Finnigan and Parkinson (Child support)

[2018] AATA 3061

Finnigan and Parkinson (Child support) [2018] AATA 3061 (20 June 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/MC013478

APPLICANT:  Mr Finnigan

OTHER PARTIES:  Child Support Registrar

Ms Parkinson

TRIBUNAL:Member T Hamilton-Noy

DECISION DATE:  20 June 2018

DECISION:

The Tribunal affirms the decision under review.

CATCHWORDS
Child support - Departure determination - Income, property and financial resources of liable parent  Redundancy payment from previous employer is a financial resource - A ground for departure exists - Decision to depart - Period of departure - 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 Finnigan and Ms Parkinson are the separated parents of [Child 1]. 

2. A case has been registered with the Department of Human Services – Child Support (the Department) since December 2011 and child support is currently collectable by the Department.  Mr Finnigan is the payer of child support in this matter and Ms Parkinson the payee.

3. At the time the relevant application was made, the following child support assessments were in place:

   ·      For the period 14 July 2017 to 30 September 2017, Mr Finnigan was to pay $414 per annum (the minimum annual rate), based on his 2017/2018 income estimate of $0 and Ms Parkinson’s 2015/2016 adjusted taxable income of $89,506.

   ·      For the period 1 October 2017 to 30 June 2018, Mr Finnigan was to pay $420 per annum (the minimum annual rate), based on his 2017/2018 income estimate of $0 and Ms Parkinson’s 2016/2017 adjusted taxable income of $87,409.

4. On 28 August 2017 Ms Parkinson applied for a departure determination on the basis that the income, property and financial resources of Mr Finnigan made the assessment unfair (called “Reason 8” by the Department).

5. Mr Finnigan cross-applied on the basis that his legal duty to support another person significantly reduces his capacity to support [Child 1] (called “Reason 9” by the Department) and that his capacity to support [Child 1] is significantly reduced because of his duty to support a resident child of the household (called “Reason 10” by the Department).

6. On 9 November 2017 a senior case officer of the department found a ground to depart from the administrative assessment was established and made a decision to depart from the administrative assessment such that, for the period 13 June 2017 to 15 February 2021, Mr Finnigan’s adjusted taxable income was varied to $136,630 per annum.

7. On 5 December 2017 Mr Finnigan objected to this decision.  On 1 February 2018 an objections officer of the Department considered the objection and disallowed the objection.

8. On 9 February 2018 Mr Finnigan made application to the Administrative Appeals Tribunal for an independent review of the Department’s decision.  A directions hearing was conducted on 18 April 2018, and the hearing itself was held on 20 June 2018.  At the hearing the parties both spoke to the Tribunal by conference telephone and gave evidence on affirmation.  The Tribunal had before it documents provided by the Department (1 to 252), documents provided by the applicant (A1 to A22) and documents provided by the second party (B1 to B17).  Copies of all documents were provided to the parties prior to the hearing and they confirmed receipt of the documents with the Tribunal. 

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Assessment Act) and the Child Support (Registration and Collection) Act 1988.

2. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Assessment Act. The liable parent or carer may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Assessment Act. Section 98C of the Assessment Act provides that the Registrar may make a determination to depart from the formula assessment and establishes a three step process. The Registrar, and the Tribunal standing in the place of the Registrar, must be satisfied that:

   (i)there is a ground to depart from the administrative assessment of child support;

   (ii)it is just and equitable to depart; and

   (iii)it is otherwise proper to depart.

3. The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Each ground is prefaced by the term “in the special circumstances of the case”. The term “special circumstances” is not defined in the Assessment Act. 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.

4. If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Assessment Act.

CONSIDERATION

Issue 1 – Is there a ground established to depart from the administrative assessment of child support?

1. The Tribunal noted that the initial application was made on the basis of Mr Finnigan’s income, property and financial resources and the Tribunal therefore considered this ground first.

2. Subparagraph 117(2)(c)(ia) of the Assessment Act provides that a ground for departure exists where, in the special circumstances of the case, application of the provisions of the Assessment Act relating to the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child because of the income, property and financial resources of either parent. The Tribunal considered each of the parent’s levels of income, property and financial resources under this ground.

Mr Finnigan

1. The Tribunal noted that the administrative assessments before it, for periods covering 14 July 2017 to 30 September 2017, used Mr Finnigan’s income estimate of $0 for the 2017/2018 financial year.  The Tribunal accepted that this assessment was lodged after Mr Finnigan was made redundant from his former position of employment and was made on the basis of Mr Finnigan’s estimate of ongoing income from employment.

2. The Tribunal accepted that, prior to June 2017, Mr Finnigan was employed on a long-term basis with [Company 1].  The Tribunal accepted Mr Finnigan’s evidence at the hearing that he was made involuntarily redundant as part of widespread redundancies made by the company in early June 2017.  A letter prepared by [Company 1] to the Child Support Agency dated 3 October 2017, contained on the Department’s documents, stated that Mr Finnigan was employed between 14 July 1986 and 2 June 2017, that he was paid fortnightly at the gross base rate of $5,254.94, and that payments made to him may have included overtime.  During his employment he salary sacrificed amounts to vehicle leases and superannuation.  The letter outlined that the following termination payments were made to Mr Finnigan:

   Redundancy payment tax free  $159,006

   ETP component of redundancy                  $149,867

   Annual leave paid on termination                $91,029

   LSL paid on termination  108,565

   Salary 7.2 hours  $525

3. Mr Finnigan accepted these amounts as correct in his oral evidence at the hearing and the Tribunal accepted these amounts as correct.

4. The Tribunal noted that the Department had calculated that the above payments made to Mr Finnigan were the equivalent of $136,630 per annum income over a 3.8 year period.  The Tribunal accepted that the amount of $136,630 represented Mr Finnigan’s previous level of income calculated by the employer.

5. The Tribunal accepted that, between the date of the objections officer’s decision and the Tribunal hearing, Mr Finnigan had lodged his income tax returns for 2015/2016 (adjusted taxable income advised by the Australian Taxation Office (ATO) to the Department was $133,693) and 2016/2017 (adjusted taxable income advised by the ATO to the Department was $477,503).  The Tribunal, however, preferred the approach of the Department in reflecting that the large lump sum payment made to Mr Finnigan was intended to represent his usual salary over a longer period of time and considered that this better reflected the intended ongoing income and financial resources intended to be available to Mr Finnigan following the termination of his employment.

6. As to any other property or financial resources available to Mr Finnigan, the Tribunal accepted that Mr Finnigan resides in a house he owns.  Mr Finnigan stated to the Tribunal that he purchased the property with Ms Parkinson in 2013 or 2014 and moved into the property in, he thinks, August 2015.  At that time the mortgage on the property was $225,000.  The Tribunal found that, at the time of the Tribunal hearing, Mr Finnigan had paid the remaining $205,000 mortgage owing from the redundancy payment he had received from his former employer.

7. Ms Parkinson in her evidence at the hearing asserted that Mr Finnigan owns two properties, not one property as he had advised the Tribunal.  The Tribunal asked Mr Finnigan about any interest in any other properties and he stated no, the property in question was owned by his son.  The Tribunal then asked about the history of the property and Mr Finnigan stated his name had previously been on the title to the property. When asked when his name was removed from the title to the property, Mr Finnigan stated it had been two weeks prior to the Tribunal hearing.  As to why the property had not been disclosed on the Statement of Financial Circumstances form he had completed several weeks earlier, he stated that he was “already engaged in the process”.  The Tribunal found Mr Finnigan to give his evidence reluctantly in respect of this property and found that he had obfuscated his interest in the property in the documentary information he provided to the Tribunal. 

8. Ms Parkinson also asserted at the hearing that Mr Finnigan owns numerous cars, and pointed to insurance payments being taken out of his bank account to [a business] as evidence that he was paying insurance for more than one car.  The Tribunal did not find, on the evidence before it, that Mr Finnigan has an interest in a number of cars such that this interest increases his level of financial resources for child support purposes.

9. As to his income going forward, Mr Finnigan stated to the Tribunal that he will not make the same kind of money again given where he lives [and] because he is nearly 50 years old.  While he initially trained as a [tradesperson] he has not done this work for 25 years.  He has applied for “a few” jobs unsuccessfully.  He is unable to travel for work [because] of the needs of his son who lives with him.  He was provided some funding for retraining by [Company 1] and has completed a number of courses in the second half of 2017.

Ms Parkinson

1. The Tribunal accepted from the evidence before it that Ms Parkinson’s 2015/2016 adjusted taxable income of $89,506 and 2016/2017 adjusted taxable income of $87,409 represented her level of income in the financial years in question.  The Tribunal accepted Ms Parkinson’s evidence that she has been with her current employer for nine years and is currently working on a full-time basis.  While her estimated weekly earnings of $1,927 indicate her income has increased, the Tribunal considered that some variations in a parent’s income, in particular increases in income across financial years, was not unusual or uncommon.

2. As to any other property or financial resources owned by Ms Parkinson, the Tribunal heard from Mr Finnigan during the hearing that Ms Parkinson had received $660,000 for her house and her superannuation amount had been misrepresented to the Tribunal.  The Tribunal heard from Ms Parkinson that she owns a block of land which she purchased with money from her last property, the sale amount of which she stated she did not want to disclose.  She stated that she has $200,000 remaining in a NAB account which will be used to build a house, through a progressive payment plan.  The Tribunal found on the evidence before it that, while Ms Parkinson has an amount of savings in a bank account, the money is intended to be used for a place of residence and that she is, in the meantime, renting.  The Tribunal noted that any income received from the interest from the account will be reflected in Ms Parkinson’s relevant income tax returns.

3. The Tribunal found on the evidence before it that Ms Parkinson’s adjusted taxable incomes correctly reflect her financial capacity to provide for [Child 1] in the period under review.  The Tribunal found that Mr Finnigan was assessed on $0 income for periods covering 14 July 2016 to 30 June 2018 and that this resulted in a requirement to pay the minimum annual rate of child support ($414 per annum up to 30 September 2017 and then $420 per annum from 1 October 2017 onwards).  The Tribunal found that the effect of the redundancy payment was that Mr Finnigan’s equivalent earnings were $136,630 per annum ongoing for a further 3.8 years past his redundancy date.  When used in the assessment of child support, this resulted in amounts of $12,475 (13 June 2017 to 3 October 2017) and $12,478 (4 October 2017 to 30 June 2018) payable by Mr Finnigan.  The Tribunal found that the discrepancy between the child support payable in the administrative assessment and the amount payable when taking into account Mr Finnigan’s actual level of financial resources established special circumstances in this case that makes the level of financial support to be provided by Mr Finnigan unfair.  This ground for departure is established.

Issue 2 – Is it just and equitable to make a departure 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 child, 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 Assessment Act. The Tribunal has already discussed the income, property and financial resources of the parents in detail above. The Tribunal also had regard to the following matters:

The nature of the duty of a parent to maintain a child and the income, earning capacity, property and financial resources of the child

1. The tribunal found that [Child 1] does not have access to any other income, property or financial resources from which to support himself.  He is still of very young age and is reliant upon his parents to meet all of his needs.

The proper needs of the child

1. The Tribunal heard from Ms Parkinson that [Child 1] has [a health] problem and his specialist wants him to purchase [medication] which cost $100 per month, and to consider [other aids] which will cost $10,000.  Ms Parkinson described these possible costs as a “recent thing” and stated that recent actual costs have included $589 and [$24].  As to when further costs may be incurred, Ms Parkinson stated that she has to return in a month’s time and see how much further [Child 1]’s [health condition] has deteriorated.

2. The Tribunal also heard from Ms Parkinson that [Child 1] is in a private primary school which costs $1,500 per annum.  She stated that she had had a discussion with Mr Finnigan about [Child 1]’s education but the Tribunal understood from her evidence that [Child 1]’s enrolment at the school had not been by mutual intention of the parties but rather was a decision made by Ms Parkinson alone.

The earning capacity of the parties

1. As to the earning capacity of each of the parents, the Tribunal noted that subsection 117(7B) of the Assessment Act requires the Tribunal to consider the following matters in determining that a parent’s earning capacity is greater than is reflected in his or her income used in the administrative assessment:

   ·    Whether the parent:

   oIs not working despite ample opportunity to do so (subparagraph 117(7B)(a)(i));  and/or

   oHas reduced their weekly hours of work to below full-time work (subparagraph 117(7B)(a)(ii));  and/or

   oHas changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii));  and

   ·    If the parent’s decision about his/her work arrangements is not justified by either his/her caring responsibilities (subparagraph 117(7B)(b)(i)) or his/her state of health (subparagraph117(7B)(b)(ii));  and

   ·    If the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to stop working, reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support (paragraph 117(7B)(c)).

2. The Tribunal accepted that Mr Finnigan was employed by [Company 1] for over 30 years up to 2 June 2017.  The Tribunal found that, as at 2 June 2017, Mr Finnigan changed his working pattern.  On the evidence before it, this decision was not due to caring responsibilities or for health reasons.  However, the Tribunal did not find that it was a major purpose of Mr Finnigan’s change to his working pattern to affect the administrative assessment of child support.  In so finding, the Tribunal noted the involuntary nature of the redundancy and Mr Finnigan’s stated attempts to retrain and find further work since June 2017.  The Tribunal concluded that it is not open to make an earning capacity determination in respect of Mr Finnigan’s circumstances.

3. The Tribunal accepted that Ms Parkinson has been employed as [an occupation] over a nine year period, currently on a full-time basis.  While she stated she has had periods of working less than full-time over the nine years, the Tribunal found that these were a result of her caring responsibilities for [Child 1] and her other children.  The Tribunal found that it is not open to make an earning capacity determination in respect of Ms Parkinson’s circumstances.

The necessary commitments of Mr Finnigan

1. The Tribunal accepted that Mr Finnigan resides with his eight-year-old son.  The Tribunal noted that Mr Finnigan’s Statement of Financial Circumstances listed household expenses for Mr Finnigan and his dependent child of $605 per week.  The Tribunal accepted that these continue to represent Mr Finnigan’s ongoing necessary expenses.  Mr Finnigan stated that in addition to paying his mortgage off, he has paid his phone and electricity bill in advance and his partner is currently assisting with food and clothing for [Child 2].

The necessary commitments of Ms Parkinson

1. The Tribunal accepted that Ms Parkinson resides with [Child 1] and three other children.  As to [Child 1]’s specific costs, the Tribunal accepted that the $70 per week in education related to [Child 1]’s costs and that the other estimated costs were shared between the four children.  Based on these findings, the Tribunal concluded that Ms Parkinson’s costs for her own necessary self-support expenses and those of [Child 1] are $953.50 per week. 

The direct and indirect costs incurred by Ms Parkinson in providing care for [Child 1]

1. The Tribunal found that Ms Parkinson is currently employed on a full-time basis.  The Tribunal did not find on the evidence before it that Ms Parkinson has been foregoing income in order to provide care for [Child 1] during 2017 or 2018.

Hardship

1. Paragraph 117(4)(g) of the Assessment Act requires the Tribunal to consider any hardship that would be caused to [Child 1] or to Ms Parkinson by the making of, or the refusal to make, a departure determination; and also to consider any hardship that would be caused to Mr Finnigan or any other child or other person that Mr Finnigan has a duty to support, by the making of, or the refusal to make, a departure determination.

1. Mr Finnigan stated to the Tribunal that he currently owes a bill to [a government agency] of $7,500, which he is repaying at $20 per month.  He stated that he has no funds left from his redundancy payment and his partner is assisting him financially at the moment, including meeting [Child 2]’s clothing and food costs.  As to how he is meeting his estimated weekly household expenses, he stated that he is “not really” meeting them.  He paid his phone and electricity bill in advance and his partner is assisting.  He no longer has mortgage payments.  He owes a friend $1,600 for a solicitor’s bill.

2. In considering the question of hardship, the Tribunal also had regard to the expenditure by Mr Finnigan of his redundancy payment.  Mr Finnigan stated to the Tribunal that he paid $205,000 off his mortgage, rewired the house for $6,000 and fixed the driveway for $20,000.  He also fixed the flooring and toilet in the house and put in a new kitchen.  He described this as having been necessary to make the house liveable.  In addition he gave his father $30,000 from a previous debt from years ago and $400 for children’s driving fines.

3. The Tribunal noted during the hearing that when considering any question of hardship, the manner in which hardship had arisen should also be considered.  Mr Finnigan stated in response that he made the payments to clear his debt and that he originally didn’t realise he would be required to pay the amount of child support the Department had set.

4. The Tribunal considered that Ms Parkinson’s current net income is insufficient to meet her estimated weekly household expenses.  In addition, Ms Parkinson may have additional [health] costs for [Child 1] in the foreseeable future.  The Tribunal considered that there would be hardship to Ms Parkinson and to [Child 1] if the Tribunal were to refuse to make a departure determination in this case.

Other matters considered by the Tribunal

1. The Tribunal noted that Mr Finnigan had cross-applied to the Department for a reduction in his child support obligations due to the care he provides to another biological child, [Child 2], who resides with him over 90% of the time. Mr Finnigan applied under two grounds on this basis, on the ground that he has a legal duty to support another person which reduces his capacity to provide for [Child 1] (called “Reason 9” by the Department) and that his capacity to provide for [Child 1] is significantly reduced because of a resident child of the household (called “Reason 10” by the Department). The Tribunal noted that [Child 2] is not a resident child as defined in paragraph 117(10)(a) of the Assessment Act, however, considered whether Mr Finnigan’s duty to provide for [Child 2] should be recognised as reducing his capacity to provide for [Child 1].

2. During the hearing the Tribunal asked Mr Finnigan about the costs of providing care to [Child 2].  Mr Finnigan stated that [Child 2] has been diagnosed with [a health condition] and that karate lessons had been recommended for him two months prior to the hearing.  [Child 2] resides with him over 90% of the time.  [Child 2] takes medication but has a health care card; his medication is $7 which lasts a few weeks at a time.  He attends a swim lesson for $10 per week.  The carer allowance Mr Finnigan receives covers [Child 2]’s medication and karate and other needs.  He estimated it costs him about $50 per week to provide care to [Child 2].

3. In addition to these regular costs, Mr Finnigan stated that [Child 2] attends a specialist [Dr A] and that this has recently cost him $300 for two visits, after the Medicare rebate available to him.  As to the frequency, he stated that lately it has been a bit and he is back again in a couple of months.  As to the necessity of the karate lessons, Mr Finnigan stated that he had put that to [Dr A] who had agreed with him it would be useful.

4. The Tribunal noted that Mr Finnigan was receiving a multi-case allowance in the administrative assessment of child support in recognition of the care he provides to [Child 2]. As to whether, or what, allowance should be reflected over and above this, Mr Finnigan stated to the Tribunal that he was “not going to over exaggerate” the costs of [Child 2] and that the carer allowance he receives covers [Child 2]’s costs.

5. The Tribunal found from this that Mr Finnigan does not incur costs for [Child 2] to a level that the child support payable for [Child 1] should be affected.

6. The Tribunal noted that Mr Finnigan had also raised, in relation to these grounds, the care he was providing to three older children.  Mr Finnigan stated that these children are no longer dependent on him; this has been in the last year or so.  The Tribunal considered that any support Mr Finnigan had provided to these children in the past also does not affect Mr Finnigan’s obligation to assist with [Child 1]’s needs.

What is the proposed departure determination in this case?

1. The Tribunal placed particular weight on the significant difference between Mr Finnigan’s estimate of income of $0 used in the administrative assessments of child support and the significant redundancy payment he received in mid-2017, which allowed his base income of $136,360 to be continued over a 3.8 year period.  The Tribunal considered that this payment means Mr Finnigan has the capacity to contribute to [Child 1]’s needs well above that required in the administrative assessment.

2. The Tribunal considered there was insufficient evidence of significant medical needs of [Child 1] going forward to increase child support further on this basis, and noted that Mr Finnigan also has a child in his care with a level of medical needs.

3. The Tribunal noted that, while Mr Finnigan had subsequently lodged his 2015/2016 and 2016/2017 tax returns, the use of these amounts (and in particular the 2016/2017 adjusted taxable income of $477,503) for a one year period would not reflect the several years the payment was intended to provide a benefit to Mr Finnigan for.  On this basis, the Tribunal considered that the use of Mr Finnigan’s base salary of $136,628 over a four year period was the preferable approach.

4. While the Tribunal noted Mr Finnigan’s evidence as to his current straitened financial circumstances, the Tribunal considered that any hardship to Mr Finnigan was a result of the decisions around his expenditure of the entirety of the payout.  Further, he has recently handed a property over to another son which has further reduced his financial resources.  The Tribunal placed weight on the hardship that would be caused to Ms Parkinson and [Child 1] if the Tribunal did not increase child support payable by Mr Finnigan for [Child 1].

5. The Tribunal considered that the setting of Mr Finnigan’s income at $136,630 for the period 14 July 2017 to 14 March 2021 was the correct and preferable approach in this case, taking into account all of the factors set out above.  This will provide a level of certainty to the parties going forward as to their respective obligations and child support payable, and will see [Child 1] through the majority of his primary school years.  A reconsideration of Mr Finnigan’s financial position in early 2021 will allow for a reassessment based on whatever future employment he is able to secure.

Issue 3 – Is it otherwise proper to make a departure determination?

1. 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. The Tribunal accepted that Ms Parkinson is eligible for a lump sum payment of family tax benefit for the 2016/2017 and 2017/2018 financial years based on her level of income. The Tribunal found that the departure determination proposed in this case is likely to reduce the impact on the public purse. The Tribunal found that it is otherwise proper to make the proposed departure determination.

2. For this reason the Tribunal affirms the decision that, for the period 14 July 2017 to 14 March 2021, Mr Finnigan’s adjusted taxable income is varied to $136,630 per annum.

DECISION

The Tribunal affirms the decision under review.