Geldart and Rearick (Child support)

[2024] AATA 2906

Geldart and Rearick (Child support) [2024] AATA 2906 (23 July 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2024/MC027530

APPLICANT:  Ms Geldart

OTHER PARTIES:  Child Support Registrar

Mr Rearick

TRIBUNAL:Member C Breheny

DECISION DATE:  23 July 2024

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – particulars of the administrative assessment – income, property and financial resources – earning capacity not correctly reflected – unjust and inequitable determination – difficulties obtaining suitable long-term employment – decision under review affirmed

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted 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. Ms Geldart and Mr Rearick are the separated parents of [Child 1], born June 2008, and [Child 2], born October 2011. A child support case was initially registered (for collection) with Services Australia – Child Support (Child Support) from 12 December 2017. At the time Mr Rearick was assessed to pay child support to Ms Geldart and child support was payable on the basis that Ms Geldart and Mr Rearick had shared care of the children. From 7 March 2019 Ms Geldart became liable to pay child support to Mr Rearick based on a nil income estimate for 2018/19 lodged by Mr Rearick on 14 March 2019.

2. On 27 April 2019 Ms Geldart lodged an application for a change of assessment stating that the administrative assessment did not adequately reflect the parties’ income, property and financial resources (also known as Reason 8A). The matter was ultimately decided by the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal) upon a review application from Mr Rearick. In a decision of 19 May 2020, the Tribunal (differently constituted) determined that Mr Rearick’s adjusted taxable income was varied to $95,910 per annum from 7 March 2019 to 6 April 2020 and Ms Geldart’s adjusted taxable income was varied to $83,253 per annum from 7 March 2019 to 30 June 2019 and to $90,000 per annum from 1 July 2019 to 30 November 2020.

3. On 21 February 2022 Ms Geldart applied for a second change of assessment application, submitting that the administrative assessment did not adequately reflect Mr Rearick’s income, property, financial resources and earning capacity (Reasons 8A and 8B). On 4 August 2022 a child support objections officer determined that Mr Rearick’s adjusted taxable income was set at $49,611 per annum for the period 21 February 2022 to 30 November 2023. Mr Rearick lodged an application for review with the Tribunal and on 21 April 2023 the Tribunal (differently constituted) determined that Mr Rearick’s adjusted taxable income was varied to $96,056 per annum for the period 21 February 2022 to 30 June 2023, based on Mr Rearick’s earning capacity. This decision reduced Ms Geldart’s child support liability from $5,300 per annum to $330 per annum.

4. For the period 1 July 2023 to 30 November 2023 Ms Geldart’s child support liability was administratively assessed as being $5,560 per annum based on her 2021/22 adjusted taxable income of $95,581 and Mr Rearick’s 2021/22 adjusted taxable income of $52,033.

5. On 12 July 2023 Ms Geldart contacted Child Support to apply for a third change of assessment on the basis that Mr Rearick’s earning capacity was not correctly reflected in the assessment (Reason 8B). She submitted that the previous Tribunal decision ought to continue and that she should not have to pay child support to Mr Rearick.

6. On 19 October 2023, a Child Support decision-maker decided that Reason 8B was established and set Mr Rearick’s adjusted taxable income at $100,000 per annum for the period 1 July 2023 to 31 October 2026, based on his earning capacity. On 22 November 2023 Mr Rearick objected to the decision and on 22 January 2024 a Child Support objections officer allowed the objection. The objections officer found that no ground to depart from the administrative assessment had been established and thus the administrative assessment could not be changed.

7. On 20 February 2024, Ms Geldart applied to the Tribunal for an independent review of Child Support’s decision. A hearing into Ms Geldart’s application for review was held on 23 July 2024. Both Ms Geldart and Mr Rearick attended the hearing by telephone and gave sworn evidence.

8. I had before me the statement and documents provided by Child Support pursuant to subsection 37(1) and section 38AA of the Administrative Appeals Tribunal Act 1975, received on 13 March 2024, 24 May 2024 and 4 July 2024 respectively and numbered 1–583. I also considered additional documents provided by Ms Geldart (marked A1–A35) and Mr Rearick (marked B1–B209) as a result of written directions issued on 11 June 2024.

LEGISLATIVE FRAMEWORK AND ISSUES

1. The legislation relevant to this review is contained in the child support law, in particular the Child Support (Assessment) Act 1989 (the 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 Act. This requires the application of a statutory formula, which takes into account factors such as the number of children, the level of care provided and the income of each parent. Either the liable parent or the carer entitled to child support may apply to the Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Act (section 98B). Section 98C 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 place of the Registrar, must be satisfied that a ground for departure exists and that it is just and equitable and otherwise proper to make a departure determination.

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

4. In the legislation, each ground for departure is prefaced by the words, “in the special circumstances of the case”. Therefore, when considering whether one (or more) ground exists, the Tribunal must be satisfied that there are “special circumstances” in the case. The phrase “special circumstances of the case” is not defined in the Act. The Full Family Court, in the case of Gyselman and Gyselman (1992) FLC 92-279, stated that:

   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.

5. Subsection 98C(3) of the Act provides that subsections 117(4) to (9) of the Act apply and the Tribunal must consider these when deciding whether it would be just and equitable or otherwise proper to make the departure decision.

6. In this case there is no dispute that Ms Geldart is working full-time for [Employer 1]. She lodges regular tax returns. Her 2021/22 adjusted taxable income was $95,581 and her 2022/23 adjusted taxable income was $100,805 (folio 521). The 2022/23 income tax return indicates that her income includes reportable fringe benefits of $31,631 (folios A24/25). The fringe benefit amount is added back for child support purposes for an adjusted taxable income of $100,805. This amount has been used in the child support assessment from 21 July 2023 (folio 521).

7. There is no evidence before me that Ms Geldart has any other income and I find that Ms Geldart’s annual tax returns adequately represent her income, property and financial resources. Ms Geldart has been working full-time in her position since January 2018 (folio A12) and I find that she does not have additional earning capacity.

8. There is also no dispute that Mr Rearick’s 2021/22 adjusted taxable income was $52,033 (folio 527). Mr Rearick’s 2022/23 income tax return (folios B14–B25) shows a taxable income of $43,473 comprising of wages from [Employer 2], a termination payment, as well as interest, franking credits, and capital gains from his share portfolio.

9. Ms Geldart did not submit that the taxable income amount was incorrect.  She argued that Mr Rearick could earn a much higher income and asked for a departure from the administrative assessment on the basis that the assessment did not correctly reflect Mr Rearick’s earning capacity (also known as Reason 8B).

10. The issue for me to consider is therefore whether Mr Rearick has additional earning capacity, and it is just and equitable to depart from the administrative assessment on this basis.

CONSIDERATION

Mr Rearick – earning capacity

1. Ms Geldart contended that Mr Rearick reduced his working hours and is currently not working to affect the administrative assessment and obtain child support payments from her. Ms Geldart submitted (folio A14) that Mr Rearick has university qualifications in [Field 1], and he had been working full-time as an [occupation 1] for [Employer 3] at the time of their separation in December 2017. Mr Rearick left his job in March 2019 and since that time he has only worked in casual positions at a much lower pay. Mr Rearick left his most recent job with [Employer 2] in March 2023, having secured the job in April 2021 (folio A16).

2. In the hearing Ms Geldart submitted that Mr Rearick has been unemployed since March 2023, and he has made no efforts to find employment. Ms Geldart acknowledged that Mr Rearick has not worked in his profession (in [occupation 1]) since March 2019. She contended however that he had made no efforts to update his skills in this area in order to secure employment in his profession.

3. Ms Geldart argued that Mr Rearick was not motivated to find employment because he was relying on child support payments from her. He was not contributing to their children’s expenses, leaving her to bear the costs. Ms Geldart noted that she was in financial hardship due to Mr Rearick’s unemployment (and lack of financial contribution). This was having a great impact on her mental health, however she had no option but to continue to work full-time to meet her financial obligations (folio A23).

4. The relevant legislative provisions for consideration of a parent’s earning capacity are provided for in subparagraph 117(2)(c)(ib) and also in subsection 117(7B) of the Act. Essentially, the provision restricts the circumstances in which a person’s earning capacity can be used as a basis to depart from a formula assessment.

5. There are three essential matters to be considered in determining whether the administrative assessment should be departed from on the grounds of earning capacity. In simple terms, they can be explained as follows:

   ·did the parent not work (despite ample opportunity to do so), reduce their hours of work or change their occupation, industry or working pattern; and

   ·was the parent’s decision not to work (despite ample opportunity to do so), to reduce their hours of work or change their occupation, industry or working pattern not justified because of caring responsibilities or their state of health; and

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

6. All three of the above criteria must be met before a change of assessment can be made to take into account whether the parent has a greater earning capacity.

   Employment at [Employer 3]

7. Mr Rearick agreed that he left his employment with [Employer 3] in March 2019 and that he has not worked in the [occupation 1] sector since then. He found short-term employment at a [business 1] from September 2019 to December 2019 and then worked at [Employer 2] from April 2021 to March 2023. Apart from two shifts at “[Employer 4]” in January 2024 (folio B198) he has not worked and is reliant on Centrelink payments.

8. Mr Rearick stated that he did not leave his workplaces at [Employer 3] and [Employer 2] to affect the child support assessment. He left because of performance issues and conflict in the workplace. Mr Rearick said that he had submitted a copy of the “Show Cause” letter from [Employer 3] and his draft response to the letter for the previous review by the Tribunal (differently constituted) and could not understand why it had not been considered. He read out the letters (in full) in the hearing.

9. The letter from [Employer 3] was dated 26 February 2019. It indicated that he had been provided with the opportunity to improve his performance and behaviour since a coaching plan was developed in September 2017 and a Performance Improvement Plan in September 2018. Issues of concern included inability to complete tasks within a reasonable timeframe and poor quality of tasks completed, as well as poor communication and interaction with line managers and not following reasonable management directions. [Employer 3] alleged that Mr Rearick’s work performance was well below the output expected of an employee at his level.

10. Mr Rearick was given the opportunity to attend a meeting on 5 March 2019 to respond to the allegations and the letter warned that [Employer 3] may take action to terminate his employment.

11. Mr Rearick’s lengthy draft response to the “Show Cause” letter essentially indicates that he disputed that the “coaching plan” was ever properly delivered and that he contended the subsequent “performance improvement plan” was inadequate. He further noted that as part of the organisational restructure of [Employer 3] in February 2019 he had been allocated a role that did not align with his existing skills and as so many of his concerns remained unresolved, he wished to leave the business. Redundancies had been offered since [Employer 3’s] relocation to [Town 1] in July 2018 and he wished to take up this offer. Mr Rearick said that [Employer 3] was not supporting him to improve his performance and provided no opportunity to develop his skills. They did not “appreciate him being there”.

    Employment at [Employer 2]

12. In terms of his employment at [Employer 2] Mr Rearick stated that he received a letter of warning in November 2022, following the investigation of an incident which occurred [in] October 2022. The investigation concluded that he had made a comment about a female employee’s weight which was against company policy and reflected badly on his decision-making ability. He had demonstrated bad judgement in his interaction with the employee.

13. Mr Rearick recounted that the female employee had commented about why her partner was still with her when he had “access to many beautiful women in his workplace”. Mr Rearick then responded by asking her “how many kilos she was likely to lose next week”. Mr Rearick said that he was commenting on the employee’s earlier discussion about going to the gym to exercise and he thought that he “reminded her of her goals that she wanted to aspire to”.

14. Mr Rearick said that he had very much hoped to advance in the business but thought that after receiving the warning letter he probably no longer had an opportunity to progress in the business. He noted that another person was ultimately appointed to the management position that he had envisaged for himself and that he had not been given the opportunity to apply for the role. This caused further conflict in the workplace and in the end he chose to resign from this employment (folio B12).

15. I asked whether Mr Rearick considered that he had difficulties relating to or communication with people in a workplace. He said that he ordinarily had no issues communicating with people but noted that there might be “other things that are lacking”. He also noted that he saw himself differently as to how he might come across to other people in a workplace.

    Other evidence

16. Mr Rearick is currently in receipt of Centrelink payments (folio B37). He provided a letter from [Agency 1] dated 4 July 2024 (folio B182) which states that Mr Rearick has been attending since 28 September 2023 and meets the job seeking requirements stipulated by Centrelink. The letter notes that Mr Rearick has also been referred to psychological and allied health services since that time and that he has been referred to several employment positions, including [occupation 1] positions.

17. Mr Rearick also provided a list of job applications that he made (including in the [occupation 1] sector) since September 2023 (folios B191–B195). Mr Rearick said that he is no longer qualified for [occupation 1] roles having been out of this area of employment for over five years now and his applications are unsuccessful.

18. A letter from [Specialist A] ([Agency 2]) dated 27 June 2024 states that Mr Rearick is attending the service to improve his mental and physical health and that the sessions are having a positive effect on his mood, motivation levels and social connection (folio B185).

19. A letter from [Psychologist A] ([Agency 2], provisional psychologist) states that Mr Rearick has attended 16 sessions since 22 February 2024 and the sessions focus on motivation, self-esteem and communication skills (folio B181).

20. A letter from [Counsellor A] ([Agency 2], rehabilitation counsellor) dated 24 June 2024 states that Mr Rearick has been attending since 4 October 2023 and has had 13 sessions. [Counsellor A] writes:

    It has been apparent that [Mr Rearick] has significant barriers to obtaining full-time employment. [Mr Rearick’s] journey to obtaining employment has not been the easiest.

    Despite facing numerous obstacles [Mr Rearick has] been actively applying to various vacancie (sic) openings but progress towards sustainable employment has been challenging. [Mr Rearick] has demonstrated proactive engagement by applying for roles that involve unfamiliar software programs. [Mr Rearick is] actively seeking and considering programs to enhance [his] skills and meet the requirements of positions that necessitate these software programs.

    Conclusion

21. I have considered the evidence before me. I note here that the Tribunal (differently constituted) found in their decision of 21 April 2023 that Mr Rearick had additional earning capacity and that Mr Rearick’s adjusted taxable income should be set at $96,056 per annum until 30 June 2023. I have no jurisdiction to change that decision.

22. Ms Geldart lodged a further change of assessment application on 12 July 2023, essentially asking for the decision regarding Mr Rearick’s earning capacity to be extended from 1 July 2023 onwards. I have therefore considered Mr Rearick’s earning capacity from 1 July 2023.

23. There is no dispute that Mr Rearick reduced his working hours to nil from March 2023 when he resigned from [Employer 2]. Ms Geldart submitted that Mr Rearick has made very little effort to find employment since then. She did not think that two job applications per month was adequate. As part of her application for a change of assessment Ms Geldart submitted a list of vacancies in the [occupation 1] sector that she thought Mr Rearick could have applied for (folios 193–208).

24. Mr Rearick’s evidence was that he does not have the skills to be successful in such roles. He did apply for positions in the [occupation 1] sector and he had not been successful.  I accept Mr Rearick’s evidence in this regard. The “Show Cause” letter from [Employer 3] dated 26 February 2019 indicates that Mr Rearick was not meeting performance expectations at that time and there is no evidence that he undertook any training activities to increase his skills since then.

1. Other job applications had also been unsuccessful. Thus, as at 1 July 2023 Mr Rearick is not working and I find that paragraph 117(7B)(a) of the Act is satisfied in this case.

2. There is no evidence that Mr Rearick’s decision not to work is justified by his caring responsibilities. [Child 1] was about 15 years old and [Child 2] was 11 years old in March 2023 when Mr Rearick resigned from his employment at [Employer 2]. He had 50% care of the children at that time, and they attend school. There is no reason why he should not be working in those circumstances.

3. The evidence from [Agency 2] indicates that Mr Rearick is attending sessions with a psychologist to address motivation and self-esteem issues. There is further evidence that Mr Rearick was referred by his GP for an opinion and management of “likely anxiety and panic attacks” on 6 April 2022 (folio 335). None of this evidence is specific enough however to include a diagnosed illness and the likely impact of such an illness on his capacity to work.

4. Mr Rearick also provided information about a surgical procedure that he underwent in late June 2023 (folios B172–B176). He said that he had a medical certificate declaring him unfit for work from 24 June 2023 to 10 July 2013, but he did not provide that certificate.

5. Based on the limited medical evidence before me I am therefore not persuaded that Mr Rearick’s ongoing unemployment was justified by his state of health. This means that paragraph117(7B)(b) of the Act is also satisfied from 1 July 2023.

6. Ms Geldart strongly argued that Mr Rearick is not working to affect the child support assessment. He used to earn about $100,000 per year but since he left his employment at [Employer 3] in 2019, he has either been unemployed or has been working in jobs where he earns significantly less. Ms Geldart submitted that he did so deliberately to avoid paying child support to her and to place the financial burden of supporting the children on her.

7. Mr Rearick disagreed, stating that he also pays for the children, including for their education and sporting activities. Mr Rearick said that he wants to work, and he is exploring every opportunity, including becoming self-employed (running a [business 2]). Unfortunately, he has not been successful at this time.

8. Mr Rearick noted that he is meeting his financial commitments from his savings. Mr Rearick’s Centrelink payments (parenting payment and family tax benefit) amount to about $1,354 per fortnight or about $677 per week (folio B37) and he listed necessary household expenses of $1,106 per week (folios B8/B9). I have deducted expenses of $318 per week for “entertainment, holidays, gifts and books” from the total amount listed on the Statement of Financial Circumstances (being about $1,424 per week), as these are considered non-essential expenses.[1]

   [1] The Family Court (in Mee and Ferguson (1986) FLC 91-716) has been prescriptive about the types of expenses that can be considered “necessary” expenses and that there are only a few expenses which can be considered to take priority over a parent’s primary duty to support their children. This includes expenses such as a reasonable amount for rent or mortgage payments, food, utilities, and some loans.

9. Mr Rearick also indicated that his rent payments of $400 per week have increased to $1,955 per month or $594 per week from May 2024. This would increase his weekly expenses to about $1,300 per week and means that his expenses exceed his income by about $623 per week.

10. I note that child support payments from Ms Geldart amounted to $106.56 per week from 1 July 2023 (folio 30), increasing to $114.15 per week from 1 September 2023 (folio 33) but decreasing to $70.68 per week from 28 June 2024 (folio 574). It appears highly unusual that Mr Rearick should deliberately forego employment opportunities to obtain child support payments of about $100 per week from Ms Geldart, as these payments do little to improve his overall financial situation.

11. On the other hand, evidence provided by Mr Rearick in relation to his employment since 2019 indicates that serious performance issues had been identified at [Employer 3] and at [Employer 2]. “Misconduct” and “serious underperformance” were identified at [Employer 3] and “bad judgement” and “poor decision-making” at [Employer 2]. Of note is that in recounting these events Mr Rearick appears to fail to accept responsibility for his poor performance in the workplace but placed the blame for his poor performance on his employer and/or other employees. He stated in his draft response to the [Employer 3] “Show Cause” letter that the organisation failed to support him, and he was not “appreciated by his employer”, and he suggested that the female employee at [Employer 2] must have misunderstood his “helpful comments reminding her of her goals” when he commented on her weight. These responses appear to show a lack of insight on how his actions/behaviour affect his performance in the workplace.

12. [Counsellor A] ([Agency 2], rehabilitation counsellor) stated in her letter that Mr Rearick has
    “significant barriers” to obtaining full-time employment, faced “numerous obstacles” and his “progress towards sustainable employment has been challenging”. Based on the evidence before me I agree with this assessment.

13. As noted above, the third criterion in relation to a person’s earning capacity represents a rebuttable presumption. The onus of proving a major purpose for the decision about their work is on the person who made the choice and: “If the Tribunal is not satisfied one way or the other, the person with the onus fails.”[2]

    [2] Carlson & Acuff & Anor (SSAT Appeal) [2010] FMCAfam 677, at [68]

14. Based on the evidence before me, Mr Rearick has demonstrated to my satisfaction that it was not a major purpose of his continued unemployment to maximise child support payments from Ms Geldart, but rather he is finding it difficult to obtain suitable long-term employment due to his lack of insight into his poor performance and decision-making in a workplace. This means paragraph 117(7B)(c) of the Act is not satisfied in this case.

15. As all three criteria provided for in subsection 117(7B) of the Act are not met, I cannot consider Mr Rearick’s earning capacity further. I therefore find that the ground for departure in relation to Mr Rearick’s earning capacity has not been established.

16. As noted above, neither party submitted that any other reason to change the administrative assessment applied in this case and because no ground for departure has been made out in this case, I am unable to depart from the administrative assessment of child support.

17. I have reached the same conclusion as the objections officer, and I therefore affirm their decision.

DECISION

The decision under review is affirmed.