Davison and Davison (Child support)

[2018] AATA 538

Davison and Davison (Child support) [2018] AATA 538 (25 January 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/PC012700

APPLICANT:  Mr Davison

OTHER PARTIES:  Child Support Registrar

Ms Davison

TRIBUNAL:Senior Member R Ellis

DECISION DATE:  25 January 2018

DECISION:

The decision under review is set aside and in substitution the Tribunal decides that:

• Mr Davison paid $300 for private school fees on 6 March 2017 and 50 per cent should be credited under section 71C of the Child Support (Registration and Collection) Act 1988 being $150;

• Mr Davison paid $300 for private school fees on 20 March 2017 and 50 per cent should be credited under section 71C of the Child Support (Registration and Collection) Act 1988 being $150;

• Mr Davison paid $150 for private school fees on 27 March 2017 and 50 per cent should be credited under section 71C of the Child Support (Registration and Collection) Act 1988 being $75; and

• Mr Davison paid $1,144.96 for the home mortgage on 22 March 2017 and 50 per cent should be credited under section 71C of the Child Support (Registration and Collection) Act 1988 being $572.48.

CATCHWORDS
Child Support – Prescribed non-agency payments – Payments for school fees and mortgage – Half of the payments credited against child support liability – 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. Mr Davison and Ms Davison are the parents of [Child 1] (born February 2000). 

2. There has been a child support assessment in place since 3 March 2017 with Mr Davison being the liable parent under the assessment.  From 3 March 2017 Ms Davison has had 100 per cent care of [Child 1].

3. On 6 June 2017 Mr Davison applied to the Department of Human Services, Child Support (the Child Support Agency) for credit of payments totalling $1,536.24 against his child support liability.  These payments were associated with private school fees and the home mortgage.

4. On 20 July 2017 the Child Support Agency made the decision to refuse to credit the amount of $1,536.24 requested by Mr Davison (the original decision).

5. On 26 July 2017 Mr Davison objected to the original decision and on 5 October 2017 the Child Support Agency disallowed the objection (the objection decision).

6. On 16 October 2017 Mr Davison applied to the Administrative Appeals Tribunal (the Tribunal) for review of the objection decision.

7. The matter was considered on 25 January 2018.  Mr Davison attended the hearing in person and gave sworn evidence.  Ms Davison gave evidence on affirmation by conference telephone.  The Child Support Agency provided the Tribunal and the parties with a bundle of documents relevant to the review (97 pages).

8. Mr Davison provided the Tribunal with additional written evidence at hearing (11 pages) in the form of invoices he claimed to have paid which he also wanted credited against his child support liability.  The Tribunal explained it was not able to consider matters that were not part of the objection decision made by the Child Support Agency, however, Mr Davison claimed he had sent these additional invoices to the Child Support Agency and they had already been considered.

9. Upon review the Tribunal decided the additional documents were not relevant to the matter under consideration and did not take them into account.  The documents were returned to Mr Davison.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Registration and Collection Act) 1988 (the Act).

2. When a child support liability is registered under the Act for collection the amount payable is a debt due to the Commonwealth and must be paid to the Child Support Agency not the payee. In some circumstances the Child Support Agency may credit payments made directly to a payee or to a third party against a child support liability that is registered for collection (sections 71, 71A or 71C of the Act). The Child Support Agency refers to the credits under sections 71 and 71A as “non-agency payments” and the credits under section 71C as “prescribed non-agency payments” as this section applies to payments of the kind specified in regulation 5D of the Act.

3. The issue which arises in this case is whether or not any of the payments made by Mr Davison can be credited against his child support liability.

CONSIDERATION

1. Mr Davison told the Tribunal at hearing he had been having an ongoing battle with the Child Support Agency about a number of payments he made from 3 March 2017 to 4 April 2017 that he thought were made instead of child support.  These included school fees, the home mortgage, insurance, rates and utility bills.  He said he did not have a problem with child support but objected to paying for both child support and the other bills as he thought this was paying double.

2. Mr Davison said there had been some confusion over what he was claiming as non-agency payments and he had trouble downloading documents the Child Support Agency had required.

3. The Tribunal advised Mr Davison it would consider the payments for school fees and the home mortgage totalling $1,536.24 that were outlined in the objection decision, being:

   ·       3 March 2017 – private school fees of $300.

   ·       7 March 2017 – private school fees of $200.

   ·       22 March – mortgage repayment of $286.24.

   ·       27 March 2017 – private school fees of $150.

   ·       29 April 2017 – private school fees of $600.

4. The Tribunal notes that, in relation to the other payments such as insurance, rates and utility bills, Mr Davison could consider making a separate claim for non-agency payments.

5. In relation to the school fees Mr Davison told the Tribunal [Child 1] had started at [a] College in February 2012 and it was the intention of both parents that he attend a private school.  He said the fees for [Child 1] were approximately $9,500 in 2017 and he had an arrangement in place with the school to pay these fees whenever he could afford them.  He said he would pay various amounts at various times.

6. Mr Davison said after his relationship ended and he left the family home on 1 July 2016 he had paid all the bills including the school fees.  It was only after Ms Davison started claiming child support that he decided he could not afford school fees as well.  The Tribunal notes there has been a child support assessment in place since 3 March 2017.

7. Mr Davison told the Tribunal he only wanted to claim the payments made in March 2017 as non-agency payments and did not want to claim the payment of $600 in April 2017.  He said he had provided the Child Support Agency with a copy of his bank statement showing the payments for school fees made in March 2017 to [account name] which was [the college].

8. The Tribunal notes in evidence provided by the Child Support Agency a copy of a bank statement including 13 pages from 1 January 2017 to 10 June 2017.  There are three payments to [account name] which the Tribunal understands is the[full account name]:

   ·       6 March 2017 (transferred on 4 March) – private school fees of $300.

   ·       20 March 2017 (transferred on 18 March) – private school fees of $300.

   ·       27 March 2017 (transferred 26 March) – private school fees of $150.

9. The Tribunal notes that two of the payment dates in the bank statement (6 March and 20 March) do not correspond with the dates as outlined in the objection decision. In addition the payment Mr Davison wishes to claim on 20 March of $300 is for a different amount.  The Tribunal asked Mr Davison for an explanation and he said he was unsure why there was a difference but reiterated they were definitely the three payments he had made for school fees in March.

10. Ms Davison told the Tribunal she did not think Mr Davison should be able to claim the school fees as non-agency payments as he had signed the school enrolment form for [Child 1] and had therefore accepted the terms and conditions of this contract.  She also said the school fees were paid in arrears and so the payments Mr Davison was claiming were for fees that were prior to 3 March 2017 when child support had commenced.  Ms Davison said she had agreed to match whatever Mr Davison paid in school fees for [Child 1] and was happy to pay her share but he had never provided her with evidence of what had been paid.

11. The Tribunal notes in evidence provided by the Child Support Agency a confirmation of school enrolment form for [Child 1] signed by both Mr Davison and Ms Davison on 17 May 2010.  The form includes a clause stating the parents “agree to be jointly and severally liable to pay promptly and in advance all tuition and other fees as required”.

12. Ms Davison accepted that Mr Davison had made these payments for school fees for [Child 1] but said she had never agreed to the payments for school fees being in lieu of child support.

13. Mr Davison disputed that the school fees in question were paid in arrears.  He said he was in credit for school fees of approximately $2,500 at the end of 2016 and so the payments made in March were definitely not in arrears.

14. As Ms Davison agrees that Mr Davison was making payments for 100 per cent of the school fees in March and Mr Davison has provided evidence of three separate payments for school fees during this period totalling $750, the Tribunal is satisfied this was the amount paid for school fees in March 2017.

15. In relation to the mortgage payment of $286.24 made on 22 March 2017 Mr Davison said this was incorrect and the payment was actually $1,144.96.  The Tribunal notes in the bank statement referred to previously there is an amount of $1,144.96 transferred from one account to another on 22 March 2017.

16. Mr Davison told the Tribunal this amount was an interest only payment transferred onto the home mortgage for the month of March.  He said the home loan was approximately $380,000 and he would transfer the required payment every month but it was interest only by that stage as that was all he could afford.  He said the loan for the family home was in both names and the home itself was also in both names.  Mr Davison said he had been paying 100 per cent of the loan payments up until that date in March as at that stage the family house had not been sold.  He noted that settlement on the family home was on 5 February 2018.

17. The Tribunal asked Mr Davison why the amount he paid on the mortgage of $1,144.96 was so different to the $286.24 mentioned in the objection decision.  He said he did not understand how the Child Support Agency would think he was only claiming such a small amount for mortgage payments.  He reiterated the amount he wanted to claim was $1,144.96. 

18. Ms Davison told the Tribunal she did not think the mortgage payment should be considered as a non-agency payment because this was a separate matter and not related to child support he should be paying for [Child 1].  She said in any case there had been a surplus in the mortgage account when Mr Davison left in July 2016 and for the first few months after this the interest for the mortgage was taken out of this surplus.

19. Ms Davison also said there was no agreement with Mr Davison that he would pay the home mortgage in lieu of child support although she acknowledged that he was paying the mortgage before child support commenced and she was living in the home.  Mr Davison agreed.

20. The Tribunal notes in evidence relevant to this case Mr Davison refers to “payment was made for mortgage is 22 march for $1144.00” in an email from him to the Child Support Agency dated 13 June 2017.  The Tribunal also notes that any surplus in the mortgage account in July 2016 is not relevant to the amount Mr Davison paid in March 2017.  As Ms Davison also agrees that Mr Davison was paying the mortgage on the home in which she was living with [Child 1] and Mr Davison has provided evidence of an interest only payment on the home mortgage of $1,144.96 in March, the Tribunal is satisfied this was the amount paid on the home mortgage in March.

21. Section 71A of the Act provides for payments made by the payer of an enforceable maintenance liability to a third party to be credited against the amount payable under the child support liability. The amount paid by the payer to the third party must partially or completely satisfy a debt owed by the payee, the payer or both the payer and the payee.  It must be the intention of both parties that the payments, or part of the payments, be credited against the payer’s child support liability.

22. As Ms Davison has told the Tribunal that payments made for school fees and the home mortgage were not intended to be credited against the child support liability then section 71A of the Act does not apply.

23. Where these payments could not be credited under section 71A, they may be credited under section 71C even if there is no mutual intention. Section 71C was introduced to give payers more choice regarding the form in which child support is paid. It provides, subject to section 71D, for an amount to be credited against a payer’s child support liability regardless of the intention of the parents at the time the payment was made provided that it does not exceed 30 per cent of the amount payable and the balance of child support is paid as it becomes due and payable. Section 71C also requires that at the time payment was made, or at the time the payment is to be credited, the payer must not have at least regular care (14 per cent) of any of the children to whom the assessment applies.

24. The payment to be credited must also be a payment of the kind specified in regulation 5D of the Child Support (Registration and Collection) Regulations 1988 (paragraph 71C(1)(b)). Regulation 5D states that specified payments are payments of the following kinds:

    (a) child care costs for the child who is the subject of the enforceable maintenance liability;

    (b) fees charged by a school or pre-school for that child;

    (ba) amounts payable for uniforms and books prescribed by a school or pre-school for that child;

    (c) fees for essential medical and dental services for that child;

    (d) the payee's share of amounts payable for rent or a security bond for the payee's home;

    (e) the payee's share of amounts payable for utilities, rates or body corporate charges for the payee's home;

    (f) the payee's share of repayments on a loan that financed the payee's home;

    (g) costs to the payee of obtaining and running a motor vehicle, including repairs and standing costs.

25. In this case the Tribunal finds that the private school fees and mortgage payment made by Mr Davison are prescribed non-agency payments of the kind specified in Regulation 5D.  The Tribunal also finds that Mr Davison did not have regular care of [Child 1] at the time the payment was made.

26. The Child Support Agency may refuse to credit an amount under section 71, 71A or 71C if satisfied that, in the circumstances of the particular case, the amount ought not to be credited (section 71D).  Although the Act does not set out in detail what these circumstances might be, the Child Support Guide contains a non-exhaustive list of circumstances in which discretion to refuse to credit an amount may be exercised. 

27. Although not bound by policy as set out in the Child Support Guide, the Federal Court has held that a tribunal should take into account relevant government policy which is not inconsistent with the provisions or objects of the legislation. Relevantly in this case, the Guide states at 5.3.1, discretion to refuse to credit an amount may be exercised if “the payer is claiming credit under section 71C for expenses for the child for which they are separately responsible”.

28. Mr Davison and Ms Davison were both responsible for the private school fees for [Child 1] as both were jointly and severally liable according to the contract they signed. After considering the policy and taking into account the circumstances of this case, the Tribunal finds that only half the school fees paid by Mr Davison in March 2017 should be credited as a prescribed non-agency payment under section 71C.

29. As the Tribunal has established that loan repayments on the family home satisfy section 71C, the Tribunal finds that Mr Davison share of the mortgage payment made in March 2017 should be credited as a prescribed non-agency payment.

DECISION

The decision under review is set aside and in substitution the Tribunal decides that:

· Mr Davison paid $300 for private school fees on 6 March 2017 and 50 per cent should be credited under section 71C of the Child Support (Registration and Collection) Act 1988 being $150;

· Mr Davison paid $300 for private school fees on 20 March 2017 and 50 per cent should be credited under section 71C of the Child Support (Registration and Collection) Act 1988 being $150;

· Mr Davison paid $150 for private school fees on 27 March 2017 and 50 per cent should be credited under section 71C of the Child Support (Registration and Collection) Act 1988 being $75; and

· Mr Davison paid $1,144.96 for the home mortgage on 22 March 2017 and 50 per cent should be credited under section 71C of the Child Support (Registration and Collection) Act 1988 being $572.48.