Eaton and Daniels (Child support)

[2019] AATA 5108

Eaton and Daniels (Child support) [2019] AATA 5108 (9 October 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/PC016061

APPLICANT:  Mr Eaton

OTHER PARTIES:  Child Support Registrar

Ms Daniels

TRIBUNAL:Member M Martellotta

DECISION DATE:  09 October 2019

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education - manner expected by both parents - cost of maintaining the children are significantly affected – a ground for departure established - financial resources of the liable parent – not just and equitable to depart – decision not to depart - 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. Mr Eaton and Ms Daniels are the parents of a child born 25 October 2000.[1] The child was recorded as being in Mr Eaton’s above primary care. Ms Daniels was the parent liable to pay child support. This review is about whether there should be a departure from the administrative assessment of child support.

   [1] The assessment ended on 6 December 2018.

2. On 9 August 2018 Mr Eaton made a change of assessment application on the basis of reason 3 which relates in this case specifically to the private education costs of the child. At the time, the assessment in place provided that:

   ·For the period 1 October 2017 to 31 July 2018 the annual rate of child support was $1,257 based upon the 2016/17 adjusted taxable income (ATI) of $31,363 for Ms Daniels and the 2016/17 ATI of $148,574 for Mr Eaton.

   ·For the period 1 August 2018 to 6 December 2018 the annual rate of child support was $427, based upon a 2017/18 ATI of $22,031 for Ms Daniels and a 2017/18 ATI of $139,130 for Mr Eaton.

3. The Department of Human Services – Child Support (the Department) decided on 14 November 2018 that the ground for departure was established but it was not just and equitable to depart from the administrative assessment.

4. Mr Eaton’s objection to that decision was disallowed on 6 February 2019. Mr Eaton then sought independent review by the tribunal. A telephone directions hearing was conducted on 9 August 2019 with Mr Eaton and Ms Daniels both in attendance by telephone conference. Directions were issued.

5. A hearing was held on 9 October 2019. Mr Eaton attended by telephone conference and gave evidence under affirmation. Ms Daniels did not attend the hearing.[2] The tribunal had before it documents provided by the Department (148 pages) and documents provided by Mr Eaton (A1–A14).

ISSUES

[2] In effect Ms [Daniels] did not participate in the proceedings following the telephone directions hearing, she did not respond to the Directions and could not be contacted on the date and time allocated for hearing.

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act). The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act. Under Part 6A of the Act the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).

2. Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and it establishes a three-step process such that the issues for determination by this tribunal are:

   ·     whether a ground is established to depart from the administrative assessment of child support; and

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

   ·     if so, whether it is otherwise proper to make a particular departure determination.

3. The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act. Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman & Gyselman (1992) FLC 92-279 has held:

   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 formula in the ordinary run of cases.

4. Likewise, in Phillippe and Phillippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”. If the tribunal is satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the tribunal may make one of the determinations prescribed in section 98S of the Act. The range of determinations which can be made includes variations to: the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

Issue 1 – Is there a ground for departure?

1. A ground for departure exists if, in the special circumstances of the case, the costs of maintaining the children are significantly affected because the children are being cared for, educated or trained in the manner that was expected by their parents (subparagraph 117(2)(b)(ii)).

2. At hearing Mr Eaton explained that following his and Ms Daniels’s separation they had always communicated upon the education arrangements for their daughter. When he moved to [City 1], it was eventually agreed that their daughter would go and live with him. They agreed upon a private education for their daughter. The cost of that education at [her school] would be met equally on the basis that Ms Daniels would make application [for a scholarship] to cover 50% of the school fees and Mr Eaton would meet the other half of the costs. Mr Eaton stated that it was agreed that if Ms Daniels was unable to secure the scholarship she would personally cover the 50%. The parties jointly enrolled their daughter on this basis

3. This arrangement went to plan until the 2018 academic year when due to problems with the Trust, Ms Daniels was unable to obtain the funds to cover the education costs from the Trust. Mr Eaton said that Ms Daniels never paid her share and  he was required to pay the entire funds himself being a total of $28,852.

4. As noted Ms Daniels did not provide evidence at the hearing but the tribunal noted that Mr Eaton’s evidence was consistent with information provided to the Department including the education costs. Information provided by the Department also confirmed that Ms Daniels had previously obtained scholarships from the Trust to cover half the costs of their daughter’s private education but this did not happen in 2018.

5. In deciding this matter, the tribunal needs to consider the type of education expected by both parents rather than any particular school intended by the parents (Wild v Ballard (1997) FLC 92-771). The tribunal will also need to consider and determine whether both parents expected that the child would be educated privately. The decision of one parent, in the absence of agreement, whether directly or indirectly, is not sufficient.

6. On the basis of the presented evidence the tribunal was satisfied and finds that the parents had an agreement that their daughter would be privately educated. The tribunal concluded that the parents had a mutual intention and expectation of private education.

7. The tribunal also finds that the parties had met the costs of that private education through a 50% personal contribution by Mr Eaton and by the remaining cost being met by Ms Daniels accessing a scholarship fund set up by [a specified] Trust. The tribunal finds that in the 2018 academic year that Ms Daniels was unable to secure a scholarship from the Trust and that the costs for that academic year totalling $28,852 were met by Mr Eaton.

8. Child support legislation does not require both parents to be liable for the costs. The most that it requires is the cost must be of an amount that significantly affects the costs of maintaining the children. The issue as to whether Ms Daniels can afford to contribute towards the cost of schooling for the 2018 academic year will be considered by the tribunal when determining what is a just and equitable determination.

9. In this matter the tribunal concluded that in the special circumstances of the case, the costs of maintaining the child are significantly affected because the child is being educated in the manner that was expected by their parents. For this reason, the tribunal therefore finds that there is a ground for departure.

Issue 2 – What is a just and equitable determination?

1. As the tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the children, the liable parent, and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to consider the matters discussed below,[3] which are as set out in subsection 117(4) of the Act:

   [3] The tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act; Tyagi & Meares [2008] FMCAfam 886.

   (4) In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:

   (a) the nature of the duty of a parent to maintain a child (as stated in section 3); and

   (b) the proper needs of the child; and

   (c) the income, earning capacity, property and financial resources of the child; and

   (d) the income, property and financial resources of each parent who is a party to the proceeding; and

   (da) the earning capacity of each parent who is a party to the proceeding; and

   (e) the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:

   (i) himself or herself; or

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

   (f) the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and

   (g) any hardship that would be caused:

   (i) to:

   (A) the child; or

   (B) the carer entitled to child support;

   by the making of, or the refusal to make, the order; and

   (ii) to:

   (A) the liable parent; or

   (B) any other child or another person that the liable parent has a duty to support;

   by the making of, or the refusal to make, the order; and

   (iii) to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.

Duty to maintain the children

1. Both parents have a duty to maintain the child and in this regard the tribunal notes the following relevant provisions of the Act:

   …that parents of a child have a primary duty to maintain the child. The duty has a priority over all commitments of the parent other than commitments necessary for self-support.[4]

   [4] Section 3 of the Act.

Proper needs of the children

1. In determining the proper needs of the child it is necessary to have regard at a broad level to the manner in which the child is being, and in which the parents expect the child to be, cared for, educated or trained, and also any special needs of the children.

2. There was no evidence regarding other special needs. The tribunal has already found that the costs of the child’s private education in 2018 was $28,852 and is satisfied that the private education is a relevant cost that is to be taken into account.

Income, earning capacity, property and financial resources of the children

1. In having regard to the income, earning capacity, property and financial resources of the child the tribunal must disregard any entitlement of the child or the carer entitled to child support to an income tested pension, allowance or benefit (subparagraph 117(7)(b)(ii) of the Act).

2. There was no evidence presented to the tribunal that the child of the assessment had at the time any income or unused earning capacity that needed to be taken into account in the child support assessment and as such the tribunal concludes that there is no basis for any adjustment pursuant to this consideration.

Other party receiving money, goods and property for the benefit of the children

1. There was no evidence or submissions presented to the tribunal in relation to this aspect and as such the tribunal concludes that there is no basis for any adjustment pursuant to this consideration.

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

1. Mr Eaton in effect submitted that there should be a departure from the assessment requiring Ms Daniels to reimburse him 50% of the 2018 academic year costs as this was the agreement between them. He also says that based on anecdotal evidence it is his belief that the assessment does not properly reflect Ms Daniels’s actual income which he believes to be higher than the ATI utilised in the assessment.

2. Mr Eaton says that Ms Daniels has established a successful [Business 1] and has undertaken some [work] and also has a [second] business which makes money [in] [Town 1]. He says he has no evidence to indicate what her actual income is but notes that on the last visit to [City 1] Ms Daniels seemed to have access to funds as she was able to buy a new car and pay for airline tickets for herself and their daughter.

3. The tribunal finds that:

   a)Mr Eaton is employed full time as a [Occupation 1].

   b)His Statement of Financial Circumstances shows that he has an average gross weekly income of $2,772. He has expenses of about $684 per week.

   c)He has remarried and lives in his partner’s home with his daughter.

   d)He confirmed that he does not have any housing costs and lives in a property owned by his wife.

   e)His most recent tax return shows that he had a taxable income of $129,692 in 2018/2019.

4. The tribunal has limited additional information regarding Ms Daniels.  An internet search confirms  and the tribunal finds that that she operates [Business 1] which advertises [specific products] and high-quality merchandise.[5] Discussions between the Department and Ms Daniels note her advice that she had only started the [business] in about mid-2018 and that as of October 2018 it had not made any significant income and that she did not have capacity to contribute to the costs of the school fees. Department documents otherwise show and the tribunal finds  that Ms Daniels’s ATI is based upon social security payments that she received in the 2016/17 and 2017/18 financial years.

   [5] [Source deleted]

Earning capacity

1. Subsection 117(7B) of the Act contains provisions regarding what needs to be considered in relation to earning capacity. In the Federal Magistrates Court of Australia decision of Ongal and Materns [2009] FMCAfam 476 at 105 to 107 the issue of earning capacity was considered in the following terms:

   The legislative provisions regarding “capacity to earn” cases have been significantly modified as a result of the report of the Ministerial Taskforce on Child Support. The Taskforce recommended that a parent’s income should only be increased on the basis that parent had a higher capacity to earn income if three criteria were satisfied:

   ·The parent was unwilling to work despite having ample opportunity to do so or had reduced his or her level of normal full time work below that which was normal in the industry in which he or she was employed;

   ·The decision of that parent to work less hours was not based on caring responsibilities or the state of health of that parent;        

   ·On the balance of probabilities, a major purpose for the parent’s decision, in respect of his or her employment, was to affect the level of child support assessed.

2. No specific submissions were made in this regard but on the basis of available evidence the tribunal concluded that it was not open to make a finding in this regard. On the evidence it appears that Mr Eaton has been employed long term as a [Occupation 1], whilst Ms Daniels has been in receipt of social security support payments and in 2018 established a business.

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

1. The self-support amount used in the assessment was $24,535. The tribunal notes that this was more than Ms Daniels’s 2017/18 ATI of $22,031. In relation to Mr Eaton the tribunal notes that on the basis of his evidence he does not have any extraordinary costs of self-support that would be relevant to the assessment.

Any hardship that would be caused

1. A parent's child support liability is usually based upon the parent's most recent taxable income. The Department can also look beyond a parent's taxable income when considering an application for a change of assessment. Income, earning capacity, property and financial resources, which do not necessarily form part of a parent's taxable income, can be added to or excluded from a child support assessment.[6]

   [6] Carey and Carey (1994) FLC 92-489.

2. In this matter the assessments were based upon the parties’ respective ATIs, which in Mr Eaton’s case consisted of his income as a [Occupation 1] and in Ms Daniels’s case consisted of social security payments.

3. Whilst there is evidence that Ms Daniels established a business in 2018 there is insufficient  evidence to contradict that the ATI as utilised by the Department in the assessment was not appropriate or reasonable. At hearing Mr Eaton concedes that he has no actual evidence to support his suspicions that Ms Daniels’s income as utilised in the relevant assessments does not reflect her actual income. Whilst it is open to the tribunal to draw an adverse inference from a party’s failure to comply with Directions issued by the tribunal or by Ms Daniels’s failure to attend the hearing in this case there is no sufficient evidence that would allow the tribunal in its view to make a finding other than one which concludes that in this matter it was appropriate for the Department to utilise the relevant ATI as provided by the Australian Taxation Office.

4. Mr Eaton told the tribunal that he has not suffered any hardship as a result of having to meet his daughter’s school fees in 2018. He said that it was not a case that he did not have financial capacity to meet the cost. On the contrary the tribunal concluded that on the available evidence it would appear that Ms Daniels did not have capacity to personally meet 50% of the costs incurred in the 2018 academic year. In this regard the tribunal notes that her contribution has historically always come from a scholarship awarded by [a specific] trust fund, that she was otherwise at the relevant time in receipt of social security payments and otherwise in the process of establishing a small business.

5. On the available evidence the tribunal was not satisfied that Ms Daniels would have had the capacity to meet the costs of her daughter’s education in the absence of the scholarship award. The tribunal concluded that it would not in the particular circumstances of this case be just and equitable to depart from the administrative assessment.

6. For these reasons the decision under review is affirmed.

DECISION

The decision under review is affirmed.