appellant and Ms Zhou separated on 24 May 2016. It is not in dispute that they ceased to be marital partners at that point.
The appellant and Ms Zhou are the parents of a child born in June 2013 (the child).
The child was enrolled in Avenues Early Learning Centre (Avenues) from January 2016. The child did not attend Avenues between 24 May 2016 and 11 July 2016.
At the time that the child recommenced attendance at Avenues, Ms Zhou was recorded by Avenues as the person who had enrolled the child at Avenues. This continued until on or about 1 June 2017.
On 12 July 2016 interim parenting orders (12 July 2016 FCC Orders) were made by a Judge of the Federal Circuit Court (as that Court then was) with the consent of the parties. Order 10 of those orders was as follows:
That the father shall be solely responsible for all costs associated with the child’s day-care.
On 21 October 2016, the appellant and Ms Zhou sought consent orders (Proposed Consent Orders) in the Family Court of Australia (as that Court then was). Order 14 of the Proposed Consent Orders was as follows:
The father shall be responsible 65% for all costs associated with the child’s day-care cost, and the mother shall be responsible 35% for all costs associated with the child’s day-care cost.
(errors in original)
A Registrar of the Family Court of Australia wrote in a letter to the appellant and Ms Zhou dated 26 October 2016 that the Proposed Consent Orders could not be made because:
The proposed consent orders contain provisions in respect of a child or children to whom the Child Support Scheme applies – refer proposed orders 14, 15 and 16. There is no jurisdiction in this Court to make such orders.
The appellant applied to Centrelink for the CCB, and was declared by Centrelink to be entitled to $482.72 in CCB for the 2016/17 financial year. The appellant applied for internal review of Centrelink’s decision. The review officer affirmed Centrelink’s decision.
The appellant sought review of Centrelink’s decisions by the Tribunal. On 19 November 2021 the Tribunal decided that the appellant had not “incurred a liability to pay for a session of care” within the meaning of s 44(1)(c) of the New Tax Act for the 2016/17 financial year.
The appellant appealed the decision of the Tribunal to the Federal Court of Australia. The matter was remitted to the FCFCOA.
On 9 May 2023, the primary Judge dismissed the appellant’s appeal from the Tribunal’s decision. The appellant has now appealed the decision of the FCFCOA to the Federal Court of Australia.
THE DECISION OF THE TRIBUNAL
There were two matters before the Tribunal. The first concerned the CCB and Child Care Rebate (CCR) in the 2016/2017 and 2017/2018 financial years. Only the issue of the CCB in the 2016/2017 financial year was in issue before the primary Judge, and is again in issue in this appeal.
The Tribunal distinguished the question of who was liable, as opposed to who was responsible, for the payment of fees. The Tribunal stated that:
Being responsible for a payment means answerable or liable to be called to account to another person for something. Being liable for a payment means bound or obliged by law or equity, or in accordance with a rule or convention. Based on those dictionary definitions, being liable and being responsible are close in meaning.
The Tribunal referred to the discussion of the Court of Appeal of Queensland in Equuscorp Pty Ltd v Short Punch & Greatorix [2001] 2 Qd R 580; [2000] QCA 407 (Equuscorp) at [10] where their Honours said:
The words “liable to pay” in s 3 carry their usual meaning, “responsible in law” (Littlewood v George Wimpey & Co Ltd [1953] 2 QB 501, 515), and a person liable to pay is “a person against whom payment of the (costs) can be enforced” (Deputy Commissioner for Taxation v Moorebank Pty Ltd [1987] 1 Qd R 414, 416).
The Tribunal stated that s 44(1)(c) of the Act provides that a CCB is payable to the individual who has incurred the liability to pay for the session of care. The care provider – in this case, Avenues – could have successfully sued the individual liable for the fees for that session. The Tribunal concluded:
The account holder, and therefore the person who was liable for the fees payable the sessions of care for the Child from January 2016 until 1 June 2017, was Ms Zhou (the mother).
The Tribunal thus affirmed the decision of the Tribunal in respect of the CCB for the 2016/2017 financial year.
THE DECISION OF THE PRIMARY JUDGE
Before the FCFCOA the appellant sought orders that:
1. The applicant was the individual “liable to pay” for the child care fees 100% (maxim 5 days a week) between 12 July 2016 to 30 November 2016.
2. The applicant is the individual “liable to pay” for the child care fees 65% (maxim 3 days a week) between 1 December 2016 to 5 June 2017.
3. The child enrolment documents in 2016 can’t be destroyed legally before 31 December 2021.
4. This case return to AAT immediately for reassess as the AAT has made legal errors to determine who is liable to pay between 12 July 2016 and 4 June 2017.
(errors in original)
The primary Judge stated that the question of law identified in the appeal was as follows:
Whether the Tribunal misconstrued s 44(1)(c) of the A New Tax System (Family Assistance) Act 1999 (Cth) (as in force on 17 August 2017) in finding at paragraph 48 of the decision that the person who has ‘incurred a liability to pay’ was the ‘account holder’?
(emphasis in original)
The primary Judge further stated that the finding of fact which the Court was asked to make was as follows:
Pursuant to the Family Court consent orders of 12 July 2016 and 21 October 2016 the applicant had incurred a liability to pay for the sessions of child care in respect of the child, for the 2016/2017 year.
The primary Judge examined the appellant’s submission that the express terms of s 44(1)(c) did not require that the relevant individual must have incurred a direct liability to the child care service provider to pay the relevant fees, and that the requirement was that the individual had “incurred a liability to pay”.
The primary Judge distinguished the case from Equuscorp in that the question in Equuscorp turned on the proper meaning of “client” under the Queensland Law Society Act 1952 (Qld) (QLS Act). His Honour continued:
There is a clear distinction between an individual who might be liable to pay something, and an individual who incurred a liability to pay something. It is trite that either legislatively, or by agreement, an individual other than the person who incurred a legal liability to pay for something might relevantly be liable/responsible for payment.
On the facts before the Court, his Honour concluded that Ms Zhou was the person liable/responsible for payment, as she was the person who incurred the legal liability for payment. The primary Judge stated that Ms Zhou’s right of indemnity against the appellant that could arise by virtue of the 12 July 2016 FCC Orders and Proposed Consent Orders did not alter the fact the Ms Zhou was the person who incurred the liability to pay Avenues for the relevant sessions of child care.
The primary Judge said:
22.The Court finds that on a construction that is consonant with the plain and ordinary meaning of the words in the section, s. 44(1)(c), such section is directed toward the individual who actually incurred the legal liability for payment of Avenues’ fees. There are sound policy reasons for that to be the case. If the applicant’s argument was to be accepted, then providers of services such as Avenues would bear the burden of having to look behind each and every enrolment form before legal proceedings could be commenced by them against a parent or guardian in the event of non-payment of service/session fees. That could potentially place such ELC in the invidious and uncertain position of having to delve into the private affairs of individuals who might be in serious and heated conflict involving their respective family law obligations or entitlements. The Court finds that that was not the intention of the legislature at the time of enactment of the legislation.
…
24.The evidence accepted by the Tribunal was that notwithstanding the absence of a signed enrolment form evidencing that Ms Zhou had contractually enrolled the child during the relevant period (such form was said to no longer be in the possession of Avenues), the Centre Manager at Avenues named Carla Hudson confirmed that the account holder was the person who held the CCB rights, and that such person was Ms Zhou and not the applicant. Such finding was open to the Tribunal based upon a consideration of all of the evidence before it, including questions sent by the Tribunal to Avenues, and answers to such questions. Having found that Ms Zhou was the account holder and person who “held the CCB rights”, the Tribunal did not err in its construction of s. 44(1)(c) when it found that Ms Zhou was the person who had enrolled the child, or when it found that she was relevantly the person who had incurred the liability to pay Avenues for its services ….
His Honour concluded:
26.In the light of the findings of the Court, it is unnecessary to deal with questions going to the validity or otherwise of any orders of the Federal Circuit Court, or of any agreement purportedly entered into pursuant to provisions of the Family Law Act 1975 (Cwth). Any determination as to the validity or enforceability of the Federal Circuit Court orders, or of the terms of any parenting plan, would not adversely impact upon the Court’s finding that it was Ms Zhou who had incurred the relevant liability to pay the Avenues fees under s. 44(1)(c).
GROUNDS OF APPEAL
The appellant’s grounds of appeal to this Court are as follows:
1. The Federal Circuit and Family Court of Australia erred in its interpretation of s 44(1)(c) of the A New Tax System (Family Assistance) Act 1999 (Cth) (as in force on 17 August 2017) (the Act) by erroneously finding that s 44(1)(c) is limited to the individual who incurred the direct contractual liability for the child care fees with the child care centre: [22], and that the Tribunal did not misconstrue s 44(1)(c): [25].
2. The Federal Circuit and Family Court of Australia took into account an irrelevant consideration by considering at [22] that the construction of s 44(1)(c) contended by the appellant would require the approved child care service to ‘look behind each and every enrolment form before legal proceedings could be commenced by them against a parent or guardian in the event of non-payment of service/session fees’ whereas the eligibility criterion for receipt of the child care benefit under s 44(1)(c) requires a determination by the Secretary, not the approved child care service, and the enforceability of payment for the child care fees by the approved child care service is not relevant.
(as in original)
SUBMISSIONS
The appellant made both written and oral submissions relating to both grounds of appeal.
The appellant submitted in relation to the first ground of appeal in summary, as follows:
·There is no statutory mandate or justification for constraining s 44(1)(c) such that it only applied to direct contractual liability to pay the approved child care service.
·The appellant was the party who ultimately bore the financial burden of the relevantly incurred liability to pay for child care fees by force of the 12 July 2016 FCC Orders and the Proposed Consent Orders.
·Both the 12 July 2016 FCC Orders and the Proposed Consent Orders were enforceable inter partes as contractual agreements, as they were both made by consent of the parties. Accordingly, due to his contractual obligation to Ms Zhou to pay the child care fees, the appellant had at all relevant times “incurred a liability to pay” within the meaning of s 44(1)(c) of the New Tax Act.
·The express terms of s 44(1)(c) do not require that liability be incurred directly with the child care service, on a contractual basis or otherwise.
·The purpose of the legislative scheme was to reduce the cost of childcare. A narrow construction not provided for in the legislation or explanatory memorandum, such that only those with a direct contractual relationship with the child care provider and not necessarily those who bore the financial burden of child care, were eligible, would undermine the legislative intent of the scheme and would place unnecessary constraint on the operation of the New Tax Act.
·The caselaw, including Equuscorp, has recognised that a party who is “liable to pay” is not confined to the party who has a direct contractual relationship with the payee.
·The appellant incurred a direct liability to pay the childcare fees through his obligation to Ms Zhou, irrespective of any direct contractual relationship with Avenues. The appellant’s obligation to Ms Zhou was sufficient to incur the requisite liability under s 44(1)(c).
·Legal Services Commissioner v Wright [2012] 2 Qd R 360 (Wright) was apposite in that it involved the question of liability to pay certain costs pursuant to statute where matrimonial consent orders had been made. In Wright the wife was found to be under a legal obligation to pay for legal costs and services provided by the lawyers to the husband who contracted them to arrange the sale of the marital property by virtue of the consent orders. The Court observed in that matter that:
The legal obligation to cause the proceeds of sale to be applied in accordance with the order had its basis and thereby its enforceability primarily from the force of the order itself, as well as its contractual force. It was thereby an obligation enforceable not only by a money claim, but also by proceedings to compel compliance the Court's order.
·In multiple other matters, parties were found to be “in substance liable to pay” where no direct contractual relationship existed between the provider of services and that party. Consequently, the interpretation taken by the Tribunal and upheld by the primary Judge is contrary to the weight of authority which recognises that a liability to pay is incurred by a person who is bound by law to meet that cost, and it is unnecessary that the obligation be enforceable only by the payee.
·The qualification on the power of the Family Court (as it then was) to make child maintenance orders under s 66E(1) was conditional on the ability of either party to apply for an assessment of the costs of the child under the Child Support (Assessment) Act 1989 (Cth) (as then in force) (CS Act). The appellant submitted that as the costs of the child as defined under the CS Act referred to a prescribed methodology and calculation that was means tested and did not take into account any actual or particular costs, an administrative assessment of the costs of the child was not the same as an order that a particular expense relating to the child be paid in a particular way.
·A consent order which allowed for the payment of child care fees in a particular way did not oust either parent from making an application for child support. Additionally, it was not open to either parent to make an application for child support seeking an assessment that specifically required the child care fees to be paid.
·In short, the provision for the payment of child care fees in the 12 July 2016 FCC Orders and Proposed Orders did not equate to the costs of the child under the CS Act and did not preclude an application for child support being made under the CS Act, thus s 66E of the Family Law Act1975 (Cth) (Family Law Act) does not apply.
·The reasoning in Selwood v Selwood [2014] FamCA 531, which ruled that orders of the court requiring the husband to pay for half of the medical, travel and accommodation costs of the child were not ultra vires, was directly applicable to the case before the Court.
·Even if the Court were to find that the 12 July 2016 FCC Orders and Prospective Orders were ultra vires, they would have contractual force.
·Although proceedings in the Family Court relating to a child’s welfare are “not strictly proceedings inter partes”, this is a reflection of the paramountcy of the child’s best interests and does not preclude consent orders from being enforceable as a contract.
·The Proposed Orders constituted a parenting plan as they fulfilled the requirements of a parenting plan under s 63C(1) of the Family Law Act. The appellant submitted that on this basis the Proposed Orders, even if they were considered to be invalid as Orders of the Court, were still valid and enforceable as a parenting plan and binding contract.
·The 12 July 2016 FCC Orders, if they were considered to be invalid to the extent that they dealt with child maintenance, were still binding between the parties as a contract.
·The 12 July 2016 FCC Orders and Proposed Orders were not intended to be child support agreements as they were limited to one issue within the purview of the costs of the child and did not preclude the parents from separately applying for child support or entering consent arrangements under the CS Act. Consequently, in the appellant’s submission, the CS Act was irrelevant and did not affect the enforceability of the 12 July 2016 FCC Orders or the Proposed Orders as contracts between the parents.
In relation to the second ground of appeal the appellant submitted in summary:
·In line with their earlier submissions, “incurred a liability to pay” in s 44(1)(c) referred to a party with a legal obligation or who ultimately bore financial responsibility for payment, irrespective whether the obligation to pay was directly owed to the child care service. Liability may still be incurred where the child care service cannot directly enforce the payment, thus no burden to “delve into the private affairs of individuals” in order to enforce payment is imposed on the child care service under this construction. The matter of enforcement is distinct from the assessment of eligibility.
·The point made by the primary Judge misapprehended the administration of the child care benefit scheme by assuming that the child care service itself was required by the scheme to administer the benefit. As it was possible under the scheme (as was the case here) to seek the administration of the payment through Centrelink as a lump sum at the end of the financial year, there was no requirement of administration of the benefit or requirement to make any assessment of eligibility placed on the child care centre.
·The wording of s 44(1)(c) is such that a party may be eligible for CCB whether or not liability has been discharged. The ability of the child care centre to enforce payment of its fees is unaffected by the eligibility criterion provided by s 44(1)(c) of the New Tax Act.
The appellant submitted in conclusion that the Tribunal and the primary Judge erred in law in adopting an unduly restrictive interpretation of the phrase “incurred a liability to pay” under s 44(1)(c) of the New Tax Act.
In relation to the first ground of appeal, the respondent submitted, in summary:
·The statutory scheme provided a scheme of family assistance payments to eligible families.
·Paragraph 25 of the Explanatory Memorandum to the A New Tax System (Family Assistance) Bill 1999 provided that :
(a)a person (or their partner) must incur a liability to pay for the session of care; and
(b)it is not necessary for that liability to be discharged.
It follows that an individual might receive the subsidy when the person’s partner incurred the liability to pay.
·The decision in Equuscorp concerned the construction of the word “client” in the then s 3 of the QLS Act, where that legislation defined “client” as ‘a person who has paid, or is liable to pay, the account of a client’. The question before the Court of Appeal was whether the majority unit holder could make an application to ask the Court to decide the reasonableness of the fees and costs charged under a bill of costs that was served on third parties that it had sued. The unit holder was not a client of the relevant law practices. The Court of Appeal held that the unit holder had not assumed liability to pay costs despite being ultimately responsible for some costs by way of a levy raised to facilitate the payment, and was not entitled to succeed on its application. It followed that Equuscorp was authority for the proposition that under the QLS Act beneficiaries in trust estates could no longer seek review of a bill of costs as they could under earlier legislation.
·The 12 July 2016 order of the then Federal Circuit Court (that the appellant be solely responsible for all costs associated with the child’s day care) was beyond the power of that Court because s 66E of the Family Law Act withdrew the power of a family law court from making a child maintenance order (relevantly) for any child in respect of whom an administrative assessment of child support could be made. Combined with the fact that the order was made by an inferior court of record in excess of its jurisdiction, the order was a nullity and was of no legal force. This is further made clear by the decision of the Full Court of the Family Court in Selwood v Selwood [2016] FamCAFC 40.
·An order or decision which is based on a mistaken assumption of an inferior court’s jurisdiction is affected by jurisdictional error. The orders of 12 July 2016 were partly within jurisdiction (to the extent that they created enforceable parenting orders) and partly outside jurisdiction (to the extent that they purported to make a ‘child maintenance order’). To the extent that the order was partly outside of jurisdiction, that order was affected by jurisdictional error. It does not matter that the order of an inferior court has not been set aside. An order of an inferior court that is affected by jurisdictional error is of no force from the moment it is made and may be disregarded: Oakey Coal Action Alliance Inc v New Acland Coal Pty Ltd (2021) 272 CLR 33 at [48].
·To the extent that the appellant contended that the orders of the Federal Circuit Court would still have contractual force notwithstanding that they were ultra vires, that contention should not be accepted.
·The proposed consent orders of 21 October 2016 were not made by the Federal Circuit Court.
·A “parenting plan” could not operate as an enforceable contract between the parties to the extent that it dealt with child maintenance orders.
In relation to the second ground of appeal, the respondent submitted in summary:
·The primary Judge understood that the task of determining who was eligible for CCB fell to the respondent.
·The impugned part of the learned primary judge’s decision was not necessary for his Honour to determine the dispute between the parties.
CONSIDERATION
Ground of appeal 1
Detailed submissions were made by both parties concerning the decision of the Queensland Court of Appeal in Equuscorp. The lead judgment there was delivered by de Jersey CJ, with whom White J agreed. As de Jersey CJ explained,
1.The applicant Equuscorp Pty Ltd owns the majority of the units in a particular unit trust. The third respondent, Permanent Trustee Company Ltd, is trustee, and the second respondent, Hallcorp Management Pty Ltd, is manager. The applicant brought court proceedings against the trustee and the manager. The manager was represented by a firm of solicitors, Short Punch and Greatorix. The firm of solicitors, Deacons Graham and James acted for the trustee. The solicitors rendered bills of costs to their respective clients. The applicant unit holder sought to challenge those bills.
Division 6A of the QLS Act, as it then was, established mechanisms for reviewing lawyers’ bills of costs by costs assessors. Division 6A applied if a client was, inter alia, given an account. “Client” was defined in s 3 of the QLS Act as follows:
“client” includes a person who has paid, or is liable to pay, the account of a client.
Chief Justice de Jersey noted that the applicant in that case was not “the client” as ordinarily understood, but that the applicant argued that it fell within the extended definition of “client”, being a person “liable to pay the account of the client”. His Honour noted that, at first instance, this contention was rejected. In particular his Honour said:
7.The fundamental reason why the applications to the District Court could not have succeeded relates to the text of the statutory provisions. Consideration of the language and flow of those provisions shows that the applicant to the court must in circumstances like these be the same party as sought review by a costs assessor (appointed by the clerk to the Tribunal).
8.Section 6ZA(1) entitles “a client” to seek the appointment by the clerk of a costs assessor. That assessment then, in certain circumstances, binds “the client” (s 6ZE(1)), save that “the client” may apply to the court under section 6ZF(1). The provisions do not contemplate a change in the identity of the applicant: the reference to “client” must throughout be read as referring to the same person or entity.
9.Here the appointment made under s 6ZA was sought by the trustee and the manager, what I might term the true clients. Yet it was the present applicant, the unit holder, which later sought review by the District Court. That did not fall within the contemplation of the statutory scheme. The learned judge did not refer to this point in his reasons for judgment, but it meant the applications could not succeed.
Importantly, his Honour continued:
10.That point aside, was the applicant shown to be “liable to pay (the client’s) account” to the solicitors, the matter agitated before the learned judge and comprehensively developed before us? The liabilities to the solicitors were in the immediate sense borne by the manager and the trustee, the entities I have called the true clients. The words “liable to pay” in s 3 carry their usual meaning, “responsible in law” (Littlewood v George Wimpey & Co Ltd [1953] 2 QB 501, 515), and a person liable to pay is “a person against whom payment of the (costs) can be enforced” (Deputy Commissioner for Taxation v Moorebank Pty Ltd [1987] 1 QdR 414, 416). Neither the solicitors nor the true clients could successfully have sued the applicant for the amounts of these costs (qua costs).
…
12.There was no evidence before the learned judge of any independent assumption of liability by the applicant for payment of the costs as such. In an effort to establish such liability, the applicant relied on provisions of the unit trust deed (cll 13.01(a), 13.02), whereby unit holders could be levied in respect of “outgoings”… Although not established by evidence before the learned judge, it was accepted by the parties, before that judge and us, that the unit holders were levied for an amount which included, among other things, their “share” of the amount of these costs.
13.Those provisions of the deed would not however establish any liability in the applicant, in terms of s 3, to pay “the account of (the) client”, being the solicitors’ account rendered to each of the trustee and the manager. Those provisions would go no further than to establish an obligation in the applicant, as unit holder, to meet a levy designed to facilitate the trustee’s and manager’s own payment of the solicitors’ accounts, or to reimburse them, their having made payment.
(emphasis added)
In a separate judgment McPherson JA in Equuscorp said:
23.I should be sorry to see the words “liable to pay” in s 3 of the Act given a narrower interpretation than was ascribed to them in decisions under s 30 of the Act of 1867 or the equivalent English provision in s 38 of the Solicitors Act. There is no good reason for adopting such an interpretation. The right so to refer did not depend on the identity of the party to whom the bill or account was made out, nor on the existence of "privity" between the solicitor and the person liable to pay. See Sadler v Palfreyman (1834) 1 Ad & E 717; 110 ER 189, which involved an even earlier version 2 Geo 2 c 23, s. 23 of these statutes.
His Honour considered that the point was covered by the decision of the Exchequer Court in Re Barber (1845) 14 M & W 720; 153 ER 665, and continued:
27.In my opinion, the fund raised here by levying the unit holders to meet the costs incurred by the trustee as manager to the solicitors bears a similar character to that considered in Re Barber. The unit holders were not liable to pay the solicitors' account, but liable to pay the amount of the levy to the trustee or manager, who was the person or persons liable to pay that account. Conceivably the result might have been different if the provision in s 31 of the repealed Act had been retained or incorporated in the new legislation. However, given the absence of any such provision, there is no power here to order an assessment of the solicitors' account…
The NSW Court of Appeal in Debney v Semerdziev [1982] 2 NSWLR 391 (Debney) at 396-397 said that the equivalent provision in the New South Wales legislation (to the legislation considered in Equuscorp) was:
… a remedial provision in respect of costs charged by officers of the court. It is not concerned with the person directly liable to the solicitor, that is, the party chargeable; other provisions of the Act deal with his right to taxation. It is concerned with persons upon whom the burden of costs falls although they are not the solicitor's clients. It is not necessary, although of course it may be relevant, that the third party be subject to an independent obligation to pay the costs, as the mortgagor was in the present case bound to pay the first mortgagee. It may be that the third party cannot succeed if he is “a mere volunteer”, but it is not possible to place a person such as the respondent in that category. If in substance the third person is liable to pay or has paid the bill, he comes within the scope of the section…
In that case however the Court also found that where there was a deficiency in the amount paid to a second mortgagee after the lawyer’s costs of a first mortgagee’s sale had been paid, in substance it was the second mortgagee’s money that was liable to pay the costs, and which in fact paid the costs, and the second mortgagee was accordingly entitled to delivery of a bill of costs pursuant to s 32 of the Legal Practitioners Act1898 (NSW). The facts discussed in Debney are distinguishable from those currently before the Court.
In Deputy Commissioner for Taxation v Moorebank Pty Ltd [1987] 1 Qd R 414 (Moorebank) the Full Court of the Supreme Court of Queensland examined s 207(1) of the Income Tax Assessment Act 1936 (Cth) which relevantly provided:
If any tax remains unpaid after the time when it became due and payable or would, but for section 206, have become due and payable, additional tax is due and payable by way of penalty by the person liable to pay the tax at the rate of 20% per annum on the amount unpaid, computed from that time or, where, under section 206, the Commissioner has granted an extension of time for payment of the tax or has permitted payment of the tax to be made by instalments, from such date as the Commissioner determines, not being a date prior to the date on which the tax was originally due and payable.
(emphasis added)
Justice Connolly (with whom McPherson and Derrington JJ agreed) observed at 416:
… In my judgment in s.207(1) reference to “the person liable to pay the tax” is to a person against whom payment of the tax can be enforced. In O’Keefe v. Calwell (1949) 77 C.L.R. 261 Williams J., in whose judgment Rich J. agreed, said at 295:
“The ordinary natural grammatical meaning of a person being liable to some penalty or prohibition is that the event has occurred which will enable the penalty or prohibition to be enforced, but that it still lies within the discretion of some authorized person to decide whether or not to proceed with the enforcement. Cf. James v. Young (1884) 27 Ch.D. 652; In re Loftus-Otway v. Otway [1895] 2 Ch.235. The word ‘liable’ is sometimes used in the sense of exposure to liability, but this is not the ordinary natural grammatical meaning of the word. It would require a context to give the word this meaning.”
I find the following passage from Hall v. Bonnet [1956] S.A.S.R. 10 from the judgment of Napier C.J. and Abbott J., although spoken in a quite different context, to be helpful:
“The dictionaries do not agree on the derivation of ‘liable’ (or ‘lyable’) from ‘ligabilis’ (cf. the Oxford English Dictionary with the Shorter Oxford Dictionary), but we think that they agree that the primary meaning (in law) is ‘that can be bound’. In this context, however, where the legislature is dealing with ‘proceedings against and contributions between tortfeasors’, the meaning is rather narrower than that. A person ‘liable’ is one ‘who can be compelled to pay by using the due process of law’. In other words, as ‘vulnerable’ means ‘who can be wounded if attacked’, so ‘liable’ means ‘who can be bound if sued’, or, to speak more accurately, ‘who can be compelled to pay by taking such steps as may be or remain necessary to obtain and enforce the judgment of a court of justice’. In this sense it seems to us that ‘liable’ comprehends the state of a wrong-doer from the time of the fault committed to the point at which his liability is established and quantified by the judgment, and, beyond that, to the point as which it is discharged whether by release or payment or otherwise, as by lapse of time. The context may show that some other meaning is intended, but this is we think, the natural meaning.”
I note further that in Equuscorp de Jersey CJ referred to the earlier decision of the Court of Appeal of England and Wales in Littlewood v George Wimpey & Co Ltd and British Overseas Airways Corpn [1953] 2 QB 501 (Littlewood). In that case the Court examined s 6(1) of the Law Reform (Married Women and Tortfeasors) Act 1935 (UK) which relevantly provided:
Where damage is suffered by any person as a result of a tort …
(c) any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued have been, liable in respect of the same damage ….
A key issue which arose in that case was whether “liable” meant responsible in law, or “held liable”. Lord Justice Stevenson in that case at 511 equated the defendant being liable, as when judgment was given against him.
Lord Justice Denning discussed in more detail the question of liability, observing at 515-517:
To see whether this is indeed the law, it is necessary to construe section 6 (1) (c) of the Law Reform Act of 1935, which gives the right to contribution. The critical question is: what is the meaning of the word “liable”? There are two rival views: one is that “liable” means “held liable.” According to this view a person is not liable for the damage unless and until he has had judgment entered against him. The other view is that “liable” means “responsible in law.” According to this view a person may be liable for the damage even though he has not been sued to judgment.
In my opinion, the ordinary meaning of the word “liable” in a legal context is to denote the fact that a person is responsible at law. Thus, when it is said (as Lord Chelmsford L.C. said in a leading case, Bartonshill Coal Co. v. McGuire, that a master is liable for the wrongdoing of his servant, that means that he is responsible for it in a court of law. It does not mean that he has actually been sued for it. Furthermore, a man may be “liable” in this sense even though the remedy against him is suspended or barred for some reason or other. The law of England is familiar with the concept of a liability which exists in the eye of the law, though it may not be enforceable by action. It is perhaps more familiar in contract than in tort. Everyone knows that a contract is good even though it may not be enforceable owing to the Statute of Frauds, and that a debt which is statute-barred is still a debt even though the debtor may, it sued, raise the Statute of Limitations. The same concept applies 516also in tort. Thus a thief is liable for his tort of conversion (which is also a felony) though he cannot be sued for it until he has been prosecuted: Smith v. Selwyn. A diplomat is liable for a tort committed by him, although it is not enforceable against him if he claims diplomatic privilege Dickinson v. Del Solar. An injured party who has incurred hospital expenses which have not been paid and have become statute-barred, can recover them from a tortfeasor: Allen v. Waters & Co., per Goddard J. A husband who has injured his wife by his negligence is guilty of a tort, but it is enforceable only against his master, not against the husband himself: Broom v. Morgan.
In the present case, the judge has found against British Overseas Airways Corporation on the issue of liability, but in their favour on the Statute of Limitations. If the word “liable” in section 6 (1)(c) is construed in the sense which I have mentioned, which I venture to think is its ordinary meaning, no injustice will result at all; whereas if it is construed as meaning “held liable by judgment” much injustice will result. Let me give some illustrations: 1. If “liable” means “held liable,” it would follow that no tortfeasor could claim contribution unless he had been sued to judgment in the courts. That would be a most unreasonable interpretation. As a matter of good sense it ought to be open to a tortfeasor to admit his liability and pay for the damage and then claim contribution from any other tortfeasor. It should not be necessary for the first tortfeasor to contest the claim in the courts before he can recover contribution. That would be so obviously a waste of time and money that Parliament cannot have intended it. When he comes to enforce his right of contribution, however, it must be open to the second tortfeasor to say: “You need not have paid, because you were not liable at all.” The court then inquires into his liability in this sense, that it sees whether the first tortfeasor was “responsible at law” for the damage. If it finds him to be responsible, and also the second tortfeasor to be so, it awards him contribution. This was assumed to be the law in Knapp v. Railway Executive, and I have no doubt that it is correct: see Page v. Burtwell, per Farwell L.J.
If “liable” means “held liable” it would put it in the power of the injured party to decide whether one tortfeasor should get contribution from another or not. If the injured party wished to help one of two tortfeasors, all that he would have to do would be to execute a deed releasing him, or simply allow the period of limitation to run against him, whereupon it would be clear that that tortfeasor, “if sued,” would not be “held liable.” Nay more, the injured party could bring a hopeless action against that tortfeasor and allow judgment to be entered for him on the ground of a release or the Statute of Limitations; whereupon that tortfeasor could say that he had in fact been sued, and had not been “held liable.” The same result may be reached without any design on the part of the injured party, but simply by delay, as here, on his part, or by an error in point of law. It is impossible to suppose that Parliament contemplated that the right to contribution should depend on such chances. Surely the sensible interpretation is that, if the first tortfeasor brings an action for contribution, the second tortfeasor should be able to resist it on the ground that he was not “liable”; that is, not responsible in law for the damage; but he should not be able to resist it on the ground that, although liable, he escaped for some special reason rendering his liability unenforceable, such as a release, or the Statute of Limitations.
(footnotes omitted)
Lord Justice Morris at 522 noted that the case turned on the meaning of the word “liable” in the context used in the relevant legislation, and continued:
… The word “liable” is a very familiar one in legal parlance and as a medium of expression is much employed. If someone is said to be liable, it is very likely that what is meant is that he is answerable at law. But no rigid or all-embracing definition can be suggested. The word may be employed with different meanings according to the context….
…
I do not think that the word “liable” in the first line of section 6 (1)(c) need be limited to tortfeasors who have been held liable, though this matter is not now directly in issue. In the context at the beginning of (c) the word may include one who has properly admitted liability to the person who has suffered damage. He may then recover contribution from another tortfeasor who either (a) has been held liable in respect of the same damage; or (b) who has not been sued but who, if he had been sued, would have been held liable…
Many cases in Australia concerning the question of “liability to pay” involve determination of liability to pay lawyers’ costs. Equuscorp is an example of such a case. A more recent case considering Equuscorp, namely Andrew Koh Nominees Pty Ltd v Receiver & Manager of The Balneum Joint Venture [2007] WASCA 152 (Andrew Koh), considered specifically the question whether a person would be “liable to pay” costs in a bill of costs for the purposes of s 228(2)(a) of the Legal Practice Act 2003 (WA). In that case a receiver paid a bill of costs from a credit balance in the name of a joint venture. Justice of Appeal Buss, with whom Steytler P agreed, relevantly observed:
32Section 228(2)(a) of the Legal Practice Act is a remedial provision. The evident intention of the Parliament was that the persons who are entitled to require that a legal practitioner's bill of costs be taxed should not be confined to the practitioner's clients in relation to the work for which the bill was raised. The apparent object of s 228(2)(a) was, in general, to enable persons upon whom the financial burden of a legal practitioner's bill of costs falls, to require that the bill be taxed…
33The focus of s 228(2)(a) is on the person who has paid a bill of costs, or is liable to pay costs in a bill, or is liable to reimburse another for costs in a bill, or is a beneficiary of a trust estate or fund against which costs may be chargeable. Section 228(2)(a) does not focus on the person who receives or is entitled to receive the relevant payment or reimbursement. No contractual or other relationship is specified between the person who has paid a bill of costs, or is liable to pay costs in a bill, or is liable to reimburse another for costs in a bill, or is a beneficiary of a trust estate or fund against which costs may be chargeable, on the one hand, and the person who receives or is entitled to receive the relevant payment or reimbursement, on the other.
34 In my opinion, a person will be "liable to pay" costs in a bill, within s 228(2)(a)(iii), if, relevantly:
(a) the person is under a legally enforceable personal obligation to pay the legal fees in a bill of costs to the legal practitioner who rendered the bill;
(b) the person is under a legally enforceable personal obligation to reimburse another person for the legal fees in a bill of costs which that other person has paid to the legal practitioner who rendered the bill; or
(c) the person's property may lawfully be applied in paying the legal fees in a bill of costs to the legal practitioner who rendered the bill, or in reimbursing another person for the legal fees in a bill which that other person has paid to the relevant practitioner.
It is not essential that there be a contractual or other relationship between the person who is under a legally enforceable personal obligation to pay or reimburse the legal fees, or whose property may lawfully be applied in paying or reimbursing the legal fees, on the one hand, and the legal practitioner in question, on the other. Where a person's property may lawfully be applied in paying the legal fees in a bill of costs etc, that person will in substance be "liable to pay" costs in a bill, within s 228(2)(a)(iii). It would be inconsistent with the evident intention of the Parliament and with the remedial character of s 228(2)(a) to hold that such a person was not "liable to pay". The reasoning in Debney, at 394, 396 - 397, is, with respect, persuasive and should be applied, by analogy, in the present case.
(emphasis added)
The legislation currently before the Court is distinguishable from the legislation examined in such cases as Andrew Koh.
Section 44 as considered by the Tribunal was introduced by A New Tax System (Family Assistance and Related Measures) Act 2000 (Cth), described in the relevant Explanatory Memorandum as being enacted to recast and simplify the structure and administration of family assistance. References in the Explanatory Memorandum to “liability” for fees are general, including to “a family, or someone else, who is liable for the fees”.
Otherwise, the Explanatory Memorandum appears to contemplate that liability means enforceability – an example of this is “Example 4” at page 168 of the Explanatory Memorandum concerning amendments to the Income Tax Assessment Act 1936 (Cth) and the Medicare levy exemption where a child is a dependant of two parents who are separated. The example discusses a parent who cares for a child for a fraction of the year, and who “will therefore be liable to the Medicare levy for half of the 51 days following the application” of relevant subsections. Similarly the commentary in respect of Item 24 of the relevant Bill notes that:
… The repeal ensures that the individual who receives the FTB advance is liable for its repayment.
The interpretation of “liable” as being synonymous with “responsible at law” was accepted by de Jersey CJ in Equuscorp. It is also consistent with the construction of “liable” in contexts other than claims referable to lawyers’ bills of costs, including claims in tort (Littlewood; Hall v Bonnett [1956] SASR 10) and taxation (Moorebank). In my view that interpretation is the appropriate construction for the word “liable” in s 44(1)(c) of the New Tax Act. It follows that, in finding at [25] that s 44(1)(c) is directed toward the individual who actually incurred the legal liability for payment of the relevant child care fees – namely Ms Zhou, who had a contractual relationship with Avenues – the primary Judge was correct in finding that the Tribunal did not err.
Although it is unnecessary for me to make further findings, I am also satisfied for the reasons contended by the respondent that neither Order 10 of the 12 July 2016 FCC Orders nor the Proposed Consent Orders made the appellant liable to pay the relevant child care fees to Avenues. As submitted by the respondent, s 66E of the Family Law Act withdrew the power of a family law court from making a child maintenance order for any child in respect of whom an administrative assessment of child support could be made under the CS Act in respect of the “costs of the child”. Order 10 of the 12 July 2016 FCC Orders was plainly framed in terms of “all costs associated with the … day-care” of the child of the appellant and Ms Zhou, and was unenforceable in light of the operation of s 66E.
Further, and particularly in light of the statutory framework established by the CS Act, I reject the submission that either or both Order 10 of the 12 July 2016 FCC Orders or the Proposed Consent Orders created contractual liability between the appellant and Ms Zhou outside the framework of that legislation, such as to make the appellant liable for the purposes of s 44(1)(c). As Fogarty J observed in Re B v J (1996) 21 Fam LR 186, an otherwise liable parent may not contract out of statutory liability for child support (see also Membrey v Hall [2019] FamCA 857 at [39]). Contractual liability between parental parties, referable to payment of child support, appears to have no place in the context of the relevant legislation, or orders giving effect to it.
Ground of appeal 1 is not substantiated.
Ground of appeal 2
At [22] of the primary judgment his Honour observed:
The Court finds that on a construction that is consonant with the plain and ordinary meaning of the words in the section, s. 44(1)(c), such section is directed toward the individual who actually incurred the legal liability for payment of Avenues’ fees. There are sound policy reasons for that to be the case. If the applicant’s argument was to be accepted, then providers of services such as Avenues would bear the burden of having to look behind each and every enrolment form before legal proceedings could be commenced by them against a parent or guardian in the event of non-payment of service/session fees. That could potentially place such ELC in the invidious and uncertain position of having to delve into the private affairs of individuals who might be in serious and heated conflict involving their respective family law obligations or entitlements. The Court finds that that was not the intention of the legislature at the time of enactment of the legislation.
The appellant submitted that the comments of his Honour at [22] exposed a fundamental misapprehension of the proper construction of the eligibility criterion in s 44(1)(c), namely that eligibility for the child care rebate pursuant to s 44(1)(c) did not depend on the enforceability of the payment of the child care fees by the child care service provider.
For the reasons I have given in rejecting ground of appeal 1, I find that the comments of his Honour at [22] did not expose errors of construction of the nature contended by the appellant. Rather, as found by the primary Judge, the issue of enforcement lies at the heart of “liability” for the purposes of s 44(1)(c).
Ground of appeal 2 is not substantiated.
CONCLUSION
The appeal is dismissed. The appellant is to pay the costs of the respondent, to be taxed if not otherwise agreed.
I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Collier. Associate:
Dated: 26 July 2024
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