Harker and Harker (Child support)

Harker and Harker (Child support) [2018] AATA 4892 (4 December 2018)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2018/SC014196
APPLICANT:  Mr Harker
OTHER PARTIES:  Child Support Registrar
Ms Harker

TRIBUNAL:Member W Kennedy
DECISION DATE: 4 December 2018
DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides to set Mr Harker’s adjusted taxable income at $78,000.00 for the period from 31 October 2017 to 31 December 2018, and to increase the assessment by $7,013.00 per annum for the period from 31 October 2017 to 30 June 2018.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education - manner expected by both parents - cost of maintaining the children are significantly affected – costs of child care are significant - financial resources of both parents - period of departure - 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

This decision concerns an application for a departure from the formula assessment of child support. Mr Harker and Ms Harker are the parents of [Child 1], who was born in 2012, [Child 2], who was born in 2013, and [Child 3], who was born in 2015. There has been a child support assessment in place for the children made by the Child Support Agency of the Department of Human Services (the Department) since 23 October 2017. The assessment is based on the parents having shared care of the children.
The annual rate of child support payable by Mr Harker at the time of Ms Harker’s application to the Department was $960.00. This was based on Mr Harker’s adjusted taxable income (ATI) of $30,457.00 and Ms Harker’s ATI of $10,951.00.
On 8 December 2017 Ms Harker applied to the Department for a departure from the assessment based on Reason 2 (the special needs of the children), Reason 3 (the cost of educating and training the children in the manner expected by the parents), Reason 6 (the high cost of child care) and Reason 8A (the income, property and financial resources of one or both of the parents). Ms Harker later withdrew her application under Reason 2.
On 24 January 2018 a delegate of the Child Support Registrar considered the departure application and decided that Reasons 3, 6 and 8A had been established. The delegate decided to set Mr Harker’s adjusted taxable income (ATI) at $76,500.00 and Ms Harker’s ATI at $50,000.00, both for the period from 1 January 2018 to 31 December 2019, and to increase the assessment by $6,819.00 for the period from 1 January 2018 to 31 December 2018, and by $7,160.00 for the period from 1 January 2019 to 31 December 2019.
On 20 February 2018 Mr Harker lodged an objection to that decision. On 4 May 2018 a Department objections officer considered Mr Harker’s objection, finding that Reasons 3, 6 and 8A had been established. The objections officer decided to set Mr Harker’s ATI at $78,000.00 and Ms Harker’s ATI at $50,000.00, both for the period from 1 January 2018 to 31 December 2019 and to increase the assessment by $6,695.00 for the period from 1 January 2018 to 31 December 2018.
On 28 May 2018 Mr Harker lodged an application for a review of the decision with this Tribunal. The Tribunal had access to the statement and documents provided by the Department. The documents are at folios 1 to 455 of the hearing papers and were provided to the parties in advance of the hearing.
Before the hearing Mr Harker provided the documents at folios A1 to A59 of the hearing papers while Ms Harker provided the documents at folios B1 to B177 of the hearing papers. At the hearing the parents acknowledged that they had received copies of the additional documents. The matter was heard and determined in Sydney on 4 December 2018. Mr Harker attended the hearing by telephone and gave his oral evidence under an affirmation. Ms Harker attended the hearing by telephone and gave her oral evidence under an affirmation. The Child Support Registrar was not represented at the hearing.

CONSIDERATION
The legislative framework and issues for the Tribunal to determine

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). This requires the application of a statutory formula which takes into account factors such as the number and ages of the children, the level of care provided and the income of each parent.
The liable parent or a carer may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Act. Section 98C of the Act provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process for considering applications to do so. The Registrar, and the Tribunal standing in place of the Registrar, must be satisfied:
·       that one, or more than one, of the grounds for departure referred to in subsection 117(2) of the Act exists; and
·       that it would be just and equitable as regards the child, the liable parent and the carer entitled to child support; and
·       that it would be otherwise proper to make a particular determination.
The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act. Each of the grounds, which for administrative purposes are referred to as reasons, require that special circumstances be established. The term “special circumstances” is not defined in the Act. In Gyselman and Gyselman [1991] FamCA 93 the Full Court of the 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.
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 must make one of the determinations prescribed in section 98S of the Act. These include varying the annual rate of child support payable or a parent’s adjusted taxable income or varying the self-support amount.

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

The Tribunal’s first task is to determine whether a ground for departure from the administrative assessment can be established. In her application to the Department Ms Harker asserted that there are three grounds (or reasons) for a departure from the administrative assessment. The Tribunal considered each of these in turn.

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

Ms Harker has sought a departure from the administrative assessment on the ground that there are extra costs involved in educating and training the children in the manner expected by the parents. This ground for departure, known as Reason 3 for administrative purposes, is set out in subparagraph 117(2)(b)(ii) of the Act:
(b)that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
…
(ii) because the child is being cared for, educated or trained in the manner that was expected by his or her parents; …
Ms Harker said at the hearing that the parents had agreed that the children would attend [School 1]. She said that Mr Harker attended the school and his mother had worked there and that Mr Harker had always wanted the children to go to school there. Mr Harker has acknowledged that he signed the application forms for [Child 2] (folios 74 to 76) and for [Child 1] (folios 304 to 308) to attend [School 1]. The clear evidence before the Tribunal is that both parents expected that the children would be educated privately and specifically at [School 1].
The cost of education at [School 1] is considerably greater than the cost of public education. The Tribunal finds that this constitutes special circumstances that would allow a departure from the formula assessment of child support under subparagraph 117(2)(b)(ii) of the Act.

Does a ground exist to depart from the administrative assessment under Reason 6?

Ms Harker sought a departure from the administrative assessment on the ground that the cost of maintaining the children was significantly affected by high child care costs. This ground for departure, known as Reason 6 for administrative purposes, is set out at subparagraph 117(2)(b)(ib) of the Act:
(b)     that, in the special circumstances of the case, the costs of maintaining the child   are significantly affected:
  …
  (ib)     because of high child care costs in relation to the child; …
Subsection 117(3A) of the Act stipulates that in order to find that there is a reason to depart from the formula assessment the child care costs must be incurred with respect to a child younger than 12 at the start of the child support period and that the costs must be incurred by a parent or non-parent carer. Further, subsection 117(3B) of the Act requires, in effect, that for child care costs to be considered high, the child care costs that have been incurred must be greater than 5% of the ATI of the parent who incurred the costs.
The children were born in 2012, 2013 and 2015 and are thus all younger than 12. The ATI used for Ms Harker at the date of her application was $10,951.00. Over the 457-day child support period the 5% threshold would be $685.56. Ms Harker has provided evidence that the child care costs that she has met during the period are well in excess of that figure. As a result the Tribunal finds that there is a special circumstance that would allow a departure from the formula assessment of child support under subparagraph 117(2)(b)(ib) of the Act.

Does a ground exist to depart from the administrative assessment under Reason 8A?

Ms Harker sought a departure from the administrative assessment on the ground that Mr Harker’s income, property and financial resources are greater than is reflected in the ATI used for him in the child support assessment in effect at the time of her application. This ground for departure, which is known as Reason 8A for administrative purposes, is set out at subparagraph 117(2)(c)(ia) of the Act:
(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; …
At the hearing Mr Harker said that he has worked as a contractor for [Company 1] since January 2018. He said that his chargeout rate is $35.00 per hour and that he works 35 to 45 hours per week.
Mr Harker has provided a Statement of Financial Circumstances (SOFC) dated 12 June 2018 (folios A1 to A9). Mr Harker states that his income amounts to $1,165.00 per week, being made up of $1,100.00 as a contractor and $65.00 per week family tax benefit (FTB). Mr Harker states that his expenses, including income tax of $280.00 per week and child support payments of $25.00 per week, come to $845.00 per week. Additionally, Mr Harker states that he is repaying four loans, with total weekly payments of $523.00. Thus Mr Harker’s weekly expenses come to $1,368.00 while his weekly income comes to $1,165.00. At the hearing Mr Harker said that he met the difference by borrowings. Mr Harker states that he has no expenses relating to rent or mortgage, utilities, medical or dental or many other day-to-day expenses that most people incur. An examination of Mr Harker’s bank account statements discloses many payments for these expenses. There is clear evidence before the Tribunal that Mr Harker’s income and expenses are both greater than he has disclosed.
In response to the directions of the Tribunal Mr Harker has provided:
·       [Bank 1] account …0223 for the period from 17 November 2017 to 11 May 2018 (folios A19 to A20)
·       [Bank 1] account …0260 for the period from 23 December 2017 to 23 February 2018 (folios A22 to A26)
·       [Bank 1] account …6380 for the period from 12 January 2018 to 28 March 2018 (folios A28 to A36).
[Bank 1] account …0223 appears to have no purpose other than to receive transfers from account …6380 and transfer funds either back to that account or to account …0260. It receives no other deposits and makes no other payments.
[Bank 1] account …0260 receives transfers from accounts …6380 and …0223 and transfers funds to those other accounts. It also receives Mr Harker’s FTB payments, at least up to 23 February 2018. From 23 March 2018 FTB payments were made to account …6380. The account also receives a few other deposits but these are relatively rare. The account is used to make many of Mr Harker’s day-to-day purchases.
[Bank 1] account…6380 appears to be Mr Harker’s main bank account. It receives transfers from Mr Harker’s other accounts, regular deposits from “[Bank 2]” and, from 23 March 2018 it also receives Mr Harker’s FTB payments. The account has received a number of unexplained deposits which the Tribunal raised with Mr Harker at the hearing. Mr Harker said that the unexplained deposits were from his partner or from his father, although he could not recall the source of a deposit of $1,400.00 on 23 January 2018 (folio A29). The account is used to meet many of Mr Harker’s day-to-day purchases.
Although Mr Harker was directed by the Tribunal to provide statements for the period from 1 January 2018 to 31 March 2018 the statements provided by Mr Harker for account …6380 run only from 12 January 2018 to 28 March 2018, a period of 75 days.
During this period Mr Harker received nine transfers from “[Bank 2]”, the first being on 29 January 2018 (folio A29) and the last on 26 March 2018 (folio A36). At the hearing Mr Harker said that the deposits were paid to him by [Company 1] however on the statements Mr Harker has redacted the identity of the payer. At the hearing he said that he did this because he did not want Ms Harker to have that information. The nine transfers from [Bank 2] total $12,625.30.
In Humphries & Berry (SSAT Appeal) [2008] FMCAfam 409 (Humphries) Federal Magistrate Slack dealt with the issue of the disclosure of financial information in matters before the Tribunal. His Honour stated that the principle of full and frank disclosure applicable to proceedings in the Family Court was also applicable to proceedings before the Social Security Appeals Tribunal, the predecessor to the Social Services and Child Support Division of this Tribunal. His Honour stated as follows at paragraph 26:
Although the SSAT has the power to obtain information (s.103K) and the power to require the Child Support Registrar to exercise powers under the Assessment Act and the Child Support Registration and Collection Act for the purposes of gaining information relevant to a review (s.103L), there nevertheless remains a primary duty and obligation on the parties to the review to make a full and complete disclosure of their financial affairs relevant to the matter before the hearing and a duty to assist the Tribunal to come to its determination in the application. The obligation to disclose information and documents extends to the presentation of that material in a way that the true nature of their financial affairs can be readily understood. The obligation extends not just to providing financial records but also includes presenting the information in a way that can be reasonably and readily understood and examined.
His Honour stated as follows at paragraphs 30 and 31:
The extent to which the SSAT should exercise its powers of information gathering and testing of evidence in each case will depend on the circumstances of the matter but the exercise of such power or the failure to exercise such power does not in any way derogate from the immutable obligation and duty of both parties throughout the proceedings before the SSAT to make full, frank and cogent disclosure of all relevant information pertaining to their financial affairs in order that the Tribunal can make a proper assessment of their respective capacities to provide for the needs of their children.

In financial proceedings under the Family Law Act, the authorities make it clear that a Court should not be unduly cautious about making findings in favour of the other party if it is not satisfied that proper disclosure has been made (see Chang & Su (2002) FLC93- 117). Such principles, in my consideration, have similar application to these matters before the SSAT.
Mr Harker was directed by the Tribunal to provide a number of documents, including:
· Statements for all bank and credit card accounts that Mr Harker is authorised to use for the period from 1 January 2018 to 31 March 2018.
Mr Harker has provided statements for the three bank accounts described above. One set of statements covers the full period while for the other two he has provided statements that cover only part of the period. Mr Harker has also redacted information that shows the source of payments to him. He has also recently changed the name of his business and when asked why he had done so Mr Harker responded that it was for “personal reasons”.
The Tribunal also directed Mr Harker to provide:
· Financial Statements for his sole trader operations for 2017/18.
In response Mr Harker has provided an unaudited and unsigned Balance Sheet from which he has redacted the name of the entity (folio A37). He has not provided a profit and loss or other financial statements.
The Tribunal considers that Mr Harker has failed to satisfy his obligation to make full, frank and cogent disclosure of his financial affairs. In the Tribunal’s directions and at the hearing Mr Harker was warned that failure to provide full and complete financial information could result in the Tribunal making an adverse finding. Under the principle stated by the Family Court in Humphries the Tribunal should not be unduly cautious in its findings.
The Tribunal found Mr Harker to be a poor witness. He failed to provide all of the documentation he was directed to provide and he was often vague and unforthcoming at the hearing. The Tribunal does not find Mr Harker’s oral evidence credible. The Tribunal has decided that under the circumstances it would be appropriate to set an ATI for Mr Harker on the basis of the average earnings of a person with his skills. The Commonwealth Jobs Outlook publication states that the average full-time wage for [a person in a similar role]is $78,000.00.
The actual ATI used in the assessment at the time that Ms Harker applied for the departure from the assessment was $30,457.00. As this is significantly lower than the figures established by the Tribunal, the Tribunal finds that there is a special circumstance that would allow a departure from the formula assessment of child support under subparagraph 117(2)(c)(ia) of the Act.

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

Relevant law and evidence

As the Tribunal is satisfied that there is a ground to depart from the administrative assessment of child support under Reason 3, Reason 6 and also under Reason 8A, 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 had regard to the following matters set out in subsection 117(4) of the Act:
(4) In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
(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.

The Tribunal considered the evidence provided by both parents, including the documents and SOFC form that each party provided to the Tribunal, as well as the documents provided by the Department.

Assessment of evidence, findings of fact and application of the law

Section 3 of the Act states that it is the duty of both parents to financially support their children. The children should receive a proper amount of financial support from their parents in accordance with their capacity to contribute.

The children’s needs

Paragraph 117(4)(b) of the Act requires the Tribunal to consider the proper needs of the children. At the hearing Ms Harker said that [Child 1] has been diagnosed with epilepsy and autism and that he has special needs. She said that although [Child 1] requires a great deal of attention the additional costs are met through public social welfare services. The Tribunal finds that no further provision needs to be made in the child support assessment.

The children’s incomes and earning capacities

The children have no independent income or earning capacity.

The income, property and financial resources and earning capacity of Mr Harker and his necessary commitments

Mr Harker’s financial circumstances were closely examined by the Tribunal. Based on the bank account details that he has provided and his oral evidence, and taking into account the opinion of the Family Court the Tribunal has found that Mr Harker should be considered to have access to financial resources of at least $78,000.00 per annum.
Mr Harker has stated that he is paying off four debts, being:
·       A [Bank 3] overdraft of $1,000.00 which he is paying off at $70.00 per week
·       A [Leasing] car loan of $34,000.00 which he is paying off at $185.00 per week
·       A [Leasing] “business shortfall” loan of $15,000.00 which he is paying off at $70.00 per week
·       A [business] line of credit that he is paying off at $198.00 per week.
Mr Harker also states that he and Ms Harker together borrowed $70,000.00 from his father and he has provided a Statutory Declaration from his father stating that he provided such a loan (folio 278). Mr Harker states that there is a loan agreement but that he has been unable to locate that agreement (although an unsigned, undated and very basic “loan agreement” has been provided (folio 280)). At the hearing Ms Harker said that the loan from Mr Harker’s father was for the business rather than for a home purchase. At the hearing Mr Harker acknowledged that the loan had not been used to purchase a home. With regards to the debts there are no debits in the documents provided by Mr Harker that appear to relate to any of the loans identified by him.
The Tribunal finds that Mr Harker works full-time and that he has no unused earning capacity. The Tribunal is satisfied that Mr Harker has sufficient financial resources to meet his necessary commitments.

The income, property and financial resources and earning capacity of Ms Harker and her necessary commitments

Ms Harker’s financial circumstances were closely examined by the Tribunal. The Tribunal examined the SOFC (folios B1 to B9) and the other documentation provided by Ms Harker. In her SOFC, which is dated 9 June 2018, Ms Harker states that she receives $432.00 per week in wages and $179.00 per week in FTB. In her SOFC Ms Harker states that she is not receiving child support from Mr Harker, but since then the parties have entered into a binding child support agreement and Mr Harker has paid some child support, although he continues to have significant arrears. At the hearing Mr Harker said that he had decided to pay less in child support than is required by the binding child support agreement.
Ms Harker states that her weekly household expenditure, taking into account income tax and health insurance, totals $2,210.00. At the hearing Ms Harker said that the difference between her income and the household expenditure is met by her partner and by loans from her mother. Ms Harker has not included in her SOFC the parenting payment or the carer allowance that she receives. There is clear evidence before the Tribunal that in her SOFC Ms Harker has understated her income.
In response to the directions of the Tribunal Ms Harker has provided statements for the following accounts:
·       [Bank 3] account …1016 for the period from 28 December 2017 to 31 March 2018 (folios B143 to B156)
·       [Bank 3] account …6674 for the period from 1 January 2018 to 31 March 2018 (folios B158 to B167)
·       [Bank 3] account …6683 for the period from 1 January 2018 to 31 March 2018 (folio B174)
·       [Bank 3] credit card account …9403 for the period from 14 January 2018 to 31 March 2018 (folios B137 to B141)
·       [A] credit card account …5090 for the period from 4 January 2018 to 4 April 2018 (folios B168 to B173).
Ms Harker has also provided statements for other bank accounts, including those for the children (for which she is a signatory) and for joint accounts dating from 2015.
[Bank 3] account …1016 receives Ms Harker’s FTB, carer allowance and parenting payment and some transfers from her [Bank 3] account …6674. It meets some of Ms Harker’s day-to-day expenses and makes loan repayments. It also pays her [Bank 3] and [credit] card accounts. [Bank 3] account …6674 receives Ms Harker’s salary from [Company 2] and transfers from Ms Harker’s other [Bank 3] accounts. It meets some of Ms Harker’s day-to-day expenses and, on at least one occasion, has paid her credit card account. [Bank 3] account …6683 is a joint account which seems to have little purpose, doing no more than receiving deposits from Ms Harker’s other accounts and transferring funds back to her other accounts.
Ms Harker’s two credit card accounts meet her day-to-day expenses not met directly by the [Bank 3] accounts. Repayments to these credit card accounts come from the bank accounts disclosed by Ms Harker.
In her application to the Department Ms Harker stated that her income from employment is $25,000.00 per annum and that her income from government payments is $1,100.00 per fortnight (folio 57). This totals $53,600.00 per annum. It appears that Ms Harker’s ATI has been set at $50,000.00, despite the original decision maker establishing that her income was more than $55,000.00 per annum. The objections officer appears to have left her ATI at $50,000.00, possibly because she said she would be “happy” with this figure (folio 340). ATIs are not set in accordance with whether or not a party is happy with the figure but rather on the basis of probative evidence.
Ms Harker’s income comes from her employment and from social welfare payments. During the period under examination Ms Harker received seven payments from [Company 2]. These were received fortnightly, every second Tuesday (occasionally Wednesday). The payments total $9,302.68, however the quantum fell dramatically towards the end of the period under examination. While the payments averaged $1,470.45 per fortnight up to March, thereafter the fortnightly payment fell to $480.00. The Tribunal understands that this is because Ms Harker was able to work full-time through the summer but only part-time while studying. Ms Harker is also in receipt of parenting payment (PP), which is normally taken into account in the assessment. At the hearing Ms Harker said that she is now partnered and that as a result her parenting payment had been considerably reduced. The other benefits she receives are not taken into account in the assessment.
The Tribunal concludes that the documentation provided to the Tribunal by Ms Harker together with her oral evidence allows the Tribunal to establish an accurate picture of the financial resources available to her. However the Tribunal finds that the variability of her income makes it difficult to establish a figure that would be fair to the parties. Under the circumstances the Tribunal finds that it would be appropriate to rely on the formula, which is to say Ms Harker’s ITRs, to establish her ATI. Accordingly the Tribunal will not change Ms Harker’s ATI.
Given that she has three young children the Tribunal is satisfied that Ms Harker has no unused earning capacity that needs to be taken into account in the assessment. The Tribunal is satisfied that Ms Harker has sufficient financial resources to meet her necessary commitments.

The parents’ duty to support others

At the hearing Ms Harker said that she does not have the legal duty to support any person other than the children of the assessment.
At the hearing Mr Harker said that he does not have the legal duty to support any other child. The documentation shows that Mr Harker has another child support assessment, but as the child support assessment already makes allowance for Mr Harker’s additional duty it is not necessary for the Tribunal to make any further provision.

Hardship

The Tribunal has found that both parents have incomes that are sufficient to meet their necessary commitments.
The departure from the formula assessment contemplated by the Tribunal will result in Mr Harker’s child support liability increasing from the assessment that was in place when Ms Harker applied for the departure from the assessment. At the time that Ms Harker applied for the departure Mr Harker was assessed to pay Ms Harker $960.00 per annum. As a result of the decision of the objections officer that increased to $14,882.00 per annum. The decision contemplated by the Tribunal will increase the assessment beyond that figure, however, because there is a binding child support agreement in effect from 1 July 2018 the impact on the parents will be limited when compared with the decision before the Tribunal.
The Tribunal is satisfied that Mr Harker has access to sufficient financial resources to meet the child support liability contemplated by the Tribunal. Taking into account Mr Harker’s primary obligation to support the children the Tribunal finds that the decision contemplated by it will not cause hardship to Mr Harker.

Terms and period of departure

The Tribunal has decided to depart from the formula assessment by increasing Mr Harker’s ATI to $78,000.00. The Tribunal has decided to leave Ms Harker’s ATI to be determined in accordance with the formula.
The Tribunal considered whether to make provision for the cost of education. Ms Harker has said that [Child 1] and [Child 2] attended [School 1] until Mr Harker withdrew them from the school in March 2018. Ms Harker said that [School 1] expected the parents to pay the fees for the children until the end of Term 1 2018. In Mee and Ferguson [1986] FamCA 3 the Full Court of the Family Court stated, at paragraph 78:
Where the non-custodian has agreed to the child attending such a school that person is liable to contribute to the fees involved so long as and to the extent that he or she has a reasonable financial capacity to continue to do so. Where the non-custodian has not agreed to the child attending such a school he or she is not liable to contribute to those expenses unless there are reasons relating to the child's welfare which dictate attendance at that school rather than at a non-private school. Then the non-custodian, as an aspect of the welfare and maintenance of the child, is required to contribute to the extent that he or she has a reasonable financial capacity to do so.
Mr Harker acknowledged that he had agreed that the children would attend [School 1] but said that his expectation in this regard ceased after the parents separated. He said that this was due to their changing financial circumstances. While Mr Harker’s change of mind does not affect the parents’ expectation which was acted on prior to the separation Mr Harker can only be expected to contribute to the cost of private education to the extent that he has the financial capacity to do so.
Mr Harker has provided a letter from Ms Harker’s solicitors dated 22 November 2017 (folio 229) which states that Ms Harker has agreed to be responsible for all private school fees, but also noting that Mr Harker signed the relevant enrolment forms. Ms Harker has said that the letter in question was part of a negotiation for a binding child support agreement. It was not an agreement but rather a proposal for an agreement which depended on the parties reaching agreement on a range of other issues.
The Tribunal finds that it would be appropriate for Mr Harker to contribute to the cost of educating the children at [School 1] for the period they were enrolled there. The evidence before the Tribunal is that the fees for [Child 1] were $1,360.00 plus a service charge of $155.00 per term. The fees for [Child 2] were $1,792.00 per term, less a sibling discount of 10% (folio 234). This means that the fees for the two children were $3,127.80 per term.
The Tribunal has given careful consideration to Mr Harker’s position, which is that he cannot afford for the children to attend [School 1] and that they have in fact now ceased to attend [School 1], as a result of Mr Harker’s actions. [Child 1] is now enrolled in a public school. That change took place in March 2018, while [Child 2] attends child care. The quantum of costs that are relevant are the costs relating to Term 4 in 2017 and Term 1 in 2018, a total of $6,255.60. The Tribunal has found that Mr Harker has the greater income and that he has 35% care (which under the formula means that he has 25% of the costs). Considering all of the circumstances, the Tribunal finds it appropriate for Mr Harker to meet 75% of the cost of the children attending [School 1] up to the end of Term 1 in 2018. The parents have entered into a binding child support agreement with effect from 1 July 2018. The Tribunal’s determination will therefore become a notional assessment from that date and will cease to affect the payments received by Ms Harker. In order to ensure that Mr Harker meets his share of the full cost for the two relevant terms the Tribunal will apportion the gross amount over the relevant period. Although the total payment to be made by Mr Harker is $4,669.20, because it is to be paid over a 243 day period the assessment will be increased by $7,013.00 per annum over the period.
The Tribunal also considered whether to increase the assessment because of Ms Harker’s child care costs. Ms Harker’s ATI at the time that she applied for the departure from the formula assessment was $10,951.00, and this very low ATI was instrumental in establishing Reason 6. However, the Tribunal has found above that she has greater financial resources, including parenting payment, carer allowance and FTB. Mr Harker’s current care percentage is 35%. Taking into account all of the circumstances the Tribunal finds that it would not be appropriate to require Mr Harker to contribute further to the cost of child care.
At the hearing Ms Harker said that she would like any departure from the formula assessment to commence on 31 October 2017, the day on which she requested that child support be collected by the Department. The assessment was issued on 3 November 2017 and Ms Harker formally applied for the departure on 8 December 2017. The Tribunal considers that Ms Harker acted reasonably promptly and that it would be appropriate to date the departure from 31 October 2017. While this results in arrears for Mr Harker the Tribunal finds that such an outcome is not unreasonable in all of the circumstances. Having regard to the matters in subsection 117(4) of the Act, the Tribunal finds that it would be just and equitable for the departure to commence from 31 October 2017.
The Tribunal is conscious that it only has before it complete details of the parents’ financial circumstances for a three-month period for Ms Harker and for an even shorter period for Mr Harker. This is partially because Mr Harker failed to provide documentary evidence to the Department and because he has also failed to fully respond to the Tribunal’s directions. The Tribunal has decided that under the circumstances it would not be safe to extend the period of departure from the formula assessment for an extended period. It will therefore set the departure for the period from 31 October 2017 to 31 December 2018.

Issue three – 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 depart from the administrative assessment. Subsection 117(5) of the Act 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 child support law recognises that each parent has a primary duty to maintain their children. In this case Ms Harker receives FTB, carer allowance and parenting payment. As a result of the Tribunal’s decision Ms Harker’s benefits may be reduced. The Tribunal finds that this is appropriate and is satisfied that it is otherwise proper to depart from the administrative assessment in this matter.

DECISION

[2018] AATA 4892

4 December 2018

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Remedies

Costs

Judicial Review