Dunfey and Farnsworth (Child support)

[2019] AATA 437

Dunfey and Farnsworth (Child support) [2019] AATA 437 (1 February 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/MC014996

APPLICANT:  Mr Dunfey

OTHER PARTIES:  Child Support Registrar

Mrs Farnsworth

TRIBUNAL:Member J Longo

DECISION DATE:  1 February 2019

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – necessary commitments for self-support for the liable parent - costs of orthodontic costs for the child – financial resources of both parents - decision under review affirmed

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

REASONS FOR DECISION

BACKGROUND

1.The issue to be determined in this application is whether there is a reason to change the administrative assessment of child support and, if so, whether it is just and equitable and otherwise proper to do so.

2.Mr Dunfey and Mrs Farnsworth are the parents of [Child 1]. Mr Dunfey is the parent liable to pay child support. The application for child support was registered with the Department of Human Services – Child Support (the Department) from 23 August 2004 and is currently subject to Departmental collection. [Child 1] is 100% in the care of Mrs Farnsworth.

3.Prior to the departure application, Mr Dunfey was assessed to pay an annual rate of child support of $2,120 for the period 1 September 2017 to 30 September 2018. This was based on Mr Dunfey’s 2016-2017 adjusted taxable income of $50,825 and Mrs Farnsworth’s 2016-2017 adjusted taxable income of $69,345. From 1 October 2018 to 3 December 2018, Mr Dunfey was required to pay an annual rate of child support of $1,989. This assessment is based on Mr Dunfey’s 2017-2018 adjusted taxable income of $50,815 and Mrs Farnsworth 2017-2018 provisional income of $70,940.

4.Mrs Farnsworth applied to the Department for a departure from the administrative assessment on 1 May 2018 in the special circumstances of the case, on the basis of Mr Dunfey’s income, property or financial resources (Reason 8A) and [Child 1]’s special needs (Reason 2). On 19 June 2018, a delegate of the Department decided that the grounds were established and made a departure determination as follows:

·From 1 May 2018 until a terminating event occurs, Mr Dunfey’s self-support amount is reduced to $0.

·For the period 1 May 2018 to 31 December 2019, the annual rate of child support payable by Mr Dunfey is increased by $1,368.

5.Mr Dunfey objected to the decision on 19 June 2018. An objections officer of the Department partly allowed the objection on 7 September 2018 and departed from the administrative assessment as follows:

·The decision to increase the annual rate of child support payable by Mr Dunfey from 1 May 2018 to 31 December 2019 by $1,368 per annum in respect of [Child 1]’s orthodontic costs is affirmed.

·From 20 June 2018 until a terminating event occurs on the case for [Child 1], Mr Dunfey’s self-support amount is reduced by 50%.

6.On 10 September 2018, Mr Dunfey lodged an application to the Administrative Appeals Tribunal (the tribunal) for an independent review of the decision. The application was heard on 1 February 2019. The tribunal considered the documents and information provided to the parties prior to the hearing,[1] as well as the oral evidence of Mr Dunfey and Mrs Farnsworth. Additional information was provided to the tribunal after the hearing and exchanged between the parties. Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s reasons for decision.

[1] Administrative Appeals Tribunal Act 1975 subsection 37(1) and section 38AA; Statement and Documents provided by the Department numbered 1 to 414; Mr Dunfey’s documents numbered A1 to A110; and Ms Farnsworth’s documents numbered B1 to B143.

CONSIDERATION

THE LEGISLATIVE FRAMEWORK

7.The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act1989 (the Assessment Act). The liable parent or a carer may apply for a determination departing from the administrative assessment under Part 6A of the Assessment Act. Section 98C establishes a three-step process to be satisfied: that there is a ground for a departure; that it is just and equitable to depart; and that it is otherwise proper. Once satisfied, the tribunal may make one of the determinations prescribed in section 98S of the Assessment Act.

Reason 2 – [Child 1]’s special needs

8.The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Subparagraph 117(2)(b)(ia) of the Assessment Act – commonly referred to as “Reason 2”– states as follows:

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

…

(ia) because of special needs of the child;

9.The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman [1991] FamCA 93 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. Ms Farnsworth’s submission to the tribunal, and to the Department, was that [Child 1]’s orthodontic treatment was a special need.

10.Ms Farnsworth provided a cost estimate[2] from [Child 1]’s orthodontist, [Dr A], and an additional report from the orthodontist on 4 December 2018. The costs associated with this treatment are $7,200. The report indicates that [Child 1] commenced orthodontic treatment on 18 May 2017. The report,[3] provided by [Dr A], to the tribunal indicates a need for treatment on the basis of the following:

[2] Page 106 of the subsection 37(1) Departmental documents.

[3] Page B90 of Mrs Farnsworth’s documents.

[Child 1] has required treatment on the basis of his crowding, which has caused some difficulties with ease of cleaning. Crowding of the teeth in teenage years if left untreated classically increases with time as the back teeth tend to drift forward over time, causing more bunching up and movement of the front teeth. This then results in a further increase in lack of access to all tooth surfaces for cleaning which means an increase in the risk of tooth decay and gum disease.

Secondly, [Child 1] has a discrepancy in the sizes of his jaws. The lower jaw being smaller than average creating a gap between his upper and lower front teeth. If left untreated, this can cause excessive wear on the teeth creating a need for expensive restorative treatment in the future.

11.The report does state that while [Child 1]’s orthodontic situation is not severe, he will achieve short term and long term benefits in the improvement of his health and well-being. [Dr A] states that the treatment is in no way purely cosmetic.

12.Mr Dunfey stated that he was not consulted and never involved in the process about [Child 1]’s orthodontics. He stated that he didn’t attend any appointments and was unable to obtain information from the orthodontist regarding the process and the costs. Mr Dunfey stated that he had seen the report provided but he did not think that the condition was critical. While he conceded that if his teeth were straightened, then it would be better, he thought it was something that wasn’t necessary. He has the same dental problems and has not been treated.

13.Ms Farnsworth stated that part of the cost was covered under her private health insurance. The amount of her insurance rebate ($2,640) reduced the cost of the orthodontic treatment to $4,560.

14.The tribunal is satisfied that [Child 1]’s orthodontic treatment was necessary and for a functional purpose. In regard to Ms Farnsworth’s costs of maintaining [Child 1] being significantly affected by this special need, the tribunal concludes that the costs of orthodontics, even with the health insurance and Medicare rebates, are significant and affect Ms Farnsworth’s ability to maintain [Child 1] as they are a significant addition to the costs stated in her statement of financial circumstances. The tribunal therefore concludes that there are special circumstances in this case which establish a ground for departure under subparagraph 117(2)(b)(ia) of the Assessment Act.

Other grounds

15.The tribunal also notes that Ms Farnsworth has sought a departure from the administrative assessment on the basis of Mr Dunfey’s income, property and financial resources (Reason 8A). However, the tribunal has already determined that there is a ground to depart from the administrative assessment based on the considerations above. The tribunal will therefore consider the submissions on this issue in the context of whether it is just and equitable and otherwise proper to depart from the administrative assessment.

Would departure from the administrative assessment be just and equitable?

16. As the tribunal is satisfied that there is a ground to depart from the administrative assessment, the next step is to consider whether it is just and equitable to depart from the administrative assessment. In deciding whether it is just and equitable, the tribunal had regard to the matters set out in subsection 117(4) of the Assessment Act. Section 3 of the Assessment Act makes it clear that the parents of a child have the primary duty to maintain the child over all commitments of the parents other than commitments necessary for self-support or the support of another person to which they have a duty. In determining the proper needs of a child, it is necessary to have regard to any special needs of the child (subsection 117(6) of the Assessment Act). The tribunal has considered the evidence of the parties relating to the needs of the child.

17.  Mrs Farnsworth also referred to [Child 1] playing [a sport]. She stated that he has been accepted to play at the State level and into  [a sports training program]. Mrs Farnsworth stated that he is also attending and playing in the State development program. Mrs Farnsworth provided total costs associated with his [sport] programs of $849.50, which includes registration costs for [the sports program]and health screening (compulsory). Mrs Farnsworth also included other costs associated with [Child 1]’s [sport activities], including local registration fees and the cost of shoes. Mr Dunfey stated that while [Child 1] is a good player, he does not believe he is at an elite level. The tribunal does not consider that the [sport] costs are significant costs which affect Mrs Farnsworth’s ability to maintain [Child 1]. On this basis, the tribunal has decided not to make a specific determination in relation to these costs.

18.  Mr Dunfey stated that his current income is through employment as a [Occupation 1] for [Company 1]. He has been employed at [Company 1] for 16 years. He was previously [professionally accredited] but he think his registration has lapsed. While he referred to himself as a [Occupation 1] in his statement of financial circumstances, he does a number of different tasks including [details deleted]. His statement of financial circumstances indicates that he has income of $52,000 per annum (gross). Mr Dunfey stated that he has a vehicle available for his personal use provided by his employer. The vehicle is registered to [Company 1] and the financial services package is paid by [Company 1]. He is reimbursed for any work-related costs for the vehicle but has to pay for private use. The work-related expenses are reimbursed in cash or cash cheque. Mr Dunfey stated that he has his own vehicle that he uses as the [Company 1] company car is sometimes used by the director.

19.  Mr Dunfey gave evidence to the tribunal that he owes around $200,000 to his parents which he has borrowed in the last two years. He stated the money was borrowed to pay for his expenses, including living expenses, legal bills and child support. Mr Dunfey stated that whatever payments he needed, his parents paid for these expenses. He stated that he had around $60,000 to $70,000 in legal costs. The amounts were provided in small sums, around $2,000 at a time, as he asked for the money. As Mr Dunfey did not have any credit, his father would help him out, paying whatever needed to be paid to avoid receiving any demands for payment. Mr Dunfey stated that the account to which he repaid the funds was a joint account. After the hearing, Mr Dunfey provided information from [Bank 1] which showed that he was a signatory to the account but that the account was not in his name.

20.  The tribunal referred Mr Dunfey to his [Bank 1] account which ended in “[number]”. The account shows Mr Dunfey’s salary from [Company 1] being paid into this account from October 2017 until June 2018. Furthermore, no withdrawals were made from the account. Mr Dunfey stated that he used the funds provided to him by his father to pay for all his expenses and saved his salary during this period.

21.  The tribunal also notes that Mr Dunfey’s other accounts provided to the tribunal, including his Visa Paycard account, do not show any transactions between April 2018 and December 2018. The passbook account in Mr Dunfey’s name also shows minimal use. Mr Dunfey provided his father’s passbook account as evidence of the repayments. The account shows two payments – $56,000 on 14 June 2018 and $148,000 on 20 June 2018. The $56,000 payment was the accumulated amount in the “[number]” account from Mr Dunfey’s income from [Company 1]. The remainder was redrawn from his mortgage account.

22.  Mr Dunfey stated that due to his level of indebtedness and expenses, he is unable to afford to contribute to [Child 1]’s costs. He stated in his application that he disagreed with the current assessment of child support and that he is left with $300 per month to live on since the decision was made. He states in his statement of financial circumstances that he has expenses of $27,336 per annum and mortgage payments of $11,640 per annum.

23.  Mr Dunfey’s statement of financial circumstances shows personal expenditure of $110 per week and household expenses of $812 per week. He has stated in the statement of financial circumstances that he has assets including his home ($800,000); motor vehicle ($1,000); funds in bank accounts ($3,242); and household contents ($5,000). The statement indicates he has around $121,000 in superannuation.

24.  Mrs Farnsworth’s Statement of Financial Circumstances shows total income of $1,249 per week ($64,948 per annum) from employment as a business development manager. Mrs Farnsworth also has rental income of $520 per week ($27,040 per annum). Her household expenditure is $2,305 per week, which is shared with [her partner], and personal expenditure of approximately $350 per week. These costs are for all members of the household, including [Child 1] and Mrs Farnsworth. In relation to Mrs Farnsworth’s assets, she owns her home jointly ($950,000 total value) and an investment property ($820,000); her car (valued at $25,000); funds in bank ($20,000) and household contents ($10,000). Mrs Farnsworth discloses liabilities including a mortgage on the principal home ($236,000 total); a mortgage on the investment property ($71,000 in total); and credit card debts ($7,963). Mrs Farnsworth has approximately $65,000 in superannuation.

25.  The tribunal is satisfied that it is just and equitable to depart and determines Mr Dunfey should contribute to half the orthodontic costs ($2,280) for [Child 1]. The tribunal has also determined that Mr Dunfey’s annual rate of child support should be varied by way of a reduction in his self-support costs. The Department, in the objection decision determined as follows:

·      The annual rate of child support payable by Mr Dunfey from 1 May 2018 to 31 December 2019 is increased by $1,368 per annum.

·      From 20 June 2018 until a terminating event occurs on the case for [Child 1], Mr Dunfey’s self-support amount is reduced by 50%.

The tribunal agrees with this determination and has decided it is appropriate in the circumstances.

26.  In Humphries & Berry (SSAT Appeal) [2008] FMCAfam 409, Slack FM dealt with the issue of the disclosure of financial information in matters before the tribunal. His Honour made it clear that the principle of full and frank disclosure applicable to proceedings in the Family Court was also applicable to proceedings before the then Social Security Appeals Tribunal.

27.  His Honour stated as follows at paragraph 30 and 31 below:

In circumstances where a party (in this case the appellant) places before the SSAT inconsistent, confusing and incomplete financial information, the fact that the SSAT can and may exercise its powers to obtain further information that might clarify the financial circumstances of a party does not relieve a party of their primary obligation to disclose their financial affairs in a manner that can readily be understood. The extent to which the SSAT should exercise its powers of information gathering and testing of evidence in each case will depend on the circumstances of the matter but the exercise of such power or the failure to exercise such power does not in any way derogate from the immutable obligation and duty of both parties throughout the proceedings before the SSAT to make full, frank and cogent disclosure of all relevant information pertaining to their financial affairs in order that the Tribunal can make a proper assessment of their respective capacities to provide for the needs of their children.

In financial proceedings under the Family Law Act, the authorities make it clear that a Court should not be unduly cautious about making findings in favour of the other party if it is not satisfied that proper disclosure has been made (see Chang & Su (2002) FLC93-117)”. Such principles, in my consideration, have similar application to these matters before the SSAT.

28.  Similarly, in K & M (No.2) [2007] FMCAfam 920 the Court said as follows:

“The law is clear: there is a duty in proceedings of this type on every party to provide full disclosure of their financial position. If full disclosure is not provided the Court is at liberty to make appropriate inferences and findings from the non-disclosure, and not to be unduly cautious in doing so when making findings or drawing inferences against the non-disclosing party.^”

29.  Mr Dunfey maintains that he is unable to afford the amount of child support, including the cost of orthodontic treatment. However, he is not meeting his expenses from his income and was not doing so for some time. Rather, his income was accumulating in his account. Mr Dunfey maintains that his parents, namely his father, paid for his expenses during the period October 2017 to June 2018. No evidence of the funds he has received have been provided, apart from a copy of Mr Dunfey’s father’s passbook account showing some withdrawals, without any reference, which Mr Dunfey claimed were payments to him from his father for his expenses. Mr Dunfey has not provided any evidence of the expenses paid, such as his legal costs for the last two years, for which he required the assistance of his parents.

30.  The tribunal is not satisfied, based on the evidence provided, that Mr Dunfey was in fact indebted to his parents. During the period Mr Dunfey was not using his income for the purpose of paying his day to day living costs but rather it accumulated in his account. Mr Dunfey has maintained that he is unable to afford the additional child support for [Child 1]. This has been his basis for opposing the present application since it was initiated in May 2018. However, no evidence to support this position has been presented. It is Mr Dunfey’s duty to disclose his financial circumstances and to be full and frank in this disclosure. The tribunal is not satisfied that Mr Dunfey has done so in this matter. It is clear that Mr Dunfey’s expenses have not been met from his income, but it is unclear how these expenses were paid. What is also unclear is on what the $205,000 purported to have been loaned to him by his parents has been used to pay. His expenses prior to the mortgage repayments were $27,336 per annum, according to his statement of financial circumstances. This would not amount to $205,000 over two years. Accordingly, the tribunal does not accept he owed money to his parents as stated. Further, the tribunal concludes that Mr Dunfey has access to additional financial resources which have not been disclosed. Accordingly, the tribunal does not accept the submission that he is unable to afford the amount of child support assessed.

31.  The above determination represents Mr Dunfey’s 50% ($2,280) contribution to [Child 1]’s orthodontic costs over the period. The tribunal has determined that the reduction in the self-support amount, by 50%, on the basis that Mr Dunfey has not shown any expenditure for his own self-support, and thus this will provide an increase in child support payable compared to the administrative assessment which was in place prior to the application for a departure determination. The tribunal has determined that such a reduction is appropriate in this matter based on the discussion of Mr Dunfey’s expenditure above. The tribunal has also taken into account Mrs Farnsworth’s income and financial resources in its determination.

32. The tribunal has carefully considered all of the written and oral evidence and costs regarding the children’s proper needs. The income, resources, benefits and assets, together with the commitments and liabilities of both parties, were also scrutinised to determine the above departure determination. In considering all of the factors in subsection 117(4) of the Assessment Act, the tribunal has taken the view that both parties will not experience hardship as a consequence of this departure determination, based on the above considerations. If circumstances change in the future, it is open to either party to seek a further departure determination based on these circumstances.

Is it otherwise proper to make a particular departure determination?

33. The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Assessment Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be ‘otherwise proper’ to make a departure determination. Subsection 117(5) focuses on the balance of support carried between the parents on the one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. Paragraph 117(5)(b) of the Assessment Act means that the tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support. The tribunal has concluded that it is otherwise proper in the circumstances to depart from the administrative assessment.

DECISION

The decision under review is affirmed.