Jayes and Jowett (Child support)

[2021] AATA 3697

Jayes and Jowett (Child support) [2021] AATA 3697 (16 July 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/BC020511

APPLICANT:  Mr Jayes

OTHER PARTIES:  Child Support Registrar

Ms Jowett

TRIBUNAL:  Member P Jensen

DECISION DATE:  16 July 2021

DECISION:

The decision under review is varied, with effect from 16 July 2021, and:

• from 16 July 2021 to 31 December 2021, Mr Jayes’s rate of child support payable is increased by $12,185 per annum;

• from 1 January 2022 to 31 December 2022, Mr Jayes’s rate of child support payable is increased by $12,392 per annum; and

• from 1 January 2023 to 31 December 2023, Mr Jayes’s rate of child support payable is increased by $12,847 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education - manner expected by both parents - cost of maintaining the children are significantly affected – decision to depart - decision under varied

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

Introduction

1. Mr Jayes and Ms Jowett are the parents of [Child 1] and [Child 2] who were born in December 2007. A child support case was registered in September 2015 with what is commonly called the Child Support Agency or CSA. From 7 February 2020, Mr Jayes was recorded as providing 35% care and Ms Jowett was recorded as providing 65% care for the children. Since 20 April 2021, Mr Jayes has been recorded as providing 100% care and Ms Jowett has been recorded as providing 0% care for [Child 2] (and there has been no change in the parents’ recorded care of [Child 1]).

2. The Child Support (Assessment) Act 1989 (“the Act”) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. From 7 February 2020 the administrative assessment was based on Mr Jayes’s provisional income of $108,372 per annum and Ms Jowett’ 2018-19 adjusted taxable income of $78,867. Mr Jayes was required to pay child support of $10,574 per annum.

3. The Act also provides for a departure from the administrative assessment in certain circumstances. Ms Jowett lodged a departure application on 20 May 2020. An original decision-maker granted her application and increased Mr Jayes’s rate of child support payable. He objected to that decision. An objections officer varied the decision slightly so that:

   ·    from 1 July 2020 to 31 December 2020, Mr Jayes’s rate of child support payable is increased by $23,265 per annum; and

   ·    from 1 January 2021 to 31 December 2021, Mr Jayes’s rate of child support payable is increased by $11,632 per annum.

4. The original departure decision and the objections officer’s departure decision effectively required Mr Jayes to pay half the children’s private school fees in addition to the basic administratively assessed rate of child support payable. Mr Jayes sought further review by this Tribunal. I conducted a directions hearing on 30 April 2021 and a full hearing on 16 July 2021. Mr Jayes and Ms Jowett gave sworn evidence by conference phone.

5. Paragraph 98C(1)(b) of the Act relevantly provides that a departure decision may be made in respect of a departure application if:

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

   (ii)... 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; …

A ground for departure

1. Subparagraph 117(2)(b)(ii) of the Act, commonly referred to as Reason 3, provides as a ground for departure:

   that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:

   …   

   (ii)because the child is being cared for, educated or trained in the manner that was expected by his or her parents …

2. The original decision-maker and the objections officer provided carefully considered reasons for their decisions but, with respect, there is one error worth noting: they both stated:[1]

   The law requires me to decide if there is a joint intention that the child has a particular type of education …

   [1]Pages 7 and 144 of the hearing papers.

3. The central issue is not whether each child is being educated in the manner that is intended by the parents, but whether each child is being educated in the manner that was expected by the parents. In this case, it is Mr Jayes’s previous expectations that are in issue; he effectively stated that the children are not being educated in the manner that he had expected.

4. In 2011, Mr Jayes and Ms Jowett applied to enrol the children in [School 1]. The proposed year of entry was Year 4 in 2017. Meanwhile, in or about 2012, the children commenced their primary school educations at [School 2]. The parents separated in 2015. The children remained at [School 2] until they completed Year 6 in 2019. At the hearing, Ms Jowett stated, and Mr Jayes did not dispute, that the children had remained at [School 2] because “they were happy there.”

5. Mr Jayes and Ms Jowett provided written submissions concerning their respective understandings of the parents’ expectations prior to separation, and they recounted their respective recollections of relevant conversations prior to separation. As Mr Jayes stated during the hearing, they were partnered at the time and so the conversations were not recorded in emails and the like. I acknowledge the difficulty that both parents faced in attempting to obtain corroborative evidence of their respective accounts of events. Nevertheless, I am required to make findings of fact on the balance of probabilities, based on the evidence that has been provided. In my opinion, the jointly signed enrolment forms that were lodged with [School 1] strongly suggest that if the children were subsequently educated at [School 1], they would be educated in the manner that was expected by the parents. It is also worth noting that there was no suggestion that Mr Jayes contacted [School 1] prior to the parents’ separation (or, indeed, at any time) to withdraw the applications for enrolment.

6. Legal proceedings were commenced in the Federal Circuit Court in respect of the parents’ care of the children and the distribution of the matrimonial assets and liabilities. A Family Report dated 19 November 2019 includes the following: [2]

   2.This report is an update to two prior reports prepared by this writer in September 2017 and March 2016. It has been commissioned by the Independent Children’s Lawyer …

   …

   Father

   …

   20.Both children are in year 6 and will be attending high school next year. [Mr Jayes] understands that [Child 2] is apparently going to [School 1] and [Child 1] to a different school, this arranged by Ms Jowett without telling him.[3]

   …

   22.[Mr Jayes stated that] [Child 1] has her own friendship group. She is “going to [School 3]” and he has noticed her with a group of girls on the main street, talking. He believes that a girls’ school will suit her.

   [2]Page 91 of the hearing papers.

   [3]Ms Jowett stated elsewhere (at page 44 of the hearing papers): “In 2018, [Mr Jayes] suggested to [Child 1] about attending [[School 3]] and she liked this idea as most of her close friends were going there.” At the hearing, Mr Jayes stated that he could not recall such a conversation. Also, Ms Jowett said that Mr Jayes had been informed by email that [Child 1] would be attending [School 3]. She did not provide a copy of any such email to the Tribunal.

7. At the start of 2020, [Child 2] commenced Year 7 at [School 1] and [Child 1] commenced Year 7 at [School 3], which is a girls’ school.

8. Ms Jowett provided a page from Mr Jayes’s barrister’s written submissions which were provided to the Federal Circuit Court on 20 July 2020. They included the following:

   ·The father would propose that the children be enrolled at [School 2]. This is only on the basis that he is unable to afford private schooling for the children. He reasonably says that he has spent a very considerable amount of money in this case on legal fees and that he wishes, from the property settlement he receives, to be able to purchase some accommodation and re-establish himself.

   …

   ·… If however the mother chooses, from her property settlement, to pay private school fees then it does not seem there is any opposition to that from the father.

9. On 6 August 2020 the original decision-maker informed Mr Jayes of his decision to increase the rate of child support payable on account of the children’s private school fees. The original decision-maker’s file note of the conversation includes the following:

   He says that in the best of worlds the kids would go to their private schools and if he was still with [Ms Jowett] he would consider it, but he wants to buy a house and re-establish himself.[4]

   [4]Page 134 of the hearing papers.

10. Mr Jayes’ request that the children transfer to a state school for the sole purpose of reducing their education costs, his lack of opposition to the children remaining at their current private schools if Ms Jowett pays the associated fees, and his statement that in the best of worlds the children would remain at their private schools, do not constitute direct evidence that the children are being educated in the manner that he had expected, but they are consistent with him having held such an expectation.

11. The parents applied to enrol the children at [School 1]. [Child 2] is being educated at that school. Viewing the evidence as a whole, I find that he is being educated in the manner that was expected by the parents. Ms Jowett enrolled [Child 1] at [School 3], which is also a private Christian school. There was no suggestion that the education being provided by [School 3] was in any way inferior to the education being provided by [School 1]. The parents have different accounts of the relevant conversations, if any, that occurred prior to [Child 1] attending [School 3]. Having heard from both parents, I consider Ms Jowett’ account of events to be the more reliable evidence on that particular issue. I find that Mr Jayes suggested to [Child 1] that she attend [School 3]. Further, I accept the accuracy of the Family Report which recounts that Mr Jayes stated in late 2019 that [Child 1] will be going to [School 3] in 2020 and a girls’ school will suit her. Viewing the evidence as a whole, I find that she is being educated in the manner that was expected by the parents.

12. In 2020, [Child 2]’s compulsory tuition fees for Year 7 at [School 1] were $14,980. It charges the same fees for Years 7 to 10. [Child 1]’s compulsory tuition and technology fees for Year 7 at [School 3] were $8,995. It charges the same fees for Years 7 to 9, and slightly more for Year 10. (As an aside, it is worth noting that Ms Jowett enrolled [Child 1] in a less expensive private school.) There is no prescribed methodology for calculating the fees that should be taken into account for the purposes of Reason 3. Schools sometimes provide discounts for early payments. Some schools very strongly encourage the payment of voluntary fees. Ms Jowett acknowledged that most private and public schools impose a compulsory capital levy and a parents’ and friends’ levy (which would suggest that the payment of those levies would not constitute special circumstances). I suggested that the potentially relevant fees for the purposes of Reason 3 and 2020 were $14,980 and $8,995, and the parents agreed. [School 1]’s fees remained the same for 2021. [School 3]’s fees increased from $8,995 to $9,390, which was an increase of 4.4%.

13. I suggested to both parents that if it were necessary to predict the likely fees for the next couple of years, it might be appropriate to proceed on the basis that [School 1]’s fees would remain the same and [School 3]’s fees would increase at the same rate, i.e. 4.4%. The parents agreed with that suggestion.

14. The relevant fees in 2020 were $23,975 and the relevant fees in 2021 were $24,370. Those fees significantly affect the costs of maintaining the children.

15. In summary, the children are being educated in the manner that was expected by the parents and the associated tuition and technology fees significantly affect the costs of maintaining the children. Ms Jowett is the only parent making direct payments to the schools. Those circumstances as a whole constitute special circumstances. Reason 3 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 needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

2. Mr Jayes is in full-time employment. According to the documentation provided by the CSA, his most recently lodged tax return was for 2016-17 and his adjusted taxable income for that year was $103,016. Other evidence suggests that there have been small increases in his income since then. He lives in rented accommodation and pays rent of $350 per week. His household consists of himself and [Child 2]. Mr Jayes completed a Statement of Financial Circumstances in January 2021 and, according to the information he provided in that document, his weekly expenses (including child support) exceeded his weekly income. However, his expenses included voluntary salary-sacrificed superannuation payments of $103 per week. I am mindful that the figures that Mr Jayes provided were estimates. Apart from his contribution of $11,632 per annum towards the children’s school fees, he did not have any out-of-the-ordinary weekly expenses, and it is not immediately apparent why Mr Jayes could not reduce his expenses to the point where they would be covered by his gross wage of over $110,000 per annum: page 227 of the hearing papers.

3. Ms Jowett is also in full-time employment. According to the documentation provided by the CSA, her most recently lodged tax return was for 2018-19 and her adjusted taxable income for that year was $78,867. A more recent payslip suggests that there have also been small increases in her income since then. She lives in the ex-matrimonial home. Her household consists of herself and [Child 1].

4. On 22 June 2021 the Federal Circuit Court made final orders in respect of the parents’ care of the children and the distribution of the matrimonial assets and liabilities. Relevantly, Ms Jowett has the option of paying $324,405 to Mr Jayes and having ownership of the ex‑matrimonial home transferred to her. She stated that she has obtained conditional approval for a loan that would allow her to make that payment to Mr Jayes. It appears likely that she will make that payment.

5. Mr Jayes is [age]. His superannuation account has a balance of approximately $427,000. He confirmed that while he remains in paid employment he can access a prescribed portion of his superannuation per annum, and when he retires he can access the entire sum.

6. I asked Mr Jayes whether, upon receipt of the $324,405, he would have the capacity to contribute to the children’s private school fees. He stated that he owes his lawyers approximately $150,000 to $160,000, he has a credit card debt of approximately $15,000 and he has a bank loan of approximately $22,000 to $24,000. He stated, in effect, that contributing to the children’s ongoing private school fees after repaying those debts would require him to reduce his weekly expenditure to an absolute minimum, and such a result would be unreasonable.

7. If Mr Jayes receives the lump sum of $324,405 and pays the debts listed above, he will be left with approximately $131,405 (plus his superannuation). The children are in Year 7 and are likely to remain in school for another five and a half years. If he paid half the children’s school fees, he would currently pay $24,370 / 2 = $12,185 per annum, and there would be small increases in that rate each year. I am not persuaded that requiring him to contribute to the children’s private school fees would have the dire consequences that he described. I find that requiring him to pay half the fees would not cause him financial hardship.

8. Ms Jowett stated that she will be borrowing approximately $550,000 to pay $324,405 to Mr Jayes and discharge her debt to her lawyers. The parents’ litigation has taken a significant financial toll on them both. Court orders have recently been made which have distributed the parents’ assets and liabilities. It would not be appropriate to vary the rate of child support payable pursuant to the administrative assessment formula on the basis of the parents’ assets and liabilities.

9. It is appropriate to vary Mr Jayes’ rate of child support payable on the basis of the children’s private school fees. There are a number of matters to note. First, Ms Jowett did not lodge her departure application until May 2020. Second, Mr Jayes was aware that both children had commenced their private school educations at the start of 2020. They were being educated in the manner that he had expected. Third, prior to the hearing, Ms Jowett submitted that the parents’ respective contributions should reflect their respective incomes. She did not reiterate those submissions during the hearing. The CSA noted that post-separation, Ms Jowett had remained in the ex‑matrimonial home, which was unencumbered, and Mr Jayes had moved to rental accommodation, and he had borne the associated costs. The CSA concluded that, on a view of the case as a whole, it was appropriate that each parent effectively pay half the private school fees, and I agree with that conclusion. Fourth, I have calculated the relevant private school fees using the methodology described above. The objections officer calculated a different figure. The original decision-maker calculated a different figure. Neither parent took issue with the previous decision-makers’ calculations or the calculations that I articulated during the hearing; the issue in dispute was of a more fundamental nature. The preferable decision is to vary the decision under review, but only with effect from the date of the hearing.

10. Half the relevant fees in 2021 is ($14,980 + $9,390) / 2 = $12,185.

11. Half the relevant fees in 2022 will be ($14,980 + ($9,390 x 1.044)) / 2 = $12,392.

12. Half the relevant fees in 2023 will be ($14,980 + ($9,830[5] x 1.044 x 1.044)) / 2 = $12,847.

    [5]         [School 3]’s fees increase for Year 10: page B16 of the hearing papers.

13. It is appropriate to require Mr Jayes to make contributions based on those figures from the date of the Tribunal hearing until the end of 2023. Such a decision will be just and equitable. It is likely that Ms Jowett will make another departure application towards the end of 2023 in respect of the school fees for 2024 and 2025, at which point she will be better placed to provide more accurate information concerning those fees.

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. Mr Jayes receives family tax benefit in respect of the children. Changing the child support payable will result in a more appropriate apportionment of financial responsibility between the parents and the community. Such a result will be otherwise proper.

DECISION

The decision under review is varied, with effect from 16 July 2021, and:

• from 16 July 2021 to 31 December 2021, Mr Jayes’ rate of child support payable is increased by $12,185 per annum;

• from 1 January 2022 to 31 December 2022, Mr Jayes’ rate of child support payable is increased by $12,392 per annum; and

• from 1 January 2023 to 31 December 2023, Mr Jayes’ rate of child support payable is increased by $12,847 per annum.