Cherrill and Cherrill (Child support)

[2023] AATA 2668

Cherrill and Cherrill (Child support) [2023] AATA 2668 (24 July 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/BC025145

APPLICANT:  Ms Cherrill

OTHER PARTIES:  Child Support Registrar

Mr Cherrill

REVIEW NUMBER:  2022/BC025172

APPLICANT:  Mr Cherrill

OTHER PARTIES:  Child Support Registrar

Ms Cherrill

TRIBUNAL:Member J Thomson

DECISION DATE:  24 July 2023

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that:

·      From 1 January 2022 to 31 December 2022 Mr Cherrill’s annual rate of child support payable is increased by $3,085; and

·      From 1 January 2023 to 31 December 2023 Mr Cherrill’s annual rate of child support payable is increased by $3,424; and

·      From 1 January 2024 until a terminating event occurs in relation to [Child 1], Mr Cherrill’s annual rate of child support payable is increased by 50% of the invoiced [School 1] tuition fees for those years.

The Tribunal notes Ms Cherrill should notify the Child Support Registrar within 7 days of receipt of the school fee invoices commencing from 1 January 2024.

CATCHWORDS

CHILD SUPPORT – departure determination – school fees – 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. Ms Cherrill and Mr Cherrill are the parents of [Child 1], born 2008. The care percentages being recorded for [Child 1] are 100% to Ms Cherrill and 0% to Mr Cherrill.

2. A child support case has been registered with Services Australia (Child Support) since 5 December 2018, collectable by Child Support from 15 March 2019.

3. On 6 June 2022, Ms Cherrill applied to Child Support for a change of assessment on the grounds that the costs of maintaining [Child 1] are significantly affected by the costs of educating or training [Child 1] in the manner intended by both parents (the ground commonly referred to as Reason 3).

4. On 14 July 2022, Mr Cherrill cross-applied for a change of assessment on the grounds that:

   ·      the administrative assessment of child support is unfair because he has paid or transferred money to Ms Cherrill or another person for the benefit of [Child 1] (the ground commonly referred to as Reason 5);

   ·      his necessary expenses for self-support significantly reduce his ability to support [Child 1] (the ground commonly referred to as Reason 7); and

   ·      he has a legal duty to support another person the costs of which significantly reduces his capacity to support [Child 1] (the ground commonly referred to as Reason 9).

5. The administrative assessment in place at the time of the parent’s respective applications for changes to the assessment referred to above required Mr Cherrill to pay Ms Cherrill child support at the annual rate of $14,993 for the period 1 September 2021 to 30 November 2022. This assessment was based on Mr Cherrill’s 2021–22 adjusted taxable income (ATI) of $117,331, and Ms Cherrill’s 2021–22 ATI of $99,061.

6. On 26 July 2022, a Child Support decision maker, DM Tyler, found Reason 3 in Ms Cherrill’s application established and changed the assessment to provide that:

   ·      from 1 January 2022, the annual rate of child support payable by Mr Cherrill is increased by $3,235 in recognition of his contribution to [Child 1’s] education costs; and

   ·      from 1 January 2023 until a terminating event occurs for [Child 1], the annual rate of child support is to be increased by 50% of [Child 1’s] education costs, subject to the following further conditions:

   (i)that either parent can notify Child Support when these costs have been advised by the school and then the assessment will be adjusted to bring them into account;

   (ii)that both parents should note that the annual change as determined by the decision will take effect from 1 January each year regardless of when Child Support is advised about the new fees, and the parents are to be responsible for ensuring Child Support is kept up to date about fee payments to avoid arrears of fees accruing; and

   (iii)that the decision ceases to have effect if [Child 1] ceases to attend the [School 1]; either parent is at liberty to notify Child Support if this occurs.

7. On 12 August 2022, Mr Cherrill objected to DM Tyler’s decision of 26 July 2022. On 24 August 2022, Ms Cherrill also objected to DM Tyler’s decision.

8. On 3 November 2022, a Child Support objections officer partially allowed Mr Cherrill’s objection, setting aside DM Tyler’s decision of 26 July 2022 and, in substitution, deciding that for the periods 1 July 2022 until 31 December 2022, and 1 January 2023 until 31 December 2023, the annual rate of child support payable by Mr Cherrill was increased by $3,084.50 per annum for each of those periods.

9. On 28 November 2022, Ms Cherrill applied to the Tribunal for review of the objection decision of 3 November 2022 and on 30 November 2022, Mr Cherrill applied to the Tribunal for review of the same objection decision.

10. The Tribunal heard both applications on 11 May 2023. Both parents attended the hearing via conference telephone and gave affirmed evidence. The Tribunal had before it documentation provided by Child Support (folios 1 to 438), admitted into evidence and marked Exhibit 1. Ms Cherrill provided documentation (folios A1 to A10) admitted into evidence and marked Exhibit A, and Mr Cherrill provided documentation (folios B1 to B87) admitted into evidence and marked Exhibit B.

11. During the course of the hearing, Ms Cherrill gave evidence of additional real property assets owned by Mr Cherrill. The Tribunal directed her to provide further evidence of his ownership of these together with evidence of the 2023 [School 1] school fees for [Child 1]. Ms Cherrill has provided additional documentation (folios A11 to A19) in compliance with the Tribunal’s directions, copies of which have been provided to Mr Cherrill for his consideration and comment. Her additional documents have been added to Exhibit A.

12. Mr Cherrill has provided additional documentation (folios B88 to B101), including an amended updated summary of his average weekly expenses totalling $2,666.13. Copies of these documents have been added to his Exhibit B documents. Copies have been sent to Ms Cherrill for comment and her written comments (folios A20 to A24) added to her Exhibit A documents, copies of which have been provided to Mr Cherrill for comment and his response taken into consideration.

ISSUES

1. The issues which arise in this review are:

   ·      Whether a ground is established to depart from the administrative assessment of child support; and if so,

   ·      Whether it is just and equitable to make a particular departure determination; and if so,

   ·      Whether it is otherwise proper to make a particular departure determination.

CONSIDERATION

1. In reaching its decision, the Tribunal has considered the affirmed evidence given by the parents at the hearing and the documentation contained in Exhibits 1, A and B before the Tribunal at hearing and provided by the parents post hearing together with their comments thereon.

2. The statutory provisions relevant to this matter are contained in the Child Support (Assessment) Act 1989 (the Act). The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Act. A formula is used. It takes into account variables including each parent’s ATI for the last relevant year of income, the number of children, and the level of care provided by each parent. Part 6A of the Act allows for a departure from the administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make a departure determination if three matters are established:

   ·      One, or more than one, of the grounds for departure referred to in subsection 98C(2) exists (subparagraph 98C(1)(b)(ii));

   ·      A departure is just and equitable as regards the children and each parent (sub- subparagraph 98C(1)(b)(ii)(A)); and

   ·      It is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B)).

3. Subsection 98(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2) of the Act.

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 Registrar may make one of the determinations prescribed in section 98S of the Act. It permits a range of determinations, including varying the rate of child support payable, the adjusted taxable income or the cost percentage of the child.

Grounds for departure

1. Subparagraph 117(2)(b)(ii) provides as a ground for departure:

   (b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:

   …

   (ii) because the child is being cared for, educated or trained in the manner that was expected by his or her parents

2. The words “in the special circumstances of the case” are not defined in the legislation. Whilst it is not possible to define with precision the meaning of that term, it is intended to emphasise that the facts of the case must establish something that is special or out of the ordinary. That is, the intention of the legislation in subsection 117(2) must be guided by the qualification that the Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman and Gyselman (1992) FLC 92-279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. The Tribunal will consider whether the application of the administrative assessment would result in an unjust and inequitable determination of child support payable, having regard to the evidence relevant to the parents’ financial positions.

3. Ms Cherrill’s application was the first in time; the Tribunal will therefore commence with its consideration of her evidence before the Tribunal.

4. Her issues were Mr Cherrill’s contribution to the child [Child 1’s] private school fees at [School 1] (an affiliated school with [College 1] conducted by the [named] Church), the date from which that contribution should apply, and the duration of his contribution to those school fees.

5. Relevant to the issue of determining a parent’s contribution to the costs of educating or training a child is the evidence of the mutual intention of the parents to have the child privately educated.

6. In this case, there was evidence before the Tribunal of both parents mutually agreeing to their daughters, [Child 2] (no longer a child in the assessment since turning 18 [in] March 2023) and [Child 1], being privately educated at [College 1] (see [College 1] Contract of Enrolment application, folios 160 to 174, Exhibit 1 and Minutes of Family Court of Australia (FCA) Consent Orders dated [in] February 2019, B30 to B46, Exhibit B).

7. Ms Cherrill also seeks to have the commencement date for any school fees contribution determination retrospective for the maximum period of 18 months prior to the date of her application for change of assessment on 6 June 2022, and the duration of the contribution extended to [Child 1’s] completion of her Year 12 schooling at her current school, [School 1], in November/December 2026.

8. Mr Cherrill’s issues centred on his assertion that he had consented to the children, [Child 2] and [Child 1], being educated privately at [College 1] conditionally upon Ms Cherrill agreeing to accept responsibility for payment of the school fees, that he had done so at a time when the parents were living as a couple with sizeable joint incomes sufficient to sustain the level of private [College 1] school fees for the children, and that although he had agreed to [Child 1] being educated privately at [College 1], he had not consented to her continued private education at the affiliated secondary school, [School 1], because he and Ms Cherrill had since separated and he could no longer afford to pay for [Child 1’s] private education at [School 1].

9. In response to questioning by the Tribunal at the hearing, he acknowledged and agreed that he had signed the [College 1] Contract of Enrolment forms for both [Child 2] and [Child 1] referred to above.

10. Mr Cherrill did not challenge the objection decision regarding Reasons 5 and 9 but did raise his costs of self-support as a ground for resisting a departure from the administrative assessment to provide his contribution to the child, [Child 1’s], school fees at [School 1].

11. He also submitted to the Tribunal at the hearing that there was no reference in the numerous court orders in evidence before the Tribunal requiring him to pay or otherwise contribute to [Child 1’s] school fees, although he conceded that there were court orders that [Child 1] complete her primary education at [College 1] and be enrolled to continue her secondary education at [School 1] (see Heads of Agreement, B50, Exhibit B, paragraph 1; FCA Consent Orders dated [in] February 2019, B35, Exhibit B, paragraphs 18 and 19; and FCC Orders dated [in] March 2020, folio 140, Exhibit 1, paragraphs 4 and 50).

12. The Tribunal need only be satisfied that [Child 1] is being educated in the manner expected by both parents and that the costs of educating her privately significantly affected the costs of maintaining the child, to find a ground for departure from the administrative assessment formula, and that the departure would be just and equitable as regards the parents and the child, and otherwise proper as regards the parents and the community.

13. The arrangement between the parents and the school regarding responsibility for the payment of the particular child’s school fees is not a relevant consideration in determining whether a ground for departure pursuant to sub-paragraph 117(2)(b)(ii) of the Act exists (see Oliver v Oliver [2021] FCCA 965 (11 May 2021)).

14. The Tribunal finds Mr Cherrill agreed to [Child 1] being educated privately at [College 1] when he signed the [College 1] Contract of Enrolment on 11 January 2012 (folios 160 to 170, Exhibit 1). In February 2019, he agreed to share in the costs of the children’s private education at [College 1] (see Heads of Agreement, B50, Exhibit B) and consented to [Child 1] continuing with her private education at [College 1] until completion of Year 6 (see FCA Orders dated [in] February 2019, B30 to B46, Exhibit B).

15. The FCC Orders dated [in] March 2020 expressly required the parents to enrol [Child 1] at [School 1] for her Year 6 and Year 7 education (see folio 140, Exhibit 1).

16. Ms Cherrill provided evidence as to the amount of [Child 1’s] tuition fees at [School 1] for Year 9 in 2022 ($6,169 – see folio 376, Exhibit 1) and Year 10 in 2023 ($6,848 – see A11, Exhibit A). [Child 1’s] cost of a child reflected in the current assessment for the period 1 September 2021 to 30 September 2022 is $26,976 and $27,630 for the period 1 October 2022 to 31 December 2023.

17. The Tribunal finds the cost of educating [Child 1] at [School 1] for Years 9 and 10 at $6,169 and $6,848 respectively, significantly affect the cost of maintaining the child, making the case special and a ground for departure established.

Just and equitable considerations

1. The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and the children.  Regard must be had to a variety of factors such as the needs of the children, the parents’ requirements and any hardship that would be caused by departing or not departing from the formula. The Tribunal has considered each of the factors in subsection 117(4) and does not propose to provide detailed reasons about each of the considerations but will discuss those it regards as pertinent in this review.

2. Both parents provided Statements of Financial Circumstances (SOFCs).

3. Ms Cherrill affirmed the contents of her undated SOFC at A1 to A9, Exhibit A at the hearing, listing her occupation as [an occupation 1] employed by the [Agency 1] on a gross weekly salary of $2,104, annualised to $109,408. In addition, she receives family assistance payments of $70 per week and child support from Mr Cherrill of $355 per week for [Child 1]. She gave evidence that she also receives funds under the National Disability Insurance Scheme (NDIS) for [Child 1’s] hearing disability which covers the cost of the child’s hearing aids and speech therapy support costs.

4. She lists assets totalling $29,362 comprising a 2018 model [Vehicle 1] valued at $20,000, household contents valued at $8,000 and modest bank savings of $1,362. She gave evidence that she resides in rented premises with her adult son, [named], a student with a part time job, earning approximately $150 per week.

5. Her current superannuation savings are listed at $364,462 and she reports liabilities comprising a [Bank 1] car loan of $7,000 for which she makes weekly repayments of $122, modest credit card repayments of $75 per week, income tax deductions from her salary of $543 per week and superannuation contributions of $104 per week.

6. Her weekly household expenses totalling $1,484 included rental of $550 which she said in evidence at the hearing had increased to $620 per week since April 2023, school fees for [Child 1] of $140 per week (annualised to approximately $7,280) and motor vehicle and household contents insurance premiums of $152 per week.

7. Mr Cherrill did not seriously challenge Ms Cherrill’s SOFC evidence.

8. He provided a SOFC dated 6 December 2022 (see B1 to B9, Exhibit B) and, post hearing, two amended schedules of his weekly household expenses with supporting invoices and explanatory summaries (see B88 to B101, Exhibit B).

9. His ‘updated’ average weekly expenses schedule at B95, Exhibit B, lists household expenses totalling $2,666.13 including weekly food expenses of $280, medical and pharmaceutical expenses of $210, hobbies and entertainment costs of $200, gardening and house/pool cleaning charges of $50, storage charges of $66.65 and the shortfall of expenses over rental income on his investment property at [Town 1] resort of $201.48 per week.

10. His submissions at the hearing centred on the excess of his listed weekly household expenses of $2,666.13 over his gross average weekly income as [an occupation 2] employed by the [Agency 1] of $2,470 (annualised to $128,440) which he asserted adversely affected his capacity to support himself and contribute to [Child 1’s] private education costs.

11. At the hearing, he affirmed his initial SOFC at B1 to B9 referred to above. He confirmed his reported weekly income of $2,470 from his listed occupation as an [Agency 1] [occupation 2]. In response to direct questioning by the Tribunal, he denied having re-partnered, implying he lived alone. He confirmed his only source of income was his [occupation 2’s] salary referred to above and that he had no real estate assets. His 6 December 2022 SOFC reported no real property assets, listing only his bank savings of $240, his 2010 model [Vehicle 2] motor vehicle valued at $5,000 and household contents valued at $3,000 – total assets of $8,240. He reported superannuation savings of $305,000, gave evidence of having incurred legal fees of $96,000 and other unspecified liabilities of $28,000, reflected in his SOFC together with credit card debt reported at $4,980, making total liabilities of $100,980.

12. He listed weekly personal expenditure totalling $1,341, comprising income tax deductions from his salary of $677, superannuation contributions of $124, life insurance and health care premiums totalling $85, child support payments of $355 and credit card payments of $100.

13. Ms Cherrill challenged his listed assets, claiming she had evidence of ownership of two real estate properties at [Town 2] and [Town 1], for which she provided documentary evidence at the Tribunal’s direction post hearing, reflecting Mr Cherrill’s residential property at [a Town 2 address] in which she said he resides with his current partner and a rental property at [an address in Town 1], which she said in her evidence Mr Cherrill purchased in May 2019 and from which he has derived rental of $560 per week since August 2022.

1. In response to further questioning by the Tribunal regarding Ms Cherrill’s evidence regarding these properties, Mr Cherrill acknowledged and agreed he owned these properties and that he had failed to disclose them in his SOFC because he was concerned Ms Cherrill would ‘take them off him’.

2. Ms Cherrill provided title searches confirming Mr Cherrill’s ownership of these properties (see A13 and A14, Exhibit A) together with evidence of comparable properties suggesting values in the range of $612,000 to $650,000 for the [Town 2] property and $507,000 for the [Town 1] property (see A15 to A19, Exhibit A). Mr Cherrill did not challenge this evidence.

3. Post hearing, Mr Cherrill has provided detailed summaries of the financial structure supporting his [Town 2] residential and [Town 1] rental properties (see B94, Exhibit B). He also provided copies of various invoices and receipts for rates assessments, Body Corporate levy charges and other outgoings on his properties together with invoices for storage charges in support of his submissions regarding his self-support/ personal living expenses and the two further schedules of weekly household expenses, the latest version (at B95, Exhibit B) reflects expenses totalling $2,666.13.

4. Ms Cherrill provided submissions, post hearing, in response to Mr Cherrill’s latest schedule of personal household expenses reported at B95, referred to above, challenging among other items, his food expenses, entertainment, medical and pharmaceutical costs and his education expenses relative to his contribution to [Child 1’s] private school fees (see her comments at A21 to A23, Exhibit A).

5. The Tribunal has scrutinised his expenses reflected in the schedules he has submitted and, in addition to Ms Cherrill’s challenged items, has noted his inclusion of storage costs and the shortfall in rental income from his investment property at [Town 1], neither of which are relevant household expenses. Having regard to his evidence that he has not re-partnered and that he is presumably living as a sole parent in his [Town 2] property, his food and general living expenses compared with Ms Cherrill’s are disproportionately and unjustifiably high.

6. Having regard to his deliberate failure to truthfully and accurately report his asset and income position with respect to his [Town 2] and [Town 1] properties, and the distorted inclusion of ‘expenses’ such as the rental shortfall in his weekly household expenses schedules, the Tribunal finds his evidence as to his income, property and financial resources available to him for child support and his living expenses unreliable and accepts Ms Cherrill’s submissions challenging his expenses. The Tribunal concludes that his expenses, after adjustment, are more likely to be in the range of approximately $1,484 to $1,758 (an annualised range of between $77,168 and $91,416).

7. There was no evidence before the Tribunal to suggest that either parent has special needs or that the child, [Child 1] has special needs which are not already being met from other sources as noted above.

Conclusions

1. The Tribunal has found both parents intended [Child 1] should be educated privately, and that her private education costs at [School 1] for the 2022 and 2023 school years of $6,169 and $6,848 significantly affect the costs of maintaining the child, making the case special and a ground for departure established.

2. The Tribunal has considered the parents’ respective occupations and financial positions as set out above and is satisfied an apportionment of responsibility for the costs of [Child 1’s] private school fees of 50% to each parent is appropriate and reasonable. The Tribunal also considers it appropriate and reasonable to commence the departure from 1 January 2022, and that the determination of Mr Cherrill’s contribution to [Child 1’s] private school fees should continue until a terminating event with respect to her child support assessment eligibility occurs or she ceases to attend [School 1].

3. The Tribunal will therefore increase Mr Cherrill’s annual rate of child support for the period 1 January 2022 to 31 December 2022 by $3,085 ($6,169 / 2 = $3,084.50 – rounded up to $3,085), and for the period 1 January 2023 to 31 December 2023, Mr Cherrill’s annual rate of child support will be increased by $3,424 ($6,848 / 2 = $3,424) in recognition of his 50% contribution to [Child 1’s] school fees. For each of the academic years of 2024, 2025 and 2026, Mr Cherrill’s annual rate of child support will be increased by 50% of the invoiced [School 1] tuition fees for those years as notified to Child Support by Ms Cherrill within 7 days of receipt of the school fee invoices for those years.

4. The Tribunal is satisfied a departure in these terms is just and equitable in the circumstances and will not cause undue hardship to either parent or the child in the assessment, [Child 1].

Otherwise proper

1. The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effects of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents rather than the community have the primary duty to maintain a child. Increasing the annual rate of child support payable by Mr Cherrill to reflect his contribution to the school fees of the child, [Child 1], as set out above, will result in an appropriate apportionment of financial responsibility between the parents and the community. Such a result would be otherwise proper.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that:

·      From 1 January 2022 to 31 December 2022 Mr Cherrill’s annual rate of child support payable is increased by $3,085; and

·      From 1 January 2023 to 31 December 2023 Mr Cherrill’s annual rate of child support payable is increased by $3,424; and

·      From 1 January 2024 until a terminating event occurs in relation to [Child 1], Mr Cherrill’s annual rate of child support payable is increased by 50% of the invoiced [School 1] tuition fees for those years.

The Tribunal notes Ms Cherrill should notify the Child Support Registrar within 7 days of receipt of the school fee invoices commencing from 1 January 2024.