Beckett and Jacques (Child support)

[2020] AATA 3659

Beckett and Jacques (Child support) [2020] AATA 3659 (2 July 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/MC018419

APPLICANT:  Ms Beckett

OTHER PARTIES:  Child Support Registrar

Mr Jacques

TRIBUNAL:Member M Martellotta

DECISION DATE:  2 July 2020

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that:

• For the period 1 June 2019 to 31 December 2019 the annual rate of child support payable by Mr Jacques will increase by $9,841 for school fees for the children

• For the period 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr Jacques is increased by $11,779 for school fees for the children

• For the period 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr Jacques is increased by $13,321 for school fees for the children.

CATCHWORDS

CHILD SUPPORT – departure determination – costs significantly affected because of private school costs – children educated in manner expected by both parents – costs significantly affected because of special needs of child - 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

1. Ms Beckett and Mr Jacques are the parents of two children[1] who are children for the purposes of the administrative assessment of child support subject to this review. Mr Jacques is the parent liable to pay child support. Ms Beckett is recorded as having primary care of both children.

   [1] [Child 1] born [in] 2007 and [Child 1] born [in] 2010.

2. On 20 May 2019 Ms Beckett lodged a change of assessment application with the Department of Human Services[2] – Child Support. Her application was on the grounds of reason 3. Reason 3 requires Ms Beckett to establish that the costs of maintaining the children are significantly affected by the costs of their caring, education or training.

   [2] Now known as Services Australia.

3. At the time of making her application the following administrative assessments were in place

   ·For the period 1 September 2018 to 31 August 2019 Mr Jacques was assessed to pay an annual rate of child support of $5,274. This assessment was based on a 2017-18 adjusted taxable income (ATI) of $48,038 for Mr Jacques, and a 2017-18 ATI of $106,404 for Mrs Beckett.

   ·For the period 1 September 2019 to 12 May 2020 Mr Jacques was assessed to pay an annual rate of child support of $5,278. This assessment was based on a 2018-19 ATI of $48,566 for Mr Jacques, and a provisional 2018-19 ATI of $109,383 for Mrs Beckett.

4. On 8 August 2019 Child Support decided that a ground to depart from the administrative assessment had been established and varied the assessment in the following terms:

   ·For the period 1 June 2019 to 31 December 2019 (7 months) the child support payable by Mr Jacques will increase by $5,740 for school fees for [Child 1] and [Child 1]. This equates to an annual increase of $9,841.

   ·For the period 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr Jacques is increased by $11,910 for school fees for [Child 1] and [Child 1].

   ·For the period 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr Jacques is increased by $14,327 for school fees for [Child 1] and [Child 1].

5. Mr Jacques objected to that decision. On objection, Child Support decided to make a different determination so that:

• For the period 1 June 2019 to 31 December 2019 the annual rate of child support payable by Mr Jacques is increased by $4,580 to reflect his contribution to the children`s school fees.

• For the period 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr Jacques is increased by $4,718 to reflect his contribution to the children`s school fees.

• For the period 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr Jacques is increased by $5,629 to reflect his contribution to the children`s school fees.

• Impact on assessment: The annual rate of child support currently payable by Mr Jacques has reduced to $9,954 and approximately $3,082 has been credited to his child support account due to Mr Jacques paying an increased rate previously.

1. Ms Beckett lodged an application with the tribunal seeking independent review of that decision. The tribunal convened a telephone directions hearing and issued directions. On 17 June 2020 Ms Beckett and Mr Jacques participated in a hearing by conference telephone and each gave their evidence under affirmation. Documents relevant to the issues to be determined had been provided by the Department (370 pages); Ms Beckett (A1–A44) and Mr Jacques (B1–B14). The tribunal deferred making a decision so as to allow the parties to provide further evidence  and submissions regarding outstanding school fees.  Ms Beckett provided this information; Mr Jacques did not provide any further information.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act).

2. Child support legislation is interpreted by the Department with the aid of the Child Support Guide (the Guide). The tribunal is not bound by law to apply the policy as set out in the Guide but provided the policy is consistent with the legislation, it is required to have regard to it and in the ordinary course follow it.[3]

   [3] See Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634.

3. The issues for the tribunal to determine in this case are:

   ·     Does a ground for departure exist? if so,

   ·     Would it be just and equitable as regards the children, the liable parent, and the carer entitled to child support determination to depart from the administrative assessment of child support?

   ·     Is it otherwise proper to make a particular departure determination?

CONSIDERATION

Issue 1 – is there a ground to depart from the administrative assessment?

1. The rate of child support payable by a liable parent is usually based on an administrative assessment calculated using the relevant formula under Part 5 of the Act. This involves the application of a statutory formula, which takes into account factors such as the number of children, the age of each child, the level of care provided and the income of each parent. The income used in the calculation has a number of components making up the adjusted taxable income, which is worked out using section 43 of the Act. The general approach is that the Child Support Registrar (the Registrar) will utilise a parent’s ATI as assessed by the Australian Taxation Office (ATO) for the last relevant year of income.

2. Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a change of assessment). The liable parent or a carer may apply to the Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Act (section 98B). Section 98C of the Act provides that the Registrar may make a determination to depart from the formula assessment and as noted, establishes a three step process.

3. The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act. Only one ground is required in the special circumstances of the case to depart from the administrative assessment and thereby satisfy the requirements of subsection 117(2) of the Act.[4] The tribunal first considered whether a ground for departure is established pursuant to reason 3.

   [4] The phrase “special circumstances of the case” is not defined in the Act. However the Family Court has held that “it is intended to emphasise that the facts of the case must establish something special or out of the ordinary” (Gyselman and Gyselman (1992) FLC92-279). 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”.

4. A ground for departure exists if, in the special circumstances of the case, the costs of maintaining the children are significantly affected because the children are being cared for, educated or trained in the manner that was expected by their parents (subparagraph 117(2)(b)(ii)).

5. In this matter it was not in contention and the tribunal finds that both parents agreed to enrol their two children at a private school, [School 1]. The parents both signed Family Court consent orders confirming their mutual intention and desire that the children maintain a private education.  The tribunal is satisfied that the children are being educated in the manner expected by the parents.

6. The tribunal finds that both children are enrolled at [School 1]; the eldest child is in year 7 and the youngest in year 4. In 2019 the combined tuition fees for the children (including a 15% sibling discount) was $19,682. In 2020 the combined tuition fees are $23,559 (including a 15% sibling discount). Based upon the 2020 schedule of fees, the costs for the children going into 2021 will be about $26,643(including a 15% sibling discount).

7. Child support legislation does not require both parents to be liable for the costs. The most that it requires is the cost must be of an amount that significantly affects the costs of maintaining the children. The issue as to whether Mr Jacques can afford to contribute towards the cost of schooling will be considered by the tribunal when determining what is a just and equitable determination.

8. The relevant assessment at the time reflected that the combined annual costs of the children was $24,535.  In this matter the tribunal concluded that in the special circumstances of the case, the costs of maintaining the children is significantly affected because the children are being educated in the manner that was expected by their parents. For this reason, the tribunal therefore finds that there is a ground for departure.

Issue 2 – Is it just and equitable to make a particular departure determination?

1. As the tribunal is satisfied that there is a ground to depart from the assessment of child support as set out above, the next step for the tribunal is to consider whether it is just and equitable as regards the children and the parental parties to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to consider the matters set out in subsection 117(4) of the Act: which is discussed in the following paragraphs.[5]

Duty to maintain the children

[5] The tribunal notes the Federal Magistrates Court case of Tyagi & Meares [2008] FMCAfam 886 which directs that in considering the matters set out in subsection 117(4) the section need not be ‘slavishly followed, each of the relevant factors listed in … should be considered’.

1. Both parents have a duty to maintain the children as is stated in the Act; “…parents of a child have a primary duty to maintain the child. The duty has a priority over all commitments of the parent other than commitments necessary for self-support”.[6]

Proper needs of the children

[6] Section 3 of the Act.

1. In determining the proper needs of the children it is necessary to have regard at a broad level to the manner in which the children are being, and in which the parents expect the children to be, cared for, educated or trained, and also any other needs of the children.

2. The tribunal has found that the costs of educating the children in 2019 was $19,682, in 2020, $23,559 and in 2021 will be about $26,643. Ms Beckett told the tribunal that their eldest child has been diagnosed as high functioning autistic [7]and has challenges regarding fine motor skills.  The school recommended that [Child 1] take up a Dragon talk to text program and this has incurred an additional cost of $448 which she has paid. Ms Beckett said that she has also paid for the school uniforms (in 2019 she paid $664 and in 2020 she has paid $281 to date) and book lists for both children. The cost in 2020 for the eldest child’s book list was $216.99. In addition, there is a per term notebook levy of $130 for the eldest child.

   [7] Both children have been diagnosed with autism.

3. Ms Beckett’s evidence was that:

   a)There had been an agreement in place whereby Mr Jacques had in a private arrangement agreed to pay the children’s school fees in lieu of child support.

   b)In 2019 he stopped paying the school fees and this resulted in a significant amount of arrears accumulating with the school, which necessitated that she take responsibility for the fees from term three 2019 (July 2019).

   c)At the point that she took responsibility to pay the fees, Mr Jacques owed the school $10,239.31.  Mr Jacques (in a letter sent by his lawyer) agreed that he would pay $568 per month toward the arrears, however he stopped making any further payments after an amount of $2,400 was credited against the arrears.  As of 31 May 2020, $7,053.38 is now outstanding (this includes payments that Ms Beckett has personally paid towards the arrears).

4. Ms Beckett told the tribunal that she disagreed with the objection decision which in effect concluded that Mr Jacques should contribute 20% of the tuition costs. She said that the decision was premised on the incorrect conclusion that Mr Jacques was paying arrears he owed for outstanding school fees directly to the school which was not the case. As it stands, Mr Jacques still owes the school $7,839.31 and there does not appear to be any intention on his part to pay those arrears.

5. Ms Beckett said that the objection decision also has not properly assessed Mr Jacques’ actual financial capacity to contribute to the costs for the children’s education and proper needs.  In her submissions Ms Beckett stated that she thought a contribution of at least 45% by Mr Jacques would be fair, however she also says that any amended determination should also consider that she is now also covering the arrears Mr Jacques was meant to pay the school.

6. Mr Jacques in his evidence agreed that he has stopped making payments to the school for the arrears that are owed. He could not recall how much is owed in outstanding fees. He says that he could not afford to make those payments which is why he stopped. He submits that having him pay 20% of the school fees is fair. Mr Jacques also agreed that he has not made any other payments towards the children’s costs of education.

7. In this matter in addition to the costs of education Ms Beckett has also raised costs relevant to the special needs[8]  of the children arising from an autism diagnosis.  The fact of this diagnosis does not appear to be in dispute.

   [8] Special needs can be because of a physical, mental or learning disability or because of a special talent or ability of the child (Lightfoot v Hampson [1996] FLC 92-663)

8. The tribunal is satisfied on the basis of the additional evidence provided by Ms Beckett that the arrears outstanding to the school are $7,053.38 and that these costs are now being met by Ms Beckett.

9. The tribunal is satisfied that the tuition fees and the additional costs incurred for the Dragon program to cater for the eldest’s child’s special needs are relevant considerations to be taken into account in any adjustment to the administrative assessment.

Income, earning capacity, property and financial resources of the children

1. In having regard to the income, earning capacity, property and financial resources of the children, the tribunal must disregard any entitlement of the children or the carer entitled to child support to an income tested pension, allowance or benefit (subparagraph 117(7)(b)(ii) of the Act).

2. There is no evidence in relation to the children have any relevant financial resources that wold be relevant to the assessment.

Other party receiving money, goods and property for the benefit of the children

1. Neither party made submissions in this regard; as such the tribunal concludes there is no basis for any adjustment pursuant to this consideration.

The income, property and financial resources of each parent who is a party to the proceeding

1. At hearing, Ms Beckett submitted that the objections officer’s decision in effect overcompensated in taking into account the relative financial positions of the parents in concluding that Mr Jacques should contribute only 20% of the costs. She said that when she and Mr Jacques made the original decision to enrol the boys in private education, they were both on low incomes and yet they were still able to meet the costs. She said that even after they separated Mr Jacques continued to have capacity to meet a greater share of the costs despite a difference in their income.

2. Mr Jacques told the tribunal that he has limited financial capacity to contribute towards the school fees or other special needs of the children. He confirmed that since the objection decision, there has been a significant change in his employment in that he has stopped working in his previous employment [in an occupation] and is now working [in another occupation].  He said however that his partner has taken up employment in [State 1] and there is uncertainty as to how long he will stay in his current role as he intends to move to join her at some point in time.

3. According to the Statement of Financial Circumstances provided by Ms Beckett the tribunal finds that:

   a)Ms Beckett is employed as a [role] with [an agency] and she earns an average gross amount of $2,246.50 per week.

   b)She owns a property where the family resides valued at about $685,000 subject to a mortgage of $224,131.

   c)There are no other significant assets or savings.  She has superannuation valued at $140,218.

   d)She has taken on responsibility for the outstanding school debt owed by Mr Jacques.

   e)Her husband’s income has been affected by the COVID-19 situation and she is the person currently predominately meeting the financial costs of the household and estimates the total household expenditure to be about $2,276 per week.

4. The Statement of Financial Circumstances provided by Mr Jacques reflected his situation when employed in his previous employment. At that time, he estimated that his weekly gross income was about $921. Since then however he says, and the tribunal finds, that he has commenced training [in his new occupation].  His payslips show that he is on an annual income of $53,529, (about $1029 per week) he stated that once he completes training his rate of pay will increase. His wife also works full time.  Payslips provided show that his income also can include penalty rates which are paid in addition to his base income. Based on the provided payslips he earns about $1,100 gross per week.

5. He estimates that his average weekly household costs are about $1,655 per week however he said that his share of those costs are now about $440 per week. Mr Jacques says that he does not own any property or other significant assets and has superannuation of about $88,288.

6. Mr Jacques says that has provided Child Support with an update about his new employment and income.

7. The tribunal is satisfied that based on these findings, the income, financial resources and property of the parties is a relevant consideration in any adjustment to the administrative assessment.

Earning capacity

1. A ground for departure exists if, in the special circumstances of the case, the 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)(ib)). Whilst Mr Jacques had raised this as a ground in his cross application, no submissions were made on this aspect at hearing.

2. The tribunal concluded that there was no basis for any adjustment pursuant to this consideration.

The commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support himself or herself, or any other child or another person that the person has a duty to maintain

1. The tribunal is satisfied taking into account the relevant costs of self-support utilised in the assessments and based upon evidence provided at hearing that neither party has extraordinary costs of self-support that are relevant to the assessment.

Any hardship that would be caused

1. As noted, the tribunal can vary the rate of child support payable or it can vary some of the variables that are used in the administrative formula. Ms Beckett told the tribunal that she has been shouldering the full costs of the children’s education and special needs and that it is only fair that Mr Jacques contribute to those costs.  Since he ceased paying arrears, she ultimately is having to also cover those costs and that any departure assessment should factor in the unpaid school arrears of $7,839.  In effect whilst her income is higher than Mr Jacques, she also has relative higher costs and is meeting other ancillary costs of the children.

2. Mr Jacques told the tribunal that whilst his income has increased with his recent change in work, he was uncertain about the future given his wife has taken up a position in [State 1] and he appeared to suggest that he would possibly quit his current role in order to move to [State 1].

Proposed departure

1. In this matter the tribunal is proposing to make a departure determination in which Mr Jacques makes an increased contribution towards the education costs of the children. It was apparent that the key issue at hearing is what would be a fair and equitable level of contribution to be made by Mr Jacques, in this regard the tribunal noted the following competing considerations:

   a)The comparative income of the parents, namely Ms Beckett earns a higher level of income than Mr Jacques.

   b)The relative costs of the household.  In this regard Ms Beckett’s evidence is that she is currently meeting more of the household costs and has a greater weekly household expenditure than Mr Jacques. Mr Jacques says that his costs have increased due to his new position (additional travel is required).

   c)Ms Beckett is now having to meet the cost of school fees arrears owed by Mr Jacques.

   d)Ms Beckett is also meeting other costs for the children, such as uniforms, book lists and the Dragon program for the eldest child.

2. As noted, Mr Jacques says that he cannot afford to contribute any additional amounts towards the children’s education costs. However financial information provided by him demonstrated that whilst he earns less than Ms Beckett, he also has less expenses.  His evidence is that his weekly average contribution to the total household costs is about $440. His only other regular expense noted in his statement of financial circumstances are monthly credit card payments and private health insurance.

3. Considering, all of the above factors and the presented evidence, the tribunal concluded that it would be fair and equitable that Mr Jacques contribute 50% of the school costs.  A departure determination in these terms would mean that in effect Mr Jacques returns to the position arrived at by the original child support decision maker of making a 50% contribution[9]. It means that he will have an additional weekly amount of $189 (2019 school fees), $226 (2020) and $256 (2021).

   [9] The tribunal notes that there is a slight variation in  the annual amounts from that determined by the original decision maker.

4. The tribunal notes that on the basis of the administrative assessment based upon the ATI of each parent (which will reflect in due course Mr Jacques’ increased income) Mr Jacques has a weekly liability of about $100 per week.[10] The tribunal notes that on the basis of Mr Jacques advised average household weekly expenses of $440 per week and also  taking into account his credit card and private health insurance costs (of about $200 per week)  this still leaves him with financial capacity to make an equal contribution to the school fees given his  average gross weekly income. In this regard the tribunal also noted that Mr Jacques said that once he completes his training his income will increase.

   [10] Based upon the 2017/18 ATI

5. The tribunal concluded that the departure should take effect from 1 June 2019 as this was when there was a change in the arrangements for the payment of the school fees and follows on from Ms Beckett’s change of assessment application. The proposed departure is set out below:

• For the period 1 June 2019 to 31 December 2019 the annual rate of child support payable by Mr Jacques will increase by $9,841 for school fees for the children.[11]

• For the period 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr Jacques is increased by $11,779 for school fees for the children.

• For the period 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr Jacques is increased by $13,321 for school fees for the children.

  [11] This equates to an increase of about $5,740 for the period  1 June 2019 to 31 December 2019

1. This approach in the tribunal’s view strikes a balance which recognises and accommodates the factors identified by the tribunal and allows the parties some certainty in the assessment for a period going forward. As always, this departure does not prevent either party making future application for a change of assessment should circumstances significantly change.

2. The tribunal is satisfied that in the special circumstances of the case it is just and equitable to make a departure determination from the administrative assessment issued in accordance with the Act in the terms as set out in these Reasons for Decision.

Issue 3 – Would it otherwise be proper to make a particular departure determination?

1. The final step is for the tribunal to determine is whether it is ‘otherwise proper’ to make a particular departure determination. Subsection 117(5) of the Act requires the tribunal to take into account whether the proposed departure is proper in the context of public interest and welfare expenditure of the community. A prime objective of the legislation is that parents are obliged to support their own children to the extent of their real capacity and such obligation should not be unnecessarily abrogated to the public welfare system.

2. As it appears that Ms Beckett does not receive family tax benefit, the departure will not have an impact on the public purse and the tribunal is satisfied that in all the circumstances a departure in these terms is otherwise proper.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that:

• For the period 1 June 2019 to 31 December 2019 the annual rate of child support payable by Mr Jacques will increase by $9,841 for school fees for the children.

• For the period 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr Jacques is increased by $11,779 for school fees for the children.

• For the period 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr  Jacques is increased by $13,321 for school fees for the children.