Cheadle and Cheadle (Child support)

[2019] AATA 1193

Cheadle and Cheadle (Child support) [2019] AATA 1193 (4 April 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/HC015514

APPLICANT:  Ms Cheadle

OTHER PARTIES:  Child Support Registrar

Mr Cheadle

TRIBUNAL:Member A Schiwy

DECISION DATE:  4 April 2019

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that no ground for a departure determination has been established.

CATCHWORDS

CHILD SUPPORT – departure determination – earning capacity of the liable parent - criteria for earning capacity not satisfied - a ground for departure not established - refusal 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 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. This application for review is about the amount of child support payable by Mr Cheadle to Ms Cheadle and whether a departure should be made from the child support formula assessment.

2. Ms Cheadle and Mr Cheadle are the parents of two children, aged 15 and 12 years. 

3. A child support case was registered in 2007.  The Department of Human Services (‘Child Support’) has determined that Ms Cheadle has 100% care of the children, and Mr Cheadle is the parent liable to pay child support. 

4. The following administrative assessments for child support have been made:

   ·For the period 1 September 2017 to 31 August 2018, Mr Cheadle is assessed to pay the ‘minimum annual rate’ of child support of $420 per annum based on Mr Cheadle’s 2016-17 adjusted taxable income of $20,851 and Ms Cheadle’s 2016-17 adjusted taxable income of $96,537.

   ·For the period 1 September 2018 to 13 June 2019, Mr Cheadle is assessed to pay the ‘minimum annual rate’ of child support of $420 per annum based on Mr Cheadle’s provisional income of $21,331 and Ms Cheadle’s 2017-18 adjusted taxable income of $61,270.

5. On 13 September 2017 Ms Cheadle applied to Child Support for an increase to the assessed rate of child support on the ground that in the special circumstances of this case, the administrative assessment results in an unjust and inequitable level of child support because of Mr Cheadle’s capacity to earn. 

6. On 2 November 2017, a Child Support case officer, a delegate of the Child Support Registrar, considered the departure application and decided to make the following departure determination:

   ·For the period 1 September 2017 until 31 October 2019, Mr Cheadle’s adjusted taxable income is varied to $67,700.

7. On 8 June 2018, Mr Cheadle objected to this decision (an extension of time was granted to lodge the objection).   On 17 November 2018 the objections officer decided to set aside the original decision and decided to make the following departure determination:

   ·For the period 21 July 2017 to 31 October 2019, Mr Cheadle’s annual child support liability is set at $6,261 ($60 per week per child).

8. On 28 November 2018 Ms Cheadle lodged an application with the Administrative Appeals Tribunal (the tribunal) seeking a review of the Child Support decision.

9. Prior to the hearing of the application for review, directions were issued to both Ms Cheadle and Mr Cheadle to provide the tribunal with specified documents.  Ms Cheadle provided the tribunal with documents (A1 to A13) and Mr Cheadle provided the tribunal with documents (B1 to B58). Both parties were provided with a copy.  The tribunal and the parties also had access to the statement and documents provided by Child Support under subsection 37(1) and section 38AA of the Administrative Appeals Tribunal Act 1975 (folios 1 to 276).

10. The matter was heard on 4 April 2019. Both Ms Cheadle and Mr Cheadle attended the hearing by conference telephone and gave evidence on affirmation.

ISSUES

1. The statutory provisions relevant to this review are found in the Child Support (Assessment) Act 1989 (the Assessment Act). The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Assessment Act. This requires the application of a statutory formula, which takes into account such factors as the number of children, the level of care provided, the income of each parent and the costs of the children.

2. The liable parent or carer may apply to the Child Support Registrar for a determination to depart from the administrative assessment under Part 6A of the Assessment 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. In the first instance, a ground for departure from an administrative assessment must be established. The grounds are set out in subsection 117(2) of the Assessment Act. If satisfied that:

   ·a ground or grounds exist (step one); and

   ·that it would be just and equitable (step two); and

   ·otherwise proper to make a particular determination (step three);

   the tribunal may make one of the determinations prescribed in section 98S of the Assessment Act. Section 98S permits a range of determinations, including varying the annual rate of child support payable and/or the adjusted taxable income of a parent.

CONSIDERATION

Issue 1 – Does a ground exist to depart from the administrative assessment?

1. Subparagraph 117(2)(c)(ia) of the Assessment Act provides that a ground for departure exists where, in the special circumstances of the case, application of the provisions of the Assessment Act relating to the 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 children because of the income, property and financial resources of either parent.

2. The term ‘special circumstances’ is not defined in the Assessment Act. In Gyselman and Gyselman [1991] FamCA 93 (Gyselman) 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.

3. Mr Cheadle is a [Occupation 1] and his taxable incomes in recent years have been:

   ·2015-16    $24,929

   ·2016-17    $20,851

4. Child Support obtained Mr Cheadle’s PAYG summaries for 2017-2018 from three employers and this showed income from wages and allowances of $34,706.  An administrative assessment issued based on this derived income and resulted in child support payable of $2,928 from 1 November 2019 to 30 November 2019.

5. Ms Cheadle has submitted that Mr Cheadle has the capacity to earn more and has a history of resigning from his employment when Child Support find out he is working and commence garnisheeing his wages.  She did not submit that Mr Cheadle is earning income that is not disclosed in his income tax returns.

6. The tribunal can only find that a parent’s earning capacity is greater than their actual income if the requirements of subsection 117(7B) are satisfied. That subsection states:

   In having regard to the earning capacity of a parent of the child, the court may determine that the parent's earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:

   (a)one or more of the following applies:

   (i)the parent does not work despite ample opportunity to do so;

   (ii)the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which the parent is employed or otherwise engaged;

   (iii)the parent has changed his or her occupation, industry or working pattern; and

   (b)the parent's decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:

   (i)the parent's caring responsibilities; or

   (ii)  the parent's state of health; and

   (c)  the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.

7. Mr Cheadle stated that:

   ·He has been suffering from mental health issues for several years.

   ·He first consulted a doctor about his mental health around four years ago.  He was prescribed Effexor (venlafaxine) and fluoxetine.  He was referred to a psychologist and had therapy for a few years until about mid-2016.  He had also been on Seroquel at some point.

   ·In August 2015 he became worse and went into a deep depression and did not want to see anyone.  He eventually applied for Centrelink benefits in late 2015.

   ·He stopped seeing his psychologist in around mid-2016.  He has had three very dark years.

   ·He tries to work but after a few months he cannot cope and has to leave.

   ·He had been living with his parents from around November 2016 and they help him out financially.

   ·He was on Centrelink benefits until around April/May 2017 and then he commenced working for [Employer 1].  He worked for a few months but he had to resign due to his health.  He applied for newstart allowance but had difficulty getting a separation certificate from his employer and so he let it go.

   ·He lived off his savings and then with help from his parents.

   ·He started working for [Employer 2] in January 2018 but had to leave after a couple of months.  He then started working for [Employer 3] in May 2018 for another couple of months.

   ·He applied for newstart allowance but was only on it for a short time as in October 2018 he recommenced with [Employer 2].

   ·In resigned from [Employer 2] on 7 February 2019 due to ill health.

   ·He moved out of his parents’ home about six months ago.  Initially he was living in [a location] (while working for [Employer 2]) and he is now living with friends.  He has reapplied for newstart allowance and when that commences he will be able to pay something to his friends.

   ·He knows he needs to go back to his psychologist and he is hoping that he can manage this soon.  He is hopeful that his health will improve and he will be able to work again.

8. Mr Cheadle provided payslips from [Employer 2].  The payslips indicate that his wages varied week to week and as at 30 January 2019 he had grossed $19,173.  He received a termination payment of $1,150.

9. Mr Cheadle’s treating doctor, Dr [A], reported [in] February 2019 that “… he continues to suffer from significant issues with Depression/Anxiety that of late have been severely affected by the circumstances of his marital break down and the lack of contact with his children.  He has been taking medication for this condition and the severity of his condition has greatly impacted on him being able to work and holding down a job for any significant period of time.” 

10. Ms Cheadle stated the following:

    ·She does not dispute that Mr Cheadle has suffered from medical problems.

    ·He has been unwell since 2003 and she believes he is an alcoholic.  He went to alcoholics anonymous for two years.

    ·He stopped drinking from 2003 to 2006 and then had a major breakdown. 

    ·His doctor told him that his antidepressants would not work if he was drinking.  Unless he takes this advice he will not get better but it is clear from his bank statements that he is still drinking.

    ·Dr [A] has been his doctor since 2009.

    ·Within a week of Child Support finding out where he works; he quits.

    ·He should be seeking to better himself.

11. The tribunal noted that Ms Cheadle contacted Child Support in May 2017 to inform them that Mr Cheadle was working.  Child Support contacted his employer [in] September 2017 which is around the time Mr Cheadle ceased working for them.  It was put to Mr Cheadle that it seemed suspicious that he resigned at this time and he reaffirmed his submission that he resigned due to ill health.

12. Mr Cheadle did voluntarily resign in September 2017 but since then he has started employment on three occasions; each time only working for a few months.  His taxable incomes have been very low since at least 2015-16 and both parents agree that Mr Cheadle has been ill for some time. 

13. Whilst Child Support’s action may have triggered Mr Cheadle’s resignation in September 2017 it does not explain Mr Cheadle’s three subsequent attempts at employment or his low income in earlier years.  The tribunal concluded that Mr Cheadle does not currently have a higher earning capacity than that reflected by his taxable incomes.  It is possible that he will regain his health and commence working again; if so this should be reflected in his taxable income.

14. The tribunal decided that a ground for departure has not been established.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that no ground for a departure determination has been established.