Jarvis and Thompson (Child support)

[2019] AATA 569

Jarvis and Thompson (Child support) [2019] AATA 569 (12 March 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/AC015123

2018/AC015197

APPLICANT:  Mr Jarvis

OTHER PARTIES:  Child Support Registrar

Ms Thompson

TRIBUNAL:Member M Kennedy

DECISION DATE:  12 March 2019

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that Ms Thompson’s objection is allowed so as to determine:

(a)For the period 8 March 2018 to 28 February 2019, the costs of the child in respect of [Child 2] is to increase by $5270; and

(b)For the period 1 March 2019 to 31 December 2019, the costs of the child in respect of [Child 2] is to increase by $3451.

For the avoidance of doubt, the purposes of the increase in the rate of child support is intended to meet the additional costs of maintaining a child because of his special needs, and may be exempt maintenance income for family assistance purposes.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of special needs - cost of maintaining the children are significantly affected – financial resources of 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

1. Mr Jarvis and Ms Thompson are the parents of two children, [Child 1] aged 14 and [Child 2] aged 7.  Care arrangements differ between the children.  For [Child 1], Mr Jarvis currently has a care percentage of 42%.  For [Child 2], Mr Jarvis has a care percentage of 24%.  Care arrangements for [Child 2] are stable.

2. Mr Jarvis applied for a change of assessment on 20 March 2018, and Ms Thompson cross-applied on 14 May 2018. As at 19 March 2018, Mr Jarvis was assessed to pay child support in the amount of $6076 based on his adjusted taxable income from 2016/2017 of $71,725 and Ms Thompson’s adjusted taxable income of $52,899.

3. The Department of Human Services (the Department) decided on 31 May 2018 to refuse to make a change to the assessment, finding none of the grounds raised by the parents established.  Ms Thompson objected to that decision on 15 June 2018.  Mr Jarvis objected on 29 June 2018.

4. The objection officer decided to allow Ms Thompson’s objection, and increased the ‘costs of the child’ component of the child support formula by $5270 for the period 8 March 2018 to 31 December 2018.  In reaching this decision, the objections officer accepted that the ground known as Reason 2 had been established in relation to the costs of maintaining [Child 2] being significantly affected by his special needs arising out of his learning delay.  The other grounds raised; including that the assessment was unjust and inequitable on account of Ms Thompson’s earning capacity, and in respect of the payment of money for the benefit of the children by Ms Thompson, were both found not to be established.

5. The parents applied to the Tribunal for review of the objection officer’s decision on 27 September 2018 (Mr Jarvis) and 10 October 2018 (Ms Thompson).

6. The documentary evidence before the Tribunal consists of the section 37 documents prepared by the Department of Human Service (C1 to C383), the documents provided by Mr Jarvis (A1 to A13) and the documents provided by Ms Thompson (B1 to B70).

Issues

1. The legislation relevant to this review is contained in the Child Support (Assessment) Act 1989 (the Act) and in the Child Support (Registration and Collection) Act 1988. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Act. This requires the application of a statutory formula which takes into account factors such as the number and age of children, the level of care provided and the income of each parent.

2. Under section 98B of the Act, if special circumstances exist, a liable parent or a carer entitled to child support may apply to the Registrar in writing, requesting a departure from the administrative assessment in relation to a child.

3. Under section 98C of the Act, before making a departure determination on an application made under section 98B of the Act, the Registrar must be satisfied that in the special circumstances of the case, one or more grounds under subsection 117(2) of the Act exist, and that it would be just and equitable and otherwise proper to make a particular determination.

4. The issues for me to determine in this case are therefore:

   ·       Whether one or more of the grounds for departure referred to in subsection 117(2) of the Act exists; and, if so

   ·       Whether it would be just and equitable as regards the child, the liable parent and the carer entitled to child support, and otherwise proper, to make a particular determination to depart from the administrative assessment of child support.

Is there a ground to depart from the administrative assessment of child support?

1. It is convenient to examine first the ground that was found to be established by the objection officer.

2. Subparagraph 117(2)(b)(ia) of the Act provides that there is a ground for departure from the administrative assessment of child support if, in the special circumstances of the case, the costs of maintaining the child are significantly affected  because of the special needs of the child.

3. In relation to this ground, Ms Thompson raises a learning delay identified in respect of [Child 2] which has been addressed to date by [Child 2] attending occupational therapy and speech pathology consultations at considerable cost.

4. Mr Jarvis has questioned whether [Child 2] has a special need so as to justify expensive therapy sessions, given his young age.  Essentially, upon elaboration at the hearing, I understand Mr Jarvis to question whether the expensive therapy was perhaps premature, and whether alternative providers who were less expensive could have been arranged. 

5. The documentary evidence addressing whether or not [Child 2] has a special need is in my view comprehensive.  Exhibit B17 is a speech pathology assessment report in respect of an assessment of 4 May 2018 (when [Child 2] was 6) identifying delayed reading accuracy.  In reaching that diagnosis, the author of the report (a certified Speech Pathologist) has taken into account clinical observations, testing and reports from Ms Thompson and also from [Child 2]’s teacher.  The report recommends weekly therapy for approximately 8-10 weeks.

6. A Department of Education learning plan prepared on 28 August 2018 has been provided and is at B26.  The author was [Child 2]’s teacher.  The report observes that [Child 2] had not yet reached age appropriate reading levels, and notes an outstanding recommendation at that time for psychological assessment.  The report also identifies that specialist teachers were assisting [Child 2] within the school for 9 hours each week, primarily in relation to literacy.  In an undated note at B34 which appears to have been prepared towards the end of the academic year, [Child 2]’s teacher observed that [Child 2] had shown little to no progress with his reading in Reception and year 1.

7. An undated report (B39) jointly authored by [Child 2]’s Speech Pathologist and Occupational Therapist similarly observes limited progress despite [Child 2] participating in therapy sessions since March of 2018, and confirms the recommendation for a psychological assessment to be undertaken to identify the presence of any specific learning disorders.

8. At B42, correspondence of 30 January 2019 confirms that [Child 2] had been referred for assessment by a Department of Education Psychologist following assessment of his case by a panel.  As at the date of the hearing the psychological assessment was ongoing without any conclusion or opinion yet available.

9. A further report (authorship unattributed but appears to be from the Speech Pathologist and Occupational Therapist, and marked as received by Ms Thompson on 15 February 2019)  (B47) notes the pending assessment by a psychologist for specified learning disorders, and recommends a further 12 months of therapy in the form of speech pathology and occupational therapy on a fortnightly basis.

10. I consider that on the balance of the evidence, it is clear that [Child 2] has notable delayed learning, particularly in the area of literacy.  In this regard, I place weight not only on the opinion of the allied health professionals consulted by Ms Thompson, but on the opinion of [Child 2]’s 2018 teacher, and noting that [Child 2]’s case for referral to a departmental psychologist was accepted by a panel convened for considering such cases.   I consider it likely, based on the limited progress observed despite therapeutic intervention, that a recognised learning disability may be diagnosed once [Child 2] is assessed by the psychologist. 

11. I have noted Mr Jarvis’ concerns that the firm that has diagnosed the learning difficulties is also the firm recommending and providing expensive ongoing therapy.  I have also noted Ms Thompson’s evidence that the firm was suggested to her by the school.  I have no alternative medical evidence before me suggesting that intervention by speech pathologists and occupational therapists is not warranted.  I consider that the evidence that is before me justifies a conclusion that the diagnosis and treatment recommendation of the registered allied health practitioners should be accepted.

12. I am satisfied therefore that [Child 2] has special needs arising out of his learning delay, and possible learning disability.  The next question to arise therefore is whether the costs of maintaining [Child 2] are significantly affected.

13. Ms Thompson has provided comprehensive records relating to the total amounts charged for speech pathology and occupational therapy, the benefits she has received towards meeting those costs from private health insurance, and the measures she has taken towards maximising contributions towards these expenses by Medicare. Ms Thompson accepts the accuracy of the calculation of out of pocket expenses arrived at by the objection officer.  In this regard, I note that the objection officer calculated out of pocket expenditure of $5270.40 for the period 8 March 2018 to 31 December 2018.  I also accept the accuracy of those calculations, noting that they take into account the fees charged by the speech pathologist and occupational therapist, less private health insurance benefit and limited Medicare rebate.

14. For the period from March to December 2019, Ms Thompson has tabulated predicted costs and benefits and identified out of pocket expenses of $3,451.20 for the remainder of the 2019 calendar year (B59).

15. While I accept the calculations and assumptions set out in that document, in the course of the hearing I questioned what the ongoing therapy provided by the identified Speech Pathologist and Occupational Therapist would achieve in circumstances where the therapists themselves had observed that there had been little progress.  Ms Thompson believed there had been some progress, but more importantly considered that the absence of progress had invoked intervention by the school and Education Department to have [Child 2] assessed by a departmental psychologist – noting such assessment come about only after the approved by a panel.  I accept as logical Ms Thompson’s contention that the limited success of intervention to date has probably resulted in the involvement of the departmental psychologist.  I accept that the therapy and involvement of the practitioners concerned throughout 2018 is reasonable in all the circumstances.   I remain concerned as to whether the significant costs predicted by Ms Thompson are reasonable for 2019, in the sense that the costs are addressing the special need identified in respect of [Child 2].

16. The issue of the ongoing utility and reasonableness of the therapy sessions suggested by the service providers at B47 throughout 2019 is not straightforward.  As mentioned above, the service providers have themselves identified a lack of progress despite their intervention since March of 2018.  Furthermore, the question of the diagnosis of any recognised learning disability and, if such a diagnosis is to be made, the appropriate therapeutic response going forward (and any associated cost), remains pending at the time of the hearing.   Despite this, I note that at B47 it is recommended that the speech pathology sessions and occupational therapy sessions are to continue fortnightly, at a predicted cost of $6578.40 in 2019 (before benefits).  This is a substantial amount of money having regard to the means of the parents.

17. During the hearing I explored with the parties a range of options to accommodate this concern, including an adjournment to await the opinion of the psychologist’s assessment, declining to depart from the administrative assessment on the basis of predicted 2019 costs, or to presume that the costs would continue and be required to address [Child 2]’s special needs noting the availability of a subsequent change of assessment application in the event that circumstances changed.  After considering those alternatives, and as explained in the conclusion of these reasons I will proceed with the latter option.

18. On balance, although I have objective concerns about the ongoing utility of the therapy sessions recommended by the speech pathologist and occupational therapist in light of their own observations that the therapy to date has had little success, and given that a different approach may well be the result of the ongoing assessment by the departmental psychologist, I consider the best evidence I have about addressing [Child 2]’s special needs going forward is the recommendation of the speech pathologist and occupational therapist as set out at B59.  While I have followed Mr Jarvis’ concerns that he perceives the service providers may have the potential for a vested interest in continuing the expensive therapy, I am unable to accept that is so in circumstances where the reports and recommendations have been prepared by registered health professionals, and in the absence of alternative medical or educational evidence.

19. I am satisfied therefore the costs of maintaining [Child 2] are significantly affected because of his special needs.  I consider that the amount of out of pocket expenses as a proportion of the statistical costs of raising a child of [Child 2]’s age is marked in both 2018 and 2019, and the nature of the special needs is out of the ordinary.  I consider that there are special circumstances present, and the ground is established.

Whether it would be just and equitable and otherwise proper to make a particular determination to depart from the administrative assessment of child support.

1. As I am satisfied that there is at least one ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable to depart from the assessment. In deciding whether it is just and equitable, the Tribunal must have regard to the following matters set out in subsection 117(4) of the Act:

   (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.

2. A consideration of these matters permit me to take into account the ground raised by Mr Jarvis in relation to Ms Thompson’s earning capacity.  It is convenient to consider the evidence in relation to that matter first.

Ms Thompson’s earning capacity

1. I may determine that the parent’s earning capacity is greater than is reflected in his or her income only if 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.

   (Subsection 117(7B) of the Assessment Act.)

2. Mr Jarvis’ position is that Ms Thompson has increased her hours of work but has been able to access purchased leave to maintain her taxable income at earlier reported levels.  Mr Jarvis gave evidence as to his observations that Ms Thompson had been able to increase her working hours but without a consequential increase in income through the use of purchased leave arrangements.

3. Ms Thompson’s evidence about her working arrangements is set out in some detail at T209 to T212.  I will not restate that detail in these reasons.  It is sufficient to observe that Ms Thompson has not worked full time since 2005, and has adjusted her part-time working arrangements from time to time, including making use of purchased leave as offered by her employer.  In this regard, I note that Ms Thompson has explained that she considers it was preferable for her in terms of superannuation and maternity leave arrangements to nominally increase her part-time hours and offset those hours with purchased leave.

4. Most recently, as confirmed by payroll records from Ms Thompson’s employer, Ms Thompson increased her part time hours from three days per week to four days per week on 5 November 2015, although averaging 6 hours per day.  Ms Thompson’s payslip also demonstrated that on a fortnightly basis she purchases 5.54 hours of leave.  Essentially therefore, Ms Thompson works 4 days per week, but purchases almost a further day of leave each fortnight.  In practice – this equates to a marginal increase on her previous working pattern of three days per week.

5. Returning to the criteria in subsection 117(7B) of the Act, I consider that it is arguable that Ms Thompson has changed her working pattern and so the first criterion allowing for assessment on the basis of earning capacity may be satisfied.  My view in this regard differs from previous decision makers considering this question who did not accept there had been a relevant change.  This is a largely academic point however because I accept Ms Thompson’s evidence that the flexible working arrangements she has pursued assist her provide care to the children, noting that [Child 2] in particular is still very young.    I consider that the adjustment to Ms Thompson’s working pattern demonstrated through her adjustment to working days and purchasing of leave is justified by her caring responsibilities.

1. Even if that observation were to be quibbled with, I also consider that Ms Thompson’s explanation as to her motivations and considerations in pursuing her flexible working arrangements, particularly given the marginal impact on her taxable income over time, demonstrate that it was not a major purpose of her decision to affect the administrative assessment of child support.

2. As the criteria provided for in section 117(7B) of the Act are not met, there can be no determination that Ms Thompson’s earning capacity is greater than is reflected in her income. If I were considering the corresponding ground for departure as contended for by Mr Jarvis, I would find that it is not established.

   Ms Thompson’s income, property and financial resources

3. I accept the accuracy of Ms Thompson’s statement of financial circumstances. I consider that the use of adjusted taxable income in the ordinary course adequately reflects Ms Thompson’s financial capacity to maintain the children.

   Mr Jarvis’ earning capacity, income, property and financial resources

4. I accept the accuracy of Mr Jarvis’ statement of financial circumstances and supporting payroll evidence.  I accept that Mr Jarvis works long hours as an agitator driver, and has no access to financial resources other than his salary as an employee.  I consider that the use of adjusted taxable income in the ordinary course adequately reflects Mr Jarvis’ financial capacity to maintain the children.

   The proper needs of the children

5. I have discussed the additional costs in maintaining [Child 2] on account of his special needs comprehensively above. 

6. In the process leading to the review in the Tribunal, I note that Ms Thompson has questioned whether there was a ground to depart from the administrative assessment of child support on the basis that she perceives she contributes more to certain extra-curricular expenses than Mr Jarvis.  In discussing this matter further with Ms Thompson at the hearing, I consider that the nature of the expenses Ms Thompson has referred to in this regard are not out of the ordinary (without making any finding as to which parent contributes more), and would not justify either the establishment of a corresponding ground or further adjustment to the child support calculation.

7. No further material matter was raised regarding the proper need of the children.

The income, earning capacity, property and financial resources of the children,  the commitments of parents to support themselves or any other person and the direct and indirect costs incurred by the carer entitled to child support in providing care for the children

1. No further material matter was raised regarding these considerations

The effect of making a particular determination on any entitlement or rate to an income tested pension or benefit.

1. In deciding if a particular determination is otherwise proper, I take into account that both Mr Jarvis and Ms Thompson are receiving family assistance.  Ms Thompson also receives a small amount of parenting payment.

2. On the basis of an observation made by Ms Thompson at the hearing to the effect that she faces financial disadvantage as a result of reduction in family tax benefit if the child support assessment is increased, I note that if the child support assessment is increased because the special needs of a child significantly affect maintenance costs, the amount of the increase may be treated as ‘disability expense maintenance’ and therefore exempt maintenance income for the purposes of family assistance.  The calculation of the rate of family tax benefit, including the application of the maintenance income test is however a matter for Centrelink.

Assessment

1. I have taken into account all of the circumstances known to me, and specifically the various matters addressed above in relation to the making of a determination that is just, equitable and otherwise proper. 

2. In my view, a determination increasing the ‘costs of the child’ component of the formula by the identified out of pocket expenses in respect of [Child 2] is a just, equitable and otherwise proper determination to make.  It is the most logical response to the ground established.  Such expenses in my view are to be borne by both parents, and it is just and equitable that they be born in an amount proportional to the parent’s income and care levels for [Child 2].  This is achieved through increasing the cost of the child component of the child support formula.

3. I note that the objection officer adopted this approach, but did not specify that the costs of the child in respect of [Child 2] was to be increased.  I consider it logical that the assessment of child support recognise that the additional costs are incurred in respect of [Child 2].

4. I will adjust the terms of the departure arrived at by the objection officer by specifying that it is the costs of the child [Child 2] that are to be increased, and provide for the period of the increase as specified by the objection officer to extend to 28 February 2019.  Thereafter, I prefer the calculations undertaken by Ms Thompsonat B59, and will increase the costs of the child in respect of [Child 2] by $3451.20 from 1 March 2018 until 31 December 2019.

5. In doing so however, I reiterate my concerns that this decision is made while the psychological assessment of any learning disability [Child 2] may have is pending, the ongoing utility of speech pathology and occupational therapy is perhaps an open question, and there is a possibility of a change to the therapy and intervention offered for [Child 2] with a possible consequential change to the cost.  On reflection, I consider that the interests of [Child 2] are best served nonetheless by extending a departure determination to ensure funds are available to meet ongoing therapy costs, but conscious that either parent may apply for a subsequent change of assessment if those costs or the circumstances of [Child 2]’s special needs change during the period of the departure imposed by this decision.

6. I have calculated the effect of my changes on the annual assessment in accordance with the findings of the objection officer, and for 2019 on the basis that there will be an increase (assuming all other factors in the assessment remain stable) from an annual rate of $8725 in 2019 to $10,267 after 1 March 2019: approximately $171 extra per month.  I am satisfied that this rate of child support represents a just, equitable and otherwise proper determination in light of the necessity of meeting [Child 2]’s special needs, and in that context is within Mr Jarvis’ reasonable capacity to pay.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that Ms Thompson’s objection is allowed so as to determine:

(a)For the period 8 March 2018 to 28 February 2019, the costs of the child in respect of [Child 2] is to increase by $5270; and

(b)For the period 1 March 2019 to 31 December 2019, the costs of the child in respect of [Child 2] is to increase by $3451.