Tyagi & Meares
[2008] FMCAfam 886
•20 August 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| TYAGI & MEARES (SSAT APPEAL) | [2008] FMCAfam 886 |
| CHILD SUPPORT – Appeal from SSAT – Departure Application – determining income amounts – meaning of ‘just and equitable’ – relevant considerations – retrospective departures. |
| Child Support (Assessment) Act 1989, s.117 |
| Hallinan v Witynski [1999] FamCA 1127; (1999) FLC ¶98-009; (1999) 25 Fam LR 647 Hides and Hatton [1997] FamCA 28; (1997) 139 FLR 91; (1997) 21 Fam LR 855; (1997) FLC ¶92-759 PJ & Child Support Registrar [2007] FMCAfam 829; (2007) 38 Fam LR 31 Ross & McDermott [1998] FamCA 134; (1998) FLC ¶98-003, (1998) 147 FLR 235; (1998) 23 Fam LR 613 |
| Appellant: | MR TYAGI |
| Respondent: | MS MEARES |
| File Number: | MLC 13088 of 2007 |
| Judgment of: | Riethmuller FM |
| Hearing date: | 27 February 2008 |
| Date of Last Submission: | 27 February 2008 |
| Delivered at: | Melbourne |
| Delivered on: | 20 August 2008 |
REPRESENTATION
| Appellant: | In person |
| Respondent: | In person |
ORDERS
That the decision of the Social Security Appeals Tribunal be set aside;
That the application for review be remitted to the Social Security Appeals Tribunal to be heard and determined according to law.
IT IS NOTED that publication of this judgment under the pseudonym Tyagi & Meares is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 13088 of 2008
| MR TYAGI |
Appellant
And
| MS MEARES |
Respondent
REASONS FOR JUDGMENT
The Appellant appeals from a decision of the Social Security Appeals Tribunal reviewing an objection decision made by an objections officer of the Child Support Agency following a departure application decision by a senior case officer.
Background
A Senior Case Officer decision was made on 5 July 2004 determining the appellant’s child support liability for two children, M born 1997 and N born 1999. The children are in the care of the Respondent. The original decision provided for the rate of child support payable by the Appellant to the Respondent for the care of the children to be fixed at $10,000 per annum for the 2004/2005 financial year. There followed a further Senior Case Officer decision on 22 July 2005, setting the child support rate at $10,000 for the period 1 July 2005 to 25 August 2006.
For the period 26 August 2006 to 31 December 2008, another Senior Case Officer set the child support rate at $10,000 per annum having regard to the special needs of one of the children and an increase in the earning of the Appellant. The Senior Case Officer carefully explored a redundancy package payment made to the Appellant on 20 January 2006 and took this payment into account together with a consideration of the needs of the children and the income of the Respondent before setting the rate of child support.
On 11 May 2007, the Appellant’s objection to the last Senior Case Officer’s decision was allowed, resulting in an increase in the income amount used in the formula for the period 26 August 2006 to 31 July 2007 to $79,739 per annum. The child support rate from 1 August 2007 to 30 June 2008 was reduced to $6,513 per annum. The Objections Officer apportioned the redundancy payment as between the 05/06 financial year and the 06/07 financial year in order to set the income amount. He adjusted the period to match the redundancy payment (apportioned for each of the weeks notionally covered by the redundancy payment) together with the actual earnings of the Appellant during the period covered by the redundancy payment. He then considered whether or not to backdate any changes, before striking the figures set out in his decision. The Appellant then sought a review by the Social Security Appeals Tribunal.
The Social Security Appeals Tribunal handed down a decision on
22 October 2007(corrected on 12 November 2007) in the following terms:
On 22 October 2007 the Tribunal decided to vary the decision:
(a) that [the appellant]’s child support income amount is set at $41,500 for the period 4 October 2007 to 28 February 2009; and
(b) to set an additional amount to the formula assessment of child support payable by [the appellant] in respect of [M]’s special needs at $4,145 per annum for the period 4 October 2007 to 28 February 2009.
The parties have not placed before me a copy of the current child support assessment as calculated following the decision of the Tribunal. It is not clear to me from the wording of the Tribunal's decision whether its effect was taken to completely replace the Objection Officer's decision, or to simply provide for additional changes to the assessment commencing 4 October 2007. It appears that the former is more likely as it is difficult to read the Tribunal's decision as operating together with the decision of the Objections Officer.
Whilst the parties were unrepresented it became clear that there were three specific issues that the parties sought to ventilate on the appeal:
(a)A claim that the Tribunal had acted without evidence, or contrary to any evidence before it, in making its findings regarding the income amount of the Appellant;
(b)The Tribunal failed to properly consider whether any departure was ‘just and equitable’ within the meaning of s.117(4) of the Act; and
(c)That the Tribunal failed to provide adequate reasons for the changes.
Issue 1 – Findings as to the income amount
In considering the ‘income earning capacity, property and financial resources’ of the Appellant, the Tribunal set out the ground provided for in s.117(2)(c)(ia). The Tribunal did not refer to sub-ss.117(7), (7A) or (7B) which provide further specific provisions regulating the operation of s.117(2)(c)(ia). The Tribunal’s reasons relevant to this issue were as follows:
29. Following the hearing [the appellant] provided payslips from his present employer, [M Pty Ltd], and tax calculation for the 2006/07 financial year showing taxable income as $36,561. The Tribunal has estimated [the appellant]’s 2007/2008 income from this employer as approximately $38,900 gross, based on his earnings from the first three months of this financial year.
31. [The appellant] told the Tribunal that he had funded his recent child support expenses through a loan from his foster parents, [JV] and [FV]. On his statements of financial expenses [the appellant] lists the lender as [B Pty Ltd] and the amount of the loan as $6,000. At the hearing he told the Tribunal that this loan amount had now increased to $10,000 and that he was meant to repay this at $30 per week but was unable to do this. He said that this is accepted by his foster parents and he pays no interest on this loan.
32. Based on [the appellant]’s payslip dated 25 June 2007 the Tribunal notes that [the appellant]’s annual salary is stated to be $28,652 per annum from [M Pty Ltd]. Although the payslip also shows that as at that date (the year to date figure) he had earned in excess of this amount. Payslips show that he regularly undertakes overtime of approximately 5 hours per week at $21.75 per hour. He also works casually making deliveries for a restaurant and in the previous financial year he states he had earnings of at least $1,100 from this. [The appellant], however, did not provide any documentary evidence of his casual restaurant work. The Tribunal also noted that [the appellant]’s tax calculation for 2006/2007 financial year gives a taxable income of $36,561.
33. The Tribunal accepts that [the appellant] has borrowed $10,000 from his foster parents over the last 12 months in the form of a no interest loan repayable at a nominal $30 per week when he can make repayments.
34. The Tribunal finds from the most recent payslips provided that [the appellant]’s income from employment is more than $38,000 annually from his employment with [M Pty Ltd] and with the addition of the money he has borrowed and other earnings from casual employment, his earnings are higher than the income used in the assessment under the formula alone. [The appellant] has had access to $10,000 in the form of a loan as outlined above, with no repayments taking place on this amount. [The appellant] has also disclosed in his statement of Financial Circumstances completed for the hearing that he has expenses of $805 per week or $41,860 per annum. The Tribunal, in taking all the above into consideration in respect to his income and available resources, finds that [the appellant] has income from his employment, and the restaurant and financial resources available totalling at least $41,500. The Tribunal arrives at this figure by taking into account his income from [M Pty Ltd] which on current payslips will exceed $38,000 annually, his income from the restaurant which should be higher than last years declared earnings of $1,100 and his access to an interest free loan from his foster parents, which he repays as and when he can. This is higher than the income used in the current assessment.
35. It finds that there are special circumstances in this case which establish s.117(2)(ia) of the Assessment Act and that [the appellant]’s income and financial resources for this financial year is at least $41,500.
The Appellant’s complaints that arise from these reasons are, in summary:
a)That there is no evidentiary basis for a finding that he will earn $38,000 per annum in 07/08, and there are no reasons explaining how the Tribunal came to that figure.
b)The Tribunal took into account as a financial resource an interest free loan of $10,000 the Appellant had received from his foster parents in the past to pay his child support arrears which he only had to repay as and when he could.
c)Whilst the Tribunal accepted that in the last financial year the Appellant earned $1,100 working on a casual basis for a friend delivering meals for a restaurant there was no evidentiary basis to support, or reasons explaining, the finding that his income from the restaurant should be higher.
A review of the material before the Tribunal discloses 6 different pay slips and an accountant’s calculation of income for the Appellant for 06/07. The pay slips show weekly income amounts for each week, and the year to date figure. Despite analysing the pay slips in various ways they do not provide evidence of the figure struck by the tribunal:
a)
There were five consecutive pay slips from the pay day of
3 September 2007to 1 October 2007. The total income amount earned over the five pay slips was $3,545.22. Averaged, and then extrapolated over 52 weeks, this comes to $36,870.29.
b)The year to date total (including overtime) on the last pay slip in this sequence comes to $9,823.75. This figure covers 14 pay periods, which, when averaged and then extrapolated over a year, comes to $36,488.21.
c)The sixth pay slip before the tribunal was that for the pay day of 25 June 2007 (the last pay slip for the 06/07 financial year). This pay slip showed the year’s earnings at $32,734.56, the total of the normal time, and two separate overtime figures (one for time and a half and one for double time). This pay slip does not support the conclusions of the tribunal.
The pay slips do not support a finding that the Appellant's income from employment is more than $38,000 annually, and there is no other evidence apparent on the file to support this finding. There are no reasons explaining how the figure was derived, or from where it was obtained.
There is no doubt that the Tribunal was correct in concluding that an interest free loan is a ‘financial resource’ of the appellant. However, financial resources must always be treated with care when considering how to take them into account, as a resource may not be readily convertible to cash or a notional income.
There were no findings that there was an expectation that the appellant would receive further advances from his foster parents. Importantly, it was said that the loans were used to pay his more recent child support debts. It is difficult to see how these loans, provided to enable the appellant to meet his child support liability (whether as a result of his own financial mismanagement or not), could amount to a financial resource justifying a further increase in the child support liability. How the interest free loans were factored into the findings of the Tribunal is not apparent on the reasons.
There appears to be no evidentiary basis for concluding that the Appellant would earn a greater amount from his restaurant work than he did in the previous year. If the finding was based upon an assumption that he could engage in a greater amount of work then that would require a consideration of the matters set out in s.117(7B), which was not undertaken. If the finding was based upon a conclusion that he was in fact carrying out more work or that the rate of pay had increased, there are no findings to support such a conclusion.
As a result, I find that the Appellant has succeeded on issue 1.
Issue 2
In considering whether a child support assessment is ‘just and equitable’ the Tribunal must have regard to the matters referred to in s.117(4). Whilst the section need not be slavishly followed, each of the relevant factors listed in s.117(4) should be considered. Importantly, overt consideration is required of the relevant factors: Hides and Hatton [1997] FamCA 28; (1997) 139 FLR 91; (1997) 21 Fam LR 855; (1997) FLC 92-759 and Hallinan v Witynski [1999] FamCA 1127; (1999) FLC ¶98-009; (1999) 25 Fam LR 647. The tribunal recounted the terms of the section, and proceeded to address the relevant sub-sections.
In paragraph 38 the tribunal briefly addresses sub-ss.117(4)(a) to (c), although without quantifying the ‘proper needs’ of the children:
38. It is the duty of both parents to maintain the children. [M] attends an independent school and doe shave special needs. The costs of [M’s] special needs include medical and private school fees, which [the Respondent] currently bears. It is the duty of both parents to bear these costs. [N] attends a government school and has no special needs. There is no suggestion that the children could meet their own needs from their own financial resources.
In considering the income and financial resources of the parties the Tribunal found that the Respondent mother earned $800 from her employment in the last financial year through casual teaching, accepting that the mother had limited income which was effectively made up of Centerlink payments, being the parenting payment and family tax benefit. The Tribunal had regard to the fact that she received Centerlink payments from which she funds her expenses of $733 per week for her and the children. The Tribunal then said:
41. The Tribunal accepts that her income is below the disregarded income amount and does not affect the assessment. The Tribunal accepts that she spends most of her income on the upkeep of herself and the children.
The tribunal appears to have overlooked the effect of s.117(7) which relevantly provides:
Income, earning capacity, property and financial resources
(7) In having regard to the income, earning capacity, property and financial resources of the child, the court must:
…
(b)disregard:
…
(ii) any entitlement of the child or the carer entitled to child support to an income tested pension, allowance or benefit.
This definition of the phrase ‘income tested pension, allowance or benefit’ is that set out in the Family Law Regulations (as a result of ss.6 and 7 of the Child Support (Assessment) Act, s.4 of the Child Support (Registration and Collection) Act, and ss.4 and Part VII of the Family Law Act). Parenting payment and family tax benefits are within this definition. Thus, this income of the respondent should have been disregarded. As a result the decision ought to have proceeded on the basis that her income was only $800 per annum, and therefore she had no financial capacity to support the children.
The Tribunal then turned to the income of the appellant. It recounted its earlier findings (discussed under Issue 1) and went on to say:
41.… In this case, the Tribunal considers that [the appellant] will not suffer hardship if the liability was increased to $8,291 annually (that is calculated on an income amount of $41,500 [child support of $4,246 annually] and half the school costs and specialist costs of $4,145 total costs $8,291).
The Tribunal appears to have approached the task of considering the relevant matters under s.117(4) by identifying the income and financial resources of the parties then collapsing the question down to a consideration of whether or not the payer would ‘suffer hardship if the liability was increased’ to the formula amount plus half the special needs expenses. The Tribunal ought to have considered the extent to which the Appellant and Respondent could contribute to the costs of caring for the children (including the special needs). It is clear from the facts of this case that the mother has little income (aside from the Centrelink payments which were not to be taken into account) and therefore would not be able to contribute financially to any of the special needs of the children. The real question was therefore the extent to which the appellant could contribute to those needs.
The fact that both the parties have a duty to meet their children's needs does not mean that the duty must be discharged equally. It is, to use the common law phrase, a ‘joint and several liability’: if one party has no financial resources the other must meet the whole of the children’s financial needs. Indeed, in many cases the difference in income of parents (often impacted upon by the need to care for children) means that one parent simply doesn’t have the income to meet half of the children’s financial needs, and thus those needs must be apportioned having regard to the financial capacity of the parents.
The extent of the children’s needs and the appellant’s capacity to meet those needs was not explored.
Importantly, no consideration was given to any hardship that might be experienced by the children, nor the mother. The focus of the reasons appears to be any hardship that may have befallen the Appellant.
The reasons of the Full Court, in Ross & McDermott [1998] FamCA 134; (1998) FLC ¶98-003, (1998) 147 FLR 235; (1998) 23 Fam LR 613 when considering an appeal concerning the extent of reasons required with respect to the matters set out in s.117(4) provides a useful example:
[45] However, it is his Honour's limited consideration of the husband's financial circumstances and also his failure to weigh the hardship that the making of or refusal to make an order varying the amount of child support would cause to the wife and child on the one hand and the husband on the other, which causes us concern.
[46] It is true that in his discussion of whether or not there were "special circumstances" in this case, his Honour referred to the equity which the husband had in his home and to the amount of income which the husband received. It is also true that after referring to the duty which a parent has to maintain his or her child, his Honour concluded that the husband had no commitment to support any other person (notwithstanding the fact that the husband had formed a new relationship).
[47] But at no point did his Honour consider the level of the husband's own expenses and what actual capacity he had to contribute out of his income to the support of his child. Rather, as we discussed in connection with the first matters raised in the appeal, what his Honour appears to have done, having determined the husband's taxable income, was to go straight to the amount payable on that income according to the formula which is used for the administrative assessment of child support . While his Honour was entitled to have some regard to the operation of the formula as a convenient guide in his determination of the new child support liability, he was not, having determined the husband's income, entitled then to go straight to the formula, and to do so without regard to the husband's expenses or liabilities, or without regard to the relative hardship which such a variation would cause to each party and to the child.
[48] Had his Honour considered and made findings with respect to these matters of the husband's expenses and of the relative hardship to the parties and to the child if the amount of child support was reduced, it might have been possible for us either to infer that his Honour had concluded that it was just and equitable and otherwise proper to make the orders which he did, or on a re-exercise of the discretion, to reach our own conclusion about these matters.
[49] However, in the absence of findings by his Honour about these important matters and also because of his Honour's error in relation to his finding of "special circumstances", we consider that we must allow the appeal and remit the matter for re-hearing.
The importance of proper reasons and the extent of reasons required was discussed in PJ & Child Support Registrar [2007] FMCAfam 829; (2007) 38 Fam LR 31:
[38] The only right of review of a decision of the SSAT is an appeal ‘on a question of law’ to the courts: s 110B. In LDME & JMA (SSAT Appeal) [2007] FMCAfam 712 at [17] to [44], Halligan FM identifies many cases on the nature of an appeal on a question of law. Most significantly, such an appeal does not allow for a review on the merits. As a result, it is important for the Tribunal to provide appropriate reasons. This will usually entail careful findings of fact and clear explanations of the reasons for any decision, particularly where it involves the exercise of a discretion such as altering a child support amount.
[39] The Full Court of the Family Court has considered the extent of reasons required in family law cases in a number of decisions. A leading authority in the family law jurisdiction is Merriman v Merriman [1993] FCA unrep603; (1993) FLC 92–422 where the Full Court said:
Following the decisions of the Full Court of this Court in Bennett and Bennett (1991) FLC 92–191, Horsley and Horsley (1991) FLC 92–205 and Bonnici and Bonnici (1992) FLC 92–272 the principles governing the need for the giving of adequate reasons for the exercise of the discretion … are well established. For present purposes they are perhaps best expressed in the following passage from the judgment in Horsley (at page 78,401):
Counsel for the wife contended that the trial Judge did not give adequate or any reasons for his decision and that his failure to do so amounted to an error of law and additionally contended that his Honour's discretion had miscarried. In Bennett and Bennett (1991) FLC 92–191 the Full Court considered a similar argument (also advanced in that case by the same counsel) and after referring to a number of authorities, … referred to the judgment of the Full Court of the Supreme Court of Victoria in Sun Alliance Insurance Ltd v Massoud [1989] VR 8 and in particular to the passage in the principal judgment of Gray J. where his Honour said:
The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if:
(a) the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b) justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.'
In Bennett's case the Full Court went on to say:
It is unnecessary to decide, in this case, whether the inadequacy of her Honour's reasons was itself an error of law requiring her decision to be set aside, in that we have already determined that the appeal should succeed on the merits. The weight of judicial authority, however, suggests that it might well amount to such an error. At the very least the failure to give adequate reasons places a duty on an appellate court to scrutinise the decision with particular care.
In the absence of adequate reasons, the Full Court is not obliged to uphold a judgment merely because the result may be said to fall within the wide ambit of the Judge's discretion. In general, the appellate Court should be able to discern either expressly or by implication the path by which the result has been reached.'
The Court concluded on this topic:
The important thing is that the appellate court must be placed in the position of being able to follow the trial Judge's line of reasoning, as must the parties, if they are to be satisfied that justice has been done.
[40] That these principles also apply to child support decisions is without doubt: see Johnson & Johnson [1998] FamCA 1519; (1999) FLC 98–004.
It does not appear to me that the Tribunal has approached the task required under s.117(4) in the manner required by the legislation, nor provided adequate reasons.
Issue 3
The final issue relates to the question of any retrospective departure. This matter is only referred to in para.42 of the decision where the Tribunal says:
42. In assessing the just and equitable criteria to depart from the administrative assessment, the Tribunal finds that it is not just and equitable to impose the burden of arrears in relation to this departure. The Tribunal has taken into account in not imposing arrears [the appellant’s] current circumstances which include a new partner and baby. It also considered that it was just and equitable to extend the end date of the child support assessment so that the parties had a period without the need to bring further applications to change the assessment.
Whilst the Tribunal has identified some of the considerations relevant to determining whether to make a retrospective decision it has not undertaken the tasks required by s.117(4) with respect to the period covered by the retrospective decision. The Tribunal has not explained the extent of the needs of the appellant’s new partner and child.
The Tribunal has not considered the fact that the assessment determined by the Senior Case Officer was higher than that set by the Tribunal. Whilst this assessment was lowered by the Objections Officer, the respondent was partially successful in her application to the SSAT to restore the assessment of the Senior Case Officer despite the reductions by the Objections Officer. The effect of the decision is that she and the children must bear the financial burden of the delay caused by the objection and review hearing. This is a relevant consideration that ought to have been taken into account by the tribunal.
For these reasons the appeal should also be allowed.
Conclusions
I have considered whether the matter should be remitted to the Tribunal for a rehearing, or whether the matter could be determined in this court. The matter was argued as a strict appeal by the parties, who appeared in person. Given the extent of the findings that need to be made and the nature of the submission it does not appear to me to be an appropriate case for me to set the rate of child support. A further hearing on the substantive issues is better conducted in the SSAT than in the court in this case. As a result I allow the appeal and remit the matter for re-hearing.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Riethmuller FM
Associate: Robin Smith
Date: 20 August 2008
103
4
0