Hills and Hills (Child support)

[2023] AATA 3289

Hills and Hills (Child support) [2023] AATA 3289 (16 August 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/MC025339

APPLICANT:  Ms Hills

OTHER PARTIES:  Child Support Registrar

Mr Hills

TRIBUNAL:Member M Baulch

DECISION DATE:  16 August 2023

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – earning capacity of liable parent – no ground established – 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. This application for review concerns the amount of child support paid by Mr Hills to Ms Hills in respect of [Child 1], [Child 2] and [Child 3], who were born in 2007, 2008 and 2010.

2. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable by one separated parent to the other.  It uses a statutory formula which contains variables such as the parents’ incomes, the number of children, their ages and their percentages of care. 

3. A parent can make an application to Services Australia – Child Support (Child Support) for a change to the administrative assessment based on the statutory formula in the special circumstances of their case – referred to in the Act as a departure determination.  Ms Hills made such an application, on 9 June 2022, seeking a change to the child support assessment on the basis that:

   ·      The assessment did not correctly reflect one or both parents’ incomes, properties and/or financial resources.

   ·      The assessment did not correctly reflect one or both parents’ earning capacities.

4. On 9 September 2022, a child support decision maker decided to make a departure determination, such that from 20 April 2022 to 8 July 2022 the annual rate of child support payable by Mr Hills was set at $18,774 per annum. 

5. Mr Hills objected to that decision and, on 1 December 2022, that objection was allowed.  The objections officer decided that there would be no change to the child support assessment because no ground for departure had been made out (the decision under review).  On 29 December 2022, Ms Hills applied to this tribunal seeking an independent review of Child Support’s decision.

6. A hearing into the application for review was held by the tribunal on 16 August 2023. Ms Hills and Mr Hills both participated in the hearing by telephone, and both gave evidence under affirmation during the hearing. A representative of the Child Support Registrar (the Registrar) did not participate in the hearing. The tribunal had before it relevant documents provided to it by the Registrar pursuant to sections 37 and 38AA of the Administrative Appeals Tribunal Act 1975 (534 pages).  The tribunal also had regard to additional material provided by Ms Hills (folios A1 to A106) and Mr Hills (folios B1 to B65).

ISSUES

1. The statutory provisions relevant to this review application are found within the child support legislation; in particular, the Act.

2. Pursuant to subsection 98C(1) of the Act, a determination to depart from the administrative assessment of child support may be made if the following three requirements, set out in paragraph (b), are met:

   (i)that one, or more than one, of the grounds for departure referred to in subsection [117(2) of the Act] exists; and

   (ii)that it would be:

   (A)   just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   (B)  otherwise proper;

   to make a particular determination under this Part; …

CONSIDERATION

1. At the time Ms Hills made her application for a departure determination, the administrative assessment of child support required Mr Hills to pay the minimum annual rate of child support of $446 per annum.  That amount increased to $459 per annum on 1 August 2022 when a new child support period commenced. 

2. Mr Hills’ liability has been at the statutory minimum because his estimated incomes, and subsequently his adjusted taxable income derived from his 2022-23 taxable income, have been below the self-support amounts of $26,319 as of 9 June 2022 and $27,063 from 1 August 2022.

3. These, therefore, are the administrative assessments from which I was considering departing when contemplating Ms Hills’ application for a departure determination.

Is there a ground, or grounds, for departure?

1. All the grounds for departing from the administrative assessment of child support are prefaced by the term “… in the special circumstances of the case …”.  As noted by the Full Court of the Family Court:[1]

   Whilst it is not possible to define with precision the meaning of that term, 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 administrative formula result in the ordinary run of cases. In Savery’s case (at Fam LR 815 FLC 77,897), Kay J, adopting the view in In the Marriage of Philippe (1977) 4 Fam LR 153; [1978] FLC 90-433 at Fam LR 155 FLC 77,202 in a different context, said that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases” . The approach to the interpretation and application of the particular grounds in s 117(2) must be guided by that qualification.

   My consideration will be guided by these principles.

   [1] Gyselman and Gyselman [1991] FamCA 93

The income, property and financial resources of either parent

1. Ms Hills’ application for a departure determination relied upon the ground for departure set out in subparagraph 117(2)(c)(ia) of the Act.

2. This provision – commonly referred to as “Reason 8A” by Child Support – provides that a ground to depart from the statutory formula may be established if, in the special circumstances of the case, the child support assessment results in an “… unjust and inequitable determination of the level of financial support to be provided by the liable parent …” due to the income, property and financial resources of either parent.

3. Ms Hills’ concerns centre on Mr Hills’ lifestyle and his ability to afford overseas travel.  Mr Hills’ evidence was that he is supported by his partner and his partner’s income is sufficient to provide him with that lifestyle.

4. It is possible that financial resources originating from Mr Hills’ partner make their way into Mr Hills’ hands.  Even if this were so and those resources, once in Mr Hills’ hands, rendered the administrative assessment of child support unjust and inequitable, I was not persuaded that the requirement for special circumstances would be made out.

5. I had regard to the case of Jordan & Verne (SSAT Appeal) [2012] FMCA 21, where the Federal Magistrates Court considered a matter where a non-working parent benefited from the financial resources provided to them by their current partner. The Court stated at [55]:

   In my view, those facts alone do not and cannot permit of a conclusion that there are “special circumstances” of the case for the purposes of s.117(2)(c) of the Assessment Act.  There is nothing special or out of the ordinary about one spouse meeting another’s expenses and providing financial support during periods when the supported spouse has no income.  Indeed, I would venture to suggest that it is an entirely ordinary circumstance that is one of the key elements of a spousal relationship. That there is therefore a disparity between the supported spouse’s income (nil) and the financial support received from the supporting spouse is nothing more than the natural consequence of the provision of support. Again, it is nothing out of the ordinary.

6. I noted that in considering Mr Hills’ income, property and financial resources, paragraph 117(7A)(b) of the Act says that I must disregard:

   the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child, or who has such a duty but is not a party to the proceeding, unless, in the special circumstances of the case, the court considers that it is appropriate to have regard to them

7. Mr Hills’ partner has no duty to maintain [Child 1], [Child 2] and [Child 3] and, absent special circumstances, Mr Hills’ partner’s income, property and financial resources are irrelevant to these proceedings.  The case law is clear that Mr Hills benefiting from the financial support of his partner, whether directly or indirectly, is not a special circumstance for the purposes of section 117 of the Act.

8. Ms Hills was unable to point to any other income, other property or other financial resource of Mr Hills, that comes from a source other than his partner, which makes the administrative assessment of child support unjust and inequitable.

9. I therefore found that the ground for departure set out in subparagraph 117(2)(c)(ia) of the Act is not made out in this case.

The earning capacity of Mr Hills

1. This provision, set out in subparagraph 117(2)(c)(ib) of the Act – commonly referred to as “Reason 8B” by Child Support” – provides that a ground to depart from the statutory formula may be established if, in the special circumstances of the case, the child support assessment results in an “… unjust and inequitable determination of the level of financial support to be provided by the liable parent …” due to the earning capacity of either parent. 

2. A parent can only be assessed on their capacity to earn if subsection 117(7B) of the Act is satisfied, which relevantly provides:   

   (7B) In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:

   (a)  one or more of the following applies:

   (i)  the parent does not work despite ample opportunity to do so;

   (ii)  the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which the parent is employed or otherwise engaged;

   (iii)  the parent has changed his or her occupation, industry or working pattern; and

   (b)   the parent’s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:

   (i)  the parent’s caring responsibilities; or

   (ii)  the parent’s state of health; and

   (c)   the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.

   All three paragraphs (a), (b) and (c) must be satisfied before a person can be assessed as having a greater capacity to earn.

3. Mr Hills has gone from full-time employment to casual or part-time employment and has also become a full-time student.  I was satisfied that Mr Hills has changed his occupation, industry or working pattern and paragraph 117(7B)(a) of the Act is satisfied.

4. Mr Hills says that the decision to cease full-time work and undertake studies was precipitated by a health incident.  I noted that he has provided a letter from one of his treating medical professionals that states that: “Due to [Mr Hills’] current neurological condition, he is unable to perform usual employment duties”.  Mr Hills did not dispute that his medical condition did not preclude him from all forms of employment, and he noted that he has, and does, work. 

5. In those circumstances, where Mr Hills is able to work, I was not persuaded that Mr Hills’ decision to change his occupation, industry or working pattern was justified because of the state of his health.  There is no evidence that Mr Hills has any caring responsibilities.  I therefore found that paragraph 117(7B)(b) of the Act is satisfied.

6. When considering paragraph 117(7B)(c) of the Act, I noted that Mr Hills’ evidence was that his health issue resulted in him deciding to retrain for a new career, since it was no longer possible for him to undertake his usual type of work.  The duration of his course is three years, with an additional three years of study possible if he undertakes a master’s course.

7. When considering the application of paragraph 117(7A)(c) of the Act to the current matter, I noted that the Explanatory Memorandum for the amending legislation[2] which inserted this subsection into the Act stated, in part:

   ‘Capacity to earn’ decisions have been among the most controversial child support decisions.  ….

   The new method of assessment is intended to be flexible enough to allow parents whose earning capacity has been assessed for child support purposes to make decisions about their work and life, for example, choosing to pursue a different career or reducing work hours due to caring responsibilities, in the same way as parents in intact families.  However, it is also important to take account of whether a parent, either payer or payee, whose earning capacity is assessed for child support purposes, makes changes to his or her work, where a major purpose of those changes was to affect the assessment of his or her liability.  Therefore, the Schedule introduces provisions that allow a court to make an order that a parent has a greater capacity to earn than he or she is presently exercising if the parent has not demonstrated that affecting his or her assessment for child support was not a major purpose of that decision.  That is, the court may make an order that a parent has a capacity to earn greater than he or she is presently exercising if the parent cannot show that he or she had an appropriate reason for his or her decision about work changes.

   ….

   Paragraph 117(7B)(c) provides that the court must also be satisfied that the parent has not demonstrated that affecting the administrative assessment of child support was not a major purpose of his or her decision about work changes.  Paragraph 117(7B)(c) is a rebuttable presumption but the onus to rebut the presumption is on the parent.  That is, the parent must demonstrate that there are good reasons why he or she has changed his or her working behaviour.  For example, a parent working in a low-skill manufacturing position may decide that there are better long-term employment prospects if he or she undertakes retraining to enable him or her to work in information technology.  This may result in lower, or no, earnings for a period of time, but he or she would not be subject to a capacity to earn decision because the decision about changing work was made for a reason other than affecting the child support assessment.

   [2] Child Support Legislation Amendment (Reform of the Child Support Scheme - Initial Measures) Bill 2006 – found at which became Act No 53 of 2006

8. Mr Hills did not take the decision to study to pursue a new career in isolation.  On his evidence, it was the consequence of being diagnosed with a medical condition that impacted on Mr Hills’ ability to undertake his usual work.  While Ms Hills may dispute the reasonableness of Mr Hills’ decision to study full-time, in light of his duty to support his children, there is no evidence to suggest that the reasons stated by Mr Hills were not the true reasons for his decision.  I noted that the objective reasonableness of Mr Hills’ decision is not a matter to which subsection 117(7B) of the Act directs my attention.

9. When viewed as a whole, I was satisfied that Mr Hills does have a good reason for the decision to change his occupation, industry or working pattern and, by virtue of that good reason, has demonstrated that affecting the administrative assessment of child support was not a major purpose of his decision.

10. I therefore found that paragraph 117(7B)(c) of the Act is not satisfied.  Therefore, it is not possible to assign Mr Hills with an earning capacity and the ground for departure set out in subparagraph 117(2)(c)(ib) of the Act is not made out.

Conclusion

1. I have found that neither of the grounds relied upon by Ms Hills in her application for a departure determination, lodged on 9 June 2022, have been made out.  Therefore, pursuant to section 98F of the Act I concluded that the application for a determination departing from the administrative assessment of child support should be refused.

2. I have arrived at a decision that is identical to that of the objections officer on 1 December 2022.  Therefore, and for these reasons, I decided to affirm the decision under review.

DECISION

The decision under review is affirmed.