Gager and Gager (Child support)

[2018] AATA 3990

Gager and Gager (Child support) [2018] AATA 3990 (13 August 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/BC013707

APPLICANT:  Mr  Gager

OTHER PARTIES:  Child Support Registrar

Ms Gager

TRIBUNAL:Deputy President J Walsh

DECISION DATE:  13 August 2018

CATCHWORDS
Child support - Refusal of application for departure - No reasonable prospects of success - Application for review dismissed under paragraph 42B(1)(b) of the AAT Act

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

DISMISSAL OF APPLICATION FOR REVIEW:

1. In this matter, the applicant father sought review of a decision which refused his application for departure from the administrative assessment of child support. His objection was disallowed on 6 March 2018. The father sought to have his child support liability assessed by taking account of the mother’s earning capacity, rather than her actual income from part-time employment.

2. There had been a previous departure decision dated 6 March 2017 which determined that the mother’s adjusted taxable income was $40,000 until 31 October 2017, based on her actual income. At the time of his further departure application in October 2017, from 4 September to 31 October 2017, the father’s child support liability has been administratively assessed at $17,048 per annum based on his 2017 adjusted taxable income of $220,566 and the mother’s adjusted taxable income of $40,000. From 1 November 2017 to 30 November 2018, his liability was $19,620 per annum based on the same income for him but a provisional income of $17,208 for the mother. The basis of both the primary decision and the objection decision to refuse to depart from the administrative assessment was that a relevant ground for departure was not made out.

3. The father’s application to the Tribunal was made on 16 March 2018. After a preliminary proceeding designed to narrow the issues in dispute, the matter was referred to me to consider whether it might be appropriate to dismiss this application under paragraph 42B(1)(b) of the Administrative Appeals Tribunal Act 1975. Mindful that such a course ought not be lightly taken, the registry was instructed to write to the father to give him an opportunity to put any further evidence or submission he wanted considered by the Tribunal. He provided written submissions in response. I then convened a telephone directions hearing on 13 August 2018 in order to ensure I properly comprehended his case. 

4. After considering the father’s written and oral submissions and the other material before the Tribunal, I decided to dismiss this application on the basis it had no reasonable prospect of success.  My reasons can be briefly stated.

The mother’s earning capacity

1. The essence of the father’s case was that, by only working part-time, the mother had a greater capacity to earn income and her earning capacity, rather than her actual income, should be reflected in the child support assessment. I noted that, given the parents shared the care of the children, a material increase to the mother’s income in the child support assessment would likely result in a significant reduction in the quantum of the father’s child support liability. I also noted that in mid-November 2017, the CSA had issued a new administrative assessment with effect from 1 November 2017 which took account of the mother’s actual 2017 adjusted taxable income of $44,855. This resulted in the father’s child support liability being reduced to $16,340 per annum from 1 November 2017.    

2. Before a departure determination can be made, it is necessary to follow the three-step process in section 98C of the Child Support (Assessment) Act 1989. The first step requires that a ground for departure be found to exist. In his application for departure, the father raised the mother’s provisional income of $17,208 per annum in the child support assessment as well her earning capacity.

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 Gyselman v 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. The Court said:

   Whilst it is not possible to define with precision the meaning of that term, 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 administrative formula result in the ordinary run of cases…. In Savery’s case (1990) FLC 92-131 (p77,897), Kay J…. said that ‘special circumstances’ were ‘facts peculiar to the particular case which set it apart from other cases’.

4. The father’s submissions about the mother’s income and earning capacity were in substance directed to the ground for departure found in subparagraphs 117(2)(c)(ia) and (ib) of the Assessment Act which provide:

   (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:

   ….

   (ia)  because of the income, property or financial resources of either parent; or

   (ib) because of the earning capacity of either parent…

5. In simplified terms, the practical test posed by these provisions in the circumstances here was whether there were special circumstances making the administrative assessment of child support unfair by reason of the mother’s income or earning capacity. I noted the provisional income issue had become redundant, since the mother’s 2017 adjusted taxable income of $44,855 had now been reflected in the child support assessment from November 2017.

10.  That left the mother’s earning capacity.  The term “earning capacity” is not defined in the Assessment Act. However, before a determination can be made that a person’s earning capacity is greater than their income in the child support assessment, subsection 117(7B) must be considered. It provides:

In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:

(a)  one or more of the following applies:

(i)  the parent does not work despite ample opportunity to do so;

(ii)  the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full‑time work for the occupation or industry in which the parent is employed or otherwise engaged;

(iii)  the parent has changed his or her occupation, industry or working pattern; and

(b)  the parent’s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:

(i)  the parent’s caring responsibilities; or

(ii)  the parent’s state of health; and

(c)  the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.

The father submitted that, having regard to the objects of the child support legislation, the clear intent of subparagraph 117(2)(c)(ib) and subsection 117(7B) was directed to a parent having a responsibility to maximise their earning capacity (and therefore income available for the support of the children). When asked which limb of paragraph 117(7B)(a) he relied on, he submitted that subparagraph (i) was satisfied. His submission was that the reference to “work” in this provision should be construed as a reference to full-time work. Accordingly, since it was common ground that the mother worked part-time hours, it was open to find subparagraph (i) was satisfied.      

11.  Earning capacity can be a basis for finding a ground for departure is made out (the first step in the three-step process). Earning capacity is also relevant in the context of the matters to be considered in assessing whether a departure would be just and equitable (the second step): see 117(4)(c) and (da) of the Assessment Act. Whether it is considered that the limitation in subsection 117(7B) applies at the first step or only at the second step, it nevertheless must be applied before it is open to make a departure decision based on earning capacity.

12.  Turning then to the essence of the father’s position, the material before the Tribunal showed that the mother had worked on a part-time basis for several years, including prior to separation. In my view, it was not open to find she did not work. I rejected the father’s submission that full-time work was the benchmark for the relevant assessment under subparagraph 117(7B)(a)(i). Given that the Parliament included full-time work as the benchmark for consideration under subparagraph 117(7B)(ii), I considered it simply not open to construe subparagraph (i) other than according to the plain language of the provision. The mother did work, albeit part-time hours, and had done so for an extended period. Subparagraph (i) could not be satisfied in the circumstances. I considered the text in subparagraph 117(7B)(b), referring to the decision “not to work”, to reduce the number of hours, or to change occupation etc (each of which relates to subparagraph 117(7B)(i), (ii) and (iii) respectively) was consistent with my view (and not consistent with the father’s position).  It followed I considered it was not open, in the circumstances, of this case, to make an earning capacity determination such that the mother’s earning capacity was greater than her income  in the child support assessment.       

The mother’s current income    

13.  At the directions hearing, the mother explained that she had recently increased her hours of work by two hours per week (from about mid-June 2018). Given her hourly rate, this meant her current income was increased by about 10%. Both parents agreed with my suggestion that her current income was then of the order of $48,500 per annum and I proceeded on that basis. The father submitted there should at least be a decision made to reflect this increased income.  

14.  There are a number a points which can be made in this respect. The normal formula assessment under Part 5 of the Assessment Act is based on the parents’ most recently assessed adjusted taxable incomes. It is inevitable that such prior year incomes will not precisely match current year incomes in most cases. So some disparity between past income and current income is inevitable. That is certainly not special.

15.  On my calculations, increasing the mother’s income in the child support assessment from $44,855 to $48,500 would reduce the father’s liability by about $320 per annum. At face value, it was difficult to see that a possible reduction of about $6 per week could be sensibly said to render the existing assessment unfair. In the ordinary course, the father’s child support obligation was determined by the Part 5 assessment, until and unless the Tribunal made a departure determination. Such a departure could not be ordered in the absence of a finding that a ground for departure was made out. Here, that required a finding that the increase in the mother’s income gave rise to special circumstances and that the existing administrative assessment produced an unfair outcome. The point beyond which a possible reduction in the child support administrative assessment might render an existing assessment unfair may not always be bright; exercises in evaluative judgments will result in shades of grey at the margins. However, on any objective assessment, I did not consider it reasonably open to find a failure to order the small potential reduction here in issue could sensibly be said to result in injustice or inequity.

16.  In the result, I did not consider there was any proper basis upon which it could be determined that a ground for departure on account of the mother’s increased income was made out. It followed that a departure determination could not be made.

Conclusion

17.  Amendments to the AAT Act made by the Tribunals Amalgamation Act 2015 broadened the scope of the Tribunal’s dismissal powers. Subsection 42B(1) relevantly provides:

(1) The Tribunal may dismiss an application for the review of a decision, at any stage of the proceeding, if the Tribunal is satisfied that the application:

(a) is frivolous, vexatious, misconceived or lacking in substance; or

(b) has no reasonable prospect of success; or

(c) is otherwise an abuse of the process of the Tribunal.

The Revised Explanatory Memorandum to the Tribunals Amalgamation Bill 2014 explained that these powers “would provide the Tribunal with greater power to dismiss unmeritorious matters early where appropriate.”

18.  The Tribunal’s statutory objective is, inter alia, to provide a mechanism of review that is fair, just, economical, informal and quick: see section 2A of the AAT Act.

19.  It is trite that the power to dismiss an application on the basis it has no reasonable prospect of success ought be sparingly invoked. In this case, after careful consideration, I came to the view that the father’s application could not succeed.

20. In the circumstances, and guided by the Tribunal’s statutory objective under section 2A of the AAT Act, I decided that it was appropriate to exercise the power available under paragraph 42B(1)(b). Permitting proceedings that simply could not succeed to continue would be inconsistent with notions of justice, fairness, economy and proportionality that the Tribunal must take into account. Accordingly, I dismissed the father’s application.