Booth and Cadle (Child support)

[2020] AATA 5847

Booth and Cadle (Child support) [2020] AATA 5847 (1 December 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/BC019023

APPLICANT:  Mr Booth

OTHER PARTIES:  Child Support Registrar

Ms Cadle

TRIBUNAL:Member K Buxton

DECISION DATE:  1 December 2020

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the carer entitled to receive – no ground for departure established – 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 Booth and Ms Cadle are the parents of [Child 1], born October 2006, [Child 2], born July 2008 and [Child 3], born December 2013. Mr Booth has sought review by this tribunal of a decision of the Child Support Agency (CSA) about the amount of child support which had been assessed as payable by him to Ms Cadle. The children were recorded as in the equal shared care of Mr Booth and Ms Cadle until a change in care was recorded from 30 October 2020 such that the children are now recorded as in the 39% care of Ms Cadle and the 61% care of Mr Booth.

2. For the period 1 October 2019 to 29 October 2020 Mr Booth was assessed to pay child support to Ms Cadle for the children at the annual rate of $13,410, calculated using Mr Booth’s 2019 adjusted taxable income of $118,454 and Ms Cadle’s 2019 adjusted taxable income of $20,385. Following the change in care, this rate reduced to $8,850 for 30 October 2020. From 1 November 2020 to 31 January 2022 Mr Booth was assessed to pay child support to Ms Cadle at the annual rate of $9,795, calculated using Mr Booth’s 2020 adjusted taxable income of $128,943 and using provisional income of $23,863 for Ms Cadle.

3. On 23 October 2019 Mr Booth applied for a change of assessment, under Part 6A of the Child Support (Assessment) Act 1989 (the Act), on the basis that Ms Cadle’s income, financial resources and earning capacity were not fairly reflected in the assessment.  Previous departure applications have been lodged in respect of this child support case. Most recently, an application lodged by Mr Booth on grounds similar to the subject application was refused on the basis that no ground existed to depart from the administrative assessment. Mr Booth sought to object to that decision but was out of time to do so. An extension of time was refused by the CSA and that decision was affirmed by the AAT on review.

4. On 5 February 2020 a delegate of the Child Support Registrar considered the application lodged by Mr Booth in October 2019 and decided that no ground existed to depart from the administrative assessment of child support. The application for a change of assessment under Part 6A was therefore dismissed. Mr Booth objected to that decision and, on 4 May 2020, an objections officer disallowed the objection.

5. Mr Booth applied to this tribunal to have the decision reviewed. The tribunal hearing took place on 1 December 2020. Ms Cadle and Mr Booth participated in the hearing by telephone and gave sworn evidence. In reaching its decision, the tribunal has considered the sworn evidence given by Ms Cadle and Mr Booth and the documentation provided by the CSA (Exhibit 1), Mr Booth (Exhibit A) and Ms Cadle (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 which 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. The legislative intent is that the administrative formula will apply in the ordinary run of cases.

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), a change of assessment can be made only if:

   ·     a ground (or more than one ground) for departure exists; and

   ·     departure from the administrative assessment would be:

   i.just and equitable as regards the children and each parent; and

   ii.otherwise proper.

3. Subsection 98C(2) of the Act provides that the grounds for departure are the same as those set out in subsection 117(2). 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 range of determinations, prescribed in section 98S of the Act, which include varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.

Income, financial circumstances and earning capacity

1. Subparagraph 117(2)(c)(ia) of the Act 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: …

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

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

10.  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 unless there is a special reason to do so. 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.

11.  Mr Booth is employed on a full-time basis as a [Occupation 1]. His taxable incomes of $118,454 for the 2019 tax year and $128,943 for the 2020 tax year are reflected in the child support case. Ms Cadle did not raise any issues about the income of financial circumstances of Mr Booth. The tribunal is satisfied that the formula is operating as intended with respect to Mr Booth’s income.

12.  Ms Cadle has previously worked in [Occupation 1] but has not done so since 2016. In mid-2020 her qualifications as a [Occupation 1] in Australia lapsed. She now derives her modest income from Centrelink income support payments and occasional casual work and, in the 2019 tax year, for which her most recent income tax return has been submitted, her income was below the amount allowed in the formula for the self-support of a parent.  Ms Cadle stated that although she has also received the coronavirus supplement from April 2020, she has not obtained any other work in the 2020 year and her income for child support purposes will be about $24,000 for the 2019/20 year.

13.  Mr Booth submitted that Ms Cadle had unrealised earning capacity which had not been taken into account in the assessment of child support. The tribunal can look beyond Ms Cadle’s income, to unexercised earning capacity, only if she does not work, despite ample opportunity to do so or if she has changed her working hours to less than full-time or changed occupation, industry or working pattern. The uncontroverted evidence is that Ms Cadle has done none of those things. Ms Cadle has not worked in the [Occupation 1] sector since 2016. Ms Cadle left her position as a [Occupation 1] to undertake caring responsibilities of home-schooling one of the children, which continued until 2018. She has not re-entered the workforce as a [Occupation 1]. Ms Cadle gave sworn evidence that she applied for various [Occupation 1] roles from 2018 but was advised that she did not hold “recency of practice” and would need to gain 450 hours of practice to prevent her qualifications from lapsing. She stated that she was unable to do so. Her [Occupation 1] qualifications lapsed in mid-2020. Ms Cadle provided sworn evidence of the extensive efforts she has undertaken both to gain recent experience and to secure alternative employment. Mr Booth stated that he was not able to challenge the accuracy of Ms Cadle’s evidence as to those efforts and the tribunal accepts that Ms Cadle has undertaken substantial efforts in an attempt to re-enter the workforce since 2018.

14.  Mr Booth submitted that Ms Cadle could have done more. He submitted that it would be a simple matter for Ms Cadle to obtain work. However, this is at odds with the clear sworn evidence of Ms Cadle that her efforts have not resulted in employment as a [Occupation 1]. There is simply no evidence that Ms Cadle has ample opportunity, or any opportunity, to work in her chosen profession of [Occupation 1] as she did not have recent experience in 2018, and she now no longer has current qualifications to practise. She has, in past periods, undertaken some casual employment and reported her modest income in her income tax returns. She has sought, but not obtained, various other work and continues to be unemployed. Therefore, the tribunal is not satisfied that a ground to depart from the administrative assessment of child support exists based on unexercised earning capacity as that concept is defined in the Act (subsection 117(7B)).

15.  The formula assessment in place from October 2019, when the departure application was lodged, to October 2020 required Mr Booth to pay to Mr Booth child support at the annual rate of just over $13,000 per annum and this decreased to just under $10,000 per annum after a change for the children was applied to the assessment in late October 2020.

16.  A departure ground is established only if, in the special circumstances of the case, the determination of the level of child support is unjust or inequitable. It is difficult to see what about this case could be said to set it apart from others such that the circumstances could properly be described as special.

17.  Mr Booth asserted, without evidence, that Ms Cadle may have cash assets in a UK bank account that should be taken into account. There is no basis in the evidence from which the tribunal could conclude that such cash assets exist. Ms Cadle gave sworn evidence that she no longer had any money in the UK and the tribunal accepts that sworn evidence.

18.  Mr Booth pointed to the difference in asset positions of the parents as providing a ground to depart from the administration of child support. Mr Booth stated that he is required to meet home loan repayments and Ms Cadle is not. He stated that he did not pursue a formal property settlement after separating from Ms Cadle, and that she retained the family home. Ms Cadle explained that she received a substantial settlement some years ago as a result of an injury, and that she had used the proceeds of that settlement to extinguish the debt on her home. Given that she did not work for two years whilst home-schooling one of the children, it is unsurprising that she utilised her funds in this way. The tribunal notes that Mr Booth has substantially greater vested superannuation and substantially greater income than Ms Cadle. That Ms Cadle does not have to meet accommodation costs does not, of itself, lead to a conclusion that the child support assessment is unfair. Parents are rarely in identical asset positions and the formula therefore uses incomes, rather than assets, in the administrative assessment of child support. In this case, the tribunal is satisfied that approach is consistent with the intent of the legislature.

19.  The child support formula is operating as intended and is likely to continue to operate as intended so long as the parents lodge their income tax returns in a timely way or otherwise accurately estimate their income. The tribunal notes that the recorded care percentages for the children assume that the parents are each meeting costs for the children for an approximation of the cost percentages arising from those care percentage determinations. Mr Booth stated that his costs of caring for the children had increased as a result of additional child care, transport and car-parking. He submitted that the increase in costs outstripped the decrease in the child support liability following the care change. However, during the hearing, he gave evidence to the effect that his increased costs fell short of the decrease in that liability.

20. If Ms Cadle is not in receipt of child support from Mr Booth whilst the children are in her care it is unclear how she could meet their expenses in addition to her own reasonable self-support costs. Like any statutory formula, the formula set out in Part 5 of the Act is not expected or intended to operate with precision, but rather to regulate the financial arrangements between the parents in relation to the costs of the children. The tribunal notes that each parent also contributes 50% of the children’s private school fees. Ms Cadle stated that she is presently using part of the child support payable by Mr Booth in order to meet her share of this expense.

21. In order to find a ground to depart exists because of the income, property and financial resources of either parent the assessed amount of child support must be unjust or inequitable. Here, the ongoing administratively assessed rate of child support payable by Mr Booth of just under $10,000 per annum is appropriate having regard to the children’s needs, the care each parent is having and the incomes available to the parents from which their own needs and those of the children could be met. The tribunal is not satisfied that those incomes and financial resources lead to an assessed amount of child support that is unjust or inequitable as regards Mr Booth, Ms Cadle or the children. The tribunal finds that there is no ground to depart from the administrative assessment having regard to the provisions of Part 6A of the Act.

22.  The tribunal notes that the decision reached is consistent with observations made by the tribunal, differently constituted, in August 2019 when considering similar issues raised by Mr Booth in a previous departure application lodged in early 2019. That application for a departure was refused, and Mr Booth was refused an extension of time within which to object to that decision. In affirming the decision to refuse to extend time, the tribunal observed:

In this matter the Tribunal considers that while Mr Booth has an arguable case, his case is not strong. While Ms Cadle may, according to Mr Booth, have access to some financial resources, her income is low. She would need to earn significantly more than is currently the case to affect the child support assessment to any marked degree. It is Mr Booth’s view that Ms Cadle should work as a [Occupation 1], a position for which she is qualified. However the evidence seems to indicate that Ms Cadle will find it problematic to renew her [Occupation 1] registration due to not working as a [Occupation 1] for a few years. She is currently studying to retrain and renew her skills according to the change of assessment decision. In those circumstances the Tribunal considers that it would be unlikely that the earning capacity’s stringent tests would be satisfied.

Conclusions

23. The tribunal has considered whether a ground exists to depart from the administrative assessment of child support on the basis of the incomes, financial resources and earning capacities of the parents. The legislative intent is that the formula is designed to apply in the majority of cases. In this case the application of the formula set out in Part 5 of the Act does not produce a child support assessment from which a ground to depart exists. The circumstances of this case are not special, and do not differ greatly from the ordinary run of cases.

24.  The tribunal has found that there is no ground to depart from the administrative assessment in place. Mr Booth’s application for a departure, lodged on 23 October 2019, is therefore refused. As the tribunal has reached the same decision as that under review, that decision is affirmed.

DECISION

The decision under review is affirmed.