Drohan and Murrell (Child support) - [2024] AATA 2902

Drohan and Murrell (Child support) [2024] AATA 2902 (29 May 2024)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2023/SC026978
APPLICANT:  Ms Drohan
OTHER PARTIES:  Child Support Registrar
Mr Murrell

TRIBUNAL:Senior Member K Dordevic
DECISION DATE: 29 May 2024
DECISION:

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

·     Mr Murrell’s annual rate of child support is increased by $3,850 for the period 20 April 2023 to 19 April 2024;
·     Mr Murrell’s adjusted taxable income is varied to:
o   $82,524 for the period 20 April 2023 to 31 December 2023;
o   $85,389 for the period 1 January 2024 to 31 December 2024;
o   an adjusted taxable income of $85,389, inflated by the September 2024 Sydney consumer price index is to be applied to the administrative assessment from 1 January 2025 to 31 December 2025; and
o   the adjusted taxable income that applied to the administrative assessment from 1 January 2025 to 31 December 2025, inflated by the September 2025 Sydney consumer price index is to be applied to the administrative assessment from 1 January 2026 to 31 December 2026.

CATCHWORDS
CHILD SUPPORT – departure determination – ground for departure – special needs of the child – orthodontic expenses – just and equitable – earning capacity – income and financial resources – male total average weekly earnings (MTAWE) – 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

The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. The Act also provides for a departure from the administrative assessment in certain circumstances.
Ms Drohan (the mother) and Mr Murrell (the father) are the parents of three children, [Child 1] (born [date]), [Child 2] (born [date]) and [Child 3] (born [date]).
This case was first registered with Services Australia – Child Support (Child Support) on 8 September 2014 and has been collected by Child Support from 12 March 2018. For the purposes of the Child Support assessment the children are recorded as being in the mother’s 80% care and the father’s 20% care, though the Tribunal understands that a recent care change was reported to Child Support and awaits determination.
The mother lodged a departure application on 20 April 2023 seeking a review of the father’s income, property, financial resources and earning capacity. On 31 May 2023 she amended her application to also seek a contribution from the father in respect of the older child’s orthodontic treatment.
On 30 July 2023 a senior case officer determined that for the period 20 May 2023 to 19 May 2025 the father’s annual rate was increased by $1,925 and during the same period the father’s adjusted taxable income was varied to $62,000.
The mother lodged a timely objection to that decision and the objection was disallowed on 6 October 2023.
On 31 October 2023 the mother sought further review of the objection decision with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal). A telephone directions hearing took place on 28 February 2024. Directions were issued on the same day requiring compliance by 29 March 2024, with the matter scheduled to be heard on 17 April 2024.
The Tribunal also issued an order in accordance with subsection 95J(1) of the Child Support (Registration and Collection) Act 1988 (the Registration Act) requesting that the Child Support Registrar exercise its powers under sections 161 of the Act or section 120 of the Registration Act to obtain from [Ms A], Director, [Company 1] the following documents:
·The 2022 and 2023 financial statements, including income tax returns, balance sheets and profit and loss statements for [Company 1];
·A statement outlining all benefits received by Mr Murrell in the 2022 and 2023 financial years by way of provision of a motor vehicle, mobile telephone and other benefits not reflected in his income tax return; and
·A declaration from [Ms A] outlining her duties and regular work hours at [Company 1] and whether she is employed elsewhere and, if so, whether this is full-time, part-time or casual employment. [Ms A] is to provide all relevant documentation to support her declaration.
[Ms A] refused to comply with the order, providing correspondence on 18 and 21 March 2024 (marked folios C1 to C3).
The Tribunal heard the matter on 17 April 2024. The mother appeared by MS Teams audio and the father appeared in person and was represented by [Mr B], lawyer, of [Law Firm 1]. The Child Support Registrar was not represented at the hearing. The Tribunal also considered the documentation provided by Child Support (folios 1 to 310), the mother (marked folios A1 to A29), the father (marked folios B1 to B217) and documents in respect of the subsection 95J(1) order referred to above.
On the day of hearing the Tribunal issued further directions to the parents.
The mother provided her response to the directions on 22 April 2024 (folios A30 to A38). On the same day the Tribunal sent a copy of these documents to the father and his legal representative.
On 2 May 2024 the father provided additional documents (marked folios B218 to B244). Additional documents provided by the father, including photographs, were not accepted into evidence as they were irrelevant to the Tribunal’s considerations.
On 28 May 2024 the mother provided additional documents which were not accepted into evidence as they were irrelevant to the Tribunal’s considerations.
The Tribunal reached its decision on 29 May 2024.

ISSUES

The statutory provisions relevant to this review are outlined in section 98C of the Act, which states that a decision to depart from the administrative assessment may be made if the following three requirements are met:
(i)that one, or more than one, of the grounds for departure referred to in subsection 117(2) exists; and
(ii)that 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 …
Therefore, the issues which arise in this case are:
· Does a ground exist for departure from the administrative assessment of child support? And, if so
· Would it be just and equitable and otherwise proper to make a particular determination?

CONSIDERATION

A ground for departure

Subparagraph 117(2)(b)(ia) of the Act provides a ground for departure if, in the special circumstances of the case, the costs of maintaining the child are significantly affected because of the child’s special needs. The term ‘special needs’ is not defined in the Act. In the matter of Lightfoot and Hampson (1996) 20 Fam LR 69, the Full Family Court stated that needs are special if they are necessary or desirable for that child’s welfare and outside the normal needs of a child that is catered for within the formula. In Gyselman and Gyselman (1992) FLC 92-279 the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.
In evidence is a statement from [Dr C], dentist,[1] dated 6 March 2024 which relevantly states:
[The child] was assessed on the 9^th Feb 2021 and she presented with 5mm bilateral class II malocclusion (this means her lower Jaw is 5mm retruded in relation her upper Jaw).
[The child] also has a narrow upper arch which required expanding.
The correction of these malocclusion is essential around the early puberty periods to allow movement before bone sutures close and growth finishes.
Expander and twin force are required for completion of treatment.
[1] [Dr C]’s registration details on AHPRA note that he is a dentist and not orthodontist: >
The Tribunal finds that the cost of the orthodontics was $7,700, which included a $300 discount for upfront payments.[2] The mother made this payment on 28 November 2022. To do so the mother made three withdrawals from her mortgage account in November and December 2022.[3]
[2] Folio 49
[3] Folio A33
The mother seeks a 50% contribution from the father in respect of the older child’s orthodontic costs.
At hearing the mother testified that the older child was reviewed by [Dr C] who is the family dentist and orthodontist. The older child had been undergoing orthodontic work for some time, including an expander to widen the arch of her mouth. The expander work was critical in order to have braces affixed. The father was aware of the expander treatment and raised no opposition to it.[4] [Dr C] stressed that orthodontic appliances needed to be affixed in the older child’s adolescence to ensure the treatment would be successful. She approached the father to contribute to the cost, but he refused.
[4] Folio 111
The father’s position is that the mother did seek a contribution from him regarding the orthodontic costs. He was hoping to contribute but could not. The next thing he knew, the orthodontics were applied. He was caught off guard. He had no money. Anyway, the older child advised him about the orthodontics and wanted them applied urgently only so they would be removed by the time of her Year 12 school photos. He did not dispute that he had advised via SMS that he would contribute to the cost[5] but he said it in the “spur of the moment”, hoping to come to an arrangement and for a “miracle”. He did not intend to mislead the mother, in fact he did call the dentist as he said he would but as it transpired he could not contribute to the cost. He recalls having a conversation with the mother soon after this at a changeover and in other contacts following advising her that if he had “spare” funds he would contribute. He has not had any spare money since that time and up until the date of hearing.
[5] Folio 111
[Mr B] submitted that it is not unusual for children to undergo orthodontic treatment, and so this expense it falls within the normal costs of raising children. He drew the Tribunal’s attention to the decision of Simiko & Kellidis (No 2)[6] which he submits supports his assertion that it is not a special need nor an out of the ordinary expense:
[6] [2022] FedCFamC2F 982
Orthodontic expenses
133. I am not satisfied that it would be just and equitable and otherwise proper as regards the children, the mother and the father to make an order under subsection 123(1)(a) with respect to future orthodontic expenses.
134. Though not insignificant, orthodontic expenses are nevertheless one of many unquantifiable and incidental expenses associated with the maintenance of children that will need to be navigated by the parents amidst all of the prevailing circumstances. Compared to the considerations of education, they lack the same characteristics to constitute a proper need.
135. If I am wrong as to it not being just and equitable and otherwise proper to make an order with respect to future orthodontic expenses, I nevertheless find that orthodontic expenses do not fall within the ambit of ‘special circumstances’ provided for in section 125(2).
136. For relief with respect to future orthodontic expenses, the mother would need to consider first making an application for a departure order under section 117 to increase the administrative assessment to make the periodic rate greater. Then an order under section 123(1)(a) or section 123(1)(b) for a lump sum.
The Tribunal put to [Mr B] that Simiko & Kellidis does not, on its face, appear relevant to the factual and legal issues requiring determination by the Tribunal. The costs considered in this matter are in respect of orthodontic costs that have already been incurred and the mother has sought a contribution from the father under section 117 of the Act. Further, when determining whether the orthodontic costs fall within the ambit of “special circumstances” Mansfield J was not referring to section 117 of the Act, as the Tribunal must. In response [Mr B] reiterated the position that the ratio outlined at paragraph 134 of the judgement was that orthodontic costs fell within the normal rubric of raising children.
The Tribunal was not persuaded that this was the case. Certainly, Mansfield J, when comparing orthodontic to education costs, was not persuaded that orthodontic costs had the same characteristics to be considered a proper need as education costs. In the Tribunal’s view this is uncontroversial. The need for a child to be provided an education is recognised as a fundamental right. However, there would be few, if any, who would suggest that a child had a right to orthodontic treatment. Respectfully, the judgement does not state that orthodontics are not a special need for the purposes of section 117 of the Act, though it does consider that to be the case for subsection 125(2) of the Act. In any event, Mansfield J goes on to indicate how relief could be secured for future orthodontic expenses, being lodging a departure application under section 117 of the Act. This is the very course the applicant mother has taken in these proceedings.
The Tribunal also considered [Mr B]’s written submissions[7] and additional material[8] which is common that many children have braces and so it cannot be a “special” expense outside the normal costs of raising a child. In the Tribunal’s view the term “special needs” does not mean uncommon in terms of the numbers of children who undergo orthodontic treatment. As outlined above, the case of Lightfoot established the principle that if costs are necessary or desirable for the child’s welfare and outside the normal needs of a child that is catered for within the formula assessment.
[7] Folios B41 to B43 and B219 to B224
[8] Folios B79 to B83, B89 to B92 and B96 to B98
The total costs of the older child in this case from 1 October 2022 was assessed as $14,373.[9] The actual cost to the mother arising from the older child’s orthodontics is 54% of the assessed costs of the child. The mother’s 2023 adjusted taxable income was $68,343, so the dental cost alone required her to apply over 11% of her total income that financial year to the older child’s necessary orthodontic work. The Tribunal is satisfied that the cost of children formula does not include a component for orthodontics.
[9] Folio 32
In light of the statements provided by [Dr C] the Tribunal is satisfied that the older child required orthodontic treatment and this was necessary for her health and welfare and is not an expense included in calculation of the normal needs that are to be addressed within the formula assessment.
The Tribunal next considered whether this cost significantly impacted on the mother’s capacity to provide for the older child.
[Mr B] submitted that there was no probative evidence before the Tribunal to indicate that the mother’s capacity to provide financial support for the older child was significantly reduced because of this expense. He submits that without knowing what funds the mother has available, one cannot determine the effect it has on her capacity to provide financially for the older child.
[Mr B] was correct in that this evidence was not available at hearing. However, post hearing the mother did provide evidence of the redraw facility on her home mortgage.[10] It indicates that as at 16 September 2022 she had a redraw facility of $17,786.39. This reduced to $10,495.77 after the orthodontic payments. The Tribunal finds accordingly.
[10] Folio A33
The facts are clear; the mother does have a redraw facility on her mortgage account. The redraw facility is modest and her evidence is that $221,000 remained payable on the mortgage as at 21 November 2023. The Tribunal accepts the mother’s evidence that she deposits all available funds into the mortgage offset account to minimise her interest costs and draws on these funds when required. The Tribunal is of the view that whilst these funds can be withdrawn, they are not savings as such. To pay for the orthodontics she increased her level of debt.
In a context where the mother is solely responsible for the mortgage, the redraw facility is modest and the outstanding mortgage is significant given the mother’s adjusted taxable income the Tribunal is not persuaded that the redraw facility establishes that the orthodontic treatment did not significantly impact on her capacity to provide for the older child as the father contends. To specifically address [Mr B]’s submissions on this point, the Tribunal is satisfied that its conclusion is based on the probative evidence before it.
The Tribunal is satisfied that the older child’s special needs reduced the capacity of the mother to provide financial support to the older child and her siblings. Therefore, in the special circumstances of the case, the costs of maintaining the older child are significantly affected because of her special needs.
The Tribunal concludes that the ground provided for in subparagraph 117(2)(b)(ia) of the Act is established.

Just and equitable

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 parties’ respective earning capacities, the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula assessment. The Tribunal has considered all the factors outlined in subsection 117(4) of the Act but will only refer to those considerations pertinent to the application.
The mother’s 2021 to 2023 adjusted taxable incomes are $60,529, $60,852 and $68,343 respectively. The mother completed a Statement of Financial Circumstances form dated 21 November 2023 in which she declares that she works on a part-time basis (her payslips indicate that she works 33.5 hours per week)[11] and is in receipt of gross weekly income of $1,442. Her assets include the family home valued at $800,000, savings of $454, a motor vehicle valued at $20,000, household contents valued at $12,000 and superannuation valued at $150,000. Her liabilities include a mortgage of $221,000, a credit card liability of $5,000 and other finance of $500. Her declared weekly personal expenditure is made up of $315 in income tax; the mother also declared $222 in superannuation but this contribution is in fact made by her employer.[12] Her weekly household expenditure is $1,386, of which the Tribunal calculates about $990 relates to her care of the children. It is clear that the mother’s expenses exceed her income, even when taking into account her receipt of income-tested benefits.
[11] Folios A22 to A24
[12] Folios A22 to A24
Given the mother’s caring responsibilities and that she works 33.5 hours per week the Tribunal is satisfied that she does not have an unused earning capacity for the purposes of the child support assessment. The Tribunal accepts the mother’s evidence that she has no out of the ordinary costs associated with her health.
The Tribunal finds that the children attend systemic Catholic schools and the parents are obliged to equally meet the tuition costs. The father’s oral testimony was that he has not contributed to his half share of the children’s school fees since at least 2023. The school are seeking recovery of the fees and he anticipates he will enter into a repayment agreement. When asked about the quantum of his arrears the father stated that it was “a lot” but could not be more specific. The father did not dispute the mother’s evidence that additional costs relating to the children’s private schooling are met by her. The Tribunal finds accordingly.

The mother testified that the older child commenced part-time work in December 2023. The child has told her that she earns less than $200 per week. The Tribunal notes that this is well below the maximum rate of youth allowance payable to a child plus the income free threshold applicable to students. The Tribunal is satisfied that the children do not have income or financial resources that would render the administrative assessment unjust or unfair.
The mother testified that the older child recently consulted with a school counsellor and a decision was reached that she did not require ongoing counselling. The mother provided evidence of this outcome[13] and the Tribunal accepts that the older child does not currently require counselling and, if she chose again to pursue counselling at school, neither parent would incur out of pocket costs.
[13] Folio A38
[Mr B] sought a deferral of six weeks to allow time for the older child to undergo a psychological assessment to determine with which parent she will live, after the older child recently decided to live with the father after an apparent altercation with the mother. After taking into account [Mr B]’s submissions on this point and its statutory objectives, the Tribunal refused this request. It also noted for the benefit of the father and [Mr B] that any change to the care arrangements may be separately notified to Child Support.
The Tribunal finds that the youngest child has been diagnosed with attention deficit hyperactivity disorder and his monthly medication costs are $38. He is reviewed regularly by a paediatrician through the public health system. He also attends a counsellor, with no out of pocket costs. The middle child also requires regular review by a paediatrician, again through the public health system. Apart from the youngest child’s medication costs, they two younger children have no other costs associated with their health and wellbeing.
The Tribunal accepts the mother’s evidence regarding the two younger children’s health. In considering the younger child’s medication costs of about $456 per annum the Tribunal is not persuaded that this is significant or warrant an adjustment to the administrative assessment.
Neither parent testified that they have a duty to support other children or adults. The Tribunal finds accordingly.
The father’s 2021 to 2023 adjusted taxable incomes were $28,552, $34,906[14] and $50,512[15] respectively. In his Statement of Financial Circumstances[16] dated 20 November 2023, the father declared his weekly income is $863 or approximately $54,000 per annum.[17] At hearing the father declared that he does not get annual or sick leave but does get four rain days per month. He reports that he has no assets, apart from $40 in savings and superannuation of about $25,000. He testified that he withdrew sums from his superannuation during the COVID-19 pandemic. He reports no liabilities and unspecified variations in his weekly income tax and that 10% of his income is payable in child support. At hearing the father reported that he owes money to people but did not include these liabilities in his statement as he misunderstood the question. He explained that he owes money to his sister and about $6,000 in unpaid tolls. He reports $710 in weekly expenses,[18] of which at least $80 relates to his care of the children; at hearing the father explained that this cost represents taking the children out for lunch or dinner when they are in his care and does not include their other food, accommodation, utilities and clothing costs when in his care. The Tribunal considers it possible that the father’s actual expenses in caring for the children are higher than the $80 per week declared, though it notes that in submissions provided post hearing [Ms A] meets some of the children’s costs either directly or by loaning the father money.[19] At hearing he explained that he did not declare [Ms A]’s income in his statement where it refers to other income earners in the household as he did not consider it.
[14] Folio 289
[15] Folio B94 and B219
[16] Folios B1 to B10
[17] Noting that $863 x 52 weeks = $44,876 per annum
[18] Noting that he calculated this to be $790 when it is in fact $710
[19] Folio B223
The mother contends that the father’s income and financial resources are significantly greater than his adjusted taxable income would suggest. She has known this is the case for a long time but finally lodged a departure application when Child Support advised she was in a situation of overpayment.
The mother submits that the father transferred his [business] to a company owned by his fiancée [Ms A]. She is adamant that the business is run by the father in all but name. She has no doubt that [Ms A] may assist with the “paperwork” but that it is the father who is “the face” and “heart and brains” of the company and undertakes all quotes and generates the income for the company. She believes that the father’s motivation to transfer his business was motivated to minimise his child support liability. She estimates that his income may be in the vicinity of $100,000 per annum.
The father’s position is that he is a casual [Occupation 1] and his adjusted taxable income accurately reflects his capacity to provide for the children. He stressed that it is “very scary times” in construction, with very little work available and in particular [Occupation 1] work is “in disruption”. He has no consistent income and so cannot budget and meet his own costs and those of the children. It is just the “way it is at the moment”. In any event, he states that [Occupation 1] is never a full-time job and so he never works a full week because the work site is rain affected, materials are not available or there is simply no work. The father stated that he has not worked for about three or four weeks prior to hearing, though he did start a job just the week of hearing though it is “only one or two days here or there”. He has approached other [Occupation 1]s to secure additional work, but nothing has ever eventuated.
The father gave the following work history. He completed his [Occupation 1] training in about 2011 and secured immediate employment. He began operating as a sole trader, under the name [Business 1], he thinks sometime in 2017 but it could have been earlier. He was contracting to [Business 2] in 2017. At the time things were going well between him and the mother and they had a private child support agreement in place. Then the mother sought collection by Child Support.[20] It was unfair as his child support liability was amended and no longer based on his wages but rather on his turnover, which did not take into account his costs. Then his child support liability was garnished from his invoices. He received no prior notification that this would occur. The director of the company that he was contracting to told him to “sort out his personal affairs” and did not appreciate Child Support calling their office. The father felt that this was an invasion of his privacy. He became aware that from then on more focus was placed on his work, including regular health and safety audits. Things started to deteriorate. He became frustrated and stopped getting work. He tried to get other work and was not making much money at all.
[20] This occurred on 12 March 2018
Eventually he had no choice but to stop operating [Business 1] as he “failed it too hard.” He also had difficulties managing the business’s paperwork, chasing work and managing the finances. He was “not cut out for it”. He accumulated large tax and child support debts. He declared bankruptcy. He cannot recall, but it is possible that he was unemployed for a while.
Then he was offered employment by [Company 1], from its director [Ms A]. When asked how he would describe his relationship with [Ms A], the father replied “she is my boss and mutual friend”. He later conceded that they had been engaged but stated that their relationship broke down in June 2023 “because of my attitudes and actions”. They remain living in the same home, no longer share a bedroom but are “friends with benefits” and [Ms A] is “just my boss”. They share the same friends, so the father conceded there may well be social media posts that suggest that they continue to socialise together, but denied they are still engaged.
The father could not recall when [Company 1] was formed.[21] That it has a similar name to his sole trading enterprise is merely coincidental; [Ms A] “likes the name [Business 1]” and saw “an opportunity”. He did not consider starting a company himself, or jointly with [Ms A] as he had “failed and I was over it”. He “wanted out of the building industry completely”. He was going through a “bad stage” and “wanted down time”. He had a “personal issue” and secured a mental health plan and was hospitalised for depression for five days in either 2021 or 2022. He supported himself during this period by borrowing from his mother; he did not want to lodge an application for income support. He was not required to repay his mother as she gifted him the borrowing, which he recalls was about $10,000. During this period [Ms A] would also assist him with paying the rent and then he would reimburse her. He could not be specific about dates but recalled it was “some months” that he was unemployed and supported by his mother and [Ms A]. They would deposit the money into his bank account. He estimated that he owes [Ms A] about $5,000 as at the date of hearing. He confirmed that [Ms A] does not chase repayments as she knows he simply does not have the money.
[21] The Tribunal notes that the Australian Business Register indicated that it was registered on 1 October 2019 [Source redacted]
The father denies that he is the face of the [Company 1] operation, noting that there is also an apprentice and other subcontractors that work on and off completing the same tasks that he does. He conceded that it is his contact number, and not [Ms A]’s, that is listed on hi pages[22] and Facebook[23] advertisements for [Company 1] but only because he is a “form of contact” and “I am the only one she trusts” and it was just the way [Ms A] “wanted to do it”. He went on to state that [Ms A] cannot always answer her phone as she is employed on a full-time basis by [Mr B], at an immigration law firm. [Mr B] confirmed that [Ms A] is employed by him on a full-time basis but stressed that he is “a very liberal employer” and so will allow [Ms A] time from work if necessary. The Tribunal notes that submissions authored by [Ms A] state that it is her telephone number that is listed on the hi pages [Company 1] advertisement.[24]
[22] Folio 235
[23] Folios 234 to 235
[24] Folios B44 and B199
The father testified that both he and [Ms A] undertake quotations, it simply depends on who is available. When questioned more about this he replied that it is “mostly me that is available” but that most jobs do not need quoting, they simply need a purchase order. [Ms A] also attends site; the last time he can recall was around Christmas time and the time before that was a couple of weeks before Christmas. She also works at [Company 1] on weekends in addition to completing about 85% to 90% of all administrative tasks. He relied on pictures of [Ms A] that show she has visited a work site.[25] The Tribunal pointed out that these images are dated 16 September 2017 and 24 September 2018. The father stated that these photographs demonstrate that [Ms A] “does know about [Occupation 1]”. He confirmed that [Ms A] does not have a trade nor has she attended TAFE with the aim of securing one, but she is a skilled construction labourer. As the Tribunal understands the father’s evidence, prior to [Ms A] establishing [Company 1] she had done some subcontracting work for him. When hiring her, he did not know if she had any relevant experience but he “will give anyone a go”.
[25] Folios B32 and B36
The Tribunal put to the father that he had suggested in the same SMS message to the mother dated 14 November 2022 outlined above regarding contributing to the older child’s orthodontics that he would purchase the child’s laptop through the company: “With the laptops I can get a good deal through office works with the company abn…”. The father explained that he simply meant that he could claim it through his own personal tax return, he did not mean to imply that he would claim the expense through [Company 1]. He said much like his meaning about contributing to the orthodontics, his comment was aspirational rather than signalling an intention. It was not possible for him to claim the expense through [Company 1] as it is not his company.
[Mr B] made the following submissions in respect of the financial arrangements between the father and [Ms A]. There is no dispute about the father’s actual income, as it is reflected in his income tax returns. This is the only reasonably probative evidence before the Tribunal. To find otherwise is short of accusing the father of tax fraud. It would be speculative to determine his income is anything but his taxable income. There is no suggestion that he has an interest in [Company 1]. The evidence is that he is a part-time senior [Occupation 1] in a company that also employs an apprentice and subcontractors. This is a normal small business. It may be right that he is the heart and soul of [Company 1], but he is not the proprietor. Furthermore, he is instructed that [Ms A] pays the father’s rent “sometimes” as an “act of charity”.
The Tribunal notes the submissions and articles provided which apparently evidence a general downturn in the construction industry[26] and that this has significantly impacted on the father’s income. The most recent submissions also refer to a recession, the COVID-19 pandemic and the war in Ukraine as also impacting on the father’s capacity to secure full-time work.[27] The Tribunal found the articles and assertions neither instructive nor persuasive. The issue before the Tribunal requires an assessment of the father’s income and financial resources and not an evaluation of the construction industry or Australian economy.
[26] Folios 198 to 202, B49 to B78, B84 to B88, B93, B102 to B109, B156 to B171
[27] Folio B221
The Tribunal had regard to the written submissions made by [Ms A].[28] Relevant to this application she states that she cannot offer any of [Company 1]’s employees full-time work and the company is not in a position to distribute income. She stressed that the father does not know her or the company’s income or finances. Whilst they share a home, she is not responsible for his finances. She pays additional rent to avoid eviction, which she stressed is motivated by her own personal interests. She can afford to do so as she is a “single independent woman”. The father then transfers $380 to her weekly reflecting his share of the rent.
[28] Folios B44 to B46
The Tribunal took the father through his bank statements in evidence covering the period 1 December 2023 to 29 February 2024,[29] including those in [Ms A]’s name.[30] When asked how he secured these documents the father replied “from [Ms A] I assume”. He confirmed that these statements indicate that she “pretty much” pays the household rent as he has not contributed to this cost “lately”. The father stated that his bank accounts evidence that he is only in receipt of the wage declared in his income tax return.
[29] Folios B179 to B188
[30] Folios B200 to B203
The Tribunal put to the father that his bank accounts do not evidence usual household costs such as utilities or mobile telephone. The father replied “[Ms A] must pay it then”. The Tribunal also noted that his bank accounts indicate that he has capacity for significant discretionary expenditure, including purchases from bottle shops, fast food operators, Uber Eats, streaming services and hotels and that this is not consistent with his income declaration. The father conceded that the bulk of his income is spent on purchasing alcohol or at hotels.
Further, the Tribunal notes that there are only three apparent purchases for petrol during this three-month period on 5, 6 and 18 December 2023 in the amount of $153.65.[31] In response the father stated that he drives a vehicle owned by [Company 1] and is required to contribute to all petrol costs for personal use; he usually fills the work vehicle himself about once a fortnight. When challenged by the fact that the bank statements suggest that he does not generally meet his petrol costs, he stated that sometimes he uses his friend’s motor vehicles.
[31] Folios B186 to B187
The Tribunal invited the father to indicate where in his bank statements does he purchase food for himself and the children. He located one purchase of $107.10 on 19 January 2024,[32] though an internet search of this Coles indicates that it also has a bottle shop attached, so given the father’s pattern of spending the Tribunal is not persuaded that this purchase was for food. The father also identified a $55.06 purchase at Coles on 2 February 2024.[33]
[32] Folio B183
[33] Folio B181
The father then conceded that in addition to his rent, [Ms A] meets most of his food expenses. He stressed that she does not meet any costs associated with his care of the children, including their extracurricular activities. Following the hearing the father declared that he received a loan of $5,000 from [Ms A], paid to him in cash, on or around 1 January 2024, to meet his living costs and his care of the children.[34] The Tribunal put to the father that this suggests that his self-support expenses are less than the child support formula allows. The father “agreed” and conceded that any discretionary funds should be considered available to meet the costs of the children.
[34] Folio B243
[Mr B] submitted that the discretionary spending evident in the father’s bank account are largely for the children’s benefit, including the streaming services. He stated that the fast food purchases should be assumed to be for the children and not the father.
The Tribunal carefully considered [Mr B]’s submissions, the father’s testimony and those statements made by [Ms A] as well as the documentary evidence before it. The father’s bank statements indicate that at no time during the period 1 December 2023 to 29 February 2024 did he make a payment towards his household rent as [Ms A] declared he does, apart from possible withdrawals from his account of $799 on 26 February 2024 and $700 on 19 January 2024 transferred to [Ms A]. During that same period [Ms A] directly transferred into his account $1,731. The father also received a payment of $500 apparently from a neighbour reimbursing him for the purchase of a door,[35] and a deposit of $300 with the descriptor “[address] Stairs”. This is in addition to net wages from [Company 1] made in two payments totalling $2,012.20 and a loan from [Ms A] of $5,000.
[35] Folio B187
Having considered all of the evidence the Tribunal finds that the commercial arrangement in place between the father and [Ms A] is a sham: Waites & Lawson [2010] FMCAfam 42. The Tribunal is satisfied that it is the father’s professional skills, experience and qualifications that generate [Company 1]’s income. [Ms A] works full-time in an unrelated business. The father has not provided a plausible or consistent explanation as to why he stopped operating as a sole trader and at the same time [Ms A], his then fiancée, established a proprietary company in an almost identical name. The Tribunal concludes that [Ms A]’s involvement in [Company 1] is secondary to that of the father and that the legal arrangements operate predominantly as a vehicle to reduce the father’s child support liability. Thus, the Tribunal finds that the income generated by [Company 1] is through the father’s efforts, though the Tribunal has no doubt that [Ms A] provides administrative assistance when not working on a full-time basis. In reaching this conclusion, the Tribunal makes no findings regarding the current nature of the father and [Ms A]’s relationship. In the Tribunal’s view it is irrelevant and so the Tribunal has disregarded the social media evidence on this point provided by the mother.

The Family Court has established the principle that in the case of self-employed parents, their taxable income may not be an accurate reflection of their earning capacity and financial resources. Several cases in particular have examined this issue closely, including Scott and Scott (1994) FLC 92-457 and Carey and Carey (1994) FLC 92-489. The Courts consider that self-employed people are able to derive additional benefits from their business in addition to wages. They also have greater control over the structure of their finances than an employee receiving salary or wages, and so may be able to use the income of the business in ways other than paying wages. Expenses and deductions which may be legitimate for tax purposes may not be considered to take precedence over child support obligations. Under child support law, other than the basic expenses necessary for self-support there are very few expenses which take precedence over the support of children. There is considerable divergence between the taxation system, which is intended to provide general support for many, and the child support system, which is intended to provide specific support for the children of relationships.
The Tribunal is hampered in determining the income and financial resources available to the father. [Ms A] has refused to provide any of the [Company 1] financial evidence, despite being directed to do so. The father’s bank statements indicate that he has minimal self-support costs and what deposits are made into his account are for discretionary purposes. The Tribunal has difficulty in reconciling the father’s payslips with [Company 1] payment summary details dated 17 November 2023 which indicates that his gross payments to that date were $54,197[36] whereas the payslip for the period ending 19 October 2023 indicates that his gross year to date income was $12,490.36.[37] This suggests that in 29 days the father earned over $41,000. However, there is also in evidence a payslip for the period ending 29 February 2024 which indicates that the father’s year to date income is $22,296.36.[38] Further, if the payment summary is relied on, this suggests that the father’s 2024 financial year income would be in the vicinity of $141,299.
[36] Folio B21
[37] Folio B20
[38] Folio B101
In Agrippa & Horton (SSAT Appeal) [2010] FMCAfam 1144, Halligan FM (as he was then) explained that parties in child support proceedings have a duty of full and frank disclosure and explained how decision makers are to deal with non-disclosure:
24. …In financial proceedings under the Family Law Act 1975 a party has a duty of full and frank disclosure of all of his or her financial circumstances (Black & Kellner, (1992) 15 Fam LR 343, (1992) FLC 92-287, Weir & Weir, (1992) 16 Fam LR 154, (1993) FLC 92-338). If it is established to the Court's satisfaction that there has been deliberate non-disclosure, “then the court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud” (Weir, above, FamLR at 158, FLC at 79,593).
25. In my view the same principle must apply in the assessment of child support for the same reason. If the SSAT is satisfied that a parent has made a deliberate non-disclosure of his or her financial circumstances, it should be reasonably robust in assessing the non-disclosing parent's financial circumstances adversely to that parent and in favour of the other parent. That is not to say that it may arrive at an entirely arbitrary result, but rather that it may draw generous inferences adverse to the non-disclosing party about that party's financial circumstances.
It is difficult to ascertain the father’s income and financial resources with any accuracy given the way in which he has arranged his financial affairs and the contradictory documentary evidence before the Tribunal. The father has disclosed annual income of approximately $54,000 from [Company 1],[39] which is consistent with his gross 2023 income. [Ms A] meets most, if not all, of the father’s share of the rental expense which is $19,760 per annum. He is also provided a motor vehicle from [Company 1], which the Tribunal conservatively values at $10,000 per annum. [Ms A] also apparently meets most household costs, including utilities and food. This suggests that the father has income and financial resources in excess of $100,000 per annum.
[39] Folio B3
In the circumstances, the Tribunal finds that it is both just and equitable that the father’s adjusted taxable income be varied to the male total average weekly earnings (MTAWE) for the 2023 year, being $82,524 from the date that the mother lodged her departure application being 20 April 2023. Of course, this may underrepresent the father’s actual income and financial resources given the Tribunal’s findings. In the absence of any reliable evidence as to the father’s actual income and financial resources available, the Tribunal is of the view that this strikes the correct balance and results in a just and equitable outcome.
Application of the MTAWE to the current administrative assessment would require the father to contribute about $9,096 per annum towards the costs of the children from 20 April 2023 and about $9,711 per annum from 1 September 2023. The father is currently assessed to contribute $0 in child support. This aspect of the decision will create arrears of about $10,100. Given the father’s income and financial resources and necessary expenses the Tribunal is certain these arrears will not cause him undue hardship.
The Tribunal is firmly of the view that it is unlikely that the father’s actual income and financial resources will be reflected in the administrative assessment into the future. To provide certainty to the parties, and to minimise the need for repeat proceedings, the Tribunal intends to vary the father’s annual rate until 31 December 2026. For ease of implementation for Child Support, the Tribunal has determined that the 2024 MTAWE is to be inflated by the September 2024 Sydney consumer price index is to be applied to the administrative assessment from 1 January 2025 to 31 December 2025. That resulting adjusted taxable income is to is to be inflated by the September 2025 Sydney consumer price index and to be applied to the administrative assessment from 1 January 2026 to 31 December 2026. Of course, should either parent’s circumstances change significantly during that time they are at liberty to lodge a departure application with Child Support.
The Tribunal is satisfied that it would be both just and equitable that the father meet half of the costs associated with the older child’s orthodontics, which is $3,850. The Tribunal is satisfied that the father has capacity to meet this cost given its findings regarding his income and financial resources. Certainly, by any reasonable measure the older child’s special needs have priority over his discretionary expenditure.
Given the Tribunal’s findings in respect of the father’s income and financial resources, it is satisfied that the father’s contribution to the older child’s orthodontic costs can be met over a one-year period, commencing on the date the mother lodged her application being 20 April 2023. This will create arrears in the vicinity of $3,850 in respect of the older child’s orthodontics.
The Tribunal has reached the requisite level of satisfaction that the father has capacity to meet his necessary expenses, his ongoing child support liability in addition to the arrears created by this decision. The Tribunal concludes that the father will not suffer undue hardship in meeting these arrears. Certain hardship would be caused to the mother and the children were the father not to contribute to the older child’s special needs and the children’s day to day expenses to the extent that his income and financial resources allow.
The Tribunal is satisfied that the administrative assessment is unfair given the older child’s special needs and the father’s income and financial resources. This results in an unjust and inequitable level of child support given the circumstances of each parent. For all these reasons, it is just and equitable to depart from the administrative assessment.

Otherwise proper

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. The mother is in receipt of family tax benefit in respect of the children of the assessment.
The Tribunal is satisfied that the departure from the assessment will better reflect the financial resources that have been available to both parents and ensure that the level of financial support provided by the parties for the children is determined according to their capacity to provide that support.
Amending the child support payable by the father may affect the mother’s rate of family tax benefit, depending on how Centrelink treats the increase in the administratively assessed rate of child support.
As there has been an increase to the annual rate on the basis of the older child’s special needs, Centrelink may determine that this increase in the child support payable should be excluded from the maintenance income amount. It is open to the mother to provide a copy of this decision to Centrelink so it may determine if the increase in the rate of child support payable should be excluded from the maintenance income amount used to calculate her entitlement to family tax benefit.
The determination is otherwise proper.

DECISION

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

·     Mr Murrell’s annual rate of child support is increased by $3,850 for the period 20 April 2023 to 19 April 2024;
·     Mr Murrell’s adjusted taxable income is varied to:
o   $82,524 for the period 20 April 2023 to 31 December 2023;
o   $85,389 for the period 1 January 2024 to 31 December 2024;
o   an adjusted taxable income of $85,389, inflated by the September 2024 Sydney consumer price index is to be applied to the administrative assessment from 1 January 2025 to 31 December 2025; and
o   the adjusted taxable income that applied to the administrative assessment from 1 January 2025 to 31 December 2025, inflated by the September 2025 Sydney consumer price index is to be applied to the administrative assessment from 1 January 2026 to 31 December 2026.