Anh and Anh (Child support)

[2019] AATA 6408

Anh and Anh (Child support) [2019] AATA 6408 (12 December 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/SC016544

APPLICANT:  Mr Anh

OTHER PARTIES:  Child Support Registrar

Ms Anh

TRIBUNAL:Member K Dordevic

DECISION DATE:  12 December 2019

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that:

·     for the period 9 November 2018 to 30 June 2019 Ms Anh’s self-support amount is varied to $10,507; and

·     for the period 1 July 2019 to 31 October 2021 Ms Anh’s self-support amount is decreased by $14,028.

CATCHWORDS

CHILD SUPPORT – departure determination – liable parent paying accommodation expenses for receiving parent – decision under 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

1. Mr Anh and Ms Anh are the parents of three children. The care register reflects that Ms Anh has sole care of the children until 30 May 2019, from 1 June 2019 that Mr Anh has 14% and Ms Anh 86% care of the children, and from 19 September 2019 that their respective care percentages were 35% and 65%. The case was registered with the Department of Human Services – Child Support (the Department) on 11 July 2018 and has been collectable since that date.

2. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. The Act also provides for a departure from the administrative assessment in certain circumstances.

3. On 5 September 2018 Mr Anh applied for a decrease in the assessment on the basis that he had provided money to Ms Anh for the benefit of the children. On 24 October 2018 a senior case officer determined that for the period 11 July 2018 to 30 June 2019 Ms Anh’s self-support amount is varied to $5,000.

4. On 9 November 2018 Mr Anh lodged a departure application with the Department. On 4 February 2019 a senior case officer determined that for the period 9 November 2018 to 8 November 2019 Mr Anh’s self-support amount is varied to $30,523.

5. Mr Anh Iodged an objection to that decision on 6 March 2019. On 18 April 2019 the objection officer allowed the objection and decided to refuse his application for departure as a ground had not been established.

6. On 15 May 2019 Mr Anh sought further review with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal).

7. A telephone directions hearing was held on 19 September 2019. Both parties attended by conference telephone. The tribunal issued directions requiring compliance by 25 October 2019. The matter was scheduled to be heard on 14 November 2019. However, as the tribunal had not provided sufficient time each party to consider the other party’s response to the directions the matter was rescheduled.

8. The tribunal heard the matter on 12 December 2019. Mr Anh and Ms Anh appeared in person. The Child Support Registrar was not represented at the hearing. In reaching its decision the tribunal has considered the sworn evidence of Ms Anh and Mr Anh. The tribunal also considered the documentation provided by the Department (folios 1-474), Mr Anh (folios A1-A131) and Ms Anh (folios B1-B259).

ISSUES

1. The statutory provisions relevant to this review are outlined in section 98C of the Act, which states that a decision to depart from the administrative assessment may be made if the following three requirements are met:

   (i)that one, or more than one, of the grounds for departure referred to in subsection 117(2) exists; and

   (ii)that it would be:

   (A)just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   (B)otherwise proper;

   to make a particular determination under this Part …

2. Therefore, the issues which arise in this case are:

   ·     Does a ground exist for departure from the administrative assessment of child support? And, if so

   ·     Would it be just and equitable and otherwise proper to make a particular determination?

CONSIDERATION

A ground for departure

1. Sub-subparagraph 117(2)(a)(iii)(A) and subparagraph (c)(ii) of the Act provide grounds for departure if the administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent because the commitments of the parent necessary to enable the parent to support himself or herself or another person that the parent has a duty to maintain and because of any payments made by the liable parent to the carer entitled to child support for the benefit of the child under the Family Law Act 1975.

2. At the time Mr Anh lodged the change of assessment application he was assessed to pay an annual rate of child support of $37,521 based on his 2018 adjusted taxable income of $177,241 and Ms Anh’s 2019 income estimate of $20,361.

3. The history of this matter is uncontested. Ms Anh relocated to [State 1] with the children. Mr Anh sought, and was granted a recovery order on 19 July 2018, stipulating that the children are to reside in [a specified] area. McClelland J determined that in the event that Ms Anh elects to live at the former matrimonial home, Mr Anh must continue to pay the “mortgage, utilities and expenses relating to that property” and the restraint regarding relocation is conditional upon Mr Anh meeting those expenses and Mr Anh’s mother paying fees associated with the children attending day care. The tribunal understands that these orders were made after Mr Anh submitted in his recovery application that he would meet these expenses and that the paternal grandmother would continue to meet the day care fees of the children (at paragraph 73). McClelland J stated that (at paragraph 72): “In circumstances where the mother has not, as at the date of hearing, had the opportunity to apply for child support or spousal maintenance, it would be inappropriate for an order to be made to impose this as an additional financial burden upon her.”

4. Mr Anh submits that he can comply with the court orders; however, he cannot meet his assessed child support liability in addition to these costs as his costs exceed his income. He seeks that his self-support is increased, taking into account these court ordered costs in addition to his necessary costs. Mr Anh submits that his self-support amount should be increased to reflect him meeting the following expenses in the 2019 financial year:

   ·$49,236 in court-ordered costs associated with providing Ms Anh and the children with exclusive occupation of the family home;

   ·$1,656.31 in the provision of a motor vehicle to Ms Anh (including insurance, registration, tolls and greenslip); and

   ·$9,095.40 for Mr Anh’s personal medical expenses (including private health insurance).

5. The tribunal finds that Mr Anh’s costs in providing the accommodation and utilities associated with Ms Anh’s current accommodation are as follows:

Description	Cost	Per annum
Mortgage repayments	$3,119 per calendar month (interest only)	$37,428
Strata fees	$1,413.04 per quarter	$5,652.16
Council rates	$328.63 per quarter	$1,314.52
Electricity	$3,188
Water	$172.73 per quarter	$690.92
Internet	$55.55 per calendar month	$666.60
Insurance	$296.23
$49,236.57

1. As stated above, at the time of lodging his application Mr Anh was assessed to pay $37,521 in child support per annum. Increasing his self-support amount by $49,237 would result in a reduction in Mr Anh’s child support liability of about $10,425 (to $26,631 per annum). In the special circumstances of this case, the tribunal is satisfied that the financial support provided by Mr Anh to Ms Anh and the children result in an unjust and inequitable determination of child support payable under the administrative assessment. The tribunal therefore concludes that the grounds provided for in subparagraphs 117(2)(a)(iii) and (c)(ii) of the Act are established.

Just and equitable

1. The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the child, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

2. Ms Anh is [an Occupation 1], specialising in [certain area]. The nature of her work dictates that she works 12-hour shifts; her employment is based on 0.31 position, but she takes extra shifts when her caring responsibilities allow. Her 2018 and 2019 taxable incomes were $48,015 and $21,004 respectively. She has recently lodged an income estimate of $46,500, which includes a component of parenting payment. As of 6 October 2019 her gross year to date income was $9,315.57. The tribunal is satisfied on the basis of payslips in evidence that this represents an accurate estimation of her income and financial resources in the 2020 financial year. In her Statement of Financial Circumstances dated 4 June 2019 she reported savings of $2,687, superannuation valued at $76,029 and household contents and personal property valued at $20,000. She reports a personal loan of $12,300 and personal health insurance of $111 per week. She estimates average weekly expenses of $967.50, of which about $400 relate to the children, though this does not include the provision of child care. The tribunal notes that the parties have yet to finalise the property settlement; apparently the matter is awaiting a hearing date.

3. Ms Anh submits that it is reasonable that Mr Anh meets the costs associated with the provision of accommodation and meets his child support liability as she does not have a choice regarding where she can live; had she been permitted to live in [State 1] she would have been able to afford appropriate housing for her and the children.

4. The parties do not dispute that the children have experienced health difficulties from birth. The medical evidence regarding the children’s [medical condition] suggest that Ms Anh’s out-of-pocket expenses relating to [Child 1] were about $1,355 over a three-year period. The tribunal is not persuaded that this expense renders the administrative assessment unfair, particularly in a context where Ms Anh’s accommodation costs are minimal.

5. The parties also do not dispute that [Child 2] and [Child 3] require [specified] procedures with out-of-pocket expenses of about $2,000. [Child 2]’s procedure is to take place in January 2020 and [Child 3]’s procedures has yet to be booked in. At hearing Mr Anh stated that he thought it appropriate that he should meet 50% of these costs. However, the tribunal is not persuaded, in the context of the court-ordered support Ms Anh receives in addition to child support, that the payment of these costs by Ms Anh results in an unjust or inequitable determination of child support.

6. In his Statement of Financial Circumstances dated 5 June 2019 Mr Anh reports weekly income of $3,337. His 2018 and 2019 adjusted taxable incomes were $177,241 and $185,185 respectively. He works on a full-time basis as [an Occupation 2]. He reports a 100% interest in the former marital home (valued at $780,000) and a mortgage on the property of $629,395. He has two motor vehicles: an unencumbered [Car 1] (in Ms Anh’s possession) valued at $36,000 and a [Car 2] valued at $46,000, with outstanding car finance of $58,953. He reports outstanding credit card liabilities of $42,000 and a personal loan (apparently from his father) of $374,066 which relate to his legal fees and expenses. He also has household contents valued at $5,000 and superannuation of $157,905. He reports personal expenditure of $2,061 and weekly household expenses of $2,621, of which $1,430 relates to the children. 

7. At the tribunal understands it, Mr Anh does not deny that he engaged in [a specified hobby] during the marriage. He denies Ms Anh’s allegations that the cash withdrawals in his bank statements still represent funds used for [his hobby]. Instead, Mr Anh states that he used cash to purchase groceries and pay the nanny in cash.

8. Ms Anh states that during the marriage and since, Mr Anh receives regular funds from a family trust fund. Ms Anh stated that during the marriage his father provided Mr Anh with $175,000 to enable him to purchase the family home and at the same time gave her $15,000 to clear her credit card debt. Mr Anh categorically denies that the $175,000 received from his father was a gift and states that there is a loan agreement which states that he must repay the loan in full by 2020; if not, his father will likely place a caveat on the property. He cannot recall the specifics about the $15,000 given by his father to Ms Anh, but he wonders whether it was a gift to her given the relatively small amount gifted. He recalls that his father also entered into a loan agreement with his sister when providing her with a large sum of money. He does not know if his father did the same with his other sister when providing her with a large sum. The only time he can recall his father providing a gift of money to him was once and it was used to pay for a washing machine shortly before the parties married.

9. The tribunal carefully considered Mr Anh’s bank statements in evidence, which evidence significant discretionary spending in addition to the costs already documented by Mr Anh. The spending is not consistent with a person in dire financial straits. Nevertheless, his proliferate spending is offset by deposit amounts to $23,660 from Mr Anh’s mother during the period 28 February to 5 July 2019. He categorically denies Ms Anh allegation that these deposits represent distributions from a family trust fund, pointing out that the description in each transfer states “loan”. He does not know how much money he has borrowed from his mother in total, but he estimates it is about $60,000. It is not necessary for the tribunal to make a finding regarding the putative family trust fund nor is it possible to do so without further documentation before it. Nevertheless, the tribunal is of the view that these sums represent a financial resource available to Mr Anh.

10. Mr Anh states that should his self-support amount not be increased to reflect his expenses he may be required to repossess and sell the [Car 1] in Ms Anh’s possession. As the tribunal understands it Mr Anh continues to meet the some of the costs associated with the [Car 1], being registration, greenslip, insurance and tolls. Mr Anh is not legally obliged to meet these payments; he states he does so as to transfer the vehicle to Ms Anh would cost 20% of the car’s value and so his continuing payments are equivalent to the transfer cost. Ms Anh meets the day-to-day running costs, including services and maintenance. Ms Anh states that she has proposed taking on the additional expenses currently met by Mr Anh if and when he will transfer the ownership of the car to her. Mr Anh stated that he will not transfer ownership of the motor vehicle as this forms part of the asset pool that will be dealt with in the property settlement. Taking into account the fact that Mr Anh prefers to continue to meet these costs rather than transfer ownership of the car to Ms Anh and the findings already made about his income and financial resources, the tribunal is not persuaded that it would be just and equitable to depart from the assessment on the basis of Mr Anh providing annual payments of $1,656 relating to this motor vehicle.

11. The tribunal next considered Mr Anh’s personal medical costs. Consistent with the Department’s policy, the tribunal is not persuaded that his private health insurance costs can be categorised as necessary. Mr Anh also reports expenses relating to his mental health totalling $3,075; however, he did not provide any evidence of Medicare and private health insurance rebates relating to these costs. Even accepting Mr Anh’s unsubstantiated claims regarding his mental health, the tribunal is not persuaded that these costs make the administrative assessment unjust or unfair given his income and financial resources. The tribunal reaches the same conclusion in relation to the purchase of a [machine] costing $1,978.80, purchased on 16 October 2018.

12. Mr Anh submits that the costs associated with his purchase of car seats, children’s beds and a pram ($3,144.62) in addition to his legal costs ($7,700) and purchase of a fridge and washing machine ($1,330) render the administrative assessment unfair and should be added to his self-support amount. The tribunal accepts that the purchase of the children’s items are necessary, but not by the sum expended by Mr Anh; it was open to him to source less expensive items. In any event, the tribunal is of the view that these costs are not unusual in the context of a recently separated person and again, given his income and financial resources, do not render the assessment unfair. Similarly, Mr Anh provided evidence of his rental payments, which is not an unusual expense for parents to incur upon the breakdown of a relationship. The tribunal is satisfied that his accommodation costs are already accurately reflected in the administratively determined self-support amount, despite his actual costs exceeding this amount.

13. Mr Anh also seeks that his self-support amount be increased to take into account his motor vehicle costs of $23,456, including $11,070 in loan repayments made per annum. It is noted that in his 2019 income tax return Mr Anh claims work-related motor vehicle deductions, which are not taken into account in his calculations. The tribunal is not persuaded that the purchase of a new motor vehicle is a necessary expense and that modest transport costs are already reflected in part in the administratively determined self-support amount. Even if this was not the case, the tribunal is not persuaded in the context of Mr Anh’s income and financial resources that this expense renders the administrative assessment unfair.

14. Mr Anh states that he incurs a child-minding expense of $230 per week. Ms Anh submits that this cost is unnecessary for two reasons. The first is that the court orders direct that his mother shall meet the children’s day care fees and the second being that she is available to care for the children on Wednesdays when he is at work. Mr Anh explained that he does not receive assistance from his mother to pay for the children’s nanny, and he makes these payments in cash. Notwithstanding the fact that there is limited evidence before the tribunal regarding this expense, and the fact that other less expensive child care options are available to him, the tribunal is not satisfied that this expense results in an unfair assessment of Mr Anh’s child support liability when seen in the context of his income and financial resources.

15. The assessment regarding the just and equitable amount of child support Mr Anh  should contribute, within the context of a recovery order being conditional on him meeting Ms Anh’s accommodation costs, is a difficult exercise and incapable of any great precision. It is the tribunal’s task to strike a balance in order to ensure that Ms Anh has the means necessary to provide for the children and Mr Anh is not placed in a situation of undue hardship. The tribunal is satisfied that the costs associated with the provision of water, electricity, internet and contents insurance is a cost that Ms Anh would otherwise be required to meet irrespective of the location of her new home; therefore, her self-support amount should be decreased by the annual total of these costs ($4,842). After careful consideration, the tribunal is not persuaded the total payments of the mortgage, strata fees and council rates should be subtracted from Ms Anh’s self-support amount. These costs are associated with the maintenance of an asset of the marriage until such time as the property settlement can take place. They are also payments within a context where Mr Anh gave an undertaking that he would meet these costs should a recovery order be granted. The parties’ respective 2018 financial year taxable incomes, expressed as percentages were 79% to Mr Anh and 21% to Ms Anh. Thus, the tribunal concludes that it is just and equitable that Ms Anh’s self-support amount be reduced by 21% of the mortgage, strata and council rates ($9,186 in the 2019 financial year) until such a time that Mr Anh ceases to pay the mortgage, utilities and expenses relating to the former marital home.

1. The tribunal finds that it is appropriate to reduce Ms Anh’s self-support amount from the date that Mr Anh lodged his application, being 9 November 2018. Given the property and parenting matters have not yet been set down for hearing, it is also appropriate to vary Ms Anh’s self-support amount until 30 October 2021. This period of departure will provide certainty to the parties and will minimise the need for repeat proceedings. Of course, it is open to either party to lodge a further departure application should Mr Anh no longer provide this support. The tribunal notes that the mortgage, strata and council rates will increase from the tribunal’s calculations, which are based on the 2019 financial year. Nevertheless, the tribunal is satisfied that a reduction of $14,028 remains appropriate in the context of this matter.

2. The underlying administrative assessment for the period 11 July 2018 to 30 June 2019 is that Ms Anh’s self-support amount is varied to $5,000. This is based on a previous change of assessment decision. As the operative decision from this application is also to decrease the self-support amount, this decision will decrease what is currently in place under the administrative assessment for the period up to 30 June 2019. Therefore, to give effect to the decision made by this tribunal, for the period 9 November 2018 to 30 June 2019 Ms Anh’s self-support amount is varied to $10,507 (self-support amount of $24,535 - $14,028 = $10,507) and for the period 1 July 2019 to 31 October 2021 Ms Anh’s self-support amount is decreased by $14,028.

3. Application of the amended self-support amount will decrease Mr Anh’s child support liability by $669 per annum from this date. Currently, a reduction of $14,028 in Ms Anh’s self-support amount will reduce Mr Anh’s annual child support liability by about $2,238 (being based on him having 35% care of the children). By the tribunal’s calculations this will give rise to an overpayment of about $1,100. The tribunal is satisfied that this will not place Ms Anh in a situation of hardship.

4. The tribunal is satisfied that the administrative assessment is unfair given Mr Anh’s provision of mortgage, utilities and expenses relating to the property in which Ms Anh and the children reside and this results in an unjust and inequitable level of child support given the circumstances of each parent. For all the reasons above, the tribunal finds it just and equitable to depart from the administrative assessment.

Otherwise proper

1. The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents rather than the community have the primary duty to maintain a child. Ms Anh is in receipt of income-tested benefits. Departing from the administrative assessment by decreasing the child support payable by Mr Anh will result in a more appropriate apportionment of financial responsibility between the parents and the community.

2. The determination is otherwise proper.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that:

·     for the period 9 November 2018 to 30 June 2019 Ms Anh’s self-support amount is varied to $10,507; and

·     for the period 1 July 2019 to 31 October 2021 Ms Anh’s self-support amount is decreased by $14,028.