Bostwick and Spickernell (Child support)

Bostwick and Spickernell (Child support) [2021] AATA 1265 (25 March 2021)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2020/BC020352
APPLICANT:  Mr Bostwick
OTHER PARTIES:  Child Support Registrar
Ms Spickernell

TRIBUNAL:Member K Dordevic
DECISION DATE: 25 March 2021
DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that from 10 March 2020 until a terminating event occurs in relation to the child [Child 1], Mr Bostwick’s adjusted taxable income is varied to $78,653 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – a ground for departure established – 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 omitted 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

The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. The Act also provides for a departure from the administrative assessment in certain circumstances.
This case was registered with the Department of Human Services – Child Support on 18 March 2008 and has been collectable since 25 January 2011. The parties are the parents of one child, who is recorded as being in the mother’s 100% care and the father’s 0% care from 29 January 2012.
After an application was lodged by the mother on 8 November 2019 a senior case officer determined on 19 February 2020 that from 8 November 2019 until a terminating event occurred in relation to the child, the father’s adjusted taxable income is varied to $60,502.
The father lodged a change of assessment application on 10 March 2020. On 29 May 2020 his application was refused, as no ground was established. The father sought a review of that decision on 7 October 2020 and an extension of time application was granted on 16 October 2020. On 29 October 2020 an objections officer disallowed the objection.
On 1 December 2020 the father sought further review with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal). A directions hearing was held on 10 February 2021 and directions were issued, requiring compliance by 5 March 2021.
The tribunal heard the matter on 25 March 2021. The father appeared by conference telephone. The mother declined the invitation to attend the hearing. The Child Support Registrar was not represented at the hearing. The tribunal has considered the sworn evidence of the father. The tribunal also considered the documentation provided by the Department (folios 1–164), the father (folios A1–A29) and the mother (folios B1–B4).

ISSUES

The statutory provisions relevant to this review are outlined in section 98C of the Act, which states that a decision to depart from the administrative assessment may be made if the following three requirements are met:
(i)that one, or more than one, of the grounds for departure referred to in subsection 117(2) exists; and
(ii)that it would be:
(A)just and equitable as regards the child, the liable parent, and the carer entitled to child support; and
(B)otherwise proper;
to make a particular determination under this Part …
Therefore, the issues which arise in this case are:
· Does a ground exist for departure from the administrative assessment of child support? And if so,
· Would it be just and equitable and otherwise proper to make a particular determination?

CONSIDERATION

A ground for departure

Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure if the administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent because of either party’s income, property and financial resources.
The father’s 2019 and 2020 adjusted taxable incomes were $4,123 and $0 respectively. At the time that he lodged the departure application under review he was liable to pay $7,985 per annum in child support from 8 November 2019 to 31 August 2020 based on his varied adjusted taxable income of $60,502 and the mother’s 2019 adjusted taxable income of $62,684. His child support liability decreased to $7,867 per annum during the period 1 September 2020 to 30 November 2021 based on his varied adjusted taxable income of $60,502 and the mother’s 2020 adjusted taxable income of $63,376.
There are no statements before the tribunal regarding the father’s fortnightly superannuation. However, there is no dispute that the father receives $2,327 in fortnightly tax-free superannuation payments ($60,502 per annum). The tribunal finds accordingly.
The tribunal must have regard to the relevant policy contained in the Child Support Guide (the Guide), although the tribunal is not bound by the policy if there are cogent reasons not to do so: Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634. Relevant to this application, chapter 2.6.14 of the Guide relevantly states:
Where a parent receives income and they have paid no, or negligible, tax on that income, the Registrar may calculate the equivalent gross value of that income. This grossed-up income will be taken into account in deciding whether there is a reason to change the assessment.
The tribunal is of the view that there are no cogent reasons not to apply the above policy. In order to receive a net income of $60,502, a PAYG employee would need to earn in the vicinity of $78,653 per annum. Application of such an income to the administrative assessment would result in an annual child support liability of $11,110 per annum, an increase of $3,240 when compared to the father’s assessed liability based on his tax free pension.
The tribunal concludes that the father has a greater capacity to meet the child’s costs than his taxable income and the tax-free pension suggests. As the father’s income is not properly reflected in the child support assessment, there are special circumstances such that the application of the administrative assessment would result in an unjust and inequitable determination of child support payable. The tribunal therefore concludes that the ground provided for in subparagraph 117(2)(c)(ia) of the Act is established.

Just and equitable

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 child, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.
One such factor that is relevant to the consideration of whether departing from the administrative assessment would be just and equitable is to consider whether the parent’s capacity to provide financial support for the child is significantly reduced because of the duty of that parent to maintain another person, or because of the special needs of that person to whom they owe a duty, or because of the necessary commitments of the parent to support himself or the other person that they have a duty to maintain.
As the tribunal understands it the father assert that, as he has a legal duty to support his wife who is no longer in receipt of fortnightly income, he no longer has capacity to meet his current child support liability. At hearing he suggested that he would be able to contribute $100 per week towards the child’s costs.
The tribunal accepts the father’s evidence regarding his wife’s circumstances. She worked for many years as [an occupation 1]. She was in receipt of fortnightly workers’ compensation payments during the last four years of her [career]. She was paid a net lump sum compensation payment of $170,211.90 on 14 February 2020 in final settlement of her workers’ compensation claim. She is precluded from receipt of income support payments until 23 May 2022.
A person has legal duty to maintain a spouse if the spouse is unable to adequately support themselves by reason of their mental incapacity that prohibits them from obtaining employment. The father has provided evidence that his wife suffers from a mental health disorder that prohibits her from working, evidenced by a report authored by [a named] consultant psychiatrist, dated 10 July 2017.
The tribunal is satisfied that the father has a duty to maintain his wife who has a mental incapacity that prevents her from obtaining employment.
The father explained that they prudently managed the lump sum workers’ compensation payment. They applied $157,297.60 towards their mortgage, which was discharged. A personal loan of $8,803.51 was also repaid in full and a $10,000 loan made to a family member (since repaid). The father and his partner secured a new home loan on 28 April 2020 of $38,400, requiring monthly repayments of $425 ($196 per fortnight, as outlined at folio A9) from 21 May 2020. They have since sold their caravan (for $7,000) and their second car in order to minimise their expenses. They are considering renting out their home and living at his brother’s vacant home in order to improve their financial position.
The father has provided two expense accounts to Child Support. He declared in his application dated 1 March 2020 that his fortnightly expenses are $2,982.75 (excluding his child support liability). On 24 September 2020 he declared fortnightly expenses (excluding child support) of $2,187 per fortnight. At hearing the father explained that the $35 per fortnight expense for pet insurance is no longer incurred.
In compliance with the directions, the father provided his bank statements for the period 1 October 2020 to 31 January 2021. On the basis of these statements, the tribunal calculates that during this four-month period the father (and his wife) spent $2,242 on alcohol, $1,090 on beauticians and hairdressers, $2,414 on eating out, $5,142 on holidays (taking into account refunds), $382 at veterinarian consultations, $254 on medications, $134 on entertainment, $864 on homewares, $988 on manchester purchases and $219 on lotto. This excludes cash transfers from his and his wife’s accounts to their adult children. On this point the father stressed that the adult children required assistance and it was only right that he and his wife provide it. He also suggested that these “loans” were refunded. Whilst it is apparent that some repayments were made by the adult children, they appear to be less than the funds transferred to them. He stressed that they had sought a refund on their cruise booking and that [wine purchases] were made for other people as well; his friends would pay back their share of these costs. Similarly, he recollected that the jewellery purchase ($300) was for an adult child, and others would have provided him with cash for their share of this gift.
In response to the tribunal raising the above discretionary expenses, the father stated that he and his wife were entitled to purchase new furniture and manchester. He is right on this point. It is not for the tribunal to dictate how they spend their discretionary fund. However, the father brought this application on the basis that he cannot meet his and his wife’s expenses and his child support liability. Thus, it is necessary to determine his net financial position. The starting point is to establish his necessary expenses (including food, shelter, medical needs).
The father submits that one necessary expense that he and his wife incur is $400 per month for a holiday timeshare, originally purchased in 2011. He explained that they were obligated to continue to pay this, stating that he was unable to cancel the payments, or sell his interest. He also stressed that his wife only feels relaxed when she is sitting by a pool. When the tribunal put to the father that his statements on this point were in direct contradiction to the product disclosure statement in evidence, he conceded this was the case, but stated that he could only sell at a loss and that this did not make “financial sense”. The father’s initial statement regarding this commitment was incorrect, and in the tribunal’s view was deliberately misleading. This impacted on the tribunal’s assessment of his credibility. The tribunal does not accept that the father has no other choice but to continue to meet this expense.
The father submitted that his life insurance policy is a necessary expense. He stressed that his superannuation pension dies with him and therefore it was necessary to take out life insurance to “look after” his wife, including paying off their loans and giving her a “decent life”. The tribunal was not persuaded that this was a necessary expense, however cogent the father’s reasons for purchasing the life insurance may be.
The father reported that he is most aggrieved by the objections officer’s description of some of his expenses as discretionary, stating that most of his expenses are necessary. The father appeared to have trouble appreciating the distinction between what may be prudent financial decisions as distinct from expenses that can be characterised as necessary for the purposes of child support. The legislation states that the father’s highest priority is the maintenance of the child and that it has priority over all his commitments, other than his commitments necessary to support himself and his wife.
The tribunal is satisfied that the father’s expenses exceed his income. The tribunal reached the conclusion that it is the father’s discretionary, and not necessary, expenses that hinders his ability to meet his child support liability. By any reasonable measure his holiday, lotto, entertainment, alcohol and eating out expenses cannot be characterised as being necessary and are not consistent with his submission that he and his wife find themselves in impecunious circumstances. Furthermore, these expenses alone average out to be $2,538 per month, which exceed his assessed monthly rate of child support ($665) by $1,873. In such circumstances, it would not be fair to reduce his contribution to the child’s costs, which by necessity would shift those costs to the mother. After carefully considering the father’s expenses declarations, the tribunal is not satisfied that his and his wife’s necessary expenses exceed his fortnightly income and thus, the tribunal is not persuaded that it would be just and equitable to depart from the administrative assessment on this basis.
At hearing the father suggested that it would be just and equitable to depart from the administrative assessment on the basis that in about 2008 he gave the mother money to build a fence around her property to ensure the safety of the child. He also pressed that he has not had any contact with the child for many years and had recently paid $875 towards the child’s orthodontics costs (and has sought to have this credited towards his child support liability). He also emphasized that Child Support advised him in or around 2008 that he overpaid child support by about $8,000. Putting aside the fact that there is no evidence to support the father’s assertion on these points, the tribunal is not satisfied that these payments made some 13 years ago justifies a departure from the administrative assessment.
Neither parent completed a Statement of Financial Circumstances form. The mother’s 2020 adjusted taxable income is $63,376. There is no evidence to suggest that her income will vary considerably in the near future or that the mother or child has any out of the ordinary expenses or are in poor health. There is also no evidence to suggest that the child has access to income or financial resources that would render the administrative assessment unfair.
The tribunal accepts the father’s testimony that he was employed as [an occupation 1] for many decades before being medically discharged. He is unable to work and suffers from a mental health disorder (managed pharmaceutically) as well as [medical conditions]. The bank statements in evidence indicate that he and his wife’s medication expenses were about $63.50 per month; the tribunal is not persuaded that this is an out of the ordinary expense that renders the administrative assessment unfair or inequitable.
The tribunal is not satisfied that it is either just or equitable that the father’s child support liability be calculated on the basis of his net superannuation payments. Instead, the tribunal concludes that his adjusted taxable income be varied to $78,653, to reflect the gross value of his superannuation income. To find otherwise would result in a disproportionate amount of the child’s costs being borne by the mother.
The tribunal considers that the father’s adjusted taxable income will be varied to $78,653 from 10 March 2020 (the date on which he lodged his departure application) until a terminating event occurs in relation to the child. This determination will provide certainty to the parties and minimise the need for repeat proceedings. The tribunal’s decision will place the father in arrears of about $3,373. The tribunal is satisfied that this will not place him in a position of undue hardship given his income and financial resources. Furthermore, these funds are necessary for the mother to adequately provide for the child.
The tribunal is satisfied that the administrative assessment is unfair given the father’s income and financial resources. This results in an unjust and inequitable level of child support given the circumstances of each parent. For all these reasons it is just and equitable to depart from the administrative assessment.

Otherwise proper

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. It is likely that the mother is in receipt of income-tested benefits. Departing from the administrative assessment will result in a more appropriate apportionment of financial responsibility between the parents and the community.
The determination is otherwise proper.

DECISION

[2021] AATA 1265

25 March 2021

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Judicial Review

Statutory Construction

Remedies