Forsyth and Ellingham (Child support)

[2018] AATA 533

Forsyth and Ellingham (Child support) [2018] AATA 533 (22 January 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/PC012256

APPLICANT:  Ms Forsyth

OTHER PARTIES:  Child Support Registrar

Mr Ellingham

TRIBUNAL:Member S Brakespeare

DECISION DATE:  22 January 2018

DECISION:

The decision under review is affirmed.

Member S Brakespeare

CATCHWORDS

Child support – Departure determination - High cost of child care – Cost of education –- 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. This  review is about whether there should be a departure from the administrative assessment of child support.

2. Mr Ellingham is the parent liable to pay child support to Ms Forsyth in respect of their two children; [Child 1], who is eight, and [Child 2], who is four. The administrative assessment is also based on care percentages reflecting that Ms Forsyth has 81% care and Mr Ellingham has 19% care of the children.

3. On 20 January 2017 Ms Forsyth made a departure application citing multiple grounds.

4. On 20 April 2017 an officer of the Department of Human Services, Child Support (the Child Support Agency) made a departure determination in the following terms (the original decision):

   ·      For the period 1 October 2016 to 31 December 2016 the annual rate of child support payable is to be increased by $6,510;

   ·      For the period 1 January 2017 to 31 December 2017  the annual rate of child support payable is to be increased by $8,301;

   ·      For the period 1 January 2018 to 31 December 2018 the annual rate of child support payable is to be increased by $1,898;

   ·      For the period 1 January 2019 to 31 December 2019 the annual rate of child support payable is to be increased by $2,012.

5. Mr Ellingham objected to the original decision.

6. On 14 July 2017 an objections officer partly allowed the objection and made a departure determination in the following terms (the objection decision):

   ·      For the period 1 January 2017 to 31 December 2017 the annual rate of child support payable by Mr Ellingham is increased by $3,915;

   ·      For the period 1 January 2018 to 31 December 2018 the annual rate of child support payable by Mr Ellingham is increased by $1,865.

7. Ms Forsyth lodged an application for review of the objection decision with the tribunal on 2 August 2017.

8. A hearing was held on 22 January 2018. Ms Forsyth and Mr Ellingham attended the hearing and gave sworn evidence to the tribunal. The Child Support Agency provided the tribunal and the parties with papers relevant to the review (196 pages) in accordance with subsection 37(1) of the Administrative Appeals Tribunal Act 1975.  Ms Forsyth and Mr Ellingham provided documents to the tribunal which were distributed to the parties prior to hearing (folios A1 to A13 and B1 to B30 respectively).

9. Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s consideration of the issues which it has to decide.

ISSUES

1. The statutory provisions relevant to these reviews are contained in the Child Support (Assessment) Act 1989 (the Act).

2. The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.

3. 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).

4. 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.

5. The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.

6. 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 and Gyselman [1991] FamCA 93 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.

7. 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”.

8. 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.

9. 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

1. Where multiple grounds of departure are cited the tribunal only needs to be satisfied that  at least one ground for departure has been established before moving on to consider what is a just and equitable determination. Issues relevant to the other grounds will be considered as part of that process.

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 child are significantly affected because of high child care costs in relation to the child (subparagraph 117(2)(b)(ib) of the Act) . A parent's costs involved in enabling the parent to care for a child can only be high if the costs that have been or will be incurred, during a child support period, total more than 5% of the amount worked out by:

   ·      dividing the parent's adjusted taxable income for the period by 365; and

·      multiplying the quotient by the number of days in the period (subsection 117(2B)).

1. The relevant child support period is 1 October 2016 to 31 December 2017. The tribunal finds that Ms Forsyth’s income amount worked out under subsection 117(2B) is $16,983.01. This means that Ms Forsyth’s out of pocket cost would need to be in excess of $849.00 to be considered high.  

2. Ms Forsyth provided the Child Support Agency with a Child Care Benefit and Rebate Statement covering the period 4 July 2016 to 19 February 2017. At hearing Ms Forsyth confirmed that that statement is the last available statement.

3. Based on that statement the objections officer calculated that the net childcare fees (after allowance has been made for both the child care benefit and child care tax rebate) for both children during the relevant child support period were likely to be $4,755. In arriving at the calculations the objections officer found that [Child 1] ceased attending child care on 31 January 2017 and [Child 2]’s attendance after 19 February 2017 would be calculated on the basis of two days of childcare per week. The tribunal accepts those calculations and finds that that the costs of child care during the relevant child support period are in excess of $849 and are therefore high.

4. Ms Forsyth advised the tribunal that she still incurs costs for after school care for [Child 1] on an ad hoc basis. However she provided no evidence in relation to the costs.

5. Mr Ellingham was of the view that as Ms Forsyth is not working child care is not necessary.

6. Ms Forsyth told the tribunal that she had to leave her previous position as it was shift work, and the hours did not work in with childcare. She said that she has continued to seek other employment since then and has left [Child 2] in childcare so that she has time for job searching. She noted that [Child 2] is at a Family Daycare which are very hard to get access to and therefore she was loath to give up [Child 2]’s place there, in case she returned to work. Ms Forsyth said that she was also unwell throughout 2017 and underwent a number of medical tests which eventually resulted in[a medical conditon]. She said that whilst she held a number of qualifications gained whilst in[another country] job searching has been difficult so far. Ms Forsyth told the tribunal that she is hopeful of securing employment soon as she has recently been interviewed for a position.

7. The tribunal accepts that Ms Forsyth had a need for childcare and that [Child 2] remained in childcare throughout 2017.The tribunal therefore finds that in the special circumstances of the case, the costs of maintaining [Child 1] and [Child 2] are significantly affected because of high child care costs in relation to the them. This means a ground for departure has been established.

Issue 2 – Is it just and equitable to make a particular 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[1], which are as set out in subsection 117(4) of the Act:

   [1] 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.

2. In having regard to the proper needs of the child, regard must be had to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Act).

3. It is not in contention and the tribunal finds that [Child 1] is currently attending a private Catholic school and that [Child 2] is enrolled, and is likely to attend the same school. At hearing Mr Ellingham acknowledged that the parents agreed that the children would be educated in the Catholic education system and that it was not his intention to make any change to the current arrangements.  He acknowledged that he ceased making the payments for [Child 1]’s school fees in late 2016. In his view the amount of child support he pays Ms Forsyth is sufficient to cover the schooling costs. He noted that he purchased school uniforms for [Child 1] to use when she is in his care.

4. Ms Forsyth contended that Mr Ellingham agreed, via a parenting plan, to pay the costs of education until she found work. She further noted that the Child Support Agency had only added the tuition costs to the child support assessment. In her view that did not cover the costs of the education.

5. The tribunal notes that the objections officer found that the total cost of the compulsory fees for [Child 1]’s education (tuition, building levy and amenities) was $1,776 in 2017, increasing to approximately $1,825 in 2018.  The tribunal finds that the compulsory fees are a significant extra cost to Ms Forsyth. The tribunal notes that the annual fee schedule for 2017 issued by the school includes a number of other costs specific to the level that the student is in. The tribunal is of the view that those other costs are not significant and, along with the costs of books and uniforms, are normal education costs which are catered for within the administrative assessment of child support.

6. In respect of costs of care incurred by the parent entitled to child support the tribunal finds that the likely net cost of childcare incurred in respect of [Child 2] from January 2017, when the departure application was made, and 31 December 2017, being the end of the relevant child support period, was $2,814.28. There was no evidence provided to support a finding that significant child care costs were incurred in respect of [Child 1] during that period.

7. The tribunal finds that Mr Ellingham’s adjusted taxable income for 2015/16 of $352,953 is currently used in the administrative assessment. In a Statement of Financial Circumstances submitted to the tribunal Mr Ellingham advised that he earns $5,900 per week in salary. He has no other source of income. His only asset of significance is his home (due for completion this week). He has minimal savings.

8. The tribunal finds that at all relevant times Ms Forsyth’s income used in the administrative assessment was less than the self-support amount allowed by the formula.

9. Mr Ellingham contends that Ms Forsyth’s income is higher, based on her lifestyle and expenses. He suggested that she is receiving undeclared income from employment in her partner’s business.

10. Ms Forsyth told the tribunal that she is in receipt of parenting payment and family assistance. Her father also assists her by paying some of her expenses on an ad hoc basis. Those expenses will at times include her rent and the cost of the children’s extracurricular activities. Ms Forsyth denies working in her partner’s business, or drawing an income from it. The tribunal notes that the Child Support Agency conducted enquires into Ms Forsyth’s partner’s business and found that there was no link between Ms Forsyth and the business.  The tribunal accepts this to be the case.  In a Statement of Financial Circumstances she completed for the tribunal Ms Forsyth indicated that she has no assets of significance.

11. Mr Ellingham advised the tribunal that he pays income tax of $2,420 per week, rent of $255 per week, mortgage payments of $846 per week and health insurance premiums of $62 per week. Mr Ellingham said that he has been paying $2,000 per month to repay a loan to Ms Forsyth’s father. The loan was in respect of the land on which he has built his home. There is $36,000 outstanding; however recently he had reduced the repayments to $1,000 per month as he has run into financial difficulty whilst building his home. Mr Ellingham said that the decision to build the home was a poor one in retrospect, and he may try to sell the home once it is finished.  

12. The tribunal finds that after accounting for Mr Ellingham’s income tax, rent, mortgage payments and health insurance premiums there is $2,317 per week left to pay his child support, the loan to Ms Forsyth’s father and his other necessary living expenses.

13. Ms Forsyth indicated that her household living expenses are approximately $2,900 per week  which includes rent of $500 per week and medical costs for her and the children of $320 per week. In respect of the medical costs for the children she stated that the children have required [medical]appointments at considerable expense to her. No evidence was provided to the tribunal regarding the need for and the costs incurred for the children’s special needs. Mr Ellingham told the tribunal that he had recently upgraded his  medical insurance to premium and he has asked Ms Forsyth to provide receipts of the medical costs so that he can claim a rebate for her. However she had not yet provided him with any receipts. Given the lack of evidence the tribunal cannot be satisfied that the children have special needs.

14. Ms Forsyth said that her partner and her father contribute to her expenses on an ad hoc basis.  Mr Ellingham contended that Ms Forsyth has overestimated her expenses.

15. The tribunal is not satisfied that the expenses listed by Ms Forsyth are accurate given her limited income and despite the fact her partner and father assist with her expenses on an ad hoc basis.

16. The tribunal proposes to make a departure determination in the following terms:

    ·      For the period 1 January 2017 to 31 December 2017 the annual rate of child support payable by Mr Ellingham is increased by $3,915;

    ·      For the period 1 January 2018 to 31 December 2018 the annual rate of child support payable by Mr Ellingham is increased by $1,865.

17. Such a determination results in a weekly child support liability for Mr Ellingham of $568.03 from 1 January 2017.

18. The tribunal notes that as at 9 August 2017 (being the most recent figures available to the tribunal) Mr Ellingham was up to date with his child support payments. The tribunal is satisfied that Mr Ellingham has capacity to meet those payments, given that after his major commitments are accounted for he has $2,317 per week available to him.

19. Ms Forsyth has no capacity to support the children as her income is less than the self-support amount set out in the child support formula. Whilst her father and partner contribute to her expenses the tribunal notes that neither of them have a duty to support the children.

20. The tribunal finds that it is just and equitable to increase Mr Ellingham’s child support liability  to take into account the extra education costs and the out of pocket costs of childcare.  There was no evidence before the tribunal regarding the costs of childcare for 2018 and it was unclear whether the childcare would be ongoing. For this reason no allowance is made for childcare costs after 31 December 2017.

Issue 3 – Is it otherwise proper to make a particular 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 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. It focuses on the balance of support carried between the parents on 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. 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.

2. Ms Forsyth is in receipt of family tax benefit for the children. A determination to increase the child support payable to her may decrease the amount of family tax benefit payable to her. As such a determination is likely to shift the burden from the taxpayer to the parent the tribunal finds it is otherwise proper to make the determination.

3. The departure determination that the tribunal is making reflects that made on objection.

DECISION

The decision under review is affirmed.