Lawson and Lynch and Anor
[2016] FCCA 1258
•26 May 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LAWSON & LYNCH & ANOR | [2016] FCCA 1258 |
| Catchwords: CHILD SUPPORT – Where the applicant has filed an appeal against an AAT child support first review decision – where the applicant seeks a stay of the decision pending the hearing of the appeal – where the applicant seeks the stay pursuant to s.111C of the Child Support (Registration & Collection) Act – where the application is cast in the wording of s.44A (2) of the Administrative Appeals Tribunal Act – where s.44A(2) is the correct section to apply in the context of this application - application for a stay dismissed. |
| Legislation: Administrative Appeals Tribunal Act 1975 (Cth), ss.44AAA, 44A |
| Cases cited: Lloyd & Tasker (2016) 304 FLR 286 Tuck & Johns & Anor [2015]FCCA 2832 |
| Applicant: | MR LAWSON |
| First Respondent: | MS LYNCH |
| Second Respondent: | CHILD SUPPORT REGISTRAR |
| File Number: | NCC 2623 of 2014 |
| Judgment of: | Judge Terry |
| Hearing date: | 10 May 2016 |
| Date of Last Submission: | 10 May 2016 |
| Delivered at: | Parramatta |
| Delivered on: | 26 May 2016 |
REPRESENTATION
| Solicitor Advocate for the Applicant: | Mr Powe | |
| Solicitors for the Applicant: | Powe & White Family Lawyers | |
| Solicitor Advocate for the First Respondent: | Ms Thomas | |
| Solicitors for the First Respondent: | Wall Legal | |
| Solicitor Advocate for the Second Respondent: | Ms Mitchell | |
| Solicitors for the Second Respondent: | Sparke Helmore Lawyers | |
ORDERS
The Application in a Case filed on 16 March 2016 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Lawson & Lynch & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT NEWCASTLE |
NCC 2623 of 2014
| MR LAWSON |
Applicant
And
| MS LYNCH |
Respondent
REASONS FOR JUDGMENT
Introduction
Mr Lawson has filed an appeal against an AAT child support first review decision which varied his adjusted taxable income and the adjusted taxable income of the respondent Ms Lynch for the period 16 April 2015 to 31 December 2017.
The effect of the decision is to increase in the amount of child support payable by Mr Lawson and to create arrears.
I have listed the appeal for hearing on 11 November 2016 and Mr Lawson seeks a stay of the decision pending the hearing of the appeal. His stay application is worded as follows:
That pending further Order of the Court that a stay, pursuant to s. 111C of the Child Support (Registration & Collection) Act 1988, of the decision made by Mr P Ryan, member of the Administrative Appeals Tribunal Social Services and Child Support Division on 3 February 2016 in review number (omitted) and between Ms Lynch, Applicant and Mr Lawson and Child Support Registrar, other parties, be granted.
Ms Lynch opposes a stay being granted.
Evidence and submissions
Mr Lawson relied on his application in a case and supporting affidavit filed on 16 March 2016.
Ms Lynch relied on her response and supporting affidavit filed on 26 April 2016.
The Child Support Registrar has not filed any material.
The matter proceeded by way of submissions and the submissions made were very limited.
Mr Lawson’s solicitor submitted that his client could not afford to pay the increased amount of child support resulting from the AAT decision and further submitted that it was undesirable that he be required to do so because if the appeal went in his favour Ms Lynch might be unable to repay the overpaid amount of child support.
Mr Lawson’s solicitor did not address the issue of the applicable law.
Ms Lynch’s solicitor submitted that it would cause her client hardship if a stay was granted because she could not afford to lose her child support payment. She also did not address me the issue of the applicable law.
Ms Mitchell, the solicitor for the Child Support Registrar, submitted that s 111C of the Child Support (Registration & Collection) Act did not give the court the power to stay the decision of the AAT pending the hearing of an appeal against a child support first review decision. In support of this submission she referred me to Lloyd & Tasker, a decision of Judge Cassidy delivered on 16 February 2016.[1]
[1] Lloyd & Tasker (2016) 304 FLR 286
Ms Mitchell did not otherwise seek to be heard in relation to the stay application.
Background
Mr Lawson and Ms Lynch are the parents of X, aged 8. Limited background information was provided but it would appear that there have been child support assessments in place since 2009 requiring Mr Lawson to pay Ms Lynch child support for X.
The events leading to current situation are as follows:
·On 16 April 2015 Ms Lynch applied for a departure from the administrative assessment then in force.
·On 10 June 2015 a senior case officer made an order departing from the administrative assessment and setting Mr Lawson’s taxable income at $83,916.00 for the period 1 May 2015 to 31 May 2017.
·Mr Lawson lodged an objection.
·On 8 September 2015 an objections officer set Mr Lawson’s taxable income at $73,000.00 for the period 16 April 2015 to 31 October 2017 and Ms Lynch’s taxable income at $95,448.00 for the period 16 April 2015 to 28 May 2015.
·Mr Lawson lodged an application with the AAT for review of the objection officer’s decision.
·On 3 February 2016 the AAT set aside the objection officer’s decision aside. It varied Ms Lynch’s adjusted taxable income for 16 April 2015 to 30 June 2015 to $45,000.00 and varied her adjusted taxable income for 1 July 2015 to 31 December 2017 to $48,000.00. It also varied to $100,000.00 Mr Lawson’s adjusted taxable income for the period 16 April 2015 to 31 December 2017.
·On 16 March 2016 Mr Lawson filed a Notice of Appeal in this court pursuant to s.44AAA of the Administrative Appeals Tribunal Act, and also applied for a stay of the decision pending the hearing of the appeal.
The applicable law
Prior to 1 July 2015 an application for a review of an objection decision would have been made to the Social Security Appeals Tribunal (SSAT) and an appeal from the review decision on a question of law would have been made pursuant to s.110B of the Child Support (Registration & Collection) Act.
When that regime was in place appellants who sought a stay of collection of child support pending the outcome of their appeal relied on s.111C of the Collection Act.
S.111C provides as follows:
Stay orders
(1) This section applies if a proceeding has been instituted:
(a) in a court having jurisdiction under this Act; or
(b) before the Registrar under Part VII; or
(c) before the AAT for an AAT first review;
(d) under Part 6A or 7 of the Assessment Act.
(2) A party to the proceeding may, subject to the Family Law Act 1975:
(a) in the case of a proceeding instituted in a court--apply to that court for an order under this section; or
(b) otherwise--apply to a court having jurisdiction under this Act for an order under this section.
(3) Pending the hearing and final determination of the proceeding, the court may make such orders as the court considers appropriate staying or otherwise affecting the operation or implementation of the Assessment Act and this Act if the court considers that it is desirable to do so, taking into account the interests of the persons who may be affected by the outcome of the proceeding.
(4) The court may, by order, vary or revoke an order made under subsection (3).
(5) An order under subsection (3):
(a) is subject to such terms and conditions as are specified in the order; and
(b) operates for:
(i) such period as is specified in the order; or
(ii) if no period is specified--until a decision of the court, the Registrar or the AAT determining the proceeding becomes final.
As of 1 July 2015 however applications for review of an objection officer’s decision are made to the AAT. There is still provision for an appeal to this court from that decision on a question of law, but s.110B of the Collection Act has been repealed and the right of appeal is contained in s.44AAA of the Administrative Appeals Tribunal Act.
S.44AAA(1) provides as follows:
(1)If the Tribunal as constituted for the purposes of a proceeding that is a child support first review does not consist of or include a presidential member, a party to the proceeding may appeal to the Federal Circuit Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding.
S.44A(2) of the Administrative Appeals Tribunal Act makes provision for an appellant to apply for a stay if an appeal is lodged pursuant to s.44AAA. S.44A(2) refers to the Federal Court of Australia but by virtue of s.44AAA(2) it applies in relation to appeals to the Federal Circuit Court pursuant to s.44AAA(1).
S.44A(2) provides as follows:
(2) Where an appeal is instituted in the Federal Court of Australia from a decision of the Tribunal, that Court or a Judge of that Court may make such order or orders staying or otherwise affecting the operation or implementation of either or both of the following:
(a) the decision of the Tribunal or a part of that decision; and
(b) the decision to which the proceeding before the Tribunal related or a part of that decision;
as that Court or Judge considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the appeal.
Pursuant to s.44A (4) (a) an order under s.44(2) can be made subject to conditions. This would permit for example the decision of the AAT or the decision of the objections officer below to be stayed subject to a condition that child support continue to be paid at a certain level.
Lloyd & Tasker
In Lloyd & Tasker an appellant from a child support first review decision applied for a stay of collection of child support pending the hearing of the appeal relying on s.111C of the Collection Act.
The Child Support Registrar argued that 111C had no application and that the only section which gave the court power to grant a stay when an appeal was lodged against a child support first review decision was s.44A (2) of the Administrative Appeals Tribunal Act.
The Child Support Registrar submitted that although on s.111C(1)(a) on its face stated that the section applied if an application had been lodged in a court having jurisdiction under the Collection Act, it should be read down as applying only to matters in which the application was not only lodged in this court but was made pursuant to a provision in the Collection Act.
SSAT appeals met this criterion because they were instituted under s.110B of the Collection Act; AAT appeals did not.
The Child Support Registrar submitted that the argument that only s.44A(2) gave this court power to grant a stay when an appeal was lodged against an AAT was supported by the wording of s.110P of the Collection Act which provides as follows:
Scope of Division
(1)This Division applies for the purposes of the Assessment Act and this Act.
(2)This Division is subject to the following provisions (which authorise the making of stay orders):
(a)section 111C of this Act;
(b)section 41 of the AAT Act;
(c)section 44A of the AAT Act, including that section as it applies because of paragraph 44AAA(2)(b) of the AAT Act.
The Child Support Registrar further submitted that if this court was able to rely on s.111C as the head of power to grant a stay in an appeal from AAT child support first review decision it would create an inconsistent application of stay provisions between this court and the Federal Court. Both courts have jurisdiction to hear appeals from AAT child support first review decisions but unlike this court the Federal Court does not have jurisdiction under the Collection Act.
Judge Cassidy held that s.44A(2) applied in respect of an appeal from child support first review decision to the exclusion of s.111C and said that she found the submission referred to in paragraph 26 above which involves reading down s.111C(1)(a) persuasive.
The alternative argument is that s.44A(2) applies but is not the exclusive source of power to grant a stay and that s.111C also continues to apply.
Judge Kelly in Tuck & Johns & Anor held that s.111C and s.44(2) could operate concurrently. [2] Judge Cassidy did not consider that decision persuasive because it did not appear that Judge Kelly had the benefit of the arguments which were provided to her.
[2] Tuck & Johns & Anor [2015] FCCA 2832
Discussion about the applicable law
Judge Cassidy’s decision while deserving of respect is not binding on me and I note the following.
First, it is arguable that s.111C should continue to apply alongside s.44A (2) because it provides for a different remedy to s.44A (2).
S.44A (2) allows the court to stay or otherwise affect the operation or implementation of the decision of the AAT or the decision in respect of which a review was sought. S.111C allows the court to stay the operation or implementation of the Collection Act.
In Lloyd & Tasker s.111C would have provided a remedy for the appellant (if the court had exercised its discretion in his favour) because the court could have stayed the collection of some or all of his child support assessment pending the hearing of the appeal. S.44A (2) on the other hand did not provide a remedy for him. The decision he appealed against was the refusal of the AAT to make a departure order and the decision he sought to review was to the same effect. Staying those decisions would have had no effect on his liability to pay child support.
It could be argued that the fact that s.111C provides a different remedy to s.44A (2) favours a construction which allows both provisions to operate.
Second, the strength of the argument that the wording of s.110P of the Collection Act favours s.44A (2) operating to the exclusion of s.111C in the context of AAT appeals is not immediately apparent to me although it might become apparent upon hearing detailed submissions.
Third, if it is accepted that s.111C has no application in the context of AAT appeals because the phrase “This section applies if a proceeding has been instituted in a court having jurisdiction under this Act” should be read down, this could have unforseen consequences. This construction of s.111C could for example have implications for an application for the stay of collection of child support/child maintenance pursuant to an overseas maintenance order where the application to vary or discharge the order has been made pursuant to the Family Law Regulations.
Fourth, it is not immediately apparent to me why this court should be deprived of a power to grant a stay because the Federal Court does not have a similar power when the reality is that appeals direct to the Federal Court from AAT child support first review decisions are likely to be extremely rare.
I have reservations at present about the proposition that s.111C has no application when an appeal is made from a child support first review decision.
However the parties in the case before me barely touched on the issue of the applicable law during submissions and given that and given the potentially far reaching implications of a decision about whether s.111C continues to have application, I am reluctant to express a concluded view about the matter when I do not need to do so.
I do not need to do so because although s.111C is referred to in the order sought by Mr Lawson, his application is cast in the wording of s.44A(2) (he sought a stay of the AAT decision) and in the factual circumstances of this case s.44A(2) potentially provides him with a remedy.
I therefore intend to treat Mr Lawson’s application as an application made pursuant to s.44A (2).
Whether a stay should be granted
In the AAT decision it is noted that the effect of the decision is that Mr Lawson will be required to pay $148.00 per week child support from 16 April 2015 to 30 June 2015 and $145.00 per week from 1 July 2015 to 31 December 2017.
For the period from 1 July 2015 this equates to child support of $7,540.00 per annum.
If I correctly understand Mr Lawson’s affidavit the child support he would be required to pay if the AAT decision was stayed would be $4,875.00 per annum.[3] Mr Lawson did not seek a stay of the objection decision.
[3] Affidavit of Mr Lawson filed 16 March 2016
There is a difference of $2,665.00 between the two amounts. The appeal has been listed for hearing on 11 November 2016 so potentially Mr Lawson would be required to pay an additional $1,332.50 child support between now and then.
He will also be liable to pay arrears dating back to April 2015. I cannot do a calculation of exactly what that would entail and Mr Lawson did not attempt to do so but the arrears could exceed $5,000.00.
In his affidavit filed on 16 March 2016 Mr Lawson claimed that he was not in a financial position to pay the revised child support assessment and by implication suggested he suffer hardship if the stay was not granted.
The problem for him is that he provided no evidence in support of this claim. It is a bare assertion.
Mr Lawson derives income from (business omitted) Pty Ltd, a sole director sole shareholder company.
In a financial statement he completed in October 2015, he declared that he received wages of $346.46 per week, interest of $2.98 per week and interest on the money in “X's Education Fund” of $15.68 per week. However in the AAT decision it is recorded that the company has retained profits of more than $1.2m, fixed assets with a write down value of $500,000.00 and a term deposit of more than $650,000.00. Mr Lawson did not challenge the accuracy of this information.
The Tribunal Member noted that Mr Lawson asserted that he needed to retain profits in order to replace equipment in due course but said that most of the major fixed assets of the company had written down values which suggested that they would not need to be replaced for many years.
Ms Lynch also provided evidence which calls into question Mr Lawson’s claim that paying the additional amount required by the AAT decision will cause him hardship. She provided evidence that:
a)In May 2015 Mr Lawson completed a document in which he stated that he had $88,000.00 in savings;
b)In October 2015 he declared that he had $7,000.00 in savings and $30,000.00 in the account called X’s education account;
c)Although he maintained that he was drawing a small income from his company, he also asserted more than once in documents supplied to the Child Support Agency that he lived within his means and paid his credit card off each month.
Mr Lawson did not seek to file any additional material after Ms Lynch’s affidavit containing this evidence was filed.
In the light of the information provided by Ms Lynch and in the Tribunal decision, Mr Lawson cannot expect the court to accept his bare assertion that he is not in a position to pay child support assessed on the basis that he had an income of $100,000.00, even if it results in him being required to pay arrears of child support.
Ms Lynch’s solicitor submitted that it would cause her hardship if she did not receive child support payments but of course if the order was made as proposed by Mr Lawson she would continue to receive them at the level provided for in the objection decision i.e. $93.75 per week.
There was no evidence that it would cause Ms Lynch hardship as such if the order sought by Mr Lawson was made. However she is working part time and has the primary care of a child. Even a modest reduction in her child support might well have an adverse impact on her.
Mr Lawson’s solicitor argued that if it turned out that the money had been overpaid Mr Lawson might have difficulty recovering it from Ms Lynch. However Ms Lynch has an income earning capacity and there is no compelling evidence that the money overpaid to Ms Lynch would be irretrievably lost to Mr Lawson.
The flip side of this of course is that if Mr Lawson does not pay the amount required by the Tribunal decision and his appeal is unsuccessful, he will accrue 6 months more of arrears and it may take time for Ms Lynch to recover the arrears from him.
An issue I need to consider is the strength of the appeal. If there was compelling evidence that Mr Lawson had strong prospects of success this might tip the balance in favour of staying the decision of the Tribunal.
An appeal against a child support first review decision can only be made on a question of law and the grounds of appeal in the Notice of Appeal filed on 16 March 2016 do not on their face suggest that the appeal has strong prospects of success.
The Notice of Appeal contains complaints about factual findings (for example that the major fixed assets of the company would not require replacement for many years, that Ms Lynch had decided not to seek full time employment because of child care responsibilities and that an increase in Mr Lawson’s child support would not cause him hardship).
The Notice of Appeal contains a complaint that the AAT erred in law in finding that Mr Lawson had an annual income of more than $100,000.00 pre-tax but that was not the Tribunal’s finding. The Tribunal found that the child support payable by Mr Lawson under the administrative assessment did not accurately reflect his true level of income, property and/or financial resources and it used the tool of setting an adjusted taxable income to address this issue, which is permissible.
Neither Ms Lynch nor Child Support Registrar has made an application for summary dismissal of the appeal and neither sought to address me about the strength of the appeal but nevertheless it is somewhat difficult to discern at present a strong ground of appeal on a question of law.
The grounds may be amended and refined prior to the hearing of the appeal and may be developed in oral argument with reference to decided cases and time will tell whether any of the grounds succeed. However I do need to weigh into the mix in determining whether to grant the stay that at present the grounds of appeal on their face do not seem compelling.
Conclusion
Ms Lynch has been pursuing a departure from the administrative assessment of child support since April 2015 and has obtained decisions from a senior case officer, an objections officer and the AAT setting Mr Lawson’s adjusted child support income at a considerably higher amount than the amount he is taking by way of drawings from his company.
Ms Lynch is entitled to presume that the decision of the Tribunal is correct and is entitled to the benefit of the decision. In light of the financial information about Mr Lawson’s company which is outlined in the AAT decision, information Mr Lawson did not seek to challenge (although by his appeal he sought to challenge the conclusions drawn from that information) there is nothing to suggest that it will cause Mr Lawson hardship if the AAT decision is not stayed and the grounds of appeal in their current state do not suggest a strong case for establishing that the Tribunal has made an error of law.
I am not satisfied that Mr Lawson has made out a case for having the decision stayed.
An option open to me would be to stay the decision subject to a condition that Mr Lawson continue to pay child support from this point on at the rate required by the decision. This would effectively prevent the child support agency taking steps to collect the arrears. However in light of the financial information available, I cannot be satisfied that it would cause Mr Lawson hardship if he had to pay the arrears, nor that the amount Ms Lynch would receive if the arrears were paid is such that Mr Lawson would be unable to recover the money if the appeal is decided in his favour.
For all of the above reasons I intend to dismiss the application in a case.
I certify that the preceding seventy two (72) paragraphs are a true copy of the reasons for judgment of Judge Terry
Date: 26 May 2016
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