Gilmore and Gilmore (Child support)

[2018] AATA 951

Gilmore and Gilmore (Child support) [2018] AATA 951 (19 February 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/SC011987

APPLICANT:  Mr Gilmore

OTHER PARTIES:  Child Support Registrar

Mrs Gilmore

TRIBUNAL:Member T Bubutievski

DECISION DATE:  19 February 2018

DECISION:

The decision under review is set aside.  In substitution the tribunal decides as follows:

• For the period 1 January 2017 to 31 December 2017 the annual rate of child support payable by Mr Gilmore is to be increased by $14,791;

• For the period 1 January 2018 to 31 December 2018 the annual rate of child support payable by Mr Gilmore is to be increased by $15,022; and

• For the period 1 January 2019 to 31 December 2019 the annual rate of child support payable by Mr Gilmore is to be increased by $15,262.

CATCHWORDS

Child Support – Departure determination – Income and financial resources of parents – Business income – Education of child in a manner expected by both parents – Costs of education – Decision under review set aside and substituted

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 Gilmore and Mrs Gilmore are the parents of two children, [Child 1], and [Child 2]. The case was registered with the Department of Human Services (Child Support) (the Department) from 3 May 2010, but child support is collected privately.

2. Mr Gilmore was assessed to pay child support at an annual rate of $16,146 at the time Mrs Gilmore made an application to change the child support assessment on 18 October 2016 on the basis of upcoming [medical] fees for their son, private school fees for both children, and the increased cost of her buying a house and paying legal fees due to the delay in the parties’ Family Court proceedings. On 14 December 2016 a departmental Delegate of the Child Support Registrar refused to make a departure from the administrative assessment.

3. Mrs Gilmore objected to this decision, and on 14 June 2017 the decision was reconsidered by a departmental objections officer, who found that there was a reason to depart from the assessment established by virtue of the children's private school fees. The officer made the following decision:

   …That the annual child support rate payable by Mr Gilmore be increased by $24,692 for the period 1 January 2017 to 31 December 2017;

   That the annual child support rate payable by Mr Gilmore be increased by $28,123 for the period 1 January 2018 to 31 December 2018;

   That the annual child support rate payable by Mr Gilmore be increased by $29,529 for the period 1 January 2019 to 31 December 2019….

4. On 25 June 2017 Mr Gilmore made an application for review by the Social Services and Child Support Division of this tribunal.

5. Mr Gilmore then took stay action in the Federal Circuit Court of Australia. This matter was heard on 25 July 2017, and collection of arrears was stayed. Under clause 3 of the stay orders Mr Gilmore was to continue to pay the current periodic child support and half of the children's school fees.

6. The matter went to an early case appraisal conference. The tribunal held a telephone directions hearing on 30 November 2017. The matter was heard by the tribunal on 11 January 2018. Mr Gilmore and Mrs Gilmore both attended the hearing by telephone and gave sworn evidence. The Child Support Registrar did not seek leave to appear. As there had been some delay in the exchange of evidence by the tribunal prior to hearing, in the interests of natural justice, following the hearing the tribunal allowed the parties additional time to make any written submissions. Both parties and the tribunal had access to documents numbered 1 to 251 from the Department, and after all submissions, documents A1 to A297 and B1 to B101 from the parties, plus an additional email from Mrs Gilmore.

ISSUES

1. The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Assessment 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, the income of each parent and the costs of the children.

2. The liable parent or a carer may apply to the Child Support Registrar for a determination to depart from the administrative assessment under Part 6A of the Assessment Act. The application for departure is authorised by section 98B 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. In order to depart from the administrative assessment the Registrar, and the tribunal standing in place of the Registrar, must be satisfied:

   (i)       that one, or more than one, of the grounds for departure referred to in   subsection 117 (2) exists; and

   (ii)that it would be:

   (A)just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   (B)      otherwise proper;

   to make a particular determination under this Part;

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

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. Section 98S permits a range of determinations, including varying the annual rate of child support payable or the adjusted taxable income of the parties.

Issue 1 – Does a ground exist to depart from the administrative assessment?

Does a ground exist to depart from the administrative assessment under Reason 3?

1. Mrs Gilmore sought a departure from the administrative assessment on the ground that the costs of maintaining the children are significantly affected by the cost of educating them in the manner that was expected by her and Mr Gilmore. This is the ground reflected in subparagraph 117(2)(b)(ii) of the Assessment Act. The children both attend [School 1], commencing in 2016, when Mrs Gilmore relocated to [City 1]. They had previously been educated in a public school in [City 2].

2. Mrs Gilmore's position was that there should be no change from the decision made on objection.

3. There is some agreement between the parents, in that they both agree that they intended to have both children educated privately for high school. Their daughter commenced Year 7 in 2017, while their son was in Year 4. The point of contention is whether or not their son, in particular, was intended to commence private education prior to being in Year 7. Mrs Gilmore said that there was a joint intention that both children would transfer to a private school together at the time their daughter commenced high school. Mr Gilmore says that there was no such joint intention, and the only joint intention was to educate both children privately for their high school years.

4. In her original application to change the child support assessment Mrs Gilmore gave the following evidence, which she reaffirmed at the tribunal hearing:

   … The children were both intending to go to [School 2] from 2017. [Child 1] was enrolled in 2009 and completed enrolment interviews in 2015….. In 2009 I phoned a woman at the school… and enquired about whether we needed to enrol [Child 2] early (in 2009) for year 4, 2017 or whether it would be easier not to pay the $265 waitlist enrolment fee in 2009 and just enrol him when [Child 1] start year 7. She indicated that at that point in time he would have had no issues getting into the year 4 class and that it would probably be fine to just enrol him when she started and save the waitlist fee, but if we wanted a guaranteed place then we would need to pay. We both decided we would save the fee and just wait. It was intended that both children would remain together at one school for their schooling for logistical purposes and that I would try and get a job at [School 2] so that the kids and I were together and this would give him a guaranteed place anyway…

5. Mr Gilmore said that both parents have an expectation of private schooling from Year 7 onwards for both children, and that he also had an expectation that in the circumstances the parents would each cover 50% of that cost. Mr Gilmore said that he would have been agreeable to a public school option for his son until Year 7, but that Mrs Gilmore chose to enrol him in [School 1] early. He argued that he had not agreed to this and did not have the capacity to make a contribution to the cost of his son's school fees until he reaches Year 7.

6. Mr Gilmore directed the tribunal's attention to a partial court transcript in relation to Mrs Gilmore's relocation to [City 1], in which he clearly sets this out as his position. He says that this transcript also demonstrates that Mrs Gilmore was prepared to bear the financial cost of educating the children privately. Mrs Gilmore disputed this, and said that the transcript only indicates that she was prepared to bear that cost herself for 2016 if she absolutely had to, because she acknowledged that the children had been enrolled in private education slightly before the intended date, so that they did not need to suddenly change schools again after three terms. Mrs Gilmore relocated to [City 1] following this hearing in March 2016.

7. Mrs Gilmore noted that the cost of both the children's school fees in [City 1] is less than school fees would have been at the chosen private school in [City 2]. The costs for [School 2] for Year 4 was $25,300 per annum, and they were $28,400 per annum for Year 7, not inclusive of enrolment and application fees and other usual expenses such as uniforms and textbooks. The fees for [School 1] are $14,845 per annum for Year 4, and $19,260 per annum for Year 7, plus application fees of $175 each and enrolment fees of $1,750 each.

8. Mrs Gilmore referred the tribunal to a letter written by Mr Gilmore, dated 2 October 2016, which was provided to her for the purposes of securing a home loan. In this letter, he says that it is his current intention to continue to pay child support at the rate of $500 per week and also to contribute 50% of the amount of [Child 1]'s school fees at [School 1] commencing in 2017. She said that a financial commitment of this magnitude in total (approximately $40,000 per annum) is not significantly different from the assessment currently in place following the decision of the objections officer ($40,838 per annum at the time the application was lodged with the tribunal, rising to $42,536 per annum from 4 December 2017).

9. Mr Gilmore said that the letter was provided for a specified purpose, and he took issue with it being tendered as evidence in the tribunal process. Nonetheless, he said that it affirmed his commitment to only pay private school fees in respect of [Child 1] in 2017, not [Child 2]. In terms of its use as evidence, the tribunal notes that under law it is able to inform itself in any way that it sees fit and there was no specific reason to exclude this evidence from consideration.

10. The tribunal asked Mr Gilmore about an incident Mrs Gilmore had recounted in her evidence, which appears to have occurred in about September 2015, in which Mr Gilmore offered to pay both the children's school fees at a [City 2] school if Mrs Gilmore stayed in [City 2]. Mr Gilmore said that he made a number of offers to try and prevent Mrs Gilmore moving to [City 1]. He said that although he had made this offer he did not have the capacity to pay it at that time and would not have such capacity until 2020.

11. The tribunal asked Mr Gilmore what he thought would have happened in relation to the children's schooling if the parties had not separated. Mr Gilmore said that he would have intended to keep their son at public school until high school, because he could not have afforded it otherwise. He said they just would have had to try and work out the logistics of that, even if Mrs Gilmore and their daughter were at the same school and their son was at a different school. He said that their daughter had also been enrolled at the school Mrs Gilmore was teaching at, and that he would have been relying on a teacher discount to meet the fees. Mrs Gilmore said that this was the first time she has heard this, but most schools do not offer a teacher discount, or if they do they are extremely small (5%). She reaffirmed that the quantum of the school fees that Mr Gilmore had committed to pay in [City 2] (50% for their daughter at [School 2]) is not materially different to the school fees in [City 1] for both children.

12. The acceptance of offer form from [School 1], dated 4 January 2016, was signed by Mr Gilmore on 15 April 2016 and Mrs Gilmore on 21 April 2016. Mr Gilmore has signed to accept the offer of a place for their son in Year 3, 2016, commencing in term two. He has not signed the section of the form in which responsibility for fees is taken, with Mrs Gilmore being the only signatory to that part of the agreement. Mr Gilmore said that he signed the enrolment form because he could not see the point in fighting it after the relocation hearing and the fact that Mrs Gilmore was determined to send both children to [School 1] in 2016. He said that because he felt this was a unilateral decision and he had not committed to pay school fees for their son until he commenced Year 7 he did not agree to have any responsibility for the fees. The tribunal notes that Mr Gilmore also did not sign that part of the form in relation to their daughter. He said that his view was that although he was prepared to pay half of [Child 1]'s school fees it was Mrs Gilmore's responsibility to deal with the school in the matter of fees.

13. Mr Gilmore has subsequently set up a direct debit arrangement with the school for a fortnightly amount in respect of [Child 1]'s school fees. Subsequent to the hearing he advised that he has actually paid about $3,000 more than half of the total fees, due to the direct debit running for the entire year rather than just the 40 weeks of school. In response to that, Mrs Gilmore noted that Mr Gilmore has made no significant contributions to [Child 1]'s other school related expenses.

14. The evidence of the parties is in conflict in relation to the issue of the timing of [Child 2] attending private school. Mrs Gilmore said that there was a joint parental expectation that [Child 2] would commence private schooling at the same time [Child 1] commenced Year 7. Mr Gilmore says that there was no such expectation - the expectation was that both children would be educated privately once they reached Year 7, and not before. There is a limited third party evidence to support either view. No enrolment or application forms for private schools were available in respect of [Child 2] for any time prior to the parties’ separation and Mrs Gilmore's relocation. Neither of the children was educated privately while Mr and Mrs Gilmore were together. When given the option of paying a relatively small fee to secure [Child 2] a place in the 2017 Year 4 class at [School 2] in 2009 the parents elected not to do so. In his letter of October 2016 Mr Gilmore makes no mention of paying school fees in respect of [Child 2], and in both the relocation hearing and the hearing in respect of the stay orders in this matter he has strenuously asserted his view to be that he would lack capacity to pay such fees prior to 2020. In one of her submissions, Mrs Gilmore acknowledges that it cannot be proven that Mr Gilmore agreed for [Child 2] to also attend private education from Year 4, but says that it also cannot be proven that he did not agree. The tribunal does not find this to be a compelling argument.

15. There are two issues at play here, and it appears that they have become somewhat conflated. The first issue is the expectation of the parents in relation to the children's education, and the second issue is the capacity of the parents to pay for that education. The issue of capacity only becomes relevant once expectation is established. This was noted in Mee and Ferguson (1986) FLC 91-716, which said at paragraph 75 that: “… the mere fact that the non-custodian can afford to pay fees, or indeed if he or she is a wealthy person, is not in itself a reason for imposing that liability…”

16. In deciding whether the reason is established the tribunal needs to consider the type of education intended by both parents for the children, rather than any particular school intended by the parents (Wild v Ballard (1997) FLC 92-771). A joint expectation is usually established if a child was attending a particular type of private school at the time of separation, although if the parents had an expectation that the child should attend a particular type of primary school it cannot be presumed that the same expectation automatically applies to a similar type of secondary school (Daher v O’Meara [2004] FMCAfam 34). In this case, there is clearly a change in that expectation in respect of [Child 1] from Year 7, and the parents agreed that it was their intention that from that time she be privately educated rather than remaining in the public system.

17. In making the original decision in this case, the officer has referred to this expectation in respect of [Child 1] only. [Child 2] is mentioned, but the officer has made no findings in relation to educational expectations for him. In the decision of the objections officer, the officer has noted that the court has not made any departure order in respect of child support for school fees, and then found the fact that Mr Gilmore signed an Acceptance of Offer form for [Child 2] on 15 April 2016 to be clear evidence of a joint expectation. The objections officer took the view that “both parents changed their position on the matter” after the relocation hearing. Mr Gilmore's actions in proceeding to this tribunal and instituting stay proceedings, and the evidence of both parents as given to the tribunal, indicate that in fact neither parent changed their position substantially. Mr Gilmore simply decided not to stand in the way of [Child 2] being enrolled at [School 1] in 2016, solely on the basis that he would not have liability for [Child 2]'s school fees. This falls far short of an expectation that [Child 2] would be educated privately from Year 3 or Year 4. It seems that [Child 2] moving to the same school as [Child 1] when [Child 1] commenced Year 7 was more a desire if circumstances allowed than an expectation.

18. The tribunal finds that [Child 1] is being educated privately from 2017 onwards on the basis of her parents’ joint expectation, and that the parents also jointly expect [Child 2] to be educated privately for high school. As a joint expectation has been established in respect of [Child 1], the next issue to consider is whether the costs of maintaining [Child 1] are significantly increased because of this type of education. The child support assessment in its usual form is intended to cover all costs of schooling children which are common to both private and public education such as uniforms, shoes, textbooks, extracurricular activities, general schooling equipment and the minimal fees levied at a public school. It is not intended to cover the additional tuition fees incurred in private education. In 2017 [School 1] fees for Year 7 were $20,090, plus a facility fee of $1,040. There was also a $25 fee for membership of the Parents and Friends Association, which the tribunal intends to disregard on the basis that it is a very small amount and not significantly different from the fees levied by public schools. Nonetheless, the additional fees incurred as a result of [Child 1]’s private education amount to $21,130 in 2017. In 2018, the fee schedule shows the cost for Year 8 to be $20,400, plus a facility fee of $1,060 - a total of $21,460. As the administrative assessment of child support in this case returns a total annual rate of child support payable by Mr Gilmore for both children of only $16,146 per annum, the tribunal is satisfied that the private school fees significantly impact on the cost of maintaining [Child 1].

1. The term ‘special circumstances’ is not defined in the Assessment Act. 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 tribunal was satisfied that the extent of the school fees establish special circumstances such that the child support assessment could be amended to take them into account. The tribunal finds this ground established. As a ground is established, the tribunal must also consider whether it is just and equitable, and otherwise proper, to change the assessment.

Issue 2 – Would departure from the administrative assessment be just and equitable?

1. As the tribunal is satisfied that a ground has been established to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable to depart from the assessment. In deciding whether it is just and equitable, the tribunal must have regard to the following matters set out in subsection 117(4) of the Assessment Act:

   (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. Section 3 of the Assessment Act states that it is the duty of both parents to financially support their children. All children should receive a proper amount of financial support from their parents in accordance with their capacity to contribute. The tribunal only has to consider the factors set out in subsection 117(4) of the Assessment Act to the extent they are relevant in any particular case (see Gyselman).

3. Mrs Gilmore is employed as a teacher, and declares a weekly income of $1,942 before tax (around $101,000). This is lower than the 2016 taxable income currently being used in the child support assessment of $122,833, and appears to have coincided with the relocation to [City 1]. Her payslips show a normal fortnightly income of $3,962.98 per fortnight ($103,037.48 per annum). Her 2017 taxable income does not yet appear in the assessment as provided to the tribunal, but will presumably be incorporated into the assessment under the normal processes. A reduction in Mrs Gilmore's income increases the amount of child support Mr Gilmore is assessed to pay. If her income has reduced by more than 15% and there is some reason why this tax return is unable to be lodged, Mrs Gilmore could make an estimate of her income.

4. Mrs Gilmore says that she receives $607 per week in child support from Mr Gilmore, giving total weekly income of $2,555. Her total household expenses are listed to be $2,200 per week, including $694 per week in education expenses. Some of her listed expenses are very low (eg, hairdressing and toiletries of $3 per week for 3 people, and only $30 per week for entertainment and hobbies with two children in the house). It seems to the tribunal that this reflects the general tightness of her budget and the limited extent of her ability to make discretionary spending. She discloses only $4,800 in savings, and it seems likely to the tribunal that she likely does have expenses which are more or less equal to her income.

5. The tribunal noted that in her application for a change to the child support assessment Mrs Gilmore made application on the basis that she had incurred additional expenditure for the benefit of the children in the purchase of this home, and references the delay in her relocation as a result of the parties’ Family Court proceedings. This is not a matter for consideration in the administrative assessment of child support, although the Family Court may choose to consider it in the parties’ settlement of property. Mrs Gilmore has also made reference to future [medical] costs to be incurred in respect of [Child 2]. She may choose to make a further application to change the administrative assessment of child support if she and Mr Gilmore are unable to negotiate about the shared payment of this expense when it is incurred. The tribunal is not in a position to make a prospective determination on the basis of costs which have not been paid.

6. Mr Gilmore is essentially self-employed as a venture capital funds manager, although in technical terms for issues of professional liability he is in fact an employee of [Company 1], which is jointly owned by the Trust of his business partner and [Trust 1], of which his company, [Company 2], is the trustee. From 2017 onwards he has drawn a salary of $300,000 per annum, which increased from $275,000 in 2016. The child support assessment is presently based on his 2016 taxable income of $274,771.

7. [Company 1] was initially the fund manager of one [fund] on behalf of [Company 3], and took on a second [fund] in 2016. Mr Gilmore and his business partner are both limited liability partners in the fund and are required to contribute 0.5% of the assets of the fund each - a total liability of $500,000 each over the life of the two funds. The tribunal examined the venture capital deeds by virtue of which Mr Gilmore is obliged to make these contributions and was satisfied that this is indeed an obligation imposed on him, and that default will result in sale of the partnership assets. It is a condition of his ongoing employment as fund manager.

8. Mrs Gilmore argues that Mr Gilmore left salaried employment at the same level of income to start this business; that he did not need to take on a second fund in 2016 and therefore increase his outgoings and reduce his capacity to support the children; that he is not in fact making all the necessary contributions to the fund himself due to borrowings from his sister, who is also a beneficiary of [Trust 1]; that he was also a founding partner of a second business called [Company 4]; and that he has a much greater capacity to contribute to the support of the children than he argues. The tribunal considered each of these issues in turn.

9. Mr Gilmore has worked as a fund manager for many years. Mrs Gilmore said that there was a business failure in 2010, and Mr Gilmore had worked in this industry on and off between his entrepreneurial efforts. Mr Gilmore confirmed that he was previously in corporate venture capital, but started [Company 1] in February 2014 with a view to ultimately having a higher income. His salary at [Company 1] is similar to his previous corporate positions, but he does have the demands of the fund calls on that salary.

10. The law in relation to a parent’s earning capacity says that a parent’s child support liability may only be determined on the basis of their earning capacity under certain circumstances. These include situations where a person does not work despite ample opportunity to do so or if they have changed their working pattern or industry, and have not demonstrated that a major purpose of this change was to affect the administrative assessment of child support. In this case, Mr Gilmore continued to pay Mrs Gilmore child support at a rate over and above the administrative assessment after the establishment of [Company 1], even confirming as late as October 2016 his intention to pay child support of $500 per week plus half of [Child 1]'s fees at [School 1] - well in excess of the administrative rate. The tribunal could find no basis on which to take into account Mr Gilmore's earning capacity rather than his actual income.

11. Mrs Gilmore argued that Mr Gilmore had no need to take on a second fund in late 2016, and the consequences of doing so are increased fund calls in the next few years, which decrease his capacity to provide financial support to the children. She said that he advised her after the first one was opened that he would have an income of $268,000 per annum on an ongoing basis with which to provide child support. Mr Gilmore could not recall having said this, but Mrs Gilmore provided a copy of an email dated 12 February 2014 in which Mr Gilmore tells her that he is entitled to earn a salary of $268,000 per annum for the term of the fund, which will be between five and 15 years. While the tribunal acknowledges Mrs Gilmore's point, it does note that the additional fund increased Mr Gilmore's salary from $275,000 to $300,000 per annum. The tribunal is not in a position to determine that taking on the additional fund was unnecessary. This, again, would amount to making an earning capacity decision, the preconditions for which are not satisfied.

12. This brings the tribunal to the issue of the capital calls on the funds. Under the terms of the venture capital agreement, [Company 2], through the vehicle of the [Trust 1], is obliged to provide 0.5% of any capital investments made by the funds. Mr Gilmore said that under the venture capital legislation, [Company 1] is structured in the normal manner, with three limited partners - [Company 3] holding 99%, and himself and his business partner, each holding 0.5%. He is the settlor of the [Trust 1], and said that he provides all the capital to the trust. At the hearing he said that it was a standard discretionary trust with no named beneficiaries, but subsequent to the hearing he disclosed that his sister, [Ms A], is in fact a named beneficiary of the trust. She provided an affidavit to say that her understanding was that this was for issues of succession relating to Mr Gilmore's children, as she is the executor of his estate, not to give her any rights in the trust and its income. Nonetheless, Mr Gilmore also provided the tribunal with copies of five loan agreements between himself and his sister. These loan agreements are not unsecured loans to Mr Gilmore. They are in fact secured loans, and the purpose of each loan is specified in each agreement as: “The Loan must be used to invest in interest in [Company 1]”. All the loans are supported by General Security Deeds which grant [Ms A] a security interest in the collateral. The impact of these loans is that [Ms A] has a security interest in [Company 1] equivalent to these lendings. The loan documents provided establish loans as follows:

    ·$50,000 on 26 February 2014;

    ·$50,000 on 4 December 2014;

    ·$20,000 on 17 March 2016;

    ·Two loans of $20,000 and $50,000 on 18 August 2016 - a total of $190,000.

13. Mr Gilmore's evidence is that, although this money was lent to him, he then immediately ‘onlent’ it to the [Trust 1] for the purpose of capital calls on the funds. The tribunal noted that the term of each loan is specified to be 48 months, but that no repayments could be identified in Mr Gilmore's financial statements. Mr Gilmore confirmed that he has made no repayments in respect of these funds, and that he did not expect to be able to repay them. He said that it was his intention to seek an extension of the terms of the loans.

14. [Ms A]’s affidavit to the tribunal says that:

    … The basis on which each of these funding arrangements has been provided is solely in response to a direct request from Mr Gilmore for a loan to meet outgoings and not specifically related to any capital call against the fund. I understand that the 17 March 2016 loan was intended to help Mr Gilmore pay the legal fees in relation to his relocation hearing in March 2016…

    [Ms A] says that she ceased lending Mr Gilmore money as she was no longer able to afford to due to her own financial circumstances.

15. As the loan agreements and security deeds specify that the loaned funds must be used for investment in [Company 1] (including the loan agreement of 17 March 2016), and the evidence of the two parties differs, the tribunal examined the capital calls on the funds, and the extent to which [Ms A] had contributed to this via the [Trust 1], rather than the funds actually coming from Mr Gilmore's salary. The tribunal had before it a copy of the [Trust 1] capital contributions to 30 November 2017.

Date	Fund	Amount
27/2/14	Fund 1	$25,541
12/6/14	Fund 1	$5,000
4/7/14	Fund 1	$2,245
24/9/14	Fund 1	$3,450.70
22/12/14	Fund 1	$2,344.44
22/12/14	Fund 1	$10,278.03
1/4/15	Fund 1	$4,260.89
17/4/15	Fund 1	$1,118
21/5/15	Fund 1	$4,000
18/6/15	Fund 1	$7,500
19/6/15	Fund 1	$21,307
27/7/15	Fund 1	$9,600
27/10/15	Fund 1	$7,500
18/12/15	Fund 1	$18,962
19/4/16	Fund 1	$17,489
7/6/16	Fund 1	$11,192
12/9/16	Fund 1	$5,000
19/9/16	Fund 1	$15,000
29/11/16	Fund 1	$2,500
15/12/16	Fund 1	$10,362.63
23/12/16	Fund 1	$2,385.15
27/2/17	Fund 1	$1,250
18/4/17	Fund 1	$3,000
23/6/17	Fund 1	$2,499.38
27/9/17	Fund 1	$12,376.24
23/10/17	Fund 1	$2,495
Total for Fund 1	$206,156.46
2/9/16	Fund 2	$30,000
4/10/16	Fund 2	$12,500
4/10/16	Fund 2	$5,000
22/12/16	Fund 2	$679.94
19/1/17	Fund 2	$4,500
7/2/17	Fund 2	$165.07
21/3/17	Fund 2	$102.50
18/4/17	Fund 2	$5,250
8/5/17	Fund 2	$187.50
23/6/17	Fund 2	$232.53
11/7/17	Fund 2	$20,000
10/8/17	Fund 2	$10,000
27/9/17	Fund 2	$289.62
Total for Fund 2	$88,907.16
Total fund payments	$295,063.62

1. While the timing of the loans made by [Ms A] does roughly match calls on the funds, the amounts do not. For example, there was a loan of $50,000 made in February 2014 but the fund call at that time was only $25,541. Even if all the other fund payments up until the next loan in December 2014 are taken into account, this only accounts for $36,236.70. It seems likely that Mr Gilmore used some portion of these loans to fund his personal expenses, but then used his money to meet capital calls. It is also possible that there is money sitting in a [Trust 1] bank account, as Mr Gilmore has previously disclosed in court processes that there was $25,000 in the trust. The end result of this is that [Ms A] has a secured interest in [Company 1] of $190,000, and Mr Gilmore has only contributed a maximum of $105,063.62 himself between 2014 and 2017.

2. The vast majority of this was after the inception of the second fund in September 2016. According to the register of partnership interest of the funds, Mr Gilmore must still find a significant amount of uncalled capital - slightly under $205,000, according to the figures above, most of which relates to the second fund. Mr Gilmore's evidence is that the bulk of the capital calls come in the first few years of the fund when investments are being made initially, and this can be seen in the fact that about 35% of his total capital commitment was made into the second fund in its first 12 months. In 2017 he appears to have contributed $62,347.84 in total between the two funds from January to November. The tribunal does not find that all the capital calls made on the funds were completely financed by Mr Gilmore, as his sister has a secured interest over $190,000 of the committed funds. Nonetheless, the tribunal does accept that Mr Gilmore has made $62,347.84 in contributions to the funds between January and November 2017, and is contractually bound to pay just under $205,000 into the two funds between November 2017 and September 2021.

3. The tribunal has no evidence before it to dispute [Ms A]'s affidavit to the effect that she is unable to lend Mr Gilmore any more money. On that basis, the tribunal accepts that Mr Gilmore must find the fund contributions from his own income, and that this may consequently reduce the amount of income he has available for the support of the children.

4. In the matter of the business, [Company 4], Mr Gilmore said that it is one of the businesses that [Company 1] invests in, but a condition imposed upon doing so by [Company 3], the majority fund partner, was that he give up all his shareholding for no return. He did so, and no longer has any financial interest in this business.

5. In terms of other things which may increase his capacity to pay child support, Mr Gilmore did say that he had rental from a flatmate in 2017, but this has since ceased. This was a friend, and Mr Gilmore is hesitant to open his home to somebody he does not know. His bank statements show rental income of $565 per fortnight, or $14,690 per annum. Mr Gilmore said that this enabled him to meet his expenses and take the children on holidays. Mr Gilmore has a mobile phone paid for by his work, but meets his vehicle expenses himself and claims a taxation deduction. The business pays no other personal expenses on his behalf. He does use his business frequent-flier points for personal travel, and was able to take the children on holidays to [a location in Australia] by doing this. His personal expenses as set out in the credit card and bank statements provided to the tribunal for the period from August to November 2017 show relatively minimal expenses, but do show all the normal things like groceries, internet, public transport, rent, child support and school fees. Mrs Gilmore said that Mr Gilmore has also had overseas trips to [another country], and does not live a lifestyle which is consistent with having financial difficulties.

6. Mr Gilmore discloses an income of $5,769 per week. His payslips show that he is paid monthly - $25,000 per month, less tax of $9,525, giving net income of $15,475 or $3,571.15 per week. His personal expenses of $2,847 per week include the current child support payment of $609. His budget has a great deal more discretionary spending than Mrs Gilmore’s – it includes $100 per week each for entertainment and holidays, $50 per week for clothing and shoes, $40 per week for children’s activities and $350 per week for food. He has an excess of income over expenditure of around $1,000 per week when these discretionary items are considered. Discretionary expenditure does not take priority over a parent’s duty to support their children. His necessary expenses, including child support of $609 per week ($31,668 per annum) come to around $134,000 per annum.

7. The tribunal notes that he does maintain a property, which costs him $900 per week to rent. Mr Gilmore said that he acknowledged it was expensive, but he did so for the purposes of continuity for the children. The tribunal noted that the assessment proceeds on the basis that Mr Gilmore has 24% care of both of the children, and so in addition to child support he is obligated to meet their needs while they are in his care. This reduces the amount of child support he is assessed to pay for their day to day needs, but does not impact on any additional amounts which may be required due to the needs of the children or the expectations of the parents.

8. Mr Gilmore’s statement of financial circumstances for the tribunal discloses savings of $12,514.85, which he explained was set aside for capital calls for the business. On this statement, which was signed on 27 August 2017, he lists his assets in [Company 1] to be $334,412. This includes committed funds and partnership assets related to the purchase of office equipment for their eight staff. He has a credit card bill of around $2,600 and no debt other than that to his sister.

1. Mr Gilmore's available income and financial resources appear to be a salary of $300,000 per annum, supplemented in 2017 by rental income of $14,690; a benefit from a mobile phone; and an ability to undertake personal travel using business frequent-flier points, thus saving him the expense of flights and accommodation. In order to work out Mr Gilmore's capacity to contribute to child support for [Child 1] and [Child 2] the tribunal must convert these benefits to some sort of monetary value. On balance, it seems that an additional amount of $5,000 per annum would be sufficient to cover this. This means that in total Mr Gilmore had available to him $319,690 in 2017 and will have $305,000 available to him ongoing.

2. These benefits are offset by his need to make capital contributions to the funds. Given his excess of income over expenditure, and his knowledge of this need as a condition of employment, the tribunal is satisfied that Mr Gilmore has some capacity to make these contributions from his income without affecting the normal assessment of child support. His after tax income is $185,000. Child support under the formula is $16,436 per annum. This still allows him nearly $170,000 in self-support income. From this, he is still relatively comfortably able to meet his fund commitments and still have a reasonable lifestyle. This can be seen from the fact that Mr Gilmore has contributed over $62,000 of what appears to be his own money to the funds between January and November 2017, without borrowing from his sister, and without incurring any significant debt. He has also paid child support of $609 per week - $31,668 per annum – during this time.

3. Having said that, combined with his fixed expenses, this does seem to have taken all his financial resources and the tribunal is not satisfied that he would in fact be able to meet a significantly higher child support commitment in the short term, regardless of whatever previous commitments he has made to Mrs Gilmore. The pattern of fund payments supports Mr Gilmore’s evidence that he will have a greater capacity to support the children financially in future than he does now.

4. The tribunal is satisfied that Mr Gilmore is able to meet the child support assessment under the formula with his current income and there should be no change to his adjusted taxable income for child support purposes. His taxable income is reflective of his capacity. The tribunal is not increasing it for rent in 2017 or non-cash benefits throughout the period to reflect the pattern of fund payments. These additional things help support Mr Gilmore to meet the child support as assessed while also meeting his fund commitments.

5. Although this takes account of the normal child support assessment, it does not make allowance for the additional cost of educating [Child 1] in the manner expected by the parents. In the objection decision, the officer decided that as Mr Gilmore had a higher proportion of the total income of the parents, it would be fair for him to pay more than half of [Child 1]’s school fees. The tribunal agrees that this is an appropriate approach in this case. Mr Gilmore has around 70% of the available income for the support of the children. If the parties were still together and pooling funds, it is likely that he would bear the cost of more than half of [Child 1]'s education. 70% of her fees for 2017 was $14,791; 70% of her fees for 2018 is $15,022, and 70% of the fees for 2019 is likely to be $15,262 (allowing for a 1.6% increase as there was between 2017 and 2018).

6. The tribunal is satisfied that Mr Gilmore does have the capacity to meet the assessment as amended. It is not significantly different from the $609 per week he is presently paying. It represents the extent of his capacity at the present time.

7. The parties should be aware that there is a limit to the forensic abilities of an administrative process. The tribunal does not have the same resources as a court, but it is satisfied that both parties met their obligation of disclosure to the tribunal, and it would be correct to proceed on the basis of the evidence obtained. As the objection decision covers the 2017 to 2019 years, and [Child 2] is to start high school in 2020, the tribunal is satisfied that it would be appropriate in this case to replace the decision for the same period, as long as it is proper to do so.

Issue 3 – Is it otherwise proper to depart from the administrative assessment?

1. The final step for the tribunal is to determine whether it is “otherwise proper” to depart from the administrative assessment. Subsection 117(5) of the Assessment Act requires the tribunal to take into consideration the nature of the duty of a parent to maintain a child, and the effect that any change to the assessment would have on the rate of any Centrelink benefits being received by the parties or the children.

2. The child support law recognises that each parent has a primary duty to maintain their children. In the case that they cannot, the government may assist in the form of family assistance payments. Mrs Gilmore does not declare any family assistance payments as part of her income, so this decision will have no impact on the public purse. The tribunal is satisfied that a departure from the assessment will better reflect Mr Gilmore’s financial circumstances and ensure that the level of financial support provided by the parties for the children is determined according to their capacity to provide that support. It is therefore otherwise proper to depart from the administrative assessment in this matter. 

DECISION

The decision under review is set aside.  In substitution the tribunal decides as follows:

• For the period 1 January 2017 to 31 December 2017 the annual rate of child support payable by Mr Gilmore is to be increased by $14,791;

• For the period 1 January 2018 to 31 December 2018 the annual rate of child support payable by Mr Gilmore is to be increased by $15,022; and

• For the period 1 January 2019 to 31 December 2019 the annual rate of child support payable by Mr Gilmore is to be increased by $15,262.