Flack and Sleiner (Child support)

[2019] AATA 1195

Flack and Sleiner (Child support) [2019] AATA 1195 (15 April 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/MC014035

APPLICANT:  Mr Flack

OTHER PARTIES:  Child Support Registrar

Ms Sleiner

TRIBUNAL:Member J Longo

DECISION DATE:  15 April 2019

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the receiving parent and the child - a ground for departure not established - 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 Flack and Ms Sleiner are the parents of [Child 1]. Mr Flack is currently the parent liable to pay child support and is currently subject to Departmental collection. [Child 1] is 100% in the care of Ms Sleiner.

3.Prior to the departure application, Mr Flack was assessed to pay an annual rate of child support of 1 December 2017 to 28 February 2019, Mr Flack is required to pay an annual rate of $11,598. This assessment was based on Mr Flack’s adjusted taxable income of $106,790 and Ms Sleiner’s 2016/2017 adjusted taxable income of $12,151.

4.Mr Flack applied to the Department for a departure from the administrative assessment on 22 January 2018 on the basis of Ms Sleiner’s income, property or financial resources (Reason 8A) and because of the income, earning capacity, property and financial resources of the child (Reason 4).

5.On 22 February 2018, a delegate of the Department refused to change the assessment on the basis that no ground was established. Mr Flack objected to the decision on 14 March 2018. An objections officer of the Department disallowed the objection on 10 May 2018 finding that no ground was established.

6.On 10 May 2018, Mr Flack lodged an application to the Administrative Appeals Tribunal (the tribunal) for an independent review of the decision on the basis of [Child 1]’s income. The application was heard on 8 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 Flack and Ms Sleiner. The tribunal deferred its decision on 8 February 2019 to obtain further information. 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 219; Mr Flack’s documents numbered A1 to A14.

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 4 – the income, earning capacity, property and financial resources of the child

8.Subparagraph 117(2)(c)(i) of the Assessment Act – commonly referred to as “Reason 4” by the Department – provides as a ground for departure:

(2)  For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:

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

(i) because of the income, earning capacity, property and financial resources of the child.

9.The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman [1991] FamCA 93 the Full Court of the 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. Likewise, in Philippe and Philippe (1978) FLC 90-433 the court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”. The tribunal was guided by these cases in the consideration of this application.

10.The tribunal has also considered the reasoning of the Full Court of the Family Court in the decision of Mee and Ferguson [1986] FamCA 3 (at paragraph 45):

(b) above refers to the financial capacity of the child to meet his own needs. In the vast majority of cases that would hardly be an issue. Section 76(1) (c) gives it unusual emphasis by requiring the court to take into account "the income, earning capacity, property and other financial resources of the child". Obviously it would not be appropriate for an Australian [Mr B] to look to Mr and Mrs [B] for his support. On the other hand it would in ordinary circumstances be unreasonable to expect that pocket money and other small sources of income derived from paper rounds and casual work after school and the like ought to be taken into account in diminishing the financial responsibility of the parents for the needs of that child.

11.In relation to the income and earning capacity of [Child 1], Mr Flack stated that [Child 1] left school when she was 16 and was no longer studying. Mr Flack stated that between May 2017 and August 2017 she was living with Mr Flack but then returned to reside with Ms Sleiner. On her return to Ms Sleiner, Mr Flack states that [Child 1] commenced full-time employment and he knows [Child 1] is working full-time because his daughter told him that she was working full-time but for cash-in-hand. He stated that at the time she was working at [Business 1]. Mr Flack stated that [Child 1] commenced working at [Business 1] around December 2017/January 2018 until June 2018. Mr Flack stated that [Child 1] told him that she was earning around $800 per week.

12.Since July 2018, he stated that [Child 1] had found another job at [Business 2] and that this employment was full-time employment. Mr Flack further stated that [Child 1] was earning less while at [Business 2] but still more than she would receive in youth allowance. Mr Flack further confirmed that since around December 2018, [Child 1] has been unemployed. Mr Flack told the tribunal that [Child 1] told him she left her job at [Business 2] because she was expected to work 10 to 12 hour days.

13.Mr Flack stated that [Child 1] paid for herself and her mother to go on a holiday to Bali. He stated that she would not have been able to afford this trip if she wasn’t working on a full-time basis. Mr Flack stated that [Child 1] did not have any other income, apart from her employment, and so could not have paid for the trip by other means.

14.Ms Sleiner stated that [Child 1] was working at [Business 1] but had ongoing mental health issues and did not work full-time. Ms Sleiner stated that [Child 1] was hospitalised in December 2017 but continued to be supervised by a psychologist on a fortnightly basis. Ms Sleiner stated that [Child 1]’s work at [Business 1] was spasmodic as she would fill in and cover other people’s shifts. Ms Sleiner stated that [Child 1] stopped working at [Business 1] around April/May 2018. Ms Sleiner stated that [Child 1]’s job at [Business 2] started in August 2018 and she was only working 4 to 6 hours per shift on Friday, Saturday and Sunday. Ms Sleiner stated that she only worked there until November 2018. Ms Sleiner stated that [Child 1] is not currently working.

15.Apart from the evidence of Mr Flack, which differed from Ms Sleiner’s evidence, no other evidence is before the tribunal regarding [Child 1]’s employment since December 2017. Mr Flack stated that he chose not to ask for information, such as payslips and bank account information, from [Child 1] due to the effect this would have and has had on their relationship.

16.The tribunal notes in the information provided, both to the tribunal and to the parties, that the Department made verbal enquiries from [Business 1] regarding [Child 1]’s employment. The notes in the documents indicate that [Child 1] was working casually at the time. In addition to these enquiries, the tribunal also issued statutory notices to the Department to obtain payslips and PAYG information for [Child 1] from [Business 2] and [Business 1], however the Department responded by saying that neither business provided a response to these requests and no information about her income was provided.

17.While it is clear that [Child 1] was working for both [Business 1] and [Business 2], the length of her employment and the hours she was working remains unclear. In the absence of other evidence to substantiate that [Child 1] had a level of income sufficient to be considered in the context of Mr Flack’s child support liability, the tribunal is not satisfied that there are no special circumstances in this case which establish subparagraph 117(2)(c)(i) of the Assessment Act. Therefore, this ground is not established.

Reason 8 – Income, property, financial resources

18.  Mr Flack also submitted that, in the special circumstances of the case, the administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by him for the children because of Ms Sleiner’s income, property and financial resources (subparagraph 117(2)(c)(ia) of the Act). Mr Flack stated that he believed that Ms Sleiner’s income was much higher than the $12,000 contained in the administrative assessment. He believed her income was closer to $70,000 per annum, based on the income from the business that she had with her husband. Mr Flack stated that some of the expenses claimed shouldn’t be accepted for the purpose of the child support assessment.

19.  Ms Sleiner disagreed with Mr Flack’s submissions on her income and stated that the business deductions were not income and these did not provide any extra income. She stated that the division of the income between her and her husband was determined by the household expenses and usually a 60/40 split, with 40% of the income being assigned to her. They did not pay regular wages from the business as the income was spasmodic and irregular but rather would use funds to pay their household expenses which were treated as drawings by the accountant. Ms Sleiner stated that she has separated from her husband and did not receive any cash settlement. Rather, she took over the retail shop and her ex-husband took over the [manufacturing] business from the dissolution of the partnership and she did not receive any monetary compensation.

20.  Since their separation, she has had to close the retail shop and is currently not employed. Ms Sleiner stated that the business was no longer viable and so she closed the shop on 27 December 2018. Her brother has lent her some money because her mother passed away in June 2018 – approximately $10,000. She is currently living in her mother’s home which is to be sold and the proceeds will be divided between her and two other siblings. She will be required to repay these funds. Her mother’s home has not been sold and will not be sold until after June 2019 as her mother’s will specified that she could remain in the house for 12 months after her mother passed away. She is currently looking for employment and is only in receipt of family tax benefit.

21.  The tribunal notes that Ms Sleiner did not provide any documents requested by the tribunal. As to why this information was not provided, Ms Sleiner stated that she did not have time to comply due to having to pack up the shop during the period.

22.  The tribunal has examined the partnership returns provided to the Department. The amount of the distribution to Ms Sleiner accords with her evidence of receiving 40% of the income. The tribunal notes that the other expenses in the business, such as the motor vehicle expenses, have been determined by way of the log book method which would seem to indicate they would not include any personal use. Even if some allowance were made for personal use, the amount would not, in the tribunal’s view, considerably affect the administrative assessment of child support. In addition, the tribunal is satisfied that Ms Sleiner has closed the retail business due to its lack of viability and is not currently working as this was not disputed.

23.In the circumstances and on the basis of the tribunal’s findings above in relation to both Mr Flack and Ms Sleiner’s circumstances, the tribunal is not satisfied that Ms Sleiner’s income, financial resources or property are such that it makes the assessment of child support under the administrative assessment unfair or unjust. Therefore, in the circumstances, the tribunal is not satisfied that a ground for departure is established under subparagraph 117(2)(c)(ia) of the Act.

Conclusion

24.As the tribunal has determined that there is no ground established to depart from the administrative assessment, no consideration is required of whether it is just and equitable and otherwise proper to depart from the administrative assessment.

DECISION

The decision under review is affirmed.