Arnold and Hardcastill (Child support)

[2023] AATA 195

Arnold and Hardcastill (Child support) [2023] AATA 195 (3 January 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/MC024268

APPLICANT:  Ms Arnold

OTHER PARTIES:  Child Support Registrar

Mr Hardcastill

TRIBUNAL:Senior Member J Longo

DECISION DATE:  03 January 2023

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that the annual rate of child support payable by Mr Hardcastill from 1 April 2022 to 31 March 2024 is increased by $3,176 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – special needs of children – a ground for departure 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 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.The issue to be determined in this application is whether there is a reason to change the administrative assessment of child support and, if so, whether it is just and equitable and otherwise proper to do so.

2.Mr Hardcastill and Ms Arnold are the parents of [Child 1] and [Child 2]. Mr Hardcastill is the parent liable to pay child support. The application for child support was registered with Services Australia – Child Support (the Agency) from 21 September 2011 and is currently subject to Agency collection. [Child 1] and [Child 2] are in Ms Arnold’s care 86% of the time and Mr Hardcastill’s care 14% of the time.

3.Prior to the departure application, Mr Hardcastill was assessed to pay an annual rate of child support of $3,254 for the period 1 August 2021 to 14 November 2021. This was based on Mr Hardcastill’s 2020-21 adjusted taxable income of $45,175 and Ms Arnold’s 2020-21 adjusted taxable income of $34,862. From 15 November 2021 to 30 June 2022, Mr Hardcastill was required to pay an annual rate of child support of $3,798. This assessment is based on Mr Hardcastill’s 2020-21 adjusted taxable income of $45,175 and Ms Arnold’s 2021-22 income estimate of $18,041.

4.Ms Arnold applied to the Agency for a departure from the administrative assessment on 6 October 2021 on the basis that the special circumstances of the case, [Child 1’s] special needs meant that the costs of maintaining the child are significantly affected (Reason 2). On 31 December 2021, a delegate of the Agency decided that the grounds were established and made a departure determination as follows:

·For the period between 1 August 2021 and 31 January 2022 the annual rate of child support payable by Mr Hardcastill is increased by $1,723.00.

·For the period between 1 February 2022 and 31 July 2022 the annual rate of child support payable by Mr Hardcastill is increased by $4,344.00.

·For the period between 1 August 2022 and 31 January 2023 the annual rate of child support payable by Mr Hardcastill is increased by $2,611.00.

·For the period between 1 February 2023 and 31 January 2024 the annual rate of child support payable by Mr Hardcastill is increased by $2,091.00.

5.Mr Hardcastill objected to the decision on 21 January 2022. An objections officer of the Agency partly allowed the objection on 21 April 2022 and departed from the administrative assessment as follows:

·For the period 1 April 2021 until 31 March 2022, Mr Hardcastill’s annual rate of child support is increased by $458 per annum.

·For the period 1 April 2022 to 31 March 2024, Mr Hardcastill’s annual rate of child support is increased by $2,091 per annum.

6.On 20 May 2022, Mr Hardcastill lodged an application to the Administrative Appeals Tribunal (the Tribunal) for an independent review of the decision. The application was heard on 6 December 2022. The Tribunal considered the documents and information provided to the parties prior to the hearing,[1] as well as the oral evidence of Mr Hardcastill and Ms Arnold. Additional information was provided to the Tribunal after the hearing and exchanged between the parties. Relevant aspects of the evidence and material before the tribunal will be referred to in the Tribunal’s reasons for decision.

[1] Administrative Appeals Tribunal Act 1975 subsection 37(1) and section 38AA; Statement and Documents provided by the Agency numbered 1 to 426; Ms Arnold’s documents numbered A1 to A40; and Mr Hardcastill’s documents numbered B1 to B28.

CONSIDERATION

THE LEGISLATIVE FRAMEWORK

7.The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act1989 (the Assessment Act). The liable parent or a carer may apply for a determination departing from the administrative assessment under Part 6A of the Assessment Act. Section 98C establishes a three-step process to be satisfied: that there is a ground for a departure; that it is just and equitable to depart; and that it is otherwise proper. Once satisfied, the tribunal may make one of the determinations prescribed in section 98S of the Assessment Act.

Reason 2 – [Child 1] and [Child 2’s] special needs

8.The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Subparagraph 117(2)(b)(ia) of the Assessment Act – commonly referred to as “Reason 2”– states as follows:

(b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:

…

(ia) because of special needs of the child;

9.The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman [1991] FamCA 93 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. Ms Arnold’s submission to the Tribunal, and to the Agency, was that [Child 1’s] therapy and [Child 2’s] orthodontic treatment were special needs.

10.Ms Arnold stated that [Child 1] had been diagnosed with ADHD and learning difficulties and provided the Agency, and the Tribunal, with reports confirming the diagnosis. To assist in her treatment for these conditions, Ms Arnold stated that [Child 1] attends fortnightly psychology sessions and also undertakes equine therapy. Ms Arnold provided a report to the Agency from [Doctor A], consultant paediatrician, dated 25 August 2021[2] which confirmed the diagnosis of ADHD, based on the assessment undertaken by [Psychologist A] at [Health Service 1]. A further report was provided by Mr Hardcastill, conducted by [Psychologist B], dated 21 August 2022[3]. The conclusion of the report was that while [Child 1’s] full scale IQ placed her within the average range of cognitive functioning, as assessed on 23 May 2022, her education assessment, on 8 August 2022, placed her within the below average to very low range and was indicative of delays across most of her academic development. The conclusion of the report states that [Child 1] qualifies for a diagnosis of a generalised learning disability. The Tribunal accepts the conclusions of the reports provided in this matter.

[2] Page 116 of the subsection 37(1) Agency documents.

[3] Page B17 to B28 of Mr Hardcastill’s documents.

11.Ms Arnold provided costs in relation to [Child 1’s] ongoing treatment for her special needs, which includes fortnightly psychologist[4] sessions and equine therapy. In relation to [Child 1’s] psychologist, Ms Arnold stated that these are not covered by Medicare and she does not have any private health insurance. Ms Arnold stated that she was initially paying $140 per session for [Child 1’s] psychologist but this has reduced to $110 per session after changing to another psychologist. The total costs incurred for psychology sessions as provided to the tribunal, with [Child 1’s] initial psychologist, between February 2022 and July 2022 are $1,580. From September 2022, the ongoing costs are $110 per fortnight.

[4] Page A16 to A17 and A40 of Ms Arnold’s documents

12.Ms Arnold also provided costs relating to [Child 1’s] assessment and diagnosis to the Agency by [Doctor A] and [Health Service 1].[5] These total $1,769.40 in out of pocket costs for Ms Arnold.

[5] Pages 106,107,109,110 & 111 of the subsection 37(1) Agency documents.

13.In relation to the equine therapy, these costs are incurred per term[6]. Ms Arnold stated that [Child 1] has attended two terms thus far, which have been paid by her. As [Child 1] has attended every second weekend, there will be no cost for term 1 of 2023 as the payments are for weekly attendance and [Child 1] has not attended every weekend. Ms Arnold stated that the equine therapy was recommended by her son’s occupational therapist for [Child 1] and that this therapy was support by [Doctor A]. The total of the costs incurred for equine therapy, based on the invoices provides to the Tribunal, is $2,930.00, which cover [Child 1’s] attendance until the end of term 1 2023.

[6] Pages A30 to A31 of Ms Arnold’s documents.

14.Ms Arnold confirmed that [Child 1’s] conditions do not qualify for funding through NDIS, as ADHD is not covered and her learning disability is not severe enough to be covered under the scheme. Ms Arnold indicated that [Child 1] will be undertaking further testing for autism spectrum disorder in January 2023. If [Child 1] is diagnosed with autism spectrum disorder, then it is likely she will receive funding under NDIS. The Tribunal acknowledges that [Child 2] has special needs based on his diagnosis of autism spectrum disorder but that the costs associated with these special needs are covered under his NDIS funding and therefore these costs do not significantly affect the costs of maintaining the children. Therefore, these costs have not been considered in this departure determination.

15.In regard to [Child 2], Ms Arnold provided to the Tribunal information relating to orthodontic treatment, as assessed by [Health Service 2].[7] The report states that [Child 2’s] orthodontic situation will achieve short-term and long-term benefits in the improvement of his crowding, overbite and expansion of his upper arch. The costs for the orthodontic treatment, as provided in the information to the Agency, total $8,364.00, with an initial fee of $1,672.80 and then 24 monthly instalments of $278.80. The information provided to the Agency indicates that [Child 2’s]s treatment will be for between 18 and 24 months. Ms Arnold stated that the treatment for commenced in April 2022.

[7] Pages 116 to 122 of the subsection 37(1) Agency documents.

16.Mr Hardcastill did not dispute [Child 2’s] need for orthodontic treatment and acknowledged that the treatment had already commenced. He stated that he was happy to cover 50% of [Child 2’s] orthodontic costs.

17.The Tribunal is satisfied that [Child 1’s] ADHD and learning disability, and that the associated psychology and equine therapy for these conditions, are a special need. Furthermore, the Tribunal is satisfied that the costs for these treatments, as outlined above in paragraphs 11 to 13 of these Reasons, are significant and affect Ms Arnold’s ability to maintain [Child 1].

18.The Tribunal is also satisfied that [Child 2’s] orthodontic treatment is necessary and for a functional purpose and is a special need. In regard to Ms Arnold’s costs of maintaining [Child 2] being significantly affected by this special need, the Tribunal concludes that the costs of orthodontics, are significant and affect her ability to maintain [Child 2]. Both the costs for [Child 1] and [Child 2] combined are a significant addition to the costs of maintaining the children. The Tribunal therefore concludes that there are special circumstances in this case which establish a ground for departure under subparagraph 117(2)(b)(ia) of the Assessment Act.

Would departure from the administrative assessment be just and equitable?

19.As the Tribunal is satisfied that there is a ground to depart from the administrative assessment, the next step is to consider whether it is just and equitable to depart from the administrative assessment. In deciding whether it is just and equitable, the Tribunal had regard to the matters set out in subsection 117(4) of the Assessment Act. Section 3 of the Assessment Act makes it clear that the parents of a child have the primary duty to maintain the child over all commitments of the parents other than commitments necessary for self-support or the support of another person to which they have a duty. In determining the proper needs of a child, it is necessary to have regard to any special needs of the child (subsection 117(6) of the Assessment Act). The Tribunal has considered the evidence of the parties relating to the needs of the child.

20.There is no dispute in regard to Mr Hardcastill’s income from employment. Mr Hardcastill is employed as [an occupation 1] with [Employer 1] and has a base salary of $875 per week ($45,545 per annum) according to the payslips provided.[8] He stated that he commenced employment with [Employer 1] in March 2022. Mr Hardcastill’s adjusted taxable income for 2020-21 was $45,175.

[8] Pages B12 to B14 of Mr Hardcastill’s documents.

21.Mr Hardcastill’s Statement of Financial Circumstances states that his assets are two motor vehicle (total value $5,500); and household contents ($1,000). While not listed on his statement of financial circumstances, he previously disclosed to the Agency savings in his bank totalling $81,919 as at 7 July 2021. In response to the Tribunal’s queries, Mr Hardcastill stated that his funds in the bank had reduced to approximately $60,000, due to purchases of [sport 1] equipment ($10,000) and repayment of his credit card and car repairs ($6,200). He has superannuation of approximately $95,000. His Statement of Financial Circumstances shows a credit card liability of $4,939. He stated at hearing that his credit card debt is currently $3,000. Mr Hardcastill’s personal expenses are $305 per week (child support, income tax, credit card repayments and health insurance).

22.In regard to his household expenses, Mr Hardcastill has indicated that these are around $814 per week for himself and the children. This expenditure includes food, rent, car expenses, entertainment, children’s activities and hairdressing/toiletries. Mr Hardcastill also has $70 per week in out of pocket physiotherapy costs for ongoing treatment relating to a car accident in 2014. Mr Hardcastill stated that he is living with his mother in her property but is paying rent. Mr Hardcastill stated that his savings are money received in compensation for this car accident (approximately $90,000).

23.In relation to Ms Arnold, her adjusted taxable income for 2020-21 was $35,837. Ms Arnold provided the Agency with a letter, dated 30 March 2022, indicating that her employment with [Employer 2] was terminated on 29 October 2021 due to not meeting the vaccination mandate requirements. Ms Arnold told the Tribunal that she is currently working as a [position 1] in a casual position. The Tribunal notes that Ms Arnold provided a contract of employment confirming her employment as a [position 1].[9] Ms Arnold’s payslip shows income of $203 per week. She stated that she hopes to move to a permanent part-time position, increasing to around 15 hours per week. Ms Arnold stated that she had a major stroke in 2014 and as a consequence this has affected her ability to work. She experiences ongoing fatigue and has weakness and loss of fine motor skills in her left arm. She is unable to sustain full-time employment. Ms Arnold stated that she is in receipt of jobseeker payment presently which will be reduced by her employment income. Ms Arnold stated that in addition to jobseeker payment, she receives carer allowance and family tax benefit for the children.

[9] Pages A11 to A12 of Ms Arnold’s documents.

24.Ms Arnold’s Statement of Financial Circumstances shows income as $1,466 per week, however this is the total of her jobseeker payment, carer allowance and child support received. In regard to her assets, she lists a motor vehicle ($12,475), household contents ($30,000) and funds in the bank ($1,401). She has minimal superannuation of $4,348. Ms Arnold states she has a liability of $9,000 in credit card charges. Ms Arnold’s personal expenses are $173 per week (life insurance premiums, credit card repayments and health insurance).

25.The Tribunal notes Ms Arnold claims $1,764 per week in household expenses for her and the children. These expenses include education expenses for the children, and therapy costs for [Child 1]. This expenditure also includes expenditure on entertainment, children’s activities, gifts, books and magazines. Her petrol expenses are $250 per week, which Ms Arnold stated relates predominately to driving the children around to medical appointments and other activities. Ms Arnold confirmed that she is residing on her parents’ property, in a separate house, and is not required to pay rental costs.

26.In determining the proper needs of a child, it is necessary to have regard 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 Assessment Act). The Tribunal has considered the evidence of the parties relating to the needs of the children.

27.Ms Arnold referred to her out of pocket expenses in relation to the therapy costs for [Child 1]. In addition, Ms Arnold has education costs of $300 per week for [Child 1] and [Child 2] to attend private school. She stated that both children have benefitted from extra programs at the school in relation to their respective special needs. Mr Hardcastill stated that Ms Arnold has chosen to educate the children privately, the cost of which is greater than her income. Ms Arnold also submitted that the entertainment costs and costs for extra-curricular activities were necessary costs related to the children’s proper needs. The Tribunal considers that these cost, which may provide benefit for the children, are not necessary costs for the determination of the proper needs of the children. The Tribunal has therefore not taken into account these costs in the determination of any departure determination, as they are not considered as necessary when having regard to the proper needs of the children.

28.The Tribunal has already discussed above, in paragraph 15 of these Reasons, the costs associated with [Child 2’s] orthodontic treatment. Mr Hardcastill submitted that he was happy to pay half of these costs and was aware that the treatment had commenced. Mr Hardcastill also did not dispute the information provided relating to [Child 1’s] costs but questioned whether her condition was such that it required treatment. He also submitted that there were differing views regarding diagnosis, however the evidence presented to the Agency and to the Tribunal did not show any contrasting views regarding her diagnosis, rather both the psychology reports and her paediatrician’s diagnosis were consistent. The Tribunal finds that the treatment for [Child 1] is consistent with the recommendations as discussed in the reports provided.

29.Subsection 117(4) of the Assessment Act requires the Tribunal to take into account whether any departure determination or failure to make a departure will cause any hardship to the child, the carer, the liable parent or any other person the liable parent has a duty to support.

30.In relation to both Mr Hardcastill and Ms Arnold, The Tribunal finds that Mr Hardcastill has capacity to contribute further to the children’s costs and has indicated a willingness to do so in relation to [Child 2’s] orthodontic costs. The Tribunal finds that this contribution should also be extended for [Child 1’s] treatment costs. The Tribunal finds that the funds received by Mr Hardcastill ameliorate any hardship that a departure determination would create. It is clear that Mr Hardcastill has used some of these funds for discretionary spending, such as the purchase of [sport 1] equipment. While Mr Hardcastill stated that this expenditure was necessary as it allows him to maintain his fitness subsequent to his car accident, expenditure for the children’s needs should have equal, if not greater priority as prescribed under the Act.

31.Additionally, Ms Arnold’s views that her expenditure on entertainment and extra-curricular activities are necessary costs, should not have greater priority to the children’s special needs. Her willingness to incur these additional expenses does create hardship in meeting other costs related to the children.

32.The Tribunal also finds, as confirmed by both Ms Arnold and Mr Hardcastill in their oral evidence to the Tribunal, that neither [Child 2] nor [Child 1] have income, assets or financial resources available to them.

33.The Tribunal is satisfied that it is just and equitable to depart from the administrative assessment and determines Mr Hardcastill should contribute to half the orthodontic costs ($4,182) for [Child 2]. The Tribunal has also determined that Mr Hardcastill’s should contribute to half of [Child 1’s] therapy costs. The Tribunal is therefore satisfied that it is just and equitable to make a departure determination as follows:

·     The annual rate of child support payable by Mr Hardcastill from 1 April 2022 to 31 March 2024 is increased by $3,176 per annum.

34.The above determination will result in an increase in the child support payable from the assessment which was in place from 1 February 2022. The Tribunal finds that there should be a change in the child support payable by Mr Hardcastill as outlined above. The Tribunal has carefully considered all the written and oral evidence and costs regarding the children’s proper needs. The income, resources, benefits and assets together with the commitments and liabilities of both parties were also scrutinised to determine the above departure determination. The Tribunal has considered half the costs of [Child 2’s] orthodontic treatment ($4,182) in varying the child support payable by Mr Hardcastill. The Tribunal has also considered half of [Child 1’s] psychology sessions and equine therapy (approximately $2,169) until 30 April 2023 in varying the child support payable by Mr Hardcastill.

35.In considering all of the factors in subsection 117(4) of the Assessment Act, the Tribunal has taken the view that both Mr Hardcastill and Ms Arnold will experience some hardship as a consequence of this departure determination. The Tribunal has extended the period for the departure determination until 31 March 2024 to spread these costs and reduce the immediacy of the impact on Mr Hardcastill. Some of the additional child support payable are for costs already incurred. While the Tribunal made the departure determination until 31 March 2024, the costs for [Child 1] only relate to the period until 30 April 2023 but are spread over a longer period to reduce the monthly costs to Mr Hardcastill. The assessment will revert to the administrative assessment from 1 April 2024. The Tribunal has determined that it is not just and equitable to extend the costs relating to [Child 1] beyond 30 April 2023 as it is unclear whether [Child 1] will become eligible for NDIS funding in the future.

36.The above determination has considered the costs of the children’s education and that Ms Arnold has determined the children to be educated in this manner. Accordingly, these costs have not been included. The Tribunal considers that it is just and equitable that the costs of [Child 2’s] orthodontics and [Child 1’s] therapy are equally shared as specified above. The Tribunal notes that the above departure determination increases Mr Hardcastill’s child support by almost as much as the annual amount payable under the administrative assessment based on his adjusted taxable income and Ms Arnold’s income. Mr Hardcastill will be required to pay approximately $134 per week in child support. The Tribunal has considered that while this will mean a reduction in his savings to meet these costs, they are necessary costs and it is just and equitable in the circumstances. It is open to either parent to seek a further departure determination if their circumstances change in the future.

Is it otherwise proper to make a particular departure determination?

37.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 Assessment 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. Subsection 117(5) focuses on the balance of support carried between the parents on the 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. Paragraph 117(5)(b) of the Assessment Act means that 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. The Tribunal has concluded that it is otherwise proper in the circumstances to depart from the administrative assessment.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that the annual rate of child support payable by Mr Hardcastill from 1 April 2022 to 31 March 2024 is increased by $3,176 per annum.