Hartline and Diehr (Child support)

[2020] AATA 1750

Hartline and Diehr (Child support) [2020] AATA 1750 (17 April 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/MC017361

APPLICANT:  Mr Hartline

OTHER PARTIES:  Child Support Registrar

Mrs Diehr

TRIBUNAL:Member S Brakespeare

DECISION DATE:  17 April 2020

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – whether there was a ground for departure - financial resources of receiving parent are fairly represented in the administrative assessment - no ground for departure - application to depart is refused - decision under review affirmed

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. Mr Hartline and Mrs Diehr are the parents of [Child 1], born [in] March 2001. The child support case commenced on 29 August 2011.

2. On 12 March 2019 Mr Hartline applied for a change of assessment on a ground relating to the income, property and financial resources of Mrs Diehr.

3. At the time the application was made Mrs Diehr was the parent liable to pay child support to Mr Hartline. As of 15 April 2019 Mr Hartline became liable to pay child support to Mrs Diehr. However, a care percentage decision made by the tribunal (separately constituted) on 20 March 2020 has resulted in Mrs Diehr being the liable parent with effect from 15 April 2019. The child support case ended on 20 September 2019.

4. On 21 June 2019 an officer of the Child Support Agency refused to make a departure determination (the original decision). Both parties objected to that decision.

5. On 30 August 2019 an objections officer of the Child Support Agency disallowed the objection.

6. On 9 September 2019 Mr Hartline lodged an application for review of the objection decision with the tribunal.

7. A hearing was held on 17 April 2020. Mr Hartline and Mrs Diehr gave evidence on information to the tribunal via conference telephone. The Child Support Agency provided the tribunal and the parties with papers relevant to the review (299 pages). The parties also provided Statements of Financial Circumstances to the tribunal in accordance with a direction issued by the tribunal. In error, these extra documents were not exchanged with the parties prior to hearing. However, their contents were discussed in some detail during the hearing and both parties advised that they wished the tribunal to proceed to decide the matter without them having viewed the extra documents. (The documents, folioed A1 to A10 and B1 to B9, were sent to the parties on an information only basis post-hearing).

8. Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s consideration of the issues which it has to decide.

ISSUES

1. The statutory provisions relevant to these reviews are contained in the Child Support (Assessment) Act 1989 (the Act).

2. The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.

3. Under Part 6A of the Act the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).

4. Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and it establishes a three step process such that the issues for determination by this tribunal are:

   ·whether a ground is established to depart from the administrative assessment of child support; and

   ·if so, whether it is just and equitable to make a particular departure determination; and

   ·if so, whether it is otherwise proper to make a particular departure determination.

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

6. Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman & Gyselman (1992) FLC 92-279 has held:

   as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the court will not interfere with the formula in the ordinary run of cases.

7. Likewise, in Phillippe and Phillippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.

8. If the tribunal is satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the tribunal may make one of the determinations prescribed in section 98S of the Act.

9. The range of determinations which can be made includes variations to: the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

Issue 1 – Is there a ground for departure?

1. A ground for departure exists where, in the special circumstances of the case, application in relation to the child of the provisions of the Act relating to the 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 because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).

2. The administrative assessment for the child support period relevant to the application date provides:

• for the period 1 January 2019 to 20 September 2019 Mrs Diehr is required to pay Mr Hartline an annual rate of child support of $1,443. The assessment is based on Mrs Diehr’s 2017/18 derived income of $19,682 and Mr Hartline’s 2017/18 adjusted taxable income of $116,599. The assessment takes into account that Mr Hartline had 66% care of the child and Mrs Diehr had 34% care of the child.

1. Mr Hartline contends that Mrs Diehr received an inheritance from her parents which should be taken into account for the purposes of the child support assessment.

2. Mrs Diehr said that she received the inheritance in 2016 and it was applied at the time to the mortgage on the family home, which she owns jointly with her husband.

3. A determination under Part 6A can only be made in respect of a day in a child support period that is more than 18 months earlier than the day for a change of assessment is made if a court has granted leave under section 112 of the Act for the determination to be made (section 98S of the Act). The tribunal finds that the inheritance was received and expended more than 18 months prior to the date of the current change of assessment application and is not open to the tribunal to take the amount into account. Mr Hartline would need to seek relief from the court to make a change to the assessments relevant to the period when the inheritance was received and spent.

4. Mr Hartline told the tribunal that he had previously made a change of assessment application on the basis of the inheritance; however the Child Support Agency officer and the objections officer dealing with the matter at the time had refused to make a departure application (he claims on the basis Mrs Diehr had denied receiving an inheritance). The tribunal advised Mr Hartline that any previous objection decisions were not before the tribunal. His course of action would be to lodge an application for review, along with an extension of time application, of the previous objection decision(s) with the tribunal. There would be no guarantee however that an extension of time would be granted.

5. Mr Hartline contends that Mrs Diehr holds property in a family trust which should be taken into account for the purposes of the child support assessment. He said that he had previously advised the Child Support Agency of the existence of the family trust and Mrs Diehr had denied that it had existed. It was an officer of the Child Support Agency that finally undertook further investigation and discovered there was in fact a family trust. Mr Hartline also said that Mrs Diehr’s accountant, who is also his accountant, had told him that Mrs Diehr and her husband were using the family trust to hide assets.

6. Mrs Diehr told the tribunal that the family trust was set up in 2015 to purchase an investment property. The funds for the investment property came from loans secured against Mrs Diehr’s property that she owns jointly with her husband and properties that her husband owns independently. Mrs Diehr said that the property was sold after making losses for three years. Although the sale of the property resulted in a capital gain the family trust did not distribute any income as it had incurred losses in the financial year it was sold and in the two previous financial years. There was no income to distribute. Mrs Diehr said that the family trust was set up on the advice of their accountant to protect their other assets. It was not set up to hide income for child support purposes. Tax returns for the family trust have been lodged in respect of each of the financial years since the family trust was set up.

7. Mrs Diehr said that the proceeds of the property sale were used to repay the mortgage which had been secured against their other properties. She said her husband, who is a [Occupation 1], subsequently purchased [an asset] which he uses for non-commercial purposes; that is, he uses it for his own pleasure to take the family on holidays. It is not used for business activities as alleged by Mr Hartline. His allegations of contracts with [other businesses] are baseless and he has not provided any evidence to support them. Mrs Diehr said that her husband is employed full-time as an [Occupation 1]. He is recorded as the owner of the [asset]. She is registered with [the relevant authority] as the operator responsible for ensuring that the [asset] is maintained. The only reason that she is registered with [the authority] is because her husband is not an Australian citizen and [the authority] requires Australian citizens to fulfil that role. Their accountant advised them to hold the [asset] in the family trust to protect their other assets from any liabilities that might arise due to the [asset]’s operation.

8. The tribunal is satisfied that Mrs Diehr has not received a distribution of income from the family trust. The 2017/18 income tax returns for the family trust confirm that the trust incurred a significant loss that year and that no distributions were made to beneficiaries. The tribunal also found that there was no evidence to support Mr Hartline’s allegation that the [asset] is being used for commercial purposes.

9. The objections officer established that the only property registered in Mrs Diehr’s name is the family home she jointly owns with her husband. Mrs Diehr’s husband owns a number of properties in his own name. As Mrs Diehr’s husband has no obligation to support the children of Mr Hartline and Mrs Diehr, the tribunal finds that his income, property and financial resources are not relevant to the child support assessment.

10. Mr Hartline also alleged that Mrs Diehr owns a collection of [chattels] valued at around $75,000. Mrs Diehr said that she and her husband have a small collection of [chattels] and the value is about $2,500. The tribunal asked Mr Hartline where he obtained the valuation of $75,000 from. He said that he used Google. The tribunal is not satisfied that the [chattel] collection is of significant value. Mr Hartline also alleged that Mrs Diehr owns several motor vehicles. However, Mrs Diehr stated, and the objections officer confirmed, that Mrs Diehr has only one vehicle registered in her name.

11. Mrs Diehr’s Statement of Financial Circumstances indicates that her income, from casual employment and a small business she runs, is less than the self-support amount used in the administrative assessment. Mrs Diehr’s child support liability is assessed at the fixed annual rate. The tribunal is satisfied that the correct amount of income is being considered for Mrs Diehr.

12. Mrs Diehr submitted that most of the household expenses are paid for by her husband as he earns a significantly higher income than she does.

13. The tribunal is not satisfied that Mrs Diehr has income, property or financial resources that make the administrative assessment of child support unjust and inequitable.

14. This means that a ground for departure under subparagraph 117(2)(c)(ia) is not established.

15. Mr Hartline also wanted the tribunal to consider the fact that he had purchased a motor vehicle for the child and that Mrs Diehr had failed to contribute toward its purchase.

16. A ground for departure exists where, in the special circumstances of the case, application in relation to the child of the provisions of the 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 because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975 or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child.

17. This ground applies when the liable parent makes payments or transfers or settles property in respect of the child. At all relevant times Mrs Diehr was the liable parent. As it is Mr Hartline who bought the car for the child, this ground for departure does not apply.

18. The tribunal refuses to make a departure determination.

DECISION

The decision under review is affirmed.