Walker & Fielding (SSAT Appeal) - [2010] FMCAfam 320

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WALKER & FIELDING (SSAT APPEAL)

[2010] FMCAfam 320

CHILD SUPPORT – Appeal from decision of SSAT – whether the approach of the SSAT private education expenses amounted to error of law – whether approach to the financial circumstances of the applicant by the SSAT amounted to an error of law.

Child Support (Assessment) Act 1989
Child Support (Registration and Collection) Act 1988

Construing Undertakings and Court Orders (2008) 82 ALJ 82, John Tarrant
Repatriation Commission v Nation (1995) 57 FCR 25
Yates Property Corp Pty Ltd v Boland (1998) 89 FCR 78
Australian Energy Ltd v Lennard Oil NL [No 2] [1988] 2 Qd R 230
LDME & JMA (SSAT Appeal) [2007] FMCAfam 712
Kennon v Spry (2008) FLC 93-388
Dwyer and McGuire (1993) FLC92-420

Applicant:

MR WALKER

Respondent:

MS FIELDING

File Number:

BRC 8613 of 2009

Judgment of:

Slack FM

Hearing date:

9 March 2010

Date of Last Submission:

9 March 2010

Delivered at:

Brisbane

Delivered on:

18 June 2010

REPRESENTATION

Counsel for the Applicant:

Mr Scott-Mackenzie

Solicitors for the Applicant:

Browns Lawyers

The Respondent appeared on her own behalf.

ORDERS

That the Appeal from the decision of the Social Security Appeals Tribunal dated 17 August 2009 be dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Walker & Fielding (SSAT Appeal) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRC 8613 of 2009

MR WALKER

Applicant

And

MS FIELDING

Respondent

REASONS FOR JUDGMENT

This is an appeal from the decision of the Social Security Appeals Tribunal (hereafter “the SSAT”) dated 17 August 2009.
The applicant raises 17 grounds of appeal.
In general the grounds of appeal fall into three categories:
a)A challenge to the approach taken by the SSAT to the private school education expenses of the child (Grounds 1 and 2).
b)A challenge to the approach taken and findings made by the SSAT to the financial circumstances of the applicant (Grounds 3 to13).
c)A challenge to the approach of the SSAT by taking into account irrelevant considerations or alternatively not taking into account relevant considerations (Grounds 14 to 17).
The respondent seeks that the appeal be dismissed.

The decision of the SSAT

The SSAT affirmed the decision of the child support objections officer made on 31 October 2008 that:
1. For the period 1 August 2008 to 31 December 2008 the annual rate of child support payable by Mr Walker is set at $14,985.
2. For the period 1 January 2009 to 26 August 2009 the annual rate of child support payable by Mr Walker is set at $12,000.

Relevant litigation background to the Appeal

The applicant was assessed by the Child Support Agency as the parent liable to pay child support to the respondent in respect of the child K born [in] 1991.
The Child Support Agency made an administrative assessment for the period from 1 August 2008 to 26 August 2009 which provided the applicant pay child support in the amount of $5,662 per annum.
The respondent made a change of assessment application on 18 July 2008.
On 3 September 2008 a senior case officer decided:
1. For the period 1 August 2008 to 31 December 2008 the annual rate of child support payable by the applicant was to be set at $17,851.
2. For the period 1 January 2009 to 26 August 2009 the annual rate of child support payable by the applicant was to be set at $13,871.
The applicant objected to that decision and on 31 October 2008 the objections officer made the decision that went on review to the SSAT.

Grounds 1 and 2 of the Appeal – Treatment of the education expenses of the child

Submissions of the applicant

As I understand the submissions of the applicant, two aspects of the decision of the SSAT are the subject of challenge.
The applicant contends that, had the SSAT correctly applied the law, it would not have reached a conclusion that there was a ground for departure based upon the private school fees paid for the child.
Further and/or in the alternative, if there was no error in the treatment of the school fees as a ground for departure, the SSAT erred at law in the way that it took account of the school fees when considering whether it was just and equitable as between the child and the parents. In particular the SSAT should have reached the conclusion either that the applicant had no liability to contribute to the school fees or alternatively only one half of the fees as might have been incurred at the [M] School.

Relevant findings of the SSAT

The SSAT concluded that there was a ground for departure based on the extra costs in caring for, educating or training a child in the way the parents intended.
The SSAT then considered that as there was an intention on the part of the parents to educate K at a private school, the actual costs are those to be considered (para.21 of the Reasons).

Relevant background facts re school fees

The child left school after completing Year 12 at the end of 2008 at the [A] School.
Orders were made on 8 September 1998 by the Family Court, and specifically an order was made that the father to provide half of all school fees and any additional school expenses upon receipt of invoice from school.
The SSAT accepted (and this does not appear to be in dispute) that at the time the orders were made the child was attending the [M] School.
The respondent enrolled the child at the [A] School for high school without the consent of the applicant. It does not appear to be in dispute that the respondent enrolled the child at [A] for Year 8 when she was in Year 2 and that the applicant had no involvement in the enrolment.
The invoices for the school fees at [A] were initially forwarded to the applicant for payment but were not paid. The respondent then made payments herself.
It seems agreed that in 2008 the tuition fee at [M] School was $2,004 per annum. The tuition fee at [A] School in 2008 was $5,970 per annum.
The SSAT said (@ para.19 of the Reasons):
It is settled law that it is the type of education rather than the particular school that forms the substance of the requisite intention (Wild v Ballard [1997] FamCA 41).
The SSAT seemed to interpret the consent orders as meaning there was an intention on the part of the parents to educate K at a private school, the actual costs are those to be considered.
Having made those findings the SSAT then considered that a ground for departure had been established. Thereafter they approached the matter on the basis that the applicant should be responsible for half of the actual school fees.
Whilst the applicant submits that the SSAT erred in being satisfied that a ground for departure was established by Reason 3, I am satisfied that the SSAT were entitled to reach that conclusion for the following reasons.
For the SSAT to be satisfied that a ground for departure existed, it needed to be satisfied that in the special circumstances of the case the costs of maintaining the child is significantly affected:
2.Because the child is being cared for, educated or trained in the manner that was expected by his or her parents.
I agree with the submission that the intention of the parties in this matter was not a relevant consideration because in this case there was an order that required the applicant to meet half of all school fees and any additional school expenses. It was the order that created the legal obligation of the applicant to contribute to school fees and not the intention of the parties.
In a useful article, Construing Undertakings and Court Orders (2008) 82 ALJ 82, the author John Tarrant, refers to a number of decisions. Mr Tarrant identifies two lines of authority on the approach to the interpretation of Court orders.
In Repatriation Commission v Nation (1995) 57 FCR 25, the Full Court of the Federal Court (Beaumont J, with whom Black CJ and Jenkinson J agreed), said (at 34):
Under the ordinary rules of construction, evidence of surrounding circumstances is admissible to assist in the interpretation of an instrument if the language is ambiguous or susceptible to more than one meaning but not admissible to contradict the language of the instrument when it has a plain meaning.
In his article Mr Tarrant identifies a second line of authority that supports the proposition that the reasons for judgment must be referred to so as to ensure that Court orders are interpreted in the correct context.
He refers to the decisions of Yates Property Corp Pty Ltd v Boland (1998) 89 FCR 78 and Australian Energy Ltd v Lennard Oil NL [No 2] [1988] 2 Qd R 230. In particular, reference is made in the decision of Yates Property to the remarks of Drummond J (at 78) that it is impermissible, in my view, as well as being quite unrealistic, to attempt to read, that is, to understand, an order in isolation from the context of the reasons for it being made.
I do not consider it necessary to resolve the apparent difference in the lines of authority on the use of extrinsic material in the interpretation of orders. In this matter I consider that the orders are clear and unambiguous. There was no apparent attempt to put the reasons for the orders before the SSAT and there was no extrinsic material put before the SSAT that entitled the SSAT to interpret the orders other than what is clear from the orders.
The applicant has never applied to vary or discharge that order.
Whilst the applicant now contends that the proper interpretation of that order was that he would only have to contribute to the fees payable at the [M] School, the order itself does not in any way limit the liability for school fees to a particular school.
As I understand it, there was no extrinsic material placed before the SSAT that established that a proper interpretation of the orders was as the applicant contended. Whilst the respondent acknowledged in her evidence to the SSAT that she did not have the applicant’s consent to change the child’s school, there is nothing in the orders that indicates that his consent was necessary and certainly nothing in the orders that indicates that, as a result, he was relieved of his obligations under the orders.
The applicant’s obligation to pay school fees arose as a result of the orders of the Court. I consider that the SSAT was obliged to give proper effect to the order of the Court.
If the applicant had a remedy, it was to seek to be relieved of his obligation pursuant to the order.
Notwithstanding that there was already an order of the Court fixing the applicant’s liability, I do not consider that excluded the SSAT from reaching a conclusion that special circumstances exist to found a ground of departure.
The SSAT was entitled to interpret the order in its plain and ordinary meaning and apart from the evidence of the parties as to their intention at the time the orders were made (which is largely irrelevant) there was no extrinsic material placed before the SSAT that allowed the SSAT, in my consideration, to interpret the orders in any other way.
I consider that the SSAT was entitled to treat the education expenses of the child in the way that it did and no error of law emerges in that approach.

Grounds 3 to 13 – Treatment of the applicant’s financial circumstances

The submissions of the applicant sets out the following relevant facts that I accept.
[R] Pty Ltd (“[R]”) was incorporated on 19 April 1994. It was the proprietor of a business known as [G] (the “business”).
Mr Walker was the sole director and secretary of [R] until

30 July 2007. He was the owner of all of the issued shares in [R] until 30 September 2001.
Mr Walker and Ms W met in 1996 and were married [in] 2001.
On 3 September 2001 a company, the alter ego of Ms W, [B] Pty Ltd (“[B]”) purchased from Mr Walker all of the issued shares in [R] for valuable consideration.
[B] was incorporated on 6 July 2001. At all material times Ms W was the sole director and secretary of [B] and the owner of all of the issued shares in the company.
[B] is the Trustee of the Walker Trust (“Trust”). The primary beneficiaries are:
a)Ms W;
b)Mr Walker;
c)Ms W’s daughter, [X], born [in] 1985;
d)Ms W’s son, [Y], born [in] 1987.
Mr Walker and Ms W worked in the business subsequent to [B] acquiring all of the issued shares in [R] and were both paid a salary.
Between 2001 and 2007 [R] made an overall tax loss of $306,989.
On 4 July 2007 the business was sold by [B] to Korean interests for $760,000.
The net amount received by [B] after deducting the debts of the business was $529,000.

Discussion and Conclusions

It is important to remember that the SSAT were considering the child support period from 1 August 2008 until 26 August 2009.
It is not clear from the reasons what (if any) employment the applicant had during that period. The SSAT seemed to accept that the applicant was not in any regular employment although it seems that he was involved in some [omitted] related activities and that he continued to operate another arm of the business, [omitted] (para.44 of the Reasons).
Otherwise it would seem that the proceeds of the sale of the business were used to support the Walker household and outgoings that needed to be met.
It is not clear from the reasons how the proceeds from the sale of the business were dealt with. According to the applicant, those monies were always under the control of his wife and he did not have any entitlement to those monies. According to para.54 of the Reasons the monies were held in the Walker Trust and [B] was the Trustee.
The SSAT made a number of findings which the applicant argues constitutes the error.
The SSAT concluded and/or made findings that:
a)Mr Walker has defacto access to the Trust’s funds (para.55 of the Reasons).
b)Mr Walker was in reality the “majority” partner in the enterprise and accordingly entitled to a proportional share of any profit and loss and of the proceeds of the business.
c)Mr Walker clearly sees that he has a right to access the funds remaining from the proceeds of the sale of the business to support himself
The primary submission of the applicant is that, as a matter of law, the SSAT were simply not able to reach those conclusions on the facts of the matter.
I agree that there was not sufficient evidence for the SSAT to reach a conclusion that the applicant had any legal right, claim or entitlement to the proceeds of the sale of the business and the mere fact that a liable parent is involved in a business does not provide the basis for a proprietary interest in the business or the sale proceeds of the business.
I accept that the Tribunal erred in coming to that particular conclusion. I am also satisfied that the error seems to be an error of law.There did not appear to be any discussion or significant evidence that the Trustee was a mere puppet of the applicant or that the Trust was a sham.
However, for reasons I will give, I do not consider that it was necessary for the SSAT to reach those conclusions or make those findings and the fact that there has been an error of law does not inevitably lead to the conclusion that the appeal should be granted.
The principles relating to “appeals” from decisions of the SSAT have been concisely stated in the decision of FM Halligan LDME & JMA (SSAT Appeal) [2007] FMCAfam 712, paras.17 to 33 of the Reasons. On the question of discerning an error of law in the Reasons of the SSAT, FM Halligan said (and I adopt):
It is well settled then that when reviewing an administrative decision for error, a Court should not be ‘concerned with looseness in language nor with unhappy phrasing’ and, the reasons for the decision under review are not to be construed minutely and finally with a eye keenly attuned to the perception of error” (Collector of Customs v Pozzolanic Enterprises Pty Ltd, above, at 287, cited with approval in Minister for Immigration and Multicultural Affairs v Wu Shan Liang (1996) 185 CLR 259 at 272 per Brennan CJ, Toohey, McHugh and Gummow JJ, and see the comments of Kirby J to similar effect at 291).
The SSAT is an administrative tribunal, not a Court of law, and is bound to pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick (s.88, Registration Act, and compare s.141, Social Security (Administration) Act 1999). It is not afforded the luxury of lengthy deliberation on the reasons for its decisions, but must give the parties written notice of its decision on the review and written or oral reasons for that decision within 14 days of making the decision (s.103X, Registration Act). The function of the SSAT is not to deliver judgments of jurisprudential excellence when delivering its reasons. In my view, therefore, the above authorities apply to a s.110B appeal, and the court reviewing the reasons for decision of the SSAT in such an appeal to discern legal error should not adopt an overly pedantic approach.
I also agree with the principles enunciated by Halligan FM in relation to the power of Courts concerning appeals of this type:
The Court “must” hear and determine an appeal from the SSAT, and “may” make such order as it thinks appropriate by reason of its decision (s.110F(1), Registration Act). The orders a Court may make on a s.110B appeal include an order affirming or setting aside the decision of the SSAT, or an order remitting the case to be heard and decided again by the SSAT, either with or without the hearing of further evidence, in accordance with the directions of the Court (s.110F(2)).
Three points may be made about the Court’s powers in a s.110B appeal.
First, the use of the word “may” clearly signifies that the power is discretionary. The fact an error of law by the SSAT is found does not inevitably lead to the decision being set aside. For example, if it is clear there would be no purpose served by having the case heard again, the Court may, in the exercise of its discretion, decline to remit the matter to be heard and determined again, and affirm the decision under appeal (see Clements v Independent Indigenous Advisory Committee, above, at [41]).
Second, the power to make such order as the Court thinks fit is qualified by the words “by reason of its decision”. The “decision” in this context is the decision on the hearing and determination of the appeal (s.110F(1)), the appeal being “on a question of law” (s.110B). Thus, the orders made must flow from a finding in favour of the Applicant on an identified question or questions of law.
Third, the particular power under s.110F(2) to make the orders specified in that subsection does not limit the general power under s.110F(1) to make such order as the Court thinks appropriate by reason of its decision on the appeal.
As indicated in the discussion of the principles in relation to these appeals, the Court retains a discretion to refuse an appeal even if an error of law is established. In the exercise of that discretion, I consider that, in part, I should approach the matter with a consideration of the reasons and evidence in circumstances where the error had not been made.
During the relevant child support period, it is not immediately clear what income the applicant was earning. He did not provide, according to the Reasons, an update of his financial circumstances. He was operating his business although his evidence, which the SSAT seemed to accept, was that there had been a downturn in the business due to the reduction in [clients] during the period. However his business continued to operate and that was his employment during the period.
Having come to the conclusion that a ground for departure had been established (a conclusion that in my view the SSAT was entitled to reach having regard to the education expenses for the child), it was then necessary for the SSAT to consider whether it was just and equitable as between the child and the parents to depart from the child support assessment.

The SSAT also found that in the special circumstances of the case
Mr Walker’s taxable income does not reflect his true financial resources and that there is a ground for departure under s.117(2)(c)(1a) (see para.71 of the Reasons).
I consider for reasons I will give that the SSAT were entitled to reach that conclusion.
In that consideration and in considering whether it was just and equitable to depart from the child support assessment, the SSAT were obliged to consider the income property and financial resources of the applicant.
The term financial resource is not defined in the Assessment Act.
A financial resource, in my consideration, refers to something which is not property but from which a financial benefit is or may be gained [see Kennon v Spry (2008) FLC93-388, Gummow and Hayne JJ (@ 83035)].
The principle object of the Assessment Act (ss.4) is to ensure the children receive a proper level of financial support from their parents.
A particular object of the Assessment Act includes ensuring:
a. That the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and in particular, the parents with a like capacity to provide financial support for their children should provide like amounts of financial support.
The term financial resource in the light of the objects of the Assessment Act should be broadly defined and would, in my consideration, refer to any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children.
In this matter there was ample evidence upon which the SSAT was entitled to reach a conclusion that the applicant was receiving a financial benefit from the monies received from the sale of the business.
It was accepted, for example, that those monies were applied to the general living expenses of the Walker household and the regular outgoings including the mortgage expenses. In other words, those monies were being applied to the applicant’s living expenses and outgoings.
It also seems that during the relevant child support period there were a number of loans to the applicant’s company, [P]. For example, in September 2008 there was a loan of $14,000 to [P]. The applicant chose to operate the company and it was from this source that the applicant derived his income at that time.
It should also be noted that the SSAT was not accepting of the evidence given by the applicant about the nature of the arrangements between himself and his wife. His evidence that he worked for between 60 to 80 hours per week (seven days per week) between 2001 and 2007 in a business that he established; for which he was the public face; for an income of between $40,000 and $50,000 per annum; and that he should have no expectation or entitlement in the sale proceeds is inherently unbelievable. The SSAT was, in my view, in the light of the history of the operation of the business and the applicant’s involvement in the business, to be sceptical about his evidence that he did not have any entitlement to the sale proceeds or more particularly that he would not receive any benefit from those proceeds or that he did not have access to those funds.
The issue for the SSAT was not to determine what if any proprietary right he had in those funds. The SSAT were simply obliged to consider whether those monies represented a financial resource and if so what would be a just and equitable determination of the level of his child support having regard to the fact that he had that resource available to him.
Lindenmayer J in Dwyer and McGuire (1993) FLC92-420 said (@ 80319):
In any event, having thus identified the availability of substantial property and financial resources, and having taken account of the income versus asset base of the partnership, it is, in my opinion, unnecessary for the court to seek to identify any specific source from which an obligation of the father to pay child support can be met (see the analogous position in relation to an order for lump sum child maintenance under the Family Law Act commented upon in the course of the decision of the Full Court of the Family Court in Collins and Collins (1993) FLC ¶92-343 at 79,638; (1993) 16 Fam LR 261 at 268; per Fogarty and Renaud, JJ). It is obvious, on the evidence, that the father has both sufficient real property, and a financial resource in the form of a capacity to borrow against the value of that real property, to meet any reasonable order for child support. It is up to him to organise his own affairs in order to devise the means to meet his proper level of child support obligations.
Having identified that the applicant had a financial resource available to him that allowed him to meet his child support obligations, in my view, it was then unnecessary for the SSAT to go on and make findings about his particular interest in the resource. Ultimately the SSAT, after having reached the conclusion that this was an appropriate matter to depart from the child support assessment, the SSAT was then charged to come to a determination that was just and equitable between the parents and the child and otherwise proper. I do not consider that it was necessary for the SSAT to identify what property interests that applicant may have had in the financial resource
It is important to remember that the relevant child support period was part of the child’s last year in high school and the applicant already had a legal obligation to meet half of her school fees. It should also be remembered that the applicant’s duty to maintain his daughter was a legal obligation that should not have been given any lesser priority over his other legal obligations. For example, there appeared to be no difficulty in lending $14,000 to the business [P] operated by the applicant in September 2008. Whilst the applicant may well have been under a legal obligation to repay those monies, he had no less of an obligation to meet his child support commitments.
He was assessed to pay child support at the rate of $5,662.00 per annum for the period 1 August 2008 to 26 August 2009. Given that he already had an obligation to meet school fees, I consider that it was appropriate for the SSAT to come to the conclusion that that was not a just and equitable assessment of support to be paid by the applicant.
The SSAT discussed (para.89 of the Reasons) the costs of maintaining the child and whilst the SSAT did not come to particular findings accepted that the costs were greater than $12,000 for the 2008 year.
The conclusion reached by the SSAT as to an appropriate level of support payable by the applicant represented a sum of $288 per week approximately for the 2008 calendar year (including his obligation to meet half of the school fees for 2008) and $230 per week for the 2009 calendar year. Whilst there may be legitimate differences of opinion as to what constitutes a just and equitable apportionment of child support between liable parents, I could not conclude that the outcome in this matter was outside any reasonable ambit of discretion to constitute an error of law.
Whilst I am satisfied that the Grounds of Appeal have identified some errors in the approach taken by the SSAT, I am not satisfied that this Court should exercise the discretion to set aside the decision upon these grounds.

Grounds 14 to 17 – Taking into account irrelevant considerations

The applicant argues that the SSAT, in coming to its conclusion to affirm the objections decision, took into account two factors-the applicant’s delay and the fact that a reduction in the level of child support payable by the applicant would result in a debt owing by the respondent to him- that were (in the case of the delay) not supported by the evidence or irrelevant considerations of such magnitude that they constitute an error of law.
Whilst I accept that the SSAT did seem to take into account what it regarded as delay on the part of the applicant and the fact that a liability would have been created for the respondent to the applicant if there was a reduction in the assessment, for the reasons I have already given, I am not satisfied that this Court should exercise a discretion to set aside the determination. It was clearly a major concern for the SSAT that they did not receive reliable and complete information from the applicant about the true nature of his financial affairs and on the facts, in my view, the SSAT was entitled to come to that conclusion. That was the major factor that influenced the SSAT in their conclusion. In such circumstances the SSAT were entitled to be somewhat robust in the exercise of their discretion.
I am not persuaded that the decision should be set aside upon these grounds.
For the reasons I have given, I consider the Appeal should be dismissed.

I certify that the preceding ninety (90) paragraphs are a true copy of the reasons for judgment of Slack FM

Date: 18 June 2010