Archer and Merval (Child support)

[2020] AATA 575

Archer and Merval (Child support) [2020] AATA 575 (15 January 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/MC016511

APPLICANT:  Ms Archer

OTHER PARTIES:  Child Support Registrar

Mr Merval

TRIBUNAL:Member P Noonan

DECISION DATE:  15 January 2020

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides for the period 3 November 2018 to 31 December 2022 Mr Merval’s adjusted taxable income is varied to a default income of two-thirds of the annualised male total average weekly earnings figure for each applicable calendar year adjusted from 1 January 2019 and on 1 January of each year thereafter.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – parent refused to disclose financial details – failure to comply with directions - 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 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 Merval and Ms Archer are the parents of three children who are currently relevant to the child support assessment.

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. A child support case was first registered with the Department of Human Services (the Department) [in] November 2014 and child support has been registered for collection by the Department from [June] 2015. The Department currently maintains a case completion date for this matter of 30 October 2027.

4. [In] September 2018 Ms Archer applied for a departure from the assessment of child support payable. Prior to 1 October 2018 a previous change of assessment decision was in place which resulted in the annual rate of child support payable by Mr Merval being $5,200. Care of the children at the time of the application for a departure was registered as being 365 nights per year to Mr Merval for the eldest child and 365 nights a year to Ms Archer in respect to the two younger children. Ms Archer also has a younger dependent child who is not a child of this assessment. Relevant administrative assessments of child support payable are as follows:

   ·      From 1 October 2018 to 2 November 2018, Mr Merval was assessed to pay an annual rate of child support of $7,125. This assessment was based on a default income equal to two-thirds of the annualised male total average weekly earnings (MTAWE) of $48,308 for Mr Merval and a 2016-17 adjusted taxable income of $17,261 for Ms Archer.

   ·      From 3 November 2018 to 20 November 2018, Mr Merval was assessed to pay the statutory minimum annual rate of child support being $420. This assessment was based on a 2016-17 derived income of $23,000 for Mr Merval and a 2016-17 adjusted taxable income of $17,261 for Ms Archer.

   ·      From 1 January 2019 to 31 March 2020, Mr Merval was assessed to pay the fixed annual rate of child support of $2,886. This assessment was based on a 2017-18 derived income of $12,000 for Mr Merval and a 2017-18 adjusted taxable income of $15,172 for Ms Archer.

5. [In] December 2018 a Department officer, acting as a delegate of the Child Support Registrar, found that a ground for departure was established and decided to depart from the assessment in the following terms:

   ·      From 1 October 2018 to 31 October 2019, the adjusted taxable income amount for Mr Merval is set at $36,200;

   ·      From 1 October 2018 to 28 February 2021, the self-support component used in the formula for Mr Merval is to be reduced to $5,954;

   ·      From 1 November 2019 to 31 January 2021, the adjusted taxable income amount for Mr Merval is set at $36,779.

6. Mr Merval objected to this decision and [in] April 2019 a department objections officer partly allowed his objection in the following terms:

   ·      For the period 1 May 2018 to 31 October 2020, Mr Merval’s adjusted taxable income is set at $28,524.

7. Ms Archer subsequently applied to the Tribunal for an independent hearing of the Department’s decision. A hearing for the matter was held on 15 January 2020. The Child Support Registrar did not attend the hearing. Ms Archer attended the hearing by conference telephone and gave evidence on affirmation. Ms Archer was represented by legal counsel being Ms [A]. Mr Merval attended the hearing by conference telephone and gave evidence on affirmation.

8. Pursuant to paragraph 98C(1)(b) of the Act, a decision to depart from the administrative assessment may be made if the following 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; …

CONSIDERATION

Mr Merval’s income and access to financial resources

1. Subparagraphs 117(2)(c)(ia) and (ib) of the Act, commonly referred to as Reason 8, provide as grounds for departure:

   (c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to 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:

   ...

   (ia) because of the income, property and financial resources of either parent….

   (ib) because of the earning capacity of either parent.

2. It is undisputed that Mr Merval operates as a sole trader. There was very limited financial information in respect to Mr Merval’s financial affairs supplied by the Department. It was noted that he has not filed a taxation return since the registration of this child support case.

3. In Directions issued by the Tribunal on 14 October 2019 Mr Merval was directed to provide the following items: 2017-18 Taxation Notice of Assessment; 2018-19 taxation return and Notice of Assessment; up-to-date and completed Tribunal Statement of Financial Circumstances; a copy of all bank statements (personal and business) for the period 1 July 2018 to 30 September 2018 including credit card; savings and loan statements; business activity statements for the past four quarters; all original evidence used as a basis for claiming contractor, subcontractor and commission expenses for the period 1 January 2018 to 30 June 2018; lease agreement in respect to business premises.

4. Mr Merval subsequently failed to comply with any of the Directions issued by the Tribunal. At the hearing the Tribunal questioned Mr Merval as to his reasons for his failure to comply with the Directions. Mr Merval stated that he was unwilling to submit to an intrusive scrutiny of his affairs by the government. Further he had been inadvertently [delayed in a location] for the past two months. In addition he could not afford to pay his accountant to finalise his taxation returns. Further his financial papers were locked up in a premise to which he had no access.

5. The Tribunal notes that Mr Merval was afforded three months to comply with the Tribunal’s Directions. In that time he made no attempt to comply in any way. The Tribunal finds Mr Merval’s proffered excuses for failing to comply to be highly unlikely. Further he certainly had time to provide bank statements, a completed Statement of Financial Circumstances and the invoices he used to claim expenses for a draft 2017-18 taxation return, upon which the Department largely based its assessment of his income. Mr Merval has therefore completely failed to comply with the Tribunal’s more general direction that he is to provide full and frank disclosure of his financial circumstances to the Tribunal. The Tribunal noted that when discussing this lack of compliance Mr Merval disclosed that he continues to pursue business opportunities as [an Occupation] and has not sought any form of income support payments. He submitted this is because he “wants nothing to do with the government”.

6. In Agrippa and Horton (SSAT Appeal) [2010] FMCAfam 1144, Halligan FM (as he was then) explained that:

   parties have a duty of full and frank disclosure in child support proceedings and explained how decision makers are to deal with non-disclosure: 25. In financial proceedings under the Family Law Act 1975 a party has a duty of full and frank disclosure of all of his or her financial circumstances (Black & Kellner, (1992) 15 Fam LR 343, (1992) FLC 92-287, Weir & Weir, (1992) 16 Fam LR 154, (1993) FLC 92-338). If it is established to the Court's satisfaction that there has been deliberate non-disclosure, “then the court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud” (Weir, above, FamLR at 158, FLC at 79,593). 26. In my view the same principle must apply in the assessment of child support for the same reason. If the SSAT is satisfied that a parent has made a deliberate non-disclosure of his or her financial circumstances, it should be reasonably robust in assessing the non-disclosing parent's financial circumstances adversely to that parent and in favour of the other parent. That is not to say that it may arrive at an entirely arbitrary result, but rather that it may draw generous inferences adverse to the non-disclosing party about that party's financial circumstances.

7. Mr Merval asserted that the objections officer’s assessment was overstated in respect to his capacity to pay child support however he had not appealed as he was willing to accept that assessment. He pointed to limited financial evidence that he had previously supplied the Department such as a rental arrears statement and various utility and supplier invoices to support his contention that he cannot afford to pay any more child support. The Tribunal disagrees that this limited evidence is sufficient to establish his capacity to pay child support. In all of the circumstances pertaining to Mr Merval’s lack of disclosure including a consideration of his proffered excuses for not doing so the Tribunal concludes that it is entitled to draw adverse inferences from his non-disclosure. The Tribunal notes that Mr Merval was warned of this potential in the Directions issued to him.

8. Ms Archer submitted that Mr Merval is [an Occupation] with over 20 years’ experience and used to earn around $80,000 per annum.

9. In respect to assessing Mr Merval’s income and overall access to financial resources the Tribunal has very little upon which to base its assessment. The Tribunal notes that the government’s Child Support Guide discusses at point 2.4.2 situations such as this where there is no recent taxation assessment for a parent for the purposes of ascertaining the costs of the children. In this case Mr Merval has not complied with his financial disclosure obligations. He runs a business and has not sought to access government income support payments. The Tribunal concludes he has the capacity to make a greater contribution to the maintenance of the children than currently assessed. In such circumstances the Tribunal considers it appropriate to adopt the default income of two-thirds of the annualised MTAWE figure as per s. 58 of the Act. In 2018 that amount was $49,071 per annum.

Ms Archer’s income and access to financial resources

1. There was no dispute in this matter that Ms Archer is entirely reliant upon government income and carer support payments. She has a young dependent child with significant health problems. The Tribunal considers the normal provisions of the administrative assessment should apply to the assessment of her income and overall access to financial resources. 

Conclusion – the parents’ income and financial resources

1. Under the applicable assessment, the annual rate of child support payable by Mr Merval was $420 per annum from 3 November 2018. The Tribunal has determined that his income and financial resources was reflective of an income of $49,071 per annum at that time and that Ms Archer’s income and financial resources was reflective of an income of $17,261 per annum at that time. The annual amount of child support payable by Mr Merval using these figures is approximately $4,826 per annum. Such a difference in the child support payable constitutes special circumstances as the application of the applicable assessment would result in an unjust and inequitable determination of the level of financial support to be provided by Mr Merval in support of the children. As a result a ground for departure in subparagraph 117(2)(c)(ia) of the Act does exist. The Tribunal notes that changes in the care of the children will change this amount payable.

Other grounds

1. Other departure grounds were raised relating to the costs of supporting a dependent child by Ms Archer.

2. In Marsh & Eccles [2008] FMCAfam 1417, Riethmuller FM stated, in regard to determining multiple grounds for departure from the administrative assessment, as follows (at paragraph 13):

   Once a “special circumstance” is established, it is then necessary to determine what would be a just and equitable and otherwise proper child support assessment … once a special circumstance has been established for each period, as only one special circumstance in the period is sufficient to satisfy the first step of the departure process.

3. The Tribunal will therefore consider these grounds in the context of whether it is just and equitable and otherwise proper to depart from the administrative assessment.

Would departure from the assessment be just and equitable?

Mr Merval

1. Mr Merval informed the Tribunal that he is currently living with his grandparents to save on costs. He has not disclosed his assets or current liabilities. He is however still working and has not sought government income support payments. He submitted he has not sought paid work in his area of expertise as he wishes to pursue business opportunities and believes those paid jobs are better suited to younger people. He has a current contract for a children’s book which he valued at $5,000. Ms [A] submitted that [people in this Occupation] according to her research earn on average around $66,000 per annum. The Tribunal notes this is a relatively modest amount and indicates that Mr Merval’s overall earning capacity is fairly limited. Accordingly the Tribunal was satisfied that the use of the two-thirds of the MTAWE was a just and equitable amount which did not unduly risk under-assessing or over-assessing Mr Merval’s income and overall access to financial resources.

Ms Archer

1. Mrs Archer disclosed minimal assets and liabilities. She pays rent of $380 per week and maintains a car. She also has a dependent child not of this assessment whom has significant health problems. However she noted this child is covered by a National Disability Insurance Plan. The Tribunal considered the child’s expenses are therefore covered. The Tribunal considers that Ms Archer is just able to meet her necessary self-support expenses from her income. Clearly any child support payable to her would be of assistance.

The children

1. In determining the proper needs of the children it is necessary to have regard to the manner in which the children are being, and in which the parents expected the children to be, cared for, educated or trained, and any special needs of the children (subsection 117(6) of the Act). In Eades & Cadell (SSAT Appeal) [2009] FMCAfam 275, at [22], Slack FM stated as follows:

   In considering the proper needs of the child [s. 117(4)(b)], the SSAT:

   a.would ordinarily consider the evidence of the parties about the needs of the children to assess the reasonableness and quantum of those needs;

   b.may have regard to publish guidelines as to the needs of the children (see Hallinan & Witynski at 94.323).

   c.may also have regard to the costs of children used in the assessment of child support under the existing formula arrangements (although it is not sufficient or appropriate to rely upon the formula to perform that task, Lindenmayer J in Dwyer & McGuire (1993) FLC92-420 (and see also Gyselman (supra) at 79.078).

2. There were no special needs costs raised by either parent in respect of the children.

3. It is open to the Tribunal to vary the rate of child support payable or vary some of the variables that are used in the administrative assessment formula.

4. The principal object of the Act is to ensure that children receive a proper level of financial support from their parents. Further, the Tribunal notes the statements contained in sections 3 and 4 of the Act to the following effect:

   ·   Parents of a child have a primary duty to maintain the child;

   ·   The duty has a priority over all other commitments of the parent other than commitments necessary for self-support;

   ·   The level of financial support to be provided by parents to their children should be determined in accordance with the legislatively fixed standards; and

   ·   The level of financial support is to be determined according to the capacity to provide financial support and noting that parents with a like capacity to provide financial support should provide like amounts.

5. The Tribunal has considered the evidence given by each party in respect to the questions posed to them about any potential hardship that may be caused to them by a departure determination. Mr Merval submitted that he is in financial hardship and seeks a reduction in child support payable going forward due the financial struggles of his business and his own levels of stress. Ms Archer submitted Mr Merval can afford to pay a higher rate of child support as evidenced by the fact that he has been on recent trips involving [a means of transport] and to [Country] in 2018 and he has not disclosed his financial affairs and not sought income support payments despite claiming he has no money.

6. Overall the Tribunal considers it is just and equitable to depart from the administrative assessment of child support payable. The Tribunal will commence this departure determination from 3 November 2018 when the statutory minimum annual rate of child support became payable. The Tribunal will continue the departure determination until 31 December 2022. This will provide both parents with some certainty in planning their affairs and the Tribunal also considered it likely that Mr Merval will continue to not submit taxation returns or provide any meaningful financial disclosure in this matter as he has done for many years now.

7. With regard to all of the reasoning, as set out above, for the period 3 November 2018 to 31 December 2022 Mr Merval’s adjusted taxable income is varied to a default income of two-thirds of the MTAWE.

8. With regard to the care records outlined earlier in these reasons, the amount of child support payable by Mr Merval in the period of departure is around $4,826 per annum or $92 per week. The Tribunal does not consider Mr Merval will be placed in undue hardship by this departure decision. He gave evidence that he enjoys the ongoing financial support of his family. Further, while the Tribunal has drawn adverse inferences from his non-disclosure it has also been somewhat conservative in its conclusions about Mr Merval’s income and overall resources being mindful of his caring responsibilities. The Tribunal notes that the application of the two-thirds of the MTAWE was also an outcome submitted by Ms [A] and the Tribunal considers Ms Archer is accordingly satisfied with such an outcome.

9. The Tribunal also did not consider Ms Archer will be placed in undue financial hardship by this decision. She will be paid child support that is commensurate with the Tribunal’s analysis of the parents’ overall access to financial resources.

1. Overall the Tribunal considered this departure determination is a just and equitable outcome in regard to the respective situations of each parent.

Otherwise proper

1. There is nothing improper in the adjustments to the amount of child support payable to reflect the parents’ actual respective capacities to provide support to the children.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides for the period 3 November 2018 to 31 December 2022 Mr Merval’s adjusted taxable income is varied to a default income of two-thirds of the annualised male total average weekly earnings figure for each applicable calendar year adjusted from 1 January 2019 and on 1 January of each year thereafter.