Morse & Potts (SSAT Appeal)
[2010] FMCAfam 1305
•30 November 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MORSE & POTTS (SSAT APPEAL) | [2010] FMCAfam 1305 |
| CHILD SUPPORT – Appeal from decision of SSAT – whether decision demonstrates error of law – whether decision demonstrates any breach of natural justice or was procedurally unfair – function of SSAT to determine facts – assessment of credibility of witness function of fact finding tribunal – no error of law established – appeal dismissed. |
| Child Support (Assessment) Act, ss.98C;110G;117;150 Aronson & Dyer: Judicial Review of Administrative Action (2nd Edition) 2000 LBC Information Services |
| PJ & Child Support Registrar (SSAT) Appeal [2007] FMCAfam 829 Neal v Secretary, Department of Transport (1980) 3 ALD 97 Comcare v Etheridge [2006] FCAFC 27 Blackwood Hodge (Australia) Pty Ltd v Collector of Customs (No 2) (1980) 33 ALD 38 Htun v Minister for Immigration & Multicultural Affairs (2001) 194 ALR 244 Apthorpe v Repatriation Commission (1987) 13 ALD 656 Re Minister for Immigration & Multicultural Affairs: Ex Parte Applicant S20/2002 (2003) 198ALR 59 Collector of Customs v Pressure Tankers Pty Ltd and Pozzolanic Enterprise Pty Ltd [1993] 43 FCR 280 LDME & JMA [2007] FMCAfam 712 Briese & Briese (1986) FLC 91-713 Black & Kellner (1992) FLC 92-287 Agrippa & Horton (SSAT Appeal) [2010] FMCAfam 1144 Comcare v Moon [2003] FCA 569 |
| Applicant: | MR MORSE |
| Respondent: | MS POTTS |
| File Number: | ADC 3934 of 2008 |
| Judgment of: | Brown FM |
| Hearing date: | 12 July 2010 |
| Date of Last Submission: | 12 July 2010 |
| Delivered at: | Adelaide |
| Delivered on: | 30 November 2010 |
REPRESENTATION
| Counsel for the Applicant: | In person |
| Counsel for the Respondent: | In Person |
ORDERS
The Notice of Appeal (Child Support) filed on 6 August 2009 be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Morse & Potts (SSAT Appeal) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 3934 of 2008
| MR MORSE |
Applicant
And
| MS POTTS |
Respondent
REASONS FOR JUDGMENT
Introduction
The proceedings were commenced by Mr Morse “the applicant”. The respondent to the proceedings is Ms Potts “the respondent”. The proceedings are concerned with a decision of the Social Securities Appeal Tribunal (the SSAT) made on 6 July 2009.
On 6 August 2009, the applicant filed a notice of appeal, in this court, in respect of that decision. He seeks orders that the decision of the SSAT be set aside and the matter be remitted back to the SSAT for reconsideration.
The parties are the parents of two children, [X] born [in] 1995 and [Y] born [in] 1998. The appeal relates to issues of child support for the two children, whose care is shared by the parties on a week about basis.
The grounds of appeal are as follows:
“The SSAT failed to adequately consider the appellant’s capacity to contribute to the support of the children out of his income.
The SSAT failed to consider the respondent’s greater capacity to contribute to the support of the children out of her income.
The SSAT erred in failing to deduct from the appellant’s income a similar partnership loss as was attributed to the respondent at paragraph 55 of the Reasons of Decision.
The SSAT erred in failing to take into account a relevant consideration that the appellant had to make payment of the mortgage of the family home for a substantial period as a result of the respondent’s refusal to make payment of her half share of the same.
The SSAT erred in failing to give due weight to the appellant’s illness and his inability to work as a result of the illness.
In finding at paragraph 60 of the reasons for decision that the appellant’s adjusted taxable income of $55,000.00 for the period 1 February 2008 to 31 July 2008 and his adjusted taxable income of $45,000.00 for the period of 1 August 2008 to 31 January 2009 were not wrong, the SSAT failed to adequately consider and give due weight to the appellant’s illness and inability to work.
The appellant says that he was not afforded procedural fairness in the hearing before the SSAT.”
The grounds of appeal were drawn by the applicant’s previous solicitor. Mr Morse now acts on his own behalf. He has filed a number of affidavits in support of his appeal as follows:
i)An affidavit of himself filed 28 August 2009;
ii)A further affidavit of himself filed 27 November 2009;
iii)A further affidavit of himself filed 12 February 2010;
iv)A further affidavit of himself filed 24 July 2010.
The proceedings before the SSAT took place on 14 May 2009. In his appeal, the applicant states he wishes to rely on a transcript of the proceedings before the SSAT. I have not been provided with that transcript.
The decision which the applicant submits is wrong relates to the calculation of his and the respondent’s child support income between 1 February 2008 and 31 January 2009, a period of 12 months. The applicant has been a self employed [omitted] operating a business called [M]. The respondent is employed by [omitted]. She is a PAYG taxpayer.
In the decision under appeal, the SSAT found as follows:
“1. For the period 1 February 2008 to 30 June 2008:
(a) Mr Morse’s child support income was $55,000.00; and
(b) Ms Potts’s child support income was $71,144.00
2. For the period from 1 July 2008 to 31 July 2008:
(a) Mr Morse’s adjustable taxable income was $55,000.00;
(b) Ms Potts’s adjustable taxable income was $71,144.00.
3. For the period 1 August 2008 to 31 January 2009:
(a) Mr Morse’s child support income was $45,000.00;
(b) Ms Potts’s child support income was $71,144.00.”
It is not easy to delineate, with precision, what are the applicant’s current grounds of appeal, other than that the hearing before the SSAT was procedurally flawed and more importantly, the SSAT did not properly consider the documentary evidence before it, particularly in the form of bank statements and other accounting documents provided by Mr Morse. This led to the SSAT wrongfully concluding what was the applicant’s level of income for the period in question.
In his affidavit filed on 24 June 2010, the applicant has deposed that he seeks the following orders:
“Based on the facts and evidence that I have supplied to the Honourable Court that the matter not be sent back to the SSAT.
That my Income Assessment Amount for the purposes of Child Support be set at the amount reflected in my Taxation Returns since my application was made in October 2007.
That Ms Potts income be set at the amount that is an accurate reflection of her Income Assessment Amount for the purposes of Child Support from October 2007.
That if my appeal is successful that I am paid any Child Support Arrears from October 2007.
That I will contact the Child Support Agency immediately if I know that my income will exceed the Self Support Amount in the future.
That Ms Potts discontinues making applications to the Child Support Agency unless there are solid grounds and factual evidence supporting her claims.
That the Child Support Agency disallow further applications of a Change of Assessment application by Ms Potts again unless the application has grounds for the application and that all documentary evidence supports and is relevant to her application.
That the SSAT remove the damning statements from the decision that they have made about me, my honesty and my co-operation with the application process.
An apology from the SSAT as the statements are damning to my reputation. The SSAT have not provided me with any opportunity to rectify the discrepancies that I have raised with the Bank Statement Calculations and Statements in their decision. The only option that they have provided me with is to apply to the Federal Magistrates Court. If the SSAT had of provided me with an opportunity to correct the Calculations and Statements that have been made in the decision, and reassessed the decision based on the facts and accurate documentation that I provided, I would not have made an application to the Federal Magistrates Court.
Any other orders that the Honourable Court sees reasonable.”[1]
[1] See Mr Morse’s affidavit of 24 June 2010 – pages 18 and 19
One of the difficulties created by the first proposed order above is that it is apparent from it that Mr Morse has misconceived the nature of the proceedings before this court. They are not necessarily a re-hearing or a fresh hearing of the various matters he wishes to canvas. Rather the appeal before this court is confined to questions of law. The power of the court to receive further evidence is limited.[2]
[2] See Child Support (Registration and Collection) Act 1988 at section 110G(1)
Background
[X] and [Y] are parented in a week about shared care arrangement. The parties separated in early 2007. Given that the parents care arrangements for the children are identical, which of the parents pays child support to the other depends on any differentiations between their respective levels of income.
Ms Potts is a [occupation omitted]. As such, her income is easy to calculate, although there is some controversy about a salary sacrifice arrangement she makes into her superannuation fund.
Mr Morse is a self-employed [omitted]. In addition, since separation, he has used a property jointly owned by the parties as a [omitted] establishment, receiving income from the business but paying a mortgage related to the property. Considerable controversy exists, between the parties, as to his level of income, particularly what expenses he incurs in respect of earning his income.
The original administrative assessment of child support resulted in
Ms Potts’s paying Mr Morse an annual amount of child support in the sum of $9,080.00. This assessment was based on a child support income of $75,100.00 for Ms Potts and a child support income of $24,658.00 for Mr Morse. These figures were derived from their respective tax returns for the financial year ending 30 June 2007.
On 11 December 2007, Ms Potts applied to the Child Support Agency to depart from this assessment on the basis that it did not properly reflect Mr Morse’s, income, earning capacity, property or financial resources.
Ms Potts’s application was determined by Senior Case Officer L on
13 February 2008. She determined that Mr Morse’s child support income, for the majority of 2008, be set at $55,000.00 and that
Ms Potts’s child support income be set at $78,784.00. This decision sets out some of the background to the material, which was subsequently considered by the SSAT, particularly the competing positions of the parties.
Ms Potts’s position, before Senior Case Officer L, can be summarised as follows:
·Mr Morse’s [omitted] business was financially successful;
·In particular, an extrapolation of one quarter of its 2007 figures indicating an annual turnover of $284,573.00, from which could be calculated (again extrapolating one quarter’s figures) owner drawings of $62,906.00;
·
Mr Morse had proposed resolving the parties’ matrimonial property proceedings by purchasing her share in the former family home for $100,000.00. The property, at the time, remained subject to a mortgage of $350,000.00, which liability Mr Morse would have to retain. Accordingly, Ms Potts’s calculated
Mr Morse’s annual proposed mortgage liability at $3,000.00 per month, which he would be unable to afford if his income was as he purported it to be;
·Mr Morse maintained a low taxable income because he claimed personal expenses through his business;
·Mr Morse had moved out of the former family home and was renting it during holiday periods;
·Mr Morse was earning sums of cash, which he was not declaring;
·Mr Morse had taken an overseas holiday, which was indicative of a lifestyle which could not be supported on Mr Morse’s declared level of taxable income.
Mr Morse’s position, in response, can be summarised as follows:
·The trip cost $8,000.00 which was largely funded by borrowings;
·His taxable income for the financial year 2006/2007 was $24,658.00 and this was the correct figure on which child support should be calculated;
·He received approximately $893.00 per month from holiday rents of the former family home, which he put towards the mortgage on the property;
·He hoped to be able to borrow the necessary sum to purchase this property on the basis of its expected rental income and using his current partner’s property as security for the loan.
As a result of what Mr Morse told her, Senior Case Officer L found
Mr Morse had fortnightly expenses of $2,265.00, which equated to an annual sum of $58,890.00. As such, she concluded that his estimate of income was not an accurate reflection of his actual income. In her decision, Senior Case Officer L found as follows:
“However, he (Mr Morse) indicates personal annual expenditure of $58,890 and after an allowance of $10,716 for rental income that is applied towards the home loans, his annual expenditure is $48,174. On his estimated taxable income of $30,000 in this financial year, Mr Morse would have a tax liability of approximately $4108 rendering total expenses of $52,282. Having regard to Mr Morse’s personal expenses, I consider that he has financial resources within his business from which he meets some of his personal expense. His financial resources are not reflected in his estimate of income or taxable income. I am satisfied therefore that the assessment results in an unjust and inequitable level of child support.”
Mr Morse objected to the determination of Senior Case Officer L. His objection was determined by Ms C, an objections officer, on
20 January 2009. She set Mr Morse’s adjusted taxable income for the period from 1 February 2008 until 31 July 2008 at $55,000.00 and for the period from 1 August 2008 until 31 January 2009 at $45,000.00. For the same period, she set Ms Potts’s income at $78,784.00.
It is this objection, which resulted in Mr Morse pursuing an appeal in the SSAT, which has subsequently resulted in the appeal to this court. Again, it is useful to set out some of the matters which were ventilated before the objections officer.
Mr Morse’s grounds of objection can be summarised as follows:
·It was wrong to extrapolate his business income from the spreadsheet relating to one quarter;
·The figure attributed for his sub-contracting expenses was wrong;
·He was meeting many of his recurrent expenses through the use of credit;
·Ms Potts’ child support income was wrong because she had artificially reduced it by salary sacrifice payments into her superannuation;
·His current partner was assisting him in paying mortgage expenses;
·He did not claim mortgage repayments as a business expense except when the property concerned was being rented;
·It had not been taken into account that Ms Potts had ceased to contribute to the parties’ mortgage;
·The senior case officer did not take into account the “peaks and troughs” of his business;
·He did not claim personal expenses through his business.
Ms Potts’ position was that:
·Mr Morse’s income and financial resources were not reflected in his taxable income;
·Mr Morse was employed as a [omitted];
·The structure of Mr Morse’s business enabled him to reduce his level of income by claiming a significant level of expense, which benefited him personally;
·There was a considerable flow of cash through Mr Morse’s business accounts held by him at Bank SA and the ANZ Bank, which was indicative of a significant level of business activity on Mr Morse’s part;
·Her salary sacrifice was a legitimate taxation arrangement;
·She had ceased to pay the mortgage because she had anticipated the property would be sold;
·In any event the property was rented out and generated significant income;
·Although Mr Morse had recently suffered ill health due to a coronary condition, he was still continuing to operate his [omitted] business, which generated income for him.
The objections officer found that Mr Morse was suffering from a heart condition, which had prevented him from working to his previous full capacity. She found the issue of payment of the mortgage to have limited relevance to Mr Morse’s income and loan repayment position.
The objections officer had access to the monthly profit and loss breakdown of [M], for the period from 1 January 2008 to 31 December 2008. This information had been provided by Mr Morse. As a result of this information, she found that the business had derived a total income of $158,046.00 for the period in question, although she also accepted that Mr Morse must have incurred expenses in respect of the derivation of that income.
Total sales for the business were identified by the objections officer, from the profit and loss statement provided by Mr Morse, for the period from 1 January 2008 to 23 December 2008 to be $144,907.43. This sum apparently excluded family payment and personal loans.
The objections officer also found that Mr Morse had earned around $10,000.00 per annum from his employment by [omitted]. However, he had ceased this employment in August of 2008.
From the monthly profit and loss statements provided to her, by
Mr Morse, the objections officer was able to identify “private expenses and owner’s drawings” which equated to approximately $32,000.00 per annum. She also found that Mr Morse used various bank accounts, for a combination of business and personal purposes. She had been provided with credit card printouts and other bank and cheque accounts from Bank SA and the ANZ. She noted that Mr Morse transferred funds in between these various accounts.
As previously indicated, it was Mr Morse’s position that many of his recurrent expenses were met through credit and accordingly it was not open to either Senior Case Officer L or the objections officer to conclude that his expenses, in some way, correlated to his income. However, the objections officer found that Mr Morse had been able to reduce his credit card liability by a sum of around $12,400.00 during the last six months of 2008.
The objections officer found as follows:
“I note that some credit card payments were made from the statement account and other payments were made from
Mr Morse’s overdraft account. I also note that the regular loan repayments were made from the statement account. After careful perusal of the statements, taking into account numerous transfers between accounts and deposits and withdrawals with no additional details, I do not consider that they provide conclusive evidence to assist me to determine that Mr Morse’s income is lower than determined by Senior Case Officer L.”
The objections officer also found that Mr Morse had offered to purchase Ms Potts’s interest in the former matrimonial home for a sum of $100,000.00, which would extend his mortgage liability to somewhere in the vicinity of $440,000.00 which would require a sum of approximately $38,880.00 per annum to service.
The objections officer also found that Mr Morse had ceased to receive income from [omitted] from 1 August 2008 onwards and he had suffered from a medical condition from 9 October 2008, which prevented him from working to his full capacity in the [omitted] business. However, she was satisfied from a perusal of the profit and loss statements provided to her that Mr Morse had continued to receive income from the business after October 2008. She found as follows:
“There is nothing in the evidence provided which demonstrated conclusively that Mr Morse’s loans and financial obligations or those of the business have been taken over to any significant extent by his partner. I am also not able to be satisfied, on the information available to me currently, as to whether his partner would have the financial capacity to service the additional financial obligation arising from Mr Morse’s proposed purchase of the former matrimonial home. I accept that since Mr Morse ceased employment with [omitted], his partner may have been required to provide some financial assistance to him to make up any shortfall in his income.
However, I agree with the conclusion reached by Senior Case Officer L that Mr Morse would have reasonably needed to derive a total gross income from all sources in the vicinity of $55,000 to meet his obligations at the time of making her decision.”
Mr Morse was dissatisfied with this decision and instituted proceedings in the SSAT.
The nature of the hearing before the SSAT
Mr Morse is entitled to apply to the SSAT for a review of the decision of the Child Support Registrar pursuant to the provisions of section 94 of the Child Support (Registration & Collection) Act 1988 (“the Collection Act”).
The SSAT is directed to provide mechanisms for review of decisions of the Child Support Registrar, following reconsideration, that are fair, just, economical, informal and quick [Collection Act at section 88].
The powers of the SSAT, on review of a decision of the Registrar, are set out in Division 5 of Part 7 of the Collection Act. The SSAT may affirm, vary or set aside any applicable decision and either substitute its own decision or refer the matter back to the registrar for reconsideration.
The SSAT is conferred with all the powers and discretions which are conferred on the registrar of the Child Support Agency both by the Assessment Act and the Collection Act [Collection Act at section 103T].
As such, the SSAT has the same powers to obtain information as are conferred on the Registrar of the Child Support Agency. The hearing before the SSAT is not bound by legal technicalities or the strict rules of evidence [Collection Act at section 103N]. Importantly, the SSAT has a discretion to take sworn evidence for the purpose of its review function [Collection Act at section 103G].
Accordingly, the SSAT stands in the shoes of the decision maker whose decision it is reviewing. It has the same functions and powers. It is empowered to make findings of fact and to determine the evidence on which those findings of fact are to be based. As such, the SSAT must answer the same questions that were before the Senior Case Officer and Objections Officer concerned and apply the same legislative provisions. As such, the decision making process begins anew.[3]
[3] See PJ & Child Support Registrar (SSAT) Appeal [2007] FMCAfam 829
Pursuant to section 103X of the Collection Act, if the SSAT makes a decision on review, it is required to provide written reasons for its decision within fourteen days of such decision. In this case, the SSAT has provided such reasons. These are annexed to Mr Morse’s notice of appeal filed 6 August 2009.
Pursuant to section 110K of the Collection Act, when an appeal from a decision of the SSAT has been instituted, the Executive Director of the SSAT is required to forward to this court all documents, which were before the SSAT in relation to the proceedings which have been appealed and any other documents which are relevant to that appeal.
As such, I have been provided with a bundle of documents from the proceedings concerning Mr Morse and Ms Potts before the SSAT. The bundle comprises 965 pages. It includes some bank statements, which relate to Mr Morse. These documents have apparently also been made available to the parties in the proceedings before me.
Mr Morse provided oral evidence before the SSAT. One of his criticisms of the SSAT’s decision concerning him was that it was made following a hearing which was procedurally unfair to him. I do not have a transcript of those proceedings. In this regard, Mr Morse deposes as follows:
“Unfortunately after all the considerable costs of having to pay for the lawyer and the SSAT being un-cooperative with my application to the Honourable Court, I am not in a financial position to obtain the transcript.”[4]
[4] See applicant’s affidavit filed 24 June 2010 at paragraph 52
There is no specific provision within either the Child Support (Assessment) Act (“the Assessment Act”) or the Collection Act dealing with the provision of transcript of proceedings before the SSAT. As previously indicated, the SSAT is directed to pursue its functions informally and economically. In particular, pursuant to section 103P of the Collection Act, hearings before the SSAT are to be held in private.
Section 110C of the Collection Act provides that appeals to this court, from decisions of the SSAT, are to be made in the manner prescribed by the Federal Magistrates Court Rules. The applicable rule is Rule 25A.05 of the Federal Magistrates Court Rules2001.
This rule directs any person seeking to appeal a decision of the SSAT to attach to the relevant notice of appeal a copy of the SSAT’s decision and the statement of reasons for that decision. Pursuant to section 103X of the Assessment Act, the SSAT is required to provide these documents within fourteen days of its decision. It is not enjoined to provide a transcript of its proceedings.
In my view, the burden of providing a transcript of the proceedings before the SSAT resides on the applicant. I accept that, for financial reasons, this is a burden he is unable to discharge. However, in the absence of a transcript, it is difficult for him to ground his many criticisms of procedural irregularities before the SSAT.
The nature and legislative basis of appeals to this court from the SSAT
The nature of an appeal to this court, from a decision of the SSAT, is governed by the provisions of Division 3 of Part 7 of the Collection Act, in particular section 110B, which reads as follows:
“A party to a proceeding before the SSAT under Part VIIA may appeal to a court having jurisdiction under this Act, on a question of law, from any decision of the SSAT in that proceeding.”
This court is authorised to hear such appeals from the SSAT by virtue of the provisions of section 110E of the Collection Act. Pursuant to section 110F of the Collection Act, having determined any such appeal, I am authorised to make any order, which I believe is appropriate but particularly may:
·affirm or set aside the decision of the SSAT; or
·remit the case to be heard again by the SSAT, either with or without the hearing of further evidence.
The first question to consider is what is the nature of an appeal on a “question of law”? The provisions of the Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006 has significantly reformed the review process in respect of administrative decisions of the Child Support Registrar. The legislation has inaugurated an independent process of review through the SSAT. This process is external of the Agency’s processes and is administrative in nature.
Pursuant to the provisions of section 110B, any further appeal from the SSAT is limited in nature. It is limited only to an examination of how the SSAT applied or failed to apply the applicable principles of law, which were relevant to the determination of the appeal issue which came before it.
As such, an appeal to this court, pursuant to section 110B, does not constitute a rehearing on the merits of the case nor should this court, other than in exceptional circumstances, challenge findings of fact made by the SSAT.[5]
[5] See Child Support (Registration and Collection) Act 1989 at section 110G(1)
The power of this court, in an appeal from the SSAT, to make finding of facts is limited by the provisions of section 110G of the Collection Act. The court may make a finding only if the following two provisos are satisfied:
·Such a finding of fact is not inconsistent with findings of fact made by the SSAT – other than findings made by the SSAT as a result of an error of law.
·It is convenient for the court to make such findings of fact.
Pursuant to section 110G(2) for the purpose of making such findings of fact the court may either have regard to the evidence given in proceedings before the SSAT itself or receive further evidence. However, it is clear that the power to receive further evidence is dependant upon the court discerning an error of law in the decision of the SSAT, which is subject to appeal. Essentially, this court, in its appellant jurisdiction from the SSAT, must be careful not to allow evidence to be adduced in the hope advocated by any appellant that an error of law will thus be demonstrated.
Accordingly, this court should not be concerned as to whether or not it would have come to the same conclusion as the SSAT did, but only whether the SSAT erred in law,[6] as it is only in “exceptional circumstances” that the decision of the Tribunal should not be the final decision.[7]
[6] See Neal v Secretary, Department of Transport (1980) 3 ALD 97 at 100 per Franki J and Comcare v Etheridge [2006] FCAFC 27 at paragraph [14] per Branson J.
[7] See Blackwood Hodge (Australia) Pty Ltd v Collector of Customs (No 2) (1980) 33 ALD 38 at 49 per Fisher J.
It is the function of this court to determine whether the decision of the SSAT was within its legal powers. That is what is meant by a question of law. It is not the function of this court to examine the merits of that decision.
As such, I should be cautious to approach the decision of the SSAT with “an eye [which is] too keenly attuned to perception of error”. [8]Rather I should take a commonsense approach to what the SSAT was saying in its decision and the reasons why it did said what it said.
[8] See Htun v Minister for Immigration & Multicultural Affairs (2001) 194 ALR 244 at 258
An administrative tribunal exceeds its powers and thus commits a jurisdictional error, which is correctable on appeal in respect of a question of law, if it:
·fails to construe properly the legislative provisions applicable;
·identifies the wrong issues or asks itself the wrong questions;
·ignores relevant material or relies on irrelevant material;
·fails to accord procedural fairness to the party before it;
·makes an erroneous finding of such a magnitude that it goes to the very jurisdiction which it purports to exercise rendering its decision perverse or unreasonable or otherwise offending logic.[9]
[9] See Apthorpe v Repatriation Commission (1987) 13 ALD 656 at 666
As Gleeson C.J. pointed out in Re Minister for Immigration & Multicultural Affairs: Ex Parte Applicant S20/2002:[10]
“To describe reasoning as illogical, or unreasonable or irrational, may merely be an emphatic way of expressing disagreement with it. If it is suggested that there is a legal consequence, it may be necessary to be more precise as to the nature and quality of the error attributed to the decision maker, and to identify the legal principal or statutory provision that attracts the suggested consequence.”
[10] Re Minister for Immigration & Multicultural Affairs: Ex Parte Applicant S20/2002 (2003) 198ALR 59 at 61
In Collector of Customs v Pressure Tanker Pty LtdandPazzolanic Enterprises Pty Ltd,[11] the Full Court of the Federal Court, in respect of the Administrative Appeals Tribunal, characterised the nature of an appeal, restricted to a question of law, from a fact finding and decision making tribunal as follows:
“… the nature of the task of this court is clear. It is to leave to the tribunal of fact decisions as to the facts and to interfere only when the identified error is one of law.”
[11] Collector of Customs v Pressure Tankers Pty Ltd and Pozzolanic Enterprise Pty Ltd [1993] 43 FCR 280
In summary, an appeal on a question of law:
·is not a review on the merits or a rehearing;
·as such, an appeal on a question of law is not one in which findings of fact, per se, can be called into question;[12]
·however, bearing in mind the statutory intent implicit in Part VIII of the Collection Act and the purpose of the Federal Magistrates Court itself, in dealing with SSAT appeals, the court should not be unduly legalistic or pedantic, particularly where the appellant concerned is self-represented;
·in reviewing a decision of the SSAT for error, the court should not examine the decision in question with an eye “keenly attuned to the perception of error”.
[12] See LDME & JMA [2007] FMCAfam 712 at paragraph 29
In brief terms, the requirement that a hearing be procedurally fair requires the decision making tribunal concerned to apply the rules of natural justice. There are two traditional rules of natural justice. Firstly, the hearing rule which requires a decision maker to hear a person before making a decision which affects the interests of that person. Secondly, the bias rule which provides for the disqualification of a decision maker where doubts arise as to the actual or perceived impartiality of the decision maker concerned.[13]
[13] See Aronson & Dyer: Judicial Review of Administrative Action (2nd Edition) 2000 LBC Information Services at p.300
The hearing of the SSAT and its findings
The SSAT’s decision was one of twenty-two pages, which was delivered approximately two months after the hearing in question. The SSAT is directed to provide a mechanism for the review of child support decision that is fair, just, economical and quick [Collection Act at section 88].
Accordingly the role of the SSAT is not to “deliver judgments of jurisprudential excellence when delivering its reasons”.[14] Rather it is required to follow the legislative pathway provided by section 98C of the Assessment Act and determine whether the sole ground for departure provided by the section has been met. In so doing, it is obliged to ensure the requirements of procedural fairness are met.
[14] The phrase belongs to Halligan FM. See LDME & JMA (Supra) at paragraph 35
In this regard, in my view, the SSAT correctly set out the legislative pathway it was required to follow in determining departure applications. It stands in the same shoes as the Child Support Registrar in dealing with applications to depart from administrative assessments of child support brought by either a liable parent or a carer entitled to child support. The relevant provisions are set out in Division 2 of Part 6A of the Assessment Act.
In particular, the Registrar must be satisfied of the matters set out in section 98C of the Assessment Act before departing from any applicable administrative assessment. Essentially, there are three specific pre-conditions for the making of a departure order. They are as follows:
·An applicant must establish one or more of the grounds for departure as specified in section 117(2) of the Assessment Act;
·Thereafter the Registrar must be satisfied that it is just and equitable to make a departure order;
·The Registrar must then be satisfied that it is otherwise proper to make a departure order.
In this particular case, the grounds for departure relied upon Ms Potts (and indeed by Mr Morse in his objection to the assessment of
Ms Potts’ income) are as follows:
·The assessment does not reflect the income, property and financial resources of either parent [section 117(2)(c)(ia)] of the Assessment Act];
This ground engages section 117(7A) of the Assessment Act, which requires any court (and therefore the SSAT) dealing with a departure application based on parents’ income, property and financial resources to consider the capacity of such parents to derive income either from any assets controlled or accessible by him or her or by personal exertion. The section reads as follows:
“(7A) In having regard to the income, property and financial resources of a parent of the child, the court must:
(a) have regard to the capacity of the parent to derive income, including any assets of, under the control of, or held for the benefit of, the parent that do not produce, but are capable of producing, income; and
(b) disregard:
(i)the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child, or who has such a duty but is not a party to the proceeding, unless, in the special circumstances of the case, the court considers that it is appropriate to have regard to them; and
(ii)any entitlement of the child or the carer entitled to child support to an income tested pension, allowance or benefit.”
In examining this ground of departure, the SSAT correctly (and obviously) concluded that it would have to examine the financial circumstances of both parties. In its reason for decision, the SSAT asserted that it had “analysed carefully all of the financial information provided by both parties to the Child Support Agency and to the Tribunal”.[15] This was the SSAT’s essential task. It is Mr Morse’s position that the SSAT failed to complete this task properly.
[15] See decision at paragraph 29
It is not the role of this court to re-examine this evidence and substitute its own conclusions for those of the SSAT, unless the Tribunal’s conclusions rest on some erroneous construal of the applicable legal provisions or are so egregiously erroneous that they require correction because they have resulted in a manifestly illogical or unreasonable outcome.
In his affidavit of 24 June 2010, Mr Morse asserts that the SSAT has ignored or misconstrued the evidence laid before it. I have attempted to summarise his various objections as follows:
·The SSAT has wrongly inferred that he has financial resources not reflected in his taxable income because he has met mortgage obligations on the former matrimonial home [affidavit at paragraph 12];
·It has failed to take into consideration that matrimonial property matters had not been concluded between him and Ms Potts [affidavit at paragraph 17];
·It has misconstrued Ms Potts’s salary sacrifice arrangements [affidavit at paragraph 23].
·It did not take into account he was recovering from open heart surgery in its decision to set his child support income at $45,000.00 [affidavit at paragraph 25];
·It did not properly analyse the financial documents provided by him, particularly profit and loss statements and business activity statements [affidavit at paragraph 28].
·It did not take into account that his current partner was assisting him financially with some of his recurrent expenses [affidavit at paragraph 32];
·The SSAT erroneously concluded that a sum of $285,656.00 had been deposited into various bank accounts held by him in the relevant period, when the true figure was $191,346.51 [affidavit at paragraph 46].
In this affidavit, Mr Morse also asserts that he was not accorded procedural fairness before the SSAT in the following areas:
·Ms Potts’ supplied documents to the SSAT on the day of the hearing, which the Tribunal determined were not relevant without reference to him or allowing him to examine those documents [affidavit at paragraph 24];
·The SSAT did not provide him with an opportunity to comment on their calculations and findings regarding his various bank statements [affidavit at paragraph 33];
·He was not provided with an opportunity to explain why he had a multiplicity of bank accounts [affidavit at paragraph 34];
·The SSAT unfairly made adverse findings against him based on the fact that he had deleted information from the bank statements which he had supplied to it and in particular did not give him the opportunity to submit unedited bank statements [affidavit at paragraphs 34 & 35];
·The SSAT has destroyed its calculations regarding the sums it found to have passed through Mr Morse’s various accounts and so has not provided him with an opportunity to check those calculations, or comment upon them [affidavit at paragraph 44];
·In addition the SSAT has refused his freedom of information application to have access to those calculations [affidavit at paragraph 40].
As previously indicated, I have not had access to a transcript of the evidence led before the SSAT. Accordingly, the only source of information about the hearing is the reasons of the Tribunal itself and Mr Morse’s assertions about it. In these circumstances, it is difficult to assess many of Mr Morse’s criticisms regarding what he alleges is the procedural unfairness of the hearing of 14 May 2009.
In its reasons for decision, the SSAT made the following statement:
“The Tribunal considered the extensive documentation which was provided by the parties. The Tribunal found it virtually impossible to ascertain Mr Morse’s true financial situation from an examination of the financial documentation.”[16]
It found that Mr Morse had operated 12 bank accounts for the period in question. It also concluded, from an examination of the statements produced, that Mr Morse had other accounts. The Tribunal also commented that a number of transactions had been “blanked out” which made it impossible to determine what some of the transactions related to.
[16] See reasons for decision at paragraph 32
This court has been provided with the documents, which were available to the Tribunal. It is not my function to place myself in the shoes of the SSAT and re-appraise those documents and make my own conclusions about them. The SSAT remains the fact finder.
However, I have no reason to doubt the veracity of the SSAT that it carefully examined the records produced to it and so applied itself to its principal task of attempting to ascertain the level of Mr Morse’s income and financial resources. In addition, its comment that it is “virtually impossible” to ascertain Mr Morse’s income for the period in question does not appear to me to be either illogical or unreasonable.
Clearly, the unorthodox nature of Mr Morse’s financial affairs presented difficulties to the SSAT in its role as fact finder. As previously indicated, pursuant to its empowering legislation, the SSAT is directed to carry out its review functions fairly, justly, economically, informally and quickly. As such, in my view, it would be unreasonable to expect it to undertake some independent forensic audit of
Mr Morse’s accounts.
The onus remains on Mr Morse to present his financial affairs and records in a manner which is both transparent and readily understandable. It is not for the Tribunal to embark upon some tortuous process of audit in the absence of such transparency and accessibility.
It is a fundamental principle in respect of financial proceedings brought both pursuant to the Family Law Act 1975 and the Child Support Scheme that the parties to such proceedings are under a duty to make a full and frank disclosure of all their financial circumstances.[17] In the absence of such transparent financial disclosure, in my view, it is open to the SSAT to be “reasonably robust in assessing the non-disclosing parents’ financial circumstances adversely to that parent and in favour of the other parent.”[18]
[17] See Briese & Briese (1986) FLC 91-713 and Black & Kellner (1992) FLC 92-287 at 79,133.
[18] See Agrippa & Horton (SSAT Appeal) [2010] FMCAfam 1144 at paragraph 25 per Halligan FM
Pursuant to section 103 of the Collection Act, the principal member of the SSAT may convene a pre-hearing conference, prior to the disposal of any review application before the Tribunal, if it is considered that such a pre-hearing conference would assist in the ultimate disposal of the review. Directions about the production of evidence may be made at such a conference.
In this particular case, a pre-hearing conference was convened and
Mr Morse was ordered to provide bank statements relating to both himself as an individual and in respect of his business [M] for the period 1 July 2007 to 31 January 2009.
The SSAT found as follows:
“The Tribunal appreciates that a very significant number of
Mr Morse’s bank accounts are credit card accounts and that he also has a business overdraft account. The Tribunal accepts that Mr Morse uses credit to a very large degree and that expenditure funded by credit, whilst indicative of his lifestyle expenditure, is not necessarily indicative of his income or of his financial resources. Nevertheless, it is also clear that he has made deposits of at least $285,656 into his various accounts over the period 1 January 2008 to 31 January 2009. Mr Morse argued that a very significant number of the deposits were in fact transfers from his other credit card or the overdraft account. While there were a significant number of bank transfers, there were also a very large number of deposits which were not bank transfers. With the blanking out of details, it was impossible for the Tribunal to know the details of all of the transactions. On balance, the Tribunal finds that Mr Morse’s income over this period was substantial.”[19]
[19] See reasons for decision at paragraph 39
The SSAT’s fact finding task was to make some assessment of
Mr Morse’s income over the period in question. It is clear from the reasons for judgment that it approached this task on the basis of the records available to it, as well as an assessment of Mr Morse’s credibility in respect of his financial affairs.
The Tribunal’s finding that was Mr Morse’s income was “substantial”. Again, in my view, this seems to be a finding which was open to the Tribunal on the evidence before it and was not one which can be criticised for either being illogical or perverse.
I appreciate that the expression “substantial” is not reflective of a determined or actual amount. However, the SSAT also found, in tandem with this finding, that the evidence provided to it by Mr Morse did not allow it to calculate a definitive amount, particularly as a result of the number of accounts involved and Mr Morse’s propensity to mingle his business and personal accounts. Later, the Tribunal addressed issues raised by Ms Potts, relating to the possibility that
Mr Morse received payment in cash.
The SSAT had access to the balance sheets, profit and loss statements and BAS statements for [M]. It said as follows in the reasons for decision:
“The Tribunal is satisfied that the total income of the business [M] for the period 1 January 2008 to 31 December 2008 (as evidenced by the profit and loss statements) was $158,046. The Tribunal also finds (from the BAS statements for the period 1 January 2008 to 31 December 2008) that total sales were $161,338.
The Tribunal also notes that the Balance Sheet for [M] shows total income of $173,200.50 for the 2007/2008 financial year. His income tax return for the 2007/2008 year shows that
Mr Morse’s taxable loss was $11,296 (and therefore that his income was nil). His major expenses were $74,780 to “contractors, sub-contractors and commission expenses” and $95,946 in “all other expenses” (not including interest, depreciation, motor vehicle expenses and repairs and maintenance).”[20]
[20] See reasons for decision at paragraphs 41 and 42
Mr Morse is critical of these apparent findings, which he assert are inconsistent with what follows in the decision, in particular the statement:
“The Tribunal has no conclusive way of establishing that the income of the business [M] is accurately reflected in the business accounts (profit and loss and balance sheets) nor in his tax return.”[21]
[21] See reasons for decision at paragraph 43
One of the central factual issues in the hearing, before both the SSAT and earlier in the registrar based departure proceedings in the Child Support Agency, was whether Mr Morse received cash moneys in respect of services provided by his business. It being Ms Potts’s position that substantial flows of cash went through the business, which were not accurately documented.
This was an issue of credibility. The SSAT was entitled to assess
Mr Morse’s credibility in respect of this issue. Issues of credibility are the sole domain of the fact finder. In this case, the SSAT and previously the Child Support Registrar. Clearly the SSAT formed a negative view of Mr Morse’s credibility, so far as the accuracy of his accounts was concerned.
Mr Morse had earlier provided a written statement to the Child Support Agency in response to what he claimed were Ms Potts “false and misleading statements” in respect of his financial position and business operations. Mr Morse asserts that his statement has been taken out of context and used selectively by the SSAT. As such, he believes the reliance on it, by the SSAT, is procedurally unfair to him.
The full quotation reads as follows:
“As a small business operator and as any business would do I am entitled to claim business expenses which I do, they are all accounted for, that is why I have to pay for a large accountant fee so that my bookwork is kept up to date. I note that Ms Potts seems to use the word cash jobs. Well there are cash jobs involved and as Ms Potts has stated, she can see large amounts of money coming in and out of the account. The income that I receive is banked. Sometimes when I [occupation omitted], therefore I need to employ people to help. Instead of writing 6 cheques out for $90 each I sometimes withdraw cash to pay these six people cash, but as I do I hope these people declare there cash pay.
As for the movement of cash from accounts, my privacy should be respected and I can’t understand how she has access to my accounts. And just for her peace of mind the reason for this is because of the way I work my accounts and payments. I give my clients the payment option on how they would like to pay for their labour and material costs. Still, I will be looking into and acting on this behaviour of looking in to my accounts, especially when Ms Potts has already been told officially not to go into them by my lawyer, invading people’s privacy.”[22]
[22] See Social Securities Appeal Tribunal documents at folio 307
This statement, in which Mr Morse concedes he received some cash payments and which claims some confidentiality was criticised by the SSAT, which pointed out the requirement on Mr Morse to provide comprehensive information about his financial affairs. It was also part of the background to one of the SSAT’s central findings of fact, which was that Mr Morse’s income was not accurately and not fully reflected in his financial accounts over the period 1 January 2008 to 31 January 2009.
Again, in my view, this finding of fact was open to the Tribunal. It is not the role of this court to form its own view of Mr Morse’s credibility or to perform its own fact finding exercise in respect of the issue of whether there were or were not significant cash payments received by Mr Morse in the period in question.
This fact finding exercise is the role of the SSAT and is open to challenge, as constituting a legal error, only if it can be shown to be based on irrelevant material or erroneous to such an extent that it is perverse, illogical or otherwise unreasonable. Given the factual matrix of this case, I do not think that this finding is open to question on any of these bases.
Mr Morse is aggrieved at the SSAT’s calculation that around $285,000.00 passed through his various bank accounts from 1 January 2008 to 31 January 2009.[23] He asserts that his partner has made her own calculations and reached a sum of $191,346.51.[24] These latter calculations were not apparently tendered into evidence before the SSAT during the hearing of 14 May 2009.
[23] See reasons for decision at paragraph 38
[24] See applicant’s affidavit filed 24 June 2010 at paragraph 46
In my view, it is neither possible nor the role of this court for it to assess the reliability or otherwise of the calculations on which
Mr Morse now seeks to rely. This is a matter for evidence, which was the function of the SSAT to gather and in which Mr Morse was given the opportunity to take part.
In this regard, Mr Morse is critical that the SSAT has not provided him, either in its written reasons for decision or extraneously, with detailed arithmetical calculations as to how it has reached the sum of $285,656.00.
Mr Morse made a freedom of information request, in respect of these calculations, in the course of which he learnt that the documents had been destroyed by the constituent members of the SSAT, in accordance with SSAT guidelines, which direct that notes taken by members, during a hearing, are to be destroyed at the hearings conclusion.
In my view, such notes or calculations are not of themselves evidence. Their nature is an aide-memoir to assist the members concerned in the discharge of their functions. As such they are not part of the decision, which stands alone as the sole source of explanation as to why the Tribunal reached the decision which it did.
In any event, the documents in question are the subject of a statutory privilege created by section 150 of the Assessment Act and that they came into existence whilst the members of the SSAT were performing their duties under the Act.
What sum went through Mr Morse’s various bank accounts, in the period in question, is a question of fact. As such, it is a matter for the Tribunal. In Comcare v Moon[25] Mansfield J said as follows:
“Care must be taken not to convert questions of fact into questions of law. The Tribunal more over does not commit an error of law merely because it finds facts wrongly or upon a doubtful basis or because it adopts unsound reasoning. If there is any evidence rationally and legally cable of supporting the finding of fact the finding of fact does not involve an error of law.”
[25] See Comcare v Moon [2003] FCA 569 at paragraph 33
The operative finding of fact which the Tribunal made and which caused it to accept the objections officers finding in respect of
Mr Morse’s income was that this income was “substantial” and “not … accurately and fully reflected in his financial accounts over the period 1 January 2008 to 31 January 2009.”[26]
[26] See reasons for decision at paragraph 43
Necessarily, given the status of Mr Morse’s financial affairs, this finding was somewhat imprecise. However, this does not of itself indicate that the SSAT’s reasoning was inherently unsound or doubtful. As such, I do not think the failure of the SSAT to provide the calculations in question or its findings per se represent firstly a breach of procedural fairness or secondly an error of law.
Mr Morse has made other complaints that he was denied procedural fairness. In particular, he was not given an opportunity to explain why he had a multiplicity of bank accounts and had concealed the details of some transactions in them. The implication being, if he had been given such an opportunity, it would not have led the SSAT to reach an adverse conclusion about his overall credibility.
In the absence of a transcript of proceedings, I am unable to determine what, if any, questions were asked about these issues and what responses were made. However, it seems to me to be obvious that
Mr Morse was well aware that his financial position would be closely examined during the hearing.
In addition, he had been directed to provide financial documents at the earlier convened pre-hearing conference. In these circumstances, I am unable to conclude that Mr Morse’s claims of a breach of procedural fairness are made out.
Mr Morse has complained that the Tribunal did not take into account the fact that he was recovering from cardiac surgery, when it fixed his child support income in the sum of $45,000.00 for the period from 1 August 2008 to 31 January 2009. I do not think that this assertion is supported by the SSAT’s decision. The Tribunal found that Mr Morse’s capacity to work diminished, in the period in question, due to illness, but it also found that he continued to operate his business in the period in question.
In my view, the reasons for decision clearly indicate that there is no substance to Mr Morse’s complaint. The Tribunal said as follows:
“In relation to Mr Morse’s actual income and financial resources over the relevant period, the Tribunal takes into account the he has suffered from ill health commencing around 9 October 2008 and that he has provided a medical certificate certifying him unfit for work until March 2009. However, the BAS statement for the October-December quarter in 2008 demonstrates that he continued to operate his business during this period recording sales of $41,637. Nevertheless, the Tribunal is satisfied that
Mr Morse’s capacity to personally work in the business diminished during this period and that his payments to sub-contractors increased. In addition, he was no longer working for [omitted] after August 2008.”[27]
[27] See reasons for decision at paragraph 57
Similarly, the SSAT was also aware that Mr Morse’s partner had made some financial contributions to Mr Morse, particularly towards his mortgage expenses. The Tribunal made specific reference to this state of affairs. In addition, the Tribunal considered Ms Potts’s salary sacrifice arrangements.[28]
[28] See reasons for decision at paragraph 58 & 53-56
The issue of Ms Potts’s salary sacrifice arrangements, particularly her sacrifice of $353.16 per fortnight into superannuation was considered by the Tribunal.[29] It concluded that this sum should be regarded as income potentially available to her and should be included in her child support income.
[29] See reasons for decision at paragraphs 54-56
The SSAT also recalculated Ms Potts’s work related expenses upwards, due to what it found had been an error in the calculations of the objections officer. It did not reduce her income, for the period in question, by reference to any partnership losses arising from her partnership with Mr Morse. I can find no error of law in this aspect of the decision.
In my view, Mr Morse’s complaint that he was denied procedural fairness because he was not allowed to examine and comment on documents provided by her to the SSAT, which were subsequently returned to her, rests on conjecture. What the documents did or did not contain must be a question of surmise, both for this court and for
Mr Morse himself. What however is clear is that the documents themselves did not inform the Tribunal’s decision. There is no reference whatsoever to these documents in the decision.
Conclusions
At the end of the day, Mr Morse’s central position is that there was no reasonable evidence, on which the SSAT could have concluded that his stated level of taxable income and loss, for the relevant periods, were inconsistent with the deposits made into his bank account and therefore he had a greater capacity to provide financial support to the two children in question.
As the fact finder, it was the role of the SSAT to examine Mr Morse’s financial records and affairs and determine what his level of income was for the relevant period. It fulfilled this role. I can see no egregious error in how it approached this role or the conclusions it reached. In my estimation its central conclusions are rationally and legally capable of being sustained on the evidence, which was before it.
In my view, there was evidence available to the Tribunal to enable it to reach the conclusions, which it reached, regarding Mr Morse’s level of income. Just because Mr Morse considers that the conclusion is wrong or based on some doubtful basis does not lead me to the conclusion that the SSAT has fallen into legal error.
For these reasons, no ground of appeal is made out and the application must be dismissed. Accordingly the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and seventeen (117) paragraphs are a true copy of the reasons for judgment of Brown FM
Date: 30 November 2010
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