Campling and Torney (Child support)

[2023] AATA 3741

Campling and Torney (Child support) [2023] AATA 3741 (19 October 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/BC026085

APPLICANT:  Mr Campling

OTHER PARTIES:  Child Support Registrar

Ms Torney

TRIBUNAL:  Member P Jensen

DECISION DATE:  19 October 2023

DECISION:

The decision under review is set aside and, in substitution, Ms Torney’s departure application is refused.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – no ground for departure 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 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

Introduction

1. Mr Campling and Ms Torney are the parents of five children. A child support case was registered with Services Australia – Child Support (Child Support) in 2020. Since January 2022, each parent has been recorded as providing 50% care for all five children.

2. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care for the children. The Act also provides for a departure from the administrative assessment in certain circumstances. In June 2021, Ms Torney lodged a departure application. On 28 January 2022 an objections officer decided to:

   ·    vary Mr Campling’s rate of child support payable to $8,882 per annum from 1 July 2021 to 31 December 2021; and

   ·    vary the rate of child support payable between the parents to nil from 1 January 2022 to 31 December 2023.

3. Neither parent applied to the Tribunal for review of that decision.

4. On 27 October 2022, Ms Torney lodged another departure application. On 22 February 2023 an original decision-maker decided to vary Mr Campling’s adjusted taxable income to $130,104 per annum and Ms Torney’s adjusted taxable income to $37,548 per annum from 27 October 2022 to 31 October 2024. As a result of that decision, Mr Campling’s rate of child support payable from 27 October 2022 was $13,205 per annum. He objected to the decision. An objections officer disallowed the objection. He applied to the Tribunal for further review. I conducted a directions hearing on 25 August 2023 and a substantive hearing on 18 October 2023. Both hearings were conducted via MS Teams.

5. Paragraph 98C(1)(b) of the Act relevantly provides that a departure decision may be made in respect of a departure application if:

   (i)... one, or more than one, of the grounds for departure referred to in [subsection 117(2)] exists; and

   (ii)... 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; …

A potential ground for departure

1. Subparagraph 117(2)(c)(ia) of the Act, commonly referred to as Reason 8, provides as a ground for departure:

   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:

   …

   (ia)because of the income, property and financial resources of either parent; …

2. Mr Campling is [an Occupation 1]. The departure decision dated 22 February 2023 was based, in part, on the fact that he was unemployed when the decision was made. He resumed employment with [Employer 1] on 17 October 2022. During 2022–23 he was paid $103,991 and he received reportable fringe benefits worth $6,268. During the substantive hearing he explained that the reportable fringe benefits related to credits that were applied to the cost of [transport] that he took to [workplaces] to commence his shifts. They did not have a general personal value (unlike, say, the provision of a company car for personal use). Ms Torney did not dispute that evidence and I accept it as correct. The period from 17 October 2022 to 30 June 2023 is a period of 257 days, and $103,991 / 257 x 365 = $147,691 per annum gross.

3. When Ms Torney lodged her departure application on 27 October 2022 the administrative assessment (which was the departure decision dated 28 January 2022) was based on Mr Campling’s previous unemployment and Ms Torney’s relatively low income. On 17 October 2022, Mr Campling returned to well-paid employment. That change in circumstances constitutes special circumstances for the purpose of subparagraph 117(2)(c)(ia) of the Act. Ordinarily, it would follow that the administrative assessment had become unjust and inequitable and Reason 8 was established. In the extraordinary circumstances of this case, the evidence does not support that conclusion.

4. On 21 July 2023 the parents were informed that the Tribunal would be conducting a directions hearing at 10:00 am on 25 August 2023. Ms Torney contacted the Tribunal Registry and said she would be unable to attend due to work commitments. She is employed as [an Occupation 2] by [Employer 2]. She applied to have the directions hearing rescheduled to “the September school holidays or after school hours”. She did not provide any supporting evidence, such as her [work] roster or an unsuccessful application to her employer for leave during the hour that was scheduled for the directions hearing: see paragraph 19(6)(d) of the Child Support Review Directions. It is not unusual for parents to have to take leave from their employment to attend Tribunal proceedings. Notwithstanding the absence of documentary evidence in support of Ms Torney’s application, I arranged for the Registry to contact Mr Campling and ascertain whether he could participate in a directions hearing after school hours on 24 or 25 August 2023. He said he would be doing “school runs” on those two afternoons. More generally, it became apparent that if the directions hearing were conducted outside school hours, one parent would have the five children in their care. Ms Torney was informed that her adjournment application was refused. It transpired that she did not participate in the directions hearing. Mr Campling participated in the directions hearing. I subsequently issued written directions to both parents. The directions stated that they were issued pursuant to section 33 of the Administrative Appeals Tribunal Act 1975. The directions also stated that the Tribunal “may draw adverse inferences against a party if that party fails to comply with a direction to give information or evidence to the [Tribunal].” Ms Torney was directed to provide:

   ·a completed AAT Statement of Financial Circumstances;

   ·Ms Torney’s 2021–22 individual tax return;

   ·Ms Torney’s 2022–23 payment summaries from all employers;

   ·Ms Torney’s 2022–23 individual tax return, if available;

   ·Ms Torney’s most recent payslip from each of her employers;

   ·bank account statements showing the children’s college fund balances as at 30 June 2022 and 30 June 2023; and

   ·if Ms Torney received a distribution from the Torney Testamentary Trust during 2022–23 — documentation establishing the quantum of the distribution.

5. When Ms Torney lodged her departure application with Child Support on 27 October 2022  she was required to complete a Statement of Financial Circumstances but she failed to do so: pages 181 and 182 of the hearing papers. On 17 May 2023 she was asked to complete and return an AAT Statement of Financial Circumstances but she failed to do so. In response to the direction to do so, she stated (at page B1 of the hearing papers): “I am not planning to complete this document. It is an onerous document to complete, and it is often completed inaccurately.” It transpired that she did not comply with the direction.

6. Prior to the substantive hearing, Ms Torney provided her 2021–22 individual tax return, her 2022–23 payment summaries from her employers and her most recent payslip from her current employer. She said she did not receive a distribution from the Torney Testamentary Trust during 2022–23.

7. The substantive hearing was conducted on Wednesday, 18 October 2023. During the hearing, Ms Torney said she completed her 2022–23 individual tax return during the preceding weekend. She was unable to give a satisfactory reason as to why she had not provided a copy of the tax return prior to the substantive hearing. She said, in effect, that she had been too busy to do so.

8. Ms Torney did not provide bank account statements showing the children’s college fund balances as at 30 June 2022 and 30 June 2023. I will return to that issue shortly.

9. Ms Torney provided evidence that she earned $51,583 from three employers during     2022–23. A payslip from [Employer 2] shows that she earned $19,964 during the 86 days from 1 July 2023 to 24 September 2023, which equates to approximately $84,730 per annum gross. She said she started her current role with [Employer 2] in February 2023. She did not provide any documentary evidence in support of that statement. If she had attended the directions hearing she would have been questioned about the details of her employment with [Employer 2] and her answers may have led to additional directions.

10. Mr Campling effectively submitted that Ms Torney has access to significant financial resources via her status as a beneficiary of the Torney Testamentary Trust. Ms Torney provided detailed submissions on the issue: see, for example, page 248 of the hearing papers. She said that her mother is the trustee and appointer of the testamentary trust, as well as being a beneficiary. She said that she (Ms Torney) has not received a distribution from the testamentary trust since 2012–13. She noted that if she did receive a distribution, it would appear in her tax return and it would form part of her taxable income. Mr Campling has a copy of the will that created the testamentary trust. During the directions hearing I informed him that he could provide that document but I would not be directing him to do so. He did not provide that document. I accept Ms Torney’s evidence that she did not receive a distribution from the testamentary trust during 2022–23.

11. There is no dispute that the testamentary trust distributed $50,000 to each of the five children some years ago, to be held on trust by Ms Torney for a specific purpose. There is some evidence that the distribution occurred in or around 2013: page 213 of the hearing papers. As part of the parents’ property settlement they reached an agreement. Mr Campling extracted a paragraph from the agreement: page 246 of the hearing papers. I referred Ms Torney to the extract. She did not dispute its accuracy. It stated:

    That the entirety of the funds held in the [Bank of Australia] Account #8165 continue to be held on trust for the five children for the sole benefit of their higher education. The Respondent Wife will provide the Applicant Husband with bank statement balances at his reasonable request and also documentation evidencing where those funds have been expended toward the children’s higher education.

12. At different times, both parents have confirmed that the funds are to be used for the children’s university educations. None of the children currently attend university. The oldest child is 15. If the funds were being retained for their stated purpose, that would be an unremarkable state of affairs and it would not affect the appropriate rate of child support payable between the parents. Further, if the funds were being retained for their stated purpose, one would expect Ms Torney to be able to easily provide evidence of that fact. On 18 September 2023, in response to the direction to provide the children’s college fund balances as at 30 June 2022 and 30 June 2023, Ms Torney stated: (at page B2 of the hearing papers):

    The children’s money has been preserved by me for many years. It will continue to be preserved. Mr Campling knows I am not going to spend it. Why would I? I would not misuse money from my family (Grandfather) and I will not do the wrong thing by my children.

    Mr Campling is using this process to try to make me provide this information to him while he withholds sentimental items from me that he was supposed to return as per our property orders.

13. Ms Torney did not suggest that she had a legal basis for refusing to comply with the direction and that should have been the end of the matter. If there had been a legal basis for refusing to comply, Ms Torney was better placed than most parents to make that submission. She has almost completed a [Subject] degree and she hopes to one day be [registered] as [an Occupation 3]. She rhetorically asked why she would spend those funds. One possibility is that she does not have unlimited financial resources, she earns an ordinary wage and she decided to use the funds to assist her in meeting the children’s day-to-day costs while they are in her care. If that were the case, it would reduce or extinguish her need for financial support from Mr Campling to assist her in meeting those costs. To the extent that she submitted during the substantive hearing that her legal obligations as a trustee prevented her from using the funds in that way, she had already demonstrated that she does not always comply with her legal obligations.

14. Subsequent documentation casts further doubt on Ms Torney’s credibility. On 26 September 2023 she provided what appears to be a portion of a computer screenshot which shows four balances of $51,749.41 and one balance of $51,749.45: page B19 of the hearing papers. The screenshot invites an inference that the children’s college funds have not been spent and are currently held in five bank accounts, but the screenshot is undated and it does not refer to any account holders or account numbers. The screenshot does not provide any context, such as the name of a financial institution.

15. On 8 October 2023, Ms Torney sent the following email to the Registry (at page B20 of the hearing papers):

    Hi,
    Today I transferred the children’s money into a new account for this AAT process. I have attached the proof of balance (dated today), but the proof of balance is current as of yesterday (7 Oct), It’s a day behind, so I’ll send another proof of balance tomorrow.

    Kind regards,
    Ms Torney.

16. Ms Torney provided documentation which showed that she opened a [Bank] account with an account number ending xx2307 on 2 October 2023. As at 7 October 2023 the account balance was nil. As at 8 October 2023 the account balance was $259,214. I asked Ms Torney why she opened the account and transferred money into the account. She said she was wary of Mr Campling knowing a lot about her. (However, the funds in question were held on trust for the children and Ms Torney was required to provide Mr Campling with information about those funds from time to time pursuant to the parental agreement.) She said she is entitled to transfer the funds from one account to another. I noted that whether she was entitled to transfer the funds was not the issue; the issue was why she did it. She replied: “Why not?” I noted that she claimed to be too busy to properly participate in the Tribunal proceedings. (The substantively hearing was listed for 18 October 2023 to accommodate Ms Torney’s stated availability and unavailability. Shortly after the start of the substantive hearing, Ms Torney noted that the hearing was listed for three hours but she would have to leave after two hours because she had another appointment to attend. She declined to provide details of the appointment. There was no suggestion that it was a medical necessity. She had not applied to have the substantive hearing relisted.) Ms Torney said opening a new bank account did not take much time.

17. I invited Ms Torney to comment on the following observation. She could have easily complied with the direction to provide bank account statements showing the children’s college fund balances as at 30 June 2022 and 30 June 2023. She did not comply with the direction. Instead, she opened a new account, deposited funds into the new account and claimed that the deposited funds had been transferred from the five bank accounts that had previously held the children’s college funds. It was conduct one might engage in if compliance with the direction might have revealed that the children’s college funds had not been retained as previously claimed. Ms Torney maintained her earlier account of events but was unable to take the matter further. For completeness, I note that Ms Torney also said during the hearing that she had approximately $280,000 in equity in the property in which she currently lives but her mother had recently “bought her out”. That evidence leaves open the possibility that at least some of the money that was deposited into account xx2307 was Ms Torney’s own money and not the children’s college funds. Those matters could have been explored more thoroughly if Ms Torney had attended the directions hearing and complied with the directions. Further, Ms Torney’s 2021–22 tax return refers to five amounts of interest, each of $37.36, from five bank accounts. Ms Torney hesitantly acknowledged that it appeared that the interest was in respect of the children’s college funds which had previously been held in five bank accounts. She did not provide any other explanation for the five identical amounts of interest. If it was interest on funds totalling approximately $250,000, it would represent a return of approximately 0.075%, which would be an extremely low rate of return. That evidence supports the view that the interest was in respect of a significantly smaller sum of money.

18. But for Ms Torney’s obfuscation and the possibility that, in addition to failing to comply with specific directions, she also failed to comply with her general legal obligation to fully and frankly disclose her income and financial resources, the matter would have been relatively straightforward. Mr Campling returned to paid employment on 17 October 2022, at which point he started earning significantly more than Ms Torney. From 17 October 2022 to 30 June 2023, his income was $147,691 per annum gross. He provided some evidence of his likely tax-deductible expenses: page A14 of the hearing papers. During July and August 2023, his income was approximately $21,397 x 6 = $128,382 per annum gross. His income fluctuates from fortnight to fortnight. He described an arrangement with his parents which involved him having contributed money towards his parents’ purchase of a house for $640,000. He and the children live in the house. His parents live elsewhere. Mr Campling makes regular payments to his parents, which he calls “rent”, but the payments are intended to ultimately extinguish his parents’ interest in the house. The analysis of Mr Campling’s income and financial resources occurred in the context of his provision of a Statement of Financial Circumstances, his participation in the directions hearing and his compliance with the directions.

19. Ms Torney said her 2022–23 taxable income was $66,017. During the hearing she said she had prepared, but had not provided, a copy of her 2022–23 tax return. She had a number of employers and also received jobseeker payment during 2022–23. She did not provide details of her periods of employment and unemployment. They are issues that would have normally been addressed during the directions hearing. In her current role she has been earning $84,730 per annum gross since at least 1 July 2023: page B10 of the hearing papers. She said she started her current role in February 2023 but she did not provide any documentary evidence in support of that statement. As noted earlier, she failed to provide a Statement of Financial Circumstances despite being directed to do so. After the hearing she effectively applied for leave to belatedly provide her 2022–23 individual tax return. (In fact, she simply emailed the tax return to the Registry with a very brief covering note.) Such applications are usually refused: section 30 of the Child Support Review Directions. However, each application must be considered on its particular merits. In this particular case, Ms Torney did not provide a satisfactory explanation for not providing the tax return prior to the hearing. If the tax return were admitted into evidence, it would be necessary to either reconvene for a further day of hearing or provide the parties with an opportunity to address the additional evidence via affidavits and written submissions. After considering the history of the matter, I decided to refuse Ms Torney’s application. However, the application itself has significance due to what it omitted. Ms Torney emailed her tax return to the Registry. She did not email bank account statements showing the children’s college fund balances as at 30 June 2022 and 30 June 2023.

1. If, for example, Mr Campling’s adjusted taxable income was varied to $135,000 per annum and Ms Torney’s adjusted taxable income was varied to $80,000 per annum, Mr Campling would be assessed to pay approximately $7,600 per annum in child support. The complicating factor in this case is the possibility that Ms Torney is spending the children’s college funds in contravention of the terms upon which she holds those funds on trust for the children. Such conduct would reduce or extinguish her need for child support from Mr Campling. The legality of such conduct would be beside the point so far as the current proceedings are concerned. If she was not spending those funds, she could have easily provided that evidence. She refused to provide that evidence, even when directed to do so. Instead, she provided other evidence which was intended to address the issue but actually lent further support to the inference that she has been spending those funds. As noted earlier, it is an extraordinary state of affairs. Ordinarily, Mr Campling’s return to work on 17 October 2022 would have satisfied the requirements of Reason 8. However, for the reasons stated above, the evidence does not establish that Mr Campling’s return to work resulted in the administrative assessment (which was the departure decision dated 28 January 2022)  becoming unjust and inequitable. Reason 8 is not established. There is no other potential ground for departure. Ms Torney’s departure application must be refused: subparagraph 98C(1)(b)(i) of the Act. The departure decision dated 28 January 2022 will therefore remain in force.

DECISION

The decision under review is set aside and, in substitution, Ms Torney’s departure application is refused.