Hardwick and Hardwick (Child support)

Hardwick and Hardwick (Child support) [2024] AATA 3819 (9 June 2024)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2023/BC026870
APPLICANT:  Ms Hardwick
OTHER PARTIES:  Child Support Registrar
Mr Hardwick

TRIBUNAL:Member D Tucker
DECISION DATE: 9 June 2024
DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that:

For the period 2 February 2023 to 30 June 2023 Ms Hardwick’s ATI is varied to $73,500.
For the period 1 July 2023 to 30 June 2024 Ms Hardwick’s ATI is varied to $77,000.

To reflect a 50% share of the children’s school fees Mr Hardwick’s annual rate of child support is increased:

by $7,230 for the period 1 January 2023 to 31 December 2023, and
By $7,758 for the period 1 January 2024 to 31 December 2024.

CATCHWORDS

CHILD SUPPORT – departure determination – special circumstances – parents’ income and financial resources – costs of education – special needs of the children – recusal request – 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 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

Ms Hardwick (the mother) and Mr Hardwick (the father) are the separated parents of two children, [Child 1] (born [in] March 2011) and [Child 2] (born [in] August 2014), aged 12 and 9 years respectively (the children). A child support assessment has been registered with Services Australia – Child Support (Child Support) since 14 September 2021 and is for agency collection.
For child support purposes the mother has primary care of the children (251 nights per year) and the father has regular overnight care (114 nights per year), effective from 29 March 2023.[1]
[1] page 355 of the hearing papers.
Part 5 of the Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment via a formula that calculates the rate of child support the liable parent must pay. It considers variables including the parents’ adjusted taxable income (ATI) for the last relevant year of income, the number of children and the level of care each parent provides.
Part 6A of the Act allows for a departure from an administrative assessment – a process commonly known as a “change of assessment” (COA). The intent is that the Tribunal will interfere with the operation of the formula only if warranted by special circumstances. Under subsection 98C(1), a COA can be made only if:
a. special circumstances provide a ground (or more than one ground) for departing from the administrative formula; and
b. departure from the administrative formula would be:
i. just and equitable as regards the children and each parent; and
ii. otherwise proper.
Subsection 98C(2) of the Act prescribes grounds that must be met to depart from the formula assessment, which match those set out in subsection 117(2). If a decision-maker is satisfied that one or more of these grounds are established, and it would be just and equitable and otherwise proper, they may make one of the determinations in section 98S of the Act, which include varying the rate of child support payable, the parents’ ATIs or their cost percentage for a child.

13 July 2023 – COA decision

On 8 February 2023 the mother applied for a COA based on the grounds referred to as Reason 2, Reason 3, Reason 5 (withdrawn), Reason 6, Reason 7 and Reason 8A and Reason 8B.
On 13 July 2023 Child Support found that only Reason 3 (costs of education) and Reason 8A (parents’ income) were established and varied the assessment as follows:
·   for the period 1 January 2022 to 31 December 2022, the father’s annual rate of child support was increased by $2,496 to include 50% of the children’s primary school fees.
·   for the period 1 January 2023 to 31 December 2023, the father’s annual rate was increased by $973 to include 50% of [Child 2’s] primary school fees.
·   from 2 February 2023 to 31 December 2023, the father’s ATI was varied to $96,954.

3 October 2023 – objection decision

On 14 July 2023 and 17 July 2023 respectively, the mother and the father objected to the COA decision of 13 July 2023.
The objections officer found that:
·   Reason 2 (costs of meeting special needs) was not established.
·   Reason 3 (costs of private schooling) was established.
·   Reason 6 (significant costs of childcare) was not established.
·   Reason 7 (costs of self-support) was not established.
·   Reason 8A (parent’s income and financial resources) was established in relation to both parents’ ATIs, as both had incomes higher than those reflected in the assessment.
·   Reason 8B (unused earning capacity) was not established.
The objections officer, despite finding that Reason 3 (education costs) was established, did not find it appropriate to change the assessment to include a contribution from the father, deciding instead that this was a matter for the school to settle with him directly.
The objections officer found it was just and equitable to set aside the COA decision to reflect the increase in the parents’ incomes, and varied the assessment as follows:
· For the period 1 July 2023 to 31 December 2023:
othe father’s ATI was varied to $90,908.
othe mother’s ATI was varied to $73,921.
The effect of this decision was to reduce the annual rate of child support payable by the father to $8,412, a reduction of $4,616, resulting in an overpayment to the mother.

The mother’s application for independent review

On 5 October 2023 the mother applied to this Tribunal for further review. Following her application, the mother provided evidence and written submissions, some of which had been requested by child support during the merits review conducted by the objections officer. This evidence is discussed further below.
On 25 January 2024 the father and mother participated in a telephone directions hearing. The mother complied with directions by the deadline set by the Tribunal, but the father made no response.
A hearing was scheduled for 7 March 2024, but postponed to 3 April 2024 due to the father’s illness, which he corroborated with a letter from his general practitioner (GP). Prior to the Tribunal’s final hearing, the father provided documents in response to its directions.
The Tribunal considered written and oral submissions from the parents and relevant documents provided by Child Support.

Recusal request

Post hearing, the mother requested that the Member recuse himself. The circumstances of her request can be summarised as follows:
·   On 31 January 2024 the Tribunal issued directions to both parties. The mother was asked to provide (amongst other things) a copy of her final payslip for 2022/23 showing year-to-date earnings in the salary sacrifice component of earnings. The deadline for all submissions was 15 February 2024 ahead of a hearing scheduled for 7 March 2024.
·   The mother provided submissions in compliance with the Tribunal’s directions on 16 February 2024 and 20 February 2024. They were 391 pages in length. A substantial proportion of these submissions were additional to those requested by the Tribunal.
·   On 7 March 2024 the father contacted the Tribunal’s Brisbane Registry stating that he was struggling to comply with directions for various reasons, including his health problems. He also felt unable to proceed with the hearing that day and asked if he could be represented by an advocate. Later that day he provided documents required by the Tribunal’s directions.
·   The Tribunal postponed its hearing of 7 March 2024 and sent the father an email that included the following:
As you were not well enough to participate in the hearing today, the Member has rescheduled it for Wednesday 3 April 2024 at 11 AM. The member asked that you provide a medical certificate regarding your current health condition.
The member is not agreeable to you being represented by an advocate at that hearing. However, he is open to conducting a shuttle hearing, in which he would speak with you and the other party alternately, in the absence of the other. The Member asks that you inform the case manager, no later than 27 March 2024, whether you will participate. If you elect not to participate, the hearing will proceed without you.
The Member notes that you partially complied with his directions today but have omitted to provide a statement of financial circumstances. Please provide this no later than 14 March 2024
·   On 28 March 2024 the parties’ documents were exchanged.
·   On 2 April 2024 the mother provided an additional 321 pages of submissions. As this was the day before the Tribunal’s hearing, it was not feasible for these submissions to be redacted and exchanged with the other party prior to the hearing. The Tribunal officer who received them noted that a significant proportion of the documents in this submission had already been received in earlier submissions.
·   On 3 April 2024 the father provided a medical certificate from his GP which verified that he was suffering from severe and chronic conditions to support his inability to participate in the Tribunal’s hearing on 7 March 2024.
·   By the time of the Tribunal’s hearing on 3 April 2024 it appeared that both parties had substantially complied with the Tribunal’s directions. The Member did not regard their apparent omissions to be an obstacle to proceeding with the hearing. Any missing documents that proved crucial could be submitted post hearing.
·   Unbeknown to the Member, the mother had already complied fully with its directions, but due to an oversight, there were two items submitted by the mother that were not given to the Member or exchanged with the father prior to the hearing of 3 April 2024.
·   During the hearing, the mother raised the issue of the father’s failure to supply some items in response to directions and suggested the Tribunal should draw a negative inference from this. The Member responded briefly, stating that he did not find it necessary to draw a negative inference about father’s omission, or similar omissions on the mother’s part.
·   On 4 April 2024 the mother wrote to Tribunal staff to complain about numerous issues. Her concerns included the following:
   During the hearing, the Member had stated (incorrectly) that she had not provided some items referred to in directions.
   In reference to the father, the mother claimed that the Member had stated that no investigation into his finances will be completed, despite her providing significant and factual evidence that he has been untruthful about his finances during their Family Court proceedings.
   She feared that the Member had taken evidence from the father in her absence of which she had not been notified.
   Neither child support nor the Tribunal had adequately investigated the father’s financial affairs.
·   In her letter of 4 April 2024, the mother made the following request, which the Member construed as a request for recusal:
I don’t have the confidence that the member will make an impartial decision and the comments made support this I am requesting for a new member to make the decision if possible and that all the information and evidence be included and reviewed properly, searches and investigations to the other parties [sic] finances be done that a decision not be predetermined
·   On 9 April 2024 the Member was advised of the administrative error by which some of the mother’s documents submitted in response to directions were not included in the hearing papers or exchanged with the father.
·   On 12 April 2024 Registry made the following note:
Member has read the applicant's submissions omitted from the A docs and now deemed her compliant. She has been advised of this. A259-333 (??) is to be sent to 2nd P for comment once member provides wording for cover letter.
·   On 15 April 2024, the Member gave the following direction to Registry:
Hi [Officer’s name],
My understanding is that Ms Hardwick did comply with all directions prior to hearing, but some of her documents were missed in the preparation of the hearing papers. Is that correct?
If so, could you let Ms Hardwick know that (i) I have been appraised of this and understand that she complied fully with my directions, and (ii) I have directed that the documents she provided that were omitted from the hearing papers be sent to Mr Hardwick for his response by COB on Friday this week (19 April 2024).
Please also write to Mr Hardwick, include the following, and copy this letter to Ms Hardwick:
"The following documents were provided by Ms Hardwick prior to the Tribunal's hearing in accordance with its directions. However, it appears they were missed when preparing the hearing papers and were consequently not provided to you prior to its hearing.
The Member has directed that these documents and submissions now be sent to you, with an invitation for you to make a written response by close of business on Friday 19 April 2024. It is not compulsory for you to provide a written response. If none is received Tribunal will assume that you did not wish to do so and proceed with its review."
Thanks!
On 15 April 2024, Registry staff also sent the father an SMS to alert him to check his email for its correspondence.
On 16 April 2024 and 30 April 2024 the mother spoke with Registry staff. She remained concerned that she would be disadvantaged by the Member’s misapprehension that she had not complied fully with directions prior to the hearing. She was also concerned about whether the 321 pages of documents she submitted on 2 April 2024 (the day before the hearing) would be considered by the Tribunal.
By 19 April 2024 the Tribunal had received no response from the father.
On 1 May 2024 the mother contacted the Registry again, asking whether the 321 pages of submissions that she lodged on 2 April 2024 (the day before hearing) would be considered.
On 7 May 2024, the Member gave the following direction to Registry:
I understand that Ms Hardwick has contacted the Tribunal concerned about various issues, including whether her submissions are being considered, and whether the other party has provided submissions that she has not been provided with. Could you please convey the following to reassure her about the Tribunal's process?
As previously acknowledged, on 20 February 2024 Ms Hardwick submitted documents in accordance with the Tribunal's directions, some of which were not shared with the other party or with the member prior to the Tribunal's hearing of 3 April 2024. Because Ms Hardwick provided these documents within the timeframe the Tribunal set, the Tribunal finds that she has been totally compliant with its directions. Because these documents are relevant to its deliberations it will consider them. Consequently, it was necessary to share them with the other party to provide him with an opportunity to respond. This time has passed without the other party making any response.
On 2 April 2024 Ms Hardwick submitted documents additional to those required by the Tribunal's directions. Because they were voluminous and arrived at 6 PM the day prior to the Tribunal's hearing of 3 April 2024, there was no time for the Tribunal to review them, or to share them with the other party prior to the hearing.
On 17 April 2024 Ms Hardwick made further submissions, which included a recusal request.
The Tribunal is reviewing the documents Ms Hardwick submitted on 2 April 2024 and 17 April 2024. If they include evidence directly to the Tribunal's review, it may consider them. In that case, due process will require them to be exchanged with the other party. However, the Tribunal is mindful that its remit is to provide a review mechanism that is expeditious and quick. At some point the Tribunal must stop taking evidence and finalise its review. If the Tribunal considers submissions from one party, fairness demands that they must be shared with the other party. This prolongs proceedings. For this reason, the Tribunal is generally reluctant to accept late submissions unless they include material that is directly relevant that was not dealt with during hearings.
I note that Ms Hardwick has questioned whether the Tribunal has accepted submissions from Mr Hardwick that have not been exchanged with her. Please assure her this has not and would not occur. I note that the Tribunal has had no contact with Mr Hardwick since its hearing of 3 April 2024.
The Tribunal notes Ms Hardwick's suggestion that the Tribunal should request further information from the Agency (child-support). If the Tribunal decides that it needs further evidence from the Agency (or any other party) to complete its review, it will issue directions accordingly. The Tribunal will also consider Ms Hardwick recusal request. If the member refuses Ms Hardwick's recusal request, he will provide her with a decision and written Reasons that will include an explanation of what evidence was considered and why.
In considering the mother’s recusal request, the Tribunal considered the principles set out by the High Court in Ebner v Official Trustee in Bankruptcy.[2] The Court held in that case that a judge (or in this case, the Tribunal) is disqualified, subject to qualifications relating to waiver or necessity, “if a fair‑minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide”.
[2] [2000] HCA 63; (2000) 205 CLR 337. See also Charisteas v Charisteas [2021] HCA 29
The Ebner case identifies three tests:
(i) there must be an identification of the factor which is said might lead a judge to resolve the question other than on its legal and factual merits;
(ii) there must be an articulation of the logical connection between that factor and the apprehended deviation from deciding that question on its merits; and
(iii) assessment of the reasonableness of that apprehension from the perspective of a fair minded lay observer.
In her letter of 4 April 2024, the mother identifies the factor which she feared might lead the Member to decide her application other than on its legal and factual merits. It was the fact that some of her submissions were not put before the Member prior to hearing, creating the impression she was not fully compliant with directions. The Tribunal finds that the first test identified in Ebner is met.
It is possible for the Tribunal to draw negative inferences from non-compliance with directions. Parties are usually warned of this when directions are issued. Given there is a logical connection between the factor identified by the mother and the possibility of this influencing the Member’s decision making, the Tribunal finds that the second test identified in Ebner is also met.
The third test is concerned with apprehended bias – whether, in all the circumstances, a fair-minded lay observer with knowledge of the material objective facts might entertain a reasonable apprehension that [the decision-maker] might not bring an impartial and unprejudiced mind to the resolution of the question.[3]
[3] >
In the present case, the Tribunal finds that this third test is not met, because:
·   The issue of non-compliance with directions was raised at hearing by the mother, when she asked the Tribunal to draw negative inference about the father’s failure to provide an item listed in its directions. The Member responded by assuring the mother (and the father) that he had not drawn any negative inference from either party’s partial non-compliance.
·   While the Member was briefly under the impression that the mother had not submitted all the documents listed in its directions, the Member at no point expressed any inclination to draw a negative inference from this and assured the mother of this both during its hearing and after.
·   There is no evidence to support the mother’s suspicion that the Tribunal considered submissions from the father that were not exchanged with the mother.
·   The Tribunal notes that in her letter of 4 April 2024 (in which she requested recusal) the mother expresses her dissatisfaction at the level of investigation the Tribunal appeared willing to undertake in relation to the father’s financial affairs. In the Tribunal’s view, this is not an issue relevant to apprehended bias, as the Tribunal applied the same standard to both parties.

For these reasons, the Tribunal finds it is not likely a fair-minded lay observer would reasonably perceive that the Member might not bring an impartial and unprejudiced mind to the resolution of the review. Consequently, the mother’s application for recusal is refused.
The 391 pages submitted by the mother on 2 April 2024 consisted of documents that were either already in evidence and exchanged, or not essential to the Tribunal’s review. They were therefore not taken into evidence or exchanged with the father.

Does a ground exist for departing from the administrative assessment?

Reason 8A – the parent’s income and financial resources

A child support assessment is generally calculated using the parents’ most recent taxable income. However, where a parent’s current income is not adequately reflected in the child support assessment a departure can be considered.
Both parents are PAYG government employees. Prior to the mother’s application for a COA (February 2023), the father was assessed on his 2021/22 deemed income of $84,102 and the mother’s ATI was assessed as $59,944.

The father’s income

The father provided child support with an income statement for 2021/22 stating his gross payments for the year were $85,614.27.
On 18 August 2023 he lodged his 2021–22 tax return, declaring an ATI of $83,816.
This is consistent with his income in previous periods:
· 2019–20 $81,177
· 2020–21 $81,732
The mother and the father both provided child support with a copy of the father’s payslip for the fortnight ending 1 February 2023, which indicates:
· The father was an ongoing full-time [specified] employee of [Agency 1] with a nominal annual salary (prior to him purchasing leave) of $97,254.
· His fortnightly salary was $3,728.59. However, his employer deducted $286.82 each fortnight in accordance with his purchased leave arrangement, resulting in a total gross wage of $3,441.77 per fortnight (approximately $89,500 per annum after allowing for reasonable deductions).
It is not disputed that the father purchases additional leave (equivalent to taking unpaid leave), which reduces his gross earnings, and has done so for years prior to the parents separating. The father claims he does so to manage a health condition, but during the COA process did not provide evidence to support this. Consequently, Child Support found that his income was $96,954, as stated in his payslip, after allowing $300 in work-related deductions.
The father has since provided evidence from his GP to corroborate that he needs to take regular unpaid leave to manage his health conditions. The Tribunal accepts that he is working to his capacity and his tax returns are the best available evidence of his ATI. This issue is discussed further below in relation to Reason 8B.
As directed, the father provided his income tax return for 2022/23. It shows gross earnings of $80,703. The Tribunal regards this as the best available evidence of his income and finds that his 2022/23 ATI was $79,265, after allowing $1,438 for reasonable workplace deductions.
Given there is no significant difference between the father’s actual ATI and the ATI used in the administrative assessment, the Tribunal finds Reason 8A is not established in relation to the father.
The father told the Tribunal that he has not worked at [Agency 1] since 7 September 2023, due to his health problems, and on 17 January 2024 his employment was terminated. He notified Child Support of this change in his circumstances. He has since received a termination payment of $8,000 which he spent on living costs. At the time of hearing, he had had no further income and was awaiting the outcome of a claim on his income protection insurance policy. These developments were not known to child support at the time of the objections officer’s decision on 3 October 2023.
The father also provided his most recent payslip, which was for the period ending 3 January 2024. It indicated gross YTD earnings of $17,189, consistent with the father’s evidence that he had stopped working on 7 September 2023. Given the father’s salary and the date he stopped work, it is unlikely this YTD figure excludes his $8,000 termination payment.

Undisclosed assets

The mother claims that the father received substantial monies from his parents – $94,000 by her estimate – to pay for his legal fees during their property settlement proceedings. The mother argued that this was a financial resource that should be considered within the child support assessment.
The father does not dispute that he received money from his retired parents to meet his legal expenses but states it was loaned and he is obliged to repay it. Sadly, the father’s father passed away approximately six weeks prior to the Tribunal’s hearing.
The father told the Tribunal that he and his parents opened a bank account that was used solely for the purpose of paying his lawyers. The mother speculated that the father had used this account to conceal money that should have been considered in their property settlement and should now be treated as a financial resource for child support purposes.
Child Support reviewed the bank account from which the father’s legal fees were paid, which was not in the father’s name. Regular payments are made to [named] Lawyers. No payments were made to any other person or business in this period. The father told the Tribunal that he was authorised to make payments to his lawyers from this account, but the executor of his father’s estate has since closed it.
In any case, the Tribunal does not accept the mother’s argument that money loaned or gifted to the father from his parents to pay his legal fees is a financial resource for the purposes of the assessment. Any such monies were provided to the father for a particular purpose and were not available for him to use for child support. The Tribunal notes that [in] October 2023 the Family Court commented that the father had spent over $180,000 in legal fees and the mother spent approximately $114,000.[4]
[4] Page A265
The mother also speculated that the father had received assets from his father’s estate which should be considered a financial resource. The father told the Tribunal that his father bequeathed all his assets to his mother.
The mother suggested that the father has undeclared assets which he successfully concealed from both Child Support and the Family Court during their property settlement proceedings, which concluded in October 2023. The mother submitted documents to the Tribunal to support her contention that not all the father’s bank accounts were accounted for. The mother opined that Child Support, the Family Court and the Tribunal were remiss in failing to investigate the father’s assets more thoroughly.
In response, the Tribunal notes the following:
·   The father is a long-term PAYG employee of [Agency 1]. There is no evidence of him receiving income from other sources, or engaging in any other employment or business activity that might generate such an income. There is evidence from his doctor that his health prevents him from working full time. It is therefore difficult to understand how the father could have amassed significant assets of which the mother has no direct knowledge. When this was put to the mother, she reasoned that the father could have amassed assets that he kept hidden throughout their marriage. While this is possible, there is no substantial evidence of this, despite this issue being explored by the parents’ lawyers at her behest during their property settlement proceedings.
·   It was the remit of the Family Court to determine whether the father’s assets were properly accounted for during the parents’ property settlement proceedings. The Tribunal is not a court with powers and remit to conduct detailed and lengthy forensic investigations of any party’s finances. It will accept evidence on face value if there is no compelling reason to do otherwise and make findings on the balance of probabilities.
·   While it is also possible the father might inherit assets from his father’s estate, it is unlikely that this has occurred (given the usual time required for probate to be granted). The Tribunal also notes a letter from the father’s lawyers, dated 12 February 2024, that threatens him (in vitriolic tones) with further action because he owes them approximately $58,000 in legal fees. This weighs against the likelihood that the father has undisclosed liquid assets.
·   The purpose of a child support assessment is to ensure separated parents fairly share the ongoing costs of caring for their children. It is not a vehicle for redressing unresolved grievances about property settlements. Accordingly, the Tribunal’s primary focus is on the parent’s income, rather than their assets, when determining a just and equitable sharing of the costs of their children’s care.

The mother’s income

Prior to the decision under review, the mother was assessed on her 2021/22 ATI of $59,944.
According to the mother’s payslip for the fortnight ending 21 June 2023, her YTD taxable income was $72,099 before salary sacrifice.
Based on this, the Tribunal finds the mother’s 2022/23 gross income to be $73,922 ($72,099 / 356 days x 365 days). Allowing for reasonable tax deductions, the Tribunal finds that the mother’s 2022/23 ATI was $73,500.
The mother provided updated payslips, including one for the period ending 14 February 2024 that indicates gross YTD earnings of $48,663, equivalent to annual gross earnings of $77,563. ($48,663 / 229 x 365 days). Allowing for reasonable tax deductions, the Tribunal finds that the mother’s 2023/24 ATI is likely to be $77,000.
The Tribunal notes that the mother receives carer allowance and family tax benefit, which are not included as part of her ATI for the purpose of the child support assessment.
As noted by the objections officer, the mother significantly increased her income in 2022/23. This renders the pre-existing child support assessment unfair and Reason 8A is therefore established in relation to the mother and as grounds for a departure.

Would a departure from the administrative assessment be just and equitable?

Once a reason for departing from an administrative assessment has been established, the Registrar (or the Tribunal in their stead) must consider the amount and duration of any proposed change and the factors listed in subsection 117(4) of the Act which are relevant to a particular case. These include the parties’ respective earning capacities, the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula assessment and any other relevant matters.

Reason 2 – children’s special needs

At topic 2.6.8 the Child Support Guide includes the following:
The term 'special needs' is not defined in the legislation. There must be some evidence that the needs of the child relate to a condition or disability that is out of the ordinary. These special needs can be because of a physical, mental or learning disability or because of a special talent or ability of the child. They may result in costs that are essential or desirable for the child's welfare that are outside the ordinary costs of a child that can be met from an administrative assessment (Lightfoot v Hampson (1996) FLC 92-663).
The mother told the Tribunal that both children are gifted and have ADHD and anxiety, noting that she qualifies for carer allowance based on the children’s care needs. The mother also provided a letter from the children’s paediatrician, [Doctor A], confirming that both receive additional support from their schools via funding only available in the independent school system. The father did not dispute this.
The mother claims that because of the children’s special needs she incurs out-of-pocket medical expenses, not met via Medicare or the NDIS, that significantly increase the cost of maintaining the children.
On 25 March 2023 the mother provided Child Support with an undated letter from [Orthodontists 1], stating that braces for [Child 1], if paid by instalment, would cost $6,555, to be paid in 24 monthly instalments of $270.20 after an initial deposit of $2,055. The father questioned the necessity of this treatment, given that there is nothing in the orthodontist’s letter that explains the rationale for the proposed treatment. Given the absence of any evidence to clarify whether this treatment is essential, desirable, or cosmetic, the Tribunal will not consider it further as a treatment to meet a special need.
The mother also provided the Tribunal with a letter from a physiotherapist, [Physiotherapist A], dated 4 April 2023. She recommended that both children be encouraged to participate in regular physical activity to maximise their long-term physical health and well-being. [Physiotherapist A] also recommended [Child 2] continue with one-on-one physiotherapy to deal with issues associated with his ASD level 2.
The mother provided evidence of physiotherapy costs incurred over a period of approximately 12 months, between 9 October 2021 and 29 September 2022, totalling $1,315.
The mother also provided a report drawn from her Medicare records, dated 20 February 2024, showing her out-of-pocket costs for herself and the children. For the period from 8 February 2023 (the date of the mother’s application for a COA) to 20 February 2024, her out-of-pocket costs for the children totalled $803.
Based on this evidence, the Tribunal finds that the children do have special needs and the out-of-pocket costs of [Child 2’s] physiotherapy and other treatments (per the mother’s Medicare records) are approximately $2,000 per annum, if they are all ongoing.
Based on this evidence, the Tribunal finds that the cost of treating the children’s special needs does add to the overall cost of maintaining them significantly enough to consider them in the assessment.

Reason 3 – private schooling

To find this Reason established, the Tribunal must be satisfied that the costs of maintaining the children are significantly affected by the costs of educating them in the manner that was expected by both parents (the Act subparagraph 117(2)(b)(ii)). Where that test is met, both parents may be expected to contribute to meeting any special costs of education (such as private tuition fees), according to their capacity to do so.
There is no dispute that both children were both attending [School 1] prior to the parents’ separation in accordance with their mutual intent. This is supported by interim parenting orders made [in] March 2022.[5] [Child 2] continues to attend [School 1].
[5] Page A217
The issue in dispute is [Child 1’s] enrolment at [College 1], a private high school, where she commenced Year 7 at the start of the 2023.
The parents agree that in April 2020 they both signed enrolment forms for [Child 1] to attend [College 1] in 2023 and paid a fee of $550 to secure her position. The father claims that he did so “under duress” as he believed that neither he nor the mother could afford the tuition fees. Based on this evidence, the Tribunal is satisfied that the children are being educated in a manner that was expected and intended by both parents.
On 25 November 2022 the father withdrew [Child 1] from [College 1], on the basis it was unaffordable, without consulting the mother. The mother immediately reversed this and [Child 1] remains enrolled at [College 1]. The Tribunal notes that, in relation to Reason 3, the question of mutual intent is separate to the question of affordability.
The mother has provided evidence of the fees she has paid to [School 1] and [College 1]. The Tribunal notes that charges for school camps, music, photos, P& F levy, excursions and IT are usual costs of school education, which parents of children attending public schools also must pay. These costs are accommodated by the administrative formula and therefore are not considered in a COA decision.
In 2023 [Child 2’s] tuition fees and capital levy totalled $1,945, and [Child 1’s] tuition fees at [College 1] were $12,516, a total of $14,461.
In 2024 [Child 2’s] tuition fees and capital levy will be $2,005 and [Child 1’s] tuition fees at [College 1] were $13,512, a total of $15,517.
The objections officer concluded that the cost of maintaining the children was significantly affected by the cost of educating them in the manner intended by the parents, but found it was not just and equitable to accommodate these costs in the assessment because there was no evidence of the fees being paid.
The Tribunal finds that these costs significantly increase the overall cost of maintaining the children, and therefore Reason 3 is established. The Tribunal also finds it is just and equitable to vary the assessment to require the father to contribute to the costs of the children’s schooling.

Reason 6 – costs of childcare

Reason 6 refers to the costs of child care. It is only relevant to a period in which one or more children were aged less than 12 years. [Child 1] turned 12 years old [in] March 2023, and [Child 2] will turn 13 [in] August 2026.
The mother provided the Tribunal with statements of the cost of Out of Hours School Care (OHSC) for both children.[6] The mother receives child care subsidy and according to the Tribunal’s reckoning, her out-of-pocket costs for the period 8 February 2023 (the date of her COA application) until 27 October 2023 total $570. This is equivalent to an annual cost of $794 (365 / 262 x 570).
[6] Page A51 of the hearing papers.
Child care costs incurred by a parent are not high unless they are more than 5% of the parent’s ATI for the child support period (subsection 117(3B) of the Assessment Act). Costs below this threshold should be accommodated within the administrative formula.
According to the evidence outlined above, the mother’s out-of-pocket childcare costs are approximately 1% of her ATI and therefore not unusually high and Reason 6 is not established.

Reason 7 – unusual self-support costs.

The mother’s self-support costs.

The mother also claimed that she had unusually high medical expenses for herself. The Medicare records she submitted showed out-of-pocket medical costs for her treatment, from 8 February 2023 to 20 February 2024 (approximately 12 months), totalling $281.
The mother also provided a letter from her dietician, dated 20 October 2023, stating that she requires medication costing approximately $127 per month ($1,524 per annum).
A letter from her GP, [named], dated 25 October 2023, states that she has multiple medical comorbidities, but does not quantify her out-of-pocket treatment costs.
Based on this evidence, the Tribunal is not satisfied that Reason 7 is established in relation to the mother, given that her additional medical costs represent less than 3% of her ATI.
The mother also argued that she had additional self-support costs which are not reflected in the formula, as since April 2021, after separating from the father, she had to meet all the mortgage payments for the former marital home alone. The mother provided bank statements to corroborate that the father had not contributed to the mortgage since April 2021 and that she had continued to make mortgage payments up until December 2022.
The father did not dispute this, but observed that after he left [Suburb 1], he was required to pay rent for his own accommodation, which was more than the mortgage payments made by the mother. He argued that as the mother and the children lived at the [Suburb 1] property, it was not unreasonable or unfair that she pay the mortgage.
[In] October 2023 the Federal Circuit and Family Court of Australia delivered a judgement which acknowledged the mother’s greater contribution towards the [Suburb 1] property and consequently divided it 60/40 in the mother’s favour.[7]
[7] page A281
Based on the evidence outlined above, the Tribunal finds that Reason 7 is not established. The mother’s medical expenses, while perhaps more than average, are not so excessive as to warrant a change in the assessment.
Her payment of the mortgage at [Suburb 1] was a normal living expense rather than a special circumstance, and her greater contribution to the mortgage was addressed via the parents’ property settlement. In any case, as noted above, the purpose of a child support assessment is to ensure the ongoing costs of children’s care is shared fairly, rather than to resolve property disputes.

The father’s self-support costs

The mother claimed that after she and the father separated, he lived with his parents for approximately a year and was not required to pay rent or other expenses. She claimed that he now lives in a property owned by his brother and there is no evidence he is paying rent.
The objections officer found this was not an unusual circumstance for a person who had recently separated from their partner and did not provide grounds for a departure from the administrative formula. The Tribunal finds likewise, and that Reason 7 is not established in relation to the father or mother.

Reason 8B

To find this Reason established, the Tribunal must be satisfied that at least one of the parents has unexercised earning capacity that makes the child support assessment unfair. To satisfy Reason 8B in relation to either parent, three criteria must be 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.
And
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.
And
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.
It is not disputed that the father was employed full time but purchased additional leave (equivalent to taking unpaid leave) to manage his health conditions and did so for years prior to separating from the mother. Therefore, prior to 7 September 2023, he had not significantly changed his working hours or income and the first criterion is not met.
The father’s GP, [Doctor B], wrote on 29 August 2023, that the father suffers from severe and extended situational and relationship stressors which necessitates regular time off work. Although the mother questioned the credibility of the father’s GP, the Tribunal accepts [Doctor B’s] opinion, in the absence of any substantial evidence to contradict it and finds the second criterion is not met. Accordingly, the Tribunal finds that Reason 8B is not established.
The father reports that he stopped working at [Agency 1] from 7 September 2023 due to his health conditions. He has since notified Child Support of this. He has not claimed to be incapable of finding other work, and anticipated he would do so. His GP’s advice, written 9 days before he stopped working, does not suggest he was incapable of working at all. He also told the Tribunal at hearing that he was awaiting the outcome of an income protection insurance claim. It is open to the mother and Child Support to test whether the father is not exercising his earning capacity.

Other matters

Given their age, there is no question of the children having income, earnings, property or financial resources that affect the child support assessment.
The Tribunal is satisfied that no hardship would be caused to the children or the parents, or any other child or person that the liable parent has a duty to support, by the making of, or the refusal to make, a determination.
After carefully considering all the relevant circumstances of the case, the Tribunal is satisfied that this is a just and equitable sharing of the financial cost of meeting the child’s needs.
In relation to the mother’s income, the Tribunal will commence the departure period on the date of the mother’s application for a COA on 8 February 2023. The onus is upon the parents to promptly apply for a departure if the assessment does not reflect their incomes, and the Tribunal is satisfied there were no circumstances that prevented either party from doing so earlier.

Is it otherwise proper to make a change to the administrative assessment?

Subsection 117(5) requires the Tribunal to take into consideration the following matters:
(a)the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and
(b)the effect that the making of the order would have on:
(i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
(ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.
The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances, and benefits. Parents, rather than the community, have the primary duty to maintain a child. The mother is in receipt of income-tested benefits, so departing from the administrative assessment will ensure that the apportionment of financial responsibility between the parents and the community is appropriate. The determination is otherwise proper.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that:

For the period 2 February 2023 to 30 June 2023 Ms Hardwick’s ATI is varied to $73,500.
For the period 1 July 2023 to 30 June 2024 Ms Hardwick’s ATI is varied to $77,000.

To reflect a 50% share of the children’s school fees Mr Hardwick’s annual rate of child support is increased:

by $7,230 for the period 1 January 2023 to 31 December 2023, and
By $7,758 for the period 1 January 2024 to 31 December 2024.

[2024] AATA 3819

9 June 2024

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Statutory Construction

Judicial Review

Jurisdiction

Natural Justice

Procedural Fairness