Casselden and Tregoose (Child support)

[2022] AATA 3514

Casselden and Tregoose (Child support) [2022] AATA 3514 (11 August 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/MC023411

APPLICANT:  Mr Casselden

OTHER PARTIES:  Child Support Registrar

Ms Tregoose

TRIBUNAL:Presiding Member J Nalpantidis

Member T Hamilton-Noy

DECISION DATE:  11 August 2022

DECISION:

The Tribunal set aside the decision under review and substitutes its decision that section 98F of the Child Support (Assessment) Act 1989 applies, and the Tribunal refuses to make a departure determination as there is no ground established to depart from the administrative assessment of child support.

CATCHWORDS

CHILD SUPPORT – departure determination – whether there was a ground for departure – 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

BACKGROUND

1. Mr Casselden and Ms Tregoose are the separated parents of one eligible child aged 17 years, who is recorded as being in the above primary care of Ms Tregoose.  A case has been registered with the Child Support Agency (the Agency) since 27 July 2009, in relation to which Mr Casselden is the payer of child support and Ms Tregoose the payee.  The Agency has been collecting the ongoing child support liability from 16 April 2012. 

2. At the time the relevant application was made, the following child support assessment was in place:

   ·For the period 1 October 2020 to 22 June 2021, the annual rate of child support is $13,988 based on Mr Casselden’s 2019–20 adjusted taxable income (ATI) of $87,240 and Ms Tregoose’s 2019–20 ATI of $43,013;

   ·For the period 23 June 2021 to 31 August 2021, the annual rate of child support is $17,552 based on Mr Casselden’s 2019–20 ATI of $82,240 and Ms Tregoose’s 2019–20 ATI of $43,013;

   ·For the period 1 September 2021 to 10 September 2021, the annual rate of child support is $16,840 based on Mr Casselden’s 2020–21 ATI of $85,334 and Ms Tregoose’s 2020–21 ATI of $43,013;

   ·For the period 11 September 2021 to 30 November 2022, the annual rate of child support is $13,298 based on Mr Casselden’s 2020–21 ATI of $85,334 and Ms Tregoose’s 2020–21 ATI of $43,013.

3. On 11 July 2021, Mr Casselden applied for a departure determination on the basis that the child support assessment was unfair because of Ms Tregoose’s income, property and financial resources (called “Reason 8A” by the Agency).

4. On 22 October 2021, an employee of the Agency found the ground was established and made a departure determination that, for the period 1 August 2021 until there is a terminating event for the child in the assessment, Ms Tregoose’s ATI will be increased by $50,000.

5. On 10 November 2021, Mr Casselden objected to this decision.

6. On 17 February 2022, an objections officer of the Agency considered and disallowed the objection, however based on new information provided by Ms Tregoose, the following decision was made:

   ·The determination of 22 October 2021 is ended on 15 December 2021; and

   ·From 16 December 2021, the normal administrative provisions of the Child Support (Assessment) Act 1989 will apply.

   The effect of the assessment was that the rate of child support payable by Mr Casselden increased from $11,224 per annum to $13,298 per annum from 16 December 2021.

7. On 3 March 2022, Mr Casselden made an application to the Administrative Appeals Tribunal (the Tribunal) for an independent review of the Agency’s decision. 

8. A directions hearing was conducted by the Tribunal on 1 July 2022, on which date the parties spoke to the Tribunal by MS Teams audio.

9. The Tribunal hearing was conducted on 11 August 2022 and Mr Casselden spoke to the Tribunal by MS Teams audio and gave evidence on affirmation and Ms Tregoose spoke to the Tribunal by MS Teams video and gave evidence on affirmation

10. At the hearing the Tribunal had before it documents provided by the Agency (1 to 794), documents provided by Mr Casselden (A1 to A76) and documents provided by Ms Tregoose (B1 to B83).  All documents had been exchanged between the parties prior to the hearing and they confirmed receipt of the documents with the Tribunal. 

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Assessment 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 Assessment Act. The liable parent or carer may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Assessment Act. Section 98C of the Assessment Act 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 the place of the Registrar, must be satisfied that:

   (i)there is a ground to depart from the administrative assessment of child support;

   (ii)it is just and equitable to depart; and

   (iii)it is otherwise proper to depart.

3. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Each ground is prefaced by the term “in the special circumstances of the case”. The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman (1992) FLC 92-279, the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.

4. 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 Assessment Act.

Issue 1 – Is there a ground established to depart from the administrative assessment of child support?

1. In this case the Tribunal considered the ground raised by Mr Casselden in this matter under subparagraph 117(2)(c)(i) of the Assessment Act, which provides that a ground for departure exists where, in the special circumstances of the case, the administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of the income, property and financial resources of Ms Tregoose.

Evidence before the Tribunal

Mr Casselden’s evidence

1. Mr Casselden referred the Tribunal to his written submissions (A11 to A76).  He submitted that Ms Tregoose had more financial resources than was reflected in the administrative assessment from April 2021 to December 2021, following the sale of her property.  Ms Tregoose sold her property for $325,000 which she initially deposited in her personal account.  Mr Casselden told the Tribunal the original decision maker at the Agency added $50,000 to Ms Tregoose’s ATI (for the next 18 months only), but then this was overturned which he considered was not right.  The result of this action was that he incurred arrears of $2,700.

2. Mr Casselden submitted that Ms Tregoose did not disclose the additional funds she received but she quickly decided to off load two lots of $50,000 in September 2021, and again in December 2021.  She nevertheless had use of the funds from April 2021 and the child support assessment should have taken those additional funds into account, by increasing her 2020–21 ATI, which was $44,000.  Mr Casselden submitted that Ms Tregoose’s ATI should have been increased to $94,000 from April 2021, and the additional $50,000 should be applied for the next three years. He considers the proceeds from the sale as a windfall and it should be included in the child support assessment.

3. Mr Casselden submitted that he reviewed the financial information provided by Ms Tregoose  and submitted that there were various cash cheque payments reflected in her business accounts and he questioned whether Ms Tregoose’s ATI reflects her actual income. 

4. In response to Ms Tregoose’s evidence regarding the children’s proper needs, Mr Casselden told the Tribunal that he also took the children to sports events when they were in his care.  He submitted that he contributes to the costs of the children through payment of child support, which he pays on time and as assessed by the Agency.  He cannot afford to contribute to private school fees.

5. Mr Casselden told the Tribunal he is employed as a full-time [occupation 1] and is a salary earner.  He has worked with the same employer for six years and has a salary of approximately $84,000 to $87,000.  His current child support is approximately $1,208 per month, and there have been times when he has paid child support of $1,900 per month.   

6. Mr Casselden acknowledged he lives with his de facto partner but asserted that they are financially independent.  His partner has [number] children to provide for and he has his own children to provide for. 

7. Mr Casselden submitted he pays child support of some $1,900 per month and it is difficult for him to manage this cost.  He told the Tribunal he is “not complaining” but the impact of having to pay arrears of child support added to his financial struggles.  He did not have anything specific to say about this; it was generally a struggle.  Mr Casselden told the Tribunal he lives from week to week; he has no savings and has not taken holidays. 

8. Ms Tregoose referred to the Statement of Financial Circumstances provided by Mr Casselden and submitted that Mr Casselden has not fully listed his assets because there were items previously listed, but they are now missing, this includes a [vehicle 1], a [vehicle 2] and household contents.  Ms Tregoose stated Mr Casselden listed a [specific] motor vehicle and alleged he has more than one motor vehicle.  Ms Tregoose submitted Mr Casselden did not accurately list his expenses, for example rent he listed $450 per week, food of $100 per week and electricity and gas of $100 per week.  Ms Tregoose submitted there were telephone costs of $120 per week, whereas his bank statements show payments of $120 per month.  Ms Tregoose submitted Mr Casselden transfers $650 per week to his current partner for expenses, and she alleged this is a staged transaction, and he benefits financially from his de facto relationship.

Ms Tregoose’s evidence

1. Ms Tregoose responded to Mr Casselden’s submissions that her business does provide cash cheques because some vendors require payment by cash.  She gave evidence that all payments were supported by invoices which were provided to her accountant; all transactions related to business expenses.

2. Ms Tregoose submitted that the sale of a subdivision, which was part of her own home, should not be considered a windfall.  She lived in the property with her children and was struggling to pay her mortgage and her day-to-day bills.  Ultimately she decided that subdividing the property to get funds to reduce her mortgage was the best solution for her.  Ms Tregoose submitted that the property was run down and she could not afford the costs of bringing the property to a good state.  While she received funds for the subdivided property, it also reduced the value of her home.  Essentially, the funds were then transferred to reducing her mortgage. She initially kept some funds for much needed repairs and maintenance of the home, and some much needed renovations, including a new kitchen and new bathroom.  Unfortunately, her plans changed when she was diagnosed with [condition 1] last year.  The impact of the diagnosis on her ability to work and her concerns about her future security made her re-assess her plans and she thought it best to apply the funds towards reducing her mortgage by $50,000 on 15 December 2021, leaving a balance in her savings account of $12,661.68.   

3. Ms Tregoose acknowledged the sale proceeds were $325,000.  The costs of the subdivision were $40,000, including conveyancing, real estate agent costs, and connections to utilities such as gas and electricity.  She then paid $200,000 towards her mortgage, reducing the mortgage to some $112,344 as at 30 June 2021. She held back the balance for home repairs and maintenance and renovations.  She subsequently applied the funds to paying down her mortgage in light of her changing health circumstances.   

4. The Agency material shows the following distributions made by Ms Tregoose from the sale proceeds: $11,400 to [a named] Real Estate, $1,516.60 to [a conveyancing business], $11,500 to [a fencing business], $40,000 repayments of a private loan, $350 mortgage discharge fee and $200,000 to the mortgage.  This totalled $264,766.60 with a balance of $60,233.40 cash in the bank, which was earmarked for replacement of two boundary fences and other property repairs.

5. Ms Tregoose submitted that it was unfair that $50,000 is added to her annual ATI because it effectively doubles her ATI for the purposes of the child support assessment. 

6. Ms Tregoose told the Tribunal the subdivided property was part of the property she received from the property settlement following separation in 2007–08.  Ms Tregoose told the Tribunal that she attended a joint family lawyer with Mr Casselden to work out their property settlement.  Mr Casselden received his superannuation and the [occupation 1] business owned at that time, and Ms Tregoose also paid him $120,000 which she borrowed on the home which transferred into her name.  Ms Tregoose received the house, which remained her family home.  She always considered the property as her private residence and not relevant for assessing child support.  She thought that it was her choice to subdivide the property and take on the cost and risk of doing so and did not think the proceeds from the sale could be added on to her ATI. 

7. Ms Tregoose submitted the effect of the Agency’s decision to add $50,000 to her ATI was like double dipping because Mr Casselden received his share of the matrimonial property and it was his choice what he did with his share of the property.

8. Ms Tregoose gave evidence that she is employed in her own company, and her pay is $546.40 gross per week.  Ms Tregoose told the Tribunal she purchased the company in February 2019 and as a result of the COVID-19 pandemic, the business has not been profitable since she purchased it.  She currently receives child support of $254.86 per week; last month she received $1,182 per month. She receives Centrelink family payments, which vary depending on her other income.

9. Ms Tregoose submitted that she lives week to week as far as her finances are concerned and her current income and child support payments do not cover her current expenses and if there is a reduction in child support she would be placed in hardship.

10. Ms Tregoose gave evidence that she has treatment costs, following her [condition 1] diagnosis, including specialist consultations ($120 per session) and medications costs (which are currently paid via the Pharmaceutical Benefits Scheme) and regular [treatments] (currently covered under her health care card).  She is unsure what future costs she may incur, including [treatment] costs not covered by the PBS.  Her medical condition impacts on her physically and mentally, including feeling exhausted, experiencing brain fog, and an inability to do basic day-to-day tasks.  At work she is unable to work long hours or days, as she was previously, and she has to pass on tasks to other staff members.  She rarely starts early or works back late, and does not work on weekends.

The Tribunal’s findings and conclusion

1. There is no dispute that Ms Tregoose sub-divided the property which was her principal home and on 29 March 2021 she sold the sub-divided acreage for $325,000.  The Tribunal found Ms Tregoose applied the proceeds of the sale to the costs and fees associated with the subdivision, including conveyancing, real estate agents fees, connections to utilities and other fees in the amount of approximately $40,000.  She applied $200,000 towards her home mortgage, reducing the mortgage to $112,344 as at 30 June 2021. After paying off other debts and expenses, there was a balance of some $65,000 which Ms Tregoose planned to use for personal expenses, long overdue home repairs and maintenance and renovations to her kitchen and bathroom. 

2. The Tribunal accepts that Ms Tregoose was diagnosed with [condition 1] in late 2021, which impacted on her capacity to work.  Ms Tregoose gave evidence, which was accepted by the Tribunal, that following her diagnosis, she was concerned about her changing health circumstances and the impact this had on her and her children’s future security.  This led Ms Tregoose to re-assess her plans in relation to home improvements and instead she applied the balance of her funds to further reduce her mortgage. 

3. The Tribunal accepts that as a result of Ms Tregoose sub-dividing the property, which was her principal home, the overall value of her principal home reduced.  Ms Tregoose used the majority of the sale proceeds, but not all the proceeds, to reduce her house mortgage.  She also used the proceeds to pay for some personal expenses and the costs associated with the sub-division, which may have reduced the overall value of Ms Tregoose’s assets.

4. Mr Casselden submitted that Ms Tregoose received a “windfall” from the sale of the sub-divided acreage, which was not assessed as taxable income and does not form part of her ATI.  For the reasons outlined above, the Tribunal does not consider that the sale proceeds represent a “windfall” which increased Ms Tregoose’s capacity to contribute to the financial support of the child.  The Tribunal therefore does not accept that the proceeds of the sale of the sub-divided acreage amount to special circumstances, such as to make the administrative assessment of child support unfair.

5. The Tribunal further notes that there was a property settlement between the parties some years ago; Ms Tregoose gave evidence the property settlement took place following the separation of the parties in 2007–08.  As part of the property settlement, Ms Tregoose’s principal home was transferred to her sole ownership.  The Tribunal accepts that effectively the sale of the sub-divided acreage represented in part property from the subdivision of the matrimonial property of the parties. 

6. Where a person’s income is not adequately reflected in the assessment, it may be warranted to change a parent’s income to account for those resources, if this would make a significant difference to the child support liability.

7. In this case the Tribunal has found Mr Casselden is employed and his ATI is an accurate reflection of his income for the purposes of the administrative child support assessment.  The Tribunal found nothing of note in Mr Casselden’s financial circumstances which would make the administrative assessment unfair.  Similarly, the Tribunal has found nothing of note in Ms Tregoose’s financial circumstances which would make the administrative assessment unfair.  The Tribunal has found that the sale proceeds of $325,000 obtained by Ms Tregoose from the sale of her sub-divided acreage in March 2021, were applied to the reduction of the mortgage on her principal home by $200,000 in June 2021, and then $50,000 in December 2021.  Ms Tregoose distributed the funds on various other costs with a balance of some $12,000 deposited into her savings account.  The Tribunal does not find the remaining sum is out of the ordinary or constitutes special circumstances.  

8. The Tribunal notes that the impact of its decision is that the child support liability reverts back to the administrative assessment from 1 August 2021 and this may create arrears of child support for Mr Casselden.  The Tribunal notes that the objections officer’s determination to cease the assessment on 16 December 2021 had the effect of increasing the rate of child support payable by Mr Casselden from $11,224 per annum to $13,298 per annum.   The effect of the Tribunal’s determination results in additional maintenance arrears for Mr Casselden in the amount of approximately $700.  This, either alone or considered in combination with the matters considered above, does not create a special circumstance to depart from the administrative assessment on the basis that the administrative assessment is unfair.

1. The Tribunal therefore concludes that the ground for departure under subparagraph 117(2)(c)(i) of the Assessment Act is not established. The effect of the Tribunal’s decision is that the administrative assessment of child support continues to apply in this case from 1 August 2021.

DECISION

The Tribunal set aside the decision under review and substitutes its decision that section 98F of the Child Support (Assessment) Act 1989 applies, and the Tribunal refuses to make a departure determination as there is no ground established to depart from the administrative assessment of child support.