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Appealing SSAT Errors of Fact are errors at Law

The only right of review of a decision of the SSAT is an appeal on a question of law to the courts 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.

CAZET & FAULKNER & ANOR (SSAT APPEAL)
(2012) FLC

Court citation: [2011] FMCAfam 1157

Federal Magistrates Court of Australia

Judgment delivered 27 October 2011

Child support  Appeal from decision of SSAT  Question of law  Whether finding of fact made in the absence of any evidence.

Federal Magistrate Riethmuller FM noted in PJ & Child Support Registrar [2007] FMCAfam 829 at [38], (2007) 38 Fam LR 31, (2007) FLC

"38 The only right of review of a decision of the SSAT is an appeal on a question of law to the courts  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."

The applicant father appealed a Social Security Appeals Tribunal (SSAT) decision which had determined that the fathers adjusted taxable income was $104,000. The father argued the SSAT erred in law in that it had found that he received distributions from his fathers estate in the 2009/2010 tax year totalling $91,093 where there was no evidence of that fact. He also argued that the capital sums he had received were income.

The court found that the trust account ledger sheets from the estates solicitor which were in evidence before the SSAT were among the documents forwarded to the court by the SSAT Principal Member under s 110K of the Registration Act. They show that in the 2009/2010 tax year, disbursements from the estate totalled $176,032.56, including one payment of $93,712 to a local council in connection with the subdivision of real estate forming part of the estate. If that one payment was deducted, the total disbursements from the estate were less than the amount the SSAT found had been distributed from the estate to the father, who was one of three beneficiaries of the estate. The court observed that there was no indication in the SSATs reasons as to how the figure of $91,093, which it found had been distributed to the father, was arrived at other than the statement that the records of the solicitors trust account for the estate show such distributions. It was contended on behalf of the father that the total distributions to him or on his account during the 2009/2010 year were $18,899.

The court cited Mansfield J in Comcare v Moon [2003] FCA 569, (at [33]):

    33.  Care must be taken not to convert questions of fact into questions of law. The Tribunal, moreover, does not commit an error of law merely because it finds facts wrongly or upon a doubtful basis, or because it adopts unsound reasoning: Minister for Immigration & Multicultural Affairs v Rajalingam [1999] FCA 719; (1999) 93 FCR 220 at 257; Willcocks v Comcare [2001] FCA 1315 at [6]. If there is any evidence rationally and legally capable of supporting a finding of fact, then the finding of fact does not involve an error of law. That is so even if there is a significant body of evidence pointing to a contrary finding of fact. And the decision as to what evidence is to be accepted is a matter for the administrative decision maker and not for the Court. It is not the function of the Court on an application such as the present to review the Tribunals findings of fact and to substitute its view of the facts for those of the Tribunal.

Held: for the applicant.

Having considered Comcare and Moon the court found that there was no evidence rationally or legally capable of supporting [the] finding of fact that the applicants income was $91,093. It found that the SSAT had not explained how it arrived at the figure of $91,093, other than asserting that the trust account ledger shows this figure. The court found that the total distributions from the estate over the relevant year, apart from a payment to a local council for subdivision expenses, were less than the amount the SSAT found to have been distributed to the father and there was no identifiable basis on which any part of the payment to the local council could be regarded as a distribution to the father. On that basis the court found that there was no evidence on which the SSAT could have made the finding it made and therefore the error was on a question of law and the decision could not stand.

Appearances:

Solicitor for the applicant: Mr Brent.

Respondent in person.

No appearance for the 2nd respondent.

Before: Halligan FM.

Full text of judgment below

Halligan FM:

ORDERS

    (1) The Child Support Registrar is joined as second respondent to these proceedings, and further service on the second respondent is dispensed with.

    (2) The decision of the Social Security Appeals Tribunal made on 30 November 2010 determining the mothers application for review is set aside and the application for review is remitted to the Social Security Appeals Tribunal to be heard and decided again.

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

    

Halligan FM:

Introduction

1. This is an appeal by Mr Cazet (the father) on a question of law against a decision of the Social Security Appeals Tribunal (the SSAT), made on 30 November 2010. The respondents to the appeal are Ms Faulkner (the mother) and the Child Support Registrar (the Registrar).

2. Despite my order to file and serve an amended Notice of Appeal, the father failed to join the Registrar as a party, even though the Registrar is a mandatory party to such proceedings (ss.110D and 101(1)(b), Child Support (Registration and Collection) Act 1988(the Registration Act)). However, he did serve the Registrar and the Registrar has filed a Notice of Address for Service and advised the Court that there would be no appearance at the hearing on behalf of the Registrar unless the Court specifically requested such appearance.

3. I am thus satisfied that the Registrar has been afforded procedural fairness, and I therefore order that the Registrar be added as second respondent to the proceedings but dispense with further notice to the Registrar.

4. The SSAT decision under appeal determined an application for review by the mother, and set aside the decision of an objections officer in a change of assessment case initiated by the father. The SSAT determined that the fathers adjusted taxable income for the period 1 August 2009 to 30 June 2011 be fixed at $104,000. The objections officer had fixed the annual rate of child support at $6,000 for the period 1 August 2009 to 13 December 2009 and at $7,743 for the period 14 December 2009 to 31 December 2010. It seems the father accepted that outcome, while the mother wanted the annual rate of child support fixed at the rate determined in a previous change of assessment case, namely $36,000.

5. Paraphrased, the father contends that the SSAT erred in law in that it-

    a) found that he received distributions from his fathers estate in the 2009/2010 tax year totalling $91,093 where there was no evidence of that fact;

    b) found that capital sums the father had received were income; and

    c) failed to determine, and thus to consider, the childrens proper needs as required by s.117(4)(b), Child Support (Assessment) Act 1989 (the Assessment Act) when determining whether it would be just and equitable to make a departure determination, and hence failed to have regard to a relevant consideration.

6. As ultimately pressed on the hearing of the appeal, the father sought orders setting aside the SSATs decision and remitting the matter to the SSAT for rehearing.

7. It is unnecessary to set out the SSATs reasons other than when dealing with the questions of law on which the appeal is based.

Background

8. The parties have 3 children, aged ten, nine and five. The children live with the mother and spend less than regular time with the father.

9. The father is one of three beneficiaries under his deceased fathers will. He has received significant distributions from the estate (over $1,000,000), and apart from $250,000 of this which the mother received through court proceedings according to the SSATs reasons, the father has dissipated the balance. The SSAT seems to have accepted that this was in large measure a result of the father suffering bipolar disorder.

10. There are further significant distributions to be made from the estate as its assets are realised. To assist the father manage his finances, he and his brother have established a trust. That seems to have occurred in about September 2010.

The applicable law

11. The right of appeal arises under s.110B of the Registration Act, which provides-

    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.

12. When reviewing the reasons of the SSAT, being an administrative body, the 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 finely with an eye keenly attuned to the perception of error (Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280, 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).

13. Nonetheless, as Riethmuller FM noted in PJ & Child Support Registrar [2007] FMCAfam 829 at [38], (2007) 38 Fam LR 31, (2007) FLC 98-035:

    38 The only right of review of a decision of the SSAT is an appeal on a question of law to the courts  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.

Did the SSAT make a finding of fact without evidence of that fact?

14. The SSAT said (Reasons, [19])-

    19. Before  September 2010, (the father) received his disbursements direct from (the estates solicitors) trust account. The records of that account, as submitted to the tribunal show that, in the period from 1 July 2009 to 30 June 2010, (the father) received distributions totalling $91,093 from his late fathers estate.

15. The SSAT then found as a fact that in the 2009/2010 tax year (the father) had  receipts from his fathers estate of $91,093.

16. The trust account ledger sheets from the estates solicitor which were in evidence before the SSAT are among the documents forwarded to the Court by the SSAT Principal Member under s.110K of the Registration Act. They show that in the 2009/2010 tax year, disbursements from the estate totalled $176,032-56, including one payment of $93,712 to a local council in connection with the subdivision of real estate forming part of the estate. If that one payment is deducted, the total disbursements from the estate are less than the amount the SSAT found had been distributed from the estate to the father, who is but one of three beneficiaries of the estate.

17. There is no indication in the SSATs reasons how the figure of $91,093, which it found had been distributed to the father, was arrived at other than the statement that the records of the solicitors trust account for the estate show such distributions.

18. It was contended on behalf of the father that the total distributions to him or on his account during the 2009/2010 year were $18,899. This figure is greater than the distributions recorded in the ledgers as being paid to the father, $7,500. The father said that the balance is made up of half of a $20,000 distribution shown as made to his brother, which he said was in fact his share of a distribution made to all three beneficiaries that was paid to his brother in satisfaction of a debt he owed his brother. He also said a distribution of $1399 from the estate which was not recorded in the trust account ledger as being on his behalf was a payment to a solicitor to whom he owed money for work done, and hence was a distribution to him.

19. Thus, on the fathers case as presented to me, the trust account ledgers on which the SSAT based its finding under challenge do not transparently record all payments from the estate that were for his benefit.

20. In determining whether this situation gives rise to an error on a question of law in the SSATs decision making, it is appropriate to have regard to relevant authority on when a finding of fact may be challenged in an appeal on a question of law.

21. The Full Court of the Federal Court in Collector of Customs v Pozzolanic Enterprises Pty Ltd (above), a case involving an appeal on a question of law from the Administrative Appeals Tribunal (the AAT), commented on the general limitations of an appeal on a question of law as follows ([20])-

    20 The limitation of the jurisdiction to the resolution of questions of law imposes a significant constraint upon the role of the Court in reviewing decisions of the Tribunal. The appealable error of law must arise on the facts found by the Tribunal or must vitiate the findings made or must have led the Tribunal to omit to make a finding it was legally required to make. A wrong finding of fact is not sufficient to demonstrate error of law  Where the decision of the Tribunal involves matters of fact and degree, then provided it applies correct principles of law, no appeal will lie.

22. In Comcare v Moon [2003] FCA 569, another appeal on a question of law from the AAT, Mansfield J said (at [33])-

    33.  Care must be taken not to convert questions of fact into questions of law. The Tribunal, moreover, does not commit an error of law merely because it finds facts wrongly or upon a doubtful basis, or because it adopts unsound reasoning: Minister for Immigration & Multicultural Affairs v Rajalingam [1999] FCA 719; (1999) 93 FCR 220 at 257; Willcocks v Comcare [2001] FCA 1315 at [6]. If there is any evidence rationally and legally capable of supporting a finding of fact, then the finding of fact does not involve an error of law. That is so even if there is a significant body of evidence pointing to a contrary finding of fact. And the decision as to what evidence is to be accepted is a matter for the administrative decision maker and not for the Court. It is not the function of the Court on an application such as the present to review the Tribunals findings of fact and to substitute its view of the facts for those of the Tribunal.

23. The issue here, to use Mansfiled Js words, is  Was there any evidence rationally and legally capable of supporting the finding of fact that in the 2009/2010 year, the father received $91,093 in distributions from his fathers estate?

24. The mother conceded that it is not possible to conclude that $91,093 was distributed to the father from his fathers estate based on the solicitors trust account ledger for the estate, however one reads that ledger. However, she drew attention to a suggested admission by the fathers solicitor to the SSAT that the distributions in that year were as the SSAT found. This appears in the SSATs reasons as follows (at [13])-

    13. The tribunal pointed out to (the father) that (the solicitors) trust account showed he had, in the 2009/2010 tax year, received a distribution of $91,093 from his late fathers estate. The tribunal asked (the father) why it should not take this sum as part of his adjusted taxable income and use it to assess his child support. On behalf of his client, (the fathers solicitor) acknowledged the distribution but said that it was capital and should be used only to deem an income at an appropriate interest rate to be used to assess child support.

25. I note that the estates solicitor and the fathers solicitor are one and the same.

26. The fathers solicitor put to the Court that he could not remember having made such an admission, but had not enquired about obtaining a transcript of the hearing before the SSAT. In any event, he said he was focussed on addressing the issue put to him by the SSAT, to show why capital distributions from the estate should not be treated as income, and assumed that the SSAT would have been accurate in suggesting a figure said to have been derived from his trust account ledger.

27. In the circumstances, I am not satisfied the response from the fathers solicitor, assuming it to be accurately recorded in the SSATs reasons, can be treated as an admission on which the finding of fact under challenge could rationally and legally be made.

28. Where-

    a) the SSAT has not explained how it arrived at the figure of $91,093, other than asserting the trust account ledger shows this figure;

    b) the total distributions from the estate over the relevant year, apart from a payment to a local council for subdivision expenses, are in fact less than the amount the SSAT found to have been distributed to the father; and

    c) there is no identifiable basis on which any part of the payment to the local council could be regarded as a distribution to the father; I am satisfied there was no evidence on which the SSAT could have made the finding it made.

29. This amounts to a finding of error on a question of law. This does not automatically mean the SSATs decision should be disturbed. However, the SSAT added the figure it erroneously found to have been distributed to the father from the estate in the 2009/2010 tax year to his taxable income for that year of $13,370 (see Reasons, [22]), arriving at the figure of $104,463, which it found was what the evidence showed the fathers total income for that year to be (Reasons, [29]). That figure was the amount the SSAT then found should be the fathers adjusted taxable income for child support purposes for the period 1 August 2009 to 30 June 2011 (Reasons, [36]).

30. Thus, the error the SSAT made is directly reflected in its ultimate decision, and as such, that decision cannot stand.

31. There was no issue between the father and the mother, in light of my finding of error on a question of law in relation to the estate distributions and the way the SSATs decision rested on that erroneous finding, that the SSATs decision must be set aside and the matter remitted to the SSAT for rehearing.

The remaining questions of law

32. It is thus not necessary for me to determine the remaining two questions of law raised by the father to determine his appeal. I therefore did not hear full argument from the father and the mother on them, although I have the fathers outline of argument on them.

33. However, as the matter is to be remitted for rehearing by the SSAT, it is appropriate that I make some observations about those grounds.

Treating capital as income

34. The passages of the SSATs reasons relevant to the second question of law are as follows (Reasons, [28], [29] and [31])-

    28. While the estate was principally in the form of real estate, those assets were reduced to liquid form before being distributed. (The father) received cash. That cash was available to him for any purpose that he might choose. He is under no obligation to treat it as capital. That this is so is evident from the facts of the case. In addition to the money received in the last financial year, (the father) has received more than $1 million, none of which remains. That is, (the father) spent money as he chose, albeit under the influence of his mental illness. In other words, according to (the fathers solicitors) argument, the money was directly available to (the father) for any purpose other than that of being directly used to assess his child support liability.

    29. The legislation provides that child support has a high priority. That priority cannot be less than the other activities the money might and, indeed, has been, spent on. In the tribunals opinion, it is appropriate to treat those receipts as income for child support purposes. The evidence is that (the father) received a total of $104,463 in income for the 2009/2010 tax year. The tribunal thus proposes to set his adjusted taxable income for the purposes of this decision at $104,000. If (the father) chooses to invest the money he is shortly to receive from the estate, it will then be deemed to have an income.

    

    31.  (The fathers) history of considerable receipts that have been dissipated has produced hardship for (the mother) regardless of how those amounts might be treated. If the current sums are not taken into account, (the mother) will carry an unfair burden of the support of their children and will eat further into her own resources.

35. I simply make the following observations-

    a) In deciding a change of assessment case to which s.117 of the Assessment Act applies, the grounds on which a departure determination may be made include that the usual formulaic calculation of child support will result in an unjust and inequitable determination of the level of child support because of the income, earning capacity, property and financial resources of either parent (Assessment Act, s.117(2)©(i)). This ground clearly has application where a parent is asset rich but income poor.

    b) In determining whether it would be just and equitable to make a departure determination, the decision maker must consider, inter alia, the income, property and financial resources of each parent (Assessment Act, s.117(4)(d)). Again, the assessment of a just and equitable level of child support must include a consideration of a parents property, that is, their capital assets or receipts.

    c) While not replicated in Part 6A of the Assessment Act, under which administrative departure determinations are made, Division 4 of Part VII of the Assessment Act, under which courts decide applications for departure orders, and which includes s.117, has as an additional particular object ensuring that children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both of their parents and that parents share equitably in the support of their children (Assessment Act, s.114). This again emphasises that the whole of a parents financial circumstances, and in particular both income and capital assets, are relevant when it comes to quantifying parents obligations to support their children in a change of assessment case.

    d) To treat the periodic receipt of payments of capital as income is an error law (Manchester & Manchester (SSAT Appeal) [2010] FMCAfam 947).

    e) However, I am not satisfied that receipts a parent categorises as capital can never be treated as income. If there is evidence to support a finding that the receipts are in fact income, they can be treated as such.

    f) The fact a parent meets their day to day living expenses from capital does not change the nature or character of the funds expended from capital to income. If it did, the SSAT in this case would fairly have had to treat the mothers depletion of her capital to meet living expenses (see Reasons, [31]) as income, and it did not.

    g) Simply and simplistically equating capital with income ignores the fact that once expended, capital is gone. Income usually has some element of continuity about it, so that income received in one period may be spent, but there may be further income received in subsequent periods. And if not, then as a general rule the former income cannot be taken into account in calculating child support for later periods when it will not be received (subject inter alia to 117(7B) of the Assessment Act).

    h) If the calculation of a proper level of child support in a change of assessment case is to be based in whole or part on a parents property and resources (including capital), the decision maker must explain how and why the property and resources are used to support a departure determination. It may be that actual or imputed income from capital assets is included in arriving at a parents proper income figure on which to base the calculation of periodic child support. It may be that the level of capital assets compared to actual or imputed income from them, together with any other income, is such that the calculation of a proper level of child support that ensures that children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both of their parents requires that the capital directly influence the quantification of the amount of child support.

    i) The observations by the SSAT at [31] of its reasons, quoted above, may provide a basis for having regard to the fathers past and likely future capital receipts in arriving at a just and equitable determination of his child support. But treating capital receipts as income, in the absence of a basis on which to find that the receipts are in fact income and not capital, is likely to obscure the fundamental difference between income and capital, and lead to error, not least when considering any hardship any proposed departure may cause to either parent or the child (Assessment Act, s.117(4)(g)).

Considering the needs of the children

36. The outline of argument in support of the fathers appeal submitted that at [32] of its reasons, the SSAT only referred to the Costs of Children Table for 2010 and the break-up of expenses in the mothers financial statement to the SSAT. It was asserted this break-up was an arbitrary division of most expenses between (the mother) (1/4) and the three children (3/4). It was asserted that the SSAT had failed to properly analyse and apportion the expenses of (the mother) between (the mother) and the children.

37. The SSAT referred to evidence of the costs of the children in the mothers financial statement, as acknowledged in the fathers outline of argument. The SSAT (Reasons, [32]) found there were no special needs of the children, referred to the mothers evidence that the weekly expenditure on the children was $855, and stated-

    Whilst there are some discretionary expenses listed, in the main, the tribunal accepted the expenses as claimed.

38. It is not necessary, and in fact it is inappropriate, for day to day costs of children to be minutely dissected and examined. It is legitimate to take a broad-brush approach, provided there is some evidence to support findings, and provided further that necessary findings are made.

39. While it is not necessary for me to decide this issue, I cannot readily see any difficulty with the way the SSAT approached the proper needs of the children, as it was required to do by s.117(4)(b).

Executive Secretary - Shared Parenting Council of Australia
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That is awesome.

I wish I could have used that case with mine early this week, but I could only use the LADD case to back up my claims against the tribural.

2 weeks ago my solicitor said that "I do not have a case because there has been no ERROR of LAW in the findings of the Act" or should that read "facts"?

Don't the facts determine the written law ?

So in other words, they have crossed all their T's and doted there eye's.

Yeah I understand that the Agency must marry up their written decision with the legislation, Agency Law Acts, but they

must also abide by the ATO's legislations.

My argument from day one was about what my ( PAYG ) Personal Taxable Income is and not my Business Taxable Income.

After finding a good Accountant we started sifting through the figures that the SSAT had used in there finding to see that they did not correspond with any of the documents that I supplied.

After a gut wrenching day in court I am now feeling very positive about the outcome of my case and I can not wait for it to be published.

Solicitors around Australia, you need to start looking out side of the box. Stop focusing on the CSA Law and start looking at the Australian Tax Law on Income.

Last edit: by taylor

This is great progress in this area. If only the evidence rules for the SSAT had more rigor, there might less people unhappy with their decisions as they do often get the facts wrong and going through the court appeal on a point of law is time consuming and more draining as they can only order the matter go back to the SSAT. Sadly many people are so worn out by the time the SSAT has made a decision they just take it in the teeth and give up. Frankly I believe the process has been set up this way to make people give up.
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