Gunton and Zeal (Child support)

Gunton and Zeal (Child support) [2022] AATA 3371 (8 April 2022)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2021/AC022706
APPLICANT:  Ms Gunton
OTHER PARTIES:  Mr Zeal
Child Support Registrar

TRIBUNAL:Member S Cullimore
DECISION DATE: 8 April 2022
DECISION:

The decision under review is set aside and the Tribunal substitutes a new departure determination that from 1 April 2021 to 2 February 2024 the annual rate of child support payable by Mr Zeal is fixed at $7,500pa.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – a ground for departure established – decision to depart - 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

The following background matters are drawn from the files of the Child Support Agency (“the CSA”) and are not in dispute. The Tribunal finds each matter as a fact.
The case was registered on 11 January 2021 and has been Registrar Collect since that date.[1]
[1] C408
The parents have one child born [in] February 2019, now aged 3.
On 1 April 2021 Ms Gunton applied for a change of assessment (“COA”).[2]
[2] C70
On 17 July 2021 a delegate of the CSA made a departure determination fixing the adjusted taxable income (“ATI”) of Mr Zeal at $36,387 from 3 March 2021 to 31 December 2022.[3]
[3] C260
This produced an annual rate of child support of $751 after 1 April 2021 and then $1,712 after 1 August 2021.
On 3 August 2021 Ms Gunton objected to that departure determination.[4]
[4] C288
On 19 October 2021 an objections officer allowed her objection and made a different departure determination, fixing the ATI of Mr Zeal at $30,736 from 1 April 2021 and then $44,964 from 27 July 2021.
The resulting annual rate of child support was initially $751pa and, after 27 July 2021, it was $3,710pa.[5]
[5] C42
On 11 November 2021 Ms Gunton applied for further review by this Tribunal of the objection decision.
As at that date, Mr Zeal was up to date with his payments.[6]
[6] C430

DOCUMENTARY EVIDENCE AND HEARING

The Tribunal had before it the original bundle of documents provided by the CSA. These documents are referred to as C1 to C434.
Directions were made by the Tribunal for production of further documents by the parents.
The hearing was on 8 April 2022 by teleconference.
A Mandarin interpreter assisted the Tribunal.
Documents received from Ms Gunton were marked A1 to A61 and documents received from Mr Zeal were marked B1 to B29.

CONSIDERATION

The relevant law

Child support is usually based upon “administrative assessments”. These normally use the ATIs of the parents for the financial year ending before the start of the relevant child support period.
Part 6A of the Child Support (Assessment) Act 1989 (the Act) sets out certain circumstances in which the Registrar, on application by a parent, may depart from or “change” the administrative assessment, or in other words, change in some way the manner of working out the child support liability of the payer.
The central issues for a decision maker to determine in any COA matter mirror the three steps in the process which are set out in section 98B of the Act.
They are:
(i)whether one, or more of the grounds for departure referred to in subsection 117(2) of the Assessment Act exists; and if so
(ii)whether 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 to depart from the administrative assessment of child support.
Under subsection 117(2) of the Act, a decision maker is required to consider whether, “in the special circumstances of the case”, the normal administrative assessment of child support is unjust or inequitable because of various factual scenarios (the so-called “grounds for departure”).
These factual matters (grounds) cover such matters as “the income, property and financial resources of either parent” (this is called “Reason 8A”: see below).
The “special circumstances” which must be present in the case of each Reason must tend to justify or support a departure determination being made. Those circumstances must also be separate and discrete matters from the factual matters which make up the “grounds” for departure. Decision makers often confuse this issue by stating that the grounds themselves constitute the special circumstances. The Tribunal considers that that approach does not reflect the law, or pronouncements by courts having supervisory jurisdiction in this area.
For the second step, subsections 117(4) to (9) (inclusive) of the Act then require the decision maker to consider the “just and equitable factors” before making a particular departure determination.
These factors include the income, property and financial resources of each parent; the earning capacity of the parents; the costs of providing care to the children; the necessary living expenses of the parents; and any hardship that would be caused to either parent or the children by the making of any particular COA decision.
If satisfied that it is appropriate to do so, the Registrar may then make any of the forms of departure determination allowed by section 98S of the Act.
These include but are not limited to fixing a parent’s ATI at a figure in excess of that used in an administrative assessment, as has happened to date in this matter, or fixing an annual rate of child support.

The relevant “administrative assessments” in this case

For the period from the start of the case onwards the administrative assessment was that Mr Zeal should pay Ms Gunton child support of $4,474pa.
This figure was based upon Mr Zeal’s 2019/20 “provisional” ATI of $52,638 and Ms Gunton’s 2019/20 ATI of $4,955.
From 3 March 2021 onwards the administrative assessment was that Mr Zeal should pay the Minimum Annual Rate (“the MAR”) of child support of $446.
This figure was based upon a deemed income for Mr Zeal of $11,627 and Ms Gunton’s 2019/20 ATI of $4,955.
From 12 July 2021 the administrative assessment was again the MAR.
Since 1 August 2021 the administrative assessment has been that Mr Zeal should pay child support of $751pa.
This figure is based upon Mr Zeal’s 2020/21 ATI of $30,736 and Ms Gunton’s 2020/21 provisional ATI of $5,094.
The Tribunal must consider whether there should be any “change of assessment” in this matter from the above administrative assessments.

Is there a ground for departure?

The Tribunal has concluded that the evidence and the submissions of the parents raises principally what is known as “Reason 8A”.
Reason 8A is contained in subparagraph 117(2)(c)(ia) of the Assessment Act as follows:
…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;…
The test requires the Tribunal to consider the level of child support as determined by the “administrative assessments”, set out above, on the one hand, and the “income, property and financial resources” of either parent on the other hand, and decide whether the result is in common parlance “unfair” (strictly, “unjust and inequitable”).
The level of child support can be “unfairly” low or “unfairly” high, in a particular case.
From all of the evidence before it, the Tribunal finds the following material facts concerning the income, property and financial resources of Mr Zeal:
·      He lives in a house which he owns, at [Suburb 1];
·      It is worth about $850,000;
·      Under a property settlement reached between the parents and endorsed by the Court on 17 March 2022, that property remains his, subject to him paying Ms Gunton the lump sum of $177,000;
·      He has in fact paid her $169,000 (the difference was caused by currency fluctuations);
·      He owns two properties in China, namely an apartment in [Locality 1], a high tech “hub” of [City 1], which is in [Province 1], and a smaller apartment at [Locality 2], also in [Province 1];[7]
·      Together, they are worth about $1,000,000;
·      Under the property settlement he keeps these apartments;
·      There is no mortgage over the [Suburb 1] property;
·      He has no credit card debts;
·      In 2018/19 and 2019/20 he was not required to lodge a tax return;
·      Since 1 July 2020 he has worked in short term fruit picking and food packing jobs;
·      He has received Centrelink income support payments on and off in the last two years;
·      Currently, he has an ongoing employment income of about $44,500pa.
[7] See A48–A60
From the evidence before it, the Tribunal finds the following material facts concerning the income, property and financial resources of Ms Gunton:
·      She has lived in China since the parents separated in about November 2019;
·      She lives with her child and her parents in [City 1];
·      She does not receive any Centrelink payments because of residency requirements;
·      Under the property settlement she received $169,000;
·      She owns a property in [City 1], China, worth about $77,000;
·      Under the property settlement that property remains hers;
·      She is not paid any Chinese government benefits.
The Tribunal needs then to consider the child support liability of Mr Zeal under the recent administrative assessments (see above) as against the income, property and financial resources of the parents, in as far as it has evidence on that topic, as set out above.
The Tribunal noted that the formula outcomes have been very low indeed. Since March 2021 they have varied from $446pa to $751pa.
In his Statement of Financial Circumstances, Mr Zeal put his current income as $850pw = $44,200pa, however he puts his living expense at $1,053pw = $54,756pa. He is also repaying a debt to his parents at $250pw.
He denied having any income from any source except his employment.
The Tribunal does not accept that statement is truthful. The Tribunal is satisfied from the documents produced by Ms Gunton (A48 onwards) that Mr Zeal owns two apartments in China. It is extremely unlikely that these properties are not rented out.
In any event, while the income or financial resources represented by those assets is very hard to quantify, the Tribunal finds that, as Mr Zeal is not going into debt, he must have the income and financial resources available to him from some source or sources to cover his living expenses of at least $1,300pw. This net sum would require his income to be in the low $80,000s, before tax (gross), to generate it.
The Tribunal accepts that he has received some financial support from his parents, but it seems to the Tribunal highly unlikely that he is not receiving rental income from his apartments, and/or that he has some other financial resources beyond what he has disclosed to the Tribunal.
The Tribunal is unable to make any finding on that topic, or indeed about his financial position generally, with any great degree of certainty, but the Tribunal finds that, taking a conservative approach, because of the level of his living expenses, he has income and financial resources equivalent to an income for child support purposes of at least somewhere in the region of $80,000–$85,000.
The Tribunal is equally not satisfied that Ms Gunton’s income position is as she claims (which essentially is that her income is nil). She made frequent refences in her submitted documents and in her verbal evidence to the high costs of living in China. She puts her living expenses at $1,192pw, which is $61,984pa, but she claims that she has no income at all.
The Tribunal accepts that she has been receiving some financial support from her parents and that she has recently received a lump sum for property settlement, and has repaid some money to them, but nevertheless it is hard to accept that Ms Gunton has no income of her own of any kind. She does own a property which she does not live in. It is highly likely that she too has some rental income.
Under the formula, an income of $82,500pa for Mr Zeal would produce a child support liability of about $8,889pa, if the income of Ms Gunton is $50,000pa. Using the formula as a guide, even if her income was $70,000pa, his liability to her would still be $8,482pa. Until and unless her income is over $100,000, it makes little difference, under the formula, to the child support liability of Mr Zeal.
The child support amounts produced by these incomes are well in excess of the figures produced by the formula, and so the Tribunal finds that the level of child support produced by the formula has consistently been “unfairly low”, because of the true level of income and financial resources of the parents, especially of Mr Zeal.
There are special circumstances in this matter because of the overseas properties of the parents and the high likelihood of one or both of them receiving overseas income.
Reason 8A is made out.
No other Reason needs to be considered.

The just and equitable factors

The Tribunal must consider whether it is “just and equitable” to both parents and the children to depart from the administrative assessment in any particular way.
The factors to be taken into account are set out in subsection 117(4) of the Act, as follows:
(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.
Subsection 117(9) of the Act states that the subsection 117(4) factors “do not limit other matters to which the [Tribunal] may have regard”.
In determining whether it would be just and equitable to make a departure determination, the Tribunal “must have regard to” the factors specified in subsection 117(4). Whilst the section need not be slavishly followed, each of the factors listed in subsection 117(4) relevant to this matter should be considered.

Costs of providing care

Ms Gunton has made frequent references in her submitted documents and in her verbal evidence to the high costs of care she faces in China.
In her original Statement of Financial Circumstances (A8) she put the total costs of care of the child (who is 3) at $514.45pw. In the more recent version (A19) she puts these costs at $641pw. In her verbal evidence she put the costs of his food and formula milk as “at least $145pw”.
However, in her COA application she told the CSA that the costs of care are about $11,000pa.
That seems to the Tribunal to be a much more realistic figure and the Tribunal finds that the costs of care of the child in this matter are about $11,000pa.

The father’s income, expenses and capacity to pay

The Tribunal notes its finding above that Mr Zeal’s income for child support purposes is probably at least $82,500.
He is currently making child support payments of between about $120pf and about $360pf, and he has no arrears.
The Tribunal is satisfied that he has the capacity to pay a much higher level of child support, which is much more commensurate with the level of his income and financial resources.

Hardship

With regard to hardship (paragraph 117(4)(g)) the Tribunal must consider this factor with reference to both of the parties and the children.
The requirement is to “weigh or balance the hardship” that the making of, or refusal to make, the determination would cause to the carer entitled to child support, and to the payer, and to the children.
Mr Zeal has no arrears. He has access to significant financial resources other than his employment income.
Ms Gunton’s financial position is unclear, but she probably has a much more modest level of income and financial resources. She needs as much financial support from him for the child as Mr Zeal can reasonably give.
On balancing the hardship, the Tribunal finds that the proposed departure determination will not cause undue hardship to either parent.

Proposed departure determination

The Tribunal considered that any departure determination should take specific account of all of the above, and also, specifically, the various matters, set out below.
The Tribunal noted that the child is now 3, and the costs of care are probably higher where he is in China, than if he was in Australia.
The Tribunal believes that Mr Zeal has been significantly under assessed by the formula, above.
Ms Gunton applied for a COA on 1 April 2021.
Using the incomes of $82,500 for Mr Zeal and $50,000 for Ms Gunton, for one child aged 3, in the sole care of the mother, the formula amount of child support is $8,889pa.
However, as each parent has had access to loans from their parents, to support them, there should be some reduction in this amount to reflect that fact.
Doing the best it can, in a difficult matter, the Tribunal fixes an annual rate of child support of $7,500. This will produce arrears, however Mr Zeal has had access to the income and financial resources referred to in this decision since well before 1 April 2021.
A departure period until the child is 5 (2 February 2024) seems to the Tribunal to be an appropriate outcome, giving some certainty to the parents, and allowing them to plan and budget, going into the future.
Accordingly, the Tribunal proposes, for the period 1 April 2021 to 2 February 2024, to fix the annual rate of child support payable by Mr Zeal at $7,500pa. This will wholly replace the departure determination made by the objections officer.

Is it otherwise proper to depart from the administrative assessment?

The final step for the Tribunal to undertake is to determine whether it is “otherwise proper” to make the particular determination to depart from the administrative assessment.
Subsection 117(5) of the Act requires the Tribunal to take into consideration the effect that the making of the order would have on any entitlement of Ms Gunton to an “income tested pension, allowance or benefit” – such as FTB – or the rate of any such payment.
Ms Gunton is currently not entitled to FTB.
She needs to advise Centrelink of this decision if she returns to live here and claims FTB. This is because FTB reduces where the parent receives child support of over a certain limit (about $90pf).
In any event, the Tribunal believes that it is otherwise proper to depart from the administrative assessment in the way set out in this decision.

DECISION

[2022] AATA 3371

8 April 2022

Key Legal Topics

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Family Law

Administrative Law

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