Linnan and Linnan (SSAT Appeal)
[2009] FMCAfam 353
•20 May 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LINNAN & LINNAN (SSAT Appeal) | [2009] FMCAfam 353 |
| CHILD SUPPORT –Appeal from SSAT – determining income amounts – meaning of ‘just and equitable’ – relevant considerations. |
| Child Support (Assessment) Act 1989, ss.38A, 117 |
| Dwyer v McGuire (1993) 114 FLR 325; (1993) 17 Fam LR 42; (1993) FLC ¶92-420 Bassingthwaite v Leane (1993) 114 FLR 202; (1993) 16 Fam LR 918; (1993) FLC ¶92-410 In the Marriage of Dempsey (1991) 104 FLR 283; (1991) 14 Fam LR 739; (1991) FLC ¶92-228 PJ & Child Support Registrar (SSAT Appeal) [2007] FMCAfam 829; (2007) 38 Fam LR 31; (2007) FLC ¶98-035 Tyagi & Meares (SSAT Appeal) [2008] FMCAfam 886; (2008) 39 Fam LR 604 |
| Chisholm R, Exclusion of evidence inconsistent with earlier statements: The rise and fall of the ‘Elias principle’ (2001) 15 AJFL 1 |
| Applicant: | MR LINNAN |
| Respondent: | MS LINNAN |
| File Number: | MLC 10891 of 2007 |
| Judgment of: | Riethmuller FM |
| Hearing date: | 17 February 2009 |
| Date of Last Submission: | 17 February 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 20 May 2009 |
REPRESENTATION
| Counsel for the Applicant: | Appearing in person |
| Counsel for the Respondent: | Appearing in person |
ORDERS
That the decision of the Social Security Appeals Tribunal, appeal MC225564 be set aside.
The matter be remitted to the Social Security Appeals Tribunal to hear and determine according to law.
IT IS NOTED that publication of this judgment under the pseudonym Linnan & Linnan is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 10891 of 2007
| MR LINNAN |
Applicant
And
| MS LINNAN |
Respondent
REASONS FOR JUDGMENT
This is an appeal from a decision of the Social Securities Appeal Tribunal (SSAT) made on 8 August 2008. Whilst the appeal was brought by way of an initiating application, filed out of time, it appears that the appellant attempted to file his appeal within time but that the application was confused with other proceedings then pending before the Court with respect to children. To the extent necessary I grant leave to bring the appeal out of time, and give leave to the appellant to proceed as though the initiating application filed 31 August 2008 were in fact a Notice of Appeal.
The substance of the appeal relates to the appellant’s income and earning capacity as assessed by the Social Securities Appeal Tribunal. Whilst the specific grounds were not clearly articulated in the initial documents, in an Outline of Argument document the appellant identified each of the paragraphs of the Tribunal’s decision about which he had complaint (a total of 32 separate paragraphs). From the appellant’s submissions, with respect to each of the paragraphs about which he makes complaint, one can deduce the following grounds of appeal:
(i)That the Social Securities Appeal Tribunal erred in taking into account rental property losses of the appellant when assessing his income amount;
(ii)That the Social Securities Appeal Tribunal erred in taking into account the capacity of the appellant to rent part of his home when assessing his income amount;
(iii)That the Social Securities Appeal Tribunal erred in taking into account the net proceeds of sale of a property sold by the appellant;
(iv)That the Social Securities Appeal Tribunal failed to take into account the appellant’s period of unemployment;
(v)That the Social Securities Appeal Tribunal failed to accord the appellant procedural fairness in making determinations about whether individual items of his expenses were business or personal expenses;
(vi)That the Social Securities Appeal Tribunal erred in the method by which it extrapolated the appellant’s income for the future;
(vii)That the Social Securities Appeal Tribunal erred in finding that the appellant’s income was sufficient to enable him to meet his expenses in circumstances where there was evidence before the Tribunal that the appellant’s credit card debt had quadrupled during the relevant period;
(viii)That the Social Securities Appeal Tribunal erred in making findings that there be a retrospective departure to the Child Support Assessment for a period in excess of three years;
(ix)That the Social Securities Appeal Tribunal erred in its determination of the respondent’s earning capacity; and
(x)That the Social Securities Appeal Tribunal erred in finding the appellant did not have an obligation under the mortgage for the home in which he currently lives.
Background
The appellant and the respondent have a long history of litigation, commencing in August 2005 in the Federal Magistrates Court with respect to property and children. There was a brief respite between March 2006 and October 2007 when the parties only litigated with respect to their divorce.
In the Child Support system the parties have also been active. In September 2005 a departure decision was made under Part VIA of the Child Support (Assessment) Act for the period 15 August 2005 to
19 June 2006. For the period 20 June 2006 to 10 October 2007 a review was undertaken under Part VIA on 13 September and then a successful objection application was made prior to the assessment rate being set.
The original application, from which this appeal flows, was lodged by the appellant on 24 January 2007 seeking to decrease the child support assessment to $1200 per annum. He relied upon the following claims:
(i)That the parties had entered into a property settlement;
(ii)That his mortgage repayments had increased; and
(iii)That the mother and her partner receive an income.
The respondent lodged her response on 6 March 2007 disputing each of the grounds raised by the appellant and seeking an increase to the child support assessment to $18,000 per annum based upon an income amount of $83,000 per annum for the appellant. It is apparent from the face of the response form that the respondent was relying upon statements made by the appellant in a loan application document that he was earning in excess of $83,000 per annum. She annexes a copy of that loan application document which is dated 8 December 2005.
It is clear from the application and response that the respondent’s cross-application sought a departure for periods dating back to 2005 when the appellant lodged his loan application forms at the bank. A perusal of the original decision under Part VIA indicates that the appellant was seeking a backdated reduction to his previous assessments for the period July 2005 to date (see court book 231). Ultimately, the senior case officer did not make an alteration to the assessment, and in the context of this appeal there is no need to traverse his reasons. The objection decision maker allowed the objection in part, following which the appellant lodged an appeal to the Social Securities Appeal Tribunal.
The proceedings before the SSAT involved an extensive review of documents. The SSAT documents provided to the Court number in excess of 1180 pages. The proceedings before the SSAT commenced on 25 July 2007, and were not finalised until 8 August 2008. During this time the Tribunal had hearings with the parties and made a number of requests for specific documents to be provided to the Tribunal.
Ground 1 – Rental Property Losses
The Tribunal found that the appellant had a rental property at [R], which was sold at the end of the 2006/2007 financial year. Settlement of the sale occurred on 8 August 2007. The Tribunal concluded that the net receipts of the appellant were approximately $36,000, being the total of the deposit and the monies received as calculated in accordance with the settlement statement. It is apparent that no account was made for Estate Agents’ fees, however no document was provided to the Tribunal setting out those Estate Agent fees. In any event, the Tribunal accepted that the bulk of these monies were used to pay bills, money owed by the appellant to his sister and the servicing of a mortgage on the appellant’s [D] property (his place of residence): see para. [66].
The Tribunal accepted that the appellant determined to sell the rental property in December 2006 and that it was not rented thereafter (see para. [67]). Ultimately, the Tribunal found that the net loss with respect to the rental property in the 2006/2007 financial year was $578, and in the 2005/2006 financial year $5780 (see paragraph 68).
In paragraphs 99-100 the Tribunal purported to determine the appellant’s income amount pursuant to s.38A of the Child Support (Assessment) Act 1989. Section 38A operates when the Registrar is conducting a formula assessment in accordance with Part V of the Act. The appeal to the SSAT was not an appeal from the exercise of the Registrar’s discretion under that part, but rather an appeal from a departure application under Part VIA. Whilst s.38A indicates a legislative intent that the real financial position (exclusive of investment losses through negative gearing) is to be the basis for an assessment, that has always been the law with respect to departures under s.117 (see Dwyer v McGuire (1993) 114 FLR 325; (1993) 17 Fam LR 42; (1993) FLC ¶92-420; Bassingthwaite v Leane (1993) 114 FLR 202; (1993) 16 Fam LR 918; (1993) FLC ¶92-410.
To approach the question of a departure application through the route of s.38A and a determination of supplementary income amounts indicates that the Tribunal have erred in its task, and failed to approach the matter pursuant to s.117.
The Tribunal’s reference to s.117(7A) with respect to the appellant is also difficult to understand. This was not a case where the Tribunal were asked to determine the capacity of the appellant to derive income but rather a case where the Tribunal were asked to determine the actual income being derived by the appellant. In this respect the Tribunal needed to go no further than the provisions of s.117(2)(c)(ia). Indeed, despite the roundabout route via s.117(7A) and s.38A the Tribunal reached this point at para.[101] of their decision.
There is no doubt that, as a general proposition, negatively geared investments or properties will not be taken into account for the purpose of reducing the resources otherwise available to pay child support or maintenance. To this extent there can be no challenge to the Tribunal’s findings.
However, the way in which the Tribunal has dealt with the rental property losses is a matter of some issue. With respect to each financial year the Tribunal appeared to approach its task by carefully examining all of the income and expenses of the appellant’s business (being his only source of income other than rental received, except for a brief period of social security). The Tribunal determined the appellant’s actual earnings from the business, after expenses the Tribunal considered to be properly business-related. The Tribunal then proceeded to increase the appellant’s income amount by adding the net loss associated with the rental property.
It appears clear that the actual income from the business was the pool of money from which the appellant had to support himself.
His wife was receiving the rent into her account and paying the mortgage on the rental property (see para. [67]).
If, in determining the Appellant’s income, the Tribunal had already deducted all of the expenses associated with the rental property and added the rental income, it would then be appropriate to adjust the income figure by the amount of the rental loss. In this case however, the Tribunal has never actually taken account of the rental loss. That is, no account has been made for the fact that the rental property expenses exceed the rental income (and thus a loss needed to be met by the appellant’s wife), but the amount of that shortfall has been notionally added to his income.
It appears that this error in logic flows from the Tribunal confusing its task of determining the actual earnings of the appellant with the legislative provisions of s.38A which provide for the calculations by the Child Support Registrar on a formula assessment using items shown in a tax return.
In this respect, the appeal must be allowed. Whilst an investment loss cannot be used to reduce a party’s income, it makes no sense to notionally increase the income of a party by the amount of the loss, if that loss has not first been deducted from the income.
Ground 2 – Capacity to rent home
The appellant claims the Tribunal inappropriately added to his income:
(a) rental income that was received by him with respect to the property in which he was living; and
(b) notional rental income when he ceased to rent a unit underneath the house.
To the extent the Tribunal added rental actually received by the appellant from renting out a unit underneath his house, it appears to me to be an entirely proper course for the Tribunal. This was money received by the appellant and available to him as part of his income to pay child support. The fact that he may not have declared this income for taxation purposes does not alter the proposition that it was available to him. However, the appellant’s complaint with respect to this ground goes further.
It will often be difficult for a tribunal or court to determine whether or not a person should be expected to rent out a part of their home either to a boarder or, if the part is a separate section of the home, to a tenant, in order to supplement their income for child support purposes. In some cases persons may be prepared to undertake such an endeavour until such time as they re-partner or until they can cope financially. Ordinarily, one would expect some discussion as to the relevant considerations that the tribunal or court has taken into account in this regard. There is no discussion by the Tribunal in this decision. The appellant made submissions from the bar table as to the factors that impacted upon his decision not to re-let the property. No transcript was available and it is not clear to me that this material was before the Tribunal. As a result I do not recount the appellant’s statements here and proceed on the basis that there is no evidence before me that any further relevant factors were before the Tribunal.
A further difficulty with respect to the income from the [D] property is that the Tribunal concluded:
As no income in relation to this unit was disclosed in [the appellant’s] taxable income, and consequently no allowable deductions, the full amount of rent is attributed as income for the purpose of the assessment of his child support income.
The Tribunal appears to confuse the consideration of the factors relevant to completing a tax return with the task of identifying the real income of the appellant. There is no question that the [D] property had a significant mortgage that required servicing, together with other ordinary property expenses. It is not appropriate to take into account an income from a property which has significant outgoings without also in some way accounting for the outgoings with respect to the property. In many cases, it matters little that the household expenses are not accounted for against income from a boarder in determining the ‘income’ of the payer, provided proper account is taken of these expenses as part of the payer’s necessary commitments.
Had the Tribunal descended to specifics under s.117(4), the relevant expenses would have been taken into account in that process: however, this was not done in this case. To simply ignore the expenses is an error of law on the part of the Tribunal as they have failed to have regard to a relevant consideration.
Ground 3 – Applying net proceeds of sale
With respect to this ground the appellant complains that the Tribunal took into account the proceeds of sale of the property at [R] without taking into account the expenses by way of real estate agent commission. It does not appear that the Tribunal were forwarded any documents showing the amount of the commission payable to the estate agent. On the material before the Tribunal the figures that they have reached at para.[66] was available. Whether the Tribunal ought to have realized that the sale could not have occurred without some commission payable to the agent is academic in this case as it does not appear that the Tribunal relied upon the net capital receipt of the appellant following the sale as a basis for increasing his child support assessment. At the end of the day, the amount that the Tribunal concluded he received from the sale of this property does not appear to have impacted upon their reasoning with respect to his earnings from which the child support was calculated. This ground of appeal must therefore fail.
Ground 4 – Period of unemployment
The appellant complains that he was unemployed for a number of months and that the Tribunal failed to take this into account in determining his income amount. A careful reading of the Tribunal’s decision indicates that the period of unemployment was not referred to specifically when the Tribunal was determining the appellant’s income amounts for the various years. However, there was considerable uncertainty on the material before the Tribunal as to when this period of unemployment occurred.
Rather than attempting to determine the precise period of unemployment it appears clear that the Tribunal have instead looked at the actual receipts of income of the appellant throughout all of the relevant periods. As a result, the Tribunal have only looked at the actual earnings of the appellant during this period. In these circumstances, it is academic whether or not the appellant was unemployed for any particular month as it was only his earnings from his work in the business that were taken into account by the Tribunal. The appellant’s argument on this point is reminiscent of that in In the Marriage of Dempsey (1991) 104 FLR 283; (1991) 14 Fam LR 739; (1991) FLC ¶92-228.
I find no error on the part of the Tribunal in this regard.
Ground 5 – Procedural fairness
The appellant argues that the Tribunal, in carrying out its task, ought to have gone through all of his deposits and expenses as shown on his bank statements in order to calculate the net business income each month from August 2005 to October 2007. Paragraph [122] of the Tribunal’s decision sets out each month’s payments and expenses. In order to compile this table it was necessary for the Tribunal to examine each of the line items on the statements in order to determine, with respect to each item, whether it was a business or private expense. In effect, the Tribunal has made findings of fact about every single item in the appellant’s bank and credit card statements for the whole of the period in order to determine the income amount of the appellant.
The appellant also complains that he was not given an opportunity to be heard with respect to each item.
It is apparent the Tribunal had some difficulty determining the true financial position of the appellant. The appellant provided a profit and loss statement and balance sheet, obviously printed from an accounting software program. However, he did not provide any ledger or journal entries that were utilized to compile the profit and loss and balance sheets. The Tribunal sought various documents on a number of occasions and on 27 May 2008 wrote highlighting discrepancies the Tribunal had noted with respect to bank records and made a number of general observations about reviewing the material to identify the business expenses.
It appears to me that it was apparent that the Tribunal were considering each of the expenses that the appellant incurred. At the very least by May 2008, after which he had sent in various bank statements, the Tribunal had subpoenaed the cheques and had written to him notifying him in general terms of its concerns. The appellant did not provide the Tribunal with any submissions or schedules setting out his classifications of the expenses. The appellant attempted to tender at the appeal a set of bank and credit card statements where he had indicated on each statement which expenses he said were business or personal. I declined to allow him to tender those documents on the appeal as that evidence was not before the Tribunal. I see no reason why the appellant could not have provided this evidence or a schedule from the accounting package at the time the Tribunal was dealing with the matter. In these circumstances I find that the appellant did have notice, at least generally, of the issues the Tribunal were determining.
The question that then arises is whether the Tribunal ought to have put to the appellant the classification of each line item on his bank statements and visa card statements, to enable him to make submissions line by line to the Tribunal as to the appropriate classification that the Tribunal ought to make of those items.
I am mindful that the Social Securities Appeal Tribunal is a tribunal of an administrative nature. The Tribunal sought specific evidence from the appellant. In the circumstances of this case I am not persuaded that the Tribunal have erred in the approach they have taken.
Ground 6 – Determination of future income
The appellant complains that the Tribunal utilized figures available for the first 6 months of the 2007-2008 financial year and extrapolated this over the balance of the financial year. I see no error on the part of the Tribunal in looking at the most recent trading history of the business in order to estimate the appellant’s income amount for the future.
The Tribunal was also confronted with a factual difficulty with respect to the expenses for this period in that the expenses appeared to exceed the income of the business. This was explained by the appellant who indicated that he allows friends to make purchases on his account at suppliers and is reimbursed later. The Tribunal then looked at the proportion of business expenses to business receipts in previous years and found that it was approximately 65%. The Tribunal’s reasons in this regard are as follows:
129. In the 2007/08 financial year, [the appellant’s] cheque account shows deposits of $34,543.19 for the first six months of the financial year. The Tribunal has also considered the business expenditure during the period. The Tribunal calculations are limited to this six month period as the relevant business account was closed in December 2007. The Tribunal finds that a total of $36,434.88 of business expenditure for the same period. The expenditure on business related expenses is higher than the income received during the relevant period. [The appellant] has indicated that he allows friends to make purchases on his accounts with suppliers and this may in fact explain the discrepancy in his expenditure and income, however [the appellant] would most likely be reimbursed by his friends for these items by the purchasers. The Tribunal does not accept that [the appellant] would incur the costs on behalf of others without payment.
130. [The appellant’s] own personal expenditure during the period however, determined from the cheque and credit card statements, has been consistent for the six month period with the previous financial year expenditure. This discrepancy in business expenditure, which amounts to approximately 105% of the income generated through the business, does not reconcile with [the appellant’s] overall financial position. [The appellant’s] business expenses, in the two previous financial years represented approximately 65% of income. Based on average of expenditure to income, the Tribunal has determined that his actual income for the financial year, based on a projection of six months income provided to the Tribunal, is $24,180.24. [The appellant] indicated in his statement of financial circumstances completed on 10 October 2007 household expenses totalling $475.00 per week. This amounts to an annualised amount of $24,700.00. This figure is consistent with the average for the twelve month period determined as income for the relevant period. The Tribunal therefore finds that [the appellant’s] income during 2007/08 is $30,420.00.
It appears that the Tribunal ultimately looked at the average ratio of expenses to gross income. There is nothing illogical about this method in the circumstances of this case. Ultimately the method adopted by the Tribunal was open to it, and indeed was a conservative method of estimating the income of the appellant. I am not persuaded that this passage or finding shows an error of law on the part of the Tribunal.
Ground 7 – Failure to take into account credit card debt
In support of Ground 7 the appellant asks that the Tribunal’s decision be set aside on the basis that the Tribunal made findings at para.85 that:
85. The Tribunal finds that [the appellant’s] income information as provided to the Tribunal does not accurately reflect his income from self employment. The Tribunal has found that the bank statements, summary of income and expenses and other oral and written information provided by [the appellant] is inconsistent and unreliable. The clear indication of all this information is that [the appellant] has been able to service his expenses, both business and personal, without incurring any substantial increase in debts. Whilst the debts have now changed in terms of who is now the provider of finance and who is responsible for their repayment, there is no information available to the Tribunal to indicate that these liabilities have increase. The Tribunal has also found that the net rental losses for the [R] property, undeclared rent and rent foregone from the [D] property have not been taken into account in determining [the appellant’s] child support income amount. [Emphasis added]
The documents provided to the Tribunal with respect to the appellant’s credit card show that his credit card debt increased from around $5000 to nearly $20,000 over the relevant period. The appellant’s line of credit (his mortgage) did reduce from around $278,000 to $273,000 during the period from March 2006 to September 2007 (ignoring a $29,000 drawdown made during the last month). It appears that the Tribunal erred in failing to have regard to relevant material, namely the credit card statements, in making the finding that they did.
However, ultimately the Tribunal based its findings upon the income and expenses of the appellant as best they could be ascertained from his bank statements and visa card statements. The Tribunal, at least for the years prior to the 2007-2008 year, ultimately relied upon actual income and actual expenses in order to determine the appellant’s income amount. The finding with respect to the change in the appellant’s overall debt position does not appear to impact upon his actual expenses and debts in determining his income amount in these years. It is, however, relevant to the Tribunal’s income amount finding with respect to the 2007-2008 year as the Tribunal based that finding on the actual expenses of the appellant, assuming that he was not supplementing his income from borrowings. In these circumstances the Tribunal have erred with respect to the 2007-2008 year.
Ground 8 - Retrospective departures
The appellant complains that the departure decision of the Tribunal results in a significant retrospective increase, being backdated to
24 July 2005. It is apparent from the materials that led to the Tribunal decision that both parties were seeking a review of child support that went back to the 2005 financial year.
Whilst the transcript was not before me, the appellant agreed that he was advised at the commencement of the hearing that his child support could be increased. More importantly, it must have been apparent to him, from the terms of the cross application by the respondent and that she continued to participate in the proceedings, that the respondent was agitating for an increase in child support over a significant period, particularly as she based her cross application upon his representation to his bank that he was earning in excess $80,000 per annum. This case is substantially different to PJ & Child Support Registrar (SSAT Appeal) [2007] FMCAfam 829; (2007) 38 Fam LR 31; (2007) FLC ¶98-035. Unlike the appellant in PJ’s case, the appellant here had notice of the claim for an increase, was aware it was being pursued, and would have been well aware that an increase was a live issue before the Tribunal. In this regard I find that the Tribunal have not erred with respect to procedural fairness.
Ground 9 – Determination of the Respondent’s Earning Capacity
With respect to ground 9, the appellant complains the Tribunal erred in the way in which it approached determining the earning capacity of the respondent. The respondent has the care of the children of the parties. When considering the respondent’s income and earning capacity the Tribunal had regard to s.117(7B). This section provides as follows:
Matters as to which court must be satisfied before making order
…
(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.
The Tribunal made findings with respect to the respondent as follows:
114. Subsection 117(7B)(a)(ii) refers to a reduction in the number of work hours. The Tribunal interprets this to mean a reduction in work hours that has taken place since separation or since an assessment for child support liability. The reduction specifically refers to a reduction from the normal number of hours that constitutes full time work. In this case [the respondent] has not reduced her working hours since separation. The Tribunal has found that [the respondent] has been working in a part time capacity since at least separation and works, on her own evidence, in a part time capacity at present. In fact, since the hearing of this matter, [the respondent] has advised the Tribunal that her hours of work have increased. As there has been no perceivable reduction in [the respondent’s] working hours, subsection 117(7B)(a)(ii) does not apply.
115. Subsection 117(7B)(a)(iii) refers to a change in occupation, industry or working pattern. The Tribunal interprets this to mean a change that has taken place since separation or since an assessment for child support liability. [The respondent] has changed her working pattern, as she is now working 3 days per week. However the change in working pattern is justified on [the respondent’s] caring responsibilities for her children, in particular her daughter who requires medical attention and attendance at hospital for a heart condition. The Tribunal is therefore satisfied that this subsection does not apply.
The findings of fact made by the Tribunal in paras.114-115 clearly demonstrate that the Tribunal have considered this issue in context of s.117(7B). I find no error of law in this respect. As the outcome on this issue appears inevitable I refrain from any detailed analysis of the operation of s.117(7B) in this judgment.
Ground 10 – Liability for mortgage payments
The final ground is a complaint with respect to the findings at para.137 of the Tribunal decision, which are as follows:
137. The Tribunal also notes that at the time of completing this statement of financial circumstances, [the appellant] had mortgage repayments. He has subsequently advised the Tribunal that he no longer owns this property and that the new property that has been purchased is in his wife’s name. [The appellant] also advises that the mortgage is in his wife’s name for this property. This has, in the Tribunal’s view, further reduced [the appellant’s] necessary expenses for the remainder of the child support period.
At the hearing before me, the appellant advised that, whilst his wife had paid the deposit, both he and his current wife were liable on the mortgage and that he met his share of the mortgage payments. It is not clear to me that this evidence was before the Tribunal. On the evidence before the Tribunal it was open to the Tribunal to conclude the appellant did not have an obligation under the mortgage for the home in which he currently lives.
It may be that the Tribunal was not asked to find that the appellant was contributing to the mortgage or required to pay rent in the house in which he was living (perhaps because his current wife wished to ensure that it was clear that the property was hers in law and equity, rather than it being hers with some form of constructive trust providing an equitable interest to the appellant). I do not have a copy of the transcript of what material was placed before the Tribunal in this regard.
On the state of the evidence I am not persuaded that there was sufficient material before the Tribunal to require them to specifically address these issues and therefore I do not find that this ground has been established.
Contentions of Respondent
The Respondent complains that the Tribunal failed to have regard to significant cash payments upon the appellant’s credit cards when determining his income amount. For example, at page A200 of the documents there is a BPAY payment on the appellant’s credit card of $2660 which does not appear to have emanated from his business account. Similarly on page A197 there are 3 payments totalling $4350, of which only $650 appears to have emanated from the appellant’s cheque account. On page A68 a $1,600 cash payment on a credit card account is shown.
These are significant issues of fact which ordinarily the Tribunal would be expected to deal with if they were drawn to the Tribunal’s attention. Without a transcript I am unable to determine whether the wife specifically drew these matters to the attention of the Tribunal. However, as the matter must return to the Tribunal for other reasons it is important to record these issues for the Tribunal to consider on the next occasion.
The mother also placed before the Tribunal a document completed by the appellant (a low-doc home loan application), wherein he stated the net profit before tax from the business was $83,200. This was signed on 8 December 2005. This is a significant statement against interest by the appellant as to his business earnings as at that time. It appears that his case in the Child Support Agency administrative processes was that this representation was untrue. Even without reference to that statement the Tribunal, in this case, appears to have had difficulties in accepting the evidence put forward by the appellant. In this context, it was open for the Tribunal to accept his loan document as representing his true income at that time, and that the other material before the Tribunal represented evidence that was, at best, unreliable. Alternatively, the Tribunal may have accepted that the statement in the loan application was untrue. The difficulties in dealing with this type of evidence are explored in some detail in Chisholm, R, Exclusion of evidence inconsistent with earlier statements: The rise and fall of the ‘Elias principle’ (2001) 15 AJFL 1. Whilst the better view is that subsequent evidence contradicting the representation made to the bank remains admissible and relevant, the statement made by the appellant to the bank (to induce the bank to lend him funds) remains a significant and weighty piece of evidence which ought to have been considered by the Tribunal in its reasons before coming to its decision in this case.
Conclusions
In the circumstances of this case, the complex factual findings required for a decision make it inappropriate for me to substitute a decision for that of the Tribunal. The appropriate course is to set aside the Tribunal’s decision and to remit the matter to be heard and determined according to law.
A final matter, which was not raised by the appellant or respondent, which is a cause for real concern in decisions of this type, is the manner by which the Tribunal determined whether or not the outcome of its decision was just and equitable within the meaning of s.117(4). The Tribunal spent some time exploring the circumstances of the parties, however nowhere on the face of decision is it apparent what weekly rate of child support would actually follow from the determinations made by the Tribunal. Without identifying the weekly or monthly rate of child support that would flow from their determination it is difficult to understand how the Tribunal could properly determine whether or not the assessment would be just and equitable within the meaning of s.117(4). Rather, it is indicative of the Tribunal approaching the matter on the basis of attempting to adjust the income amount component of the formula assessment (in the form of some extended process under Part V of the Act), rather than being satisfied that the particular outcome was ‘just and equitable’ as regards the child carer and liable parent, as required under s.98L. I have discussed this issue in PJ & Child Support Registrar (SSAT Appeal) [2007] FMCAfam 829 and Tyagi & Meares (SSAT Appeal) [2008] FMCAfam 886; (2008) 39 Fam LR 604, and need not repeat those reasons here.
As a result I set aside the decision of the SSAT and remit the matter for hearing and determination according to law.
I certify that the preceding fifty-seven (57) paragraphs are a true copy of the reasons for judgment of Riethmuller FM
Deputy Associate: Katherine Sudholz
Date: 19 May 2009
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