Ashely and Christy (Child support)

Ashely and Christy (Child support) [2018] AATA 4590 (29 October 2018)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2017/BC013004
APPLICANT:  Mr Ashely
OTHER PARTIES:  Child Support Registrar
Ms Christy

TRIBUNAL:Member J Thomson
DECISION DATE: 29 October 2018
DECISION:
The Tribunal sets aside the decision under review, and, in substitution, decides that:
(a) For the period 1 July 2017 to 31 October 2019, Mr Ashely’s adjusted taxable income is varied to $95,000; and
(b) For the period 1 July 2017 to 30 June 2018, the annual rate of child support payable by Mr Ashely is increased by $21,424 in consideration of his contributions to [Child 1’s] special needs costs and [School 1] education costs; and
(c) For the period 1 July 2018 to 30 June 2019, the annual rate of child support payable by Mr Ashely is increased by $13,545 in consideration of his contribution to [Child 1’s] [School 2] education costs.

CATCHWORDS
CHILD SUPPORT – departure determination – income, property and financial resources of parents – costs of special needs for the child – costs of education for the children – 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 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

Mr Ashely and Ms Christy are the parents of [Child 1], born 2003.
Mr Ashely seeks review of an objection decision made by the Department of Human Services-Child Support (the Department) on 24 August 2017. This decision partially allowed his objection to an earlier Department decision dated 26 April 2017, setting aside that decision and, in substitution, setting the annual rate of child support payable by him to Ms Christy for [Child 1] for the periods 1 January 2017 to 31 December 2017, 1 January 2018 to 31 December 2018, and 1 January 2019 to 31 December 2019, at $20,508, $15,723 and $16,510 respectively.
The Tribunal heard the matter on 2 August 2018. Mr Ashely attended the hearing in person and gave affirmed evidence. He was represented at hearing by his solicitor, [Mr A], who made submissions on his behalf. Ms Christy attended the hearing via conference telephone and gave affirmed evidence. The Tribunal had before it documentation provided by the Department, and both Mr Ashely and Ms Christy.
Mr Ashely and his representative, [Mr A], had copies of these documents at hearing. At the commencement of the hearing, Ms Christy said she also had copies of these documents, but shortly after the commencement of the hearing, she became aware she did not have copies of the Department’s documentation. In any event, she agreed to proceed with the hearing, notwithstanding she did not have copies of the Department’s documents with her.
The documentation provided by the Department, Mr Ashely and Ms Christy were admitted into evidence and marked Exhibits 1, A and B respectively.
The Tribunal had earlier directed that Mr Ashely’s accountant, [Accountant A] of [Accounting Firm 1] of [Town 1], be available at hearing to provide accounting evidence with respect to the financial reports she had prepared for Mr Ashely, in evidence before the Tribunal.
[Accountant A] attended the hearing via conference telephone and gave evidence with respect to the financial reports she prepared for Mr Ashely. The Tribunal directed that she provide copies of the profit and loss statement for the [Business 1] Unit Trust for the financial year ended 30 June 2017, together with the ledger recording loans totalling $200,056.18 made by Mr Ashely to the [Business 1A] Partnership, referred to in the balance sheet of that entity for the financial year ended 2017. Those documents have been provided and admitted into evidence as part of the documentation provided by Mr Ashely, Exhibit A. The Tribunal did not consider it necessary to provide copies of those documents to the parties as the nature and content of them was clearly disclosed in the evidence given by [Accountant A] at hearing, and no issue was taken with her evidence.
At the direction of the Tribunal, Ms Christy’s accountant provide financial reports including profit and loss statements, balance sheets and income tax returns for Ms Christy and her business entities for the 2017/18 financial year. The Tribunal also directed Ms Christy to provide further evidence in the form of receipts relating to the payment of [Child 1’s] [specialist] treatment costs. This additional documentation has been provided and admitted into evidence as part of Ms Christy’s documentation, Exhibit B. Copies have been provided to Mr Ashely for comment: no response has been received.
The issues which arise in this case are:
·       The income, financial resources and property available to both parents for the payment of child support for [Child 1];
·       The special needs of [Child 1], regarding his [specialist] treatment, and Mr Ashely’s liability to contribute to the costs of that treatment;
·       The parents’ expectations regarding the education and training of [Child 1], and the extent to which Mr Ashely should contribute to the costs associated therewith; and
·       The application of the [state] Government’s [education allowance] as regards the parents’ liability for the costs associated with the education and training of the child, [Child 1], in the manner expected by the parents.

CONSIDERATION

In reaching its decision, the Tribunal has considered the affirmed evidence given by the parents and [Accountant A], the submissions made by [Mr A] on behalf of Mr Ashely, and the documentation contained in Exhibits 1, A and B.

The legislative framework

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) Act 1989 (the Act). A formula is used. It takes into account variables including each parent’s adjusted taxable income for the last relevant year of income, the number of children, and the level of care provided by each parent. Part 6 A of the Act allows for a departure from the administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make such a departure determination if three matters are established:
·     One, or more than one, of the grounds for departure referred to in subsection 98C(2) exists (subparagraph 98C(1)(b)(i));
·     A departure is just and equitable as regards the children and each parent (sub-subparagraph 98(1)(b)(ii)(A)); and
·     It is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B)).
Subsection 98C(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2) of the Act.
If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Registrar may make one of the determinations prescribed in section 98S of the Act. It permits a range of determinations, including varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.

Grounds for departure

Subparagraph 117(2)(c)(ia) - commonly referred to as Reason 8 - provides as a ground 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; or….
Subparagraph 117(2)(b)(ia) of the Act, commonly referred to as Reason 2, provides as a ground for departure:
that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
…
(ia) because of the special needs of the child…
Subparagraph 117(2)(b)(ii) of the Act, commonly referred to as Reason 3, provides as a ground for departure:
that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
…
(ii) because the child is being cared for, educated or trained in the manner that was expected by his or her parents…
The words “in the special circumstances of the case” are not defined in the legislation. Whilst it is not possible to define with precision the meaning of that term, it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the legislation in subsection 117(2) must be guided by the qualification that the Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman v Gyselman (1992) FLC 92 - 279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. The Tribunal will consider whether the application of the administrative assessment would result in an unjust and inequitable determination of child support payable, having regard to the evidence relevant to the parents’ financial position.
Both parents acknowledge and agree that it was their mutual intention that [Child 1] should receive a private secondary school education. This is recorded in two documents in evidence before the Tribunal in the form of a Financial Agreement dated 20 August 2008 (see, relevantly, Exhibit 1, pages 721 and 722), and a Family Dispute Resolution document signed by the parties on 19 September 2014 (see Exhibit 1, pages 791 to 794).
[Child 1] is presently attending [School 2], [in Town 1], as a grade 10 boarding student, having commenced at that college in July 2017. Mr Ashely’s representative at hearing, [Mr A], acknowledged on behalf of his client that Mr Ashely accepts liability for half of the [School 2] tuition fees and other compulsory charges and levies from term 3, 2017, when [Child 1] commenced his education at [School 2], until he completes his secondary education.
Both parents acknowledge and agree that the [surgical] procedure referred to in the Department’s original decision and the objections officer’s decision under review did not proceed, and accordingly, the costs associated with that anticipated procedure should be disregarded.
Both parents also acknowledge and agree that [Child 1’s] [specialist] treatment by [the specialist] constitutes special needs, and Mr Ashely has acknowledged and agreed to contribute to half the costs associated with that treatment upon evidence of the payment of the out-of-pocket costs of that treatment, net of Medicare and other health insurance rebates, being provided by Ms Christy (see paragraphs 4.6, 4.7 and 4.8 of [Mr A’s] submissions at Exhibit A15).
Both parents are self-employed and conduct their business affairs under relatively sophisticated business/financial structures. An analysis of each business structure is essential in order to appreciate the income, financial resources and property available to each parent for child support purposes.
Mr Ashely’s business/financial structure
Mr Ashely’s representative, [Mr A], provided an outline of Mr Ashely’s business/financial structure as part of his written submissions at paragraphs 3.4 and 3.5, page A13 of Exhibit A. Mr Ashely’s former accountants, [Accounting Firm 2], also provided a written summary at pages 309 to 314 of Exhibit 1 together with supporting documentation in the form of financial reports and corresponding income tax returns for the various entities forming part of that business/financial structure.
In summary, the evidence in this respect was as follows.
Mr Ashely derives income from his activities as a [farmer] on rural property located approximately 100km outside [Town 2].
His [farming] activities are conducted on a property on which he resides known as ‘[Property 1]’, the registered proprietor of which is a company, [Business 1B]. Mr Ashely is the sole director and shareholder of [Business 1B].
[Business 1B] is the trustee of the [Business 1] Unit Trust ([Business 1] Unit Trust), the unit holders of which are Mr Ashely (50%) and a company, [Business 2], the trustee of the [Business 3] Trust (50%). The [Business 1] Unit Trust derives its income from the lease of its [Property 1] to a partnership known as ‘[Business 1A] Co’, a partnership between Mr Ashely’s company, [Business 4], of which he is the sole director and shareholder, and [Business 5] Trust, the corporate trustee of which is [Business 6]. Mr Ashely manages the [farming] activities for the [Business 1A] Partnership (the Partnership).
According to Mr Ashely’s former accountant’s summary at Exhibit 1, pages 309 to 314, the likely director and shareholder of [Business 2] is [Ms B], the mother of Mr Ashely’s current partner, [Ms C]. This relationship is confirmed in [Mr A’s] submissions at hearing on behalf of Mr Ashely in relation to the acquisition of a [farming] property known as “[Property 2]” at page A20 of Exhibit A. Company searches conducted by the Department and provided to the Tribunal pursuant to a request under section 95J of the Child Support (Registration and Collection) Act 1988 show that [Ms B] is the sole director of and shareholder in [Business 2] and [Business 6].

Ms Christy’s business/financial structure

Ms Christy’s business/financial structure is partially outlined in a letter from her accountants, [Accounting Firm 3] at page 39 of Exhibit 1. According to that letter, Ms Christy is the managing director of the company [Business 7] which operates a [Product 1] retailing business in [Town 2].
Ms Christy gave evidence that in December 2017, she incorporated a company, [Business 8], which purchased a farming property at [Town 3] upon which she conducts a commercial agricultural farming business, cultivating [Product 2] for wholesale to markets. Ms Christy is the sole director and shareholder of [Business 8].

Mr Ashely’s evidence at hearing

The submissions made by [Mr A] on behalf of and affirmed by Mr Ashely at hearing related to five points:
1.   The methodology and underlying information used by the Department’s original decision maker, [the decision maker], in determining Mr Ashely’s income for the financial years 2014/15 and 2015/16 at $150,000, and relied upon by the objections officer in the decision under review;
2.   Ms Christy’s claim for special needs regarding [Child 1’s] [surgery] and related costs of $915, now conceded by the parties as no longer relevant to the review application;
3.   Ms Christy’s unilateral decision to send [Child 1] to [School 1], in year 7 as a boarder, instead of to one of the [Town 1] based private schools [Mr A] submitted the parents had agreed upon, namely, [School 3], [School 2] and [School 4], where he was to commence as a boarder from year 9, in accordance with Mr Ashely’s assertion as to the mutual agreement the parents reached regarding [Child 1’s] private education;
4.   Mr Ashely’s liability to contribute the tuition fees and associated boarding fees at [School 1] for [Child 1] from term 2, 2016 to term 2 ,2017; and
5.   The parents’ entitlement to the benefit of the [State] Government [education allowance] tuition allowances paid directly, in this case, to [School 2] on 15 December 2017 and 2 March 2018.
In relation to point 1, [Mr A] submitted that the methodology and underlying information used by [the decision maker] was both inappropriate, and flawed.
He submitted that [the decision maker’s] methodology in determining Mr Ashely’s income for the 2014/15 and 2015/16 financial years at $109,505, and $98,363 respectively, by reference to his drawings for those years from the Partnership ($143,402 drawings less contributions of $33,897 = net drawings $109,505, and $110,404 drawings less contributions of $12,115 = net drawings $98,289) was flawed, because it failed to take account of the correct balance of Mr Ashely’s drawings account reflected in the balance sheet for the Partnership for the 2013/14 financial year, for the purpose of determining the status of the loan account for the following 2014/15 financial year and succeeding years.
[Mr A] submitted Mr Ashely’s former accountant, [Accountant B], of [Accounting Firm 2], had incorrectly reflected a debit balance of $109,505 in Mr Ashely’s drawings account for the 2014/15 financial year, instead of the correct drawings “opening balance” of $70,419, an error he said had only recently been detected by Mr Ashely’s current accountant, [Accountant A] of [Accounting Firm 1] of [Town 1], and subsequently acknowledged by [Accountant B] in the amended balance sheet for the Partnership drawings for that financial year prepared by him on 9 April 2018 and annexed to [Mr A’s] submissions at page A22 of Exhibit A, the effect of which, [Mr A] submitted, was to reduce the amount of Mr Ashely’s drawings for the 2014/15 financial year from $109,505 to $36,522 ($70,419 drawings - $33,897 contributions = $36,522), and not the amount of $109,505 relied upon by [the decision maker] in his calculations.
[Mr A] submitted that [Accountant A] had detected further errors in the financial statements for the Partnership prepared by [Accountant B] for the 2015/16 financial year in that [Accountant B] had omitted to take into account bank loans totalling $238,261.44 taken out by Mr Ashely in his personal capacity, and paid to the Partnership in the 2015/16 financial year, extinguishing his 2014/15 Partnership loan account balance of $70,419, and resulting in a credit loan account balance in his favour of $167,842.27. [Mr A] said this was subsequently acknowledged by [Accountant B] and reflected in the amended Partnership balance sheet he prepared on 9 April 2018 for the 2015/16 financial year, annexed to [Mr A’s] submissions at page A34 of Exhibit A, recording Mr Ashely as having an unsecured loan of $167,842.27 to the Partnership.
[Accountant A] gave evidence confirming the errors she had detected in the financial accounts for the Partnership referred to in [Mr A’s] submissions for the 2014/15 and 2015/16 financial years.
[Mr A] submitted that in accordance with the amended balance sheets for the Partnership for the financial years 2014/15 and 2015/16 prepared by [Accountant B] on 9 April 2018 (which were not before [the decision maker] or the Department’s objections officer), Mr Ashely’s drawings for the 2014/15 financial year were only $39,086, and nil for the 2015/16 financial year, and consequently, the information relied upon by those officers to determine Mr Ashely’s drawings over the two financial years 2014/15 and 2015/16 at $103,934, grossed up to an annual income of $150,000 was flawed.
[Accountant A] concurred with [Mr A’s] submissions in this respect.
[Mr A] made further submissions regarding Mr Ashely’s financial position asserting that, consistent with [the decision maker] and the objections officer’s decisions to determine Mr Ashely’s income, based on his drawings from the Partnership, given he took no drawings in the 2015/16 financial year, his income for that financial year should be assessed as nil.
However, [Mr A] acknowledged in his submissions that Mr Ashely had withdrawn funds from the Partnership in the past to meet his and his family’s living expenses, and that he had found it expedient to borrow (and had the capacity to borrow) funds in the 2015/16 financial year to repay his Partnership loan account to provide sufficient cash flow for the Partnership to continue to operate.
Both Mr Ashely and [Mr A] asserted that current drought conditions afflicting [Town 2] and other [rural] areas made it impossible for Mr Ashely to plant fodder crops to sustain the Partnership’s [livestocks], and [livestock] sales were depressed, resulting in there being no surplus funds in the Partnership upon which he could draw, and as a consequence, Mr Ashely was reliant on his capacity to borrow funds to sustain himself and his family, a curious submission, given Mr Ashely had not only repaid his loan account with the Partnership from the personal loans he was able to facilitate during the course of the 2015/16 financial year, but had contributed funds sufficient to place his loan account in credit to the extent of $167,842.27.

The Tribunal had before it copies of income tax returns for the [Business 1] Unit Trust for the financial years ended 2013/14, 2014/15 and 2015/16, together with copies of Mr Ashely’s personal income tax returns for the corresponding financial years, provided by his former accountant, [Accountant B].
The Trust’s income tax return for the financial year ended 2014 (see pages 356 to 365 of Exhibit 1) describes the main business activity of the Trust as “renting or leasing of non-residential property” (Mr Ashely’s [Property 1]). The income for that financial year was $205,763. No expenses were recorded against this income, which was then distributed to the Trust’s unit holders, Mr Ashely and the [Business 3] Trust in the amounts of $102,881 and $102,882 respectively.
The Trust’s 2015 and 2016 income tax returns (see pages 366 to 385 of Exhibit 1) reflected a gross rental income from [Property 1] of $129,450 and $146,212 respectively, nil expenses against those incomes, and equal distributions of those incomes to Mr Ashely and the [Business 3] Trust of $64,725 each for the 2015 financial year, and $73,106 each for the 2016 financial year.
Mr Ashely’s current accountant, [Accountant A] gave evidence at the hearing to the effect that the Trust’s income for the 2017 financial year would be the same as the gross income of $146,212 for the preceding year, and distributed in the same manner as reflected in the Trust’s 2016 return. The Partnership livestock and primary production account statements annexed to [Mr A’s] submissions to the Tribunal at pages A39 to A41 of Exhibit A reflect the Partnership’s lease payments to the [Business 1] Unit Trust for the 2017 financial year in the amount of $146,212.42.
Mr Ashely’s personal income tax returns for the financial years 2014 to 2016 inclusive reflect his receipt of the distributions from the [Business 1] Unit Trust referred to above. However, after deductions, comprising, largely, interest payments on Mr Ashely’s personal loans (in one instance, interest on his [Bank 1] loan account number [number] recording a debit balance of $2 million as at 27 July 2016 - see page 253 of Exhibit 1), his taxable income position for the 2014 to 2016 financial years, reflected in his returns for those years, was as follows:
·       2014 – $13,978 (interest deductions of $88,938);
·       2015 – ($24,911) loss (interest deductions of $89,636);
·       2016 – ($20,980) loss (interest deductions of $94,086).
The Tribunal also had before it copies of the income tax returns for the Partnership between Mr Ashely’s company, [Business 4], and his mother-in-law, [Ms B’s] trust entity, the [Business 5] Trust for the years 2014 and 2015 (see pages 315 to 329 of Exhibit 1). A copy of the Partnership’s balance sheet for the 2014 financial year was annexed to [Mr A’s] submissions (Exhibit A, page A 22) as evidence of the closing balance of Mr Ashely’s Partnership loan account, but no corresponding profit and loss statement for that year was provided.
The income tax return for the Partnership for the 2014 financial year at pages 315 to 321 of Exhibit 1 reflects total business income of $804,242 against total expenses of $1,224,149, which included costs of sales of $431,582, depreciation of $48,125, motor vehicle expenses, repairs and maintenance of $60,709, and other unspecified expenses of $351,975, resulting in a loss for that year, after $5,000 income reconciliation adjustments, of $424,907, distributed approximately equally between the partners, Mr Ashely’s company, [Business 4], and the [Business 5] Trust, his mother-in-law, [Ms B’s] Trust, in the amounts of $212,454 and $212,453 respectively.
Copies of the Partnership’s 2015 Livestock Trading Account and Primary Production Trading Account, profit and loss Primary Production Account statement and balance sheet were also in evidence before the Tribunal (see pages 401 to 405, and 406 to 411 of Exhibit 1). The profit and loss statement reflected total income of $376,337.14 against expenditure totalling $589,981.02, resulting in a loss of $213,643.88 distributed to the partners, Mr Ashely’s company, [Business 4], as to $106,736.54 and the balance, presumably, to the [Business 5] Trust, his mother-in-law, [Ms B’s] Trust.
Notable, amongst the expenditure items were depreciation of $59,406, motor vehicle expenses of $11,342.02, repairs and maintenance costs of $58,682.96, and travelling expenses of $24,781.06; total $154,212.04. The Tribunal considers some of these items, particularly the repairs and maintenance costs and travelling expenses, questionable, having regard to the [farming] nature of the Partnership’s business activities.
Copies of the Partnership’s 2016 revised financial reports were in evidence before the Tribunal as annexure BA-2 to [Mr A’s] submissions at pages A23 to A34 of Exhibit A. The profit and loss Primary Production Account statement reflects total income of $622,570.53 against expenses totalling $915,499.07, resulting in a loss of $292,928.54 for the 2016 year, distributed equally to the partners, Mr Ashely’s company, [Business 4], and the [Business 5] Trust, in the amount of $146,463.09 each.
Notable amongst the expense items were depreciation of $50,802, motor vehicle expenses of $32,900.69, Council rates of $26,320.81 (some or all of which would be attributable to [Property 1] on which Mr Ashely resides) and repairs and maintenance of $79,202.35.
However, as observed by Mr Ashely’s accountant, [Accountant A], in her evidence at hearing, even if these extraordinary items noted above were added back to the taxable incomes for the respective years, the result would still be significant losses.
Nevertheless, as [Mr A] noted in his submissions, Mr Ashely has a history of withdrawing funds from the Partnership bank account on a regular basis to cover his and his family’s living expenses.
A copy of the Partnership’s ledger entries report for the financial year ending 30 June 2017 was provided by Mr Ashely’s accountant, [Accountant A], at hearing, reflecting movements in Mr Ashely’s loan account since his loan account went into credit of $167,842.27 on 1 July 2016. The report records credits from his loan account to the Partnership account of amounts totalling $71,224.49 up to 15 June 2017, and payments from the Partnership account, recorded as ”interest”, debited to his loan account of $109,975.71 (see Exhibit A, pages A84 to A86) .
The same document also reflects a credit entry on 30 June 2017 – “UIT trust dist paid out via ICC - $140,297,44”, increasing the balance of Mr Ashely’s credit loan account to $270,388.49.
It is not the Tribunal’s function to conduct a detailed forensic examination of Mr Ashely’s personal and business financial activities. Accordingly, the Tribunal will adopt a broad brush approach in determining an appropriate level of income and financial resources available to Mr Ashely for child support purposes, based on the financial information and movement of funds between Mr Ashely and his corporate and trust entities as set out above.
In that respect, taking into account the income derived by Mr Ashely from his interest in the [Business 1] Unit Trust ($73,060 per annum for the 2015/16, 2016/17 and 2017/18 financial years), the financial resources available to him in the form of personal loans he has been able to facilitate to repay his loan account with the Partnership, and his acknowledged ability to draw from time to time on that partnership’s bank account for his own personal expenses, as evidenced by the funds passing between Mr Ashely and the Partnership, and the benefits derived from personal use of the Partnership’s motor vehicle and the payment of Council rates on his [Property 1] leased to the Partnership, the Tribunal considers that the level of income and financial resources and property available to Mr Ashely during the financial years 2015 to 2018 equates to an income of between approximately $90,000 to $100,000 per annum, say, $95,000.
Regarding [Mr A’s] submissions concerning Ms Christy’s claim for contribution to [Child 1’s] special needs, he confirmed, as did Ms Christy in her evidence to the Tribunal, that the [surgical] procedure did not proceed, and her claim for contribution in that regard was abandoned.
As regards her claim for contribution to the costs of the [specialist] procedure, [Mr A] acknowledged that Mr Ashely conceded his liability to contribute to half of Ms Christy’s proven out of pocket expenses for [Child 1’s] treatment. [Mr A] noted that both parents had private health insurance cover for that treatment available to them, and all that Mr Ashely required was evidence of Ms Christy’s actual out of pocket expenditure for the [specialist] treatment.
Ms Christy provided a copy of [the specialist] treatment contract with respect to [Child 1] (Exhibit 1, page 685) signed on 10 November 2016 reflecting a net cost of treatment of $6,624, taking into account a discount of $676.04 for upfront payment.
Ms Christy provided receipts dated 27 October 2016 and 14 November 2016 reflecting an upfront payment of $5,000 for [Child 1’s] [specialist] treatment on 27 October 2016, and payment of the balance of the discounted fee of $1,624 on 14 November 2016 (Exhibit 1, pages 686 and 687).
In response to the Tribunal’s request for further information regarding the payment of the [specialist] treatment costs referred to above, Ms Christy confirmed she had only recently submitted a claim to her private health insurer for a rebate with respect to the total of $6,624 fees she paid for [Child 1’s] [specialist] treatment, and had received a rebate of $700 against those fees leaving her with an out of pocket cost of $5,924 for [Child 1’s] [specialist] treatment.
The Tribunal finds that [Child 1’s] [specialist] treatment constitutes special needs, and that the costs associated with that treatment significantly affected the costs of maintaining the child because of those special needs. The Tribunal is also satisfied that the out of pocket cost of the treatment to Ms Christy was $5,924, and consequently, Mr Ashely’s contribution to those costs is set at $2,962.
With respect to Ms Christy’s claim for contribution by Mr Ashely to the costs of [Child 1’s] private education, the evidence submitted on behalf of Mr Ashely was to the following effect.
In his submissions on behalf of Mr Ashely, [Mr A] relied on two pieces of documentary evidence before the Tribunal: a copy of a financial agreement entered into between the parents on 20 August 2008 (Exhibit 1, pages 721 to 725), and a subsequent Family Dispute Resolution Agreement/Discussion document dated 19 September 2014 (Exhibit 1, pages 791 to 794).
The relevant passages of the 20 August 2008 agreement are at subparagraphs G (ii) and (iii) of the recitals to that agreement. Subparagraph (ii) recorded the parties having negotiated an agreement concerning their future financial support for [Child 1], the terms of which were to be embodied in a separate Child Support Agreement intended to reflect an arrangement whereby Mr Ashely would pay Ms Christy the sum of $165 per week, indexed at 5%, and that Mr Ashely would also pay [Child 1’s] annual school fees, whilst [Child 1] attended primary school, together with half of any additional schooling costs including sporting costs, uniforms and tuition.
Subparagraph (iii) recorded the parties’ further agreement to contribute equally to a sum of $200,000 to be set aside for the costs and expenses associated with [Child 1’s] senior schooling, including, but not limited to, tuition, boarding and equipment. The parties further agreed that Mr Ashely would be responsible for the payment of those costs and expenses up to the sum of $200,000 on the basis that Ms Christy’s $100,000 share of the contribution to [Child 1’s] secondary education costs had been allocated as part of a property settlement between the parents, the terms of which were set out later on that document.
[Mr A] submitted that whilst this agreement did not specifically record a mutual agreement between the parents that [Child 1] would be educated privately, he said Mr Ashely conceded that such an agreement was implied.
With respect to the later Family Dispute Resolution document dated 19 September 2014, [Mr A] submitted that the intention of that document was to qualify the parents’ earlier agreement regarding [Child 1’s] education, specifically recording the parents mutual intention that [Child 1] should attend [Primary School 1] in [Town 2] for years 7 and 8, and thereafter, attend either [School 2], [School 3], or the school identified in the Family Dispute Resolution document by the acronym “[School 4] (boarding school)”.
[Mr A] submitted that the acronym “[School 4]” was a reference to the [named] College.
[Mr A] asserted that the agreement reached between Ms Christy and Mr Ashely as evidenced by the Family Dispute Resolution document had the effect of superseding the 20 August 2008 agreement regarding the parents’ intentions with respect to [Child 1’s] future secondary schooling.
[Mr A] then submitted that Ms Christy had breached the Family Dispute Resolution agreement by unilaterally removing [Child 1] from grade 7 at [Primary School 1], [Town 2] and enrolling him as a boarding student at [School 1] commencing in grade 7, term two, in 2016.
Ms Christy’s evidence was that she had taken the unilateral decision to remove [Child 1] from [Primary School 1] in [Town 2] on the recommendation of [Child 1’s] treating psychologist, [Doctor A], whose report appears at Exhibit B, page B19.
By way of background, the care arrangements in place at the time the two agreements referred to above were entered into provided that the parents had shared equal care of [Child 1], and he was spending time with both parents at their respective homes. In Mr Ashely’s case, [Child 1] was spending time at Mr Ashely’s [Property 1], some distance from [Town 2], where Ms Christy was residing at the time, and was travelling over 1,000 km per week to and from his school at [Primary School 1] in [Town 2].
The school had raised concerns with the parents regarding the effect the extensive travelling from Mr Ashely’s property to and from school was having on [Child 1]. The Family Dispute Resolution document referred to above makes reference to this under the heading “discussion” at page 792 of Exhibit 1.
In her report, [Doctor A] confirms she had been treating [Child 1] at varying intervals since July 2013. She reports that by 2016, [Child 1] had endured several years of severe and chronic levels of conflict and tension between his parents as they fluctuated through various shared care arrangements for [Child 1]. She noted [Child 1] felt the conflict acutely and felt torn by the clear hostility between his parents, was not able to settle and have a calm home life at either parents’ home due to severe levels of conflict at each of the parents’ homes, and spoke of wanting to escape this traumatic dynamic.
After close discussion with [Child 1], during which he voiced his wishes to her, [Doctor A] reports that she informed Ms Christy that it was her clinical recommendation that [Child 1] go to boarding school to avoid the parental hostility, provide calm continuity in his daily home life and hopefully facilitate more meaningful and healthy time with each parent.
[Doctor A’s] report goes on to note that, by 2016, based on her clinical diagnosis and treatment recommendation, Ms Christy had decided to enrol [Child 1] at [School 1], at [Child 1’s] request. Nowhere in her report does [Doctor A] make a recommendation that [Child 1] be sent to [School 1].
Whilst it seems uncontested that Ms Christy did not provide Mr Ashely with a copy of [Doctor A’s] report, nor, it seems, did she discuss her intention to remove [Child 1] from [Primary School 1] to [School 1] at the end of term 2 of his grade 7 year in 2016, Mr Ashely gave evidence that it was at his suggestion that [Child 1] was referred to [Doctor A] for treatment, and certainly, according to the Family Dispute Resolution document, from at least September 2014, he was aware of the difficulties [Child 1] was experience in coping with the extraordinary travel requirements as a consequence of the shared care arrangement then in place.
[Mr A] submitted that it was inappropriate for the psychologist, [Doctor A] to make recommendations regarding [Child 1’s] schooling that would override the opinions of a parent, and further, that the psychologist’s report was unfairly being used as justification for Ms Christy’s unilateral decision to remove [Child 1] from [Primary School 1] and enrol him as a boarder at [School 1], and that generally, the decision in that respect was unjustifiable.
The Tribunal rejects [Mr A’s] submissions in this respect for the following reasons.
As noted above, nowhere in her report does [Doctor A] make a recommendation that [Child 1] be sent to [School 1].
[Mr A] acknowledged in his submissions on behalf of Mr Ashely that it was conceded the parents’ expectation was that [Child 1] receive a private education. Mr Ashely acknowledged his obligation to fund [Child 1’s] education at [Primary School 1], [Town 2] (a private primary school) in the 20 August 2008 agreement, and to that extent, it is clear his expectation was that [Child 1’s] private education would commence at primary school level in grade 7.
The later Family Dispute Resolution agreement affirms the parents’ intention that [Child 1] attend one of a range of nominated private secondary schools, predominantly in [Town 1], albeit that agreement records the parents’ intention that [Child 1] attend [Primary School 1] in [Town 2] for years 7 and 8.
Mr Ashely’s evidence was that it was the mutual intention of the parents that [Child 1] should attend one of the nominated range of private secondary schools in [Town 1], no doubt because of the proximity to his home at [Property 1] via [Town 2], in preference to [School 1].
Ms Christy’s evidence was to the effect that she mistook the reference in their discussions regarding the choice of private secondary schools, with respect to the agreements of 20 August 2008 and 14 September 2014, and thought the reference to “[School 4]” was a reference to [School 1], otherwise known as “[acryonym]”.
The Tribunal considers it is irrelevant which of the private secondary schools Ms Christy chose to enrol [Child 1], and in any event, both [School 1], located in [named town], and the other private secondary boarding schools nominated by Mr Ashely located in [Town 1] are relatively equidistant from his home at [Property 1], via [Town 2]. The Tribunal is satisfied that all of those schools meet the expectations of the parents as regards the level of private education they expected [Child 1] to receive.
Accordingly, the Tribunal finds that it was the parents’ mutual intention and expectation that [Child 1] would receive a private education from grade 7, and that the parents should share in the costs of that education over and above the normal cost to parents of a public education. The respective levels of contribution to those costs are dealt with below, and that Ms Christy was entitled to act upon [Doctor A’s] recommendation that he be sent to a boarding school, and that her choice of [School 1] as that boarding school was not unreasonable, and within the scope of both parents’ expectations as regards an appropriate boarding school.
Turning to [Mr A’s] submissions with respect to the manner in which the [state] Government [education allowance] funding assistance should be applied, he submitted that, because of the remote location of Mr Ashely’s [Property 1] residence, he was the parent eligible to apply for the funding assistance afforded by this scheme to meet the cost of [Child 1’s] private education, and accordingly, the benefit of that assistance should be credited to him and not shared with Ms Christy. In that respect, a copy of the Applicant Guidelines for 2018 was exhibited to his submissions (Exhibit A, pages A54 to A58).

The Tribunal has considered the guidelines and [Mr A’s] submissions, and finds that whilst the guidelines suggest he may be the parent eligible to apply for the assistance afforded under the scheme, that does not entitle him to the exclusive benefit of the credit afforded by that scheme, nor would it be just and equitable to Ms Christy for him to have such an exclusive benefit. Accordingly, the Tribunal finds that the benefit of the scheme should be accorded to both parents.
The Tribunal notes that Mr Ashely has already applied for and received the benefits afforded by this scheme, as reflected in the [School 2] accounts history for the period 6 July 2017 to 24 April 2018, recording the items [education allowance] subsidies of $2,621.52 and $2,696 on 15 December 2017 and 2 March 2018 credited against [Child 1’s] [School 2] school fees (see Exhibit B, page B20).

Ms Christy’s evidence at hearing

Ms Christy’s evidence regarding the issues of [Child 1’s] special [specialist] needs and private education are dealt with above.
As regards Ms Christy’s income and financial resources available to her for child support purposes, the following evidence was before the Tribunal at hearing.
Ms Christy’s accountant, [Accountant C] of [Accounting Firm 3], provided a summary of her business structure at page 39 of Exhibit 1. The summary discloses that Ms Christy is the sole director and shareholder of two private companies, [Business 7] and [Business 8]. [Business 7] was incorporated [in] November 2013 (Exhibit 1, pages 30 and 31) and conducts a [Product 1] wholesaling and retailing business based in [Town 2]. [Business 8] was only incorporated in December 2017 and operates a primary production [Product 2] farming business located in the [named district].
Ms Christy’s accountant provided financial information for [Business 7] for the financial years ended 30 June 2014 to 30 June 2018 together with relevant company and individual tax returns for Ms Christy for those financial years reflecting distributions of profits from that company and retained profits (see Exhibit 1, pages 39 to 95, and Exhibit B, pages B32 to B67).
Financial information for [Business 8] for the company’s six months’ trading from its incorporation in December 2017 to 30 June 2018 was also provided to the Tribunal post hearing by [Accountant C].
As the relevant period referred to in the decision under review is 1 January 2017 to 31 December 2019, the Tribunal will consider Ms Christy’s income and financial resources for that period as revealed in the financial reports provided by [Accountant C].
Starting with [Business 7] financial accounts for the 2016/17 financial year set out at pages B32 to B37 of Exhibit B, the company’s gross profit was $652,727. Significantly, this comes off total income of $13,405,327, $13,145,584 of which related to the item described in the profit and loss statement as ‘[Product 1] sales’. Ms Christy gave evidence that [Business 7] operates a [Product 1] wholesaling and retailing distribution business throughout [the state] requiring her to travel over 14,000 km per annum delivering [Product 1] stocks to various retail outlets, and requiring substantial capital reserves in the company to purchase its wholesale [Product 1] stocks. This is revealed in the profit and loss statement item “purchases – [Product 1] $12,870,799”. The remaining income for the company is derived from [other sales].

100.A copy of Ms Christy’s 2017 financial year income tax return provided by [Accountant C] reflects a salary of $66,560 drawn by Ms Christy as part of the total wages expenses for the business of $189,332, which, according to her evidence, employs a total of [number range] staff on a full-time and casual basis. Ms Christy also gave evidence that she salary sacrificed $23,677 to superannuation in that year, taking her total income, including interest of $166 to $90,403. Allowing for the deductions claimed in her personal income tax return for that year of $5,449, which do not seem unreasonable, her adjusted taxable income for that year was $84,954.
101.Having regard to her evidence as to the extraordinary amount of travel she is required to undertake as part of [Business 7’s] [Product 1] wholesale business operation, the motor vehicle and repairs and maintenance items in the profit and loss expenses statement do not seem unreasonable, nor does the depreciation item. Accordingly the Tribunal will not adjust those items. The resulting after tax profit for the company for the 2017 financial year was $116,163; retained profits from the financial year, including retained profits from the 2016 financial year of $50,293, totalled $166,456.
102.Taking into consideration the purchase cost of the company’s [Product 1] stocks reflected in the company’s profit and loss accounts referred to above, the Tribunal accepts there would be a need to retain substantial profits in the business to fund those purchases, and accordingly, the Tribunal does not consider it reasonable to regard the retained profits as a financial resource available to Ms Christy for child support purposes.
103.[Business 7’s] profit and loss statement for the 2018 financial year (see Exhibit B, pages B43 and B44) disclosed a gross profit of $741,108, coming off a total income of $14,446,733, of which $14,246,432 was derived from [Product 1] sales. [Product 1] purchases for that year as part of the business’ ‘goods sold’ item was $14,923,189. Depreciation, motor vehicle expenses and repairs and maintenance were not remarkably different from the corresponding items in the 2017 financial year profit and loss statement, and accordingly, consistent with the Tribunal’s approach to those items for the preceding year, the Tribunal will not adjust the profit for the business as reflected in the financial data provided by [Accountant C].
104.Ms Christy’s 2018 income tax return discloses her consistent salary of $66,560, forming part of the wages component of the company’s expenses, together with her superannuation salary sacrifice of $19,957, resulting in a total income of $86,517. Deductions claimed in that year’s income tax return amounted to $4,699, leaving her with an adjusted taxable income for that year of $81,818.
105.As noted earlier, Ms Christy’s evidence was that the company, [Business 8], was only established in December 2017. However, she provided financial reports for the six months’ trading of that company (see Exhibit B, pages B45 to B46).
106.The profit and loss statement for the company reveals a net loss of $26,556. Ms Christy gave evidence that she uses her motor vehicle to transport [Product 2] grown by the company on its farming property in the [named district] to the company’s retailing outlets. She also gave evidence that she does not draw a salary from the company, and the item ‘salaries’ in the profit and loss statement reflects wages paid to farm labourers.
107.Having regard to the fact that the business has only been operating for approximately six months, the Tribunal does not intend attributing any income or financial benefit from the company to Ms Christy for the 2017/18 financial year.
108.Accordingly the Tribunal finds the evidence, on balance, is that Ms Christy’s taxable income for the 2017/18 financial year would have been approximately $81,818.
109.The administrative assessment in place for the period 1 November 2016 to 31 January 2018 required Mr Ashely pay child support to Ms Christy in the amount of $1,373 per annum, calculated on his 2015/16 adjusted taxable income of $0, and Ms Christy’s 2015/16 adjusted taxable income of $90,825.
110.The Tribunal has found Ms Christy’s income for the financial years ended 30 June 2016/17 and 2017/18 was approximately $84,954, and $81,818, respectively, and is satisfied that her income is accurately reflected in the administrative assessment currently in place.
111.The Tribunal has found that the income, financial resources and property available to Mr Ashely during the financial years 2014/15 to 2017/18 was between approximately $90,000 and $100,000, say, $95,000, the median point between those amounts. This makes the administrative assessment upon which Mr Ashely’s child support is calculated unjust and inequitable, and a ground for departure established.

Just and equitable

112.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 children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.
113.Both parents provided Statements of Financial Circumstances.

Mr Ashely’s Statements of Financial Circumstances

114.Mr Ashely provided two Statements, the earlier dated 10 January 2018, and a later Statement annexed to his representative, [Mr A’s], written submissions, dated 26 June 2018. Both Statements are at variance as regards the information they contain.
115.In his earlier Statement, Mr Ashely describes himself as a self-employed farmer with an estimated total average weekly income of $1,405, total assets of $1,917,500, total liabilities of $2,259,000, total personal expenditure of $690, and total average weekly household expenditure of $1,614. His later Statement reports an estimated total weekly income of $923, estimated total assets of $1,617,600, estimated total liabilities of $2,233,500, total weekly personal expenditure of $122.25, and total estimated average weekly household expenditure of $780.
116.Both Statements reflect different sources of income; the Statement of 10 January 2018 records his average weekly income of $1,405 as being derived from the [Business 1] Unit Trust. This weekly income annualises to an income of $73,060, the income reflected in his 2015/16 income tax return, and estimated to be the same for the 2016/17 financial year by his current accountant, [Accountant A] in her evidence to the Tribunal at hearing. Also, this Statement does not report any income earners in his household.
117.Mr Ashely’s later Statement dated 26 June 2018 reports his average weekly income of $923, annualised to $47,999, say, $48,000, attributed to income from his interest in the Partnership business. The Statement also discloses his current partner as an income earner residing in his household, but the income attributed to this person is “nil”.
118.Both Statements reflect no interest in real property, but both reflect a mortgage liability of approximately $2,225,000.
119.The schedules of average weekly household expenses do not reflect expenditure on either mortgage or rental payments, nor do they reflect expenditure on Council rates and levies, water charges or motor vehicle registration and maintenance costs.
120.The evidence at hearing and in the income tax returns and other financial data relating to Mr Ashely’s business activities suggests that the Council rates, water charges and motor vehicle registration and maintenance expenses are met by the Partnership, and to that extent, it appears Mr Ashely derives a corresponding financial benefit. The earlier Statement lists house repairs of $15, but the same item in the later Statement records that item as “nil”.
121.Both Statements reflect Mr Ashely having an excess of weekly income over expenditure.
122.During the course of the hearing, Ms Christy raised issues regarding Mr Ashely’s purchase of a new [car] and a truck and the recent acquisition of two properties, one situated at [an address in] [Town 1], and the other, a [property] known as “[Property 2]” located at [address], via [Town 2].
123.[Mr A] addressed these issues in his submissions on behalf of Mr Ashely, who confirmed the substance of the submissions.
124.The Tribunal accepts [Mr A’s] submissions regarding the ownership of the [car] and truck; that they are assets owned by the Partnership, as reflected in the balance sheet of the Partnership at pages A48 and A49 of Exhibit A.
125.Copies of Pricefinder and Title searches for the property at [the address in] [Town 1] at pages A78 and A79 of Exhibit A confirm [Mr A’s] submissions that the property was acquired by Mr Ashely’s mother-in-law, [Ms B], on or about 1 August 2017. Mr Ashely gave evidence that he did not contribute to the purchase price for the property nor does he have any interest in it, beneficial or otherwise. The Tribunal accepts [Mr A’s] submissions and Mr Ashely’s evidence in this regard.
126.[Mr A’s] submissions regarding the acquisition of the [Property 2] were that the property was acquired by the [Business 1] Unit Trust for $600,000 in July 2016, utilising a loan of $300,000 from the Partnership. [Mr A] submitted that the Partnership’s capacity to extend that loan to the [Business 1] Unit Trust was only made possible by Mr Ashely’s partner, [Ms C], contributing $300,000 from her Family Law Property Settlement with her former partner to repay some of the Partnership’s indebtedness to its bankers, [Bank 1]. [Mr A] noted in his submissions that the acquisition of Mr Ashely’s units in the [Business 1] Unit Trust, currently valued at $1,600,000, was fully financed by [Bank 1], secured by mortgage, the current debt level of which stands at $2,225,000.
127.Neither of Mr Ashely’s Statements of Financial Circumstances disclose his ownership of any real property which would be available for mortgage security, although he reports ‘mortgage” debt to [Bank 1] of $2,225,000, presumably by way of joint and several liability for [Bank 1] loans to the Partnership or personal guarantee of the Partnership’s debts. The balance sheet for the [Business 1] Unit Trust for the financial year ended 2017 at page A82 of Exhibit A does not reflect any debt to [Bank 1]; rather, the financial records provided to the Tribunal reflect the [Bank 1] debt secured against the assets of the [Business 1A] Partnership.
128.The Tribunal finds that the evidence, on balance, suggests that Mr Ashely had the capacity to borrow substantial funds in the 2015/16 financial year to repay his loan account to the Partnership. He also had the capacity to facilitate the acquisition by the [Business 1] Unit Trust of the [Property 2], and has the capacity to service the substantial ongoing [Bank 1] bank debt in the Partnership. The partnership loan account statement referred to above reflects the movement of substantial funds between Mr Ashely and the partnership, and the evidence in the two Statements of Financial Circumstances suggests he has two sources of income; the [Business 1] Unit Trust ($73,060 per annum), and the [Business 1A] Partnership ($48,000 per annum), a total of $121,060 per annum.
129.He has acknowledged his ability to draw against the Partnership bank account to fund his family’s day to day living expenses, and, as acknowledged in [Accountant A’s] evidence to the Tribunal, he has personal use of the Partnership’s motor vehicle.
130.Mr Ashely also appears to have the benefit of living on the [Business 1] Unit Trust’s property rent free. He has acknowledged his acceptance of responsibility for half of [Child 1’s] [specialist] special needs costs, his primary school fees at [Primary School 1], [Town 2], and half of [Child 1’s] private secondary school fees at [School 2] from term 3, 2017.
131.Taking all these factors into account, the Tribunal finds Mr Ashely has access to income and financial resources equating to an income of approximately $95,000 per annum.

Ms Christy’s Statement of Financial Circumstances

132.Ms Christy provided a Statement of Financial Circumstances dated 12 June 2018 (see Exhibit B, pages B3 to B13, and B18) in which she describes herself as a director/administrative assistant employed by her two companies, [Business 7], predominantly a [Product 1] wholesaler, and [Business 8], a [Product 2] farming operation. At annexure 2 to her Statement, she reports her gross taxable income from [Business 7] as $67,200. In evidence, she said that she did not draw a salary from [Business 8].
133.She also reports receiving government Family Tax Benefits A and B of $85.56 and $6.80 per week respectively, bringing her total average weekly income to $1,375.55, annualised to $71,529.
134.Ms Christy listed assets to a total value of $1,589,666, comprising a residential property valued at $430,000, [Business 8’s] [Town 3] [Product 2] farming property valued at $950,000, savings of $4,210, shares valued at $8,000, a [motor] vehicle valued at $15,000, household contents to a value of $15,000 and her interest in [Business 7], the 2016 balance sheet value for which was $167,456. No value was ascribed to [Business 8], as the business was only established in December 2017 and is currently trading at a loss.
135.She reported liabilities totalling $1,155,000 comprising the mortgage debt on her residential property of $230,000 and $740,000 on [Business 8’s] [Town 3] farming property, and personal debt of $185,000 owed to [Business 7], in respect of which she provided a copy of the loan facility agreement evidencing that liability dated 30 June 2016 (see Exhibit B, pages B16 and B17). She also provided documentary evidence of a loan to her of $500,000 from one of her employees [dated] 21 June 2017, repayable with interest. Ms Christy has informed the Tribunal since hearing that this loan was repaid with interest on 24 September 2018.
136.The Tribunal finds that both parents have roughly comparable incomes and access to financial resources and property. There is currently some controversy as to the present care percentages operating with respect to [Child 1], but as neither parent has notified the Department of a recent change in care, the Tribunal will proceed on the basis that the care percentages being assessed by the Department of 84% to Ms Christy, and 16% to Mr Ashely.
137.Mr Ashely has conceded his liability to contribute 50% to Ms Christy’s out-of-pocket costs for [Child 1’s] [specialist] treatment, in respect of which she has provided evidence that those costs, net of her health insurance rebate of $700 amounted to $5,924. Accordingly, as noted above, Mr Ashely’s contribution is determined at $2,962.
138.In his submissions on behalf of Mr Ashely, [Mr A] acknowledged Mr Ashely’s acceptance of liability for half the cost of [Child 1’s] tuition fees at [Primary School 1], [Town 2] for term 2, 2016 to term 2, 2017 inclusive. According to the fees schedule provided by Mr Ashely (see Exhibit A, pages A51 and A52), the relevant tuition and other compulsory fees for that period amounted to $2,037, and Mr Ashely’s half share of those costs would have been $1,018.50.
139. However, as [Primary School 1] is a private primary school, it is open for the Tribunal to find Mr Ashely’s expectation was that [Child 1] receive a private school education from primary school term 2, 2016 onward. The Tribunal so finds.
140.The Tribunal has also found that Ms Christy was justified in relying on the recommendation of [Child 1’s] treating psychologist, [Doctor A], that he be sent to a boarding school and enrolling him at [School 1] in term 2, 2016.
141.The Tribunal finds Ms Christy’s choice of [School 1] as [Child 1’s] boarding school accorded with the expectations of both parents regarding the standard of education offered by that school, notwithstanding Ms Christy did not discuss her decision before enrolling [Child 1] at [School 1], and that Mr Ashely’s preference was for one of the nominated [Town 1]-based boarding schools.
142.The Tribunal therefore considers it appropriate that Mr Ashely should share the cost of [Child 1’s] tuition fees and compulsory charges as a boarder at [School 1] from term 2, 2016 to term 2, 2017. The objective, consistent with [Doctor A’s] recommendation, was that [Child 1] be sent to an appropriate boarding school, not which boarding school.
143.The Tribunal has already found [School 1] to be relatively equidistant from the respective parents’ domiciles at the time of [Child 1’s] enrolment at [School 1]. The Tribunal has also compared the range of tuition and other compulsory charges for boarding students made by [School 1] and [School 2], for the period covering terms 2 to 4 in 2016, and terms 1 and 2 in 2017. The term fees (tuition and boarding) for the 2016 year for [School 1] were $9,236, and for the 2017 year, $9,792. The corresponding term fees (tuition and boarding) for [School 2] for the 2016 year were $7,350, and for the 2017 year, $7,437.

144.Having regard to the evidence of the respective parents as to their school preferences, and taking into consideration the likelihood that they would have reached some consensus as to which boarding school [Child 1] should attend, had Ms Christy discussed that issue with Mr Ashely prior to taking the decision to enrol [Child 1] at [School 1] in 2016, the Tribunal finds it was likely they would have resolved the confusion over the identity of the ‘[School 4]’ school, and agreed upon [School 2] as the appropriate private boarding school for [Child 1] to attend, as the evidence suggests they have: both parents have agreed to [Child 1] transferring from [School 1] to [School 2] from the commencement of term 3 in 2017, and Mr Ashely has agreed to contribute to the extent of half of [Child 1’s] [School 2] tuition and boarding costs from that term onward.
145.Consistent with the Tribunal’s reasoning as set out above, and the evidence on balance, the Tribunal considers Mr Ashely should be responsible for half of [Child 1’s] [School 1] boarding school fees for the period from terms 2 to 4 in the 2016 school year, and terms 1 and 2 in the 2017 school year, calculated in accordance with the tuition and boarding fees charged by [School 2] for those terms. The Tribunal finds his contribution to those school fees is as follows:
·       2016 terms 2, 3 and 4 ($7,350 per term x 3 = $22,050 / 2) = $11,025;
·       2017 terms 1 and 2 ($7,437 per term x 2 = $14,874 /2) = $7,437.
·       Total of Mr Ashely’s half share: $18,462.
146.[Mr A] annexed a summary of Mr Ashely’s contributions to [Child 1’s] [School 2] fees from term 3, 2017 to term 2, 2018 to his submissions (see Exhibit A, pages A60 and A61), including adjustments for [education] allowances paid direct to the school. These included [education] allowances paid direct to the school on 15 December 2017 ($2,621.52) and 2 March 2018 ($2,696). Mr Ashely also paid school fees contributions totalling $3,718,75 - $93.10 on 20 October 2017, and $3,625.65 on 19 November 2017.
147.[Mr A] also provided a summary of [School 2] fees payable from term 3, 2017 onward. However this summary omitted reference to fees for term 4 of the 2017 school year, following [Child 1’s] transfer to [School 2] in term 3 of that year. Allowing for adjustments to [Mr A’s] summary for that omission, and by reference to that summary and Ms Christy’s school fees table at Exhibit B, page B24, Mr Ashely’s liability for [Child 1’s] [School 2] school fees and compulsory charges for the period term 3, 2017 to term 4, 2018 is calculated as follows:
·       2017 term 3 tuition and boarding fees - $7,437.50;
·       2017 term 4 tuition and boarding fees - $7,437.50 (less [education] allowance paid 15/12/2017 - $2,621.52,) - $4,815.98;
·       2018 term 1 tuition and boarding fees - $7,577.50 (less [education] allowance paid 2/03/2018 - $2,696) - $4,881.50;
·       2018 term 2: tuition and boarding fees - $7,577.50;
·       2018 term 3 tuition and boarding fees - $7,577.50 (less [education] allowance paid 11/07/2018 - $2,670.29) - $4,907.21;
·       2018 term 4 tuition and boarding fees - $7,577.50 less anticipated [education] allowance - $2,670.29) - $4,907.21;
·       Total of school fees for term 3, 2017 to term 4, 2018 - $34,526.90 (rounded up to $34,527);
·       Mr Ashely’s 50% contribution - $17,263.50 ($34,527 / 2 = $17,263.50).
148.Adding Mr Ashely’s contribution to [Child 1’s] tuition and boarding fees at [School 1], assessed at $18,462 on the basis of the equivalent fees charged by [School 2] as set out above, to his contribution to [Child 1’s] fees at [School 2] from term 3, 2017 to term 4, 2018, and adjusting for the fee contributions made by Mr Ashely in October and November 2017 of $3,718.75, ($18,462 + $17,263.50 - $3,718.75 = $32,006.75) a total adjusted contribution of $32,007 (rounded up) results.
149.The Tribunal therefore finds that Mr Ashely’s contribution to [Child 1’s] private school tuition fees at [School 1] for term 2 in 2016 to term 2 in 2017, plus his adjusted contribution to [Child 1’s] tuition and boarding fees at [School 2] for term 3 in 2017 to term 4 in 2018 is $32,007, and his contribution to [Child 1’s] special needs [specialist] costs is $2,962, a combined total of $34,969.

Conclusion

150.The Tribunal finds the incomes, financial resources and property available to each parent for child support purposes for the period 1 July 2016 to 30 June 2018 were $95,000 for Mr Ashely, and $82,000 for Ms Christy. This finding takes into account the vicissitudes each parent faces regarding the cash flow issues associated with the nature of their respective businesses, and the agricultural influences affecting their incomes.
151.The Tribunal is satisfied both parents have significant incomes, financial resources and property available to them and the capacity to raise funds. In Mr Ashely’s case, the Tribunal is satisfied that varying his adjusted taxable income from that which is used in the administrative assessment to $95,000 and determining his liability to contribute to half of [Child 1’s] [specialist] special needs and private education costs as set out above will not cause him or his family undue financial hardship, nor will Ms Christy’s financial circumstances be adversely affected so far as her entitlement to pensions and other benefits is concerned, and generally.
152.The Tribunal intends varying the adjusted taxable income of Mr Ashely to $95,000 for the period 1 July 2017 to 31 October 2019. The Tribunal also intends increasing Mr Ashely’s annual rate of child support by $21,424 for the period 1 July 2017 to 30 June 2018 in consideration of his contributions to [Child 1’s] [specialist] costs ($2,962) and his [School 1] private school tuition and boarding fees for term 2 in 2016 to term 2, 2017 ($18,462), and for the period 1 July 2018 to 30 June 2019, by $13,545 in consideration of his contribution to [Child 1’s] [School 2] tuition and boarding fees for term 3, 2017 to term 4, 2018, in the expectation that the parents will be able to reach agreement regarding the payment of [Child 1’s] private education costs for the balance of his secondary education, absent which, a fresh application for a change of assessment can be made to the Department.

Otherwise proper

153.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 the entitlements to income-tested pensions, allowances and benefits. Parents rather than the community have the primary duty to maintain a child. Varying the income of Mr Ashely on which child support is calculated from that used in the administrative assessment, based on his income and financial resources not reflected in the administrative assessment will result in an appropriate apportionment of financial responsibility between the parents and the community. Such a result would be otherwise proper.

DECISION

The Tribunal sets aside the decision under review, and, in substitution, decides that:
(a) For the period 1 July 2017 to 31 October 2019, Mr Ashely’s adjusted taxable income is varied to $95,000; and
(b) For the period 1 July 2017 to 30 June 2018, the annual rate of child support payable by Mr Ashely is increased by $21,424 in consideration of his contributions to [Child 1’s] special needs costs and [School 1] education costs; and
(c) For the period 1 July 2018 to 30 June 2019, the annual rate of child support payable by Mr Ashely is increased by $13,545 in consideration of his contribution to [Child 1’s] [School 2] education costs.

[2018] AATA 4590

29 October 2018

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Judicial Review

Remedies

Costs

Jurisdiction