Hitchcock and Hitchcock (Child support)

Hitchcock and Hitchcock (Child support) [2018] AATA 2288 (11 May 2018)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2017/PC012649
APPLICANT:  Mr Hitchcock
OTHER PARTIES:  Child Support Registrar
Ms Hitchcock

TRIBUNAL:Member S Brakespeare
DECISION DATE: 11 May 2018
DECISION:

The decision under review is varied so that there is a departure determination in the following terms:

·For the period commencing 10 February 2017 until a terminating event occurs for [Child 1], the rate of child support payable by Mr Hitchcock is increased by $1,515 per annum;
·For the period 1 July 2017 to 31 October 2017 Mr Hitchcock’s adjusted taxable income is varied to $85,000;
·For the period 1 November 2017 to 30 September 2018 Mr Hitchcock’s adjusted taxable income is varied to $89,960.

CATCHWORDS
Child support – Departure determination – Special needs of the child – Income and financial resources of parents – 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 review is about whether there should be a departure from the administrative assessment of child support.
Mr Hitchcock is the parent liable to pay child support to Ms Hitchcock in respect of their children [Child 2] (until her 18^th birthday [in] February 2018) and [Child 1], who is 16.
On 10 February 2017 Ms Hitchcock lodged an application for a change of assessment (departure application) with the Department of Human Services, Child Support (the Child Support Agency) on the basis of [Child 1]’s special needs and Mr Hitchcock’s income, property and financial resources.
At the time the departure application was made the relevant administrative assessments were as follows:
· For the period 6 February 2017 to 30 June 2017, Mr Hitchcock was assessed to pay an annual rate of child support of $16,850. This assessment was based on Mr Hitchcock’s income estimate of $82,750 and Ms Hitchcock’s 2015/16 adjusted taxable income of $28,110;
· For the period 1 July 2017 to 31 December 2017, Mr Hitchcock was assessed to pay an annual rate of child support of $14,190. This assessment was based on Mr Hitchcock’s 2015/16 adjusted taxable income of $73,262 and Ms Hitchcock’s 2015/16 adjusted taxable income of $28,110.
The assessments also reflected that Ms Hitchcock has sole care of the children.
On 2 June 2017 an officer of the Child Support Agency made a departure determination in the following terms (the original decision):
· For the period 1 July 2017 until 30 September 2018, the adjusted taxable income for Mr Hitchcock is varied to $91,920 per annum;
· For the period 1 July 2017 until a terminating event occurs for [Child 1] the rate of child support payable by Mr Hitchcock is increased by $1,907 per annum.
Mr Hitchcock objected to the original decision. On 8 September 2017 an objections officer of the Child Support Agency allowed the objection in part and made a departure determination in the following terms (the objection decision):
· For the period 1 July 2017 until 30 September 2018, the adjusted taxable income for Mr Hitchcock is varied to $91,920 per annum;
· For the period 1 July 2017 until a terminating event occurs for [Child 1], the rate of child support payable by Mr Hitchcock is increased by $1,515 per annum.
On 9 October 2017 Mr Hitchcock lodged an application for review of the objection decision with the tribunal.
A telephone directions hearing took place on 13 April 2018. Both parties participated. The directions were complied with.
A hearing took place on 11 May 2018. Mr Hitchcock and Ms Hitchcock both gave evidence on affirmation to the tribunal via conference telephone. The Department provided the tribunal and the parties with papers in accordance with section 37 and section 38AA of the Administrative Appeals Tribunal Act 1975. Mr Hitchcock provided documents folioed A1-A18 to the tribunal and Ms Hitchcock provided documents folioed B1-B9 to the tribunal. These documents were exchanged between the parties prior to the hearing.
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

The statutory provisions relevant to these reviews are contained in the Child Support (Assessment) Act 1989 (the Act).
The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.
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).
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.
The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.
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 and Gyselman [1991] FamCA 93 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.
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”.
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.
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?

A ground for departure exists where, in the special circumstances of the case, the costs of maintaining the child are significantly affected because of special needs of the child (subparagraph 117(2)(b)(ia) of the Act).
It is not in contention, and the tribunal finds, that [Child 1] suffers from [Medical Condition 1] and requires ongoing [specified] therapy as a result.
Mr Hitchcock contests the cost of the [therapy] and whether [Child 1] attends as often as Ms Hitchcock claims. The objections officer found that the cost of [the specified] therapy was $3,030 per annum, based on the 36 sessions that [Child 1] actually attended over the previous 12 months. The tribunal finds the objections officer’s calculation to be reasonable. The tribunal finds $3,030 per annum to be a significant additional cost and it is Ms Hitchcock who pays those costs.
The tribunal finds that there are special circumstances in this case as the costs of maintaining [Child 1] are significantly affected because of his special needs.
The tribunal finds that a ground for departure exists.

Issue 2 – Is it just and equitable to make a particular determination?

As the tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the children, the liable parent, and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to consider the matters discussed below[1], which are as set out in subsection 117(4) of the Act:
[1] The tribunal is required to give “overt consideration” to relevant factors listed in section 117(4) of the Act Tyagi & Meares [2008] FMCAfam 886
(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.
In having regard to the proper needs of the child, regard must be had to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Act). The tribunal finds that [Child 1] has extra costs relating to his special needs, in addition to the normal costs of the child, which are calculated by reference to the Costs of the Children Table.[2] Ms Hitchcock advised the tribunal that [Child 1]’s [therapy] has ceased temporarily, as Mr Hitchcock has failed to pay the assessed amount of child support and she is unable to afford to pay. The tribunal notes that the amount of $3,030 was calculated on 36 sessions per year and therefore remains an appropriate amount to take into account despite the temporary cessation.
[2] Provided for in section 155 of the Act.
The tribunal finds that [Child 2] (whilst a child of the assessment) and [Child 1] do not have any income, earning capacity, property or financial resources.
Mr Hitchcock commenced employment with [Business 1] in January 2017. A pay advice he provided to the tribunal shows that his gross weekly wage was $1,923.08; that amount is made up of $1,634.62 for 38 hours of normal time and $288.46 for motor vehicle allowance. Mr Hitchcock argues that the motor vehicle allowance should not be included in his adjusted taxable income as it is provided to him in lieu of a company car. He said that the nature of his work means that he is on the road almost constantly. Mr Hitchcock said that the car that he uses for work purposes is not used for any other purpose. He said that he repays a loan through [Business 2] at the rate of $283.00 per fortnight. He said he and his wife also have a family car and would not have the second vehicle if it was not a requirement of his work. He also provided a letter from the ATO advising that the normal withholding tax rates are to apply to 0% of his car allowance. Ms Hitchcock said that Mr Hitchcock uses the work vehicle (and never the family car) to pick up [Child 1]; in her view he receives a personal benefit from the motor vehicle.
Mr Hitchcock’s employment with [Business 1] ceased in late October 2017 and he commenced employment with [Business 3] in early November 2017. A pay advice he provided to the tribunal indicates that his gross weekly wage is $2,019.22; that amount is made up of 40 hours of normal time totalling $1,730.08 and $288.46 for motor vehicle allowance.
At hearing Mr Hitchcock advised that he has been given notice this week that his employment was ceasing.
Ms Hitchcock contended that he changes jobs regularly and the fact that he was ceasing with this particular employer was not remarkable.
The tribunal finds that Mr Hitchcock’s car allowance does not provide a significant personal benefit for him and therefore it was not appropriate to include it in his income for child support purposes.
The tribunal finds that Mr Hitchcock’s income for child support is approximately $85,000 per annum from 1 July 2017 and $89,960 per annum from 1 November 2017. On an assets and liabilities statement he provided to the tribunal Mr Hitchcock indicated that his only assets of significance are the home which is jointly owned by him and his wife, which is mortgaged, and the work vehicle, which is subject to finance. The tribunal is satisfied that Mr Hitchcock does not have any property or financial resources that should be taken into account for the purpose of child support.
The tribunal finds that Ms Hitchcock was being assessed on an adjusted taxable income of $28,110, reducing to $21,392 from 1 September 2017. Her income is derived from a combination of earnings from self-employment as [an occupation] and carer payment. In accordance with subparagraph 117(7A)(b)(ii) the tribunal finds that the carer payment is to be disregarded. However, the tribunal decided not to adjust Ms Hitchcock’s income as the effect it had on the assessment was minimal given that it was only slightly above the self-support threshold provided for in the Act.
In her Statement of Financial Circumstances Ms Hitchcock indicated that her only asset of significance is the home in which she resides with the children and which is mortgaged. The tribunal is satisfied that Ms Hitchcock does not have any property or financial resources that should be taken into account for the purpose of child support.
The tribunal is satisfied that earning capacity provisions are not satisfied in respect of either party in this case.
Mr Hitchcock claims that he is in financial hardship. He provided an income and expenses statement, prepared with the assistance of a financial counsellor. He indicated that the net family income after tax (being his net pay, the motor vehicle allowance and his wife’s carer allowance) totals $3,282 per fortnight. Net living expenditure, which includes mortgage repayments of $760 per fortnight, vehicle finance repayments of $283 per fortnight and child support payments of $803 per fortnight, is listed at $3,088 per fortnight. A further $544 per fortnight is listed in respect of credit card repayments. (Credit card debts of almost $50,000 are listed.)
Mr Hitchcock claims that he has a duty to support his wife and his stepson, who resides with him.
A person’s legal duty to support their spouse arises in circumstances set out in section 72 of the Family Law Act 1975 (the FL Act). The duty arises if their partner is unable to adequately support themselves by reason of:
·      Having the care and control of a child of the marriage or de facto relationship who is under 18;
·      Their age, physical or mental incapacity to obtain employment; or
·      Any other adequate reason.
A person is liable to support their partner only to the extent that they are reasonably able to do so, taking into account the matters listed in subsection 75(2) of the FL Act.
The tribunal finds that Mr Hitchcock’s wife does have not the care and control of a child of the marriage who is under 18.
Mr Hitchcock claims that his wife is unable to adequately support herself as she is the carer for her adult son who is disabled (he suffers from [Medical Condition 1]). He acknowledges that his stepson attends a disability support centre ([Agency 1]) for five hours a day, five days a week. However, he said that his wife needs that time each day to [support] her son, who [has a further medical condition]. He also said that his wife had been out of the workforce for 30 years and has some mental health issues which are currently being investigated. For these reasons she is unable to work. Mr Hitchcock acknowledged that his wife has not attempted to enter the workforce. He agreed that his wife receives a carer allowance in respect of her son. Mr Hitchcock said that his wife was previously in receipt of carer payment but is precluded due to his (Mr Hitchcock’s) income. He acknowledged his stepson receives a disability support pension but said that was insufficient to cover his needs.
Ms Hitchcock does not accept that Mr Hitchcock’s wife is unable to work because of her need to care for her son. She agreed that his stepson has a significant disability; however she noted that he gets support through [Agency 1] and other disability services and, in her view, Mr Hitchcock’s wife should have at least a partial capacity to work.
Mr Hitchcock has not provided any evidence to support the contention that his wife is unable to obtain employment by reason of her age, or physical or mental incapacity.
The tribunal considered whether the care needs of Mr Hitchcock’s wife’s adult son constitute an adequate reason for her inability to adequately support herself. The tribunal is not satisfied that this is the case, given that he attends a program provided by [Agency 1] for approximately five hours a day, five days per week. Mr Hitchcock further acknowledged that the organisation provides the necessary transport for his stepson to attend.
The tribunal is not satisfied that Mr Hitchcock has a duty to support his wife and therefore the costs of her support will not be taken into account when determining what is a just and equitable determination.
The tribunal considered whether Mr Hitchcock has a duty to maintain his stepson.
The Full Court of the Family Court in the matter of Vick and Hartcher (1991) FamCA 79 found that the words 'duty to maintain' are limited to a legal duty and do not include what is only a moral obligation to maintain a person or child. These principles were later adopted in Dwyer v McGuire (1993) FamCA 82 where it was found that a husband has no legal duty to support his elderly parents and sister.
In deciding whether Mr Hitchcock has a legal duty to support his stepson the tribunal considered whether the stepson is a resident child for the purpose of the Act. The definition of a “resident child” is contained in subsection 117(10) of the Act. Paragraph (d) requires that the child be less than 18 years of age. The tribunal finds that Mr Hitchcock’s stepson is aged 21, and therefore does not meet the definition of a resident child. The tribunal finds that Mr Hitchcock does not have a legal duty to maintain his stepson and therefore any costs associated with his care are not to be taken into account in making a just and equitable determination.
The tribunal proposes to make a determination in the following terms:
·      For the period commencing 10 February 2017 until a terminating event occurs for [Child 1], the rate of child support payable by Mr Hitchcock is increased by $1,515 per annum;
·      For the period 1 July 2017 to 31 October 2017 Mr Hitchcock’s adjusted taxable income is varied to $85,000;
·      For the period 1 November 2017 to 30 September 2018 Mr Hitchcock’s adjusted taxable income is varied to $89,960.
The proposed determination would result in a child support liability for Mr Hitchcock of approximately $347 per week from 10 February 2017, $363 per week from 1 July 2017, $385 per week from 1 November 2017 and $310 per week from [February] 2018.

The tribunal finds that Mr Hitchcock has the capacity to pay the assessed amount of child support. His after tax income (not including the motor vehicle allowance) during the period under review was between $1,232 per week and $1,332 per week. (The self-support amount provided in the child support calculator allows Mr Hitchcock approximately $456 per week for his own needs.) Mr Hitchcock indicated that his current household expenditure exceeds his income; however the tribunal finds that amount includes expenditure in respect of people who Mr Hitchcock does not have a duty to support.
The tribunal finds that Ms Hitchcock has no capacity to support the children as her income at all relevant times was only sufficient for her own self-support needs.
The tribunal decided that it was appropriate to include the amount for [Child 1]’s special need from the date of the departure application; as Ms Hitchcock was paying for the special needs and Mr Hitchcock was on notice at the time that a departure application was afoot.
The tribunal took note of Mr Hitchcock’s claim that he had been given notice in respect of his current employment. The tribunal takes the view that it is open to Mr Hitchcock to make a further departure application if he is unable to secure further employment or his income changes significantly.
The tribunal finds that the proposed determination is just and equitable.

Issue 3 – Is it otherwise proper to make a particular departure determination?

The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination. It focuses on the balance of support carried between the parents on one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. The tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support.
The tribunal finds that Ms Hitchcock is in receipt of family assistance payments. The proposed determination is likely to reduce her entitlement to those payments, thereby reducing the burden on the taxpayer. The tribunal finds that the proposed determination is otherwise proper.

DECISION

The decision under review is varied so that there is a departure determination in the following terms:

·      For the period commencing 10 February 2017 until a terminating event occurs for [Child 1], the rate of child support payable by Mr Hitchcock is increased by $1,515 per annum;
·      For the period 1 July 2017 to 31 October 2017 Mr Hitchcock’s adjusted taxable income is varied to $85,000;
·      For the period 1 November 2017 to 30 September 2018 Mr Hitchcock’s adjusted taxable income is varied to $89,960.

[2018] AATA 2288

11 May 2018

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Judicial Review

Jurisdiction

Remedies

Statutory Construction