Demitriou and Demitriou (Child support)

[2020] AATA 4278

Demitriou and Demitriou (Child support) [2020] AATA 4278 (3 August 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/PC017886

APPLICANT:  Ms Demitriou

OTHER PARTIES:  Child Support Registrar

Mr Demitriou

TRIBUNAL:Member W Budiselik

DECISION DATE:  03 August 2020

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents – not just and equitable to make a departure determination – decision under review affirmed

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. Ms Demitriou (the applicant/mother) and Mr Demitriou (the father) are the parents of a child (born in 2009) who is the subject of a child support case registered by the Department of Human Services (now, Services Australia) (the department) on 22 January 2019.

2. On 12 March 2019, the mother sought a departure determination (also known as a change of assessment) on the grounds that the administrative assessment of child support did not correctly reflect the father’s income, property and financial resources and his earning capacity.

3. At 12 March 2019 the administrative assessment in place provided that for the period 22 January 2019 to 21 April 2020 the annual rate of child support payable by the father was $435. This assessment was based on the father’s 2017/2018 adjusted taxable income of $25,214 and an adjusted taxable income of $8,668 for the mother.

4. On 3 June 2019, a senior case officer from the department considered the mother’s application and after finding a ground to depart from the administrative assessment varied the father’s adjusted taxable income to $155,000 for the period 22 January 2019 to 31 December 2020.

5. The father objected to the senior case officer’s decision. On 21 November 2019 an objections officer from the department dealt with the objection and set aside the decision made by the senior case officer. The objections officer did not find a ground to depart from the administrative assessment and decided the administrative assessment in place would apply.

6. On 22 November 2019, the mother lodged an application for review of the department’s decision with the Administrative Appeals Tribunal (the tribunal). On 25 February 2020, the tribunal conducted a telephone directions hearing (TDH) with the parents and issued directions.

7. A hearing into the mother’s application was conducted by the tribunal on 20 July 2020. The mother participated in the hearing on the phone. The father decided he did not wish to participate in the hearing. He asked that his case be considered on the papers. Prior to the hearing the department provided the tribunal and the parents with a bundle of papers (folios 1 – 602). The mother provided a bundle of papers (folios A1 – A31) and the father provided a bundle of papers (folios B1 – B65). Papers provided by the parents have been provided to the department.

8. The parents are before the Family Court of Western Australia (the Court) to resolve custody and property issues. The parents are embittered with each other. Each accuses the other of lying, deceiving Centrelink and of failing to disclose relevant information to the Court. They believe the department’s and the tribunal’s findings and decision will be to their advantage or disadvantage in Court.

9. Given the matter is in the Court the tribunal has decided to not repeat most of the assertions made by the parents to the tribunal, unless these are relevant to this decision.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act). The three issues to be determined by the tribunal are:

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

   b)   whether it is just and equitable to make a particular departure determination; and if so,

   c)   whether it is otherwise proper to make a particular departure determination.

CONSIDERATION

1. The rate of child support payable by a liable parent is usually based on an administrative assessment calculated using the relevant formula under Part 5 of the Act. This involves the application of a statutory formula which takes account of factors such as the adjusted taxable income of each parent, the number of children and the level of care provided. A parent’s adjusted taxable income for a given year is calculated according to a formula that includes a parent’s previous year’s taxable income (see section 43 of the Act).

2. Part 6A of the Act allows for a departure from an administrative assessment. The liable parent or a carer entitled to child support may apply to the Child Support Registrar (the Registrar) for a determination to depart from the child support administrative assessment under Part 6A of the Act.

3. Section 98C of the Act provides that the Registrar (and the tribunal in the Registrar’s place) may make a determination to depart from the administrative assessment if satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination. The tribunal may make one of the determinations set out in section 98S of the Act.

4. The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act. Each ground for departure is prefaced by the words, “in the special circumstances of the case”. Therefore, when considering whether a ground exists, the tribunal must be satisfied that there are “special circumstances” in the case. The phrase “special circumstances” is not defined in the Act. The Full Family Court, in the case of Gyselman and Gyselman (1992) FLC 92-279, held that:

   It is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the court will not interfere with the administrative formula result in the ordinary run of cases.

Issue a): Is a ground established to depart from the administrative assessment of child support?

The parents’ income, property and/or financial resources

1. A ground for departure exists where, in the special circumstances of the case, application of the administrative assessment of child support would result in an unjust and inequitable determination of child support to be provided by the liable parent in respect of the child because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).

The parents’ property and financial resources

16.The mother and father separated in May 2017 and divorced in April 2018. The mother advised the tribunal that, after numerous appearances at the Court, the case is listed for a three-day trial in early 2021.

17.The mother agreed all the matters she detailed in her submissions to the tribunal are those she has raised in Court. She also advised the tribunal she was in the process of subpoenaing further material for the Court in relation to other matters.

18.The tribunal presumes the father’s submissions are also known to the Court.

19.It is not appropriate for the tribunal to consider the parents’ property and financial resources at this time, because these will be considered by the Court as components of their resource pool, which will be apportioned.

The father’s income

20.The mother provided a statement which in part stated:

The [BANK 1] statement supplied to CSA by Mr Demitriou revealed multiple large cash withdrawals with no explanation. Over $30,000 transferred to [Ms A] or [Ms B], over $60,000 to parents’ accounts and money transfers to a new classic account called mums new account and other accounts that don’t seem to relate to business.

21.The [BANK 1] accounts referred to by the mother includes an [BANK 1] [account] and the transactions in the papers provided by the department cover the period 24 February 2019 to 24 May 2019. The account is in the name [COMPANY 1] Pty Ltd ([COMPANY 1]), which is the father’s company and employer.

22.[COMPANY 1] was deregistered [in] October 2019.

23.It appeared to the tribunal that, in the period 24 February 2019 to 24 May 2019, the company account was used for personal and business purposes. Debits were recorded for [(shoe seller)], [(jewellery)], [(skin care)], cash withdrawals at [a venue] and alcohol purchases. There were transfers of cash labelled to ‘mum dad’, including $7,000 on 6 March 2019 and $16,000 on 1 April 2019.

24.In the period 24 February 2019 to 24 May 2019, there were transactions in excess of $500,000 and at the end of the period there was a credit in the account of $34,508.99.

25.On 24 May 2019, the Court made an order directing the father to pay spousal maintenance at $405 per week with the first payment to be made by Friday 24 May 2019 and the last payment to be made by Friday 29 November 2019. When the Court makes a spousal maintenance order it takes account of matters set out in subsection 75(2) of the Family Law Act 1975. The factors the Court considers when making a spousal maintenance order include:

(a)the age and state of health of each of the parties; and

(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and

(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and

(d)commitments of each of the parties that are necessary to enable the party to support:

(i)       himself or herself; and

(ii)       a child or another person that the party has a duty to maintain; and

(e)      the responsibilities of either party to support any other person; and

…

(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and

(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and…

26.At the time the Court made its order for spousal maintenance the operative administrative assessment for child support required the father to pay an annual rate of child support of $435 (noting the senior case officer’s decision to vary the father’s adjusted taxable income to $155,000 was made on 3 June 2019).

27.The father has been in receipt of a Centrelink benefit (then newstart allowance) from 12 September 2019.

28.The father was assessed to pay an annual rate of $435 of child support in the period 22 January 2019 to 31 December 2020, based on an adjusted taxable income for the father of approximately $25,000. It is evident to the tribunal that based on the personal transactions on the [BANK 1] account and the Court’s spousal maintenance order, this was a significant underestimate of his income and his ability to support his child in the period from 22 February 2019 to 23 May 2019 (i.e. when the spousal maintenance order began to apply). From 24 May 2019, the father was required to pay spousal maintenance, and the tribunal is not persuaded, based on the evidence before it, that the father had the capacity to pay both the spousal maintenance liability and an additional amount of child support. Given the father is in receipt of a Centrelink payment from 12 September 2019 the tribunal finds he was no longer drawing income from the company from that date.

29.The tribunal is satisfied there is a ground to change the assessment based on the father’s income for the period 22 January 2019 to 23 May 2019.

30.The tribunal considered, based on the information before it, it would be appropriate for the father to pay child support at the rate of $405 per week from 22 January 2019 to 16 May 2019. Such a decision would increase the father’s child support liability by about $6,900.

Issue b): Is it just and equitable to make a particular determination?

31.As the tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the children, the liable parent, and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to consider the matters which are as set out in subsection 117(4) of the Act.

The proper needs of the child

1. In determining the proper needs of the child it is necessary to have regard to the manner in which the child is being educated, and in which the parents expected the child to be cared for, educated or trained, and any special needs of the child.

2. The tribunal was not presented with information that the proper needs of the child, as defined, need to be taken account of in assessing a fair rate of child support.

The income, earning capacity, property and financial resources of the child

1. The tribunal was not presented with evidence or assertions that the child has income, earning capacity, property or financial resources which need to be taken account of in assessing a fair rate of child support.

The income, property and financial resources of each parent who is a party to the proceeding

1. The parents’ property settlement is before the Court and the tribunal has already recorded that it will not consider the parents’ property and financial resources.

2. The father’s income has been dealt with earlier in these reasons for decision.

3. The mother’s adjusted taxable income at the time she sought a departure determination is recorded as $8,668.

4. When the tribunal asked the mother about the spousal maintenance order, she said she sought the Court’s order because she was suffering hardship. Initially the mother said at the time she had not received an inheritance of about $100,000 from her late mother. However, the mother later said she received the inheritance of approximately $112,000 in April 2019. 

5. The tribunal appreciates the Court will consider the mother’s inheritance when it makes a disposition in relation to the parents’ assets and financial resources.

6. Consequently, the tribunal does not intend to make a finding about the mother’s income.

The earning capacity of each parent who is a party to the proceeding

1. Paragraph 117(4)(da) of the Act requires the tribunal to consider the earning capacity of each parent. Subsection 117(7B) of the Act provides that the tribunal can only make a finding that a person has unexercised earning capacity if certain conditions are satisfied. One of the conditions is that the parent not exercising their earning capacity has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support.

2. When the mother lodged her departure application, she argued the father had unexercised earning capacity.

3. However, the mother also argues the father is working and not declaring income. The bank account indicates the father’s business was trading for the period February to May 2019.

4. The father has been in receipt of income support payments since 12 September 2019

5. The tribunal decided it did not need to depart from the administrative assessment because of either parent’s earning capacity.

The commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support himself or herself or any other child or another person that the parent has a duty to maintain

1. The tribunal is not aware of any other commitments either parent has to support another person that the parent has a duty to maintain

2. The tribunal is not aware of exceptional costs associated with the parents’ self-support.

Any hardship that would be caused to the child, or the carer entitled to child support by the making of, or the refusal to make, the order, and to the liable parent, or any other child or another person that the liable parent has a duty to support, by the making of, or the refusal to make, the order

1. The father has said he is without funds, homeless and mentally unwell.

2. The father was granted Centrelink benefits (newstart allowance) on the ground of asset hardship, which the tribunal understands means, in Centrelink’s opinion, he has unrealisable assets.

3. On 27 November 2019, the father wrote to the department setting out:

   Just for the record so my CSA bill does not keep climbing spousal maintenance of $405 per week ends on 29^th November.

   Can the date be noted within the system so I do not keep getting ongoing CSA bill shock??.

   …

   I’m not doing very well…

   I’m still bouncing around between a number of places…

51.On 15 October 2019, a doctor, Dr [A] from [a specified] Medical Centre, provided the department with a medical certificate which set out that the father suffered anxiety and depression and that he had been unfit to work since 18 October 2018 (which is when he first examined him). The doctor estimated it might take the father between three to 12 months for him to recover.

1. In February 2020, when the TDH was conducted the father had been an inpatient at [a] Hospital. The hospital’s psychiatric registrar confirmed with the tribunal that at that time the father’s presenting complaint was attempted suicide and he was being treated for a provisional diagnosis of a recurrent depressive episode.

2. The department’s papers reflected the mother’s view that the father’s illness was a ruse. However, at hearing the mother said she accepted the father was mentally ill and that she had known that from the time of their marriage. She said she was not the cause of the father’s mental illness.

3. When the department’s objections officer decision was finalised on 21 November 2019, the father had $23,497.71 outstanding in child support.

4. The tribunal accepts on the evidence before it (i.e. from Dr [A], from the psychiatric registrar at [the] Hospital and from the parents’ submissions) that the father is unwell and that he has attempted suicide. Rightly or wrongly the father attributes his illness to issues to do with his marital breakdown and subsequent dispute.

5. The tribunal’s view is that in all the circumstances it would be unfair to add to the father’s debt at this time and potentially place him at further risk of self-harm.

6. While the tribunal has concluded it is unfair to add to the father’s debt because of the associated hardship it does so knowing that the mother’s financial situation was buoyed by an inheritance from her late mother in April 2019 in the sum of approximately $100,000. The tribunal concluded this inheritance should protect the mother and child from hardship until the property settlement is resolved.

7. The tribunal took account of the fact that the Court is still to conduct a trial into some of the matters which are difficult for the tribunal to resolve, and that the Court will be able to test the evidence put to it by the parents before it makes its decision about the way the parents’ assets will be apportioned between them.

What is the tribunal’s determination?

1. Having considered all the factors set out in subsection 117(4) of the Act the tribunal decided in this case that it is not just and equitable to make a departure determination from the administrative assessment issued in accordance with the Act.

DECISION

The decision under review is affirmed.