Dashwood and Donelan (Child support)

[2024] AATA 876

Dashwood and Donelan (Child support) [2024] AATA 876 (13 March 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/BC027010

APPLICANT:  Ms Dashwood

OTHER PARTIES:  Child Support Registrar

Mr Donelan

TRIBUNAL:  Member P Jensen

DECISION DATE:  13 March 2024

DECISION:

The decision under review is set aside and, in substitution, Mr Donelan’s rate of child support payable is varied to $5,000 per annum from 30 January 2023 to 31 December 2026.

CATCHWORDS

CHILD SUPPORT – departure determination – school fees of the child – special needs of the child – a ground for departure established – decision 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

Introduction

1. Ms Dashwood and Mr Donelan are the parents of [Child 1] who was born in 2011 and [Child 2] who was born in 2013. A child support case was registered with Services Australia – Child Support (Child Support) from 30 January 2023. Ms Dashwood has been recorded as providing 73% care and Mr Donelan has been recorded as providing 27% care for the children since the child support case was registered.

2. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care for the children. When the child support case was registered the administrative assessment was based on Ms Dashwood’s 2021–22 adjusted taxable income of $157,444 and Mr Donelan’s 2021–22 adjusted taxable income of $59,792. The administrative assessment was nil; neither parent was required to pay child support to the other parent.

3. The Act also provides for a departure from the administrative assessment in certain circumstances. On 23 March 2023, Ms Dashwood lodged a departure application. An original decision-maker granted the application and varied Mr Donelan’s rate of child support payable to $6,000 per annum from 1 June 2023 to 31 December 2024. Ms Dashwood objected to that decision. An objections officer allowed the objection, set aside the original decision and increased Mr Donelan’s rate of child support payable by $2,808 per annum (which increased the rate from $0 to $2,808 per annum) from 30 January 2023 to 31 December 2024. Ms Dashwood applied to the Tribunal for further review. I heard the matter on 13 March 2024. Ms Dashwood attended the hearing in person. Mr Donelan attended by conference phone. Prior to the hearing, Ms Dashwood applied to be accompanied by a support person, namely her husband, Mr  [A]. Mr Donelan did not oppose the application and I granted it. Mr [A] did not participate in the hearing.

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

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

   (ii)... it would be:

   (A)just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   (B)otherwise proper;

   to make a particular determination under this Part; …

A ground for departure

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

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

   …   

   (ia)because of special needs of the child …

2. [Child 1] has a diagnosis of autism spectrum disorder Level 2 for social communication and Level 1 for restricted repetitive behaviour and anxiety. [Child 1]’s treating paediatrician noted on 20 June 2023:

   [Child 1] requires ongoing support for his lifelong disability of ASD. [Child 1] is receiving NDIS funding support for this capacity building. He requires regular allied health therapy intervention in particular psychological intervention for his anxiety, autism-related cognitive rigidity, self-esteem, and parental support for behavioural challenges. [Child 1] will also require other therapy intervention such as speech and language therapy (for development or pragmatic speech and language communication), occupation therapy (executive functioning, sensory issues) should the needs arise at any point of his life. [Child 1] will also benefit from evidence-based therapy intervention using music therapy or music related intervention.

3. [Child 2] has a diagnosis of specific learning disorder with impairment in reading and written expression (dyslexia) and attention deficit hyperactivity disorder. The same treating paediatrician noted in the same report:

   [Child 2] requires high level of educational support due to his learning disorder dyslexia and ADHD. He requires ongoing speech pathology therapy support that caters for his language and literacy skill development. … [It] is crucial to provide extra academic support (such as private tutoring and other educational resources and materials) …

4. Both parents agreed that the children have special needs. Ms Dashwood provided documentary evidence of the associated costs that she has incurred from time to time. During the hearing she said that her current annual out-of-pocket costs (after private health insurance rebates and Medicare rebates) are:

   Speech therapy for [Child 2]:  $2,550

   Soccer for both boys:  $1,800 + $850 = $2,650

   Drumming for [Child 1]:  $2,115

   Maths tutoring for both boys:  $2,480 x 2 = $4,960

   Medication for [Child 2]:  $960

   Paediatric care for both boys:                  $495 + $990 = $1,485

   Psychological treatment for [Child 2]:  $4,100

5. To obtain the private health rebates, Ms Dashwood has to maintain private health insurance. Her husband has two children from a previous relationship. The private health insurance for the family of six is $6,132 per annum, and $2,044 is referrable to [Child 1] and [Child 2]. In summary, Ms Dashwood submitted that the costs associated with the boys’ special needs totalled approximately $20,864 per annum.

6. Mr Donelan said that [Child 2] does not require speech therapy. Ms Dashwood referred to [Child 2]’s treating paediatrician’s statement that he does require the therapy. I accept the expert’s evidence on that issue. Mr Donelan said he could not afford to contribute to the associated costs. That issue is addressed below.

7. I noted that many children play sport and are involved in other extracurricular activities. Ms Dashwood said the children’s soccer and [Child 1]’s drumming have important beneficial effects. That may be so, but the activities and the associated costs do not constitute, or contribute to an overall finding of, special circumstances for the purpose of Reason 2.

8. Mr Donelan did not take issue with the other costs that Ms Dashwood had listed. They total approximately $16,099 per annum. The precise costs vary from time to time but Ms Dashwood submitted, and I accept, that the costs she listed are a fair representation of the ongoing costs. Reason 2 is established in respect of those costs.

9. Subparagraph 117(2)(b)(ii) of the Act, commonly referred to as Reason 3, provides as a ground for departure:

   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 …

10. The parents separated in August 2016. Prior to their separation, they lodged an online application for [Child 1] to attend [a] College in due course. Ms Dashwood said that they also applied for [Child 1] to attend [College 1] in due course, although she did not provide any supporting documentary evidence. Mr Donelan could not recall if, prior to their separation, they had applied for [Child 1] to attend [College 1], but he added that they “probably” had.

11. Ms Dashwood said that prior to the parents’ separation, she had expected to find “the best place for the children”, which could have been either a public or private school. At different times, Mr Donelan has given different evidence concerning his expectations prior to the parents’ separation, but he has been clear that after their separation he did not want the children to attend a private school because he believed he could not afford to contribute to the associated costs. During the hearing, Mr Donelan said that prior to the parents’ separation they had been “researching options”, but his preference had been for the children to attend a public school. He acknowledged that he had not told Ms Dashwood, at the time, that he had not wanted the children to attend a private school.

12. In October 2016, just two months after the parents’ separation, they both signed a parenting plan which included the following:

    An education fund to be set up for the children to ensure a contribution of $2,500 per parent is provided to the fund each financial year.

13. In November 2018 the parents signed another parenting plan which included the following:

    An education fund has been established for the children to ensure a contribution of at least $2,500 (to the end of 2018) increasing to $5,000 per parent is provided to the fund each year, starting February 2019 after [Child 2] starts prep.

14. [Child 1] started attending [College 1] in 2023 when he commenced Year 7. If both parents contributed to the fund pursuant to the two parenting plans, there would have been approximately $50,000 in the fund at the end of 2022, and a total of approximately $110,000 would be deposited into the fund by the time [Child 1] completes Year 12 and [Child 2] completes Year 9. I noted that the funds that the parents had planned to set aside for the children’s educations appeared to significantly exceed the likely costs of the children’s attendance at a public school. Mr Donelan noted that the fund was called an education fund; it was not confined to the costs associated with secondary school education. It could extend to the costs associated with university educations. I accept that point, but the creation of the fund, coupled with the applications for enrolment at private schools, suggests that the parents’ expectations concerning the children’s educations extended to private secondary schools including [College 1]. The children are being educated at that school. I find that by attending that school, they are being educated in the manner that was expected by the parents. Mr Donelan stated that he could not afford to contribute to the associated costs. That issue is addressed below.

15. [Child 1] attended Year 7 at [College 1] in 2023. The tuition fees were $12,660.

16. [Child 1] is attending Year 8 and [Child 2] is attending Year 5 at [College 1] in 2024. The tuition fees with a sibling discount are ($13,790 + $11,020) x 0.9 = $22,329.

17. The children are being educated in a manner that was expected by the parents and the associated tuition fees significantly affect the costs of maintaining those children. Ms Dashwood is paying those fees. Those circumstances as a whole constitute special circumstances. Reason 3 is established.

Just and equitable

1. The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

2. Ms Dashwood is a [occupation] in full-time employment. Her 2021–22 adjusted taxable income was $157,444. She ceased working for one employer and commenced working for another employer in or around November 2022. She received a termination payment of $29,798. Her 2022–23 adjusted taxable income, including her termination payment, was $208,797. In November 2023 she provided an estimate of income of $162,788 per annum. Her only income is her wage.

3. Ms Dashwood and her husband own their home which she estimated is worth $1,100,000. The associated home loan has a balance of approximately $480,000. She has no other debts. She has savings of approximately $8,000. The education fund has a balance of approximately $52,000. According to Ms Dashwood’s records, Mr Donelan has contributed $13,262 to the fund since its inception.

4. Mr Donelan is a [occupation]. He works in a [workplace]. His 2021–22 adjusted taxable income was $59,792. His 2022–23 adjusted taxable income was $68,157. Ms Dashwood submitted that Mr Donelan should be assessed on his earning capacity. I reminded her of the legislative test that must be satisfied before regard can be had to a parent’s earning capacity for child support purposes: subsection 117(7B) of the Act. She acknowledged that that test was not satisfied in respect of Mr Donelan’s circumstances. In my opinion, that acknowledgement was properly made.

5. Mr Donelan purchased a property (the Investment Property) in or around 2017. He initially lived in the Investment Property. He subsequently became partnered with Ms [B] and they purchased a house (the House) in or around 2019. [Ms B] contributed $50,000 and Mr Donelan did not contribute any cash to the purchase of the House. They lived in the House. The Investment Property was leased to tenants.

6. In August 2023, Mr Donelan sold the Investment Property and, after discharging the associated loan and meeting other expenses, he was left with $172,500 (although he noted that he would be required to pay capital gains tax of $10,000 to $20,000 in due course). He chose to credit the $172,500 against the loan in respect of the House. He acknowledged that he could have set some of the money aside to meet other expenses such as the children’s special needs and tuition costs.

7. Mr Donelan completed a Statement of Financial Circumstances in November 2023. According to that document, [Ms B] earned approximately $78,000 per annum. Mr Donelan and [Ms B] had minimal savings. They have one child, [Child 3], who was born prematurely and has been diagnosed with a chronic [disease].

8. Mr Donelan completed a second Statement of Financial Circumstances in March 2024. He and [Ms B] separated in December 2023. [Ms B] and [Child 3] are living in the House. Mr Donelan is living in a “granny flat” that is owned by his aunty and uncle. Mr Donelan said he continues to pay half the home loan repayments and half the utility expenses in respect of the House. He is not paying rent, and is not required to pay rent, in respect of the granny flat. He said that he and [Ms B] plan to sell the House and [Ms B] plans to move to Tasmania with [Child 3]. Everyone currently lives in Queensland. Mr Donelan calculated that if he and [Ms B] were able to divide their matrimonial assets amicably, and if they divided their assets equally and kept transaction costs to a minimum, he would receive about $250,000 net. However, he said that [Ms B] currently believes that she should receive more than half of the matrimonial assets. In any event, he acknowledged that he could set some of the money from the future property settlement aside to assist in meeting the children’s special needs and tuition costs, but he explained that the funds from the property settlement would be needed to buy another home for himself and for his three children, when they visited. He hopes to buy a two-bedroom apartment. In my opinion, a balance needs to be struck between Mr Donelan’s capacity to meet his current ongoing financial obligations and his desire to use his capital to purchase another home.

9. Mr Donelan suffers from depression. In his second Statement of Financial Circumstances he wrote: “I have been in and out of mental health units several times recently. As a result I have no sick leave, hence have lost several thousand in wages recently.” At the hearing he stated, and Ms Dashwood confirmed, that he had been an in-patient of mental health units on several occasions, with the most recent stay being of six to seven days’ duration in December 2023.

10. When Ms Dashwood lodged her application to register a child support case she also elected to not have Child Support collect whatever child support might become payable; an arrangement commonly referred to as “opting out” or “private collect”. To date, the matter remains private collect. The decision under review requires Mr Donelan to pay $2,808 per annum in child support from 30 January 2023. At the hearing, Ms Dashwood confirmed that Mr Donelan was up to date with his payments to her. That fact hints at Ms Dashwood and Mr Donelan’s unique relationship. Notwithstanding their disagreement concerning what might constitute a fair rate of child support payable, they both conducted themselves with commendable respect towards each other throughout the hearing. This was particularly apparent when discussing what the parents had expected concerning the manner in which the children would be educated.

11. On 8 December 2021, as part of an exchange of emails, Mr Donelan informed Ms Dashwood:

    I cannot financially support [Child 1] and [Child 2] if they were to go to a private school, or even a public school.

    My preference is that they go to a state high school.

12. On 21 April 2022, Ms Dashwood and Mr Donelan signed a [College 1] enrolment agreement for [Child 1]. The following day Ms Dashwood emailed the enrolment agreement to [College 1], with a copy to Mr Donelan, and she noted:

    Please note that Mr Donelan and myself have a shared care arrangement for [Child 1]. We do not have any court orders in place.

    Mr Donelan has advised me that, at this time, he will not be providing any contribution towards school fees levied by the school for [Child 1]’s secondary studies. In this case, and at this time, I will assume sole responsibility for all fees levied.

    This of course does not preclude Mr Donelan from making contributions in the future.

13. Ms Dashwood subsequently requested contributions from Mr Donelan towards the costs of the children’s special needs and some minor school expenses. She noted that Mr Donelan had continued to fall behind in his contributions towards the education fund. As noted above, she ultimately applied to register a child support case and then she applied for a departure decision. During the hearing, Mr Donelan said that Ms Dashwood had misled him. (Even his use of the word “misled” was commendably restrained.) In broad terms, Mr Donelan believes that Ms Dashwood undertook to pay [College 1]’s fees and he signed the enrolment forms on that basis, but once the forms were signed, Ms Dashwood started taking steps to have him contribute to those fees. I infer from Ms Dashwood’s submissions, discussed below, that she acknowledges that Mr Donelan has a limited capacity to contribute to the children’s expenses but he retains some capacity and, further, he had previously agreed to contribute to the children’s education expenses (including their private school expenses, if it transpired that they ultimately attended a private school). It is also worth noting that even if the parents had reached an agreement whereby Ms Dashwood would pay all the private school fees and Mr Donelan would never contribute to those fees — and I do not find that they reached such an agreement — such an agreement, while relevant, would not determine the issue. Parents sometimes reach agreements which, when viewed objectively, are not fair.

14. The children’s special needs costs and [Child 1]’s tuition costs during 2023 totalled approximately $16,099 + $12,660 = $28,759. The children’s special needs costs and their tuition costs during 2024 total approximately $16,099 + $22,329 = $38,428. In the absence of a departure decision, the current administrative assessment formula would use Ms Dashwood’s estimate of income of $162,788 per annum and Mr Donelan’s 2022–23 adjusted taxable income of $68,157. It would deduct a “self-support amount” of $27,508 from each parent’s adjusted taxable income. Their “income percentages” would be 80.04% and 19.96%: see the assessment notice on page 679 of the hearing papers. If the additional costs were apportioned accordingly, Mr Donelan’s rate of child support payable from 30 January 2023 to 31 December 2023 would be increased by $28,759 x 0.1996 = $5,740 per annum and his rate of child support payable during 2024 would be increased by $38,428 x 0.1996 = $7,670 per annum.

1. Ms Dashwood submitted that the original decision to vary Mr Donelan’s rate of child support payable to $6,000 per annum was fair but the decision should have commenced from 30 January 2023.

2. On the issue of the start date, Ms Dashwood applied to register a child support case on 30 January 2023. From her perspective, her attempts to resolve the parents’ child support issues without Child Support’s involvement had been unsuccessful: see, for example, her detailed letters to Mr Donelan dated 27 February 2021, 1 June 2021, 25 August 2021, 31 November 2021 [sic], 31 January 2022, 30 April 2022, 3 August 2022 and 1 November 2022 at pages 100 to 121 of the hearing papers. On 24 February 2023, Child Support wrote to both parents and informed them that it had decided to register a child support case. On 23 March 2023, Ms Dashwood lodged a departure application, i.e. she promptly lodged the departure application. It is appropriate to make a departure decision with effect from 30 January 2023.

3. On the issue of the rate of child support payable, Ms Dashwood noted that [Child 2] started attending [College 1] in 2024; the children’s combined costs have increased significantly since the original decision-maker’s departure decision and the objections officer’s departure decision were made. Ms Dashwood acknowledged that Mr Donelan’s daughter, [Child 3], has special needs and Mr Donelan is contributing to the associated costs. She noted that she had been providing more than her recorded percentages of care for [Child 1] and [Child 2]. Ms Dashwood and Mr Donelan confirmed during the hearing that Mr Donelan had only provided one night of care during the preceding 10 weeks. Ms Dashwood and Mr Donelan each stated that they had contacted Child Support about the change in care and they had been given the same advice: they could not report such a change in care until approximately 12 weeks had transpired. As an aside, that advice appears to be contrary to Child Support’s policy at 2.2.2 of the Child Support Guide under the heading “One-off block of 100% care”, but I am not reviewing Child Support’s care decisions.

4. Mr Donelan submitted that he could not afford to pay any child support to Ms Dashwood but, if he were required to pay child support, he could not afford to pay much more than he is already paying, i.e. not much more than $2,808 per annum. He did not quantify how much more he could afford to pay. As noted above, he is up to date with his child support payments. Ms Dashwood reiterated that in her opinion, it would be fair to vary Mr Donelan’s rate of child support payable to $6,000 per annum from 30 January 2023. She noted that she was currently providing full-time care and had been doing so for 10 weeks. She noted that the children’s costs were likely to increase over time. She indicated that it would be appropriate to make a decision with significant prospective effect, but she did not suggest a particular end date.

5. When deciding what might constitute a just and equitable decision, regard must be had to the particular circumstances of the case. Mr Donelan’s earnings are straightforward. He is living in accommodation which is provided by his aunty and uncle free of charge. He is paying half of the home loan repayments and half of the utility expenses in respect of the House, even though he is not living in the House. As at 7 March 2024 he had $1,400 in savings. He indicated that he could only afford to pay a little more than $2,808 per annum in child support to Ms Dashwood. I am satisfied that requiring him to pay much more would cause him financial hardship, and that is a matter that must be taken into account: paragraph 117(4)(g) of the Act. However, it is not determinative. Mr Donelan sold his Investment Property last year and he had the capacity to make a significant contribution towards the children’s special needs and tuition costs from the proceeds of that sale. He expects to sell the House, and if that occurs, he will once again have the capacity to make a significant contribution towards those costs. They are matters that must also be taken into account. Ms Dashwood’s submission that it would be appropriate to vary Mr Donelan’s rate of child support payable to $6,000 per annum appeared to be a concession by her that, given Mr Donelan’s particular circumstances, it would not be appropriate to adopt a purely mathematical methodology (which might result in a rate of child support payable of $5,740 per annum from 30 January 2023 and a rate of $7,670 per annum from 1 January 2024). I agree that it would not be appropriate to adopt a simple mathematical methodology. I am also concerned about Mr Donelan’s mental health which appears to have been affected by his recent separation from [Ms B] and is demonstrated, in part, in his recent hospitalisations. I am concerned that varying Mr Donelan’s rate of child support payable to $6,000 per annum, while mathematically justifiable, might add too much stress to his already stressful situation. Viewing the case as a whole, I consider it appropriate to vary his rate of child support payable to $5,000 per annum from 30 January 2023. Such a decision will create child support arrears of approximately $2,500. Mr Donelan does not have the capacity to pay those arrears immediately but the evidence indicates that he will have that capacity once the House is sold. Ms Dashwood submitted that it would be appropriate to make a decision with prospective effect, notwithstanding her expectation that the children’s costs will increase over time and noting that she is currently providing full-time care for the children. It is appropriate to make a decision with effect until 31 December 2026, thereby giving both parents some stability concerning child support. Such a decision will be just and equitable.

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 effect 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. Ms Dashwood does not receive family tax benefit in respect of the children. The proposed decision will be otherwise proper.

DECISION

The decision under review is set aside and, in substitution, Mr Donelan’s rate of child support payable is varied to $5,000 per annum from 30 January 2023 to 31 December 2026.