Henriques & Hatzis (SSAT Appeal)
[2014] FCCA 1194
•30 June 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HENRIQUES & HATZIS & ANOR (SSAT APPEAL) | [2014] FCCA 1194 |
| Catchwords: CHILD SUPPORT – Appeal from the SSAT – question of law – nature of jurisdictional error – denial of procedural fairness – allegation applicant denied opportunity to comment on adverse material – adverse material relates to accounting material of company employing applicant – applicant directed to produce material in question – applicant found by Tribunal to be lacking credibility – no breach of natural justice found – costs. |
| Legislation: Child Support (Assessment) Act 1989, ss.4(2), 25, 100, 117(2), 117(4), 117(7B), 161 Child Support (Registration & Collection) Act 1988, ss.80, 88, 89, 105, 110B, 110E, 110F, 110G |
| Re Minister for Immigration and Multicultural Affairs; ex parte Durairajasingham (2000) 168 ALR 407 Repatriation Commission v Owens (1996) 70 ALJR 904 Minister for Immigration and Citizenship v SZGUR [2011] HCA 1 Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation (1963) 113 CLR 475 Attorney-General (NSW) v Quinn (1990) 170 CLR 1 |
| Applicant: | MR HENRIQUES |
| First Respondent: | MS HATZIS |
| Second Respondent: | CHILD SUPPORT REGISTRAR |
| File Number: | ADC 3094 of 2013 |
| Judgment of: | Judge Brown |
| Hearing date: | 7 May 2014 |
| Date of Last Submission: | 7 May 2014 |
| Delivered at: | Adelaide |
| Delivered on: | 30 June 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Lazarevich |
| Solicitors for the Applicant: | Sydney G Maidment Lawyers |
| The First Respondent (Ms Hatzis): | In Person |
| Counsel for the Second Respondent (Child Support Registrar): | Mr Palfrey |
| Solicitors for the Second Respondent: | Sparke Helmore Lawyers |
ORDERS
The Notice of Appeal (Child Support) filed on 27 August 2013 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Henriques & Hatzis & Anor (SSAT Appeal) is approved pursuant to s.110X(4)(h) of the Child Support (Registration and Collection) Act 1988 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 3094 of 2013
| MR HENRIQUES |
Applicant
And
| MS HATZIS |
First Respondent
| CHILD SUPPORT REGISTRAR |
Second Respondent
REASONS FOR JUDGMENT
Introduction
This is an appeal from a decision of the Social Security Appeals Tribunal (the SSAT) made on 16 July 2013. Pursuant to section 110B of the Child Support (Registration & Collection) Act 1988 (the “the Collection Act”) the only ground on which such an appeal can be based is “on a question of law”.
Mr Henriques (“the applicant”) and Ms Hatzis (“the first respondent”) are the parents of [X] born [in] 2011. The appeal relates to the administrative calculation of child support, for [X], made by the Child Support Registrar (“the second respondent”) pursuant to the provisions of the Child Support (Assessment) Act 1989 (“the Assessment Act”).
[X] lives with the first respondent. In the jargon of the Child Support Agency[1], [X] is in Ms Hatzis’ 100 per cent care. Ms Hatzis is a [omitted] by profession. She ceased full time employment prior to [X]’s birth but currently works irregularly as an [omitted].
[1] I appreciate that the Child Support Agency no longer exists. It is now a unit within the Department of Human Services. It is convenient however to continue to refer to the Child Support Agency for the purpose of these reasons for judgement.
Given [X]’s tender years, it is Ms Hatzis’s case that her employment opportunities are restricted by virtue of her responsibilities to care for [X]. The applicant does not necessarily accept this proposition.
The Applicant is a [occupation omitted]. He is employed as such, by a company, [L] Pty Ltd (“the company”). Previously he was a director and shareholder of the company, but has transferred his interests in it to his nephew, Mr K. The applicant has also transferred his interests in a residential property to the company.
It is the Applicant’s case that the company pays him wages calculated by reference to the profit it makes from offering [omitted] services. For relevant periods, Mr Henriques asserts these profits have been modest and so his income low. The first respondent does not necessarily accept this. It is her position that the applicant is intent on arranging his affairs to avoid paying her child support for [X].
In Australia, the financial support to be provided by parents, to their children, is determined to reference to an administrative scheme inaugurated by the interrelated legislation contained in the Assessment Act and the Collection Act. These complex pieces of legislation are supported by other legislation, relating to social welfare payments, taxation matters and the like.
In broad terms, the child support regime creates a mechanism for the financial support to be provided by parents for their children, to be calculated administratively, through the application of a legislative prescribed formula.
This formula is based upon a number of elements, primarily related to the respective incomes of the parents themselves; the statistically calculated cost of supporting children, depending on their ages and socio-economic circumstances; and the extent of care, which each parent provides to any child concerned.
In this case, there is no controversy that Ms Hatzis, for all relevant periods, has provided 100 per cent of [X]’s care. The controversy relates to how the child support income for both Mr Henriques and
Ms Hatzis should be calculated to which the child support formula will then attach..
In the decision, which is subject to appeal, the SSAT determined that the applicant child support assessment, for [X], should be calculated on the basis that Mr Henriques’s adjustable income, for the period from 1 July 2012 to 30 June 2014 was set at .0082,746 per annum.
In reaching this decision, Mr Henriques contends that the SSAT has fallen into legal error and the proceedings leading to this determination are vitiated by procedural unfairness to him.
As a consequence, he seeks the following orders:
1.The decision of 16 July 2013 be quashed;
2.The matter be remitted back to the SSAT for rehearing;
3.He be permitted to file further evidence regarding his taxable income for the period from 1 July 2012 to 30 June 2014;
4.Costs.
The grounds of the appeal
1.The Tribunal denied the Applicant procedural fairness and natural justice insofar as it examined the Applicant in relation to his financial resources and without telling the Applicant that it intended to rely on those answers to adjust the Applicant’s taxable income for the period under review from that disclosed by the Applicant in his Statement of Financial Circumstances.
2. The Tribunal erred in failing to take proper and appropriate account of the Respondent’s capacity to earn income as a part‑time [omitted].
3.In assessing the Respondent’s earning capacity, the Tribunal failed to have regard to the evidence before it which satisfied the criteria in section 117(7B) of the Child Support (Assessment) Act 1989.
Legislative framework
The principle object of the Assessment Act is to ensure that children receive a proper level of financial support from their parents.[2] This object is supported by the following particular objects set out in section 4(2) as follows:
a)that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and, in particular, that parents with a like capacity to provide financial support for their children should provide like amounts of financial support; and
b)that the level of financial support to be provided by parents for their children should be determined in accordance with the costs of the children; and
c)that persons who provide ongoing daily care for children should be able to have the level of financial support to be provided for the children readily determined without the need to resort to court proceedings; and
d)that children share in changes in the standard of living of both their parents, whether or not they are living with both or either of them; and
e)that Australia is in a position to give effect to its obligations under international agreements or arrangements relating to maintenance obligations arising from family relationship, parentage or marriage.
[2] See Assessment Act at s.4(1)
The objective that the level of child support, payable by parents for their children, should be readily determined is, at least in part, achieved by the application of the child support formula to the circumstances of the parents concerned.
The formula itself is informed by regular statistical research, undertaken by agencies of the Australian Government, relating to the actual costs of provided for children, within the context of wages paid to average salary earners within Australia.
The intention of the legislature is that the formula should be transparent and provide fairly for the financial support of children, based on an objective assessment of their needs. The formula is also intended to be responsive to the care provided, by separated parents, for their children.
Pursuant to section 25 of the Assessment Act, separated parents, of a child living in Australia, may apply to Child Support Registrar for an administrative assessment to be made in respect of the child concerned.
As she was entitled to do, Ms Hatzis made application for an administrative assessment of child support for [X]. For the period from 8 August 2011 to 19 September 2012, Mr Henriques was assessed to pay child support, for [X], to Ms Hatzis, in an annual amount of $1,226.00. This was based on an adjusted taxable income of $6,631.00 for Mr Henriques and one of $50,074.00 for Ms Hatzis, with [X] being in her care 100 per cent of the time.
In spite of the good intentions of the Australian Government, the application of the child support formula remains controversial, particularly amongst separated parents. In addition, the potential for human circumstances to throw up situations not readily anticipated by the various child support formulae, created by the legislation, remains infinite.
In these circumstances, the legislature has created a process, through which a person aggrieved by any administrative application of the formula, in any of its intricacies, may apply to the Child Support Registrar to depart from that formula. However, this right of review is only available in certain stipulated circumstances.
The grounds for an administrative departure are set out in Part 6A of the Assessment Act, primarily in section 98C. This section provides three basic criteria, which must be satisfied, before the Registrar may decide to depart from an administrative assessment of child support.
In the first instance, the Registrar must be satisfied that one, of a number of stipulated grounds for departure, is satisfied. Amongst other things, these grounds including the following: any special needs of the child concerned; the manner agreed upon by the parents of educating the child concerned and the financial implications flowing from any such agreement; and, relevantly in this case, the income, property, financial resources or earning capacity of a parent, which is not properly reflected in any child support assessment arising.
Secondly, the Registrar must be satisfied that it is both just and equitable, as regards the child, the carer of the child and the parent liable to pay child support, to depart from the applicable administrative assessment and thirdly and finally, it is otherwise proper to do so.
On 12 July 2012, again as she was entitled to do, Ms Hatzis sought that the Child Support Registrar depart from the administrative assessment of child support determined for [X]. She did so on the basis that the assessment in question did not currently reflect Mr Henriques’s income, property, financial resources or his capacity to earn an income.
The departure application was determined by a delegate of the Child Support Registrar Senior Case Officer W (SCO W) on 10 December 2012. SCO W determined that for the period from 1 July 2012 to 30 September 2013, Mr Henriques’s adjustable income should be set at $51,000.0 per annum. Mr Henriques did not take part in the departure process but SCO W had access to his taxation records and those of [L] Pty Ltd.
From these records, SCO W determined that [L] Pty Ltd had been registered on 15 June 2010. Its main business activity was [omitted] services. Its 2010/11 tax return indicated a total income of $127,024.00. Its major expenses were motor vehicle ($64,632.00); depreciation ($14,915.00); interest charges ($228.00); and other expenses ($47,249.00).
In this context, SCO W made the following findings:
“In this case, the child support assessment is based upon Mr Henriques’s 2010/11 taxable income of $6,631. Having considered the expenses claimed in Mr Henriques’s company tax return, I am satisfied that his income, whilst acceptable for taxation purposes is unlikely to be an accurate reflection of his capacity to pay child support. I consider this to be a special circumstance because it results in an unfair level of child support being payable to Ms Hatzis for [X].”
In reaching this conclusion, SCO W considered bench marks provided by the Australian Tax Office for small businesses. The appropriate bench mark for [omitted] services stated that expenses of such a business should be no more than 54 per cent of annual turnover.
As Mr Henriques’s expenses were more than 90 per cent of his turnover, SCO W considered these expenses to have the appearance of being excessive. This was the rationale for increasing his income to $51,000.00, through discounting the company’s expenses by approximately 60 per cent.
Pursuant to provisions contained in the Collection Act, a person may lodge an objection, with the Child Support Registrar, to any decision arising from the departure process, which is created by Part 6A of the Assessment Act.
Lawyers categorise this objection process as being an independent but internal method of administrative review. The objections process is mandated by section 80 of the Collection Act.
On 12 October 2012 Mr Henriques, as he was entitled to do, lodged an objection with the Child Support Agency to the decision of SCO W. Mr Henriques’s objection was determined on 20 November 2012.
Ultimately the result of the objection decision was to vary the determination of SCO W and in lieu thereof fix Mr Henriques’s adjustable taxable income, for the period from 1 July 2012 to 31 October 2013 at $43,992.00. It was this decision which
Mr Henriques appealed to the SSAT.
The bases for the objection were as follows:
·Mr Henriques was paid a salary, as an employee of [L] Pty Ltd, which was beneficially owned by his nephew;
·The salary paid to him was a reflection of the net profit derived by the business operated by the company;
·This was not an artificial structure in the sense that there was neither inflation of the discretionary spending nor deflation of income derived by the company;
·On a proper examination of the financial statements of the business, there could be no finding that [L] Pty Ltd’s expenditure was excessive.
On 20 November 2012, Mr M, General Manager Child Support Operations issued notices pursuant to section 161 of the Assessment Act. These notices were directed to entities related to Mr Henriques, as well as Mr Henriques himself and required the production of financial documents related to the affairs of [L] Pty Ltd.
The information was required to be supplied by close of business on 4 December 2012. Section 161 authorises the Child Support Registrar to require a person to provide information and documents to him “where it is reasonably necessary for the purposes of [the] Act” to do so.
The Applicant’s accountant responded to this notice by cover of a letter dated 18 December 2012, which bears a receipt stamp of the Child Support Agency dated 2 January 2013. It enclosed income tax returns for [L] Pty Ltd for the financial years ending 30 June 2011 and 30 June 2012 and the company’s financial statement for the year ending 30 June 2012. Also enclosed was an ASIC Extract, which indicated that Mr Henriques had ceased to be a Director of the company on 18 November 2011.
Mr Henriques was also requested to complete a Statement of his Assets and Liabilities. The pro forma form was sent to him on 20 November 2012 with a letter requesting that it be completed and returned by 3 December 2012.
The documents available to me indicate that it was received by the Child Support Agency on 21 December 2012. The covering letter, from the appellant’s solicitor, bears the written notation “received 21 December 2012 after decision completion not used in decision process.”
In the Assets and Liabilities form, Mr Henriques gives his income as $15,000.00 per annum and names [L] Pty Ltd as his employer. The financial statements for the company for the year ending 30 June 2012 indicate a gross income of around $154,000.00, with a similar level of expenditure. The most significant items of expenditure are motor vehicle expenses of approximately $100,000.00; depreciation of around $12,000.00; and wages of $15,200.00.
The objection decision is not a lengthy document. The Objection Officer notes that there had been no response to the section 161 notices. No doubt this is a matter of controversy, so far as
Mr Henriques and those advising him are concerned.
The material available to me indicates that the failure of the objections officer to consider this material has been the subject of complaint by Mr Henriques’ lawyers. However, it is not my function to resolve this controversy, which in any event has been overtaken by the processes of the SSAT.
In the absence of information from Mr Henriques regarding his income, the Objection Officer concerned made the following determination:
“As Mr Henriques and his representatives assert that
Mr Henriques is employed as a [omitted] I have referred to Stinson’s ‘What Jobs Pay 2012-2013’ to obtain the relevant national average wage. The national average wage for [omitted] is $846 gross per week. I propose to set Mr Henriques’s income as $43,992 per annum.”
Notwithstanding the controversy relating to whether information had been properly and expeditiously supplied to the Objections Officer concerned, it is clear from the objection decision concerned that the central issue of controversy, at this stage, was what was
Mr Henriques’s income for child support purposes.
In the absence, rightly or wrongly, of financial information from
Mr Henriques, the Objections Officer used an external source of evidence, no doubt generic and statistical in nature, to fix a level of income, for child support purposes, for the applicant.
Any person aggrieved by a decision of an objections officer is entitled to a further appeal to the SSAT. This right of appeal arises pursuant to the provisions of section 89 of the Collection Act. The process of appeal to the SSAT provides a de novo hearing process. That is the SSAT is authorised to gather evidence and make findings of fact.
Pursuant to section 88 of the Collection Act, the SSAT is directed to provide a mechanism of review, of child support decisions, which is fair, just, economical, informal and quick. Lawyers categorise the SSAT process as being an independent and external source of administrative review.
It is trite but true nonetheless to point out that the SSAT stands in the shoes of the Child Support Registrar and its various delegates.
Mr Henriques was aggrieved at the manner in which the Objections Officer and the earlier delegate had fixed a sum for his child support income. As he was entitled to, he appealed to the SSAT. However the task arising for the Tribunal remained the same – to calculate a figure for the applicant’s child support income on the evidence available to it.
SSAT hearing process
(a) The grounds of appeal to the SSAT
The Application for Review was lodged with the SSAT on 14 February 2013. The grounds for the appeal were as follows:
“1.The Decision did not take account of information that the decision maker had before her and which if had been taken into account would have materially affected the Decision.
2.The Decision was wrong in any event in that it attributed to the Applicant’s income which he did not earn and ignored the tangible and cogent evidence of his decision to involve himself in a start up business as a [omitted] as opposed to working for a salary.
3.The evidence of the business records of the entity (owned by a family member) were relevant, cogent and conclusive evidence of his actual earnings. The financial records were not a sham or an artifice constructed to frustrate or defeat or reduce his liability to child support.
4.The Applicant’s decision to be involved in a family business was connected to securing his financial future albeit at initial sacrifice in earning power. There were no facts or circumstances which entitled the decision maker to attribute a supposed industry wage norm unless there were reasonable grounds to suspect that the financial statements of the entity connected to the Applicant were artificial or contrived. Or that the decision by the Applicant to become the main contributor to and main recipient of reward in a family business was not a rational, commercially explicable decision in his own self interest with a view to increasing his future income and financial security.”
In addition, complaints were lodged about the objection hearing process, particularly that the decision maker concerned had not had reference to financial documents relating to Mr Henriques prior to making its decision. Given the manner in which the SSAT conducted the appeal, these complaints about the objection process are no longer germane.
(b) Preliminary matters prior to the SSAT hearing
Pursuant to s.103 of the Collection Act, the Principal Member of the SSAT is authorised to convene a directions hearing, in respect of any appeal before the Tribunal. These directions can touch upon procedural matters, including what information is required to be given to the SSAT by the parties to the appeal in question.
Such a directions hearing took place, in this matter, on 14 May 2013. On this occasion, the appeal was fixed for hearing on 2 July 2013. Each of the parties was directed to provide a number of specified documents, to the SSAT, by close of business on 31 May 2013.
In the case of Mr Henriques, he was directed to provide the following documents:
·All his bank and credit card statements;
·Evidence of his earnings from 1 July 2012 to 30 April 2013, including pay slips;
·Evidence of the sale of a property located at Property F, [F];
·A detailed schedule of expenses to explain motor vehicle expenses of $100,051.00. This is a reference to the financial statements of [L] Pty Ltd, in which one of the major expenses of the business was motor vehicle expenses in this sum;
·Evidence of the value of his motor vehicles.
In the case of Ms Hatzis, she was requested to provide the following documents:
·Her taxation return for 2011/2012;
·A statement of her financial circumstances;
·All pay slips for the period commencing 1 July 2012 to 30 April 2013.
Directions were subsequently amended with the hearing date changed to 16 July 2013. The parties were also directed in respect of their obligation to make a full and frank disclosure of their financial circumstances, to the SSAT, for the purposes of the review.[3]
[3] See Affidavit of Mr S filed 5 May 2014.
In addition, on 4 April 2013, Mr Henriques provided a further statement of his financial circumstances. This confirmed his occupation as a [omitted] and the identity of his employer as [L] Pty Ltd. In this form, Mr Henriques asserted his total salary prior to tax was $300.00 per week or $15,600.00 per annum.
Ms Hatzis complied with the directions applicable to her. On 17 May 2013, she too filed the statement of her financial circumstances, in which she calculated her average weekly income to be $464.94.00, which was based primarily on government benefits. However, she indicated that she earned $306.06 per day through casual work as a [omitted].
In support of this latter assertion, she provided an Earnings Advice from the [omitted], dated 11 April 2013, which indicated that she earned salary in an amount of $3,764.52 in the financial year to that date. She also provided a Notice of her Tax Assessment, for the year ending 30 June 2012, which indicated a taxable income of $26,153.00.
Mr Henriques’s accountants responded to the directions by way of letter dated 31 May 2013. The accountants indicated that they provided the following documents, on behalf of Mr Henriques:
·ANZ Bank Statements for two credit cards and an Access account;
·Pay slips from 1 July 2012 to 25 April 2013;
·Documents in respect of the sale of the [F] property;
·“Detail (sic) Schedule of motor vehicle expenses of $100,051.00 for [L] Pty Ltd. Please note that these expenses are not personal expenses of Mr Henriques”;[4]
·Documents relating to motor vehicles owned by Mr Henriques and their value.
[4] See letter dated 31 May 2013 from [omitted] Financial Services to SSAT dated 31 May 2013.
(c) The content of the documents supplied to the SSAT
As far as I am aware, I have been provided with copies of all of the documents supplied to the SSAT pursuant to the directions made by the relevant delegate of the Principal Member. These documents are referred to in the decision of the SSAT. In the case of Mr Henriques there are 304 pages of documents; in the case of Ms Hatzis there are 21 pages of documents.[5]
[5] See Decision of SSAT dated 16 July 2013 (hereinafter referred to as “the Decision”) at paragraph 11. In the Decision the documents are identified by the prefix A and a number, in the case of Mr Henriques and the prefix B and a number in case of Ms Hatzis. I will follow the same practice.
It is apparent from the Decision that the SSAT had close regard to many of these documents and as such, it is clear that these documents were influential in the determination which was ultimately made. For that reason, it is necessary for me to delineate and describe the salient documents with some precision and indicate where reference is made to them in the Decision.
I have also been provided with copies of documents which were available to SCO W and in the objections process. These documents were also available to the SSAT.
Mr Henriques submitted a further statement of his financial circumstances to the SSAT. This indicated his total average income was $300.00 per week and his personal and household expenditure totalled $204.00 per week. He indicated he owned property to the value of $40,000.00 and had superannuation of $5000.00. His liabilities were calculated to be $5000.00[6]
[6] See A 2.
In addition, Mr Henriques provided copies of payslips addressed to him issued by [L] Pty Ltd between 6 July 2012 and 26 April 2013.[7] These payslips are similar in content indicating that Mr Henriques is employed as a [omitted].
[7] See A 76 – 117.
No reference is made to an annual salary or the number of hours worked by him. As such there is no calculation of an hourly rate of pay. The gross pay is consistently $478.00 with $43.00 being withheld for tax and $43.02 for superannuation. Against the heading Cheque No in each case has been entered Cash.
The payslips make reference to YTD or year to date payments. As at 26 April 2013, Mr Henriques is said to have been paid $21,032.00 with $1,892.00 deducted for tax and superannuation respectively.
Mr Henriques supplied copies of statements of an ANZ Bank Access Account, in his own name, for the period 29 June 2012 to 23 May 2013.[8] The SSAT found that Mr Henriques had approximately $20,000.00 in this account. It further found that there were regular deposits, by way of card entry, of generally $200.00 One exception being a deposit of $25,333.61, on 31 October 2012, being the proceeds from the sale of his real property.
[8] See A 13 – 22.
In particular, the SSAT noted a correlation between a deposit of $400.00 into Mr Henriques’ ANZ account with a withdrawal from the [L] Pty Ltd account, in a similar amount, with both transactions occurring at the [omitted] Branch of the ANZ.[9]
[9] See the decision at paragraph 24(n).
The documents provided indicate that Mr Henriques sold his property at Property F, [F] for the sum of $375,000.00. Settlement occurred on 31 October 2012. A sum of approximately $241,000.00 was required to discharge a mortgage registered on the property.
The remaining proceeds, according to the Settlement Statement, were distributed as to $25,333.61 to Mr Henriques and $105,061.18 as a vendor’s loan to purchaser. The purchaser concerned was [L] Pty Ltd. On 3 September 2012, Mr Henriques completed a Statutory Declaration in which he indicated that he was gifting the sum of $102,317.00 to his nephew Mr K, on the settlement of the property.
The SSAT found that [L] Pty Ltd had been registered as a company on 15 June 2010. Initially Mr Henriques was the Sole Director and Secretary of the company. He also owned the only shared issued in respect of it.
ASIC records indicate that Mr Henriques ceased to be a Director and Secretary of the company on 1 July 2010, being replaced by Mr K.
Mr Henriques’s shareholding in the company was also transferred. It is Mr Henriques’s position that, at all times relevant to these proceedings, he had no beneficial interest in the company and did not control it.
A Schedule of motor vehicle expenses, Mr Henriques’s accountant provided what is described as a GL Transaction Details Report for [L] Pty Ltd for the period from July 2011 to June 2012.[10] In summary, these purport to indicate that the company had spent $67,748.55 on petrol and oil; $10,972 on registration and insurance; and $31,718.96 on repairs and maintenance.
[10] See the decision at paragraph 24(q).
The SSAT noted that some receipts had been provided for registration, repairs and maintenance by Mr Henriques but none had been provided for petrol and oil. In the context of these proceedings, I am unable to look behind this finding, which does not appear to be challenged. No evidence was taken from the person or persons, who compiled this ledger.
In addition, Mr Henriques’s accountant made available the ANZ Bank business account of [L] Pty Ltd for the period from 21 June 2011 to 19 July 2012. As will become clear, in due course, these statements were highly influential in how the SSAT reached its decision.[11]
[11] See A161-209 and the decision at paragraph 24(s)-(t).
The statements indicate that the major depositor into the account is [V]. There is no controversy that [V] is the company’s major customer. For reasons, which are unclear to me, no attempt seems to have been made to calculate the total sum deposited by [V] into the account in the period in question. It does, however, appear to be a sum well in excess of $160,000.00.
An examination of the statements concerned indicates that a person has handwritten, against some of the withdrawals concerned the word petrol. The statements also indicate that there are many ATM withdrawals over the period in question.
(d) The SSAT hearing
I have been provided with a transcript of the proceedings of the SSAT held on 16 July 2013. This transcript reveals that Mr Henriques was represented, at the hearing, by his solicitor Mr Fuller. Ms Hatzis appeared on her own behalf. The Child Support Registrar elected not to appear.
At the outset of the proceedings, both Mr Henriques and Ms Hatzis were sworn and each gave sworn evidence during the course of the proceedings. Mr Henriques, in particular, was questioned by the Tribunal about his financial affairs.
At the outset of the proceedings, Mr Fuller said as following:
“… by way of opening the case is really of relatively short compass … Mr Henriques has put forward his financial circumstances, including the company that employs him, and those particulars are put forward on the basis that they are the reality of his situation and that there is no basis for departing from that reality to make an assessment based on some statistical or other industry norm …”[12]
[12] See transcript at page 8.
Up until this stage, it is apparent that those conducting the internal review processes, within the Child Support Agency, had not had access to the financial records which had been provided to the SSAT for the resolution of Mr Henriques’s appeal to it.
In these circumstances, both SCO W and the Objections Officer had referred to generic material, relevant to the [omitted] industry, in order to determine what Mr Henriques’s income was for the purposes of assessing child support.
It is, I think clear, from the comments of Mr Fuller that his client was well aware that the central task of the SSAT was to determine what was Mr Henriques’s income for child support purpose. It is also, I think clear, from the nature of the directions provided earlier, that the records directed to be produced would most likely be integral to the completion of this task.
Essentially, Mr Henriques was put on notice that the SSAT hearing would centre on an examination of his financial affairs and how they interrelated with those of [L] Pty Ltd. In addition, given the directions made by the Tribunal, it was also clear that his relationship with Mr K would also be subject to scrutiny.
The SSAT had evidence available to it, which indicated that
Mr Henriques had been employed, on a full time basis, as a [omitted] by a company that contracted with [omitted]. He had held this employment until 21 June 2010, which was around about the time of the incorporation of [L] Pty Ltd. His income approximately $40,000.00 per annum.
This figure was consistent with records available to the SSAT, from the Child Support Agency, for the financial years from 07/08 to 09/10, which revealed an adjustable taxable income in the $50k. Accordingly, the commencement of his employment with the company had apparently resulted in a marked reduction in Mr Henriques’s level of income. His taxable income for the 2010/11 year being $6,631.00.
In questions from Mr Fuller, Mr Henriques denied that his incorporation of the company was motivated by a desire not to pay maintenance for [X],[13] although he conceded his relations with
Ms Hatzis were somewhat strained.
[13] See transcript pages 14-15.
The Presiding Member questioned Mr Henriques about his relationship with the company. He conceded that he was employed on a casual basis, which was not subject to a contract of employment. He confirmed that he estimated his wage, prior to tax, to be $300.00 per week, which was paid in cash.
In this context, it was put to him by the Tribunal that the pay slips supplied to it, indicated an income of $435.00 per week. He was also asked to comment why, if he was a casual employee, the wage slips did not indicate the number of hours worked by him.
The transcript of this passage indicates that Mr Henriques’s evidence in respect of these issues was not particularly clear. He could not explain why there was a difference between his estimate of income and what the pay slips said.
In answer to questions about the relationship between [V] and the company, Mr Henriques indicated that it was he rather than Mr K who did the work for [V]. He indicated that Mr K was employed as a mechanic by an entity separate to [L] Pty Ltd, although he did some repairs on the company’s vehicles.[14]
[14] See transcript pages 35-39.
Given the contents of the transcript, it seems to me that there is an evidentiary basis for the Tribunal to have concluded as follows:
“Mr Henriques was unable to explain the difference in his evidence that he is paid $300 cash per week and the payslips showing that he is paid $435 net per week. Mr Henriques said that he works casually and the hours he works vary from week to week, but even though he is a casual [omitted] he said his wages do not vary with the hours worked. Mr Henriques said that he agreed to help his nephew out and told his nephew to pay him what he can and if there is anything left at the end of the year to ‘fix me up for it’. Mr Henriques told the Tribunal it was just him doing the work for [L]. He said [V] pays [L] according to the run sheet. [V] gives him a starting time and he does the work. Someone from [V] contacts Mr Henriques to arrange the work. The work is not arranged through his nephew. [L] owns the prime mover ….
Mr Henriques said that his nephew works as a mechanic for someone else but he is not sure who he works for. He said his nephew does not do any [omitted] for [V] or any other work for [L] other than helping to maintain the truck.[15]
[15] See the decision at paragraph 28 and paragraph 30.
The SSAT closely questioned Mr Henriques in regards to the [L] Pty Ltd account, particularly the manner in which petrol was purchased and by whom. Mr Henriques confirmed that it was he who filled up the truck and that he had a debit card for this purpose, which related to the company’s account. He said he obtained receipts for all petrol purchases and these receipts were given back to the business.
In this context, he was asked to comment upon how he knew an amount, which seemed to have been withdrawn from an ATM machine, was actually referrable to a petrol purchase. The relevant portion of the transcript reads as follows:
MS MILLER: --- that’s that there are – I will find an example so I can … some that – because you’ve given us some business statements with handwritten annotations on it ---
MR HENRIQUES: Yes.
MS MILLER: --- that say “Petrol”.
MRS BRADLEY: They start at page 162.
MS MILLER: And then looking at these – so, for example, on A173, there’s amounts there said to be for petrol that are actually withdrawals from an ANZ ATM …
MR HENRIQUES: Yes.
MS MILLER: How do you decide that they’re for petrol whereas some of the other Visa debit purchases ---
MR HENRIQUES: Yes.
MS MILLER: --- say from BP or ---
MR HENRIQUES: Yes, yes,
MS MILLER: --- you know, from a petrol station ---
MR HENRIQUES: Yes.
MS MILLER: --- so there’s amounts that come from an ATM ---
MR HENRIQUES: Yes.
MS MILLER: --- and again there’s $800 on 11 October ---
MR HENRIQUES: Yes.
MS MILLER: --- compared to say BP [suburb omitted], BP [suburb omitted] ---
MR HENRIQUES: Yes.
MS MILLER: --- so how do you decide that those ones from an ATM ---
MR HENRIQUES: Yes.
MS MILLER: --- how are they for petrol?
MR HENRIQUES: Yes, these have been pulled out cash to pay petrol. Because both cars come with the company as well, so ---
MRS BRADLEY: Are there other people who drive the cars and the prime mover of this company?
MR HENRIQUES: Yes, there – yes, there is, yes.
MS …: So are they employees or ---
MR HENRIQUES: No, they’re not.
MRS BRADLEY: Are they working for [V]?
MR HENRIQUES: No, they don’t.
MS …: So are they doing it in a private capacity or for the business?
MR HENRIQUES: No, for the business. I’m not sure. I can’t answer that question as I don’t – there’s – look, my nephew uses the car as well, so I don’t know. After that I don’t know what he does with it.
MS MILLER: Who has got the cards for this account, the Classic account? So you’ve got a debit card?
MR HENRIQUES: Yes.
MS MILLER: Are there any other cards?
MR HENRIQUES: No.
MS MILLER: Are you the only person who has the debit card?
MR HENRIQUES: Yes.
MRS BRADLEY: Now, we need to – if there’s anything that’s potentially adverse to you, then we need to put it to you ---
MR HENRIQUES: Yes.
MRS BRADLEY: --- to give you a chance to comment on it.
MR HENRIQUES: Yes.
MRS BRADLEY: What would your comment be to the suggestion that the amounts taken out from an ATM ---
MR HENRIQUES: Yes.
MRS BRADLEY: --- are a cash advance for living expenses or for expenses other than petrol?
MR HENRIQUES: I don’t know.
MRS BRADLEY: Anything else you want to say about that?
MR HENRIQUES: Yes – no, not at all.
MRS BRADLEY: … that this is the only account that the [V] money goes into ---
MR HENRIQUES: Yes.
MRS BRADLEY: --- on a regular basis, and would this be the account that your wages would come from?
MR HENRIQUES: Yes, that’s right.
MRS BRADLEY: And would all the company expenses be paid for through this account?
MR HENRIQUES: Yes, probably would be.
MRS BRADLEY: And we can see that the WA home loans comes out of this account as well.
MR HENRIQUES: Yes.”[16]
[16] See transcript at pages 42- 44.
It is thus clearly the case that Mr Henriques was asked to comment upon what the Tribunal Member regarded as being irregularities in the use of the debit card in question. It was specifically put to
Mr Henriques that he withdrew cash sums, which he utilised for his own living expenses. He was not able to answer this question. Later, the Presiding Member asked Mr Henriques whether Mr K took any wages out of the business.
Mr Henriques indicated that he did not know and the only use he had of the debit card was for fuel payments. In response to the question as to whether Mr K himself withdrew moneys from the company account, Mr Henriques replied as follows:
“What do you mean … mean? With his debit card. I don’t ask him, I never ask him that question. I just use the card when I need to put fuel in the truck and after that that’s his.”[17]
[17] See transcript at page 46.
In respect of why he had transferred the company to his nephew,
Mr Henriques replied:
“Because I wanted to help him out.”[18]
[18] See transcript at page 46.
In respect of the property formerly owned by him at [F], Mr Henriques indicated that he had owned the property for between 10 and 12 years and he had sold it to [L] Pty Ltd to “helps family out”.[19]
[19] See transcript at page 54.
In the light of all this evidence, the SSAT found the Applicant’s evidence to be inconsistent. As such, it was not satisfied that the transfer of the company to Mr K was an arm’s length transaction and that Mr Henriques was not still in control of it.
Given that finding, the SSAT found itself unable to exclude the possibility that the change of ownership of the company was related to Ms Hatzis’s application for an administrative assessment of child support for [X].
Although it did not specifically say as such, the only logical inference arising from this finding was that the Tribunal considered, on balance, Mr Henriques was intent on arranging his affairs in order to avoid paying child support to Ms Hatzis for [X].
I have only had the opportunity to read a transcript of the proceedings. I did not observe Mr Henriques giving his evidence and so am not in a position to make my own comments or provide my own assessment of his overall level of credibility. That is a function which falls solely within the domain of the SSAT.
As McHugh J has remarked, findings on credibility are a function of the primary decision maker “par excellence” and that such a decision maker need not give detailed reasons as to why a particular witness was not believed.[20]
[20] See Re Minister for Immigration and Multicultural Affairs; ex parte Durairajasingham (2000) 168 ALR 407 at [67].
In the particular case before the SSAT, it is clear from the decision provided and which is subject to this review, that the Tribunal had difficulty believing significant portions of Mr Henriques’s evidence, particularly in respect of the circumstances surrounding the transfer of the company; the transfer of Mr Henriques’s real property; and the operation of the debit card attached to the company’s business account.
During the course of the hearing, Mr Henriques was asked to comment in respect of each of these issues. I have recorded some of Mr Henriques’s evidence in respect of these matters. It is clear from reading the decision of the SSAT, as a whole, the Tribunal did not accept his evidence in respect of these issues.
This fact finding exercise was the central function of the SSAT and occurred after Mr Henriques and those advising him had been informed of the parameters of the inquiry before the SSAT. It was an inquiry into the financial relationship between the company and Mr Henriques and what his level of income was for child support purposes.
The SSAT described Mr Henriques’s evidence, concerning his wages, as contradictory. It noted the absence of evidence of regular payment of wages to Mr Henriques. It also noted that he held and operated the debit card relating to the company’s account. In the view of the Tribunal, these factors supported a finding that Mr Henriques was the beneficial owner, rather than an employee, of the company.[21]
[21] See the decision at paragraph 40.
In these circumstances, the SSAT undertook its own analysis of the various withdrawals from the company account made either by debit card or otherwise. In this context, it should be noted that the documents in question originated from a source connected to
Mr Henriques – the accountant for the company, which on
Mr Henriques’s evidence had advised him initially in respect of the appropriate company structure and later assisted in its transfer to Mr K.
In this context, the SSAT made a number of findings from its analysis of the relevant bank records. It found that between June 2011 and July 2012, a sum of $69,439.00 had been withdrawn from the company business account, primarily at ATMs. As previously indicated,
Mr Henriques had been asked to comment on how he could be certain these withdrawals were for petrol purchases. In addition, Mr Henriques had not provided any receipts in recept of purported petrol purchases.
In addition, the Tribunal found that a sum of $13,307.60 had been withdrawn from the company account and paid towards the mortgage on Mr Henriques’s property at [F] prior to the property’s transfer to [L] Pty Ltd.
The SSAT questioned Ms Hatzis about her employment arrangements.[22] She confirmed she was a [omitted], who was offered work only if another [omitted] was unwell. As a consequence, she was not given advanced notice of when she would be required. Given this situation and her responsibilities for [X], she was not always able to take up work offered to her.
[22] See transcript at pages 80-84.
Ms Hatzis was employed on a similar basis prior to [X]’s birth. However, it was her evidence that she was able to work far more hours, at this stage, because her situation was more flexible.
Ms Hatzis’s evidence was also that she herself has some health issues and [X] has special needs. It was the tenor of her evidence that [X] benefited from attending at child care. In this context, Ms Hatzis deposed as follows:
“There is not work on every single day of the week. So just because [X] is in child care does not mean that a [omitted] is going to be sick and I can rock up at work. I can’t say, ‘hey, guess what, she is at child care, so can I work today?’”.
Ms Hatzis was asked if she had ceased full time work to care for [X]. Her evidence was that, at present, there was no way she could take a [omitted] contract at the present time. Accordingly, the issue of
Ms Hatzis’s capacity to earn an income for herself was the subject of scrutiny by the Tribunal.
(e) the findings of the SSAT
The SSAT’s salient findings can be summarised as following:
·Prior to the Applicant’s self-employment, he had been earning a salary of around $50,000.00 per annum, as a [omitted];
·The company had been set up in order to provide [omitted] services for [V], who was its sole customer;
·Between June 2011 and 19 July 2012, monies had been regularly deposited into the company account from [V];
·Between July 2011 and 2 July 2012, monies had been utilised to pay the mortgage on the [F] property, from the company account, which was both before and after the property was transferred to Mr K;
·Between June 2011 and July 2012, $69,439.00 had been withdrawn from the company account, primarily at ATM’s;
·
The company account only had one debit card, which
Mr Henriques operated.
The SSAT made the following findings relating to the credit of
Mr Henriques:
·His evidence regarding the sale of [L] Pty Ltd was inconsistent. As such, it was not satisfied that the sale of the company to Mr K was at arm’s length and that Mr Henriques did not remain in control of it;
·As such, the Tribunal could not exclude the possibility that the change of ownership of the company related to Ms Hatzis’s application for a child support assessment;
·The company continued to pay Mr Henriques’s mortgage, after it had been transferred to Mr K. The amount paid was $13,307.60;
·The Tribunal did not accept Mr Henriques’s evidence that all cash withdrawals at ATMs were for fuel for the truck;
·Mr Henriques’s evidence about his wages was contradictory;
·Mr Henriques was the beneficial owner rather than an employer of [L] Pty Ltd.
The SSAT also noted discrepancies in withdrawals, which were identified as being for petrol and the location of such withdrawals, which did not appear to be related to petrol stations. In this context, the Tribunal made the following finding:
“The Tribunal accepts that the withdrawals from the [L] account at service stations such as BP and Caltex were for fuel and there were expenses incurred at truck wash and for repairs and maintenance, such as at [omitted], Supercheap Auto and various truck repair and servicing businesses. However even though Mr Henriques contended that it costs over $1,000 to fill up the truck for long distances, the Tribunal did not accept Mr Henriques’ evidence that the all cash withdrawals at ATMs were for fuel for the truck. Mr Henriques told the Tribunal he fills up the truck and uses the [L] company card to pay for fuel and hands in the receipts. Mr Henriques said that the accountant had listed the items for petrol on the bank statements. Mr Henriques said that he thought cash withdrawals from the ATMs were used to pay for petrol and that the [L] card is used to buy petrol for all the company vehicles. However the Tribunal, for example, noted that one withdrawal from an ATM for $102 marked ‘petrol’ was at [omitted] Tavern while others were at ANZ ATMs in [omitted] Mall.”[23]
[23] See the decision at paragraph 41.
It seems clear that these finding in respect of the provenance of some of the withdrawals in question had implications regarding the SSAT’s assessment of Mr Henriques’s credit overall.
In respect of Ms Hatzis, the SSAT found that, prior to the birth of [X], she had worked as a [omitted] on contract. However, since the child’s birth, she had not been able to take on any long term contracts because of her responsibilities for [X]. The Tribunal was satisfied that Ms Hatzis had not reduced her hours at work to influence the applicable assessment of child support.
These various findings led the Tribunal to reach the following conclusion:
“The Tribunal was satisfied that in the 2011/12 financial year Mr Henriques had financial resources of $82,746 ($13,307 + $69,439) to be taken into account in the child support assessment. As the child support assessment was based on an adjusted taxable income of $6,631 for Mr Henriques the Tribunal fund that there were special circumstances in this case that result in an unjust and inequitable determination of the level financial support to be provided by Mr Henriques for [X] because of his income, property and financial resources and that the ground for departure is established.”[24]
[24] See the decision at paragraph 45.
The Tribunal further found that it was both just and equitable and otherwise proper to depart from the applicable administrative determination of child support for [X]. Essentially, it was found that the original determination did not properly take into account
Mr Henriques’s financial resources.
The nature and legislative basis of appeals to this Court from the SSAT
The nature of an appeal to this court, from a decision of the SSAT, is governed by the provisions of Division 5 of Part 7A of the Collection Act, in particular section 110B, which reads as follows:
“A party to a proceeding before the SSAT under Part VIIA may appeal to a court having jurisdiction under this Act, on a question of law, from any decision of the SSAT in that proceeding.”
This court is authorised to hear such appeals from the SSAT by virtue of the provisions of section 110E of the Collection Act. Pursuant to section 110F of the Collection Act, having determined any such appeal, I am authorised to make any order, which I believe is appropriate but particularly may:
·affirm or set aside the decision of the SSAT; or
·remit the case to be heard again by the SSAT, either with or without the hearing of further evidence.
The first question to consider is what is the nature of an appeal on a “question of law”? The provisions of the Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006 has significantly reformed the review process in respect of administrative decisions of the Child Support Registrar. The legislation has inaugurated an independent process of review through the SSAT. This process is external of the Agency’s processes and is administrative in nature.
The intent evinced by the legislature, in limiting any appeal from the SSAT to a question of law, is to ensure that the merits of the case are dealt with not by this court but by the SSAT. The High Court has characterised “this distribution of function [as] critical to the correct operation of the administrative review process.”[25]
[25] See Repatriation Commission v Owens (1996) 70ALJR 904
Accordingly, pursuant to the provisions of section 110B, any further appeal from the SSAT is limited in nature. It is limited only to an examination of how the SSAT applied or failed to apply the applicable principles of law, which were relevant to the determination of the appeal issue which came before it.
As such, an appeal to this court, pursuant to section 110B, does not constitute a rehearing on the merits of the case nor should this court, other than in exceptional circumstances, challenge findings of fact made by the SSAT.
The power of this court, in an appeal from the SSAT, to make finding of facts is limited by the provisions of section 110G of the Collection Act. The court may make a finding only if the following two provisos are satisfied:
·Such a finding of fact is not inconsistent with findings of fact made by the SSAT – other than findings made by the SSAT as a result of an error of law.
·It is convenient for the court to make such findings of fact. [26]
[26] See Child Support (Registration and Collection) Act 1989 at section 110G(1)
Pursuant to section 110G(2), for the purpose of making such findings of fact, the court may either have regard to the evidence given in proceedings before the SSAT itself or receive further evidence. However, it is clear that the power to receive further evidence is dependent upon the court discerning an error of law in the decision of the SSAT, which is subject to appeal.
Essentially, this court, in its appellant jurisdiction from the SSAT, must be careful not to allow evidence to be adduced in the expectation advanced by any appellant that an error of law will thus be demonstrated.
Accordingly, this court should not be concerned as to whether or not it would have come to the same conclusion as the SSAT did, but only whether the SSAT erred in law,[27] as it is only in “exceptional circumstances” that the decision of the Tribunal should not be the final decision.[28]
[27] See Neal v Secretary, Department of Transport (1980) 3 ALD 97 at 100 per Franki J and Comcare v Etheridge [2006] FCAFC 27 at paragraph [14] per Branson J.
[28] See Blackwood Hodge (Australia) Pty Ltd v Collector of Customs (No 2) (1980) 33 ALD 38 at 49 per Fisher J.
It is the function of this court to determine whether the decision of the SSAT was within its legal powers. That is what is meant by a question of law. It is not the function of this court to examine the merits of that decision. Essentially, it is not the function of this court to reappraise the evidence led before the SSAT and re-determine the case, according to the conclusions it draws from the available evidence.
As such, I should be cautious to approach the decision of the SSAT with “an eye [which is] too keenly attuned to perception of error”. [29]Rather I should take a common sense approach to what the SSAT was saying in its decision and the reasons why it did said what it said. The function of the SSAT is not to produce reasons of “jurisprudential excellence”.[30] It is to provide an informal and expedient level of independent review.
[29] See Htun v Minister for Immigration & Multicultural Affairs (2001) 194 ALR 244 at 258
[30] See LDME & JMA [2007] FMCAfam 712
An administrative tribunal exceeds its powers and thus commits a jurisdictional error, which is correctable on appeal in respect of a question of law, if it:
·fails to construe properly the legislative provisions applicable;
·identifies the wrong issues or asks itself the wrong questions;
·ignores relevant material or relies on irrelevant material;
·fails to accord procedural fairness to the party before it;
·makes an erroneous finding of such a magnitude that it goes to the very jurisdiction which it purports to exercise rendering its decision perverse or unreasonable or otherwise offending logic.[31]
[31] See Apthorpe v Repatriation Commission (1987) 13 ALD 656 at 666
As Gleeson C.J. pointed out in Re Minister for Immigration & Multicultural Affairs: Ex Parte Applicant S20/2002:[32]
“To describe reasoning as illogical, or unreasonable or irrational, may merely be an emphatic way of expressing disagreement with it. If it is suggested that there is a legal consequence, it may be necessary to be more precise as to the nature and quality of the error attributed to the decision maker, and to identify the legal principal or statutory provision that attracts the suggested consequence.”
[32] Re Minister for Immigration & Multicultural Affairs: Ex Parte Applicant S20/2002 (2003) 198ALR 59 at 61
In Collector of Customs v Pressure Tanker Pty LtdandPazzolanic Enterprises Pty Ltd,[33] the Full Court of the Federal Court, in respect of the Administrative Appeals Tribunal, characterised the nature of an appeal, restricted to a question of law, from a fact finding and decision making tribunal as follows:
“… the nature of the task of this court is clear. It is to leave to the tribunal of fact decisions as to the facts and to interfere only when the identified error is one of law.”
[33] Collector of Customs v Pressure Tankers Pty Ltd and Pozzolanic Enterprise Pty Ltd [1993] 43 FCR 280
The emphasis in judicial review cases is on what is a fair hearing not on what is a fair outcome. As the High Court said in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs:
“It is, therefore, not to the point to ask whether the Tribunal’s factual conclusions were right. The relevant question is about the Tribunal’s processes, not its actual decision.”
One of the grounds of appeal, in this matter, is that the SSAT denied the Applicant procedural fairness, particularly in respect of how it elected to treat the various withdrawals from the company’s account, from the ATM’s. In particular, it is contended that the Applicant was ambushed by this issue and prevented from making effective comment in respect of it.
In Re Minister for Immigration & Multicultural Affairs: ex-parte Lam[35] the High Court (McHugh & Gummow JJ) observed that “the particular requirements of compliance with the rules of natural justice will depend upon the circumstances. Different procedures may be required, even of the same repository of power, from one situation to the next …”
[35] See Re Minister for Immigration & Multicultural Affairs: ex-parte Lam (2003) 195 ALR 502 at [48]
In the same case,[36] Gleeson CJ spoke of a concept he entitled “practical injustice”. He said as follows:
“Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice.”
[36] Ibid [37]
The import of Mr Henriques’s case is that he was not accorded procedural fairness and the conclusions reached by the SSAT resulted in him suffering a situation of such practical injustice. In this context, he relies on the decision of the Full Court of the Federal Court Commissioner for ACT Revenue v Alphaone Pty Ltd[37] where it was said:
“Where the exercise of a statutory power attracts the requirement for procedural fairness, a person likely to be affected by the decision is entitled to put information and submissions to the decision-maker in support of an outcome that supports his or her interests. That entitlement extends to the right to rebut or qualify by further information, and comment by way of submission, upon adverse material from other sources which is put before the decision-maker. It also extends to require the decision-maker to identify to the person affected any issue critical to the decision which is not apparent from is nature or the terms of the statute under which it is made. The decision-maker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material. Subject to these qualifications however, a decision-maker is not obliged to expose his or her mental processes or provisional views to comment before making the decision in question.”
The Grounds of Appeal
[37] Commissioner for ACT Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 591-592
(a) Denial of natural justice and lack of procedural fairness
The applicant challenges the SSAT’s finding that, in the applicable child support period, he had financial resources available to him in the sum of $82,746.00. On his behalf, it is submitted that there was insufficient evidence for the SSAT to find that the monies withdrawn from ATM’s by the applicant were not used for petrol and business expenses.
Prior to reaching a contrary conclusion, it is submitted that it was incumbent upon the Tribunal to put the applicant on notice that it was considering reaching such a conclusion to enable the proceedings to be adjourned in order to allow the applicant to call his accountant and proffer further documentary evidence in regards to the issue. In these circumstances, it was procedurally unfair for the SSAT to conclude Mr Henriques had received financial benefits to the value of $69,439.00.
In addition, it is asserted that the applicant had not been informed, prior to the hearing of 16 July 2013, of the nature of the case he was expected to meet before the SSAT. He acted on the assumption that the case concerned what was an appropriate level of notional income to be applied to him – that being what had occurred at the earlier administrative departure and objection hearing stages.
In this sense, it is argued that Mr Henriques was ambushed. If he had known his accounts were to be subject to scrutiny, he would have called his accountant to explain his accounts and produced relevant expense documentation.[38] Potentially, Mr K could have also been called to give evidence.
[38] See Submissions of the Applicant at paragraph 18
It is clear that the rules of procedural fairness do apply to proceedings before the SSAT. Mr Henriques had the potential to be directly affected by the decision made. As such he had an entitlement to be heard and present evidence. In addition the rules of procedural fairness “would ordinarily require the party affected to be given the opportunity of ascertaining the relevant issues and to be informed of the nature and content of adverse material.”[39]
[39] See Alphaone (supra) at 590-591
In this particular case, the adverse material originated with
Mr Henriques himself. It was his accountant who provided the bank records of [L] Pty Ltd. Mr Henriques provided the evidence that he had the debit card in respect of the account and made the withdrawals in question.
The SSAT, as the fact finder in the case, was charged with making any necessary findings regarding the credibility of Mr Henriques. It found him to be an unreliable witness. It doubted his assertion that he had little or no knowledge of the structure of the company and was its employee only.
To the contrary, it was found that Mr Henriques remained the company’s beneficial owner and the motivation for its change of ownership was to avoid child support. It was dubious in respect of
Mr Henriques’s rationale for the transfer of both the company and the [F] property
It is not the function of this court to substitute its own finding in respect of these issues of credit for those of the SSAT. In my view, in the circumstances of this case, such credibility findings were open to the Tribunal. As previously indicated, credibility findings are the sole domain of fact finders such as the SSAT.
In my view, it was clear what case Mr Henriques was expected to meet before the SSAT. Ms Hatzis had asserted at the instigation of the departure process that she did not believe the administrative assessment of child support for [X] was properly reflective of Mr Henriques’s income, property or financial resources. It was her position that
Mr Henriques had managed his financial affairs to avoid paying a proper level of child support for [X].
In this regard, the directions made by the SSAT on 14 May 2013 are crucial. Mr Henriques was directed to provide a detailed schedule to explain how motor vehicle expenses of $100,051.00 claimed by the company were calculated. In my view, the Tribunal raised with
Mr Henriques its interest in these expenses and indicated that they would likely be subject to its scrutiny. As such, there was no element of surprise or trickery. This is particularly so given the provenance of the documents on which the SSAT founded its decision.
In this sense, there is a dichotomy between whether the conclusions reached by the SSAT in respect of the ATM withdrawals was factually right and whether the process through which the issue was actually raised with Mr Henriques was a fair one. In the case of the latter consideration, I do not think it is accurate to assert that Mr Henriques was ambushed about the issue.
In SZBEL the High Court approved the reasoning of the Full Court in Alphaone and confirmed that ordinarily a person who will be directly affected by any particular decision is required to be informed of all relevant issues, including the nature and content of any adverse material. In most cases, the starting point for this will be the reasons for decision of the subservient decision making body. In this case the delegate of the Child Support Registrar and the subsequent objections officer.
In the case, the High Court said as follows:
“The Tribunal is not confined to whatever may have been the issues that the delegate considered. The issues that arise in relation to the decision are to be identified by the Tribunal. But if the Tribunal takes no step to identify some issues other than those that the delegate considered dispositive, and does not tell the applicant what that other issue is, the applicant is entitled to assume that the issues the delegate considered dispositive are ‘the issues arising in relation to the decision under review’. That is why the point at which to begin the identification of issues arising in the relation to the decision under review will usually be the reasons given for that decision. And unless some other additional issues are identified by the Tribunal (as they may be), it would ordinarily follow that, on review by the Tribunal, the issues arising in relation to the decision under review would be those which the original decision-maker identified as determinative against the applicant.” [40]
[40] SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (supra) at 163
Accordingly, the SSAT’s range of inquiry is not limited in its parameters to only issues ostensibly considered by delegates of the Registrar, in the earlier departure and objection determinations. However issues relating to procedural fairness dictate that if there is to be a focus on issues not identified in the lower decision notice be given and the issues in question specified.
In Minister for Immigration and Citizenship v SZGUR[41] French CJ and Kiefel J summarised the applicable principles as follows:
“Procedural fairness requires a decision-maker to identify for the person affected by any critical issue not apparent from the nature of the decision or the terms of the statutory power. The decision-maker must also advise of any adverse conclusion which would not obviously be open on the known material. However a decision-maker is not otherwise required to expose his or her thought processes or provisional views for comment before making the decision.”
[41] Minister for Immigration and Citizenship v SZGUR [2011] HCA 1
In this case, Mr Henriques was aware (or should have been aware) of what the major issue arising in the case before the SSAT given both the contents of the directions made to him and the legislative basis of the decision which had been made. The issue was his income earning capacity and financial resources, arising from his relationship with [L] Pty Ltd, the company which he had established and which he had transferred to Mr K.
In view, the Tribunal, in its questioning of Mr Henriques regarding the use of the debit card and its request for his comment in respect of the possibility that he had utilised monies withdrawn from the account for his own living expenses, alerted Mr Henriques of the prospect that it might draw an adverse conclusion from this material. In this regard, it is germane that one of the directions in question was specifically directed to vehicle expenses.
Given the manner in which the earlier hearings, within the Child Support Agency were finalised, although each remained focussed on what was Mr Henriques’s level of income and financial resources for the purpose of calculating child support, in the absence of actual evidence from [L] Pty Ltd and Mr Henriques, the fact finders concerned, in each case arising, were compelled to look at comparative sources of evidence regarding the remuneration of persons employed in similar positions to that occupied by Mr Henriques.
This did not mean that the SSAT would itself adopt the same course and would consider only whether the comparisons used earlier were reasonable. To the contrary, in the various directions it made, the SSAT indicated that it would conduct a direct inquiry into Mr Henriques’s own financial affairs and he was put on notice in this regard, particularly in regards to the calculation of motor vehicle expenses of the company. In particular, he was given the warning that he was required to make a full and frank disclosure of his financial circumstances to the Tribunal.
In addition, what are relevant issues in any case, of which an applicant must be informed, will vary from case to case, depending upon the statute which elicits the opportunity to be heard in an application for review.
In this case, the right to review by the delegate of the Child Support Registrar arose pursuant to the provisions of section 98C of the Assessment Act, which provides the applicable legislative criteria required to found a departure from an administrative determination of child support. Specifically reference is made to the criteria contained in section 117(2), one of which is the income, property and financial resources of either parent.
Accordingly, the applicant was on notice that one of the relevant issues to be considered before the SSAT was whether, given the level of his income, earning capacity, property and financial resources, the relevant administrative assessment of child support under review, had resulted in an unjust and inequitable determination of his level of child support for [X].
During the course of the hearing, after it had been established that there was one debit card for the company bank account; and that
Mr Henriques held and operated it; the Tribunal directly raised with
Mr Henriques its concerns that not all the withdrawals from the account were likely to be for petrol and at least some of them might relate to Mr Henriques’s personal living expenses. He was specifically asked if he wished to comment on this particular issue.
Mr Henriques was represented before the SSAT. Neither he nor his representative requested an adjournment of the proceedings or sought an opportunity to call further evidence in respect of the issue of the company account and the monies withdrawn from it. It is now the applicant’s contention that the tribunal should have adjourned the proceedings, effectively on its own motion, so that:
“…complete documentary evidence [could have been] put forward, and the accountant called if necessary …”[42]
[42] See Applicant’s submissions at 12.1
The difficulty arising from this submission was that the applicant had earlier been directed to provide documentary evidence, particularly in respect of how motor vehicle expenses attributable to the company had been calculated. In this sense, it is difficult to see how his failure to provide a more detailed explanation of the withdrawals in question can be attributed to a lack of procedural fairness on the part of the SSAT.
In this context, the applicant complains that the Tribunal did not explain to him why it was asking questions about petrol and ATM withdrawals. This submission does not seem to be borne out by the actual transcript of proceeding, which indicates that Mr Henriques was specifically asked to comment on whether the withdrawals were for petrol or represented an advance on his own living expenses.[43]
[43] See transcript at page 44
It is clear from the decision of the SSAT that it did not accept much of Mr Henriques’s evidence regarding his rationale for transferring the company to the effective control of Mr K and his subsequent decision to transfer his property at [F] to the company. Ultimately, the Tribunal concluded that it was unable to rule out the possibility that
Mr Henriques had organised his financial affairs to avoid paying a proper level of child support to Ms Hatzis for [X].
As previously indicated, assessment of credit is an issue for the finder of fact in any particular case – in this matter the SSAT. It is not my function, in a process of judicial review, to substitute my own findings in respect of credit. In his submissions, counsel for the Registrar described Mr Henriques’s business affairs as “unusual”. This seems to me to be not an inappropriate way to characterise them.
It is not an uncommon phenomenon that, during the process of an inquisitorial hearing, a decision making tribunal reaches a conclusion that a party who will be affected by its decision is not being truthful about the subject matter of the inquiry in question. In such circumstances, is the decision maker required to inform the party concerned that it considers he or she is lying, in the hope that through such a process of reframing, a previously recalcitrant applicant will choose to be more candid in future?
As the High Court pointed out in SZBEL, it is not necessary for a Tribunal to put to an applicant in so many words that he or she is lying. Nor is a Tribunal required to adopt the position of a contradictor of evidence it considers unreliable.[44] Rather it is entitled to withhold both its actual mental processes, as engaged by the hearing process and any provisional views it may have reached, from any applicant concerned, until decision is reached.[45]
[44] See SZBEL (supra) at page 165 - 166
[45] See P v Child Support Registrar [2013] FCA 1312 at page 41
In this context, the following passage from SZBEL appears apposite:
“Procedural fairness does not require the Tribunal to give an applicant a running commentary upon what it thinks about the evidence that is given. On the contrary, to adopt such a course would be likely to run a serious risk of conveying an impression of pre-judgment.”[46]
[46] See SZBEL (supra) at page 166
In any event, in this particular case, during the course of the evidence, the SSAT did expose some of its thinking to Mr Henriques. It suggest to him that some of the withdrawals from the bank account in question had at least the potential to be regarded as providing for his personal living expenses. The transcript indicates that Mr Henriques was given an opportunity to comment on this assertion.
However, as the High Court pointed out in SZBEL even in cases where the issues arising for the decision are properly identified to the applicant concerned, it may nonetheless be necessary for the decision maker concerned to advise an applicant of any adverse conclusions in the terms envisaged by the Federal Court in Alphaone. Such a requirement must, of course, depend upon the circumstances of the case concerned. The High Court did not elucidate in regards to this.
In this context, what obligations did the Tribunal have to Mr Henriques vis-à-vis notions of procedural fairness? In my view, the following issues are germane:
·The legislative framework applicable to the decision required to be made by the SSAT included a consideration of the financial resources and income earning capacity of both parties;
·Prior to the hearing, the applicant was directed to be frank in his level of financial disclosure to the Tribunal;
·In particular he was directed to provide documentation in respect of his earnings; the transfer of his real property; and how motor vehicle expenses were calculated;
·Documents were provided, which emanated from the company’s accountant;
·As such, it seems difficult to see how the applicant could have been ambushed by these specific documents;
·The SSAT did not accept that [L] Pty Ltd was an entity out of the applicant’s control;
·The applicant was legally represented at the hearing;
·He did not request an adjournment of the proceedings;
·Issues in respect of the transfer of the company; the [F] property and the use of the company’s bank account were put to him for comment by the SSAT.
In all these circumstances, in my view, it was not necessary, in terms of procedural fairness, for the SSAT to indicate specifically to
Mr Henriques that it disbelieved his evidence, during the course of the hearing itself; nor for it to accord him an adjournment of proceedings, on its own volition, on the basis that such an adjournment would enable Mr Henriques to be more copious or explicit in his discovery of documents or indeed delineate more specifically in what categories withdrawals were to be placed.
At the end of the hearing process, the Tribunal reached the conclusion, as it was entitled to do, that Mr Henriques had been disingenuous in his transfer of property of significant value to Mr K and his motivation in so doing was to avoid child support. In these circumstances, it seems to me to be a stretch of the Alphaone principle that the SSAT should have been required to adjourn the proceedings to allow Mr Henriques to comment further.
In my assessment, the hearing process accorded to Mr Henriques was fair in its structure. He was given an opportunity to comment on the documents arising in the case, many of which, in any event, emanated from him. He operated the debit card in question. He was on notice that the SSAT believed the transfer of the [F] property was germane to its inquiry.
As was pointed out in Lam the rules of procedural fairness are not a rigid code and their application will change depending on the circumstances prevailing. The case follows in a long line of authority. In Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation, [47] Kitto J noted the impossibility of laying down any universally valid test to determine whether a party, who was likely be adversely affected by a decision, had been given an opportunity of adequately presenting its case to the relevant decision maker. However part of the process of assessing whether the hearing in question had been fair included reference to the statutory framework in which the proceedings themselves took place.
[47] Mobil Oil Australia Pty Ltd v Federal Commissioner of Taxation (1963) 113 CLR 475 at 503
As previously indicated, the SSAT is directed to provide a mechanism of review that is fair, just, economical, informal and quick. This review is available only after the parties concerned have completed a process of internal review within the Child Support Agency itself. This process of review concerns a process of administrative assessment of child support, intended to ensure that parents provide a proper level of financial support for their children.
In my view, in her initial application for departure to the Registrar,
Ms Hatzis defined the parameters of the issues in dispute between all concerned. It was her position that the manner in which Mr Henriques had configured his business affairs, particularly how he had chosen to perform work for [V], had led to a situation in which his ostensible taxable income did not reflect his true financial position. This was the same issue before the SSAT.
The duty to make a full and frank disclosure of one’s financial circumstances has been described as “fundamental to the whole operation of the Family Law Act in financial cases…”[48] I would characterise proceeding relating to the provision of financial support for children in a similar light. In such cases, it is fundamental to the rule of law that any fact finding tribunal be in a position to consider all aspects of the financial circumstances of the parties concerned.[49]
[48] Per Smither J in Briese & Briese (1986) FLC 91-713 cited with approval by the Full Court in Black & Kellner (1992) FLC 92-287 at 79,133
[49] See Luciano & Luciano (unreported) Family Court (O’Ryan J delivered 8 May 2000) at paragraph 373
If a party elects not to be frank as directed, he or she chooses to do so at his or her own peril. In such circumstances, it cannot be the responsibility of the decision maker to protect such a person from the consequences of such behaviour. As was observed in SZBEL, to do otherwise may attract the criticism that the tribunal in question is partial.
It is apparent from the decision of the SSAT that the Tribunal considered that Mr Henriques had breached both the direct and implicit requirement that he make a full and frank disclosure of his financial affairs. It disbelieved his evidence regarding the transfer of the company to Mr K and its subsequent operation.
In these circumstances, I do not consider that it was incumbent upon the Tribunal, to attempt itself to unpack the various salient transactions of the company, in regards to its various expenses, given that it did not believe Mr Henriques’s account of them and it considered the arrangements of the company, up to that point, to be both unorthodox and disingenuous.
Nor was it appropriate to allow an adjournment in the hope that
Mr Henriques would be more candid about these matters in future. I am satisfied that he was accorded an opportunity to put his case appropriately, if he had wished to do so, on 16 July 2013.
The SSAT is directed to be fair and expeditious in proceedings, not only so far as Mr Henriques is concerned, but also so far as Ms Hatzis is concerned. She had instigated the departure process in the first place seeking an appropriate level of child support for [X]. She was found to be credible in her evidence, Mr Henriques was not.
Given the principles and objects of the applicable legislation and the directives applicable to the applicable appeal mechanisms arising, I am satisfied that Mr Henriques was provided with an appropriate degree of procedural fairness, in the sense that he was sufficiently acquainted with the salient issues at large before the SSAT and was provided with a sufficient opportunity to present his case, including to comment on material found to be adverse to him.
Mr Lazarevich, counsel for the applicant, submits that a fair reading of the transcript of proceedings indicates that his client did not acquit himself particularly well before the SSAT. I agree with that assessment. However, this fact, of itself, does not render the hearing process inherently unfair to him.
Mr Henriques was represented at the hearing, of which he was given advanced notice. There is no indication that he either he or his representative sought any adjournment of the proceedings before the SSAT. As Deane J observed in Sullivan v Department of Transport there is no obligation on a tribunal to ensure that a party takes the best advantage of the opportunity afforded to him to present his or her case.[50]
[50] Sullivan v Department of Transport (1978) 20 ALR 323 at 343
The applicant further submits that the SSAT had insufficient evidence on which to base its conclusions, namely that his relevant financial resources came to a sum in excess of $80,000.00. As previously indicated, the sum was calculated by reference to sums withdrawn by Mr Henriques, by means of ATM’s, from the company’s account and the amount credited to the mortgage on the [F] property, whilst Mr Henriques continued to own it.
Accordingly, it cannot be said there is no evidence to support the finding. Rather the criticism is that it is fundamentally unfair to
Mr Henriques for the Tribunal to have used the evidence in the way in which it ultimately elected to do so.
This criticism must be evaluated in the context of the proceedings in this court, which allow rectification of the subservient decision only if there is a demonstrable error of law in that decision. The SSAT remains the sole finder of fact in the case. It is not my function to cure its “administrative …error” per se.[51]
[51] See Attorney-General (NSW) v Quinn (1990) 170 CLR 1 at 35 – 36 per Brennan J
The administrative task, for the SSAT, was to determine what was an appropriate level of child support income, to be attributed to
Mr Henriques, according to the criteria contained in section 117 of the Assessment Act. It correctly applied the relevant provisions to this task and considered each of the matters it was required to do so.
It did so against a background in which Mr Henriques was found to have lacked candour in his account of his financial circumstances. In these circumstances, the Tribunal considered the evidence available to it, namely the bank records of the company, particularly the withdrawals Mr Henriques acknowledged he had made. This process led it to make the findings of fact which it did.
In this regard, I bear in mind what was said by Mansfield J in Comcare v Moon[52] as follows:
“Care must be taken not to convert questions of fact into questions of law. The Tribunal more over does not commit an error of law merely because it finds facts wrongly or upon a doubtful basis or because it adopts unsound reasoning. If there is any evidence rationally and legally capable of supporting the finding of fact the finding of fact does not involve an error of law.”
[52] See Comcare v Moon [2003] FCA 569 at paragraph 33
It may well be the case that if Mr Henriques had chosen to present his case in a different way, the SSAT would have reached a different conclusion. However that fact does not render the present determination legally erroneous. The SSAT utilised the evidence available to it to reach a conclusion about what was an equitable level of income to be attributed to Mr Henriques, in circumstances in which it found he (Mr Henriques) had not been completely candid with it about the issue and had moreover arranged his financial affairs with a view to avoid paying child support.
I can discern no jurisdictional error in the process by which the SSAT reached the determination that Mr Henriques’s adjusted taxable income should be set at a figure of $82,746.00 for the period in question. Regardless of the artificiality of the situation confronting it, the Tribunal was charged with coming up with a specific figure. It could not determine a range of figures, nor in my view, specify a methodology to arrive at such a figure. This was its jurisdictional task and to acquit properly that task, it had to come to a figure.
A finding of fact is not reviewable by a court in the context of judicial review, unless the finding of fact is made in the absence of evidence to support it. That is an error of law. As is the drawing of a factual inference in the absence of evidence to support it. However, the making of a wrong finding of fact is not in itself an error of law provided there is some evidence before the decision maker concerned which is rationally (as opposed to perversely) capable of supporting such a conclusion.
The seminal Australian case on jurisdictional error is Craig v South Australia.[53] It dealt with the at times subtle difference between errors of jurisdiction and errors within jurisdiction. The former being capable of being remediated by a superior court as errors of law, the latter not.
[53] Craig v South Australia (1995) 184 CLR 163
Hayne J in Re Refugee Review Tribunal; Ex parte Aala[54] alluded to the latitude an administrative tribunal has to go wrong in matters within its jurisdiction. The distinction is important because it goes to the heart of the difference between a review on an error of law and rehearing on the merits.
[54] Re Refugee Review Tribunal; Ex parte Aala (2001) 204 CLR 82
In Aala[55] Hayne J said as follows:
“In deciding whether writs of prohibition and certiorari (and analogous forms of relief) should be granted, a distinction is drawn between jurisdictional error and error within jurisdiction. This Court has not accepted that this distinction should be discarded. As was noted in Craig v South Australia, that distinction may be difficult to draw. The difficulty of drawing a bright line between jurisdictional error and error in the exercise of jurisdiction should not be permitted, however, to obscure the difference that is illustrated by considering clear cases of each species of error. There is a jurisdictional error if the decision maker makes a decision outside the limits of the functions and powers conferred on him or her, or does something which he or she lacks power to do. By contrast, incorrectly deciding something which the decision maker is authorised to decide is an error within jurisdiction. (This is sometimes described as authority to go wrong, that is, to decide matters within jurisdiction incorrectly.) The former kind of error concerns departures from limits upon the exercise of power. The latter does not.”
[55] Supra at [163]
In my view, the SSAT acquitted the task allotted to it both within the applicable legal parameters and with an appropriate degree of rationality. Essentially, it found that Mr Henriques regularly utilised monies from the [L] Pty Ltd account for his own purposes and these were to be regarded as a financial resource to which he had sole recourse and which were therefore relevant for child support purposes. It then quantified the value of this resource, as best it could, notwithstanding the deficits arising from Mr Henriques’s evidence. There was evidence available to it to reach the figure it ultimately did.
In my view, in so doing the Tribunal was performing its essential fact finding task. It performed this task with the prerequisite degree of fairness for Mr Henriques. As was said in SZBEL what is required of procedural fairness is a fair hearing not a fair outcome. There was thus, in my view, no jurisdictional error in the decision of the SSAT.
For these reasons there is no basis on which to establish the first ground of appeal.
(b) Failure by the SSAT to take proper account of
Ms Hatzis’ capacity to earn income, particularly within the context of section 117(7B)
The second and third grounds of appeal are closely related and, in my view, it is convenient to consider them together. They turn on findings made by the Tribunal in respect of Ms Hatzis’ capacity to earn income and whether she was properly utilising that capacity. The issue turns on the provisions of section 117(7B) of the Assessment Act.
It is Mr Henriques’s submission that Ms Hatzis has chosen to reduce her hours of work in order to produce for herself an artificially low child support income, which will have implications for the calculation of child support for [X]. Essentially, he asserts that Ms Hatzis could place [X] in child care and avail herself of more regular [omitted] positions.
In determining whether it is just and equitable to depart from an administrative assessment of child support, the court is required to have regard to the income, property and financial resources of each parent [Assessment Act section 117(4)(d)] and the earning capacity of each parent, who is a party to the proceedings [section 117(4)(da)].
Section 117(7B) provides the relevant criteria, to which the court must have regard, in determining whether a parent’s earning capacity is greater than that which is reflected in his or her income for the purposes of the child support assessment scheme. The section is crucial in so-called “capacity to earn” cases and reads as follows:
“(7B) In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:
(a) one or more of the following applies:
(i) the parent does not work despite ample opportunity to do so;
(ii) the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full‑time work for the occupation or industry in which the parent is employed or otherwise engaged;
(iii) the parent has changed his or her occupation, industry or working pattern; and
(b)the parent’s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:
(i) the parent’s caring responsibilities; or
(ii) the parent’s state of health; and
(c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.”
In my view, the applicable provision requires the decision-maker concerned to follow a four step process in order to discharge its legislative task. It must determine as follows:
·Does the person in question have a greater earning capacity?
·Does the earning capacity fall within section 117(7B)(a)?
·Are the lower earnings justified?
·Has the parent proved that avoidance is not a major purpose?
The essential evidentiary task for the Tribunal was to determine, given that Ms Hatzis’ income had significantly reduced since [X] was born, whether this reduction was the result of a conscious decision on
Ms Hatzis’ part not to exercise fully her income earning capacity and which was motivated by a desire to avoid child support rather than parenting caring responsibilities.
In this case the evidence indicated that Ms Hatzis was a sole parent. [X] was a child of around two years of age at relevant times, who attended child care regularly to assist her with sensory issues. It was in this context that the Tribunal considered the application of section 117(7B).
On the basis of evidence available to it, The Tribunal found that Ms Hatzis was a contract [omitted] prior to [X]’s birth. It accepted her evidence that she had not taken up any long term contracts because she was engaged in caring for [X].
As a consequence, any offers of [omitted] which had been made to her had been at short notice and for short periods.[56] Essentially the Tribunal found the provisions of section 117(7B)(a) did not apply to Ms Hatzis. It rejected the proposition that Ms Hatzis did not work despite ample opportunities to do so.
[56] See the decision at paragraph 67
In this context, the Tribunal made a finding that the provisions of section 117(7B) did not apply to Ms Hatzis as it was satisfied that she had only reduced her hours of work after [X] had been born and in order to care for her child not because she wished to avoid child support.[57]
[57] Ibid at paragraph 74
In my view, it is clear from the decision that the SSAT considered the possible application of section 117(7B) to Ms Hatzis’ circumstances, particularly it considered whether the evidence disclosed that she had changed her mode of employment to evade child support obligations. It specifically found that she had not. This is a question of fact not of law. Accordingly, it falls within the sole domain of the primary fact finder and is not amenable to a merits review in this court.
For these reasons there is no basis on which to establish either the second or third grounds of appeal. Accordingly, the appeal filed on 27 August 2013 must be dismissed.
Costs
Ms Hatzis has represented herself in these proceedings. Her input into them has been limited. She has been content to hang on the coat tails of the Child Support Registrar. She is not to be criticised for this. However, it must be the case that she has not incurred legal costs in opposing the appeal.
The Child Support Registrar has made an application for costs. The question of costs in appeals arising from determinations of the SSAT is governed by the provisions of section 105 of the Collection Act and section 100 of the Assessment Act. These provisions incorporate, where necessary, relevant provisions of the Family Law Act 1975 and applicable portions of the court’s rules to proceedings such as these, arising as a consequence of the child support regime. Accordingly, the question of costs is governed by the provisions of the Family Law Act, particularly section 117.
Section 117(1) abolishes, for the purposes of Family Law Act 1975 proceedings, the general rule that in civil proceedings costs follow the event in family law and by implication child support proceedings. Section 117(2) then provides the court with a general discretion to make costs orders if it is of the opinion that there are circumstances that justify it in so doing. Section 117(2A) sets out the matters that the court shall have regard to.[58]
[58] See Browne v Green (2002) 29 Fam LR 428 at 432
The matters delineated in section 117(2A) include the following: the financial circumstances of the parties concerned; the conduct of the parties to the proceedings; whether the proceedings were necessitated by the failure of a party to comply with previous court orders; whether one of the parties to the proceedings have been wholly unsuccessful; and any other relevant matter.
Mr Henriques has been unsuccessful in his appeal. Although, as I have found, the finding of the SSAT was informed by the failure of
Mr Henriques to be frank about his financial circumstances and his disposal of assets to Mr K, I accept that he is not a wealthy person. In these circumstances, I do not propose to make an order as to costs.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgement.
I certify that the preceding two hundred and twenty five (225) paragraphs are a true copy of the reasons for judgment of Judge Brown
Associate:
Date:30 June 2014
[34] SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152 at 160
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