Hortinzia and Hortinzia (Child support)

Hortinzia and Hortinzia (Child support) [2021] AATA 1987 (5 May 2021)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2021/SC020795
APPLICANT:  Mr Hortinzia
OTHER PARTIES:  Child Support Registrar
Ms Hortinzia

TRIBUNAL:Member P Sperling
DECISION DATE: 05 May 2021
DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that the binding child support agreement made under Part 6 of the Child Support (Assessment) Act 1989 and signed on 28 February 2011 applies for the period [from] April 2019 to 12 November 2019 in relation to [Child 1], and notes that this means that clause 3.2 of the binding child support agreement continues to apply.

CATCHWORDS

CHILD SUPPORT – binding child support agreement – whether agreement continues to apply after child’s eighteenth birthday – whether terminating event had occurred – agreement continued to apply – 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 application for review is about the child support assessment applying in respect of [Child 1].
Mr Hortinzia and Ms Hortinzia are the separated parents of three children, [Child 1] born [in] April 2001, [Child 2] born [in] October 2002 and [Child 3] born [in] January 2006. Since 8 March 2010 Services Australia (previously known as the Department of Human Services) – Child Support (Child Support), made formula assessments of the child support to be paid by Mr Hortinzia to Ms Hortinzia in respect of the children.
On 1 March 2011 Child Support accepted a binding child support agreement (the agreement) which had been signed on 28 February 2011. This meant that from 1 March 2011 child support for the children would be calculated in accordance with the terms and conditions in the agreement.
On 26 March 2019 Ms Hortinzia made an application to Child Support to extend the child support assessment for [Child 1] beyond his 18th birthday ([in] April 2019) until the end of the 2019 school year.
On 17 April 2019 Child Support accepted Ms Hortinzia’s application to extend the child support assessment for [Child 1] and decided that the amount of child support payable for him [from] April 2020 until 15 November 2019 was to be determined on the basis of formula assessment.
On 5 February 2020 Mr Hortinzia objected to this decision and requested an extension of time to lodge this objection. On 19 March 2020 an objections officer refused Mr Hortinzia’s request for an extension of time to lodge his objection. On 23 March 2020 Mr Hortinzia applied to the Administrative Appeals Tribunal (the tribunal) for review of the objections officer’s decision of 19 March 2020 to refuse his request for an extension of time to lodge his objection. On 2 June 2020 the tribunal (separately constituted) granted an extension of time for Mr Hortinzia to lodge his objection.
On 19 January 2021 an objections officer considered Mr Hortinzia’s objection and partly allowed it by affirming the decision to apply formula child support assessment from the date [Child 1] turned 18 but changing the last day that [Child 1] is included in this assessment to the slightly earlier date of 12 November 2019.
On 13 February 2021 Mr Hortinzia applied to the tribunal for an independent review of the objections officer’s decision of 19 January 2021.
A hearing into the application for review was held by the tribunal on 5 May 2021. Mr Hortinzia and Ms Hortinzia both participated in the hearing by conference telephone and gave sworn evidence 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 Child Support pursuant to sections 37 and 38AA of the Administrative Appeals Tribunal Act 1975 (270 pages), which were copied to Mr Hortinzia and Ms Hortinzia prior to the hearing.

ISSUES

The statutory provisions relevant to this review application are found in the Child Support (Assessment) Act 1989 (the Act).
The issues which arise in this case are:
· Does the binding child support agreement end for [Child 1] on his 18th birthday?; and
· How should child support be assessed for [Child 1] for the period [from] April 2019 to 12 November 2019?

CONSIDERATION

Part 5 of the Act provides for an administrative assessment of the child support payable by one parent to the other. It uses a statutory formula which contains variables such as the parents’ adjusted taxable incomes, the number of children and their percentages of care.
Pursuant to Part 6 of the Act, parents can take themselves out of the regime of formula assessments by entering into either limited or binding child support agreements. For an agreement to be a binding child support agreement it must satisfy specific requirements (see subsection 80C(2) of the Act). Mr Hortinzia and Ms Hortinzia entered into a binding child support agreement on 28 February 2011.
It appears that the parties applied to the Registrar pursuant to section 88 of the Act for acceptance of the agreement and it was accepted pursuant to section 92 of the Act. Following acceptance of the agreement the Registrar was required by subsection 94(1) of the Act to immediately take such further action (if any) as was necessary to give effect to the agreement.
The Registrar was required by section 34B of the Act to assess the annual rate of child support for [Child 1] immediately after accepting the agreement and, pursuant to section 95 of the Act, was required to do so having regard to the terms in the agreement for the payment of periodic child support.
An examination of the actual signed agreement, as contained in Child Support documents, shows that the agreement covers Mr Hortinzia and Ms Hortinzia’s three children ([Child 1] being the eldest child), none of whom were 18 years of age at the time the agreement was signed. Relevantly, it also shows that the following was agreed:
·     Clause 1.7 – “assessment” means any administrative assessment for either the Liable Party or the Carer to pay children support for the children made at any time during the term of this Agreement by the Agency pursuant to the Act;
·     Clause 3.2 – the annual rate of child support for the children payable by the Liable Party [Mr Hortinzia] under the administrative assessment is to be reduced by 100%;
·     Clause 3.3 – both parties agree that the Liable Party will pay child support to the Carer in an amount of $0.00 per week for [Child 1] for the period 14 February 2011 [to] April 2019, $0,00 per week for [Child 2] for the period 14 February 2011 to 15 October 2020 and $0.00 per week for [Child 3] for the period 14 February 2011 to 8 January 2024;
·     Clause 3.6 – the Carer acknowledges and warrants that they will not seek, nor lodge any further applications whatsoever, for any further or additional child support payments or any payments incidental thereto during the term of this agreement concluding on 8 January 2024;
·     Clause 3.7 – the parties acknowledge that this agreement finalises all child support matters for the children and that they have entered into all documents to verify their agreement.
Section 95 of the Act further provides that the provisions of the agreement specifying the periodic amounts to be paid have effect, for the purpose of Part 5 of the Act, as if they were an order made by consent by a court under Division 4 of Part 7 of the Act. The agreement that applies in this case is therefore, for the purposes of Part 5, taken to be an order made by a court under Division 4 of Part 7 of the Act.
Section 142 of the Act states that, where an order made under this Act is in force in relation to a child and a child support terminating event happens in relation to the child, then the order ceases to be in force.
Section 12 of the Act provides that, generally, a terminating event includes when a child turns 18 years of age. However, section 151D of the Act states that, if an application under subsection 151B(1) for assessment or agreement to continue beyond a child’s 18th birthday is accepted, then a child support terminating event does not happen in relation to the child when the child turns 18. This section further states that in such circumstances, instead of a terminating event when the child turns 18, there is a child support terminating event on either the day the child ceases to be in full-time secondary education or the last day of the secondary school year, whichever occurs first.
The consequence of these provisions is, that if a decision is made to continue child support under assessment or agreement beyond a child’s 18th birthday, then a pre-existing child support agreement which affects a child support assessment pursuant to section 34B of the Act remains in force and continues to apply until the end of the child’s secondary schooling or any end date specified in the agreement, whichever occurs first.
In considering this matter the tribunal also noted that this interpretation of the legislation is consistent with the policy advice in chapter 2.5.5 of the Child Support Guide[1] which states that:
If the assessment for the child is based on an agreement which resulted in an assessment under section 34B (because child support was already payable), then the carer who is entitled to child support may apply for an extension. The application does not need to be signed by the other party for it to be accepted. If the agreement does not specify an end date (i.e. that is more specific than the usual terminating events), the agreement will continue to modify the assessment after the child turns 18. If the agreement specifies an end date (CSA Act section 84(1)(g)), and the assessment has been extended under section 151B, the agreement will cease to modify the assessment after the end date, and the assessment will instead be based on the formula.
[1] The Child Support Guide (the Guide) is the government policy adopted by the Agency that applies to the interpretation and application of the child support legislation. Generally, the Tribunal will follow the Guide unless there is a cogent reason not to do so. There are no circumstances in this matter that would require the Guide to be disregarded.
As previously noted, in this case the relevant binding child support agreement resulted in assessment under section 34B of the Act. The Child Support documents show that on 26 March 2019 Ms Hortinzia made an application to continue child support under assessment or agreement beyond [Child 1]’s 18th birthday. In accordance with the policy set out in chapter 2.5.5 of the Guide, the tribunal is satisfied that this application to extend assessment past [Child 1]’s 18th birthday, which was made under section 151B of the Act, can be accepted.
The tribunal then turned to the question of whether the binding child support agreement should continue to apply in relation to [Child 1] for the period [from] April 2019 (when he turned 18) to 12 November 2019 (the end of his final school year as confirmed in correspondence from [Ms A], Principal, [School 1]).[2]
[2] Child Support documents page 109
During the hearing the tribunal asked both parents what the intention was in respect of the agreement when [Child 1] turned 18.
Mr Hortinzia told the tribunal that he entered into a binding child support agreement in 2011 because the separation period immediately prior to that had been very difficult and he didn’t think he could handle ongoing interactions with Ms Hortinzia about child support. Instead he thought it would be better to have a final settlement that didn’t require him to pay child support in the future. As a result, he said he agreed to a very generous financial settlement as part of the divorce proceedings, which he believed provided Ms Hortinzia with more than enough (including in assets) to cover any child support that he might otherwise have been assessed to pay in the future.
Mr Hortinzia also told the tribunal that, at the time he signed the binding child support agreement, he was unaware that the Act allowed child support to be extended after a child turned 18. However, at the time he was advised by his lawyer that the agreement stipulated that Ms Hortinzia would not make any further applications for child support and so he assumed that this would prevent Ms Hortinzia from making any application for child support, both before and after each child turned 18.
When asked by the tribunal to explain the intention of clauses 3.2 and 3.3 of the agreement, Mr Hortinzia said that he thought that both clauses meant that Ms Hortinzia would not claim any further child support after each of the children turned 18. He therefore considered that Ms Hortinzia should not have made a claim for child support when [Child 1] turned 18 because he believed that she had received sufficient financial assets and funds through their settlement to cover any and all child support for all of the children ongoing. Mr Hortinzia also confirmed that there was no specific communication himself and Ms Hortinzia about this between at the time, because they were only communicating through their lawyers. Mr Hortinzia concluded that, in his view, there is no point in having a binding child support agreement if it wasn’t actually binding and is overridden by Child Support.
Ms Hortinzia told the tribunal that at the time she signed the agreement her lawyer told her that when each child turned 18, if they were still at school she would be eligible for additional child support. She said that is why there is a clause in the agreement saying that $0 child support was payable but only until each child’s 18th birthday.
Ms Hortinzia confirmed that, at the time the agreement was signed, she did not discuss the contents of the agreement directly with Mr Hortinzia as they were only communicating through their lawyers.
Ms Hortinzia also told the tribunal that, although she was aware that she was able to apply for further child support when [Child 1] turned 18, she didn’t act on this at the time until she was contacted by Child Support who confirmed and advised her that she was able to lodge an application for ongoing assessment for [Child 1] because he was still at school.
The tribunal carefully reviewed the wording of the binding child support agreement, a copy of which is contained in the Child Support documents, and makes the following findings:
·     The only end date referred to in the agreement is [in] January 2024 which is the 18th birthday of the youngest child;
·     Under Clause 3.3 of the agreement, the end date for the Liable Party to pay $0.00 per week for [Child 1] is [in] April 2019;
·     There are no specific clauses in the agreement that set out agreement about child support in respect of [Child 1] in the circumstances where he continues to attend full-time schooling after he turns 18 years; however, Clause 3.2 requires the annual rate of child support under any administrative assessment for all of the children to be reduced by 100%;
·     Because Clause 3.2 does not have an end date, it continues to operate in respect of [Child 1] beyond his 18th birthday and provides that the agreement is not terminated in respect of [Child 1] on his 18th birthday or at any time prior to the termination of the agreement as a whole, [in] January 2024;
·     Clauses 3.6 and 3.7, which seek to prohibit the parties from making further applications for additional child support, are not provisions of a kind referred to in subsection 84(1) of the Act and therefore, in accordance with subsection 84(3) of the Act, these two clauses do not have effect in determining the child support arrangements to be applied.
Given the tribunal’s findings in relation the agreement itself (as set out in paragraph 29 of these Reasons) as well as the evidence provided by Mr Hortinzia and Ms Hortinzia regarding the intention of the agreement at the time it was signed (as set out in paragraphs 25 to 30 of these Reasons), the tribunal does not support a finding that the agreement was intended to, or indeed should, end for [Child 1] on his 18th birthday. Instead, because the tribunal has determined that Clause 3.2 continues to operate in respect of all children until the agreement terminates [in] January 2024, the tribunal is satisfied that the intention and legal effect of the agreement is that there should be no child support payable under administrative assessment for any of the children (i.e. the annual rate of child support for the children payable under the administrative assessment should be reduced by 100% consistent with clause 3.2 of the agreement) until the agreement ends [in] January 2024, regardless of whether any of the children are attending school after their 18th birthday or not.
Therefore, in respect of child support payable for [Child 1], the tribunal finds that the binding child support agreement does not end on [Child 1]’s 18th birthday.
The tribunal notes that Child Support decided to determine [Child 1]’s child support assessment under formula assessment [from] April 2019 to 12 November 2019. As noted above, Part 5 of the Act does provide for the application of a statutory formula. However, the application of Part 5 of the Act is limited by section 35C, which states that:
This Part applies in relation to the assessment of child support payable by a parent for a child, subject to:
(a)any determination made by the Registrar under Part 6A (departure determinations); and
(b)any order made by a court under Division 4 of Part 7 (departure orders); and
(c)any provisions of a child support agreement that have effect, for the purposes of this Part, as if they were such an order made by consent.
The tribunal is of the view that, because there is a binding child support agreement which continues to apply in respect of [Child 1], and this agreement is taken to be an order made by a court pursuant to Division 4 of Part 7 (noted at paragraph (b), above) then, pursuant to section 35C of the Act, Part 5 of the Act applies subject to the terms of that agreement. This means that the administrative assessment for [Child 1] continues to be affected by the terms of the binding child support agreement signed by the parents on 28 February 2011. As a consequence, it was not open to Child Support to determine child support based on formula assessment [from] April 2019.
In short, this means that child support payable by Mr Hortinzia in relation to [Child 1] for the period [from] April 2019 to 12 November 2019 should continue to be assessed in accordance with the binding child support agreement and that Clause 3.2 of the agreement continues to apply during this period.

DECISION

[2021] AATA 1987

5 May 2021

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Statutory Construction

Jurisdiction

Remedies

Judicial Review