Cowie and Brelsford (Child support)
[2019] AATA 258
•11 January 2019
Cowie and Brelsford (Child support) [2019] AATA 258 (11 January 2019)
DIVISION:Social Services & Child Support Division
REVIEW NUMBER: 2018/AC014641
APPLICANT: Mr Cowie
OTHER PARTIES: Child Support Registrar
Ms Brelsford
TRIBUNAL:Member K Millar
DECISION DATE: 11 January 2019
DECISION:
The Tribunal sets aside the decision under review and, in substitution, decides that:
· For the period 1 January 2018 to 31 December 2018:
o $7,520 is added to the costs of the child for [Child 1]; and
o $5,319 is added to the costs of the child for [Child 2].
o The resulting annual rate of child support is increased by $560 per annum
· For the period 1 January 2019 to 31 December 2019:
o $7,750 is added to the costs of the child for [Child 1]; and
o $7,165 is added to the costs of the child for [Child 2]
o The resulting annual rate of child support is increased by $560 per annum.
CATCHWORDS
CHILD SUPPORT – departure determination – costs of education - manner expected by both parents - cost of maintaining the children are significantly affected – costs relating to special needs of the child - financial resources of both parents - decision to make a departure determination - 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
Mr Cowie and Ms Brelsford are the parents of [Child 1] who is 16 years of age and [Child 2] who is 14 years of age. The children are in the care of Ms Brelsford 100% of the time.
On 2 January 2018 Ms Brelsford applied for an increase to the amount of child support Mr Cowie pays due to the costs of educating the children, who are currently attending [School 1].
To increase the child support paid by Mr Cowie on the basis of the school fees, it must be established that the costs of supporting the children are significantly affected because the children are being educated in the manner expected by their parents.
Mr Cowie does not agree there should be any increase to the amount of child support he pays. He states the children attend [School 1] on the basis that Ms Brelsford pays the fees for this school, and submits that this is reflected in the consent orders of the Federal Circuit Court dated [August] 2012.
A senior case officer declined to change the assessment of child support, and Ms Brelsford objected to this decision. The objections officer allowed Ms Brelsford’s objection to this decision and found there was a ground to depart from the administrative assessment on the basis of the school fees. The objections officer increased the amount of child support Mr Cowie pays by $6,747 for the period 1 January 2018 until 31 December 2018b and by $6,949 for the period 1 January 2019 to 31 December 2019.
Mr Cowie applied to the Tribunal for a review of this decision.
At the hearing of this matter, Mr Cowie said he had not received the documents provided by the Child Support Agency. The hearing was adjourned and Mr Cowie provide with a further copy of these documents and the opportunity to review the documents. On recommencing the hearing, Mr Cowie said he was prepared and able to proceed with the hearing. Mr Cowie is recorded in the telephone direction hearing confirming that he had received bundle of 170 pages from the Child Support Agency.
CONSIDERATION
The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act) and in the Child Support (Registration and Collection) Act 1988 (the Registration and Collection Act).
In the usual course of events, the rate of child support is based on an administrative assessment under Part 5 of the Act. The rate is calculated according to a statutory formula that takes into account factors such as the number of children, the percentage of care provided and the income of each parent.
A parent or a carer can apply to the Child Support Registrar under section 98B of the Act for a decision to depart from the administrative assessment under Part 6A of the Act. To change the administrative assessment of child support, the parent must show the matters set out in section 98C of the Act, being:
· There is one or more of the grounds for departure from the administrative assessment listed in subsection 117(2) of the Act; and
· It is just and equitable to depart from the administrative assessment; and
· It is otherwise proper to depart from the administrative assessment (section 98C of the Act).
Ms Brelsford relies on the costs of educating [Child 1] and [Child 2].
Is there a ground to depart from the administrative assessment?
In her application to depart from the administrative assessment, Ms Brelsford relied on the cost of educating [Child 1] and [Child 2]. It also became apparent during the course of the hearing that [Child 2] was also having orthodontic treatment, and both parents anticipated a further application would be made to depart from the administrative assessment.
Mr Cowie was advised that the Tribunal can consider grounds raised by the parents which do not form part of the original application, but that are apparent on the material in front of it. In the course of the hearing Ms Brelsford stated she incurs fees for orthodontic treatment for [Child 2]. Mr Cowie was specifically warned that if the Tribunal found a ground relating to the costs of educating the children was established and it was also established that [Child 2] had special needs this could result in an adverse outcome for him, specifically that the amount of child support he pays would be increased to account for both the school fees and the orthodontic costs.
School fees
The ground in subparagraph 117(2)(b)(ii) of the Act states that it is a ground to depart from the administrative assessment where, in the special circumstances of the case, the costs of maintaining the child are significantly affected because the child is being cared for, educated or trained in the manner that was expected by his or her parents.
In this context, the “manner” in which the children are educated refers to the way in which a thing (their education) is done or happens, or a kind or sort (of education) (Oxford English Dictionary). It is the type of education that must be considered and not the particular school (Wild and Ballard [1997] FamCA 41, Stark & Sherman & Anor (SSAT Appeal) [2012] FMCAfam 1184).
The manner in which the parents expected the to be educated is a finding of fact, and in the specific circumstances of the case this may mean the parents expected the children to be educated privately, or alternatively that there was an expectation that children receive a particular type of education consistent with the philosophical or religious beliefs of the parents. In this case the distinction is raised between a Catholic education and a private education more generally. In each individual case, a finding of the manner in which the children were expected to be educated will depend on evidence of the intention of the parents.
Court orders regarding [Child 1] and [Child 2]’s education
In consent orders made by the Federal Magistrates Court on 16 August 2012, the recitals state Ms Brelsford has expressed a wish that the children are given a private education, and Mr Cowie has no objections to such education on the condition that he is not responsible for the costs of the education.
Orders of the Federal Circuit Court dated 6 August 2014 discharge all previous orders in relation to the children’s education order that the children attend [School 1] and the parties sign all documents as may be necessary for that purpose on condition that Ms Brelsford is solely responsible for all direct costs associated with the children’s attendance at [School 1].
This specific order was discharged by the Court on 15 November 2017.
Further orders were made by the Federal Circuit Court on 21 March 2018, however these orders do not address the children’s education.
The costs of educating the children has previously been the subject of an application to this Tribunal where it was found that the orders of the Federal Circuit Court addressed [Child 1]’s education and specified the way in which the costs would be met. This decision further found that it was the expectation of the parents that [Child 2] attend [School 2], and made orders regarding a departure from the administrative assessment for [Child 2]’s school fees at [School 2].
The situation has now changed as the orders relating to the children’s attendance at [School 1] and that Ms Brelsford pay for these expenses have been revoked. It is not agreed how this transpired. Ms Brelsford states this was at her request and following mediation where Mr Cowie stated he no longer objected to [Child 1]’s education at [School 1], and Mr Cowie said his lawyer made submissions that this order should not be revoked.
Mr Cowie
In his response to the objection lodged by Ms Brelsford, Mr Cowie states he is not content for the children to attend [School 1], and that his preference has always been that the children attend a state school or [School 3], a Catholic school. He states Catholic schools can be distinguished from other private schools as they are not members of the Independent School Association. He sets out why he considers a Catholic schooling more appropriate for the children, including that the children attended a Catholic primary school, Ms Brelsford’s family is Catholic, it is likely that their school mates from their primary school would attend [School 3], his step-children attend [School 3] and attending this school would strengthen the bonds between the children and entitle them to sibling discounts, attending this school would allow him more frequent contact with the children and as he considers the standard of teaching excellent as his step-children attend this school.
In this statement, Mr Cowie says he is happy to contribute to the costs of the children’s education if they attend a state school and to discuss an appropriate contribution if they attend [School 3], however he has no wish to contribute to the cost of [School 1].
Mr Cowie said when the parties separated the children were attending a state primary school.
Mr Cowie is not Catholic or Lutheran. He said that Ms Brelsford wanted the children educated at a private school. He denied that his concerns about [School 1] relate to cost rather than the type of education. Mr Cowie said the order requiring Ms Brelsford to pay the fees for [School 1] was discharged at her request. He said his lawyer provided submissions on the removal of this clause and asked that it was not removed from the orders.
Mr Cowie acknowledges that as [Child 1] is going into year 12 it would do more harm than good for her to move school at this stage. On it being put to him that this could show that his current intention is for [Child 1] to remain at [School 1], he said this decision process was taken out of his hands.
Mr Cowie said he did not understand why Ms Brelsford enrolled [Child 2] in [School 1] if she cannot afford the fees.
In his submissions Mr Cowie referred to Seymour v Seymour [2009] FMCAfam846 and Barstow & Barstow [2016] FCCA 2185. In regard to Seymour, the Federal Magistrate found it was the joint intention of the parents for the children to attend a private school and for the father to pay the majority of the school fees. Leave to appeal was refused.
In Barstow, the decision before the Judge was an application about where the children should attend school, and not matters of child support. In that case, the Judge accepted the father was philosophically opposed to a private education. This is not the case here, as there is ample evidence Mr Cowie would be content for the children to attend a Catholic school, and was also content for [Child 1] to attend [School 1] on the basis that Ms Brelsford pay the cost of this education. I do not accept that Mr Cowie’s distinction between a Catholic school and other private education is meaningful to him. He is not Catholic, and the reasons he has provided for wanting the children to attend a Catholic school relate to continuity of the children’s schooling, the availability of student discounts and facilitating connections with his step-children. This does not show a philosophical preference for a Catholic school, and his distinction between Catholic schooling and other schooling was not raised at the time [School 1] was first proposed, but rather more recently when the fees for this school was put in issue for the purposes of child support.
Ms Brelsford
Ms Brelsford said she believed they both wanted a private education for the children including when they were married, but they could not afford it at that time. She said that before the orders were made by the Court in 2012 Mr Cowie did not object to the children being privately educated. On being asked how not objecting to a decision supported the contention that he intended that the children were to be educated in a particular way, she said she considered Mr Cowie had shown an intention for the children to be privately educated on many occasions, and referred to an email dated 6 August 2013 in which Mr Cowie states [Child 1] and [Child 2] have settled well at [School 2]. This email also states [Child 1] is looking forward to moving on to [School 3], and that he believes it would be in the children’s best interests to attend a school like [School 3]. He states in the email he would be prepared to pay for [Child 1] to attend [School 3] provided she live predominantly with him.
In regard to enrolling [Child 2] at [School 1], Ms Brelsford said the 2014 orders of the Court required her to enrol both children at [School 1].
Conclusion
I have very carefully considered Mr Cowie’s expectations regarding the education of the children educated in a particular manner, in particular as court orders were required to specify the children’s education. I have come to the conclusion that his strong advocacy for [School 3] shows a general intention for the children to receive a private education. I am not persuaded that there is a distinction in the circumstance of this particular case between a Catholic education and other types of private education.
As a result, I find that the children are being educated privately in the manner expected by their parents, and that this is a special circumstance, or out of the usual course of events.
The 2017 fees for [School 1] for tuition alone were $12,838 after the deduction of the sibling discount. In 2018 the tuition fees less the sibling discount were $14,915. Ms Brelsford also seeks to rely on the costs of purchasing a device for the children, however I consider that part of finding a child’s education in the general course of events and accounted for in this formula.
In the context of Ms Brelsford’s 2016/17 taxable income of $65,166 and 2017/2018 taxable income of $75,040 I am satisfied that the costs of maintaining the children are significantly affected because they are being educated in the manner expected by their parents.
It follows that a ground to depart from the administrative assessment has been established.
[Child 2]’s special needs
At hearing, Ms Brelsford said [Child 2] was undergoing orthodontic treatment that resulted in increased costs to her. Both parents said they expected further action at the conclusion of this process to address the costs of this treatment. As noted above, Mr Cowie was advised that the Tribunal can consider grounds raised on the information before it.
Ms Brelsford was given time after the hearing to provide evidence on whether [Child 2] had a special need for orthodontic treatment and if so the costs of this treatment. Mr Cowie was provided with this information and given time to provide a written response.
A ground for departure exists under subparagraph 117(4)(b)(ia) where ,in the special circumstances of the case, the costs of maintaining a child are significantly affected because of the special needs of the child.
Ms Brelsford provided a report from [Child 2]’s orthodontist which states he had a need for orthodontic treatment according to an objective rating system and this involves extraction of two teeth and braces.
Ms Brelsford provided information on the total cost for the banding being $6,460. She provided a copy of a dental payments plan showing she pays $250 per month for this treatment which commenced in October 2018. She also submitted she will received $3,000 in payments from her health insurance which is the lifetime limit for [Child 2] for orthodontic treatment. After the final submissions, but before this decision was finalised, Ms Brelsford advised she had new information that her health insurance rebate would be $3,100 and not $3,000.
Ms Brelsford says Mr Cowie has not responded to any communication from her since April 2015, but was aware from [Child 2] of the orthodontic treatment. It was also stated in the previous decision of this Tribunal that [Child 2] would require orthodontic treatment. This was raised in the previous hearing of this Tribunal. Ms Brelsford said she intended to seek a contribution from Mr Cowie after the finalisation of this application by way of a further application. Ms Brelsford states she is seeking 50% of the orthodontic costs, or $1,730 at $576 per year for three years. Given the advised increase in the rebate form health insurance, a more accurate figure is $1,680, or $560 per year for three years.
Mr Cowie acknowledges that [Child 2] requires this treatment but would like to enter a payment plan such as that entered by Ms Brelsford so that he can spread his payments over a two to three year period. He said he contacted her plan but is unable to contribute without her consent. He enquired as to whether this would be credited as a non agency payment. In seeking an order regarding payments to a third party, Mr Cowie raises matters beyond the powers of this Tribunal. In her final submission Ms Brelsford states reasons why she wants this collected through child support. As the Tribunal had already formed a conclusion on this matter, it did not have any regard to these submissions other than accepting in Mr Cowie’s favour that the amount was lesser then previously submitted.
I consider that in the special circumstances of the case where [Child 2] requires orthodontic treatment, Ms Brelsford’s costs of maintaining [Child 2] are significantly affected by his special needs. It follows this ground is also established.
Is it just and equitable to depart from the administrative assessment?
As I have found that a ground to depart from the administrative assessment due to the costs of educating the children has been established, it is then necessary to consider the factors in subsection 117(4) to determine if it is just and equitable to make a particular determination.
The nature of the duty of a parent to maintain a child
Section 3 of the Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain. In this case Mr Cowie and Ms Brelsford have the responsibility to maintain [Child 1] and [Child 2] and this has priority over all commitments other than necessary commitments.
The proper needs of the children
The children’s education and special needs have been discussed above.
The income, property and financial resources of the children
Neither parent stated the children had income, property or financial resources from which they can support themselves.
Income, property and financial resources and earning capacity of the parents
Both parents work full time and do not have interest in trusts or companies. Income from their respective employment is readily ascertained by their tax returns.
Mr Cowie has an 80% share of an additional property in [State 1] which he said is currently rented. I do not have the benefit of having his tax return before me (nor was it requested of him), however net rental losses are added back to a person’s adjusted taxable income. Nevertheless, of note is that he had been able to acquire an investment. His share of this property is worth approximately $294,400.
The necessary commitments of each parent
Mr Cowie lives with his partner and two step-children, one who is 19 years old and one who is 16 years old. His partner works. Mr Cowie says the 19 year old is dependent as he only has a part time job and does not qualify for Centrelink payments.
Mr Cowie has a mortgage on the home in which he lives and the property in [State 1]. He owes $1,000 on a credit card. He pays death and income protection premiums of 50% per week and health insurance premiums of $125 per week, however this amount would be more commensurate with family cover than individual cover and therefore could be considered to be an expense of his partner and his step-children as well as his own expense. I consider approximately $50 per week should be allowed for health insurance.
His weekly commitments amount to $907, with $104 of this being for the property in [State 1]. He has tax of $572 and $175 per week in insurance premiums. I am not satisfied the costs of the property in [State 1] or all of the health insurance premiums are necessary commitments. Excluding the rental property and two thirds of the health insurance and adding back tax of $572 results in costs of approximately $1,425 per week. His total average income is stated to be $2,189 per week, an excess of approximately $750 per week without child support.
Ms Brelsford is currently in arrears with the school fees of $22,367. She states she is required to purchase a computer for [Child 2] on him commencing in year 8 at a cost of $1,345.86.
Ms Brelsford has relocated with the children to a property owned by herself and her partner, of which she has a 25% share. Her mortgage repayments for this property are $35 per week. Ms Brelsford said she has relocated to reduce her rental costs to try and address her debt. This also means she has significant costs relating to travel to her place of work and bus fees for the children. Ms Brelsford states this is not sustainable in the long terms, and she will look at renting at a location closer to the school and her workplace when she is in a position to do so. Ms Brelsford says she is currently paying $50 per week to her sister to stay at her house two nights a week to reduce her travel, which is otherwise 40km each way.
Ms Brelsford has a car loan of $20,000 with repayments of $112 per week. She has credit card debt of $7,625 and a Centrelink debt of $1,700. She has a HECS debt of $17,566. Ms Brelsford pays health insurance of $55 per week. I am satisfied the health insurance is necessary given the orthodontic treatment required by the children, and is less than a third of that claimed by Mr Cowie.
The total costs for Mrs Brelsford and the children as listed in her Statement of Financial Circumstances are $1,675 and tax (including HECS) is listed at $437 per week which together with her insurance premiums brings her total costs to $2,167 per week. She lists her total average income as $1,939. There is a shortfall, which she says she meets through her partner’s income.
Direct and indirect costs incurred by the carer entitled to child support
In having regard to the direct and indirect costs incurred by the carer entitled to child support in providing care for the child, I must have regard to the income and earning capacity foregone by the carer entitled to child support in providing that care (subsection 117(8)).
Ms Brelsford previously worked as a school support officer and was studying full time, and has recently completed her qualifications as a teacher and now works full time as a teacher.
Hardship to the parents or the children
Mr Cowie said that if the child support remains the same or is increased he will not be able to undertake household repairs such as roof repairs and maintenance on his vehicle. He said he has been delaying general household maintenance until he know the effects on his child support.
Ms Brelsford says her biggest concern at this point in time is that the children will be ejected from [School 1], particularly when [Child 1] is entering into year 12. She said that if [Child 2] is required to leave [School 1] he will be the only one of Mr Cowie’s children or step-children not to receive a private education.
Ms Brelsford says she suffered a back injury in a motor vehicle accident and was compensated for this injury. She receives physiotherapy and massage however she has moved further from her work and the school to save rental costs.
At this point in time, the hardship to the children in changing schools outweighs the hardship to Mr Cowie in being unable to undertake household repairs. Ms Brelsford has relocated away from her work and the school to try and meet the cost of the school fees. In contrast Mr Cowie has been able to accumulate further assets in [State 1], albeit with a significant mortgage.
Other matters
Mr Cowie referred repeatedly in his submissions and oral evidence to paying 100% of the child support. This is a misunderstanding that deserves correction, as Mr Cowie submitted that any addition to this amount would be in addition to him paying 100% of the child support for the children.
Ms Brelsford is recorded as having 100% care of the children. The care of the children is only one component of the administrative formula and does not result in Ms Brelsford bearing no costs for the children. According to the administrative assessment, even at 100% care and at the respective incomes of the parties, the cost of each child is $16,907, and a total of $33,814. In the absence of a departure from the administrative assessment, the annual rate of child support is approximately $23,000. This is less than 100% of the costs of the children as assessed under the administrative formula.
The particular determination
A determination can be made varying the costs of the children under s.98S(1)(j) of the Registration and Collection Act.
Mr Cowie was also advised that a common approach taken in looking at taking into account the costs of educating the children and any special needs was to add these costs to the costs of the children in the formula, which would then allocate these costs in accordance with the formula and the respective income of the parents. He was advised this may result in an increase to the child support he pays that would be higher than that in the decision of the objections officer.
Having considered all of the factors in subsection 117(4), in particular the relative financial position of each of the parents, I am satisfied that the costs of educating the children should be borne by the parents in proportion to their income. I am not satisfied I should add costs such as the ICT levy, capital levy and electives should be included. In 2018 this results in adding $7,520 to the costs of the child for [Child 1] and $5,319 for [Child 2]. In 2019 it results in adding $7,750 to the costs of the child for [Child 1] and $7,165 for [Child 2]
As the parents both submitted payment by Mr Cowie of 50% of the orthodontic appropriate, this is the determination relating to this ground tested. This results in an increase of a further $560 per annum for three years for [Child 2]’s orthodontic costs.
This results in an annual rate of child support for the child support period ending 30 November 2018 of approximately $32,400 or $623 per week per week. This is less than the excess of Mr Cowie’s income over his necessary commitments.
For the child support period commencing 1 December 2018 this result in an annual rate of approximately $33,400 or $642 per week. The annual rate is only minimally increased due to the increase in Ms Brelsford’s income for the 2018 financial year. This again is less than the amount of Mr Cowie’s necessary commitments.
[Child 1] completes her secondary education at the end of 2019 and the child support assessment ends on her 18th birthday or if an extension is sought on the last day of her secondary schooling. Ms Brelsford applied for the departure from the assessment on 2 January 2018. Prior to this date, the child support payable was governed by a previous decision of the Tribunal.
Given the application was lodged 2 January 2018 and [Child 1] finishes her secondary education at the end of 2019, it is proportionate to consider the child support payable for the 2018 and 2019 calendar years. While this does leave one payment for [Child 2]’s orthodontic expenses, the financial position of the parties may again be considered at this point in time.
Is it otherwise proper to make a particular departure determination?
75. The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Act.
76. Subsection 117(5) of the Act sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination. Subsection 117(5) focuses on the balance of support carried between the parents on one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. Paragraph 117(5)(b) of the Act means that the Tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support.
Neither parent receives government assistance and this consideration does not apply.
DECISION
The Tribunal sets aside the decision under review and, in substitution, decides that:
For the period 1 January 2018 to 31 December 2018:
o$7,520 is added to the costs of the child for [Child 1]; and
o$5,319 is added to the costs of the child for [Child 2].
oThe resulting annual rate of child support is increased by $560 per annum
For the period 1 January 2019 to 31 December 2019:
o$7,750 is added to the costs of the child for [Child 1]; and
o$7,165 is added to the costs of the child for [Child 2]
oThe resulting annual rate of child support is increased by $560 per annum.
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