Manchester & Manchester (SSAT Appeal)
[2010] FMCAfam 947
•7 September 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MANCHESTER & MANCHESTER (SSAT APPEAL) | [2010] FMCAfam 947 |
| CHILD SUPPORT – SSAT Appeal – Error of law established – proceeds of sale of capital not a financial resource – non discernable consideration of s.117 (4) – remit for rehearing. |
| Child Support Assessment Act 1989, s.117(4) |
| Wright v Wright [2009] FMCAfam 979 Comcare Australia v Lees [1997] FCA 1415 Nestle Australia Ltd v Federal Commissioner of Taxation (1987) 16 FCR 167 |
| Applicant: | MR MANCHESTER |
| Respondent: | MS MANCHESTER |
| File Number: | PAC5144 of 2009 |
| Judgment of: | Dunkley FM |
| Hearing date: | 10 June 2010 |
| Date of Last Submission: | 10 June 2010 |
| Delivered at: | Parramatta |
| Delivered on: | 7 September 2010 |
REPRESENTATION
| Solicitors for the Applicant: | Maclarens Lawyers |
| Solicitors for the Respondent: | Legal Aid NSW |
ORDERS
The decision of the Social Security Appeals Tribunal made on
29 September 2009 be set aside.
The decision be remitted for rehearing according to law and subject to any further evidence that may now be applicable.
IT IS NOTED that publication of this judgment under the pseudonym Manchester & Manchester is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT Parramatta |
PAC5144 of 2009
| MR MANCHESTER |
Applicant
And
| MS MANCHESTER |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an appeal from a decision of the Social Security Appeals Tribunal (Tribunal) made on 29 September 2009. Mr Manchester is the Appellant. He is the parent liable to pay child support to
Ms Manchester for their children [W], born [in] 1992, [X], born [in] 1994, [Y], born [in] 1999 and [Z], born [in] 2000.
Ms Manchester is the Respondent and opposed the Appeal.
Background
On 18 May 2009, an Objections Officer at the Child Support Agency (Agency) disallowed an objection by Mr Manchester, with respect to his Child Support Assessment.
As a result the above a decision made by a Senior Case Officer of the Agency on 23 May 2008 to change Mr Manchester’s existing Child Support Assessment was unaffected. As a consequence, at the time of the Appeal to the Tribunal, Mr Manchester was assessed as follows:
a)For the period 20 March 2008 to 30 June 2008 to have a child support income set at $69, 600.00 per annum;
b)For the period 1 July 2008 to 31 March 2010 to have an adjusted taxable income set at $69,600.00;
c)For the period 1 July 2008 to 31 March 2010 Ms Manchester’s adjusted taxable income was set at $25,287.00 per annum.
Mr Manchester’s Appeal was heard in the Federal Magistrates Court on 10 June 2010. He was represented by his solicitor, Mr Tilley.
Ms Manchester was represented by her solicitor, Ms Cole.
There are two grounds of appeal, set out in the Notice of Appeal
Background Facts
Mr and Ms Manchester have four children, [W], born [in] 1992, [X], born [in] 1994, [Y], born [in] 1999 and [Z], born [in] 2000.
The children live with the mother, Ms Manchester.
The parties separated early in 2005.
The Family Court of Australia made property settlement Orders on
8 December 2005, wherein Mr Manchester acquired Ms Manchester’s share of the matrimonial property at [H] for a cash payment.
Mr Manchester also retained a family business known as “[S]”.
To discharge existing liabilities, to fund his obligation for the property settlement, by way of payment to Ms Manchester, Mr Manchester transferred twenty percent of the [H] park property to his mother and borrowed $570,000.00. The borrowing was from Westpac and was secured as a Low Doc home loan.
Mr Manchester also later obtained an overdraft from Westpac Bank with a limit of fifty thousand dollars. This loan was obtained as a Low Doc Loan. His income amount disclosed in the application was false.
Both the mortgage and the overdraft are in the joint names of
Mr Manchester and his mother. Mr Manchester with the help of his two brothers makes all repayments in respect of the mortgage.
Mr Manchester himself makes payments on the overdraft account. He mixed both business and personal expenses in the overdraft.
Mr Manchester accounting records are less than ideal and are reflective of a sole trading [business owner]. His taxation returns were not up to date at the time of the Tribunal hearing.
Mr Manchester’s statement to the Tribunal is found in Part 4 of the bundle of documents.
Mr Manchester asserts he receives rental income of $300.00 per week with respect to the [H] property. He receives $2,000.00 a month from his two brothers. Profit from his business and additional benefits from his business, principally being food.
The Agency and the Tribunal conclude that because Mr Manchester has been able to meet monthly expenses of $4,433.00, this equates to an income of $53,196.00 per annum which is calculated to be about $69,600.00 in pre tax income. Clearly the two thousand dollars that
Mr Manchester receives from his brothers is treated by the Agency and the Tribunal as either income or a financial resource available to him.
It is asserted on Mr Manchester’s behalf this is either an error of law or contrary to all of the available evidence.
Each party agrees that Appeal lies to this Court. Each party agrees that the Tribunal correctly identified the legislative framework to be applied to their decision making task.
Grounds of Appeal
Mr Manchester grounds of appeal are set out in his Notice of Appeal, filed 4 November 2009. Those grounds are:
Ground 1
a)The Tribunal erred in finding that Mr Manchester’s income should be set at $69,600.00 per annum in that:
i)
The Tribunal failed to make a finding as to the income of
Mr Manchester from his business.
ii)The Tribunal treated borrowings and capital payments as income for child support purposes.
iii)There was no evidence before the Tribunal to support the finding.
iv)The Tribunal merely adopted the findings of the Child Support Agency officers.
Ground 2
b)The Tribunal erred in finding that it was just and equitable to make the proposed departure from administrative assessment of child support.
i)The Tribunal failed to make proper findings as to the actual income and expenses of the parties.
ii)The Tribunal failed to consider the proposed departure in the context of its findings of the actual income and expenses of the parties.
Ground 1 – “finding that Mr Manchester’s income should be set at $69,600.00 per annum”.
It was submitted that the Tribunal accepted Mr. Manchester’s evidence that he took an overdraft which he used for both business and personal purposes. The Tribunal accepted Mr Manchester was receiving financial assistance from his brothers in an amount of two thousand dollars per month. The Tribunal accepted Mr Manchester was receiving rent of $300.00 per week with respect to the [H] Property.
It was submitted that the Tribunal decided because Mr Manchester could meet payments of four thousand, four hundred and thirty three dollars per month, he therefore must have the income to do so. It was submitted that this elevated his overdraft borrowings and financial assistance from his brothers to the status of income. Reference was made to Wright v Wright[1], a decision of Federal Magistrate Riethmuller, which confirmed an earlier decision of the Family Court, that capacity to borrow is not property. The payment of two thousand dollars a month by Mr Manchester’s brothers with respect to his mortgage payments is not income in Mr Manchester’s hands as income is usually defined[2]. It is at best a payment the brothers make on his behalf, but that does not convert it to income. Nor is it a financial resource. Mr Manchester asserted to the Tribunal he would ultimately transfer an interest in the [H] property to his brothers. In accepting all of Mr Manchester’s evidence except his evidence of future transfer to his brothers, no reason was given by the Tribunal.
[1] Wright v Wright [2009] FMCAfam 979
[2] See Macquarie Dictionary, Butterworth’s Australia Legal Dictionary, Section 6 (1) Income Tax Assessment Act 1936.
Sale of capital to his brothers, that is, sale of interest in a portion of the West [H] Property is not income.
There was no analysis by the Tribunal as to whether the sale constituted a capital gain and therefore was assessable for income tax purposes.
In paragraph 20 of the Tribunal’s decision is the following:
The Tribunal also asked Mr Manchester about the property he owns at [H]. He advised he has an agreement with his two brothers whereby they each give him $1000.00 per month. The agreement is that in return for providing this money the brothers will acquire a part of the property. However, Mr Manchester advised that the council will not allow the property to be subdivided and no legal steps have been taken to add the brothers to the title for the property.
In paragraph 47 of the Tribunal’s decision is the following:
The additional material indicates that Mr Manchester is making repayments to the home loan with the assistance of his two brothers, who now each give him $1000 per month, although they have reportedly provided different amounts at different times.
Mr Manchester’s evidence is that in return for the assistance from his brothers, they will acquire an interest in the [H] property but there is no formal agreement. The Tribunal considers that the funds provided by Mr Manchester’s brothers comprise a resource that is available to him to meet his financial commitments.
The Tribunal appears to have been influenced by the fact the local council would not permit a subdivision. However, subdivision is not required for Mr Manchester’s brothers to obtain an interest. It is a simple contract consisting of offer, acceptance and consideration. The names can be added to the title absent Council approval for subdivision, just as his mother’s was.
That the contract has not yet been perfected by adding the brothers to the title is entirely reasonable as their entitlement has yet to be quantified and cannot be quantified whilst they continue to make monthly “purchases”.
Accordingly, the conclusion that the $2,000.00 is part of
Mr Manchester’s income or is a financial resource is contrary to all the evidence and is also wrong at law.
Mr Manchester is selling his capital. In Comcare Australia v Lees[3] says:
[3] Comcare Australia v Lees [1997] FCA 1415
“But it has long been established that an insupportable finding of fact may be set aside. This is because the question whether there is any evidence of a particular fact is a question of law. Further, whether a particular inference can be drawn from facts is also a question of law.”[4]
[4] Ibid.
This conclusion of itself would be sufficient to allow the appeal.
Similarly, drawdown’s from the overdraft account are not income, having regard to the decision in Wright v Wright[5].
[5] Wright v Wright [2009] FMCAfam 979
The Agency and the Tribunal had available to it Mr Manchester’s Taxation Return for the year ended 30 June 2006 and found no fault with that return. The Agency and the Tribunal also had available
Mr Manchester’s Bank Statements with respect to his home loan account and clearly accepted it as a matter of fact that his brothers were depositing two thousand dollars in reduction of his liabilities.
There was no finding made that his business was generating less income than would have been expected from the proper conduct of such a business.
For all of the above reasons this ground of appeal succeeds.
Ground 2 – Just and equitable finding, needs of children and hardship of the parties.
It is clear that the Tribunal did not, in its analysis of section 117 (4) Child Support Assessment Act, found in paragraph 52-54 of the Determination, other than in a non specific way, identify or quantify the needs of the children. Nor did the Tribunal consider hardship to either of the parents or the children. It made no finding about either. As Sexton FM points out in Ladd, “must have regard to”[6] is a mandatory requirement.
[6] Ladd & Child Support Registrar & Anon (SSAT Appeal) [2010] FMCAfam 23
It must be done in a specific and analytical way, evaluating and giving weight to the facts of the individual case, and not superficially. As Wilcox J said in Nestle Australia Ltd v Federal Commissioner of Taxation[7].
[7] Nestle Australia Ltd v Federal Commissioner of Taxation (1987) 16 FCR 167
For these reasons, Ground 2 of the appeal is also made out.
a)Conclusion
Given the extent of the findings that will need to be made with respect to Mr Manchester’s income, in the period of 20 March 2008 onwards it is appropriate the case be remitted for rehearing. The Tribunal in that task will undoubtedly be assisted by the Taxation Returns and accounting records that should by now have been filed and prepared by Mr Manchester or his accountants. The Tribunal will also likely be assisted by other financial documents that should have by now have been prepared by Mr Manchester’s advisors. The Tribunal will need in an analytical way consider the needs of the children, the hardship of the parties and make just and equitable findings.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of Dunkley FM
Date: 7 September 2010
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