Barlow and Barlow (Child support)

[2018] AATA 3055

Barlow and Barlow (Child support) [2018] AATA 3055 (13 June 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/MC012807

APPLICANT:  Mrs Barlow

OTHER PARTIES:  Child Support Registrar

Mr Barlow

TRIBUNAL:Member S Letch

DECISION DATE:  13 June 2018

DECISION:

The decision under review is affirmed.

CATCHWORDS

Child support - Departure determination - Income, property and financial resources and earning capacity of the liable parent - A ground for departure established - Decision to depart - Decision under review affirmed

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. Mr Barlow and Mrs Barlow are the parents of [Child 1] and [Child 2], twins born in October 2002. Mrs Barlow is recorded by the Department of Human Services (“the Department”) as having 100% care of both children. Mrs Barlow has sought review by this Tribunal of a decision of the Department to disallow her objection to the assessment of Mr Barlow’s liability for child support.

2. For the period 1 July 2017 to 31 July 2017, Mr Barlow is assessed to pay an annual rate of child support of $5,192. This assessment is based on a 2015/16 adjusted taxable income of $41,650 for Mr Barlow and a 2015/16 adjusted taxable income of $26,973 for Mrs Barlow.

3. For the period 1 August 2017 to 31 October 2018, Mr Barlow is assessed to pay an annual rate of child support of $5,280. This assessment is based on a 2016/17 provisional adjusted taxable income of $42,358 for Mr Barlow and a 2016/17 adjusted taxable income of $20,382 for Mrs Barlow.

4. On 17 July 2017, Mrs Barlow applied for a change of assessment under what the Department refers to as reason 8A. Mrs Barlow urged the Department to assess Mr Barlow’s adjusted taxable income at a higher level on the basis that Mr Barlow was working more than 60 hours per week and earning in excess of $100,000 per annum.  

5. On 11 September 2017, the original decision-maker determined a ground to depart had been established. For the period 7 August 2017 to 31 October 2018, Mr Barlow’s adjusted taxable income was to be assessed as $86,000.

6. On 22 September 2017, Mrs Barlow objected to the decision. On 28 October 2017, an objections officer allowed Mrs Barlow’s objection in part, determining that, for the period 7 August 2017 to 21 September 2017, Mr Barlow’s adjusted taxable income be assessed as $86,000; and for the period 22 September 2017 until a terminating event, Mr Barlow’s adjusted taxable income be assessed as $97,200.

7. On 31 October 2017, Mrs Barlow sought further review by the Tribunal. The Tribunal’s hearing took place on 13 June 2018. Mrs Barlow and Mr Barlow participated in the hearing by conference telephone.  Mr Barlow was represented by [a] lawyer with [a named law firm].

8. In reaching my decision, I have considered the sworn evidence given by Mrs Barlow and Mr Barlow; the documentation provided by the Department (Exhibit 1); and the additional materials provided by Mrs Barlow (Exhibit A) and Mr Barlow (Exhibit B).  

CONSIDERATION

The legislative framework

1. 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.

2. Part 6A of the Act allows for a departure from an 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 98C(1)(b)(ii)(A)); and

   ·     it is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B)). 

3. Subsection 98C(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2).

12.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 Tribunal 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.

Issue 1 – Is there a ground to depart?

13.Subparagraphs 117(2)(c)(ia) and (ib) of the Act, commonly referred to by the Department as reasons 8A and 8B, provide as grounds for departure:

(c)that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:

…

(ia)      because of the income, property and financial resources of either parent; or

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

…

14.The matters which must be taken into account when assessing a person’s earning capacity are contained in subsection 117(7B) of the Act, which provides the following:

In having regard to the earning capacity of a parent of the child, the court may determine that the parent's earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:

(a)  one or more of the following applies:

(i)  the parent does not work despite ample opportunity to do so;

(ii)  the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which the parent is employed or otherwise engaged;

(iii)  the parent has changed his or her occupation, industry or working pattern; and

(b)  the parent's decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:

(i)  the parent's caring responsibilities; or

(ii)  the parent's state of health; and

(c)  the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.

15.The starting proposition is that the child support formula should apply. Only in special circumstances should a departure be made. 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 legislature is 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’s approach to the interpretation and application of the particular grounds in subsection 117(2) must be guided by that qualification.

16.Mr Barlow properly concedes a ground to depart has been established. Mr Barlow commenced with [Company 1] in March 2017; his income (after a break from 16 May 2017 to 15 August 2017) materially increased. I was advised during the hearing that Mr Barlow has since finished with [Company 1] in May 2018, and has now secured other work at a lower hourly rate (approximately $25 per hour); however, despite the reduction, [the lawyer] advised Mr Barlow accepted the assessment of $97,200 as a fair reflection of his financial capacity.  

17.Accordingly, I am satisfied it would be unfair or unjust for Mr Barlow’s child support liability to be calculated on the basis of his adjusted taxable income. His taxable income is not a fair reflection of his financial capacity. In the special circumstances of the case, the formula should not apply as it would in the ordinary course. There is a ground to depart.

Issue 2 – Is it just and equitable to depart from the administrative assessment?

1. The next relevant consideration for the Tribunal is whether a departure from the administrative assessment is just and equitable. This enquiry 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.

19.There was no dispute that Mrs Barlow’s adjusted taxable income represents a fair assessment of her financial capacity. She is reliant on Centrelink income support payments to support herself and her two children. Her financial circumstances are constrained; she seeks a greater contribution from Mr Barlow by way of child support. Neither party has any particularly unusual expenses in respect of their own self-support, or in relation to the children.

20.Mr Barlow submits I should affirm the decision; he accepts the Department’s assessment of his financial capacity as fair. Mrs Barlow alleges Mr Barlow ought to be assessed as having a higher capacity to work; she suggests a level of manipulation on his part by refusing to work additional hours, or refusal of other, potentially more suitable, work.

21.I note Mrs Barlow raises no particular issue with the Department’s arithmetic in setting Mr Barlow’s income as $86,000, then $97,200 from 22 September 2017 (the date of Mrs Barlow’s objection). She did not suggest the assessment should be set to a date earlier than a terminating event (likely, in the ordinary course, to be when the children turn 18 years of age in October 2020). She contends Mr Barlow’s liability should be calculated on a figure more in the order of $130,000. I note there was some suggestion of potential other applications for changes of assessment; those contingencies, and the decision the Department may or may not make, are not something I can deal with in this application. It is trite to observe that Mrs Barlow, and indeed Mr Barlow, will be able to exercise review rights in respect of any future decisions by the Department.

22.As I explained to Mrs Barlow during the hearing, I must make my decision on the basis of evidence, and not supposition or conjecture. The evidence from [Company 1], which I accept, is that Mr Barlow, as a casual employee, has never “knocked back” any work he has been offered, and has “willingly accepted jobs offered to him”. Mr Barlow’s pay information reveals the assessment of $97,200 with effect from September 2017 is a reasonably accurate reflection of his likely adjusted taxable income; that has been borne out by subsequent pay information. There is nothing in the evidence gathered by the Department, including Mr Barlow’s bank records, which suggest Mr Barlow has undeclared financial resources.

23.I observe this is not the first occasion I have dealt with an application by Mrs Barlow. In a decision dated 18 May 2017, I determined no ground to depart had been established in the matter before me. Mrs Barlow had urged an assessment in which Mr Barlow would be assessed at what she suggested was his potential earning capacity. She estimated that to be in the range of $80,000 to $90,000. I observe the evidence reveals Mr Barlow has secured work in excess of that range, and his financial capacity has been assessed above the assessment Mrs Barlow had previously sought.

24.Mrs Barlow is clearly a very devoted parent. She is motivated by the very best of intentions to support her children as best she can. It is a very good thing that she is able to exercise her right to an external review by the Tribunal. I also make the observation that Mr Barlow, in 2017, told me of his aspiration to earn a level of income consistent with the assessment suggested by Mrs Barlow; he has since derived income exceeding that sum, and has accepted the assessment made by the Department to increase his adjusted taxable income, and his corresponding child support liability.

25.In this instance, I do not accept the merits of the issues I need to decide are with Mrs Barlow. On the evidence before me, I am satisfied a just assessment is to assess Mr Barlow’s income as $86,000 from 7 August 2017 (the first period after Mrs Barlow’s application for a departure, and based on his earnings information for the period from 14 March 2017 to 15 August 2017). There is no compelling ground to increase Mr Barlow’s assessed income from any earlier date, and create additional arears for Mr Barlow. Setting Mr Barlow’s income at $97,200 from 22 September 2017 (the date of Mrs Barlow’s objection, and based on earnings information which included payments in September 2017), until a terminating event, is fair and gives both parties a level of certainty upon which to plan their respective budgets until the child support case concludes. It is just and equitable to make a determination in those terms.

Issue 3 – Is it otherwise proper to make a departure determination?

1. The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents rather than the community have the primary duty to maintain a child.

2. The rate of child support should reflect the obligation of both parents to take financial responsibility for the children and, where increased, may decrease any income-tested benefits payable. A departure is therefore proper.

28.As the Tribunal has reached the same conclusion as the objections officer, the decision under review will be affirmed.

DECISION

The decision under review is affirmed.