Ashby and Rendell (Child support) - [2024] ARTA 211

Ashby and Rendell (Child support) [2024] ARTA 211 (24 October 2024)

Applicant/s: Miss Ashby

Respondent: Child Support Registrar

Other Parties: Mr Rendell

Tribunal Number: 2024/HC027955
Tribunal: Member A Byers
Place:Brisbane
Date:24 October 2024

Decision:The Tribunal varies the decision under review to the decision that Mr Rendell’s annual rate of child support is reduced from 5 September 2023 until the child [Child 1] ceases to be an eligible child in accordance with paragraph 49 of these Reasons.

CATCHWORDS
CHILD SUPPORT – departure determination – costs of private schooling – mother’s expectation of private education, or no preference and passive acquiescence – joint attendance at school presentations and enrolment applications – mother a part-time student living off savings – parties’ share of property settlement – costs of mother’s culturally important visits to family – decision under review varied

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 pursuant to subsection 16(2AB) of the Child Support (Registration and Collection) Act 1988.

Statement of Reasons

BACKGROUND

For child support purposes Mr Rendell is the parent liable to pay child support to Miss Ashby for their children [Child 1] (born March 2008) and [Child 2] (born July 2016). The parties separated in May 2021 and a child support case has been registered since June 2021. Each party has 50% care of the children.
On 5 September 2023 Mr Rendell lodged an application with Child Support seeking a change of assessment. Although several grounds were cited, ultimately the concern is Reason 3 in relation to the children’s private schooling costs. Prior to Mr Rendell’s application he was covering the tuition fees and compulsory school levies and this remains the case.
According to Child Support records, at the time of Mr Rendell’s application his child support liability of $14,324 per annum was assessed under Part 5 of the Child Support (Assessment) Act 1989.[1] This assessment used an adjusted taxable income for Mr Rendell of $141,763 for the 2020/21 income year and Miss Ashby’s estimate for 2023/24 of $0.
[1] All further legislative references are to this Act.
On 20 October 2023 a Child Support officer made a departure determination. The officer decided that Reason 3 applied and concluded Miss Ashby should contribute to half the children’s combined school fees. The officer decided accordingly that the child support otherwise payable by Mr Rendell under Part 5 should be reduced by $2,999 per annum from 5 September 2023 to 31 December 2027.
Miss Ashby objected to this decision on 20 November 2023. Miss Ashby’s reason for objecting was essentially that she could not afford to pay school fees as she was a part-time student living off her savings.
On 26 April 2024 the objections officer agreed that Reason 3, was established. The objections officer varied the decision under review to the decision that the child support otherwise payable by Mr Rendell should be reduced by $2,999 per annum from 5 September 2023 until [Child 1] ceased to be an eligible child. As [Child 1] is in Year 10 this year, this evidently addresses the fact he is unlikely to be an eligible child in 2027.
On 17 July 2024 Miss Ashby sought review by the Administrative Appeals Tribunal (AAT) and the application was heard on 24 October 2024. Both parties appeared by conference telephone and gave sworn evidence. Miss Ashby was represented by Mr Laurie Fittock of Child Support Help Australia. An interpreter for Miss Ashby was present but not required. The Child Support Registrar was not present.
The following material was before the Tribunal:
-     the ‘Section 37(1) Statement and Documents’ provided by Child Support comprising folios 1 to 308 (marked Exhibit 1);
-     supplementary ‘Section 38AA Request and Documents’ provided by Child Support comprising folios 309 to 406 (marked Exhibit 2);
-     documents provided by Miss Ashby, comprising folios A1 to A21 (marked Exhibit A); and
-     documents provided by Mr Rendell, comprising folios B1 to B38 (marked Exhibit B).
From 14 October 2024, the AAT became the Administrative Review Tribunal (the Tribunal). Under the relevant transitional provisions, applications for review not finalised before 14 October 2024 are taken to be an application for review to the Tribunal. The transitional provisions enable the Tribunal to continue and finalise any aspect of a review not already completed by the AAT. This decision and statement of reasons is accordingly made by the Tribunal.

ISSUES

10. As clarified at the hearing, Miss Ashby raises the dual issues of whether there is a basis for a departure determination under Reason 3 and, if there is, whether it is just and equitable to make a departure determination. Regarding the first point, the issue is whether Miss Ashby had an expectation that the children would be privately educated, or instead had no particular preference and merely passively acquiesced to Mr Rendell’s wishes. Regarding the second point, the issue is whether Miss Ashby has the income or financial resources to pay a share of the education costs.

11. Mr Rendell’s position in a nutshell is that Miss Ashby’s share of their property settlement (in October 2021) was around $1,400,000 which would ordinarily leave her financially able to make an equal contribution.

CONSIDERATION

The legislative framework

12. Section 98B enables a liable parent, or carer entitled to child support, who is of the view that special circumstances exist, to ask Child Support to make a determination departing from the provisions of the Act governing the administrative assessment of child support (a departure determination, also known as a change of assessment decision).

13. Section 98C empowers the Registrar to make a departure determination if satisfied that:

(1)one or more grounds for departure referred to in subsection 117(2) exist;
(2)it would be just and equitable as regards the child, the liable parent and the carer entitled to child support; and
(3)it would be otherwise proper.

Are there grounds for departure?

14. As indicated, Mr Rendell applied for a change of assessment on 5 September 2023 seeking a departure determination in part under Reason 3, which concerns the children’s private education costs.

Subparagraph 117(2)(b)(ii) – Reason 3

15. Subparagraph 117(2)(b)(ii) provides a ground for departure where, in the special circumstances of a case, the costs of maintaining a child are significantly affected because the child is being educated in the manner that was expected by their parents.

16. The term ‘special circumstances’ is not defined in the Act. In Gyselman v 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.

17. It is well established that child support payable under a Part 5 assessment does not cover the compulsory costs of private schooling that are over and above those ordinarily incurred in the public education system. As children’s textbooks and associated costs are typically also incurred in public schooling, they are ordinarily excluded. However, tuition fees and compulsory school levies represent charges not incurred in public schooling.

18. A joint expectation at some point should not be understood as akin to entering a contract from which there is no exit clause. Apart from the fact the relevant provision is not couched in contractual terms, or in terms of an agreement between parents, it is clear parents can have the same expectation without ever having discussed the subject of the expectation. Further, it has never been suggested that a parent cannot change a prior expectation about private education where their financial resources are not adequate. In this regard, Riethmuller J noted in Dobbins & Devlin & Anor [2014] FCCA 1274 (at paragraph 43):

The simplistic argument of the mother that it is not open to a parent to change their expectations with respect to their child’s education simply due to financial reasons cannot be correct. Throughout life people change their expectations both with respect to their own lives and their children as a result of the resources available to them.

19. I think this passage has to be understood with circumspection. Where a parent has expected their child to be privately educated, there would need to be clear evidence both that their financial position has materially altered and that this was the cause of their changed view.

20. In my view an expectation that a child will attend private schooling involves a positive or active attitude by a parent that this will occur. It amounts to an anticipation typically associated with active steps to bring this about, or an active acquiescence in the other parent taking the requisite steps. Regarding education, the active steps a parent may make may include seeking out suitable schools, being placed on a waiting list, signing enrolment forms and paying school fees.

21. In the present matter, the available documentation shows the parties signed an enrolment application form on 23 February 2020 for [Child 2]’s kindergarten year at [School 1] in 2021. Documentation provided also shows the parties signed an enrolment application form on 14 April 2020 for [Child 1] to attend Year 7 at [School 2] in 2021.

22. I accept Mr Rendell’s uncontested evidence that [Child 1] attended kindergarten/primary school at [School 1] from 2012 or 2013 following a joint enrolment application and has accordingly been in the private schooling system for around 12 years. I also accept Mr Rendell’s evidence that he and Miss Ashby both attended school presentations prior to deciding that [Child 1] should attend [School 1].

23. I accept Miss Ashby probably had no particular preference regarding the nature of the children’s education and I consider Mr Rendell was probably the driving force in this regard. That said, Miss Ashby was a signatory to enrolment forms for both children in 2020 in a context where [Child 1] had already been in private schooling for some seven or eight years. I am satisfied in this context that Miss Ashby participated in the process and had a continuing expectation at the time that both children would be privately educated.

24. I am satisfied from school invoices Mr Rendell has provided that [Child 1]’s [School 2] school fees for 2023 and 2024 total $3,818 and $3,993 respectively. [School 1] school invoices reveal the fees for [Child 2] for 2023 and 2024 are $2,180 (with an ‘early bird discount’) and $2,380 respectively. The documentation provided shows Mr Rendell is current with his payments.

25. The combined school fees for 2023 and 2024 are therefore $5,998 and $6,373 respectively. As the fees are significant and are not taken into consideration in the Part 5 assessment, I consider they give rise to special circumstances. Further, as there was a mutual expectation that the children be privately educated, I am satisfied there are grounds for departure under Reason 3.

26. Due to the particular circumstances of this case, I think it is apposite to consider Miss Ashby’s financial resources under just and equitable considerations rather than attempt to first determine objectively whether she altered those expectations according to her changed financial position.

Is a change of assessment just and equitable?

27. Subsection 117(4) provides as follows:

Matters to consider for purposes of subparagraph (1)(b)(ii)
(4) In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
(a)the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b)the proper needs of the child; and
(c)the income, earning capacity, property and financial resources of the child; and
(d)the income, property and financial resources of each parent who is a party to the proceeding; and
(da)the earning capacity of each parent who is a party to the proceeding; and
(e)the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i)himself or herself; or
(ii) any other child or another person that the person has a duty to maintain; and
(f)the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g)any hardship that would be caused:
(i)to:
(A)the child; or
(B)the carer entitled to child support;

by the making of, or the refusal to make, the order; and
(ii) to:
(A)the liable parent; or
(B)any other child or another person that the liable parent has a duty to support;

by the making of, or the refusal to make, the order; and
(iii) to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.

28. Under subsection 3(1) parents have a primary duty to maintain their children and under subsection 3(2) this duty has priority over all commitments other than (amongst other things) the commitments necessary to enable a parent to support themselves.

29. On the available evidence there is no suggestion that the children have special needs or separate income or financial resources.

Miss Ashby’s income and financial resources

30. It is common ground that, prior to the parties’ separation (in May 2021), Mr Rendell was the breadwinner and the parent responsible for meeting the children’s education costs. It is apparent from Miss Ashby’s evidence that she had some sporadic work arranged by Mr Rendell but this would not have been sufficient for her to contribute.

31. I am satisfied that, at the time of separation, Miss Ashby was a student and was not employed or otherwise deriving income. In submissions to Child Support on 24 October 2023, Miss Ashby stated that she informed Mr Rendell she could not afford to contribute to the children’s continued private schooling and suggested they be moved to a public school.

32. Although Mr Fittock rightly points to the disparity in the parties’ incomes, it is a party’s financial resources that are to be considered and, in this regard, Mr Rendell points to the financial resources available to Miss Ashby following their property settlement.

33. Exhibit 1 includes a consent order of 4 October 2021 by the Federal Circuit and Family Court of Australia. Under the order, Mr Rendell was to transfer an unencumbered right and interest in [Road], [Suburb 1] (in Queensland). A property at [Location] (Tasmania) was to be sold with Mr Rendell to first discharge the outstanding mortgage and with Miss Ashby to then receive 44.5% of the net proceeds free of the mortgage.

34. A settlement account of 14 April 2022 shows the [Location] property settled on 13 April 2022 with net proceeds of $614,211 after discharge of the mortgage outstanding of $106,606. According to the account, the “cash adjustment share” paid to Miss Ashby was $435,450.

35. Miss Ashby sold the [Suburb] property on 24 April 2023 for $980,000.[2] This indicates Miss Ashby effectively derived $1,415,450 from the property settlement less tax on the associated capital gain. In this regard Miss Ashby had an inflated taxable income of $429,442 in 2022/23. According to the Australian Taxation Office’s calculator, this income would have attracted a tax liability of $172,507, including the Medicare levy.[3] The net proceeds from the property settlement for present purposes is therefore about $1,243,000.

[2] [Real estate agency URL]

[3] I understand that Miss Ashby bought a home in Tasmania for around $320,000 and resided there until purchasing her current home for $515,000 in May 2024. The first property has very recently been set up as an Airbnb rental. According to Miss Ashby, after paying the final instalment on her new home she now has about $80,000 in savings. Miss Ashby said she has incurred costs associated with furnishing her new home in addition to the normal costs of living.

37. What can be inferred from this is that Miss Ashby has elected to invest her property settlement in property as a means of deriving income. Had she continued to live in the first Tasmanian property purchased, I consider she would have savings or available funds comfortably exceeding $600,000. It can also be inferred that Miss Ashby would have had available funds materially exceeding this figure after purchasing the first Tasmanian property.

38. I accept Miss Ashby does not presently have any earned income and has not worked since the parties’ separation. Miss Ashby expects to commence deriving Airbnb rental income from her first Tasmanian property from October 2024 and she will finish her [degree] at the close of this year. I understand Miss Ashby will be seeking employment in this area in 2025.

Mr Rendell’s income and financial resources

39. Mr Rendell completed a ‘Statement of Financial Circumstances’ (SOFC) form on 13 June 2024. Mr Rendell declared gross weekly income from work of $2,558 and a taxable weekly rental profit of $226 (including a mortgage). Mr Rendell’s expenses are unremarkable and, apart from the mortgage, he does not have any debts. At the hearing Mr Rendell indicated he could continue to meet the school fees without a contribution from Miss Ashby.

Miss Ashby’s costs

40. Miss Ashby made several attempts to complete SOFC forms each of which contained different asset, income and expense details. Miss Ashby’s listed expenses appear unremarkable overall. Miss Ashby’s estimated weekly expense associated with holidays to visit family in [Country] varied from $60 to $100 depending on which SOFC is considered. However, it appeared from Miss Ashby’s evidence at the hearing that, contrary to the indication in some of the SOFCs, her children do not accompany her. This reduces Miss Ashby’s estimated holiday costs to between $35 and $60 a week.

41. As holiday costs of $60 per week would cover a half share of the children’s current schooling costs, Miss Ashby responded that the trips are culturally important. Miss Ashby does not see herself as prioritising holiday expenditure over the children’s education costs as she considers they would be properly educated in the public education system.

42. Miss Ashby does not have any debts. Miss Ashby’s sources of income to date are family tax benefit, child support and savings interest. As indicated, Miss Ashby expects to derive rental income from October 2024 and will be seeking work in the [subject] area upon the completion of her degree studies this year.

Just and equitable conclusions

43. Ultimately, I consider it is just and equitable for Miss Ashby to pay an equal share of the children’s private schooling costs. In summary, although Mr Rendell does have a capacity to meet the costs himself, Miss Ashby did secure a significant financial resource from the parties’ property settlement in October 2021 (around $1,243,000 after capital gains tax).

44. Following the reasonable purchase of a home in Tasmania (for around $320,000), Miss Ashby retained ample funds to contribute to the children’s education. Although Miss Ashby’s savings have significantly reduced following the purchase of a rental property, that choice should be considered for child support purposes in the context of a parent’s obligations explained in section 3. In particular, section 3 anticipates that a parent will arrange their financial resources in a way that enables them to address the primary obligation to meet their children’s costs.

45. Mr Rendell indicated that, were a departure determination made, he would accept as appropriate a start date coinciding with his change of assessment application (5 September 2023). As to an end date, Mr Rendell does not have any pressing issue with that adopted by the objections officer save for the fact a further change of assessment application would be required as that date approached if [Child 2] continues to be privately schooled.

46. I consider it fair to commence a departure determination from when Mr Rendell lodged his application as Miss Ashby was entitled to rely on the prior assessment in place. As [Child 1] will turn 18 in March 2026 and will have finished Year 12 at the end of 2026, he will cease to be an eligible child in either March 2026 or at the close of the 2026 school year if either parent applies for an extension of the child support assessment. Either way, I think it is appropriate at this point to set an end date according to when [Child 1] ceases to be an eligible child as this gives the parties some stability in the meantime.

47. I am satisfied the considerations outlined balance the children’s costs both with the parties’ respective duties under the child support law as parents and with their capacities to contribute to those costs in a way that is just and equitable.

48. As the school fees for 2024 have increased, the objections officer’s decision will be varied to take the increase into account. Further, as the CPI increase to the 12 months ending September 2024 was 2.7% and there are signs of easing, I will use an increase of 2.5% to estimate future increases in the children’s schooling costs. This produces the following table of actual and estimated combined schooling costs:

Year combined cost 50%

$5,998 $2,999
$6,373 $3,186
$6,532 $3,266
$6,695 $3,347

49. Accordingly, it is just and equitable in my view to decrease the annual rate of child support otherwise payable by Mr Rendell under Part 5 from 5 September 2023 to when [Child 1] ceases to be an eligible child in 2026 by $2,999 in 2023, $3,186 in 2024, $3,266 in 2025 and $3,347 in 2026.

Is a change of assessment otherwise proper?

50. Subsection 117(5) provides as follows:

(5) In determining whether it would be otherwise proper to make a particular order under this Division, the court must have regard to:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and
(b) the effect that the making of the order would have on:
(i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
(ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.

51. I am satisfied that a departure determination in the proposed terms set out above is otherwise proper. As noted above, it recognises that Miss Ashby’s financial resources are to be considered having regard to section 3. The reduction in Mr Rendell’s child support liability does not have any repercussions for a social security benefit or pension, although the change will likely increase the family assistance payable to Miss Ashby.

DECISION

The Tribunal varies the decision under review to the decision that Mr Rendell’s annual rate of child support is reduced from 5 September 2023 until the child [Child 1] ceases to be an eligible child in accordance with paragraph 49 of these Reasons.

Date of hearing:	Thursday, 24 October 2024
Representative for the Applicant:	Mr Laurie Fittock
Representative for the Other party:	Unrepresented