Devoe and Devoe (Child support)

[2021] AATA 697

Devoe and Devoe (Child support) [2021] AATA 697 (4 February 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/MC019668

APPLICANT:  Mr Devoe

OTHER PARTIES:  Child Support Registrar

Ms Devoe

TRIBUNAL:Member Y Webb

DECISION DATE:  04 February 2021

DECISION:

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

• The previous departure determination of 24 January 2019 is ended on 30 April 2020; and

• for the period 1 May 2020 until a terminating event occurs in relation to both of the children’s entitlements to child support, Mr Devoe’s adjusted taxable income is varied to $100,000 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents – reduction in income due to ill health – decision under review set aside and substituted

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. This review relates to the issue of child support regarding the children of Mr Devoe and Ms Devoe.  The children are aged 17 and 15.  According to Services Australia’s (Child Support Agency) records the children are in the 62% care of Ms Devoe and the 38% care of Mr Devoe.

2. The child support case was registered with the Child Support Agency in June 2012 and has been collectable by the Agency since November 2012. 

3. On 22 April 2020, Mr Devoe applied to the Child Support Agency for a change to the administrative assessment on the basis of Reason 8A.

4. At the time of Mr Devoe’s application for a change to the assessment a previous change of assessment decision was still in place; that was a decision of an objections officer made on 24 January 2019.  That decision varied Mr Devoe’s adjusted taxable income to $200,870 per annum from 16 August 2018 to 14 November 2018; varied his adjusted taxable income to the minimum rate between 15 November 2018 and 15 February 2019; and varied his adjusted taxable income to $200,870 per annum from 16 February 2019 to16 August 2021.  (The decision also varied Ms Devoe’s adjusted taxable income to $34,812 for the period 16 August 2018 to 31 October 2019.)

5. On 6 May 2020, a Child Support Agency officer decided that no Reason had been established and therefore the application was refused.  Mr Devoe objected to that decision but on 28 July 2020 his objection was disallowed, the objections officer finding that no Reason had been established.  The assessment therefore reverted to the decision made on 24 January 2019. 

6. On 14 August 2020 Mr Devoe requested review by the Administrative Appeals Tribunal (the Tribunal).

7. A telephone directions hearing was conducted with both parents on 29 October 2020.

8. Mr Devoe and Ms Devoe attended the hearing by way of a telephone conference on 4 February 2021.  Both gave sworn evidence.

DOCUMENTARY EVIDENCE

1. The Tribunal had before it a number of documents, organised into exhibits as set out in the attached Schedule. The Tribunal had regard to all of this evidence and refers specifically to particular items in this Statement of Reasons.

ISSUES

1. The central issues for the Tribunal to determine in this case are:

   · Whether one or more of the grounds for departure referred to in subsection 117(2) of the Child Support (Assessment) Act 1989 (Assessment Act) exist; and if so,

   ·      Whether it would be:

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

   (b)   otherwise proper

   to make a particular determination to depart from the administrative assessment of child support.

2. Section 98J of the Assessment Act provides that a person who has made an application for a change of assessment is not precluded from making a subsequent application for a change of assessment if because of circumstances existing at the time of the subsequent application there are grounds from departing from the administrative assessment.

3. As observed by the Family Court in Ignacio v Ignacio [2016] FamCA 50 at [106]:

   The Assessment Act (s 98J) is not so broad as to enable parties to engage in child support assessment departure disputes whenever they feel inclined, irrespective of surrounding circumstances. Multiple departure applications are possible, but subsequent departure applications are only permitted when the circumstances at the time the subsequent application is made warrant it.

4. The question for the Tribunal therefore is whether the application is grounded by circumstances existing at the time the (subsequent) application was made. That point in time was 22 April 2020. The enquiry of the Tribunal in this review therefore is materially different to a review of a decision on a change of assessment application that is not made when a departure determination is already in force. In this case, the Tribunal must decide whether a ground is established at 22 April 2020, by reference to the assessment then in force. If the ground is established by reference to the time the subsequent application was made the Tribunal will then have the usual discretion to take into account all the matters provided for in subsection 117(2) of the Assessment Act, including the discretion to apply any new determinations retrospectively up to 18 months prior to the date of the subsequent application and indefinitely into the future. Before the Tribunal can consider this however, it must first be satisfied that a ground is established.

5. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Each ground for a departure from the administrative formula is prefaced by the words “in the special circumstances of the case”. Therefore, when considering whether a ground exists in this case, the Tribunal must be satisfied that there are “special circumstances” in the case. If satisfied that there are “special circumstances” and that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Assessment Act. Section 98S sets out a range of determinations that may be made under the departure provisions.

6. The phrase “special circumstances of the case” is not defined in the Assessment Act. In the case of Gyselman and Gyselman (Gyselman),[1] the Full Court of the Family Court of Australia held that:

   Section 117(2) sets out the grounds for departure from administrative assessment. Each of those grounds is prefaced by the words “in the special circumstances of the case”.

   Whilst it is not possible to define with precision the meaning of that term, as a generality 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.

   [1] (1992) FLC 92-279

7. Subsection 98C(3) of the Assessment Act provides that subsections 117(4) to (9) of the Assessment Act apply to the Registrar and therefore the Tribunal must consider those provisions when deciding whether, if a ground is established, it would be just and equitable or otherwise proper to make the departure decision.

Is a ground established in respect of circumstances existing at the time of the subsequent application?

1. In considering whether a ground or grounds exist which justify departing from the administrative assessment currently in place, the Tribunal considered the evidence and submissions provided by the parents at the hearing in addition to the extensive information contained within the documentation provided by the Child Support Agency as well as the documentation provided by the parents.

Reason 8A

1. The legislative ground corresponding to Mr Devoe’s application in relation to Reason 8A is set out in subparagraph 117(2)(c)(ia) of the Assessment Act.  The test is whether:

   in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child: [paragraph 117(2)(c)]

   …

   (ia) because of the income, property and financial resources of either parent; or …

2. To establish Reason 8A in relation to either parent’s income, property or financial resources it is necessary to show that there are special circumstances establishing that the income used in the assessment makes the child support assessment unfair and unjust.   

3. In relation to the requirement that there has been a significant change in his circumstances Mr Devoe contended that his mental health has deteriorated and this has affected his income.  He also contends that his financial circumstances had significantly changed as at 22 April 2020 when he made his application for a change to the assessment so as to make the assessment in place unjust and inequitable at the time of the subsequent application. 

4. Mr Devoe provided copies of medical certificates.  Some of these related to an injury to his [body part] which occurred in 2017.  These medical certificates regarding his [injury] relate to a period outside the scope of this review.

5. In relation to his mental health Mr Devoe provided a GP Management Plan Review dated 2 November 2018 which confirmed that Mr Devoe had been suffering from depression since 25 August 2012[2].  The review stated that Mr Devoe “needs psychologist referral”.  A medical certificate from [Dr A] dated 21 January 2019 stated that Mr Devoe was suffering from a temporary condition of depression with lowered mood, suicidal ideation and insomnia and that he had had no past treatment, was currently receiving counselling and a psychiatrist review was planned.  [Dr A] stated that Mr Devoe was totally incapacitated for work from 21 January 2019 to 21 April 2019[3]. Mr Devoe provided further medical certificates in virtually identical terms stating that he was totally incapacitated for work from 2 October 2019 to 2 January 2020 and then from 9 January 2020 to 9 April 2020[4]. 

   [2] A47

   [3] A45

   [4] A55 and A56

6. In addition, Mr Devoe provided a letter from his general practitioner, [Dr A], dated 27 March 2020 which stated in full: “This is to certify that Mr Devoe wasn’t able to work from 4^th December 2018 until 9^th January 2020 due to mental health reasons.  Mr Devoe is currently able to work 3 days a week[5]”.

   [5] A50

7. At the hearing Mr Devoe stated that he was, for a period of time between 2018 and 2020 and as part of his mental health plan organised with his general practitioner, seeing a psychologist initially weekly and then less frequently.  However he did not find this helpful. He stated that he was more comfortable speaking with [Dr A] and he has continued in 2019 and 2020 to see his doctor in relation to mental health issues.  He stated that he tried various medications as prescribed by his doctor but there were side effects and he decided against medication.  He stated that he continues to see [Dr A] on an “as needs” basis.

8. The current operative decision of 24 January 2019 takes into account that Mr Devoe was suffering from a mental illness in the period 15 November 2018 to 15 February 2019 and set the rate of child support for that period to the minimum annual rate.  At that time this reflected the medical certificates which had been provided. 

9. In the objection officer’s decision of 10 January 2020 the officer decided that although further medical certificates had been provided (those being for the periods 21 January 2019 to 1 July 2019 and from 2 October 2019 to 2 January 2020), no Reason had been established and therefore Mr Devoe’s application for a change to the assessment was refused.  Mr Devoe did not apply to the Tribunal for a review of that decision.

10. Since that time and in support of his claim that mental health issues have prevented him from working over an extended period of time Mr Devoe provided the medical certificate stating that he was totally incapacitated for work from 9 January 2020 to 9 April 2020 (referred to above in paragraph 22) as well as the letter dated 27 March 2020 which stated that he was not able to work from 4 December 2018 until 9 January 2020 (as referred to above in paragraph 23).

11. Ms Devoe contended that [Dr A] was a personal friend of Mr Devoe’s and that the Tribunal should not rely upon the medical certificates and letters he has provided.  However, the Tribunal has no evidence of impropriety regarding [Dr A] and it accepts that Mr Devoe continues to be affected by a mental health illness albeit that this has improved to the extent that he is, from January 2020, able to work three days a week (as [Dr A]’s letter states).

12. The Tribunal is satisfied that additional information has been provided by Mr Devoe that his depression was not restricted only to the period 15 November 2018 to 15 February 2019 as the current administrative assessment contemplates.  The Tribunal accepts that mental health issues have impacted Mr Devoe’s capacity to work full-time on an ongoing basis.

13. In relation to whether this has affected his income, property and financial resources, Mr Devoe contended that he ceased his involvement with [Company] due to mental health reasons and his business partners no longer being prepared to “subsidise” his debts and to subsidise the letting of his factory at [Suburb] at a rate of $3,500 per month.  In addition, Mr Devoe stated that with the severe injury to his [body part] in 2017 he was not able to undertake his trade as [an Occupation] at that time.  In addition, he stated that the business had taxation and other debts.

14. Mr Devoe has a history of involvement in various companies.  He was the sole director and shareholder of Devoe Enterprises Pty Ltd but this business was deregistered on 19 December 2018[6].  Mr Devoe explained at the hearing that this business was involved in making [Product 1].

    [6] A70 and A71

15. According to ASIC records Mr Devoe was one of three founding directors and three shareholders of [a company] but his directorship ceased on 20 August 2018 and he no longer holds any shares in that business.  As at 2018 Mr Devoe was one of two directors of [Company] but his directorship ceased on 20 August 2018[7] and as at 4 March 2020 there is only one director of [Company]: that being [Mr B][8].  Mr Devoe contends that since his resignation as director he has had no involvement whatsoever in [Company].

    [7] A38

    [8] A38

16. Ms Devoe stated that she believes Mr Devoe is a silent partner in the business of [Company].  She stated that she believes that he still “pops in and out of the business”.  She stated that he has controlled [Company] ever since it started and that he has been instrumental in the appointment of directors.  She stated that the directors over the years have included his mother and his friends.  It is clear from ASIC information, and Mr Devoe agreed, that his mother was appointed as a director to [Company] in 2012 and ceased to be a director in 2014[9].  The Tribunal has no evidence in relation to the circumstances of the other two directors named in the Register of Directors and Secretaries.

    [9] A38

17. The Tribunal has no proof that Mr Devoe is still exercising any control or receiving any financial benefits from [Company].  He strongly denied that was the case.  The Tribunal does not accept that Mr Devoe cut ties with the business without any recompense when he resigned as director and ceased being a shareholder in August 2018.  The 2017/2018 company tax return for [Company] showed that the income of the company was $5,585,600 and the expenses were $4,615,092.  This left a healthy profit of $970,508 with shareholder funds in the company of $1,548,097.  While in the past Mr Devoe had referred to taxation debts, the records showed that the company was up to date with its taxation obligations.  In that context, the Tribunal does not accept that Mr Devoe left the company with no financial benefits.  However, because Mr Devoe denies there was any kind of financial settlement or ongoing benefits, it is not possible to know his true financial circumstances.  Nevertheless, the Tribunal is not persuaded that Mr Devoe’s annual income in more recent times, and specifically from April 2020 (when he made his change of assessment application) has been $200,870.  This figure was originally determined from the 2016/2017 company tax return and the business activity statement (BAS) for the period 1 July 2017 to 30 June 2018.  The figure of $200,870 comprised a combination of expected share of the profit for that year plus the wage which was being paid to Mr Devoe at that time of $37,000 per year[10].  While the Tribunal accepts that this may well have been an accurate estimate of Mr Devoe’s income in 2018 there is an absence of evidence to support a finding that his income remains at that level now that he is no longer a director or a shareholder in [Company].

    [10] C1 -page 36

18. It is also difficult to believe that if Mr Devoe was earning $200,870 per year why he would still be repaying two loans: one with a balance owing of $98,317.47  (as at 30 November 2020) and another with a balance owing of $537,430.13 (as at November 2020 especially as Ms Devoe advised, and Mr Devoe did not deny, that at property settlement in 2013 Mr Devoe owned his home (valued at approximately one million dollars) freehold.  

19. In his Statement of Financial Circumstances Mr Devoe also stated that he owes $12,500 to a friend.  In addition, he stated that when his mother was a director of [Company] she put money into the business. It was a loan.  He could not remember exactly how much but he had to repay her.

20. In relation to his income, Mr Devoe is currently working on a part-time basis at [Business] as [an Occupation] earning $720 (gross) per week (approximately $37,440 per annum).  He has been working for this employer since January 2020. He provided payslips verifying his employment and his income[11]. 

    [11] A32-A34

21. He is also receiving rental income from the factory premises which he owns in [Suburb].  While his bank accounts show that at least some of the rental income is paid into his [Bank 1] account, it is not clear why this amount fluctuates between $1,551.51 per month and $3,872.23 per month as shown in his bank statement[12].  Mr Devoe declared in his Statement of Financial Circumstances that the amount of rental income he receives is $650 per week[13] ($2,600 per month) but this figure does not appear to even approximately correlate with his income tax return for the 2018/2019 year which shows that his gross rental income totalled $41,769 ($3,480 per month) and his net rental income $14,695 ($1,224 per month).  In addition, it appears that the rental income which is going into Mr Devoe’s [Bank 1] account is being used primarily for living expenses.  There is very little evidence that the rental income is being used to fund maintenance and expenses associated with the rental factory premises except for the occasional bank transaction such as the one for $2,049.01 on 18 July 2020 for “Maida roof sheets”[14].  If Mr Devoe had other expenses associated with his factory rental property it is unclear how he is funding them.  The Tribunal considers in these circumstances that Mr Devoe’s income should include net rental income of approximately $35,000 per year (allowing for more modest expenses than he has declared in his income tax return for the 2018/2019 year).

    [12] A21-A27

    [13] A3

    [14] A21

22. The Tribunal brought to Mr Devoe’s attention that he had included a letter from his lawyer to Ms Devoe supposedly seeking a settlement in relation to child support issues.  In that letter his lawyer stated that “settlement options could include a lump sum ex-gratia payment to you”[15].  The Tribunal asked Mr Devoe that if he had no available funds how he could offer to make a lump sum ex-gratia payment to Ms Devoe.  Mr Devoe stated that he would try to obtain a loan. 

    [15] A59

1. Mr Devoe strongly denied that he had other income apart from his wages from [Business] and his rental income from the factory premises.  He denied that he had ever owned any shares.  He provided documents relating to the Devoe Family Trust which confirmed that in 2019 a tax return was not necessary and a bank statement  addressed to the Trust which showed as at 30 October 2020 it had a balance of $0 (as well as an opening balance of $0).  Mr Devoe noted that the account had been closed for two years but the bank still sends statements.  The Tribunal accepts that the Devoe Family Trust is no longer operating.

2. In relation to property Mr Devoe declared that he owns his home which he valued at $1 million (and subject to a mortgage as detailed above) and the factory premises at [Suburb] which he valued at $550,000.  He stated that he uses the income from the rental property and his wages to pay the loan on his home.  However, the [Bank 1] statements do not correlate with his loan account.  There are only occasional transfers from his [Bank 1] Account to his loan account and the amounts transferred do not match the amounts or dates of deposits into his loan account.  It is unclear from which source the home loans are being repaid.  This tends to suggest that Mr Devoe has other means of paying his home loans.  During 2019 and until September 2020 Mr Devoe was repaying the home loan at a rate of approximately $2,700 per month.  From October 2020 Mr Devoe was repaying approximately $500 per month on one loan and approximately $2,000 per month on the “fixed rate” loan. This calculates to approximately an average of $2,600 per month or $31,200 per year.  If Mr Devoe received net rental income of approximately $35,000 per year together with income from wages of $37,440 this is a total of approximately $72,440.  If his home loan is $31,200 per year and his household expenses (according to his Statement of Financial Circumstances) are approximately $1,000 per week (disregarding his mortgage payments as they have been counted above) this means that his home loan costs and his household expenses total approximately $81,200 per year.  He has taxation deductions of approximately $32 per week ($1,664 per annum).  This takes his liabilities/expenses to approximately $82,864 per year which is considerably more than the income he receives from wages and rental income. 

3. In relation to property Ms Devoe raised the issue of classic cars owned by Mr Devoe as well as land which he owned.  In his Statement of Financial Circumstances Mr Devoe declared that he owned two cars: a [Car 1] which he estimated is valued at approximately $500 and a [Car 2] which he estimated is valued at approximately $10,000.  Ms Devoe contended that the [Car 2] is worth around $100,000 rather than $10,000.  She also stated that Mr Devoe owned or owns a [Car 3] which is also worth around $100,000.  However, Mr Devoe stated that he sold that vehicle for $40,000 because he needed to repay debts.  In relation to the land which Mr Devoe owns or owned Mr Devoe stated that he sold that block of land about four years ago and put $80,000 into the mortgage.  Mr Devoe was vague about the details of either of these sales.  The Tribunal would not have any knowledge of the car and the land which he sold if it had not been brought to the Tribunal’s attention by Ms Devoe.

4. Taking into consideration all of Mr Devoe’s known or most likely income and financial resources, the Tribunal does not consider that there is the evidence to support a finding that Mr Devoe has an income of $200,870 (which is the current assessment).  On the other hand it is unclear how he is paying the home loan accounts as it does not appear to be from his [bank 1] account (other than small amounts occasionally). Mr Devoe stated that his partner “helps out” but he has not provided any evidence to support this and the home loans are in Mr Devoe’s name.  While Mr Devoe stated that he was struggling to pay his home loan, the home loan accounts shows regular repayments over 2019 and 2020.

5. While it is difficult to be precise about Mr Devoe’s income, property and financial resources the Tribunal is confident that he has access to an income and financial resources of at least $100,000 per year taking into account the assets he has sold in recent years.  It does not see that he can meet his stated costs and liabilities on an income of less than this.

45.The Tribunal has found that as at 22 April 2020 when Mr Devoe made his application for a change to the assessment his actual income was approximately $100,000 per annum.  However, at that time the assessment was based on Mr Devoe earning an income of $200,870 per annum.  The Tribunal is satisfied that there was a significant discrepancy between Mr Devoe’s actual income and the income being used in the assessment as at 22 April 2020 and that this is a special circumstance.

46.Reason 8A has been established.

Would it be just and equitable to depart from the administrative assessment?

1. Section 3 of the Assessment Act states that parents have the primary duty to maintain their children and that this duty takes priority over all commitments of the parents other than commitments necessary to enable the parent to support themselves or any other child or another person that the parent has a legal duty to maintain. The Assessment Act contemplates not only that both parents contribute to the support of their children but that the parents’ capacity to contribute must be taken into account.

2. Having found a reason for departure, the Tribunal must consider whether it is just and equitable to depart from the administrative formula assessment. The Tribunal must have regard to a range of matters set out in subsection 117(4) of the Assessment Act. This requires an assessment of the duty of the parents towards the children; the needs of the children; any income, earning capacity and financial resources of the children; the income, earning capacity and financial resources of the parents, self-support commitments and an evaluation of hardship on the parties (and/or the children) if the Tribunal increased or decreased the amount of child support payable.

3. In considering these issues, the Full Family Court, in the case of Gyselman, stated that:

   However, some of the matters listed in sub-section (4) may overlap with matters already considered under sub-section [117] (2) and some of the paragraphs in sub-section (4) may be more significant in one case than they would be in another or of little relevance in a particular case. It is an essential part of the s.117 exercise to carry out the obligation under sub-section (4). However, that does not mean that it is necessary in each case to slavishly go through each of the paragraphs. The extent to which it is necessary to do so will depend upon the facts and conduct of the individual case and the analysis already performed under sub-section (2).

4. Of particular relevance in this matter are the following aspects of subsection 117(4) of the Assessment Act.

The proper needs of the children

1. In determining the proper needs of the children, subsection 117(6) of the Act requires the Tribunal to have regard to the manner in which the parents expected the children to be cared for, educated and trained as well as a consideration of any special needs of the children.

2. Both parents confirmed that, in general terms, there were no issues which they wished to raise in relation to the proper needs of the children.  The Tribunal finds that the children have no special needs and that they incur the usual and typical expenses for children of their age.

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

1. Both parents agreed that the children have no income, earning capacity or property.  The Tribunal finds that the children are wholly dependent on their parents for financial support.

Mr Devoe’s income, property, financial resources, earning capacity and expenses

1. Mr Devoe’s income, property and financial resources and his expenses have been covered at length above.  In relation to his earning capacity the Tribunal has accepted that the medical advice (as at March 2020) is that Mr Devoe is fit to work three days a week. He is currently working three days a week.  No evidence has been provided which indicates that Mr Devoe is permanently incapacitated and therefore there are not likely to be any long-term limitations on his ability to work.

2. Ms Devoe contended that Mr Devoe is capable of earning more than he states he is earning.  She believes that he is deliberately trying to avoid paying child support.  The earning capacity provisions are difficult to satisfy.  There are three criteria all of which must be satisfied. Subsection 117(7B) of the Assessment Act states:

   (7B)   In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:

   (a)one or more of the following applies:

   (i)the parent does not work despite ample opportunity to do so;

   (ii)the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full‑time work for the occupation or industry in which the parent is employed or otherwise engaged;

   (iii)the parent has changed his or her occupation, industry or working pattern; and

   (b)the parent’s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:

   (i)the parent’s caring responsibilities; or

   (ii)the parent’s state of health; and

   (c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.

3. In relation to criterion one, Mr Devoe is working and has not changed his occupation although he has reduced his hours of work and therefore the first criterion is satisfied.  However, his hours of work were reduced on the advice of his medical practitioner and therefore the Tribunal finds that Mr Devoe’s decision to work part-time was justified on health grounds.  Hence, he is exercising his earning capacity.

Ms Devoe’s income, property, financial resources, earning capacity and expenses

1. Ms Devoe is currently employed three days a week.  Her work involves [Product 2].  She stated, and the Tribunal accepts, that she has worked on a part-time basis for approximately three years.  She advised that she was stood down due to the COVID-19 pandemic but now she has obtained new employment although her wage, which is now approximately $500 per week, is still “topped up” with JobSeeker payments.

2. Ms Devoe explained that after separation she tried to operate her own very small business but it wasn’t profitable.  For a number of years she lived off her savings and about three years ago she went on to newstart allowance and found part-time employment.

3. Ms Devoe provided her Notice of Assessment for the year ended 30 June 2020[16].  This showed that her taxable income was assessed by the Australian Taxation Office to be $33,903 and this was accepted as her adjusted taxable income for the 2019/2020 year by the Child Support Agency.  In the 2018/2019 year her adjusted taxable income was determined to be $33,335.  There is no evidence to suggest that Ms Devoe’s actual income differs from her taxable income which she earns as an employee and supplemented by Centrelink benefits.  Ms Devoe also receives some family tax benefit which does not form part of her adjusted taxable income.

   [16] B12

4. Ms Devoe declared in her Statement of Financial Circumstances that she has significant savings: a term deposit of $180,000 and further savings of approximately $20,000[17].  She explained that the amount of $180,000 is the proceeds remaining from the property settlement with Mr Devoe.  The Tribunal accepts that this is the case and disregards that amount as being a financial resource specifically for child support purposes.  The Tribunal also accepts Ms Devoe’s statements at the hearing that she supplements her earnings from the $20,000 savings amount.  She stated that she is frugal with her spending and lives modestly within her means.  She estimated her weekly household expenses to be $1,345 and this included $200 per week for private school costs.  Ms Devoe owns her own home freehold.  She estimated its value to be approximately $560,000.

   [17] B5

5. The Tribunal accepts all of Ms Devoe’s statements regarding her income, property, financial resources and her expenses.

6. In relation to her earning capacity Ms Devoe told the Tribunal that after separation she mostly lived off her savings and that she tried to earn an income from a small business but it was not profitable.  She returned to the workforce as an employee approximately three years ago and although she was stood down during 2020 because of COVID-19 she has since secured part-time employment.  The Tribunal accepts all of her statements regarding her work history.  There is no evidence that since separation she has reduced her hours of work or changed her work pattern with a major purpose of that action being to affect the child support assessment.  Hence the Tribunal finds that Ms Devoe’s earning capacity is not an issue.

Necessary commitments to support themselves

1. The Tribunal notes that the Family Court of Australia has been prescriptive about the types of expenses that can be considered “necessary” expenses and that there are only a few expenses that can be considered to take priority over a parent’s primary duty to support their children.  This includes expenses such as a reasonable amount for payment of rent or mortgage, food, utilities and some loans.  In Mee and Ferguson[18] the Full Court of the Family Court stated at paragraph 128:

   Some of the items obviously have to be taken into account before maintenance is arrived at; for example, the cost of reasonable transport, food and clothing, and other like expenses are necessary to the continued reasonable existence of a parent, and, barring legislative direction to the contrary, it would not accord with the understanding in this jurisdiction to suggest that those items should be put out of consideration before child maintenance is determined. On the other hand there is no doubt that one of the primary responsibilities of a parent is the continued support of children to the extent to which the parent continues to be able to do so and that may in appropriate circumstance mean making financial sacrifices or cutting one's cloth to meet that commitment during the years when it applies.

   [18] (1986) FLC 91-716; [1986] FamCA 3

2. Mr Devoe and Ms Devoe both stated that they have medical conditions which will require surgery.  Both stated that they have had multiple tests and that these can be expensive together with specialist costs.  While Ms Devoe agreed she holds a health care card she explained that this assists where a provider is willing to bulk bill but many medical professionals are not prepared to bulk bill.  The Tribunal accepts her statements in this regard.  The Tribunal does not intend to change the child support assessment in relation to self-support expenses on the basis that both parents have costs in that regard.

Any hardship to either parent or the children by the making of, or refusal to make, an order

1. In relation to hardship Mr Devoe stated that the current rate of child support is unsustainable.  He contended that he just did not have the means to pay it.  He stated that he feels as if he has gone deeper into a “black hole” and that he is not being heard.  He stated that he has paid for things for the children when they are in his care.

2. Ms Devoe stated that if the current rate of child support is reduced the children will be the ones who suffer.  She stated that Mr Devoe did not pay any child support for nine years and she has been the parent who has had to cover virtually all of the children’s expenses.  She stated that Mr Devoe has assets he can sell, including the factory.  She referred to his statements that he has sold a car and a property and said that the children received no benefit from those sales.

Proposed determination

1. Ms Devoe’s view is that Mr Devoe is still a silent partner in [Company].  She believes that he is receiving income or financial resources from that company (or possibly other companies or arrangements).  She urged the Tribunal to uphold the decision made in January 2019 that Mr Devoe’s income is $200,870 per annum,

2. While the Tribunal does not accept that Mr Devoe left the company with no financial benefits it is not possible to know his true financial circumstances.  Nevertheless, the Tribunal is not persuaded that Mr Devoe’s annual income in more recent times, and specifically from April 2020 (when he made his change of assessment application) has been $200,870.  This figure was originally determined from the 2016/2017 company tax return and the BAS for the period 1 July 2017 to 30 June 2018.  The figure of $200,870 comprised a combination of expected share of the profit for that year plus the wage which was being paid to Mr Devoe at that time of $37,000 per year[19].  While the Tribunal accepts that this may well have been an accurate estimate of Mr Devoe’s income in 2018 there is an absence of evidence to support a finding that his income remains at that level now that he is no longer a director or a shareholder in [Company] and a considerable period of time has elapsed since his involvement in the company.

   [19] C1 -page 36

3. Mr Devoe is currently working on a part-time basis at [Business] as [an Occupation] earning $720 (gross) per week (approximately $37,440 per annum). 

4. He is also receiving rental income from the factory premises which he owns in [Suburb]. 

5. The Tribunal accepts that there are legitimate expenses associated with his factory rental property but it appears that the rental income which is going into Mr Devoe’s [Bank 1] account is being used primarily for living expenses.  There is very little evidence that the rental income is being used to fund maintenance and expenses associated with the rental factory premises.  If Mr Devoe has expenses associated with his factory rental property it is unclear how he is funding them.  The Tribunal considers in these circumstances that Mr Devoe’s income should include most of the rental income. Allowing a modest amount for genuine deductions the Tribunal is satisfied that Mr Devoe’s rental income is approximately $35,000 per year.

6. Mr Devoe strongly denied that he had other income apart from his wages from [Business] and his rental income from the factory premises. 

7. He stated that he uses the income from the rental property and his wages to pay the loan on the home.  However, the [Bank 1] statements do not correlate with his loan account.  There are only occasional transfers from his [Bank 1] Account to his loan account and the amounts transferred do not match the amounts or dates of deposits into his loan account.  This tends to suggest that Mr Devoe has other means of paying his home loans.  The bank statements show that Mr Devoe is repaying approximately $31,200 per year on his home loans.  If Mr Devoe received rental income of around $35,000 per year this, together this amount with income from wages of $37,440, is a total annual income of approximately $72,440.  If his home loan is $31,200 per year and his household expenses (according to his Statement of Financial Circumstances) are approximately $1,000 per week (disregarding his mortgage payments as they have been counted above) this means that his home loan costs and his household expenses alone total approximately $81,200 per year.  He has taxation deductions of approximately $32 per week ($1,664 per annum).  This takes his liabilities/expenses to approximately $82,864 per year (not including child support) which is considerably more than the income he receives from wages and rental income. 

1. While it is difficult to be precise about Mr Devoe’s income, property and financial resources the Tribunal is confident that he has access to an income and financial resources of at least $100,000 per year taking into account the assets he has sold in recent years.  It does not seem that he can meet his stated costs and liabilities on an income of less than this.

2. The Tribunal therefore proposes to vary Mr Devoe’s adjusted taxable income to $100,000 per annum.  In relation to the period from which this income should commence the Tribunal is satisfied that it should start from 1 May 2020 that being the beginning of the month following Mr Devoe’s application for a change to the assessment.

3. Ms Devoe requested that the decision apply until the end of the child support cases for both children and while the Tribunal is mindful that circumstances can change over time in view of the age of the children the Tribunal sees some merit in a determination for a reasonable period of time which gives some certainty to both parents.  Therefore the Tribunal proposes to vary Mr Devoe’s adjusted taxable income to $100,000 per year until the child support case ends for both of the children.

4. The Tribunal’s proposed determination will mean that Mr Devoe’s child support liability from 1 May 2020 will be approximately $13,838 per annum (when Ms Devoe’s 2018/2019 adjusted taxable income was used in the child support formula) and approximately $13,778 per annum (when Ms Devoe’s 2019/2020 adjusted taxable income was used in the child support formula).  In the future the rate of child support payable is likely to slightly change depending on the future adjusted taxable income of Ms Devoe.

Is it otherwise proper to depart from the administrative assessment?

1. The final step for the Tribunal to undertake is to determine whether it is “otherwise proper” to make the particular determination to depart from the administrative assessment. Subsection 117(5) of the Assessment Act requires the Tribunal to take into consideration the following matters:

   (a)   the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and

   (b)   the effect that the making of the order would have on:

   (i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or

   (ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.

2. The Tribunal must consider whether the proposed departure is “proper” within the context of the public interest and welfare expenditure by the community (see Gyselman).  It is a prime objective of the child support legislation that parents should be obliged to support their own children to the extent of their real capacity, and that that obligation should not be unnecessarily left to the public welfare system when the parents themselves have the capacity to maintain their children.

3. Paragraph 117(5)(b) of the Assessment Act directs the Tribunal to have regard to the effect that the making of the order would have upon the rate of entitlement to any income tested pension, allowance or benefit.

4. Ms Devoe is receiving family tax benefit and she confirmed that she is aware of the impact of child support payments on that benefit.

5. The Tribunal is satisfied that the proposed determination is “otherwise proper” and that the determination should be made.

DECISION

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

• The previous departure determination of 24 January 2019 is ended on 30 April 2020; and

• for the period 1 May 2020 until a terminating event occurs in relation to both of the children’s entitlements to child support, Mr Devoe’s adjusted taxable income is varied to $100,000 per annum.

SCHEDULE

List of Exhibits

1. Services Australia – Child Support Agency marked as C exhibits:

   ·     CSA’s large bundle of 187 pages marked as exhibit – C1

   ·     CSA’s smaller bundle pages 188-243 marked as exhibit – C2

2. Mr Devoe has provided the following documents marked as A exhibits:

   ·     A1  Directions  

   ·     A2-A11                Statement of Financial Circumstances

   ·     A12-A19              Mr Devoe’s individual income tax return 2018/2019

   ·     A120-A27             Bank statements – savings account 1/7/20–30/9/2020    

   ·     A28-A30               Loan account

   ·     A31  Loan account

   ·     A32-A34               Payslips

   ·     A35-A36               Text message

   ·     A37  Letter to CSA dated 25/6/2020

   ·     A38   Register of Directors and Secretaries of [Company]

   ·     A39 -A43              Company details – [Company]            

   ·     A44-A57               Medical certificates and documentation

   ·     A58-A60               Legal letter from Mr Devoe’s lawyers               

   ·     A61-A62               Written submission

   ·     A63-A65               Written submission

   ·     A66-A68               Written submission

   ·     A69  Letter from Cbus superannuation fund

   ·     A70  Bank statement for Devoe Family Trust

   ·     A71  ASIC document re Devoe Enterprises Pty Ltd

   ·     A72  Devoe Family Trust – client update document

3. Ms Devoe has provided the following documents marked as B exhibits:

   ·     B1  Cover sheet

   ·     B2-B10                Statement of Financial Circumstances             

   ·     B11  Cover sheet

   ·     B12-B13              Notice of assessment year ended 30 June 2020

   ·     B14   YTD earnings for 2020–2021 year

   ·     B15   Cover sheet

   ·     B16-B18               Written submission

   ·     B19  YTD earnings

   ·     B20  Letter to Mr Devoe’s lawyer 20/2/2020

   ·     B21  Legal letter to Mr Devoe’s lawyer 10/9/2013

   ·     B22  Court document 28/2/2014

   ·     B23  Text messages

   ·     B24-B25               Photographs

   ·     B26-B29               Federal Circuit Court of Australia – property orders 7/10/2013