Kane and Naylor and Anor

Case [2015] FCCA 2075

FEDERAL CIRCUIT COURT OF AUSTRALIA

KANE & NAYLOR & ANOR [2015] FCCA 2075
Catchwords:
CHILD SUPPORT – Administrative Appeals Tribunal (Social Services and Child Support Division) – appeal from a decision of the AAT in a child support first review – no error of law found.

Legislation:

Administrative Appeals Tribunal Act 1975, s.44

Child Support (Assessment) Act 1989, s.117

Child Support (Registration and Collection) Act 1988, ss.110B, 110G, 110K
Child Support Registrar & Crowley and Anor [2015] FamCAFC 76
Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280
Collins v Minister for Immigration and Ethnic Affairs (1981) 4 ALD 198
Hussain v Minister for Foreign Affairs (2008) 169 FCR 241
LDME & JMA (SSAT Appeal) [2007] FMCAfam 712
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24
Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611
Waterford v Commonwealth (1987) 163 CLR 54
Applicant: MR KANE
First Respondent: MS NAYLOR
Second Respondent: CHILD SUPPORT REGISTRAR
File Number: BRC 8796 of 2010
Judgment of: Judge Cassidy
Hearing date: 29 May 2015
Date of Last Submission: 10 July 2015
Delivered at: Brisbane
Delivered on: 6 August 2015

REPRESENTATION

Counsel for the Appellant: Ms McMahon
Solicitors for the Appellant: Boe William Anderson
The First Respondent appeared in person
Solicitors for the Second Respondent: Australian Government Solicitor

ORDERS

  1. That the Further (Amended) Notice of Appeal (Child Support) filed 1 May 2015 be dismissed.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRC 8796 of 2010

MR KANE

Applicant

And

MS NAYLOR

First Respondent

CHILD SUPPORT REGISTRAR

Second Respondent

REASONS FOR JUDGMENT

Introduction

  1. This is an appeal from a decision of the Social Security Appeals Tribunal (as it then was) (“the Tribunal”).

  2. The grounds for appeal are set out in the Further (Amended) Notice of Appeal (Child Support) filed 1 May 2015.  They are:

    “[1] The Tribunal erred in law by taking into account the irrelevant opinion of the first respondent as to signs of ill health (physical or mental)

    [2] The Tribunal erred in law by asking itself the wrong questions insofar as it dealt with the evidence of the applicant.

    [3] The Tribunal erred in law by denying the applicant procedural fairness in the exercise of its powers pursuant to Part 4, Division 4 of the Social Security (Administration) Act 1999.”

  3. The Addendum to the Further (Amended) Notice of Appeal (Child Support) filed 1 May 2015 amended ground 3 to read as follows:

    “[3] The Tribunal erred in law by denying the applicant procedural fairness in the exercise of its powers pursuant to Part 4, Division 4 of the Social Security (Administration) Act 1999 under Part VIIA of the Child Support (Registration and Collection) Act 1988.”

Background

  1. The factual background to this matter is adequately summarised in the submission of the Child Support Registrar…

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AGLC
Kane and Naylor and Anor [2015] FCCA 2075
Case
[2015] FCCA 2075
Decision Date

CaseChat Overview and Summary

This matter concerned an appeal by Mr Kane against a decision of the Social Security Appeals Tribunal (SSAT) regarding child support assessments for his children with Ms Naylor. The dispute arose after Mr Kane applied for a departure from the administrative assessment, citing his belief that Ms Naylor's income was higher than declared and that his own financial circumstances had changed due to his resignation from employment. Ms Naylor cross-applied, arguing Mr Kane had additional financial resources. The SSAT ultimately set aside a previous objection decision and substituted a new decision that adjusted Mr Kane's income based on his earning capacity and modified Ms Naylor's income, altering the child support payable.

The primary legal issue before the court was whether the SSAT erred in law by denying Mr Kane procedural fairness in its exercise of powers under the *Social Security (Administration) Act 1999* and the *Child Support (Registration and Collection) Act 1988*. Specifically, the appeal focused on the SSAT's handling of Mr Kane's medical evidence regarding his resignation and his subsequent refusal to disclose details of his health conditions to Ms Naylor, despite being informed that such non-disclosure might prevent the SSAT from being satisfied that his resignation was justified on health grounds.

The court found that the SSAT had acted appropriately in its handling of the procedural fairness issue. The SSAT had clearly explained to Mr Kane that his refusal to disclose medical details, which would have been withheld from Ms Naylor, could lead to a finding that his resignation was not justified on health grounds. The SSAT also noted that non-disclosure orders had previously been made. Despite these warnings and the opportunity to provide further details, Mr Kane declined to do so. The SSAT's subsequent finding that Mr Kane's resignation was not justified on the balance of probabilities, based on the limited evidence available and the lack of disclosure, was therefore not an error of law. The court concluded that the SSAT had not denied Mr Kane procedural fairness and that the amended notice of appeal, which relied on this ground, should be dismissed.

Orders

Orders of the court

1.

That the Further (Amended) Notice of Appeal (Child Support) filed 1 May 2015 be dismissed.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The factual background to this matter is adequately summarised in the submission of the Child Support Registrar filed 22 May 2015, at paragraphs 8 – 33 (inclusive) of those submissions:“SSAT decision[8] The First Respondent, Ms Naylor, and the Applicant, Mr Kane are the parents of X, Y and Z (SSAT decision at [1]). The child support assessment for the children was registered on 29 June 2005. [9] The administrative assessment of child support for the period commencing on 1 September 2013 required Mr Kane to pay the annual rate of $10,300. This was based on the parents’ 2012/2013 adjusted taxable incomes: $69,588 for Mr Kane, and $40,223 for Ms Naylor (SSAT decision at [2]). [10] On 21 October 2013, Mr Kane applied for a departure from the administrative assessment for the period from 1 August 2010 to ‘ongoing’. Mr Kane said he believed that Ms Naylor’s actual income must be higher than around $40,000, given that she had recently purchased a home for some $423,000. She would need a higher income to service a loan for such a property. He suggested she was salary sacrificing to reduce her taxable income. He asked the Child Support Agency to find out what income Ms Naylor had declared to her bank to obtain the loan, and use that income in the child support assessment (SSAT decision at [3]). [11] Ms Naylor cross-applied on the basis that Mr Kane had additional financial resources available to him because his partner and her son were contributing to his living costs (SSAT decision at [4]). [12] On 11 December 2013, a Senior Case Officer refused to make a departure from the administrative assessment (SSAT decision at [5]). [13] On 20 December 2013, Mr Kane resigned from his job with effect from the close of business on 6 January 2014. Mr Kane told the SSAT that he remains unemployed (SSAT decision at [6]). [14] On 3 January 2014, Mr Kane objected to the Senior Case Officer’s decision. On 14 March 2014 an Objections Officer allowed the objection and made a departure from the administrative assessment for a short period. The Objections Officer set Mr Kane’s adjusted taxable income at nil for the period 28 February to 5 March 2014. The rationale for this timeframe was that leave payments that Mr Kane received when this employment ended supplied him with the equivalent of his former income for the period to 27 February 2014, and then from 6 March 2014 Mr Kane had lodged a current income estimate of nil. The annual rate, based on an income of nil for Mr Kane went down to $346 (SSAT decision at [7]). [15] Ms Naylor applied to the SSAT for a review of the objection decision. She contended that Mr Kane should be assessed on an earning capacity basis, such that he is treated as still having the income he had in his previous employment. Mr Kane, on the other hand, agreed with the Objections Officer’s decision (SSAT decision at [8]). [16] By its decision of 26 June 2014, the SSAT decided to set aside the objection decision and substituted a new decision that for the period 15 January 2014 to 31 July 2015 (SSAT decision at page 11):Mr Kane’s adjusted taxable income is set at $69,588;Ms Naylor’s adjusted taxable income is set at $47,865;The annual rate of child support is to be varied to the rate that would be payable on these incomes under the child support formula if Y and Z (and not X) were the only children of the assessment.[17] Significantly for the purposes of this appeal, the SSAT decision set the Applicant’s adjusted table (sic) income at $69,588 for the period, based on an assessment of his earning capacity.” SSAT’s reasons for decision[18] The Registrar submits that the SSAT correctly summarised the issues it had to determine as being (SSAT decision at [11]):[18.1] whether a ground for departure from the administrative assessment exits[18.2] whether a departure from the administrative assessment would be just and equitable[18.3] whether a departure from the administrative assessment would be otherwise proper.[19] In addressing the first issue, the SSAT found that a ground of departure was established under ss 117(7B)(b)(ii) and (c) of the Assessment Act as the Applicant’s resignation was not justified on the basis of his state of health and he did not demonstrate that affecting the administrative assessment of child support was not a major purpose of his resignation (SSAT decision at [12]-[28]).[20] The evidence before the SSAT when determining whether the Applicant’s resignation was justified on the basis of his state of health included two short letters from Dr T, General Practitioner, dated 24 October 2013 and 21 May 2014 and the Applicant’s oral evidence to the SSAT (SSAT decision at [17]-[19]). Dr T’s first letter did not state that Mr Kane was unable to continue his job. The most it said was that the job was affecting his health, and that it would be in his best interests to change the employment. The second letter says that Mr Kane’s ability to work and seek employment is affected, but it does not explain whether the effect is substantial (SSAT decision at [22]). [21] The evidence relied upon by the Applicant before the SSAT did not provide details of the medical conditions the Applicant suffered from, in what way or ways they affected the Applicant’s capacity to work, or to what extent his capacity to work was affected. The Applicant was unwilling to disclose details of his state of health unless they could be withheld from the First Respondent (SSAT decision at [19]). [22] The SSAT determined that because of the need for procedural fairness, it would not be appropriate to take evidence from the Applicant or Dr T that would be withheld from the First Respondent. The SSAT brought to the Applicant’s attention that if he refused to provide details about his medical conditions and how they affect his work capacity, the SSAT may not be satisfied that his resignation was justified on the basis of his state of health. The SSAT also pointed out that non-disclosure orders had been made earlier in the course of the review proceedings. Despite this, the Applicant declined to provide any further details of his conditions and how his capacity was affected (SSAT decision at [20]).[23] The SSAT also heard oral evidence from the First Respondent who said that she had occasion to observe the Applicant, for example, when dropping the children off for contact. The First Respondent said she had not seen any sign of ill health, physical or mental, though she did infer from the Applicant’s casual dress that he had quite a bit of time off work in 2013. The First Respondent was also aware that the Applicant had been taking the children on outings to cinemas and theme parks (SSAT decision at [21]). [24] The SSAT found that, on the basis of the available evidence, it was not satisfied on the balance of probabilities that the Applicant was ill to the extent that he had to resign. Consequently, the SSAT held that the Applicant’s resignation was not justified on the basis of his state of health (SSAT decision at [23]). [25] The SSAT then considered whether the Applicant had demonstrated that it was not a major purpose of his decision to resign to affect child support. The SSAT considered a Child Support Agency file note dated 17 September 2013 which showed that the Applicant was contemplating leaving work for health reasons. However, the SSAT determined that the fact that the Applicant made this enquiry did not establish that he later resigned for health reasons. Having rejected the Applicant’s sole explanation of why he resigned, namely, ill health, the SSAT did not accept the Applicant’s assertion that he resigned for a purpose other than affecting the child support assessment (SSAT decision at [24]-[25]). [26] The SSAT considered that there were special circumstances in this case in that the Applicant, without justification, resigned from a job and became unemployed (SSAT decision at [27]).[27] The SSAT then found that it would be just and equitable to depart from the administrative assessment following a consideration of the relevant factors outlined under s 117(4) of the Assessment Act (SSAT decision at [65]-[72]). [28] This specific aspect of the SSAT’s decision was made on the basis of the following findings of fact:[28.1] The two younger children attend state schools and do not have any special needs or unusual costs (SSAT decision at [31]).[28.2] On the current minimal rate of child support, the First Respondent is unable to afford discretionary items for the children, such as holidays, sports and movie outings (SSAT decision at [32]).[28.3] X has been in paid employment, normally earning $377.65 a week, since some time in January 2014 (SSAT decision at [33]).[28.4] X primarily lives with the First Respondent but stays with her parents three nights per fortnight while she works night duty (SSAT decision at [36]-[38]).[28.5] The First Respondent earned $46,481 over 11.5 months according to a payslip dated 18 June 2014 (SSAT decision at [43]).[28.6] The First Respondent is making weekly payments for ‘mortgage’ to her parents but it is an arrangement with a degree of latitude if needed (SSAT decision at [56]-[58]).[29] After considering the Applicant’s financial circumstances, the SSAT determined that the Applicant should be treated as if he still has an adjusted taxable income of $69,588. The start date for this income figure in the departure decision was 15 January 2014 and this income figure was to apply until 31 July 2015 (SSAT decision at [66]-[67]).[30] The SSAT also determined that, in light of the increase in the First Respondent’s income, it was appropriate to set her income at the 2013/2014 level of $46,865. The appropriate period in the SSAT’s view was 15 January 2014 to 31 July 2015. The increase was based on applying a 19% increase calculated from a payslip dated 18 June 2014. This is because the earnings in the year to date were equivalent to approximately $48,500 over twelve months (SSAT decision at [45] and [69]).[31] The SSAT also considered that it was appropriate to, in effect, eliminate the child support for X for the period 15 January 2014 to 31 July 2015 as X began paid employment from mid-January 2014. This was achieved by specifying that the rate of child support to be paid is the rate that would be payable if Z and Y were the only children of the assessment (SSAT decision at [70]). [32] The SSAT then found that it would be otherwise proper to depart from the administrative assessment following a consideration of the relevant factors outlined under s 117(5) of the Assessment Act (SSAT decision at [73]-[76]). [33] The SSAT determined that the proposed departure determination, for the most part, increased the rate of child support to be paid by the Applicant. This would reduce the First Respondent’s entitlement to a family tax benefit. Consequently, increasing the rate of child support would appropriately shift more of the cost of raising the children from the community to the parents (SSAT decision at [74]).”[Footnotes omitted.]

Ratio Decidendi

Legal Principle Established

The Addendum to the Further (Amended) Notice of Appeal (Child Support) filed 1 May 2015 amended ground 3 to read as follows:“[3] The Tribunal erred in law by denying the applicant procedural fairness in the exercise of its powers pursuant to Part 4, Division 4 of the Social Security (Administration) Act 1999 under Part VIIA of the Child Support (Registration and Collection) Act 1988.” The factual background to this matter is adequately summarised in the submission of the Child Support Registrar filed 22 May 2015, at paragraphs 8 – 33 (inclusive) of those submissions:“SSAT decision[8] The First Respondent, Ms Naylor, and the Applicant, Mr Kane are the parents of X, Y and Z (SSAT decision at [1]). The child support assessment for the children was registered on 29 June 2005. [9] The administrative assessment of child support for the period commencing on 1 September 2013 required Mr Kane to pay the annual rate of $10,300. This was based on the parents’ 2012/2013 adjusted taxable incomes: $69,588 for Mr Kane, and $40,223 for Ms Naylor (SSAT decision at [2]). [10] On 21 October 2013, Mr Kane applied for a departure from the administrative assessment for the period from 1 August 2010 to ‘ongoing’. Mr Kane said he believed that Ms Naylor’s actual income must be higher than around $40,000, given that she had recently purchased a home for some $423,000. She would need a higher income to service a loan for such a property. He suggested she was salary sacrificing to reduce her taxable income. He asked the Child Support Agency to find out what income Ms Naylor had declared to her bank to obtain the loan, and use that income in the child support assessment (SSAT decision at [3]). [11] Ms Naylor cross-applied on the basis that Mr Kane had additional financial resources available to him because his partner and her son were contributing to his living costs (SSAT decision at [4]). [12] On 11 December 2013, a Senior Case Officer refused to make a departure from the administrative assessment (SSAT decision at [5]). [13] On 20 December 2013, Mr Kane resigned from his job with effect from the close of business on 6 January 2014. Mr Kane told the SSAT that he remains unemployed (SSAT decision at [6]). [14] On 3 January 2014, Mr Kane objected to the Senior Case Officer’s decision. On 14 March 2014 an Objections Officer allowed the objection and made a departure from the administrative assessment for a short period. The Objections Officer set Mr Kane’s adjusted taxable income at nil for the period 28 February to 5 March 2014. The rationale for this timeframe was that leave payments that Mr Kane received when this employment ended supplied him with the equivalent of his former income for the period to 27 February 2014, and then from 6 March 2014 Mr Kane had lodged a current income estimate of nil. The annual rate, based on an income of nil for Mr Kane went down to $346 (SSAT decision at [7]). [15] Ms Naylor applied to the SSAT for a review of the objection decision. She contended that Mr Kane should be assessed on an earning capacity basis, such that he is treated as still having the income he had in his previous employment. Mr Kane, on the other hand, agreed with the Objections Officer’s decision (SSAT decision at [8]). [16] By its decision of 26 June 2014, the SSAT decided to set aside the objection decision and substituted a new decision that for the period 15 January 2014 to 31 July 2015 (SSAT decision at page 11):Mr Kane’s adjusted taxable income is set at $69,588;Ms Naylor’s adjusted taxable income is set at $47,865;The annual rate of child support is to be varied to the rate that would be payable on these incomes under the child support formula if Y and Z (and not X) were the only children of the assessment.[17] Significantly for the purposes of this appeal, the SSAT decision set the Applicant’s adjusted table (sic) income at $69,588 for the period, based on an assessment of his earning capacity.” SSAT’s reasons for decision[18] The Registrar submits that the SSAT correctly summarised the issues it had to determine as being (SSAT decision at [11]):[18.1] whether a ground for departure from the administrative assessment exits[18.2] whether a departure from the administrative assessment would be just and equitable[18.3] whether a departure from the administrative assessment would be otherwise proper.[19] In addressing the first issue, the SSAT found that a ground of departure was established under ss 117(7B)(b)(ii) and (c) of the Assessment Act as the Applicant’s resignation was not justified on the basis of his state of health and he did not demonstrate that affecting the administrative assessment of child support was not a major purpose of his resignation (SSAT decision at [12]-[28]).[20] The evidence before the SSAT when determining whether the Applicant’s resignation was justified on the basis of his state of health included two short letters from Dr T, General Practitioner, dated 24 October 2013 and 21 May 2014 and the Applicant’s oral evidence to the SSAT (SSAT decision at [17]-[19]). Dr T’s first letter did not state that Mr Kane was unable to continue his job. The most it said was that the job was affecting his health, and that it would be in his best interests to change the employment. The second letter says that Mr Kane’s ability to work and seek employment is affected, but it does not explain whether the effect is substantial (SSAT decision at [22]). [21] The evidence relied upon by the Applicant before the SSAT did not provide details of the medical conditions the Applicant suffered from, in what way or ways they affected the Applicant’s capacity to work, or to what extent his capacity to work was affected. The Applicant was unwilling to disclose details of his state of health unless they could be withheld from the First Respondent (SSAT decision at [19]). [22] The SSAT determined that because of the need for procedural fairness, it would not be appropriate to take evidence from the Applicant or Dr T that would be withheld from the First Respondent. The SSAT brought to the Applicant’s attention that if he refused to provide details about his medical conditions and how they affect his work capacity, the SSAT may not be satisfied that his resignation was justified on the basis of his state of health. The SSAT also pointed out that non-disclosure orders had been made earlier in the course of the review proceedings. Despite this, the Applicant declined to provide any further details of his conditions and how his capacity was affected (SSAT decision at [20]).[23] The SSAT also heard oral evidence from the First Respondent who said that she had occasion to observe the Applicant, for example, when dropping the children off for contact. The First Respondent said she had not seen any sign of ill health, physical or mental, though she did infer from the Applicant’s casual dress that he had quite a bit of time off work in 2013. The First Respondent was also aware that the Applicant had been taking the children on outings to cinemas and theme parks (SSAT decision at [21]). [24] The SSAT found that, on the basis of the available evidence, it was not satisfied on the balance of probabilities that the Applicant was ill to the extent that he had to resign. Consequently, the SSAT held that the Applicant’s resignation was not justified on the basis of his state of health (SSAT decision at [23]). [25] The SSAT then considered whether the Applicant had demonstrated that it was not a major purpose of his decision to resign to affect child support. The SSAT considered a Child Support Agency file note dated 17 September 2013 which showed that the Applicant was contemplating leaving work for health reasons. However, the SSAT determined that the fact that the Applicant made this enquiry did not establish that he later resigned for health reasons. Having rejected the Applicant’s sole explanation of why he resigned, namely, ill health, the SSAT did not accept the Applicant’s assertion that he resigned for a purpose other than affecting the child support assessment (SSAT decision at [24]-[25]). [26] The SSAT considered that there were special circumstances in this case in that the Applicant, without justification, resigned from a job and became unemployed (SSAT decision at [27]).[27] The SSAT then found that it would be just and equitable to depart from the administrative assessment following a consideration of the relevant factors outlined under s 117(4) of the Assessment Act (SSAT decision at [65]-[72]). [28] This specific aspect of the SSAT’s decision was made on the basis of the following findings of fact:[28.1] The two younger children attend state schools and do not have any special needs or unusual costs (SSAT decision at [31]).[28.2] On the current minimal rate of child support, the First Respondent is unable to afford discretionary items for the children, such as holidays, sports and movie outings (SSAT decision at [32]).[28.3] X has been in paid employment, normally earning $377.65 a week, since some time in January 2014 (SSAT decision at [33]).[28.4] X primarily lives with the First Respondent but stays with her parents three nights per fortnight while she works night duty (SSAT decision at [36]-[38]).[28.5] The First Respondent earned $46,481 over 11.5 months according to a payslip dated 18 June 2014 (SSAT decision at [43]).[28.6] The First Respondent is making weekly payments for ‘mortgage’ to her parents but it is an arrangement with a degree of latitude if needed (SSAT decision at [56]-[58]).[29] After considering the Applicant’s financial circumstances, the SSAT determined that the Applicant should be treated as if he still has an adjusted taxable income of $69,588. The start date for this income figure in the departure decision was 15 January 2014 and this income figure was to apply until 31 July 2015 (SSAT decision at [66]-[67]).[30] The SSAT also determined that, in light of the increase in the First Respondent’s income, it was appropriate to set her income at the 2013/2014 level of $46,865. The appropriate period in the SSAT’s view was 15 January 2014 to 31 July 2015. The increase was based on applying a 19% increase calculated from a payslip dated 18 June 2014. This is because the earnings in the year to date were equivalent to approximately $48,500 over twelve months (SSAT decision at [45] and [69]).[31] The SSAT also considered that it was appropriate to, in effect, eliminate the child support for X for the period 15 January 2014 to 31 July 2015 as X began paid employment from mid-January 2014. This was achieved by specifying that the rate of child support to be paid is the rate that would be payable if Z and Y were the only children of the assessment (SSAT decision at [70]). [32] The SSAT then found that it would be otherwise proper to depart from the administrative assessment following a consideration of the relevant factors outlined under s 117(5) of the Assessment Act (SSAT decision at [73]-[76]). [33] The SSAT determined that the proposed departure determination, for the most part, increased the rate of child support to be paid by the Applicant. This would reduce the First Respondent’s entitlement to a family tax benefit. Consequently, increasing the rate of child support would appropriately shift more of the cost of raising the children from the community to the parents (SSAT decision at [74]).”[Footnotes omitted.]