Brannick and Mott (Child support)

[2021] AATA 1269

Brannick and Mott (Child support) [2021] AATA 1269 (23 February 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/HC019371

APPLICANT:  Mr Brannick

OTHER PARTIES:  Child Support Registrar

Ms Mott

TRIBUNAL:Member C Breheny

DECISION DATE:  23 February 2021

DECISION:

The decision under review is set aside and a decision substituted that for the period 16 October 2019 to 31 March 2022 the rate of child support payable by Mr Brannick is set at $600 per month or $7,200 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

1. Ms Mott and Mr Brannick are the separated parents of [Child 1], born March 2006, [Child 2], born July 2007 and [Child 3], born February 2009. A child support case has been registered with (then) Department of Human Services – Child Support (Child Support) since 12 January 2010 and has been registered for collection from that date. Since late 2017 Mr Brannick has been residing in [Country 1] and he is assessed as liable to pay child support to Ms Mott on the basis that she has 100% care of the children.

2. Most recently Mr Brannick’s child support liability was set by a departure determination made by a Child Support objections officer on 6 March 2018, following a change of assessment application lodged by Ms Mott on 16 October 2017 and Mr Brannick’s objection to that decision. The objections officer determined that Mr Brannick’s adjusted taxable income was set at $88,000 for the period 1 October 2017 to 15 October 2019. This resulted in an annual child support liability of $18,411.

3. From 16 October 2019 Mr Brannick’s child support liability reduced to $5,166 on the basis of a 2017/18 provisional adjusted taxable income of $42,045 for Mr Brannick and Ms Mott’s 2017/18 adjusted taxable income of $33,190.

4. On 23 October 2019 Ms Mott contacted Child Support to lodge a further change of assessment application seeking an increase in Mr Brannick’s child support liability to $18,000 per year because the administrative assessment did not adequately reflect Mr Brannick’s income, financial resources and earning capacity. Mr Brannick could not be contacted at the time.

5. On 23 December 2019 decision maker (DM) McDonald decided that a ground to depart from the administrative assessment had been established and set Mr Brannick’s adjusted taxable income at $135,000. On 18 February 2020 Mr Brannick lodged an objection to DM McDonald’s decision and on 10 June 2020 a Child Support objections officer disallowed Mr Brannick’s objection.

6. On 1 July 2020 Mr Brannick applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal for an independent review of the objection decision. A hearing into Mr Brannick’s application for review was held on 23 February 2021. Both Ms Mott and Mr Brannick attended the hearing by conference telephone and gave evidence on affirmation. A representative of the Child Support Registrar (the Registrar) did not attend the hearing. 

7. I had before me the Statement and Documents provided by Child Support pursuant to subsection 37(1) and section 38AA of the Administrative Appeals Tribunal Act 1975 received on 3 August 2020 and 2 February 2021 respectively and numbered 1–477. I also considered additional documents provided by Mr Brannick (marked A1–A283) and Ms Mott (marked B1–B29) as a result of written directions issued on 24 November 2020.

LEGISLATIVE FRAMEWORK AND ISSUES

1. The legislation relevant to this review is contained in the child support law, in particular the Child Support (Assessment) Act 1989 (the Act) and the Child Support (Registration and Collection) Act 1988.

2. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Act. This requires the application of a statutory formula, which takes into account factors such as the number of children, the level of care provided and the income of each parent. Either the liable parent or the carer entitled to child support 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 provides that the Registrar may make a determination to depart from the formula assessment and establishes a three step process. The Registrar, and the Tribunal standing in place of the Registrar, must be satisfied that a ground for departure exists and that it is just and equitable and otherwise proper to make a departure determination.

3. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Act. 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.

4. In the legislation, each ground for departure is prefaced by the words, “in the special circumstances of the case”. Therefore, when considering whether one or more grounds exist, the Tribunal must be satisfied that there are “special circumstances” in the case. The phrase “special circumstances of the case” is not defined in the Act. The Full Family Court, in the case of Gyselman and Gyselman,[1] stated that:

   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 administrative formula result in the ordinary run of cases.

   [1] [1992] FLC 92–279

5. Subsection 98C(3) of the Act provides that subsections 117(4) to (9) of the Act apply and the Tribunal must consider these when deciding whether it would be just and equitable or otherwise proper to make the departure decision.

CONSIDERATION

Preliminary matter

1. A component of this case involves consideration of overseas income. The Child Support (Assessment) Regulations 1989 provide the following at regulation 7C for the purposes of using overseas income in administrative assessments of child support:

   7C  Overseas income — conversion of currency

   (1)For the purpose of determining, under Subdivision BA of Division 7 of Part 5 of the Act, an amount of income expressed in foreign currency to be a person’s overseas income, the Registrar must convert the amount into an equivalent amount in Australian currency.

   (2)The amount must be worked out in accordance with:

   (a)  the average exchange rate for the foreign currency for the financial year in which the income was derived, being the average of the telegraphic transfer rates published by the Commonwealth Bank of Australia for that currency for that financial year; or

   (b)  if no such rate is available for the foreign currency for that financial year — an exchange rate for the foreign currency that the Registrar considers appropriate.

2. I consider regulation 7C also provides guidance for the conversion of foreign income in the context of this review.

3. Mr Brannick lives in [Country 1]. Most of the information in relation to his income is in [Country 1 currency]. I have decided to use an average conversion rate using historical rate calculations from the website and I have indicated the average conversion rate where relevant.

A ground for departure

1. In this case, Ms Mott asked for a departure from the administrative assessment on the basis that the assessment did not correctly reflect the parties’ respective income, property, financial resources and earning capacity (also known as “Reason 8A and Reason 8B”).

Income, property, financial resources and earning capacity of both parties

1. Subparagraph 117(2)(c)(ia) of the Act provides that, in the special circumstances of the case, a ground for departure may be established if application of the legislative provisions relating to an administrative assessment results in an “unjust and inequitable determination of the level of financial support to be provided by the liable parent” due to the income, property and financial resources of either parent.

Mr Brannick – income, property and financial resources

1. At the time Ms Mott lodged her application on 23 October 2019 child support liability was $5,166 based on a 2017/18 provisional adjusted taxable income of $42,045 for Mr Brannick. Ms Mott submitted that Mr Brannick had not lodged a tax return since 2016/17, but he is a director of a family trust and has an Australian ABN. He must have access to considerable financial resources.

2. Mr Brannick confirmed that he is a trained [occupation 1], but he has not worked in this profession since about 2015. He moved to [Country 1] in December 2017. He was not able to find any work there in 2018, but continued to pay child support from his savings.

3. He then found work as a “fly in-fly out” [related occupation 1] with [Employer 1] in [Country 2] for a period of about two months from January 2019. He left this employment due to major workplace safety concerns. Mr Brannick provided a tax statement from [Employer 1] (folios 190-192) indicating he received total wages of [Country 2 currency]84,123652.38. He also provided bank statements indicating he was paid in USD (folios 200-203). The total amount being USD35,516.92 or about $50,279.[2] I note that Mr Brannick suggested that his total income from [Employer 1] converted to approximately $43,000 (folio 184).

   [2] Average exchange rate for the first six months in 2019

4. Mr Brannick said he then obtained work with [Employer 2] in [Country 1], in their [specified] area. [Employer 2] is [a services] company. He worked there from 22 January 2019 to 30 January 2020. He provided a copy of a work contract dated 22 January 2019 (folios 410/411, translation folio A248). The contract states that his monthly base salary is [Country 1 currency]450,000, or approximately $922 per month in 2019. This employment was terminated on 30 January 2020 (folio 384). A payslip from January 2020 (folio 409) shows a gross income of [Country 1 currency]458,005 or approximately $945 for that month.

5. Mr Brannick next found employment with “[Employer 3]” on 7 February 2020, but he was made redundant due to the COVID-19 pandemic on 26 April 2020 (folio 342). He received a redundancy payout of [Country 1 currency]804,014, about $1,497 (folio 335).  His payslip from [Employer 3] for March 2020 indicates a gross monthly salary of [Country 1 currency]525,089, approximately $992 per month[3] (folio 194).

   [3] Average exchange rate for the first four months in 2020

6. I note here that Mr Brannick told Child Support on 18 February 2020 that his current income has been and is [Country 1 currency]650,000 per month gross or about $1,200 (folio 125).

7. Based on the evidence before me, it appears that in the 2018/19 financial year Mr Brannick received about $43,000 (Mr Brannick’s statement) to $50,279 (my calculation) from [Employer 1], plus $5,532[4] (my calculation) to $7,200[5] (Mr Brannick’s statement) from [Employer 2], a total of $48,532 to $57,479.

   [4] Being six months at $922 per month

   [5] Being six months at $1,200 per month

8. In the 2019/20 financial year, Mr Brannick received income from [Employer 2] for seven months and from [Employer 3] for three months, until he was made redundant in April 2020. At most his income was $13,497 (ten months at $1,200 per month, plus redundancy payment). I note this is below the statutory self-support amount provided for by the legislation.

9. Mr Brannick further submitted a “Company Statement” dated 31 March 2016 for “[Business 1]” (folios A44/A45). It indicates that his father is the sole director and shareholder of the company.

10. A letter from [Ms A] (Mr Brannick’s partner) dated 19 June 2020 states that she has been paying child support on Mr Brannick’s behalf since June 2019 (folio 389). The letter also states that she pays for all their living expenses and paid for plane tickets to Australia, so Mr Brannick could attend a funeral in February 2020.

11. Mr Brannick also provided a letter from [Ms A’s] father, [Mr A], indicating that he lent his daughter money, so she could pay the child support debt of $9,631, outstanding as at 1 March 2020 (folio 195).

12. Based on these deliberations I am satisfied and find that Mr Brannick’s own income and financial resources amounted to $13,497 in the 2019/20 financial year and that he is currently unemployed and financially supported by his partner.

Mr Brannick – earning capacity

1. Ms Mott submitted that Mr Brannick had greater earning capacity, based on his actual qualifications and this ought to be taken into consideration. Ms Mott accepted that it may be difficult for Mr Brannick to find work in his profession in [Country 1], but contended that he could return to Australia and find suitable work here.

2. I note previous tax returns show that Mr Brannick’s 2014/15 taxable income was $102,033 (folio 56), his 2015/16 taxable income was $51,615 (folio 61) and his 2016/17 taxable income was $40,300 (folio 56). Mr Brannick moved to [Country 1] in December 2017 and has not lodged a tax return since then.

3. I also note that Mr Brannick’s financial circumstances have been examined in previous change of assessment decisions, with the most recent one setting his adjusted taxable income at $88,000 until 15 October 2019. I am unable to consider the periods reviewed in those decisions in this current review.

4. The relevant legislative provisions for consideration of a parent’s earning capacity are provided for in subparagraph 117(2)(c)(ib) and also in subsection 117(7B) of the Act. Essentially the provisions restrict the circumstances in which a person’s earning capacity can be used as a basis to depart from a formula assessment.

5. There are three essential matters to be considered in determining whether the administrative assessment should be departed from on the grounds of earning capacity. In simple terms they can be explained as follows:

   ·did the parent not work despite ample opportunity to do so, reduce their hours of work or change their occupation, industry or working pattern; and

   ·was the parent’s decision not to work despite ample opportunity to do so or to reduce their hours of work or change their occupation, industry or working pattern not justified because of caring responsibilities or their state of health; and

   ·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 reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support.

   All three of the above criteria must be met before a change of assessment can be made to take into account whether the parent has a greater earning capacity.

6. Evidence before me indicates that at the time Ms Mott lodged her most recent departure application (on 23 October 2019), Mr Brannick was employed with [Employer 2], earning (no more than) the equivalent of about $1,200 per month.

7. Mr Brannick stated that he is not licensed to perform [related occupation] work in [Country 1] and he has been looking for other work, but this is difficult, particularly since the COVID-19 pandemic. Mr Brannick said that he moved to [Country 1] to be with his partner, who is a [Country 3] national. He has now applied for permanent residency in [Country 1], which he hopes will be approved some time next year. He has no intention of returning to Australia, given that his partner would not be able to join him, as she is not an Australian resident/citizen.

8. Whilst it could be said that Mr Brannick changed his occupation/industry, as he was not working in his profession as [an occupation 1], I am not persuaded that he did so to (adversely) affect the child support assessment. I accept Mr Brannick’s statement that his major reason for moving to [Country 1] was to be with his life partner, [Ms A]. I also note that despite having a low income, Mr Brannick (with assistance from his partner) has been trying to meet his child support liability.

9. Based on this evidence, Mr Brannick has demonstrated to my satisfaction that the major purpose of his move to [Country 1] (and thus the change in his occupation), was to be with his partner, not to affect the child support assessment. This means that paragraph 117(7B)(c) of the Act does not apply in this case. As all three criteria provided for in subsection 117(7B) of the Act are therefore not met, I cannot consider Mr Brannick’s earning capacity further.

Ms Mott – income, property and financial resources

1. Ms Mott is a qualified [occupation 2]. Her 2019/20 taxable income was $43,664 (folio B11). Payslips from her employer ([Employer 3]) show that she worked 24 hours per week, earning about $700 per week (folios B12-B24). As at 17 September 2020 she had earned $8,345.13 from that employer (folio B24), when her employment ended.

2. Ms Mott then obtained casual employment with [Employer 4] as a relief [occupation 2] until November 2020, earning a total of $3,618.62 (folio B29). Since December 2020 Ms Mott is on maternity leave. She is receiving parental leave pay from Centrelink and is expecting to be on maternity leave for 12 months until December 2021.

3. Child Support records show that Ms Mott’s 2018/19 taxable income was $41,299 and her 2017/18 taxable income was $33,190 (folio 421). I have no evidence that she has any other source of income and I am therefore satisfied that Ms Mott’s income, property and financial resources are adequately represented by her annual income tax returns.

Ms Mott – earning capacity

1. Ms Mott has been working part-time for a number of years. She is currently on maternity leave and now has [number] children in her care. Overall, I do not consider that Ms Mott has greater earning capacity than she exercises for the purposes of this review.

Conclusion – income, property, financial resources and earning capacity of both parties

1. When Ms Mott lodged her departure application on 23 October 2019 (the 2019/20 financial year), the rate of child support was based on a provisional taxable income of $42,045,[6] as Mr Brannick had not provided a tax return or overseas income declaration. This resulted in an annual child support liability of $5,166.

   [6] Being 2/3 MTAWE (Male Total Average Weekly Earnings)

2. I have found that Mr Brannick’s actual income and financial resources in 2019/20 amounted to about $13,497 and I have estimated that Mr Brannick’s child support liability for the children, if calculated on the basis of his actual financial resources, would be $427 per year (the minimum annual rate) at the time Ms Mott lodged her application.

3. I find that the difference between an annual child support liability of $5,116 and the annual rate of child support ($427) based on Mr Brannick’s actual financial resources, is so great that it gives rise to special circumstances in this particular case.

4. I am therefore satisfied that the ground for departure set out in subparagraph 117(2)(c)(ia) of the Act has been made out in respect of Mr Brannick’s income, property and financial resources only.

5. Subparagraph 98C(1)(b)(i) of the Act is satisfied if “one, or more than one” of the grounds for departure are established. Having found one ground for departure established, I will now consider whether it is just and equitable to make a departure determination.

Just and equitable

1. The requirement to consider whether a departure would be just and equitable directs that my attention is turned to what is fair to the parents and their children. To do so I must have regard to a number of factors set out in subsection 117(4) of the Act, such as the needs of [one named child], the parents’ commitments and any hardships that would be caused by departing, or not departing, from the statutory formula.

Mr Brannick

1. Mr Brannick’s income, property and financial resources have been discussed in some detail above. I have found that at the time Ms Mott lodged her application for a change of assessment Mr Brannick’s income, property and financial resources amounted to $13,497. He was made redundant in April 2020 and since then has been financially supported by his partner.

2. Mr Brannick provided a completed Statement of Financial Circumstances (folios A1–A10). He indicated ‘nil’ income for himself and approximately $716 per week (about $37,232 per year) for his partner. Mr Brannick noted that his partner has since lost one of her part-time jobs and her income is now about $350 to $400 per week.

3. Mr Brannick listed household expenses (excluding child support) of $376 per week. They are minimal expenses (below the self-support amount), with the most significant cost being rent of $182 per week.

4. It appears that Mr Brannick’s partner is just able to meet these expenses from her (now reduced) income.

Ms Mott

1. Ms Mott indicated on her Statement of Financial Circumstances (folios B1–B9) that her average income is about $897 per week, although, as noted, she is currently on maternity leave. Ms Mott also receives a carer allowance for her son. Ms Mott indicated that her partner’s income was $1,200 per week.

2. Ms Mott’s household expenses amount to $1,941 per week,[7] including rent of $490 per week and $200 per week for the children’s extra-curricular expenses. Ms Mott said that the children attend private school, but school fees are paid for by Mr Brannick’s parents.

   [7] $2,091 - $150 non-essential expenses, such as gifts and entertainment

3. Whilst Ms Mott and her partner were able to meet her expenses previously, it appears that this might be more difficult at the moment, as Ms Mott is on maternity leave.

The children

1. Ms Mott did not indicate that she has any out of the ordinary expenses for the children, and, as noted above, their private school fees are paid for by their grandparents.

2. The children are now 14, 13 and 11 years old and attend school. They have no income, property or financial resources relevant to my determination.

Otherwise proper  

1. The requirement to consider whether it is “otherwise proper” to depart from the administrative assessment 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 or benefits (subsection 117(5) of the Act).

2. It is a prime objective of the child support legislation that parents should be obliged to support their own children to the extent of their real capacity, and that that obligation should not be unnecessarily abrogated to the public welfare system when the parents themselves have the capacity to maintain their children.

3. Ms Mott is in receipt of Centrelink payments, which are affected by maintenance payments such as child support. Any increase to child support payable would result in an appropriate decrease in these payments. Such a result would be otherwise proper.

Conclusion

1. Section 98S of the Act describes the determinations that the Registrar, and the Tribunal standing in the shoes of the Registrar, may make if it decides to depart from the administrative assessment. It is open to the Tribunal to set a rate of child support payable or set some of the variables used in the administrative assessment formula (for example, vary one or both parents’ adjusted taxable income).

2. Mr Brannick submitted that he is currently unemployed and is being financially supported by his partner. I have found that Mr Brannick’s income in 2019/20 was only about $13,497 and, as such he would only liable to pay the minimum annual rate of child support.

3. In the hearing Mr Brannick stated that he was able to obtain a loan from [Mr A] (his partner’s father) and he offered to pay child support at a rate of $600 per month ($7,200 per annum) for a period of up to 12 months. He hoped to have found employment by then.

4. I note Child Support records show that Mr Brannick’s maintenance liability was fully paid as at 10 March 2020 (paid by [Ms A] and her father). Since then he has accrued further arrears, which stand at $29,021 as at 1 February 2021 (folio 475). Ms Mott stated that she would hope to be able to pursue those outstanding arrears at a later date, although she accepted Mr Brannick’s offer, as being “at least something” to help look after the children.

5. I have considered the evidence before me. As noted previously, Mr Brannick’s partner has been paying child support at a rate of about $2,500 per month on the basis of the change of assessment decision made on 23 December 2019, which set Mr Brannick’s income at $135,000 from 16 October 2019 onwards. There is no evidence before me that he had any such income in the past, even in 2014/15 his taxable income was only $102,033.

6. I am of the view that it is reasonable that I should set Mr Brannick’s child support liability at $600 per month (or $7,200 per year) from 16 October 2019. That rate is higher than the rate of child support set by the administrative assessment at the time. I will set this rate until 31 March 2022. By that time Mr Brannick’s employment prospects should hopefully be clearer.

7. I have estimated that my decision means that Mr Brannick’s child support liability is likely to be “in credit” up to about April/May 2021, based on the previous payments made. The ongoing child support payments will assist Ms Mott to meet her expenses for the children to some extent, but I am not persuaded that Mr Brannick is currently in a position to pay a higher amount.

8. I have reached a different conclusion to the objections officer and I will set aside their decision accordingly.

DECISION

The decision under review is set aside and a decision substituted that for the period 16 October 2019 to 31 March 2022 the rate of child support payable by Mr Brannick is set at $600 per month or $7,200 per annum.