Gretton and Gretton (Child support)

[2022] AATA 4095

Gretton and Gretton (Child support) [2022] AATA 4095 (17 August 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/BC023092

APPLICANT:  Mr Gretton

OTHER PARTIES:  Child Support Registrar

Mrs Gretton

TRIBUNAL:Member S Letch

DECISION DATE:  17 August 2022

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – whether there was a ground for departure – income, property and financial resources of both parents – no ground for departure established – 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. Mr Gretton and Mrs Gretton are the parents of [Child 1], born 2007. Mrs Gretton has been assessed by the Child Support Agency (CSA) as liable to pay child support to Mr Gretton. Mr Gretton seeks a review of an objection decision by the CSA which disallowed his objection to a “change of assessment” decision of 14 October 2021. 

2. By way of background, it is convenient to set out some extracts from the objections officer decision dated 22 December 2021:

   Prior to the Change of Assessment decision (subject of this objection), the following assessments
   were in place:

   For the period 7 July 2021 to 2 January 2022, Ms Gretton is assessed to pay the annual rate of child support of $446. This is based on Ms Gretton`s 2021-22 estimated Adjusted Taxable
   Income (ATI) of $15,642 and Mr Gretton`s 2019-20 ATI of $90,731. The final 28 days of this
   period are an extension of the minimum rate, prior to the return of a higher rate thereafter. The final two days also reflect Mr Gretton`s 2020-21 provisional ATI of $93,271, which has no influence on the calculation.

   For the period 3 January 2022 to 30 June 2022, Ms Gretton is assessed to pay the annual rate of child support of $724. This is based on Ms Gretton`s 2021-22 estimated ATI of $30,268 and Mr Gretton`s 2020-21 provisional ATI as above.

   DECISION UNDER REVIEW

   On 15 September 2021, Mr Gretton applied for a change to the assessment on the basis of
   Reason 8A.

   On 4 October 2021, DM [name deleted] refused to make a change as no reason had been established.

   …

   Reason 8A relates to a parent`s actual income and financial resources. Where these are not
   adequately reflected in the assessment it may be warranted to change a parent`s income to account for those resources, if this would make a significant difference to the child support
   liability/entitlement. This can also be applied where a parent`s income has been overstated and
   reflecting their actual income would result in a significantly different assessment.

   As outlined above, there is no evidence to indicate Ms Gretton is deriving an income higher than that estimated. Accepting this, I note the estimate provisions of the Act allow for the ATI to be reconciled as the applicable tax return is lodged. In this case, as Ms Gretton completes her
   2021-22 tax return, it will automatically be compared against her estimated ATI. If she is deemed to have earned more than estimated (expected), the higher amount will be applied and backdated to cover the estimate period in accordance with the estimate provisions of the Act.

   Given this will ensure any additional income will be captured (if applicable), and with no evidence
   to oppose the estimate available so far, I am satisfied Ms Gretton is assessed fairly. Her financial position does not create a special circumstance and Reason 8A is not established.

   Reason 8B: To establish this reason, Mr Gretton must show that either their own or Ms
   Gretton`s income or earning capacity makes the child support assessment unfair.
   The evidence of each parent and other evidence available:
   Mr Gretton stated there are suitable opportunities for employment within Ms Gretton`s field,
   in her area.

   Relevant facts, findings made and application of the law:

   In order to establish Reason 8B I must be satisfied that the child support assessment is unfair
   because of Ms Gretton`s earning capacity. I can only determine a parent's earning capacity is
   greater than is reflected in his or her ATI used in the child support formula if all the following three
   matters are satisfied:
   1. The parent is either:
   - not working despite ample opportunity to do so; or
   - has reduced his or her weekly hours of work to below full-time work; or
   - has changed his or her occupation, industry or working pattern;
   2. The parent's decision about his or her work arrangements is not justified by either:
   - his or her caring responsibilities; or
   - his or her state of health;
   3. The parent has failed to show that the decision about his or her work arrangements was not
   substantially motivated by the effect this would have on the child support assessment.

   All three compulsory criteria must be satisfied before a change to the assessment can be made to take into account a parent's earning capacity, rather than his or her actual income.

   The child support case commenced 13 February 2019. Outside of 2019-20, Ms Gretton has held a low ATI reliant on income support payments. This remains largely the case. As such, I do not consider there has been any changes to Ms Gretton work arrangements. Given she had not held employment, I do not consider she has reduced her hours of work from fulltime.

   Finally, as Ms Gretton is employed, albeit as a casual, it cannot be said she is choosing to remain unemployed. The elements within the first criterion are not met.

   As all three criteria cannot be met, Ms Gretton is not deemed to have an unexercised earning
   capacity.

   Reason 8B is not established.

   DECISION

   As no reason has been established, the application must be refused under Section 98F of the Child Support (Assessment) Act 1989. As a result, no changes will be made to the child support
   assessment.

   The objection is disallowed. The determination of DM [name deleted] is affirmed.

   …

3. Mr Gretton and Mrs Gretton participated in the Tribunal’s hearing by conference telephone.  In making its decision, the Tribunal took into account the sworn evidence of both parties, the CSA materials and additional materials submitted by both parties.

CONSIDERATION

The legislative framework

1. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Act). A formula is used. It takes into account variables including each parent’s adjusted taxable income for the last relevant year of income, the number of children and the level of care provided by each parent.

2. Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make such a departure determination if three matters are established:

   ·     one, or more than one, of the grounds for departure referred to in subsection 98C(2) exists (subparagraph 98C(1)(b)(i));

   ·     a departure is just and equitable as regards the children and each parent (sub-subparagraph 98C(1)(b)(ii)(A)); and

   ·     it is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B)). 

3. Subsection 98C(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2).

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 Act. It permits a range of determinations, including varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.

Issue 1 – Is there a ground to depart?

1. Subparagraphs 117(2)(c)(ia) and (ib) of the Act, commonly referred to by the CSA as reasons 8A and 8B, provide as grounds for departure:

   (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 and financial resources of either parent; or

   (ib)       because of the earning capacity of either parent

2. The matters which must be taken into account when assessing a person’s earning capacity are contained in subsection 117(7B) of the Act, which provides the following:

   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.

10.The starting proposition is that the child support formula should apply. Only in special circumstances should a departure be made. The words “in the special circumstances of the case” are not defined in the legislation. Whilst it is not possible to define with precision the meaning of that term, 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 Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman and Gyselman (1992) FLC 92-279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. The Tribunal’s approach to the interpretation and application of the particular grounds in subsection 117(2) must be guided by that qualification.

The hearing

11.Mr Gretton told the Tribunal that he considers Mrs Gretton’s income has reduced – he observed her 2019/20 adjusted taxable income was some $45,000 (which the Tribunal observes included a capital gain, in addition to casual employment income, and likely a jobseeker for some, or all, of the tax year).  Mr Gretton told the Tribunal that a capital gain should “still count” towards a child support assessment. Mr Gretton told the Tribunal that he considers that Mrs Gretton has reduced the time she is available to work.

12.Mrs Gretton told the Tribunal she had not worked since February 2022 (evidenced by the payslips she supplied). She was receiving jobseeker payment, and was declaring casual income to Centrelink as she earned it. Mrs Gretton told the Tribunal that the day before the hearing, she received a letter from Centrelink confirming that her claim for a disability support pension had been granted. Her claim was made on the basis of [Medical conditions].  

13.In relation to Mrs Gretton’s health, Mr Gretton told the Tribunal he had not seen the documents Centrelink will have relied upon to grant Mrs Gretton’s pension. In respect of Mrs Gretton’s general mental health, Mr Gretton said that Mrs Gretton was continuing to consume alcohol even though this would affect her medication. He said there was “something amiss”, suggesting Mrs Gretton was making a deliberate choice to consume alcohol and “using that as a tool” to reduce her availability for work.

14.Mrs Gretton told the Tribunal that she last worked in February 2022 because she was “not asked back”. She said she should not have been doing [work] because of her [medical condition]. Mrs Gretton said she could not do any other types of work because of a variety of symptoms, including severe anxiety and depression, fatigue, nausea, memory loss and panic attacks. She said her health continues to deteriorate.

15.In relation to “criterion three” (that is, whether Mrs Gretton had not demonstrated that it was not a major purpose of her decision about her working arrangements to affect her child support liability), Mr Gretton did not make any particular submission on that matter. Mrs Gretton’s position was that she is not able to work as a result of her compromised health.

16.Mr Gretton confirmed his income is around $60,000 per annum. He did not identify any particularly unusual expenses.

17.Mrs Gretton’s income consists solely of her recently granted disability support pension. She did not raise any particularly unusual expenses. Mr Gretton pointed to Mrs Gretton’s indication she spent some $156 per week on “alcohol” when she is expected to pay only $38 per month in child support; Mrs Gretton clarified that included her entertainment expenses, and estimated about $50 per week was accounted for by expenditure on alcohol.  

Consideration

18.The Tribunal observes that Mrs Gretton’s income has been historically quite low in recent years; her 2019/20 income included a capital gain. Her income since some time in the 2019/20 financial year has consisted of jobseeker payments and casual income, which Mrs Gretton declared to Centrelink on a regular basis, resulting in adjustments to the amount of jobseeker payment she received. At the time of the objection decision, Mrs Gretton was still maintaining casual employment; she has not worked since around February 2022. In that sense, her circumstances have changed. However, the Tribunal accepted Mrs Gretton’s evidence that she did not cease work voluntarily.  

19.Even if it were to be accepted that the first criterion in paragraph 117(7B)(a) applied to Mrs Gretton, she will not be assessed on a capacity to earn if her state of her health justifies any decision not to work.

20.The Tribunal accepted Mrs Gretton’s evidence that she has recently been granted a disability support pension by Centrelink. Mrs Gretton told the Tribunal she was granted the pension on the basis of her [medical conditions]. The Tribunal observes the bar is quite high to be paid that pension. Mrs Gretton’s eligibility for the pension is entirely consistent with the medical evidence contained in the documents before the Tribunal which reveal a long history of severely compromised mental health, including involuntary admissions to hospital, and severe manic episodes and psychosis (as documented in various decisions of the Mental Health Review Tribunal contained in the supplementary materials provided by Mrs Gretton).

21.Accordingly, the Tribunal is comfortably satisfied that any reduction in Mrs Gretton’s working hours is justified by the poor state of her health. Accordingly, an earnings capacity does not apply to her. If the Tribunal is wrong to so conclude, the Tribunal observes that it would not be satisfied that a major purpose of any decision by Mrs Gretton to reduce her hours, or not work, was to impact the child support assessment.

22.The recent materials from the CSA reveal that, since July 2021, Mrs Gretton’s income has been assessed on the basis of estimated income; the most recent estimate was $22,629 applied in the assessment from 9 February 2022. Given that the estimates supplied by Mrs Gretton will be reconciled in the assessment on the basis of her actual income (which is likely to be less than the self-support amount in any event), the Tribunal is satisfied that no adjustment is required in the assessment for Mrs Gretton’s income.

23.Similarly, the Tribunal considers Mr Gretton’s financial capacity has been adequately reflected in the assessment by the application of the rolling formula provisions. His 2020/21 income had been “deemed” (as $93,731) in the absence of the finalisation of his tax return; from 24 May 2022, his assessed 2020/21 adjusted taxable income of $62,893 has been applied in the assessment. As a result of Mrs Gretton’s low income, there is no difference in the rate of child support whether Mr Gretton’s income is assessed as $90,000, or $60,000.

24.The Tribunal does not consider either parent has any unusual expenses in relation to themselves, or the child of the assessment, which would warrant any adjustment.

25.The Tribunal concludes there are no special circumstances in this case giving rise to an unfair assessment of Mrs Gretton’s child support liability. There is no ground to depart from the child support formula.

Issue 2 – Is it just and equitable to depart from the administrative assessment?

26.As the Tribunal has concluded there is no ground to depart from the formula, it is not necessary to consider whether a departure would be just and equitable.

27.As the Tribunal has reached the same conclusion as the objections officer, the decision under review will be affirmed.

DECISION

The decision under review is affirmed.