Barlow and Crofts (Child support)

Barlow and Crofts (Child support) [2021] AATA 4232 (10 September 2021)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2021/HC020674
APPLICANT:  Mr Barlow
OTHER PARTIES:  Child Support Registrar
Ms Crofts

TRIBUNAL:Member S Brakespeare
DECISION DATE: 10 September 2021
DECISION:

The tribunal sets aside the decision under review and, in substitution, refuses to make a departure determination.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the paying parent – foreign rental income – no ground for departure established – 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 Barlow is the parent liable to pay child support to Ms Crofts in respect of their child [Child 1], who is nine years old. The child support case commenced on 31 October 2012. The records reflect that Ms Crofts is the primary carer of the child.
On 17 April 2019 Ms Crofts lodged an application for a change of assessment citing as grounds for departure, the income, property, financial resources and earning capacity of Mr Barlow. On 6 December 2019 an officer of the Child Support Agency refused to make a departure determination (the original decision). Ms Crofts lodged an objection to the original decision. On 31 October 2020 an objections officer allowed the objection and made a departure determination in the following terms (the objection decision):
· for the period 1 July 2019 to 30 June 2022 the rate of child support payable by Mr Barlow is varied to $12,000 per year.
Mr Barlow lodged an application for review of the objection decision with the tribunal. A telephone directions hearing was convened on 30 July 2021. Both parties participated and the directions were complied with.
A hearing was held on 10 September 2021. Mr Barlow and Ms Crofts gave evidence on affirmation to the tribunal via conference telephone. The Child Support Agency provided the parties and the tribunal with bundles of paper relevant to the review (1124 pages). Prior to the hearing, the tribunal exchanged further documents it had gathered from the parties (folios A1 to A423 and B1 to B38).
Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s consideration of the issues which it has to decide.

ISSUES

The statutory provisions relevant to these reviews are contained in the Child Support (Assessment) Act 1989 (the Act).
The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.
Under Part 6A of the Act the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).
Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and it establishes a three step process such that the issues for determination by this tribunal are:
·whether a ground is established to depart from the administrative assessment of child support; and
·if so, whether it is just and equitable to make a particular departure determination; and
·if so, whether it is otherwise proper to make a particular departure determination.
The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.
Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman & Gyselman (1992) FLC 92-279 has held:
as a generality 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 court will not interfere with the formula in the ordinary run of cases.
Likewise, in Phillippe and Phillippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.
If the tribunal is satisfied that a ground exists 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.
The range of determinations which can be made includes variations to: the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

The administrative assessments that are relevant to the time the change of assessment application was made are as follows:
·     for the period 1 September 2018 to 30 September 2019 Mr Barlow was assessed to pay an annual child support amount of $3,332. The assessment was based on a 2017/18 default adjusted taxable income for Mr Barlow of $49,071 and Ms Crofts’s 2017/18 adjusted taxable income of $145,521;
·     for the period 1 October 2019 to 30 September 2020 Mr Barlow was assessed to pay an annual child support amount of $3,128. The assessment was based on a 2018/19 default adjusted taxable income for Mr Barlow of $50,076 and Ms Crofts’s 2018/19 adjusted taxable income of $177,813;
·     for the period 1 October 2020 to 31 December 2021 Mr Barlow is assessed to pay an annual child support amount of $3,239. The assessment was based on a 2019/20 default adjusted taxable income for Mr Barlow of $51,151 and Ms Crofts’s 2019/20 adjusted taxable income of $176,178.

Issue 1 – Is there a ground for departure?

A ground for departure exists where, in the special circumstances of the case, application in relation to the child of the provisions of the 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 because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).
The term financial resource is not defined in the Act. Slack FM considered the term in Costa & Fairbank (SSAT Appeal) [2010] FMCAfam 39 as follows:
A financial resource, in my consideration, refers to something which is not property but from which a financial benefit is or may be gained [see Kennon v Spry (2008) FLC93-388, Gummow and Hayne JJ (@ 83035)].
The principle object of the Assessment Act (ss.4) is to ensure the children receive a proper level of financial support from their parents.
A particular object of the Assessment Act includes ensuring:
The term financial resource in the light of the objects of the Assessment Act should be broadly defined and would in my consideration refer to any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children
Mr Barlow is a resident of [Country 1] and does not lodge income tax returns in Australia. The adjusted taxable income used in the administrative assessment is an amount that the Registrar considers appropriate of at least two-thirds of the annualised MTAWE figure for the relevant June quarter.
Mr Barlow told the tribunal that he completes [Country 1] income tax declarations every year, declaring all of his taxable income. He agrees with the finding of the original decision maker that his income from all sources is not more than the amount used by the Child Support Agency in the administrative assessment. He said that the allegations Ms Crofts has made about his income suggest that he is illegally withholding from the Inland Revenue and the Child Support Agency information about his income and financial resources, an allegation he strenuously denies.
Mr Barlow stated that his main source of revenue is rental income. He derives income from an investment property at [Address 1] and renting out the spare room in his home at [Address 2]. He also derives a small amount of income from self-employment. The [Address 1] property was jointly purchased by Mr Barlow and his father. Mr Barlow states that, in order for him to have an income to support himself, his father has foregone his share of the rental income. Mr Barlow collects the rent and is required to pay the mortgage to [Bank 1] (interest only) and all other expenses relating to the property. With respect to the home in which he lives Mr Barlow said his father initially purchased it in their joint names as an investment property. Subsequently his father sold his own home and paid out the mortgage to provide Mr Barlow with a home in which to live.
Mr Barlow told the tribunal that he does not receive payments for performing work for his father. His father does not own any businesses; he derives his income from a number of properties he owns. Mr Barlow said his father has previously provided him with loans for his business ventures. These business ventures have been failures. Mr Barlow said he has repaid to his father most of the loan associated with [Company 1] and [Company 2], but his savings account still contains $17,000 being funds advanced to him by his father for [Company 3]. That company is currently dormant. Mr Barlow said he is yet to repay his father, as for a period of time during the pandemic he was receiving no rental income and was using the money to pay expenses on the properties. Mr Barlow said that he is again in receipt of rental income; however it is a reduced amount. He acknowledged that he receives financial support from his father; however, it is not the significant amounts attributed to him by the objections officer.
Mr Barlow acknowledges that he is recorded as a Director of [Company 4] and is also listed on their website as a legal officer for the business. Mr Barlow said the business is owned by his cousin [Mr A]. He asked Mr Barlow, being [City 1] based, to be named as director when the business was registered in [Country 1]; however the business does not earn any income in [Country 1] and Mr Barlow has never received any payment in respect of his association with the business.
Mr Barlow told the tribunal he disagrees with the conclusions that the objections officer has made in respect of his income and financial resources. He said the objections officer has relied on the spreadsheet provided by Ms Crofts where she purports to have analysed the bank statements Mr Barlow provided to the Child Support Agency. He strongly refutes her conclusions and has provided his own spreadsheets showing that Ms Crofts’s analysis relies on erroneous assumptions.
Ms Crofts told the tribunal that she is an accountant. She said that the spreadsheet she provided to the Child Support Agency is based upon the deposits and expenses recorded each month in respect of Mr Barlow’s bank accounts. She said that the analysis disregarded the transfers between Mr Barlow’s accounts (that is, these amounts were not counted as income). Ms Crofts said that she explained the spreadsheet in detail to the objections officer and that the objections officer compared her spreadsheet entries against the bank statements and was satisfied that they were correct.
Mr Barlow told the tribunal he has refuted many of the assertions and assumptions Ms Crofts has made, via the spreadsheets he provided to the tribunal. In particular, he claims that much of the expenditure attributed to him is in fact expenditure he has made on his father’s account, using monies provided to him for that purpose by his father. The tribunal is not satisfied that the spreadsheets provided by Ms Crofts are an accurate representation of Mr Barlow’s income and financial resources.
Ms Crofts told the tribunal that she believes that Mr Barlow is receiving extra funds either through his own involvement in a business or through distributions from undeclared Trusts. Mr Barlow denies those assertions.
The tribunal is not satisfied that there is sufficient evidence to support a finding that Mr Barlow is receiving income from involvement in a business or through trust distributions.
The tribunal is satisfied that Mr Barlow has received financial assistance from his father through direct transfers of funds, loans (most of which have been repaid) and the purchase of assets, being Mr Barlow’s home and investment property.
The tribunal is satisfied that the income Mr Barlow derives from his assets is included in his income tax returns, copies of which are before the tribunal. Mr Barlow’s income tax returns for the financial year ended 5 April 2020 recorded his net rental income as £15,535.His business income was £1,236. These amounts together convert to approximately $31,500. The tribunal finds that Mr Barlow receives some direct financial assistance from his father, being £650 per month, which is approximately $14,700 per annum. These amounts added together are less than the adjusted taxable income used for Mr Barlow in the administrative assessment. Having regard to recent bank statements provided by Mr Barlow the tribunal is satisfied that that his rental income has reduced.
The tribunal notes that Mr Barlow has the benefit of not being liable for rent or mortgage payments. Potentially, this means that he has greater capacity to make child support contributions. However the tribunal considers that the benefit is likely to be counter balanced by a higher cost of living associated with residing in [City 1]. The tribunal further notes that Mr Barlow’s rental income decreased significantly after April 2020 due to the pandemic; however no such reduction is reflected in the adjusted taxable income used in the assessment. The tribunal is of the view that the any benefit Mr Barlow receives from not being liable for rent or mortgage payments is balanced by higher living costs and a reduction in his rental income.
The tribunal is not satisfied that there are special circumstances in this case in relation to Mr Barlow’s income, property or financial resources.
This means that there is not a ground for departure under subparagraph 117(2)(c)(ia) of the Act.
A ground for departure exists where, in the special circumstances of the case, application in relation to the child of the provisions of the 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 because of the earning capacity of either parent (subparagraph 117(2)(c)(ii) of the Act).
In relation to earning capacity, subsection 117(7B) of the Act requires the tribunal to consider three matters in determining that the parent’s earning capacity is greater than is reflected in their income used in the administrative assessment:
Whether the parent is:
·     not working despite ample opportunity to do so (subparagraph 117(7B)(a)(i)); and/or
·     has reduced their weekly hours of work to below full-time work (subparagraph117(7B)(a)(ii)); and/or
·     has changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii)); and
If the parent’s decision about their work arrangements is not justified by either their caring responsibilities (subparagraph 117(7B)(b)(i)) or their state of health (subparagraph 117(7B)(b)(ii)); and
If the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to stop working, reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support (paragraph 117(7B)(c)).
All three of the above criteria must be met before a departure determination can be made to take into account whether the parent has a greater earning capacity. If the above criteria are satisfied then the tribunal must determine the actual earning capacity of the parent.
Mr Barlow is currently working part-time as a self-employed contractor. There is no evidence to suggest that he has ever worked full-time or that he has changed his occupation, industry or working pattern. Whilst he is a qualified [Occupation 1] there is no evidence to suggest that he has [worked as an Occupation 1] at any time since the commencement of the child support case. The tribunal finds that the earning capacity provisions are not satisfied in this case.
This means that there is not a ground for departure under subparagraph 117(2)(c)(ii) of the Act.
As a ground for departure has not been established the tribunal refuses to make a departure determination.

DECISION

The tribunal sets aside the decision under review and, in substitution, refuses to make a departure determination.

[2021] AATA 4232

10 September 2021

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Statutory Construction

Judicial Review

Jurisdiction

Remedies