Burberry and Burberry (Child support)
[2018] AATA 2229
•21 May 2018
Burberry and Burberry (Child support) [2018] AATA 2229 (21 May 2018)
DIVISION:Social Services & Child Support Division
REVIEW NUMBER: 2017/HC013026
APPLICANT: Mr Burberry
OTHER PARTIES: Child Support Registrar
Mrs Burberry
TRIBUNAL:Member M Baulch
DECISION DATE: 21 May 2018
DECISION:
The decision under review is set aside and, in substitution, the tribunal decided that there are to be determinations to depart from the administrative assessment of child support such that the rate of child support payable by Mr Burberry is to be varied, pursuant to paragraph 98S(1)(a) of the Child Support (Assessment) Act 1989, so that:
The annual rate of child support is increased by $8,564 for the period 1 September 2017 to 31 December 2017; and
The annual rate of child support is increased by $8,858 for the period 1 January 2018 to 31 December 2018; and
The annual rate of child support is increased by $9,300 for the period 1 January 2019 to 31 December 2019; and
The annual rate of child support is increased by $9,766 for the period 1 January 2020 to 31 December 2020.
CATCHWORDS
Child support - Departure determination - Financial resources of parents - Costs of education - Mutual expectation 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
This application for review concerns the amount of child support paid by Mr Burberry to Mrs Burberry in respect of their children, [Child 1], who was born in 2005, and [Child 2], who was born in 2007.
The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable by one separated parent to the other. It uses a statutory formula which contains variables such as the parents’ incomes, the number of children, their ages and the percentages of care.
A parent can make an application to the Department of Human Services – Child Support (the Department) for a change to the administrative assessment based on the statutory formula in the special circumstances of their case – referred to in the Act as a departure determination. Both parents have made such applications; Mrs Burberry on 10 August 2017 and Mr Burberry on 22 September 2017.
On 29 September 2017, a departmental decision-maker considered the parents’ applications and decided that there should be a change to the child support assessment and made departure determinations which increased the amount of child support to be paid by Mr Burberry.
Mr Burberry lodged an objection to that decision and, on 24 November 2017, that objection was partly allowed. The objections officer decided that there should be a departure determinations such that the annual rate of child support payable by Mr Burberry was increased by (the decision under review):
· $8,700 for the period 1 September 2017 to 31 December 2017;
· $9,135 for the period 1 January 2018 to 31 December 2018;
· $9,592 for the period 1 January 2019 to 31 December 2019;
· $10,072 for the period 1 January 2020 to 31 December 2020.
Mr Burberry has now applied to this tribunal for an independent review of the Department’s decision.
A hearing into the application for review was held by the tribunal on 21 May 2018. Mr Burberry and Mrs Burberry both discussed the application for review with the tribunal in person and both gave sworn evidence during the hearing. A representative of the Child Support Registrar did not participate in the hearing.
The tribunal had before it relevant documents provided to it by the Department pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, which were labelled folios 1 to 207. The tribunal also had regard to additional documents provided by Mr Burberry (labelled folios A1 to A60) and by Mrs Burberry (labelled folios B1 to B117).
Mr Burberry advised the tribunal that he had not received a copy of the documents prepared by the Department, but in any case wanted the tribunal to proceed and make its decision. After the hearing the tribunal became aware that a second copy of the documents had been sent to Mr Burberry by the Department on 12 April 2018 via registered mail and were recorded as being delivered on 15 May 2018.
ISSUES
Pursuant to section 98C of the Act, a determination to depart from the administrative assessment of child support determined in accordance with the statutory formula 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) of the Act] 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 [Part 6A of the Act]; …
CONSIDERATION
When the parents made their applications for a departure determination, the assessment of child support required Mr Burberry to pay an annual rate of $9,991 based upon both parents’ 2015-16 taxable incomes - for Mr Burberry that was $85,700 and for Mrs Burberry it was $93,232. This assessment was based upon care determinations which recorded Mr Burberry as having 0% care of [Child 1] and 22% care of [Child 2] and Mrs Burberry as having 100% care of [Child 1] and 78% care of [Child 2].
On 1 September 2017 a new child support period commenced that required Mr Burberry to pay an annual rate of child support of $8,359 based upon both parents’ 2016-17 taxable incomes – for Mr Burberry that was $77,623 and for Mrs Burberry it was $96,069. On 27 March 2018 [Child 1] turned 13 years of age and the annual rate of child support increased to $9,243, assessed using the same incomes for the parents as before.
Therefore, these are the administrative assessments of child support from which I am considering departing.
Is there a ground, or grounds, for departure?
All the grounds for departing from the administrative assessment of child support are prefaced by the term ‘in the special circumstances of the case’. As noted by the Full Court of the Family Court:[1]
Whilst it is not possible to define with precision the meaning of that term, 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 administrative formula result in the ordinary run of cases. In Savery's case (at Fam LR 815 FLC 77,897), Kay J, adopting the view in In the Marriage of Philippe (1977) 4 Fam LR 153; [1978] FLC 90-433 at Fam LR 155 FLC 77,202 in a different context, said that ‘special circumstances’ were ‘facts peculiar to the particular case which set it apart from other cases’. The approach to the interpretation and application of the particular grounds in s 117(2) must be guided by that qualification.
[1] See Gyselman and Gyselman [1991] FamCA 93.
Educating the children in the manner expected by the parents
Subparagraph 117(2)(b)(ii) of the Act (commonly referred to as ‘Reason 3’ by the Department) provides as a ground for departure where:
…in the special circumstances of the case, the costs of maintaining the child are significantly affected…because the child is being cared for, educated or trained in the manner that was expected by his or her parents.
[Child 1] and [Child 2] attend a private school, [School 1], and Mrs Burberry’s application for a departure determination seeks a change to the child support assessment under this ground.
Within the documents before me are applications for admission for [Child 1], signed by the parents on 31 August 2009, and [Child 2], signed by the parents on 29 April 2008, to attend [School 1].
Mr Burberry submitted at hearing that the children attended [School 1] as a matter of convenience – Mrs Burberry is on the teaching staff there – and it was never an expectation that they would continue with all their education at that school. He thinks the school is unaffordable and would prefer the children be educated elsewhere. Mrs Burberry’s evidence was that no other schools were considered and that [School 1] was the only school they considered sending the children to.
Having regard to the evidence, I was satisfied that, historically, the parents expected [Child 1] and [Child 2] to be educated at [School 1].
Since 2017 the costs of the children attending [School 1] has been borne solely by Mrs Burberry. The evidence shows that the fees incurred by Mrs Burberry for [Child 1] and [Child 2] to attend [School 1] in 2017 were $20,390 and in 2018 were $21,090 and I so found. These are the actual costs paid by Mrs Burberry after the application of a 40% discount because she teaches at [School 1].
Under the administrative assessment of child support, the costs of the two children in 2017 were approximately $28,222 per annum, before the new child support period commenced on 1 September 2017, and approximately $27,274 per annum thereafter. Once [Child 1] turned 13 years old on 27 March 2018 the costs of the children were approximately $30,158 per annum. I was satisfied that the cost for [Child 1] and [Child 2] to attend [School 1] has a significant effect on the costs of maintaining [Child 1] and [Child 2].
I was also satisfied that the costs of [Child 1] and [Child 2] attending [School 1] are greater than the costs of them attending a government school and the expenses incurred are out of the ordinary and therefore constitute special circumstances.
I therefore found that the ground for departure set out in subparagraph 117(2)(b)(ii) of the Act has been established in this case.
Just and equitable
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. Regard must be had to a variety of factors, set out in subsection 117(4) of the Act, such as the needs of the children, the parents’ commitments and any hardships that would be caused by departing, or not departing, from the statutory formula.
[Child 1] and [Child 2]
At all relevant times the Department has recorded [Child 1] as being in Mrs Burberry’s sole care and [Child 2] being in Mrs Burberrys care for 78% of the time and Mr Burberry’s care for 22% of the time. There is no evidence that [Child 1] and [Child 2] themselves have any income, property, earning capacity or financial resources relevant to my consideration.
As noted above, the costs of the children used in the statutory formula varies between $27,274 per annum and $30,158 per annum. I have found that the parents expected [Child 1] and [Child 2] to be educated at [School 1] in a manner expected by their parents and this cost $20,390 in 2017 and $21,090 in 2018.
Neither parent advanced any contention that [Child 1] and [Child 2] have special needs that are relevant to my consideration.
[Child 1] and [Child 2] have attended [School 1] for the entirety of their school lives and are now in grades seven and five respectively. Mrs Burberry submitted that not making a departure determination would mean that [Child 1] and [Child 2] would have to leave [School 1] and that this prospect should be viewed as a hardship that would impact on them.
Mr Burberry
When the parents made their applications for a departure determination, the administrative assessment of child support was based upon Mr Burberry’s adjusted taxable income of $85,700 – determined by reference to his 2015-16 taxable income. Once a new child support period commenced on 1 September 2017, Mr Burberry’s adjusted taxable income used in the statutory formula was $77,623 – determined by reference to his 2016-17 taxable income.
Mr Burberry is in full-time employment as a [occupation]. His payslips disclosed a current gross income of $3,102.88 per fortnight or $80,674 per annum. Mr Burberry has minimal assets; he does not own a home, but lists vehicles, tools, household contents and superannuation amongst his assets. He also has about $93,000 deposited in a bank account.
I was satisfied that Mr Burberry’s income, property and financial resources are adequately represented by his adjusted taxable income used in the administrative assessment of child support.
I received no submissions, nor identified any evidence, that Mr Burberry has any unutilised earning capacity that is relevant to my consideration.
Mr Burberry’s Statement of Financial Circumstances form completed on 20 February 2018 shows total weekly expenditure, excluding the liability to pay child support, as follows:
Income tax: | $383.00 | Superannuation: | $31.03 |
Credit card payments: | $150.00 | Health insurance: | $40.05 |
Household expenses: | $910.00 |
I calculated that Mr Burberry’s living expenses are currently $1,514.08 per week, or $78,732.16 per annum for himself and the care he provides for [Child 2] 22% of the time. I noted that Mr Burberry’s living expenses consume almost the entirety of his current income, leaving him little capacity to satisfy his child support liability even when determined under the statutory formula.
Under the administrative assessment of child support, Mr Burberry has the benefit of a self-support amount of $24,154 per annum. I identified no evidence to persuade me that Mr Burberry’s commitments to support himself should not be measured by $24,154 per annum.
Mr Burberry submitted that if I were to make a departure determination he would suffer hardship. Mr Burberry stated that he would not be able to afford to exist and would be working to go broke. Mr Burberry submitted he has no future or prospects and he has been unable to secure finance to purchase a home because the banks assess his income – after child support – to be too low.
Mr Burberry’s bank statements show that he is going backwards, drawing down on his savings. If his current spending is considered, accommodating the administrative assessment of child support, let alone a departure determination, will cause him difficulty.
I accepted that Mr Burberry would potentially suffer from hardship if I were to make a departure determination.
Mrs Burberry
When the parents made their applications for a departure determination, the administrative assessment of child support was based upon Mrs Burberry’s adjusted taxable income of $93,232 – determined by reference to her 2015-16 taxable income. When the new child support period commenced on 1 September 2017, Mrs Burberry’s adjusted taxable income used in the statutory formula was $96,069 – determined by reference to her 2016-17 taxable income.
Mrs Burberry works full-time as a [occupation]. Her payslips disclose a current income before tax of $8,240.68 per month, or $98,888 per annum. Mrs Burberry owns a home, over which there is a mortgage, giving her equity worth $219,000. She also lists a vehicle, caravan, household contents and superannuation amongst her assets. Her liabilities include the balance of a loan taken out to purchase her car. Mrs Burberry has only minimal funds deposited in bank accounts. In comparisons to Mr Burberry, Mrs Burberry’s financial circumstances can be regarded as more favourably situated.
Mrs Burberry’s income, property and financial resources was one of the grounds relied upon by Mr Burberry in his own application for a departure determination (see subparagraph 117(2)(c)(ia) of the Act). He argues that the relative positions after the settlement of their property matters justify him paying less child support than might otherwise be the case. However, I considered that Mr Burberry’s and Mrs Burberry’s relative positions after their property settlement were nothing out of the ordinary, particularly where separated couples had children. I did not view Mrs Burberry’s income, property and financial resources subsequent to the property settlement to be a matter which required any particular focus when contemplating a departure determination.
It was Mrs Burberry receiving a transfer of property, superannuation and money under the property settlement that was another ground relied upon by Mr Burberry in his own application for a departure determination (see subparagraph 117(2)(c)(ii) of the Act). However, if an order – whether by consent or otherwise – provides for any payment, settlement or transfer of property for the benefit of the children, section 66R of the Family Law Act 1975 provides the order must expressly state that the purposes of the payment, transfer or settlement is to make provision for the maintenance of the children. There is no evidence that the order in settlement Mr Burberry and Mrs Burberry’s property affairs was an order so expressed, consequently I did not form the view that the transfer of assets to Mrs Burberry under the property settlement was a matter to which I should have regard when considering a departure determination.
Mr Burberry also submitted at hearing that Mrs Burberry’s father had recently passed away, that Mrs Burberry would likely benefit from his estate and Mrs Burberry’s father had been a very wealthy man. Mr Burberry contended that this potential inheritance should be taken into account when I make my decision on his application for review. Mrs Burberry’s evidence was that her father had only very recently passed away – the previous week – and the details of his will were unknown. Other potential beneficiaries include her brother and her mother.
Mrs Burberry has not received an inheritance from her father at this point in time, and the prospect that she might its quantum is, in my opinion, only speculative. I declined to take into account such uncertain circumstances in making my decision in this matter. It will always be open to Mr Burberry to make his own application for a departure determination if Mrs Burberry does benefit from an inheritance from her father’s estate. Mr Burberry expressed his concern that he will not be aware if that occurs, but that is a matter beyond the scope of these proceedings.
I was satisfied that Mrs Burberry’s income, property and financial resources is adequately represented by her adjusted taxable income used in the administrative assessment of child support.
I received no submission nor identified any evidence that Mrs Burberry has any unutilised earning capacity that is relevant to my consideration.
Mrs Burberry’s Statement of Financial Circumstances form completed on 12 December 2017 shows total weekly expenditure as follows:
Income tax: | $445.00 | Credit card payments: | $50.00[2] |
Health insurance: | $70.38[3] | Household expenses: | $1,439.00 |
[2] Mrs Burberry evidence was 50% of the amount shows related to interest charges.
[3] Mrs Burberry recorded a weekly amount of $305, which is actually her monthly cost. I calculated the weekly amount to be $305 x 12 ÷ 52 = $70.38.
I calculated that Mrs Burberry’s living expenses are currently $2,004.38 per week, or $104,228 per annum for herself, [Child 1] and [Child 2] for 78% of the time. I noted that Mrs Burberry’s living expenses exceed her current income.
Under the administrative assessment of child support, Mrs Burberry has the benefit of a self-support amount of $24,154 per annum. I identified no evidence to persuade me that Mrs Burberry’s commitments to support herself are not adequately represented by $24,154 per annum.
Mrs Burberry submitted that if I were not to make a departure determination she would suffer hardship. In spite of currently receiving a higher rate of child support, Mrs Burberry’s bank statements show that she is going backwards, drawing down on her savings and increasing her levels of debt. If her current spending is considered, a departure determination would still not result in her being able to make ends meet.
I accepted that not making a departure determination would potentially result in hardship for Mrs Burberry.
Having considered those matters set out in subsection 117(4) of the Act, I was satisfied that it would be just and equitable to make a departure determination that increased Mr Burberry’s liability to pay child support.
Otherwise proper
The requirement to consider whether a departure would be otherwise proper, is set out in subsection 117(5) of the Act, which directs my attention to what is fair to the community. It is necessary to consider the effect, if any, that a departure from the administrative assessment would have on entitlements to income tested pension, allowance or benefit. Parents, rather than the community, have the primary duty to maintain their children.
The evidence shows that Mrs Burberry receives family tax benefit. She advised me that she receives the payment in a lump sum at the end of the financial year. A letter sent to her by Centrelink on 22 August 2017 shows that for the 2016-17 year Mrs Burberry received ‘standard family tax benefit’ in the amount of $5,500.55.
The base rate of family tax benefit for the 2016-17 year was $2,255.70 per annum per child.[4] This suggests that Mrs Burberry receives family tax benefit at a rate higher than the base rate. I concluded that a departure determination which would increase the child support liability would potentially result in a reduction in the amount of family tax benefit payable to Mrs Burberry.
[4] A guide to Australian Government payments: 20 March – 30 June 2017, the Department of Human Services.
I was satisfied that a determination that would increase the amount of child support payable by Mr Burberry would be otherwise proper.
Conclusion
Section 4 of the Act sets out the objectives of the Act, these objectives include:
· Parents of a child have a primary duty to maintain that child;
· That duty has a priority over all commitments of the parent other than commitments necessary for self-support;
· The level of financial support to be provided by parents to their children should be determined in accordance with the legislatively fixed standards; and
· The level of financial support is to be determined according to the capacity to provide financial support and noting that parents with a like capacity to provide financial support should provide like amounts.
I have found that there is a ground for departure in this case, and it would be just and equitable and otherwise proper for me to make a departure determination. Section 98S of the Act describes the determinations that I may make if a decision is made to depart from the administrative assessment of child support.
I have found that a ground for departure exists on the basis of school fees incurred by Mrs Burberry for [Child 1] and [Child 2]’s attendance at [School 1]. I acknowledge that Mr Burberry would suffer from hardship if I increase the amount of child support he is require to pay, but this needs to be weighed against the hardship which would apply to Mrs Burberry, [Child 1] and [Child 2] were I not to make a departure determination. I concluded that a departure determination that results in Mr Burberry contributing towards the costs of educating the children at [School 1] is appropriate and represents a balanced response to the relative hardships.
Mrs Burberry made her application for a departure determination on 10 August 2017 and a new child support period commenced from 1 September 2017. I was satisfied that 1 September 2017 is a reasonable date from which my departure determination should apply. Applying the departure determination until the end of 2020 gives the parents and children certainty and stability – something both parents submitted was desirable – and seems eminently sensible.
Mr Burberry submitted that he should not have to contribute to these costs in any extent. Mrs Burberry submitted that any determination I make should be based upon the fees prior to the discount being applied as she works hard for that discount and it should not be of benefit to Mr Burberry.
Ultimately the ground for departure I have found in this case is based upon the costs of maintaining [Child 1] and [Child 2] being affected by the manner of their education. The costs for them to attend [School 1] in 2017 were $20,390 and in 2018 were $21,090 and these are the amounts I will rely on to craft my departure determination.
The departure determination made by the objections officer proportioned the cost of the school fees between the parents roughly in line with their share of their incomes – approximately 42% of the fees being added to Mr Burberry’s child support liability. This seems a reasonable approach. By my calculations, this would increase Mr Burberry’s liability to pay child support by $8,564 for the 2017 school year and $8,858 for the 2018 school year.
For future school years the objections officer indexed the extra child support to be paid by Mr Burberry by 5% per annum. I formed the view that this was a reasonable approach and concluded that doing so would increase Mr Burberry’s liability by $9,300 for the 2019 school year and by $9,766 for the 2010 school year.
Accordingly, I concluded that the appropriate departure determinations to apply in this case are, pursuant to paragraph 98S(1)(a) of the Act:
· To vary the annual rate of child support payable by Mr Burberry such that the annual rate is increased by $8,564 for the period 1 September 2017 to 31 December 2017; and
· To vary the annual rate of child support payable by Mr Burberry such that the annual rate is increased by $8,858 for the period 1 January 2018 to 31 December 2018; and
· To vary the annual rate of child support payable by Mr Burberry such that the annual rate is increased by $9,300 for the period 1 January 2019 to 31 December 2019; and
· To vary the annual rate of child support payable by Mr Burberry such that the annual rate is increased by $9,766 for the period 1 January 2020 to 31 December 2020.
As my calculations are slightly different to that of the objections officer, I decided to set aside their decision and substitute my own as set out below.
DECISION
The decision under review is set aside and, in substitution, the tribunal decided that there are to be determinations to depart from the administrative assessment of child support such that the rate of child support payable by Mr Burberry is to be varied, pursuant to paragraph 98S(1)(a) of the Child Support (Assessment) Act 1989, so that:
The annual rate of child support is increased by $8,564 for the period 1 September 2017 to 31 December 2017; and
The annual rate of child support is increased by $8,858 for the period 1 January 2018 to 31 December 2018; and
The annual rate of child support is increased by $9,300 for the period 1 January 2019 to 31 December 2019; and
The annual rate of child support is increased by $9,766 for the period 1 January 2020 to 31 December 2020.
Key Legal Topics
Areas of Law
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Family Law
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Administrative Law
Legal Concepts
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Jurisdiction
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Judicial Review
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Remedies
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Statutory Construction
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