Agacy and Ihara (Child support)

[2024] AATA 2308

Agacy and Ihara (Child support) [2024] AATA 2308 (31 May 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/HC027065

APPLICANT:  Mr Agacy

OTHER PARTIES:  Child Support Registrar

Ms Ihara

TRIBUNAL:Member T Hamilton-Noy

DECISION DATE:  31 May 2024

DECISION:

The Tribunal affirms the decision under review.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of communicating or spending time with children – international flights and other costs – no documentary evidence – mother’s application for intervention order and father’s limited time with children – small, ad hoc money transfers and necessary expenses for self-support – father’s expenses paid by current spouse – parents’ financial resources – father’s work history and business opportunities – earlier AAT decision and no change in circumstances since then – mother’s earning capacity – part-time arrangements due to childcare responsibilities and incremental increases in income – decision under review affirmed

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted 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

1. Mr Agacy and Ms Ihara are the separated parents of four children.  A case has been registered with Services Australia – Child Support (Child Support) since 4 October 2019 and payments have been collectable by Child Support since that time.  Mr Agacy is the payer of child support in this matter and Ms Ihara the payee.

2. There has been a previous Administrative Appeals Tribunal decision made on 3 February 2021 (by the Tribunal differently constituted) in which the following decision was made:

   ·   For the period 16 October 2019 to 8 July 2020, Mr Agacy’s adjusted taxable income is varied to $121,566 per annum;

   ·   For the period 9 July 2020 to 8 July 2021, the annual rate of child support payable by Mr Agacy is varied to $24,500; and

   ·   For the period 9 July 2021 to 31 December 2024, the annual rate of child support payable by Mr Agacy is varied to $20,000.

3. On 25 January 2023, Mr Agacy made a departure application to Child Support on the basis of the costs he was incurring to spend time with or communicate with the children (called “Reason 1” by Child Support); money he had transferred to the children (called “Reason 5” by Child Support); his necessary expenses for self-support (called “Reason 7” by Child Support); the parents’ income, property and financial resources (called “Reason 8A” by Child Support); and Ms Ihara’s earning capacity (called “Reason 8B” by Child Support).

4. On 30 July 2023, an employee of Child Support refused to change the assessment on the basis that no ground had been established.

5. Mr Agacy objected to this decision on 28 August 2023 and, on 15 October 2023, an objections officer of Child Support disallowed the objection. 

6. On 16 November 2023, Mr Agacy made an application to the Administrative Appeals Tribunal for an independent review of Child Support’s decision.   

7. A directions hearing was conducted on 21 March 2024.  Mr Agacy participated by MS Teams audio and Ms Ihara did not participate in the directions hearing.  Following the directions hearing the Tribunal issued directions to both of the parties for the provision of further documents. 

8. The hearing was held on 9 May 2024, on which date both parties participated by MS Teams audio.  At the hearing, the Tribunal had before it documents provided by Child Support (1 to 290), documents provided by Mr Agacy (A1 to A69) and documents provided by Ms Ihara (B1 to B9).  Copies of all documents were provided to the parties prior to the hearing and both parties confirmed receipt of all documents.  

9. The Tribunal had been provided some of the documents from Mr Agacy shortly before the hearing (A67 to A69).  Ms Ihara was given time after the hearing to consider and respond to these.  Ms Ihara’s written response (B10 to B11) did not raise new matters before the Tribunal and these were provided to Mr Agacy for his information only. The Tribunal then proceeded to make a decision on all of the information before it on 31 May 2024.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Assessment Act) and the Child Support (Registration and Collection) Act 1988.

2. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Assessment Act. The liable parent or carer may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Assessment Act. Section 98C of the Assessment Act provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process. The Registrar, and the Tribunal standing in the place of the Registrar, must be satisfied that:

   (i)there is a ground to depart from the administrative assessment of child support;

   (ii)it is just and equitable to depart; and

   (iii)it is otherwise proper to depart.

3. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Each ground is prefaced by the term “in the special circumstances of the case”. The term “special circumstances” is not defined in the legislation. In Gyselman and Gyselman (1992) FLC 92-279, the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.

4. If satisfied that a ground or grounds exist 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 Assessment Act.

CONSIDERATION

Costs of spending time with, and communicating with, the children

1. Subparagraph 117(2)(b)(i) of the Assessment Act provides that a ground for departure is established where, in the special circumstances of the case, the costs of maintaining a child are significantly affected because of high costs involved in enabling a parent to spend time with, or communicate with, the child.

2. The Tribunal accepted, by way of background, Mr Agacy’s evidence that he was residing in Australia up to February 2020 and that he was then stuck overseas due to the COVID-19 pandemic.  Mr Agacy gave evidence that he returned to Australia between December 2022 and February 2023 and that he had spent “roughly $10,000” on flights and other travel-related costs.

3. Documents relating to this ground had been previously provided to Child Support by Mr Agacy and were contained in the Child Support material provided to the Tribunal and to the parties.  These included confirmation of cost of flights with a departure date of 5 December 2022 and a return date of 1 February 2023 at the cost of US $2,334.  The Tribunal accepted this represented the amount Mr Agacy paid for travel to and from Australia between December 2022 and February 2023.  The Tribunal also had regard to email correspondence between the parties during December 2022 and to an application for an intervention order by Ms Ihara dated 13 December 2022, naming herself and the children as protected family members, which were also contained in the Child Support documents.

4. At the Tribunal hearing, the Tribunal asked Mr Agacy about time spent with the children during the trip and he stated that he had gone to see the children on 7 December 2022.  He stated that he had seen the children in school, despite Ms Ihara not allowing him to see the children, and he had an opportunity to take the children for the school holidays which was also refused.  He spent time travelling to and from [City].  Ms Ihara then attended the police to obtain an intervention order.  The Tribunal asked how much time Mr Agacy had spent with the children during the trip and he stated it had been one day.  As to what discussions or arrangements had been made with Ms Ihara before the trip, Mr Agacy stated that he doesn’t remember because Ms Ihara does not take calls or answer emails, so there would have been little or no communication, although he would have sent emails before the trip.  As to how the travel had been funded, Mr Agacy stated he had family and friends who had contributed to the costs.

5. The Tribunal accepted from the evidence before it that Mr Agacy travelled to Australia between December 2022 and February 2023 and that, during this trip, he saw the children on one occasion at the children’s school and attempted, via email, to make arrangements to see the children on other occasions.  The Tribunal accepted that Ms Ihara applied for an intervention order after Mr Agacy attended the children’s school and that Mr Agacy did not see the children for the remainder of the trip.  The Tribunal has accepted Mr Agacy’s claimed expenses relating to his flight to Australia, but notes that no other invoices or evidence of expenses to see the children has been provided.

6. The legal issue for the Tribunal is whether there have been high costs to enable Mr Agacy to spend time with, or communicate with, the children.  The Tribunal was not persuaded that this ground is established for two reasons.  Firstly, while Mr Agacy estimated the trip had cost him in the vicinity of $10,000, there was no documentary evidence to substantiate these estimated costs aside from the payment incurred for the flights.  In the absence of clear evidence, the Tribunal is not satisfied that there were high costs incurred by Mr Agacy in respect of the trip. 

7. Further, in order for the ground to be established, the Tribunal must be satisfied that the costs “enabled” Mr Agacy to spend time or communicate with the children.  The evidence suggests that there was an impromptu visit to the children’s school by Mr Agacy, followed by the application for an intervention order and a failure of the parents to reach any agreement about Mr Agacy having further contact with the children.  Given this, the Tribunal did not accept that any costs incurred by Mr Agacy enabled him to spend time with the children.

8. Given the above findings, the Tribunal has concluded that this ground for departure is not established.

Money transferred to the children

1. Subparagraph 117(2)(c)(ii) of the Assessment Act provides that a ground for departure is established where, in the special circumstances of the case, use of the administrative assessment of child support would result in an unjust and inequitable determination of child support payable, because of any payments made by a liable parent to the child.

2. Mr Agacy gave evidence at the hearing that he was not pursuing this ground as it had related to amounts transferred to one of the children when she was in distress.  The Tribunal noted that there was evidence in the Child Support documents of transfers from Mr Agacy to one of the children between August 2022 and July 2023, of amounts between $20 and $300.  The amounts varied considerably and were described as amounts for children’s birthdays, “as needed” and gifts.  The Tribunal does not accept that there are special circumstances in this case that result in an unjust and inequitable amount of child support payable by Mr Agacy due to payments he has made to the children, because the Tribunal does not find that ad hoc amounts transferred from Mr Agacy to the children are out of the ordinary or that they should reduce any child support liability of Mr Agacy. 

3. Having regard to the amounts transferred, to the evidence of the applicant at the hearing and to the requirement for special circumstances to be established before the ground is met, the Tribunal concluded that this ground for departure is not established.

Mr Agacy’s necessary expenses for self-support

1. Subparagraph 117(2)(a)(iii) provides that a ground for departure exists where, in the special circumstances of the case, the capacity of a parent to provide financial support for a child is significantly reduced because of commitments of the parent necessary to enable the parent to support himself or herself.  

2. The Tribunal asked Mr Agacy about this ground for departure at the Tribunal hearing, and he told the Tribunal that he had moved to a new country and doesn’t have the kind of job he used to have in Australia.  Mr Agacy submitted that his costs are significant compared to his income.  The Tribunal observed that the ground for departure related to unusually high or out of the ordinary costs of self-support, and Mr Agacy stated that his costs are not unusually high, but that he would not consider his circumstances as ordinary. 

3. The Tribunal had regard to a Statement of Financial Circumstances prepared by Mr Agacy, which state that his estimated weekly expenses amount to $60 per week, being costs of $20 per week for food, $10 per week for household supplies, $10 per week for telephone and $20 per week for petrol.  While the Tribunal had some difficulty accepting these figures (in particular, the estimated costs for food for a grown adult would seem very low), based on this information and on the evidence given by Mr Agacy at the hearing, the Tribunal finds that there are no special circumstances that impact Mr Agacy’s capacity to provide financial support for the children due to his own necessary self-support commitments.  This ground for departure is not established.

The income, property and financial resources of the parents

1. Subparagraph 117(2)(c)(ia) of the Assessment Act provides that a ground for departure exists where, in the special circumstances of the case, application of the provisions of the Assessment 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. The Tribunal considered each of the parent’s levels of income, property and financial resources under this ground.

Mr Agacy’s income, property and financial resources

1. The Tribunal asked Mr Agacy about his employment history and he told the Tribunal that he had worked in [work sector 1] in [Country 1] for a 10-year period before being registered as [an occupation] in Australia in 2007.  He commenced living in Australia in 2008 and, from 2008 to 2014, worked as [an occupation] for a non-government agency, then as [a manager] with the same organisation from 2014 to 2016.  He stated that in 2015 or 2016 he had lost his job and moved to another agency as a lead [occupation] for around a year, then obtained a role in the same position in a regional [workplace] which he worked in from September 2016 to October 2019.  He stated that he had then found it difficult to obtain other employment and he had accessed jobseeker payments through Centrelink.  At the same time, he had completed an MBA and made a decision to pursue business opportunities.  The Tribunal accepted the evidence given by Mr Agacy about his employment history.

2. Mr Agacy stated that he had appealed the Child Support decision because he had received jobseeker payment while in Australia and accessed his superannuation twice during the COVID-19 pandemic, withdrawing $10,000 on each occasion.  He also disagreed with the Child Support decision because a subsequent assessment based on his current circumstances assessed him at $519 per annum.  Going forward his income is around $20,000 per annum and he knows this will improve. 

3. Mr Agacy gave evidence at the hearing that his current situation is “still very dynamic”, that he is still transiting out of Australia and is undertaking odd jobs at the moment.  He stated that his income will change over time. 

4. The Tribunal asked Mr Agacy about his current employment arrangements and he stated that he set up a company with his current spouse in August 2021 and, as part of that company, is renting for [services].  He stated that he [does a work task] for the company as well, through [service sharing companies].  He stated that the company was registered in August 2021, is owned equally by him and his current spouse and that his current spouse is the director and he is the president of the company.  He described that he effectively runs the company and his current spouse does not put any hours into the company.  Both are shareholders and an amount of $5,000 was provided by his current spouse to set the company up in August 2021.

5. Mr Agacy was asked about how he is currently meeting his expenses and he stated that he and his current spouse now split the bills and that, as of October 2023, he has been paying all of their rent.  He is putting over 70 hours per week into the business but the company does not pay him at this point in time. 

6. Mr Agacy confirmed with the Tribunal that he has been putting 70 hours per week into the business since the business commenced in August 2021.  As to why he would put so much time in, for what he claims is income of $20,000 per annum, he stated in response that the company is still not making any income, but he believes the company is going to grow.  As to why he could not obtain employment in a management position given his employment background, he stated that he could but he hasn’t got a job.  When asked what work he has sought in management roles, he stated that his only option had been to apply for a role with Australian agencies.  When asked what work he had looked for in [Country 2], he stated that he had been looking for employee roles constantly but could not remember details of an agency he had applied through.  He then stated he had spoken to a couple of friends but there were no roles available. 

7. Mr Agacy gave evidence that, since the last AAT hearing, his spouse has been his sole provider, for example, paying for a rental business which rents cars out to other people.  When asked for further details about this business, Mr Agacy stated that his spouse purchased two cars.  When asked about income tax return details, Mr Agacy gave evidence that the cars had been purchased in each of his and his spouse’s names and they were advised to do this by an accountant and loan the cars to the company; these cars had been purchased in November 2023 and March 2024.  When asked what the company had been doing between August 2021 and November 2023 during which time Mr Agacy had given evidence he had been putting in 70 hours per week of work towards the company, Mr Agacy stated that it was a [work sector 2] company and he had been “looking for contracts to buy items”.

8. When asked how much the company was paying Mr Agacy to lease the two cars, he stated in response that they had invested in the cars and would “acquit the cost of the cars to the company”.  When asked again how much the company was paying to lease the cars, Mr Agacy then stated that the company was not paying them to lease the vehicles and they had put the vehicles as the company’s assets.

9. Mr Agacy asserted at the hearing that the previous decision had not taken into account that he was in school between February and December 2020, or that he had accessed $20,000 in superannuation.  The Tribunal observed that the superannuation had been taken into account in the previous AAT decision, to which Mr Agacy stated that if he was making money he would not have needed to do that.  He gave evidence that his current income is $20,000 and that his income is from rideshare and the rental.  When asked about his income from the rideshare work, he stated that some weeks he works a full-time equivalent and would earn $1,500 to $1,800 per month.

10. Ms Ihara was invited to respond to the evidence given by Mr Agacy at the hearing and she stated that Mr Agacy is also involved with the [Name] group of businesses, in the [work sector 2]. Ms Ihara asserted that Mr Agacy has business interests in [Country 2], [Suburb] in Victoria and in [Country 1]. 

1. When this evidence was put to Mr Agacy, he agreed that he was involved in [Name] Industries and that this was the business he had been describing to the Tribunal earlier.  The Tribunal accessed the [Name] website during the hearing and described to Mr Agacy that the [Name] Group website described locations in [Country 2], Australia and [Country 1].[1] Mr Agacy stated that the Australian and [Country 2] arms were not doing anything and the [Country 1] arm of the business had not received approval.  Mr Agacy confirmed that this was the company that was renting out the two vehicles he had been talking about earlier.  The Tribunal observed that the website described the company as an international company offering services to the global community in [work sector 2] and [work sector 2 services].  Mr Agacy stated that that is what the company had hoped to do and all of his efforts in trying to develop the company had not eventuated. The Tribunal observed that the company’s description was very different to what he had described earlier in the hearing to the Tribunal.  Mr Agacy stated in response that he doesn’t change the website very often and they are trying to find companies who can give them jobs. 

   [1] [URL].

2. In his closing submissions to the Tribunal, Mr Agacy gave evidence that nothing has changed since 2019 when he left Australia and lost his job.

3. The Tribunal is mindful that there is an existing AAT decision in relation to Mr Agacy’s income which covers the period that Mr Agacy is seeking the Tribunal consider.  In the separate AAT decision, made on 3 February 2021, the AAT took into account Mr Agacy’s lump sum payment received at the time he ceased work in October 2019 and his previous level of income from employment, which had been within the vicinity of $121,566 per annum.  The AAT found that Mr Agacy had an unexercised earning capacity from November 2019.  As to Mr Agacy’s circumstances after that time, the AAT took into account Mr Agacy’s previous brief receipt of newstart allowance, significant amounts received from family and friends between September 2019 and October 2020, significant withdrawals Mr Agacy had made from his bank account during 2020, and two releases of superannuation in June and July 2020. The AAT found that the amount of deposits into Mr Agacy’s account and undocumented loans were financial resources and would require a PAYG earner to earn $95,420 per annum to have access to such funds.  Reducing Mr Agacy’s self-support expenses to nil would lead to a liability of $24,500 per annum, consistent with the use of Mr Agacy’s adjusted taxable income of $121,566. The AAT found that, while it was difficult to determine Mr Agacy’s income going forward from July 2020 with any precision, there was nothing to suggest he would not have access to similar income and financial resources into the future.  The annual amount of child support payable by Mr Agacy was varied to $24,500 from 9 July 2020 to 8 July 2021 and – particularly relevant to the current decision – was varied to $20,000 from 9 July 2021 to 31 December 2024, to take into account the range of factors considered by the AAT about Mr Agacy’s circumstances.

4. The above decision is, in effect, the administrative assessment of child support that the Tribunal must consider in relation to this ground.  The Tribunal has carefully considered the evidence before it and has decided that the previous AAT decision is reflective of Mr Agacy’s more recent circumstances for several reasons.

5. Firstly, on Mr Agacy’s own evidence, his circumstances have not changed since 2019.  The previous AAT took into account Mr Agacy’s loss of Australian employment and move to [Country], his reliance on family and superannuation to meet his expenses, the withdrawal of superannuation amounts and the likelihood that Mr Agacy’s arrangements would continue into the foreseeable future. There was nothing before the Tribunal to suggest that the manner in which Mr Agacy is meeting his expenses has changed significantly since the last AAT decision and his evidence suggested that he is relying on the same factors in the present matter as those considered in the previous AAT decision.

6. Secondly, the Tribunal was troubled by the evidence that unfolded in the latter part of the hearing, where it transpired that Mr Agacy is involved in a company that professes on its website to provide services to the global community in [work sector 2] and [work sector 2 services].  The public description of the company’s operations was vastly different to – and inconsistent with – Mr Agacy’s own description of his business, as being the renting out of two privately owned vehicles to [service providers].  The description by Mr Agacy of having invested 70 hours per week into the company since August 2021 was also inconsistent with the company only having purchased two vehicles in late 2023 and early 2024 and the applicant did not give clear or credible evidence as to what he had been doing for the company prior to the purchase of the vehicles that necessitated such weekly hours. 

7. Thirdly, the Tribunal notes that in the matter of Ross and McDermott [1998] FamCA 134, the Full Court of the Family Court considered this ground for departure and noted (at [28] – [30]) that the circumstance that a payer may have suffered a reduction in income would not, per se, amount to special circumstances. Additionally, it must be shown that such a reduction results in an unjust and inequitable determination of the level of financial support to be provided by the payer. While there is no reference to the payer’s financial commitments in the wording of the ground for departure, implicit in the ground is a requirement to consider the change in the income of the person with their commitments, before a view can be reached that there is an unjust and inequitable determination of the level of financial support to be provided.

8. Mr Agacy in the present matter has provided a Statement of Financial Circumstances to the Tribunal in which he estimates he is only incurring $60 per week for his own expenses ($3,120 per annum).  Given these minimal expenses, and given Mr Agacy’s evidence that until recently his current spouse has covered all of his expenses, the variation of his annual liability to $20,000 per annum does not lead to an unjust and inequitable determination.

9. Given the above findings of the Tribunal, the Tribunal found that the use of the previous AAT decision to set Mr Agacy’s rate of child support does not result in an unjust and inequitable determination due to his recent and current level of income, property and financial resources.

Ms Ihara’s income, property and financial resources

1. Ms Ihara gave evidence to the Tribunal at the hearing that she works 40 hours per fortnight in a permanent ongoing position, that this has been a longstanding pattern of work and that she has had incremental increases in her income over the past several financial years.  This was consistent with the history of Ms Ihara’s taxable incomes reflected in the Child Support documents. 

2. The previous AAT decision, which forms the assessment of child support for the purposes of this decision, reflected that Ms Ihara’s adjusted taxable income for the last relevant year of income had been taken into account as part of the overall reasoning of the Tribunal.  Any incremental increases to Mr Ihara’s adjusted taxable income in the subsequent financial years is an expected outcome of a long-term ongoing position and does not create a special circumstance that would make the assessment of child support unfair.

3. Ms Ihara gave evidence to the Tribunal that her most recent financial year’s income was $67,000 to $68,000.  Her expenses specified in the Statement of Financial Circumstances she provided are in excess of this income and are met, in part, by the rate of child support set in the previous AAT decision.  Ms Ihara gave evidence at the hearing of additional costs relating to the children, such as medical testing and ear nose and throat issues, but acknowledged that these costs are unknown at present.  Other child-related costs are ad hoc and appear to be reflected in the family’s estimated weekly household expenses.  Having regard to the incremental increases in Ms Ihara’s income and her current claimed expenses, the Tribunal found that the use of the previous AAT decision to set Mr Agacy’s rate of child support does not result in an unjust and inequitable determination due to Ms Ihara’s level of income, property and financial resources.

4. Given both parents’ levels of income, property and financial resources have been reflected in the assessment of child support which led to the previous AAT decision, the Tribunal has concluded that this ground for departure is not established. 

Ms Ihara’s earning capacity

1. Subparagraph 117(2)(c)(ib) provides that a ground for departure is established where, in the special circumstances of the case, use of the administrative assessment of child support would result in an unjust and inequitable determination of child support payable by a liable parent, because of the earning capacity of either parent.

2. Subsection 117(7B) of the Assessment Act requires the Tribunal to consider the following matters in determining whether a parent’s earning capacity is greater than is reflected in their income used in the administrative assessment:

   ·   Whether the parent:

   oIs not working despite ample opportunity to do so (subparagraph 117(7B)(a)(i));  and/or

   ohas reduced their weekly hours of work to below full-time work (subparagraph 117(7B)(a)(ii));  and/or

   ohas changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii));  and

   ·   If the parent’s decision about their work arrangements is not justified by either their caring responsibilities (subparagraph 117(7B)(b)(i)) or their state of health (subparagraph 117(7B)(b)(ii));  and

   ·   If the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to stop working, reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support (paragraph 117(7B)(c)).

3. As noted above, Ms Ihara has been employed on a long-term basis with the same employer.  She gave evidence that her part-time arrangements are due to her caring responsibilities for the children of the assessment.

4. On the evidence before it, the Tribunal finds that Ms Ihara is working, has not reduced her weekly hours of work to below full-time work (on the basis that she is in a longstanding part-time commitment) and has not changed her occupation, industry or working pattern.  The first criterion in respect of the earning capacity considerations is not met in Ms Ihara’s circumstances.  It is not open to the Tribunal to make an earning capacity determination in respect of Ms Ihara’s circumstances and the Tribunal therefore concluded that this ground for departure is also not established. 

5. As the Tribunal has found no ground is established to depart from the assessment of child support, the Tribunal has reached the same conclusion as Child Support and therefore affirms the decision under review.

DECISION

The Tribunal affirms the decision under review.