Abbey and Cruz (Child support)

Abbey and Cruz (Child support) [2018] AATA 4522 (29 August 2018)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2018/PC014261
APPLICANT:  Mr Abbey
OTHER PARTIES:  Child Support Registrar
Ms Cruz

TRIBUNAL:Member S Brakespeare
DECISION DATE: 29 August 2018
DECISION:

The decision under review is varied so that there is a departure determination in the following terms:

·For the period 24 September 2017 to 31 July 2019 Mr Abbey’s adjusted taxable income is varied to $72,000;
·For the period 1 January 2018 to 31 December 2018 Mr Abbey’s annual rate is increased by $2,440;
·For the period 1 January 2019 to 31 December 2019 Mr Abbey’s annual rate is increased by $3,410.

CATCHWORDS
CHILD SUPPORT – departure determination – income, property, financial resources of the liable parent – special needs of the child – a ground for departure is established – decision to depart – decision under review set aside and substituted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

This review is about whether there should be a departure from the administrative assessment of child support.
Mr Abbey is the parent liable to pay child support to Ms Cruz in respect of their two children [Child 1] (aged 5) and [Child 2] (aged 3). The child support case commenced from 24 March 2017.
On 3 December 2017 Ms Cruz lodged an application for a change of assessment (a departure application) on the grounds of [Child 1]’s education costs, [Child 1]’s special needs and Mr Abbey’s income.
The relevant administrative assessments were as follows:
·For the period 23 June 2017 to 31 January 2018 Mr Abbey was required to pay an annual rate of child support of $0. The assessment was based on Mr Abbey’s 2015/16 adjusted taxable income of $18,756 and Ms Cruz’s 2015/16 adjusted taxable income of $41,799 and care percentages that reflected that Ms Cruz had 86% care of the children and Mr Abbey had 14% care of the children;
·For the period 1 February 2018 to 30 April 2019 Mr Abbey was required to pay an annual rate of child support of $1,332. The assessment was based on Mr Abbey’s 2016/17 adjusted taxable income of $31,830 and Ms Cruz’s 2016/17 adjusted taxable income of $12,012 and care percentages that reflected that Ms Cruz had 86% care of the children and Mr Abbey had 14% care of the children.
On 28 March 2018 an officer of the Child Support Agency made a departure determination in the following terms (the original decision):
·For the period 30 December 2017 to 29 December 2018 Mr Abbey’s adjusted taxable income is set at $71,000;
·For the period 1 January 2018 to 31 December 2018 Mr Abbey’s annual rate is increased by $2,440 per annum;
·For the period 1 January 2019 to 31 December 2019 Mr Abbey’s annual rate is increased by $2,562.
Mr Abbey and Ms Cruz both objected to the original decision.
On 31 May 2018 an objections officer partly allowed the objection and made a departure determination in the following terms (the objection decision):
·For the period 24 September 2017 to 31 December 2018 Mr Abbey’s adjusted taxable income is set at $72,000;
·For the period 1 January 2018 to 31 December 2018 Mr Abbey’s annual rate is increased by $1,250, representing [Child 1]’s special needs;
·For the period 1 January 2018 to 31 December 2018 Mr Abbey’s annual rate is increased by $2,440, representing [Child 1]’s school fees;
·For the period 1 January 2019 to 31 December 2019 Mr Abbey’s annual rate is increased by $3,410.
Mr Abbey lodged an application for review of the objection decision with the tribunal on 3 June 2018.
A telephone directions hearing took place on 27 July 2018 and both parties participated.
A hearing was held on 29 August 2018. Mr Abbey attended and gave sworn evidence to the tribunal. Ms Cruz attended and gave evidence on affirmation to the tribunal. The tribunal also had before it bundles of documents provided by the Child Support Agency and the parties.[1] Mr Abbey and Ms Cruz also had copies of the documents.
[1] The Child Support Agency provided 308 pages in accordance with sections 37 and 38AA of the Administrative Appeals Tribunal Act 1975. Mr Abbey provided documents folioed A1 to A15 and Ms Cruz provided documents folioed B1 to B32.
Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s consideration of the issues which it has to decide.

ISSUES

The statutory provisions relevant to these reviews are contained in the Child Support (Assessment) Act 1989 (the Act).
The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.
Under Part 6A of the Act the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).
Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and it establishes a three step process such that the issues for determination by this tribunal are:
·whether a ground is established to depart from the administrative assessment of child support; and
·if so, whether it is just and equitable to make a particular departure determination; and
·if so, whether it is otherwise proper to make a particular departure determination.
The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.
Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman and Gyselman [1991] FamCA 93 has held:
as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the court will not interfere with the formula in the ordinary run of cases.
Likewise, in Philippe and Philippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.
If the tribunal is satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the tribunal may make one of the determinations prescribed in section 98S of the Act.
The range of determinations which can be made includes variations to: the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

Issue 1 – Is there a ground for departure?

A ground for departure exists where, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).
At hearing Mr Abbey conceded that the income used for him in the administrative assessment is significantly less than his current income and that it would result in an unfair, unjust and inequitable determination of child support. Information on the Child Support Agency file indicates that Mr Abbey commenced with his current employer on 26 June 2017 (he was previously self-employed) on a salary of $59,172. After completion of training his salary increased to $72,000 per annum from 24 September 2017.
Application of an income for Mr Abbey of $72,000 to the administrative assessment results in a child support liability for Mr Abbey of approximately $12,200 per annum. This is significantly more than the child support amounts assessed under the administrative assessment, that is $0 per annum and then $1,332 per annum.
The tribunal is satisfied that in the special circumstances of the case, application in relation to the children of the provisions of the Act relating to the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the children because of Mr Abbey’s income.
This means that a ground for departure has been established.
While a number of grounds have been put forward, the tribunal is only required to establish that at least one ground for departure exists before moving on to decide what is a just and equitable and otherwise proper determination.

Issue 2 – Is it just and equitable to make a particular determination?

As the tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the children, the liable parent, and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to consider the matters discussed below,[2] which are as set out in subsection 117(4) of the Act:
[2] The tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act: Tyagi & Meares [2008] FMCAfam 886.
(4) In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b) the proper needs of the child; and
(c) the income, earning capacity, property and financial resources of the child; and
(d) the income, property and financial resources of each parent who is a party to the proceeding; and
(da) the earning capacity of each parent who is a party to the proceeding; and
(e) the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i) himself or herself; or
(ii) any other child or another person that the person has a duty to maintain; and
(f) the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g) any hardship that would be caused:
(i) to:
(A) the child; or
(B) the carer entitled to child support;
by the making of, or the refusal to make, the order; and
(ii) to:
(A) the liable parent; or
(B) any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order; and
(iii) to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.
In having regard to the proper needs of the child, regard must be had to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Act). These costs are likely to be additional to the costs of the child’s needs as calculated under the Costs of the Children Table.[3]
[3] Provided for in section 155 of the Act.
Both parents agree that [Child 1] has special needs which require regular sessions with a [specialist]. A consent order from the Family Court dated 22 May 2017 requires the cost of the therapy to be met equally by the parties. Ms Cruz had initially requested that the costs of [Child 1]’s treatment be included in the child support assessment as the burden of paying for the therapy was falling on her. This was because the parent who took the child to therapy was the one who paid and, as she was not working, she was the parent who was more likely to take [Child 1] to his appointments.
At hearing both parents agreed that it would be preferable if the arrangements for the payment for the therapy were sorted out between the parties and not included in the child support assessment going forward. To this end Mr Abbey gave a commitment that he would make arrangements with the [specialist] to ensure that each parent paid for half of the sessions, and that the payment was not dependent on who took [Child 1] to the appointments. He said he would comply with the arrangement even if the amount of sessions increased from monthly to fortnightly or even weekly.
The parents also agreed that the objections officer had made an error with the out of pocket costs of the therapy. The calculations were based on an out of pocket cost of $120 when the actual cost was $80. The tribunal notes that the objections officer’s calculations were based on out of pocket costs of $120 per session for ten sessions and $200 per session thereafter and also assumed that the sessions would occur on a weekly basis.
Ms Cruz provided evidence from the [specialist] regarding the appointments attended by [Child 1] as well as her Medicare statement indicating the out of pocket costs. In the 12 month period commencing 1 September 2017 [Child 1] has attended 12 appointments. The tribunal finds that the out of pocket costs for those appointments was $892. Ms Cruz paid $665.50 and Mr Abbey paid $226.50. According to the consent order each parent should have paid $446 (being one half of the total amount).
The tribunal finds that Mr Abbey paid $219.50 less than he should have over a 12 month period. This amount is not significant. Given the court order, and the undertaking by Mr Abbey that he would make arrangements with the [specialist] to ensure he paid for every second appointment regardless of who accompanied [Child 1] to a session, the tribunal concludes that there is no basis to adjust the assessment in respect of [Child 1]’s special needs.
[Child 1] is currently attending a private school, [School 1]. The fees for the school in 2018 are $4,880 (after discounts) and Ms Cruz has paid those fees, although both parents are liable. Mr Abbey told the tribunal that he agreed for [Child 1] to attend [School 1] for kindergarten only in 2016 and that was the basis on which he signed the enrolment forms. He never signed any forms to re-enrol him in subsequent years. Mr Abbey agreed that the decision to send [Child 1] to the school was based on an understanding that electronic devices were not used in the early education years at the school.
Mr Abbey said he has changed his mind about [Child 1] attending the school after separation. His decision was in part based on financial concerns. However, he had also decided that he was not happy with the [School 1] teaching methods and thought that both [Child 1] and [Child 2] would be better served at a mainstream school. Mr Abbey also noted that since separation neither parent lives close to [School 1] and the excessive travel was, in his view, detrimental to the children.
Ms Cruz told the tribunal that she and Mr Abbey visited the local public primary school prior to enrolling [Child 1] at [School 1]. They were both concerned about the use of electronic devices at the public school and also thought the student body at [School 1] would be preferable. Further, given [Child 1]’s special needs, they thought it would be a more supportive environment for him. [Child 1] has settled well into the school and benefits from the [teaching] environment.
Ms Cruz told the tribunal that [Child 2] has been accepted into the kindergarten program at [School 2] for 2019 and that she hopes that a place will also open up for [Child 1] there before the end of the year. The school is close to Ms Cruz’s current residence. [Child 1] will remain at [School 1] until he gets a place at [School 2]. She is reasonably confident that both children will be at [School 2] in 2019.
The tribunal finds that it was the intention of the parents for [Child 1] to attend a [private] school and he continues to attend a [private] school. The cost of that education (after discounts) was $4,880 in 2018 and Ms Cruz took responsibility for payment of the fees, although both parents were liable. The education costs significantly affect the costs of maintaining the child. The tribunal finds that Mr Abbey should continue to contribute toward those costs if he has the financial capacity to do so.
The tribunal takes the same view with respect to the child [Child 2] even though at the time of the separation [Child 2] had not been enrolled in a school and had not commenced her education. Ms Cruz has only recently made an application for [Child 2] to attend [School 2] in 2019 and has subsequently received an offer. Mr Abbey has made it clear that he has changed his expectations regarding the children attending a [private] school and he communicated that to Ms Cruz before the enrolment process started in respect of [Child 2]. However the tribunal notes that in his written application to the tribunal Mr Abbey stated that it was his wish that the children receive a private school education but under the mainstream Australian education system. The tribunal is satisfied that it was and is the expectation of both parents that the children be educated in the private, as opposed to the public, school system.
The tribunal finds that Mr Abbey’s child support liability should be increased by an amount equalling 50% of the school fees in respect of both children. The objections officer found that the fees for both children for 2019 were likely to be approximately $6,820 (if they were both at [School 1]). Ms Cruz indicated that [School 2] fees may be slightly more. Given it is unclear whether [Child 1] will remain at his current school, or move in 2019, the tribunal decided to attribute Mr Abbey with 50% of the known cost, that is $3,410 for 2019.
The tribunal takes the view that it would be preferable if the parents could reach agreement to each pay 50% each of the school fees and not have to rely on the child support assessment to allocate money for fees. However at this point in time Ms Cruz is paying all of the school fees and therefore an adjustment must be made to the child support assessment to reflect that.
The tribunal is satisfied that the children do not have any income, property or financial resources.
The tribunal has established that Mr Abbey’s current income is in the vicinity of $72,000 per annum. Mr Abbey said he had undertaken some overtime so that he could pay Ms Cruz in respect of property settlement. Mr Abbey advised that he had no income from any other sources. He has a 2014 motor vehicle purchased under a novated lease. He lives in rental accommodation. He has no other assets of significance.
Ms Cruz told the tribunal that her only income is parenting payment and family tax benefit. The tribunal is required to disregard these payments for the purpose of the child support assessment. Ms Cruz had no property of significance. She has a car and savings of approximately $15,000 (being the remainder of the funds from property settlement).
Mr Abbey’s commitments are income tax of $272 per week, health insurance premiums of $23.73 per week, $229 per week novated lease (from pre-tax income) and $350 per week rent. Mr Abbey told the tribunal that he would incur a significant financial penalty if he tried to end the novated lease before the 7 year term expired.
The tribunal had regard to a pay advice for Mr Abbey and found that his net fortnightly pay after income and salary sacrifice deductions is $1,652 which equates to a disposable income of $826. After allowance has been made for rent and health insurance he has a disposable income of $453 per week.
Ms Cruz advised that her commitments are rent of $340 per week and school fees of $105 per week. She also advised that she requires further [surgery]; the cost may be in the vicinity of $10,000.

Having regard to all the above factors the tribunal proposes to make a determination in the following terms:
·For the period 24 September 2017 to 31 July 2019 Mr Abbey’s adjusted taxable income is set at $72,000;
·For the period 1 January 2018 to 31 December 2018 Mr Abbey’s annual rate is increased by $2,440;
·For the period 1 January 2019 to 31 December 2019 Mr Abbey’s annual rate is increased by $3,410.
The objections officer varied the income from 21 September 2017 from when Mr Abbey’s income increased. It was decided not to backdate the variation to when he commenced employment as this was likely to cause Ms Cruz a significant family tax benefit debt. The tribunal agrees with that reasoning. The tribunal has extended the period varying Mr Abbey’s adjusted taxable income until 31 July 2019 when Mr Abbey would be in a position to lodge an income tax return which would be more reflective of his current income. Mr Abbey and Ms Cruz indicated they agreed with the end date being extended.
This means that Mr Abbey’s weekly rate of child support will be approximately:
·$145 per week from 24 September 2017;
·$211 per week from 1 January 2018; and
·$230 per week from 1 January 2019.
The tribunal finds that Mr Abbey has the capacity to pay the assessed amount given that he has $453 per week available to him after income tax, rent and commitments. Mr Abbey contends that he has a very tight budget as he has the children for two nights a week and he also provides for the needs of his elderly mother who came to live with him last year. She is from [Country 1] and has no income – due to the turmoil in her home country she no longer receives a pension. The tribunal finds that Mr Abbey does not have a legal duty to support his mother and therefore the needs of the children take precedence.
The tribunal finds that Ms Cruz has a limited ability to support the children given her income is less than the self-support amount used in the administrative assessment. A failure to make the proposed determination is likely to cause hardship to Ms Cruz and the children.
The tribunal finds the proposed determination to be just and equitable.

Issue 3 – Is it otherwise proper to make a particular departure determination?

The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination. It focuses on the balance of support carried between the parents on one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. The tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support.
Ms Cruz is in receipt of family assistance payments in respect of the children. The proposed determination is likely to reduce her entitlement to that payment, thereby lessening the burden on the taxpayer. The tribunal therefore finds the proposed determination to be otherwise proper.

DECISION

The decision under review is varied so that there is a departure determination in the following terms:

·For the period 24 September 2017 to 31 July 2019 Mr Abbey’s adjusted taxable income is varied to $72,000;
·For the period 1 January 2018 to 31 December 2018 Mr Abbey’s annual rate is increased by $2,440;
·For the period 1 January 2019 to 31 December 2019 Mr Abbey’s annual rate is increased by $3,410.

[2018] AATA 4522

29 August 2018

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Judicial Review

Remedies

Procedural Fairness