Cabot and Child Support Registrar (Child support)

[2018] AATA 4420

Cabot and Child Support Registrar (Child support) [2018] AATA 4420 (11 October 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/PC014772

APPLICANT:  Mr Cabot

OTHER PARTIES:  Child Support Registrar

TRIBUNAL:Senior Member R Ellis

DECISION DATE:  11 October 2018

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that the extension application should be granted.

CATCHWORDS
CHILD SUPPORT – Refusal of application for extension of time to object – Unfamiliarity with process not a reasonable explanation for delay – Substantive application concerning categorisation of a lump sum payment as a financial resource may have merit – 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. Mr Cabot and [Ms A] are the parents of [Child 1] (born June 2004), [Child 2] (born May 2008), [Child 3] (born October 2011) and [Child 4] (born February 2013).  Mr Cabot is the parent liable to pay child support.

2. There has been a child support assessment in place since 3 October 2011 and the children are recorded as being in the above primary care of [Ms A].

3. For the period 24 June 2017 to 30 June 2017, the annual rate is $46,672 based on Mr Cabot’s 2016-17 reconciled estimate of income of $287,133 and [Ms A’s] 2015-16 adjusted taxable income of $19,888.

4. For the period 1 July 2017 to 30 September 2017, the annual rate is $414 (the minimum annual rate) based on Mr Cabot’s 2015-16 adjusted taxable income of $16,813 and [Ms A]’s 2015-16 adjusted taxable income of $19,888.

5. For the period 1 October 2017 to 31 December 2018, the annual rate is $47,464 based on Mr Cabot’s 2016-17 adjusted taxable income of $287,133 and [Ms A’s] 2016-17 adjusted taxable income of $19,273.

6. On 28 September 2017 Mr Cabot applied to the Department of Human Services, Child Support (the Child Support Agency) for a change to the assessment.

7. On 30 November 2017 the Child Support Agency made the decision to change the assessment so that for the period 1 October 2017 to 30 June 2018 the adjusted taxable income for Mr Cabot was set at $21,329 (the original decision).

8. This was done on the basis of Mr Cabot’s income, property and financial resources (the ground commonly referred to as Reason 8A) and the effect of the decision was to reduce the arrears owed by Mr Cabot by $7,599.16.

9. On 3 July 2018 Mr Cabot objected to the original decision and as his objection was not made within the prescribed period he applied for an extension of time on the same date.

10. On 16 July 2018 the request for an extension of time was refused and on 9 August 2018 Mr Cabot sought a review by the Administrative Appeals Tribunal (the Tribunal).

11. The matter was heard on 11 October 2018. The Tribunal had before it a bundle of documents provided by the Child Support Agency (299 pages) and copies of the documents were provided to Mr Cabot prior to the hearing.  [Ms B], Mr Cabot’s Enduring Power of Attorney, gave evidence on affirmation by conference telephone on behalf of Mr Cabot.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Registration and Collection) Act 1988 (the Act).

2. The issue which arises in this case is whether or not to grant Mr Cabot’s request for an extension of time to lodge an objection to the original decision.

CONSIDERATION

1. Part VII of the Act is about the procedures related to objections made for certain decisions. Section 81 is about time limits on lodging objections and provides that a person has 28 days in which to lodge an objection after a notice of the decision is served on them. Section 82 provides for a person to apply for an extension of time to lodge an objection after the 28 day period has elapsed. Section 83 requires the Child Support Agency to either grant or refuse an extension of time application and serve notice in writing of the decision.

2. In the event the Child Support Agency refuses the extension of time application the person applying may apply to the Tribunal for review (item 1 of the table in subsection 89(1) of the Act).

3. Mr Cabot was advised about the outcome of the original decision in a letter from the Child Support Agency dated 30 November 2017 and, under provisions of the Evidence Act 1995, he was therefore taken to be served with written notice of this decision by 13 December 2017. Given Mr Cabot lodged his objection more than 28 days after he was served with notice, the Tribunal is satisfied an extension of time was required.

4. The Tribunal is required to consider whether or not it is reasonable or proper for an extension of time to be granted to Mr Cabot to lodge his objection to the decision made on 30 November 2017. From other decisions, which provide guidance to the Tribunal on this matter, it is clear that generally the statutory time limit of 28 days is to be enforced unless there are acceptable reasons for departing from this prescribed timeframe.

5. A consideration of other relevant authorities establishes that when considering matters relating to an extension of time, the Tribunal should consider and balance a range of factors. These factors are a guide and are not exhaustive, but generally include:

   ·         the reasons for the delay and whether the applicant rested on their rights;

   ·         the merits of the substantive application;

   ·         any prejudice to the other party, including any difficulties they will experience in providing evidence as a result of the delay;

   ·         any prejudice to the general public; and

   ·         fairness in granting an extension of time.

Reasons for the delay

1. The Tribunal finds that Mr Cabot’s application on 3 July 2018 in relation to the decision on 30 November 2017, and served on him by 13 December 2017, was approximately 174 days out of time.

2. In seeking an extension of time, [Ms B] explained that her son Mr Cabot had [a medical condition] and relied on her to manage his affairs.  This included child support matters.  [Ms B] said she was initially unaware of how to deal with her son’s child support issues and was not familiar with the process or the implications of not objecting sooner.

3. [Ms B] told the Tribunal that the fault was hers and Mr Cabot should not be penalised for a problem she created.  [Ms B] said caring for Mr Cabot was extremely time consuming given the severity of his disability and she was also dealing with other matters on his behalf in the courts.  [Ms B] said she found it difficult managing everything and did not know how to rectify the child support situation.

4. The Tribunal notes that during a conversation with the decision maker on 29 November 2017, [Ms B] was advised about the outcome of the original decision and Mr Cabot’s objection rights were explained.  In a further conversation with the Child Support Agency on 1 December 2017 [Ms B] was again advised she would need to object if she did not agree with the original decision. The 28-day time limit to such objections was also explained.

5. The Tribunal asked [Ms B] why she had not objected sooner given the advice provided by the Child Support Agency.  She said she was ignorant about child support matters and did not understand what was required.  [Ms B] said Mr Cabot was still receiving letters from the Child Support Agency about the outstanding debt which was very upsetting to them both.  She said eventually the Child Support Agency explained what was required and she submitted an objection.

6. The Tribunal also notes that correspondence from the Child Support Agency dated 30 November 2017, which notified Mr Cabot of the original decision, outlines what to do if he believed it was incorrect.   This includes asking the Child Support Agency to undertake a review “within 28 days from the date you receive this letter.”

7. While [Ms B] may have been unfamiliar with what was required in order to submit an objection on behalf of Mr Cabot, the Tribunal does not consider this an acceptable reason for the considerable delay in objecting.  The requirement to object within 28 days was made clear to [Ms B] and it was open to her to seek further advice on the process if she felt this was needed.

Merits of the application

1. [Ms B] told the Tribunal that Mr Cabot had received a total and permanent disability insurance payout in 2016 as a result of his [medical condition] and part of this payout was considered by the Child Support Agency as income.  [Ms B] said the payout was not income as most of the money went towards the purchase of a home suitable for Mr Cabot given his diagnosis and deteriorating condition.  She said Mr Cabot had a possible 10 year lifespan.

2. [Ms B] said in addition to the cost of purchasing the house, Mr Cabot was also required to undertake improvements to ensure it was suitable for someone in his condition including the installation of bars for mobility purposes and special sleeping arrangements.  She said they were now looking at the need for wheelchair access and hydrotherapy at the house. She said funds from the insurance payout were also used to pay stamp duty and legal fees.

3. [Ms B] said because the Child Support Agency had treated the insurance payout as income Mr Cabot now had a significant child support debt. She reiterated this was very distressing to Mr Cabot who could no longer work and now faced the prospect of selling his home.  She asked the Tribunal if the debt could be dropped.

4. The Tribunal notes the following in evidence from the Child Support Agency:

   ·     on 22 April 2016 Mr Cabot lodged an estimated income of $13,635 for 2016-17;

   ·     Mr Cabot received an insurance payment of $468,214 on 27 September 2016 comprising a taxable component of $265,526 and a tax-free component of $202,688;

   ·     Mr Cabot received a total net payment of $409,799 following the deduction of $58,415 in tax;

   ·     on 15 September 2017 Mr Cabot’s taxable income of $265,804 for 2016-17 became available and the Child Support Agency used a reconciled income of $287,133 for the periods 1 July 2016 to 30 June 2017 and 1 October 2017 to 31 December 2018; and

   ·     Mr Cabot’s current adjusted taxable income is based on his Centrelink disability support pension.

5. In the original decision made on 30 November 2017 the Child Support Agency considered the taxable component of Mr Cabot’s insurance payment of $265,526 as a financial resource for the purposes of child support. The Child Support Agency was satisfied the 2016-17 estimate of income in place for Mr Cabot from 1 July 2016 to 30 June 2017 “was appropriately reconciled based on the lump sum financial resource he received.”  The Child Support Agency did not find it fair to use Mr Cabot’s adjusted taxable income of $287,133 for a second period and was satisfied his only source of ongoing income was his disability support pension.

6. The term financial resource is not defined in the legislation.  In Costa & Fairbank,[1] the Court said that financial resource “refers to something which is not property but from which financial benefit is or may be gained”.

   [1] (SSAT Appeal) [2010] FMCAfam 39

7. The Child Support Guide at 2.6.14 states the following in relation to lump sum payments received by a parent:

   Where a parent receives a substantial amount of money (a lump sum) that would otherwise not form part of his or her income amount used for child support purposes, and therefore is not included in the assessment of child support, the lump sum may be taken into account in deciding whether the assessment should be changed.

   Such payments may arise as a consequence of the parent:

   ·being retrenched from their employment,

   ·drawing funds from a superannuation fund,

   ·receiving a distribution from a deceased estate,

   ·being compensated for some loss or damage, or

   ·being successful in a lottery or some other gambling venture.

   In each case it will be necessary to decide whether receiving the money makes the amount of child support payable unjust and inequitable.

8. Including a lump sum payment, such as an insurance payment, as a financial resource for the purposes of child support is dependent on the circumstances of each case.  In the case of Mr Cabot, the Tribunal is satisfied that another decision maker could decide differently and therefore there may be some merit in reviewing the substantive application.

Prejudice to [Ms A] and the wider public

1. The Tribunal must also consider the potential prejudice to [Ms A] and the wider public. The Tribunal is not satisfied that [Ms A] would be able to provide evidence relevant to the objection.  Given Mr Cabot is approximately 174 days out of time in making his application, it would be reasonable for [Ms A] to consider the original decision was final.

2. [Ms A] should ordinarily be able to rely on the child support assessment once the period for objection has passed. Should a contrary decision be made on objection which resulted in a retrospective change to the assessment, this could be prejudicial to [Ms A], especially given the length of time that has elapsed since the original decision. The Tribunal finds [Ms A] could be disadvantaged should the extension of time to lodge an objection be granted.

3. The Tribunal also considered whether or not there would be prejudice to the general public if an extension of time was granted. Time limits for the review of administrative decisions should be observed as strictly as possible in order to assist the proper administration of government agencies. There is also a public expectation that there be a degree of certainty in relation to time limits, however, the law allows for extensions of time. In this case, given the extensive delay, the Tribunal believes there would be prejudice to the general public if an extension of time was granted.

Fairness in granting an extension of time as between Mr Cabot and other persons in similar positons

1. The Child Support Agency notifies parties that they can seek a review of decisions and they have 28 days within which to submit a request for such a review. Most people comply within the 28 day timeframe. It is clear the statutory time limit is to be enforced unless there are acceptable reasons for the delay.  Mr Cabot has [a medical condition] and [Ms B] has submitted that he would be significantly disadvantaged if required to meet his existing child support obligations.  The Tribunal considers Mr Cabot’s circumstances are different to that of other applicants and it would be fair to him and to others to grant an extension of time.

CONCLUSION

1. Although [Ms B] has explained she did not understand the objection process, the Tribunal does not find this to be a satisfactory explanation for the lengthy delay in objecting to the original decision.  There may be some merit to reviewing the substantive application, which weighs in favour of granting an extension of time.  Balanced against this, the Tribunal considers there could be prejudice to [Ms A] and the general public should an extension of time be granted.

2. The Tribunal has also found that, in light of Mr Cabot’s state of health, his circumstances are different to that of other applicants and it would be fair to grant an extension of time.

3. Taking into account all these relevant factors, the Tribunal concludes that it would be appropriate for the extension of time in which to lodge an objection to be granted.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that the extension application should be granted.