Holden and Kurn (Child support)

[2022] AATA 5223

Holden and Kurn (Child support) [2022] AATA 5223 (14 December 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/SC023721

APPLICANT:  Mr Holden

OTHER PARTIES:  Child Support Registrar

Ms Kurn

TRIBUNAL:Senior Member K Dordevic

DECISION DATE:  14 December 2022

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that Mr Holden’s child support liability is varied to $30,000 per annum from 3 June 2020 to 5 December 2022.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – children not being educated in manner expected by both 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

1. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable in a child support case. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. The Act also provides for a departure from the administrative assessment in certain circumstances.

2. Ms Kurn (the mother) and Mr Holden (the father) are the parents of three children (the children). This case was first registered with the Child Support Agency (the Agency) on 14 March 2016 and registered for collection from that date. The care record reflects that the children are in the mother’s 93% care and the father’s 7% care.

3. The father lodged a departure application on 3 June 2020.

4. On 17 December 2021 a senior case officer determined that for the period 1 November 2021 to 31 October 2023 the father’s annual rate of child support is varied to $27,621. On 20 January 2021 the father lodged an objection to that decision. On 6 April 2022 an objections officer partly allowed the objection, determining that from 1 November 2021 to 30 June 2022 the father’s annual rate of child support is varied to $28,425.

5. On 20 April 2022 the father sought further review with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal).

6. A directions hearing was held on 26 September 2022. Directions were issued the same day requiring compliance on 23 November 2022.

7. On 27 October 2022 the Tribunal asked the Child Support Registrar to exercise the Registrar’s powers under section 161 of the Child Support (Assessment) Act 1989 or section 120 of the Child Support (Registration and Collection) Act 1988 to obtain from:

   ·AUSTRAC all transactions held in accounts of Mr HOLDEN (DOB [date]) or under his alias [Alias 1], [Alias 2], [Alias 3] or [Alias 4] from 11 June 2021 to date; and

   ·Department of Home Affairs all movements of Mr HOLDEN (DOB [date]) noting his alias [Alias 1], [Alias 2], [Alias 3] or [Alias 4] from 14 June 2021 to date. 

8. The Child Support Registrar complied with the orders, providing the responses on 29 November 2022 (marked folios C1 to C17).

9. The hearing took place on 14 December 2022. The mother and father appeared by MS Teams Video and gave their testimony under affirmation. It was necessary to have a brief adjournment in the proceedings when it became apparent that the father was participating in the hearing in his local library, despite the fact that he had given an undertaking that he was in a quiet area and could not be overheard. The father was directed to secure a closed room in the library. Upon the hearing commencing again the father stated that he had moved into a closed room in the library. However, when asked to demonstrate that he was in a closed room with no-one present by use of the camera on his laptop, it was apparent that not only was he in a room with the door open to the main library but that there was also another person present in the room. Upon further instructions from the Tribunal, the father was able to satisfy the Tribunal he was in a quiet area with no-one present and the hearing continued. Later in the hearing the father was directed to place his headphones on again, after removing them when the mother gave her testimony. It was explained to the father that, as a matter of procedural fairness, it was necessary for him to hear the mother’s case so that he could make submissions and tender evidence in response.

10. The Tribunal also considered the documentation provided by the Agency (folios 1 to 462), the father (A1 to A114), and the mother (B1 to B58). The Tribunal reached its decision on the same day.

11. The father tendered into evidence further documents on 15 and 16 December 2022. These documents were returned to the father with the explanation that the decision had been made and therefore these documents were not accepted into evidence.

ISSUES

1. The statutory provisions relevant to this review are outlined in section 98C of the Act, which states that a decision to depart from the administrative assessment may be made if the following three requirements are met:

   (i)that one, or more than one, of the grounds for departure referred to in subsection 117(2) 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 …

2. Therefore, the issues which arise in this case are:

   ·      Does a ground exist for departure from the administrative assessment of child support? And if so,

   ·      Would it be just and equitable and otherwise proper to make a particular determination?

CONSIDERATION

A ground for departure

1. Subparagraphs 117(2)(c)(ia) and (ib) of the Act provide grounds for departure if the administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent because of either party’s income, property, financial resources or earning capacity. The central issue in this matter is whether the administrative assessment accurately reflects the father’s income, financial resources and earning capacity.

2. At the time the father lodged his departure application he was liable to pay the fixed annual rate ($2,166) in child support, based on the parents’ 2019 adjusted taxable incomes of $0 (the father) and $63,883 (the mother).

3. The Agency’s objections officer determined that the father entered into a contract with the [Country 1] Government in March 2021, receiving remuneration of USD360,000. In his correspondence to, and discussions with, the Agency the father denied any such contract. The father wrote to the Agency on 15 January 2022 and stated:

   …

   There is some incredible error hear (sic)

   I am not in any employment

   My only income is my Age Pension

   I did not receive 360 000 USD as stated

   I suspect that there are many people with my name And I have been confused with another person of the same name

   …

4. In his written submissions to this Tribunal[1] the father acknowledged that he signed a contract with the [Country 1] Government, but never received a signed contract back. He then went on to state:

   Discussions proceeded

   I receive Notice to Mobilise

   I was unable to travel on to [Country 1] because of complete Lock Down in [Country 2]

   There were other problems with the contract

   [Country 1] Government has no technical expertise. They did not understand how to manage a Civil Engineering Contract and. (sic) Expected me to undertake the work remotely which was completely impossible.

   To Set Up a Project Management Unit PMU I had to be in [Country 1]

   Eventually the [Country 1] Government got frustrated and we amicably agreed to cancel the contract, if there ever was a contract.

   [1] At folio A2

5. The father provided a letter he authored to the Government of [Country 1] dated 16 September 2021 which relevantly states:

   1.     I do have a contract with the Government of [Country 1] for professional services as a Project Manager. It is my intention to continue in this role.[2]

   2.     …

   I received the Notice to Proceed. Therefore the commencement of my duties is 19 July 2021.

   …

   3.     …I did mobilise on 14 August 2021. I travelled to [Country 3] with the intention of obtaining onward travel to [City 1] and then a flight t [City 2] to [City 3]. I did advise Ministry of Finance about my proposed travels. Unfortunately we were all overtaken by events…

   [2] At folio A128

6. The father’s submissions at hearing can be summarised as follows. The decision under review is incorrect as it was based on an alleged employment contract, when in fact it was only ever a draft contract. He never undertook that employment. At first, he thought that the decision was a “gross error”.  Then he realised that he should have found out what the Agency was “talking about”; he now acknowledges that he did enter into a contract with the [Country 1] Government.

7. The Tribunal makes the following findings. On 19 March 2021 the father entered into a contract (the contract) with the Ministry of Finance of the Government of [Country 1] with a total maximum payment of USD360,000 with payments to be made into the father’s [Bank 1] account #7680, with reporting requirements spanning from 30 April 2021 to 31 July 2023[3]. Email correspondence provided by the father indicates that he lodged a claim for payment in respect of the contract and a response was attached to an email from the Deputy Secretary of the Ministry of Finance[4]. At hearing the father stated that he had no recollection of seeking or receiving any payment in respect of the contract.

   [3] At folios A111 to A121

   [4] At folio 136

8. An AUSTRAC investigation by the Agency indicates that on 31 March 2020 a transfer of $235,715 was made from an account with the father’s known alias ([Alias 4], with the same registered address the Agency previously used for the father) to an account held in the father’s name[5]. The information provided by AUSTRAC to this Tribunal indicates that during the period 19 April 2022 to 27 October 2022 he transferred $20,685 overseas. At hearing he stated that these funds were for the benefit of his three infant children who live in Africa. He also confirmed that he pays on average KES50,000 to his partners in [Country 4] each month[6] for the children’s maintenance and their private school fees; in his view he has a greater duty to his children in Africa than the children, as there is no social security system.  He does not believe he should provide similar support to the children as he was required to pay the mother $50,000 as part of the property settlement in or around 2015. Later in the hearing he stated that he did provide his other ex-partner who resides in Australia with child support in advance for the children of that relationship after he had “a windfall” and “she needed the money”. He cannot recall whether he made this payment in cash or by direct transfer, or from which account the payment was made.

   [5] At folio 255

   [6] At folio A75

9. The Tribunal put to the father that during the period 20 July 2020 to 10 June 2021 he received deposits from overseas accounts totalling $94,714[7]. The father confirmed this was the case, explaining that this was from his adult son, [Mr A]. He recalls that he paid a deposit of between $80,000 and $94,000 some 10 years ago for [Mr A] to purchase a property valued at $105,000. When his son sold the property for about $150,000, he returned the father’s initial deposit. He was adamant that the returned funds were not available for the support of the children of the assessment as it could not be characterised as income. He confirmed that the deposit was returned in “several different tranches”. Apparently, this was necessary as his son could not electronically transfer the total sum as he did not have electronic banking facilities. Instead, his son gave him his bank card which the father used to withdraw cash from the son’s account. He would then walk to his own bank and deposit the cash sums into his account, including the $64,714 deposited on 1 September 2020. He described this as a “perfectly honest arrangement between a father and son” and did not consider the cash transfer arrangement unusual or unsafe in a context where his son does not have access to internet banking.  Without corroborating evidence, the Tribunal does not accept that the $94,714 was from the father’s adult son. In any event, even if the funds were from [Mr A], it is nevertheless a financial resource available to the father to support the children of the assessment. 

   [7] At folio 255

10. The Tribunal sought specific responses from the father in regard to deposits into his personal bank accounts. The father could not provide an explanation as to the source of a $5,000 deposit into his [Bank 1] account #7680 on 10 May 2022. In response to questioning about his [Bank 2] account #0209 the father stated that the $1,900 deposited into the account on 1 and 4 April 2022[8] was “not significant” and therefore he could not recall from whom it was received. The $14,982.64[9] deposited into his account on 29 April 2022 related to shares he held many years ago that were deposited into his account by the Public Trustee. He initially could not recall the reason for a deposit of “Dick Smith Class” of $129.88[10], but then explained that this was received after shareholder action following the company’s bankruptcy. He had also forgotten about a home purchase deposit and so was refunded $1,700 on 1 December 2021[11] from a real estate agency.

    [8] At folio A34

    [9] At folio A35

    [10] At folio A40

    [11] At folio A39

11. When asked about his share portfolio the father stated that he holds shares of about $10,000 to $15,000[12]; he cannot recall exactly as he has not looked into it for a long time. He confirmed that he is able to leave significant funds in his accounts and his share portfolio untouched as he lives frugally when he goes to Africa and when in Australia. Though he is unable to officially own a home in [Country 5], there is a home in which his ex-partner lives and which he is permitted to manage and holiday in rent free; in response to the mother’s testimony that he in fact owned this property he replied that one “could say I have a right over it”.  The Tribunal was left with the impression that the home was the father’s in all but name, given the property ownership prohibitions in place in [Country 5].

    [12] In his Statement of Financial Circumstances at folio A15 he declares share portfolio of $10,000 and his 2022 income tax returns indicates that he received franked and unfranked dividends of $606.50.

12. When asked about the disconnect between his submissions to the Agency and this Tribunal that he cannot meet his child support liability and the funds that are deposited into his bank account, the father stated “There are times when I have money in my account and times where there is nothing…when I have money I will transfer money to my children in [Country 4] or my wife in [Country 6]”. He did not believe that he would receive another “windfall” into the future.

13. The Tribunal invited the father to explain the purpose of the $15,000 in cash withdrawals from his [Bank 1] bank account #7680 and $14,000 from his [Bank 3] account #3196 and the transfer of $16,000 to his overseas account during the period 1 April to 4 May 2022. The father explained that he is limited to only taking $10,000 in cash out of the country, so he may have used some of the remaining funds to meet his living expenses, transferred some overseas and left the remaining cash in his home whilst he was overseas. He did not think it a security risk to leave such large sums in his unoccupied home. There is also evidence that the father transferred AUD7,720.58 to his [bank account in Country 4]  on 19 April 2022[13]; at hearing the father explained that he would have used these funds whilst overseas, as well as making these funds available for his partners and their children.

    [13] At folio C7

14. When asked the purpose of the transfer of $10,000 to [a conveyancer] on 9 and 10 May 2022 from his [Bank 3] account #3196[14] the father stated that this was to remove a caveat from his home; he could not recall any more of the particulars. The [Bank 3] bank account #3196 is the account into which the father’s age pension is paid. During the period 15 December 2021 to 11 March 2022 the balance grew from $30,167.60 to $34,076.67[15]. The Tribunal put to the father that this is not consistent with someone whose only source of income is social security payments, as the father contends and that it instead suggests that he has access to other income or financial resources. Furthermore, his [Bank 1] account #7680 had a stable balance of $39,673.20 from 31 December 2021 to 4 March 2022. His [Bank 2] visa card was also in credit from 6 December 2021 with no transactions during the previous month. The father did not contest that there was evidence of discretionary spending in his accounts not consistent with his submissions that he is only in receipt of age pension. By way of example, he confirmed that he had new flooring in his home at a cost of $2,000 and that he engaged in online dating[16], explaining “at times I do and at times I do not” have funds as “something usually happens in life” whereby he has discretionary income available and so he is not required to live hand to mouth. He remarked that he would like to “share” his “windfalls” with the mother, but will not do so as she is “not appreciative”. The father denied that this suggested he has the capacity to support the children but that he is not willing to because of his rancorous relationship with the mother.

    [14] At folio A66

    [15] At folio 238

    [16] At A46

15. In the Tribunal’s view, the father is not a witness of credit. The evidence is clear; during the same period the father was corresponding with the Government of [Country 1] regarding the contract, he denied the existence of the very same contract with the Agency. The father had no apparent discomfort in making false statements to this Tribunal; at the outset of the hearing he confirmed that he was in an area where he could not be overheard; as a matter of fact he was in a public library. When advised this was inappropriate and after allowing a brief adjournment so he could secure a closed room, the father again attested to the fact that he was alone and could not be overheard when in fact he was in a room in the library with an open door and he was seated alongside a member of the public. The Tribunal is satisfied that the father’s testimony can be characterised as generally inconsistent, implausible and largely self-serving. The Tribunal reached this conclusion, notwithstanding the fact that it accepts the father’s submission that given his advanced age he has some memory difficulties. Thus, the Tribunal gave little weight to his testimony and instead preferred the financial evidence before it.

1. In the absence of a full and frank disclosure in respect of his income and financial resources, it is apparent that the father receives regular deposits into his accounts; from 31 March 2020 to 30 November 2022 (139 weeks), and disregarding his income support payments of about $17,000 per annum, he received $354,142 into his personal bank accounts.  Apportioned over the same period, this indicates that he received net income of about $2,548 per week. A PAYG earner would have to earn approximately $172,000 per annum to have access to such financial resources. This finding does not take into account any putative part-payment he made have received from the [Country 1] Government.

2. At the time the father lodged his departure application on 3 June 2020 he was assessed to pay the fixed annual rate of $2,166, based on his and the mother’s 2019 adjusted taxable incomes. Application of the father’s income and financial resources of $189,000 ($172,000 + $17,000 in age pension) to the child support assessment would increase his annual child support liability to more than $37,000 whilst the oldest child was under 13 years of age, and to more than $41,000 per annum once she turned 13 years of age (taking into account that the father has two other relevant dependants in his 100% care, which may or may not be correct).

1. As the father’s income and financial resources are not properly reflected in the child support assessment, there are special circumstances such that the application of the administrative assessment would result in an unjust and inequitable determination of child support payable. The Tribunal therefore concludes that the ground provided for in subparagraph 117(2)(c)(ia) of the Act is established.

Just and equitable

1. The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the parties’ respective earning capacities, the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula assessment.

2. The mother provided a Statement of Financial Circumstances form dated 23 November 2022. She is employed as a [Occupation 1] with the state-based health authority, working on a full-time basis. She also holds two other casual positions and works when her caring responsibilities allow. Her total income from the three employers is $2,940 gross per week. The Tribunal is satisfied that the mother does not have an unused earning capacity. At hearing the mother explained that she is building a home on her land and so is currently renting. The mother estimated the value of her land at $200,000, with a mortgage of $485,000 for the home build. She reports savings of $120, household contents valued at $5,000, a motor vehicle valued at $15,000 and $30,000 in superannuation. Apart from her mortgage she reports a family tax benefit debt of $22,000 and payments of $250 per month to support her mother who lives overseas. She reports personal expenditure of $0 per week, which does not include her tax liability of at least $855 per fortnight. She reports average weekly expenses of $1,895, of which $1,245 relates to her care of the children. The mother’s 2021 and 2022 adjusted taxable incomes are $103,952 and $122,861 respectively. There is nothing to suggest that the mother’s income and financial resources are not accurately reflected in the administrative assessment.

3. Neither party submits that the children have access to income or financial resources that render the administrative assessment unfair. There is also no evidence tendered by either parent to suggest that either parent has received money, goods or property for the benefit of the children that would render the administrative assessment unfair or unjust. The Tribunal finds that the children are generally in good health and have no costs that are out of the ordinary, apart from the eldest daughter’s private education costs discussed below. The two younger children attend public primary schools.

4. The Tribunal finds that the eldest child has learning difficulties. In a report dated 3 September 2020, [Ms B], registered psychologist, determined that the eldest child has cognitive and functional abilities in the very low range and would benefit from being placed in a class with students with a mild intellectual disability[17]. [Ms B] also recommended that the child attend a speech and language assessment. At hearing the mother explained that she simply cannot afford to engage the child in speech therapy. She has enrolled the child in a systemic Catholic school as the local public high school is not appropriate given conflict of interest with her social work role and they are not in-zone for the only other public high school in their regional area. The Tribunal finds that the eldest child’s private school fees and compulsory levies are $3,767 per annum[18]. It is not in dispute that the father was not involved in the decision making regarding the child’s enrolment in private school; the Tribunal is satisfied that the child is being educated in the manner expected by the mother and not the father, notwithstanding the fact that he does not dispute that his children in Africa attend private schools.

   [17] At folios B51 to B54

   [18] At folio B55

5. In his Statement of Financial Circumstances form dated 25 November 2022 the father reports that his only source of income is age pension of $808 per fortnight.  He reports savings of $15,000, a share portfolio valued at $10,000, household contents valued at $10,000 and no superannuation. He reports no liabilities. The father reported household expenses of $185 per week and child support liability of $100 per week, which would appear to take into account the support he provides for his children in Africa, as his current child support assessment in respect of the children of this assessment is $459 per annum.

6. The Tribunal accepts the parents’ consistent testimony that the child support assessment was ended by the mother from 5 December 2022. At hearing the mother explained that she made this request as she believes that the father is using the child support system to emotionally and financially abuse her.

7. The Tribunal has already made findings in regards to the father’s credibility and the subsequent difficulties in ascertaining with sufficient precision his actual income and financial resources. The Tribunal is satisfied that in the circumstances the most appropriate course is to vary the annual rate of child support payable by the father. The mother’s evidence is that her costs associated with the care of the children are $64,740 per annum ($1,245 per week). The Tribunal is satisfied that the deposits into the father’s accounts indicate that the father has capacity to meet $30,000 of the children’s costs per annum and that it is just and proper that he do so. It is appropriate that the father’s capacity to contribute towards the children’s costs is reflected in the administrative assessment from 3 June 2020, the date on which he lodged his departure application and up until the administrative assessment ends on 5 December 2022. Of course, the mother is at liberty to seek collection from the Agency at any time into the future.

8. As at 24 May 2022 the father was in child support arrears of $14,729.71[19]. The Tribunal’s decision will increase the father’s liability by about $39,000. Given his past and current income and financial resources, the Tribunal is not persuaded that this will place him in a position of undue hardship. Furthermore, the mother requires this financial support in order to adequately care for the children.

   [19] At folio 456

9. The Tribunal is satisfied that the administrative assessment is unfair given the father’s income and financial resources. This results in an unjust and inequitable level of child support given the circumstances of each parent. For all these reasons it is just and equitable to depart from the administrative assessment.

Otherwise proper

1. The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents, rather than the community, have the primary duty to maintain a child.

2. The mother is not in receipt of income-tested benefits. Departing from the administrative assessment will have no impact on the apportionment of financial responsibility between the parents and the community.

3. The determination is otherwise proper.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that Mr Holden’s child support liability is varied to $30,000 per annum from 3 June 2020 to 5 December 2022.