Ketchum and Ferko (Child support)

[2021] AATA 2731

Ketchum and Ferko (Child support) [2021] AATA 2731 (18 May 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/SC019751

APPLICANT:  Mr Ketchum

OTHER PARTIES:  Child Support Registrar

Ms Ferko

TRIBUNAL:Member M Douglas

DECISION DATE:  18 May 2021

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – special needs of the child – orthodontic expenses – no ground for departure established – decision under review affirmed

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. Mr Ketchum and Ms Ferko are the parents of [Child 1], [Child 2] and [Child 3], in regards to whom the Child Support Registrar has issued administrative assessments of child support. 

2. An assessment of child support is made in accordance with the provisions of Part 5 of the Child Support (Assessment) Act1989 (the Act).  Broadly speaking, those provisions prescribe a formula that applies to several variables to work out the amount of child support one parent has to pay to the other.  Those variables include the parents’ incomes (which generally will be a parent’s taxable income from the financial year before the start of the child support period to which the assessment relates), the level of care that each parent provides for their children and the cost to care for the children.  A parent, if they believe there are special circumstances, may apply to the Registrar under section 98B of the Act for a determination to depart from those provisions of the Act relating to the assessment of child support.  The Child Support Registrar, who acts through staff employed at Services Australia - Child Support, describes such an application as a “change of assessment application”. 

3. The Registrar, if satisfied that the criteria of subsection 98C(1) of the Act are met can make one or more of the determinations listed in subsection 98S(1) to depart from the provisions of the Act relating to the assessment of child support. The criteria specified in subsection 98C(1) are firstly, that one of the several grounds for departure listed in subsection 117(2) of the Act is established in the particular case, secondly, that is just and equitable as regards the parents and the children to make a departure determination and, lastly, that it is otherwise proper to make a departure determination. 

4. The matters that must be considered regarding the second criterion are listed in subsection 117(4) of the Act, but broadly speaking consideration of those matters ensures that any departure will be fair to both parents and fair for the children.  The matters to be considered regarding the third criterion are listed in subsection 117(5) of the Act, and broadly speaking consideration of those matters ensures that any departure reflects that the parents of children, rather than the Australian community through the social security system, have primary responsibility for the cost of their children’s care.

5. On 23 April 2020 Mr Ketchum made a change of assessment application to Services Australia.  His purpose was to obtain a contribution from Ms Ferko, by means of a departure to the assessment, towards an expense of $7,500 he had incurred in November 2019 for orthodontic treatment that [Child 1] had received.  That brought into consideration the ground for departure listed at subparagraph 117(2)(b)(ia) of the Act, which Services Australia describes as “Reason 2” and which reads:

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

   (ia) because of special needs of the child.

6. In its decision in response to Mr Ketchum’s change of assessment application, Services Australia recorded that the assessment of child support in force at the time Mr Ketchum made his change of assessment application required Ms Ferko to pay child support to Mr Ketchum at an annual rate of $203.  Services Australia also recorded that that assessment was calculated on Ms Ferko’s estimate of her then income, which she had elected to be used in the assessment instead of her taxable income from the prior tax year, and Mr Ketchum’s estimate of his then income of $28,235 that he similarly had elected to be used for him.  The assessment was based on Mr Ketchum having 100% care of [Child 1] and 33% care of [Child 2] and [Child 3] and Ms Ferko having 67% care of [Child 2] and [Child 3]. 

7. On 27 May 2020, Services Australia published its decision in response to Mr Ketchum’s change of assessment application which was to refuse to make a determination to change the assessment.  It found “Reason 2 is not established”.

8. On 3 June 2020 Mr Ketchum lodged an objection to Services Australia’s decision.  On 7 August 2020 Services Australia disallowed his objection and affirmed the decision it made on 27 May 2020 not to make a determination to depart from the provisions of the Act with respect to the assessment of child support.  Services Australia, however, in dealing with Mr Ketchum’s objection, found that a ground for departure had been established as a consequence of the cost of [Child 1] having orthodontic treatment, but Services Australia was not satisfied that it would be just and equitable as regards both parents and the children to make a determination to change the assessment of child support. Hence its decision not to make a determination to depart from the provisions of the Act with respect to the assessment of child support.

9. On 27 August 2020 Mr Ketchum applied to the Tribunal for a review of Services Australia’s objection decision.  The Tribunal heard his application on 18 May 2021.  Mr Ketchum and Ms Ferko participated in the hearing using Microsoft Teams.  They both gave affirmed oral evidence.  No one from Services Australia participated, which is customary.  However, in accordance with subsections 37(1) and 38AA(1) of the Administrative Appeals Tribunal Act 1975, Services Australia provided the Tribunal, and also provided to Mr Ketchum and Ms Ferko, a copy of the documents it had that were relevant to its objection decision.  These documents are paginated 1-420 (and are hereafter referred to as “the hearing papers”). 

10. In accordance with directions the Tribunal made at an earlier directions hearing, Mr Ketchum provided documents relating to his financial circumstances, which have been marked A1-60, and Ms Ferko similarly provided documents relevant to her financial circumstances, which are marked B1-79. 

11. The Tribunal has had regard to the affirmed oral evidence of Mr Ketchum and Ms Ferko and also to the documents described.

12. The Tribunal notes that the assessment of child support was in force at the time Services Australia made its original decision was subsequently amended.  Further, assessments have since also issued for subsequent child support periods that were also, subsequent to the initial issue of those assessments, amended as a consequence of Mr Ketchum and Ms Ferko both electing to have the assessment calculated at various times on estimates of their respective incomes and also as a consequence of there being a change in the care of [Child 2] and [Child 3] from 19 February 2021 such that the parties have been sharing the care of those children equally since then.  As at the date the Tribunal heard Mr Ketchum’s application the assessments in force have obligated Ms Ferko to pay child support to Mr Ketchum for the children at the following rates:

Period	Annual rate of child support	Ms Ferko’s ATI	Mr Ketchum’s ATI
7 February 2020 –   30 June 2020	$2,443	$49,882.56 (reconciled estimate)	$26,801 (estimate)
1 July 2020 – 31 August 2020	$1,195	$37,190 (2018/19 taxable income)	$26,801 (estimate)
1 September 2020 – 13 October 2020	$1,951	$45,417 (2019/20 taxable income)	$26,801 (estimate)
14 October 2020 – 7 February 2021	$203	$28,235 (estimate)	$26,801 (estimate)
8 February 2021 – 18 February 2021	$4,081	$67,225 (estimate)	$26,801 (estimate)
19 February 2021 – 5 April 2021	$8,041	$67,225 (estimate)	$26,801 (estimate)
6 April 2021 – 30 April 2021	0	$22,364 (estimate)	$26,801 (estimate)
1 May 2021 – 30 June 2021	$8,041	$67,225 (estimate)	$26,801 (estimate)

1. The entries in all but the final row in the above table are based on information that appears at pages 294-296 and 414-418 of the hearing papers.  The final row is based upon the evidence Mr Ketchum and Ms Ferko gave at the hearing.

CONSIDERATION

1. As mentioned, in support of the change of assessment application Mr Ketchum made to Services Australia, he relied upon the ground for departure listed at subparagraph 117(2)(b)(ia) of the Act, which, as also mentioned, Services Australia refers to as Reason 2. 

2. There is no dispute that [Child 1] had orthodontic treatment in November 2019.  Ms Ferko, however, contended that the treatment was not “essential dentistry”.  She said that she had carried out some research from which she learnt that it is only if a child’s teeth have some trauma or “over jetting” that orthodontic treatment is essential.  Ms Ferko contended that absent the treatment being essential, the treatment is only recommended.  Ms Ferko said that [Child 1] did not have over jetting or trauma to her teeth and consequently [Child 1] did not have a special need requiring the treatment for which Mr Ketchum incurred expense.  Further, Ms Ferko said that she was not consulted at all regarding the treatment that [Child 1] had. 

3. The Tribunal observes that in the material that Ms Ferko provided the Tribunal there is a referral relating to [Child 1] written by [Dr A] of [Orthodontic Practice 1] in which [Dr A] noted as follows:

   Mild upper arch crowding plus signs of lower arch crowding.  Oral hygiene affected by lower incisor & canine crowding.  32 linguilly [sic] placed.  All adult teeth present.  Pt has been given an OPG referral. (page 5 of the hearing papers)

4. In the material Mr Ketchum provided the Tribunal there is an undated letter from [Dr B] of [Orthodontic Practice 2] that includes the following comment:

   After initial assessment with [Child 1] it is apparent that Upper and Lower Braces will be needed for a duration of 12-18 months.  This will prevent further trauma to the pallet [sic] and her detention. 

   It is ideal to start treatment at this stage to achieve desired results, treatment will allow better oral hygiene and function, will minimise discomfort and also will prevent irreversible damage to teeth and jaw.  Further if we miss this window of adolescent growth then treatment outcome will be limited. (A42)

5. The letter from [Dr B] also advises that the cost to carry out the treatment that he had recommended would be $7,500.  Mr Ketchum’s evidence was to the effect that the treatment [Child 1] had in November 2019 was the treatment [Dr B] had recommended.

6. The Tribunal considers that based upon the 2017 referral written by [Dr A] and also [Dr B]’s recommendation for [Child 1] to have treatment, [Child 1] did have a special need with respect to her teeth that required treatment.  It is clear from the letter [Dr B] wrote that [Child 1] needed the treatment to ensure proper hygiene and function of her teeth and to prevent potential future damage to her teeth.  Ms Ferko’s contention that the work that was done to [Child 1]’s teeth was not essential is rejected.  Even if it was not essential, in the sense of not being strictly necessary, it was certainly desirable and in [Child 1]’s best interest, in terms of her future health, that she have that treatment.

7. The Tribunal therefore considers that there was a special circumstance in this case with respect to [Child 1] necessitating [Child 1] having braces applied to her teeth.  The Tribunal considers that [Child 1] had a special need in that regard and that as a consequence of that special need Mr Ketchum incurred a cost of $7,500 to ensure the treatment was administered.  That cost, in the Tribunal’s view, significantly affected the cost of maintaining [Child 1]. 

8. It follows that this ground for departure is established. 

Is it just and equitable to make a determination?

1. As already mentioned, the matters the Tribunal must take into account when considering whether it is just and equitable to depart from the provisions of the Act with respect to the assessment of child support are listed in subsection 117(4) of the Act. The Tribunal is not required to go slavishly through each of those matters but must have regard to those that are relevant to the particular circumstances of this case and do so in a practical and flexible way:  (Gyselman and Gyselman (1992) FLC 92-279; Ross v McDermott (1998) 23 Fam LR 613; and Lawson and Edney [2017] FCWA 77.) Rather than dealing separately with each matter that is relevant, it is convenient for the Tribunal to group the matters and consider them, insofar as the matters have relevance, by a reference to the following headings.

The children’s circumstances

1. There is no evidence to indicate that any of the children receives any income or has any property. 

2. As mentioned, [Child 1] had a special need with respect to her teeth that required orthodontic treatment that significantly affected the cost of maintaining her.  Mr Ketchum paid the total cost of that treatment.  He drew upon his superannuation to the order of $3,000, around June 2020, to ensure he could do so.  He paid the other $4,500 by instalments between November 2019 and June 2020.

3. Other than her need for orthodontic treatment, there is no evidence that [Child 1] has special needs or that the other children have special needs.

4. Until February this year, Ms Ferko cared for [Child 3] and [Child 2] for 75% of the time, and Mr Ketchum cared for them for the rest of the time.  Since February, the care of those children has been shared between them.  Given that Ms Ferko is the parent assessed as liable to pay child support, she is therefore the parent who bears the greater part of the cost associated with the care of [Child 2] and [Child 3]. 

5. At all relevant times, [Child 1] has resided with Mr Ketchum, and notwithstanding he receives child support from Ms Ferko, which he would apply towards the costs he incurs for caring for all three children, the bulk of the cost related to [Child 1]’s care would be defrayed from his resources by virtue of [Child 1] residing with him all of the time.

6. Making a determination departing from the provisions of the Act with respect to the assessment of child support such that Ms Ferko would have to pay more child support to Mr Ketchum would necessarily mean that hardship would be caused to [Child 3] and [Child 2] when the children are in her care given that she would have less or her income to apply towards the cost she incurs for caring for those children when they are residing with her.

Mr Ketchum’s circumstances

1. Mr Ketchum has employment as a [Occupation 1] with [Employer 1].  He does not work during school holidays and does not receive an income from this employer during school holiday periods.  He also has employment on a casual basis with a [restaurant].  He said that since November 2020 he had not worked any shifts for that employer for several reasons including that he is studying for a [degree] and he now has increased care of his two youngest children.  He said that since November each time that employer called him to see if he could work a shift he was unable to do so either because of his studies or because of his responsibilities with caring for his children. 

2. The documents he provided, however, included three payslips that he had received from that employer, the most recent being for mid-January 2021 and the earliest being for November 2020, and those payslips revealed that over that approximate two-month period he had received wages of $378.37 from that particular employer.  It would seem, based on that, that Mr Ketchum will continue to receive some income from that employer, but given Mr Ketchum’s present situation, the income he will receive from that employer will be particularly modest. 

3. Mr Ketchum also provided the payslip he received from [Employer 1] for the fortnight ending 18 February 2021.  That revealed that his gross earnings in the current financial year to that date from that employer were $17,017.62.  It would seem, based upon that evidence, that Mr Ketchum’s estimate of income that he has elected to be used for him in the current assessment of child support is likely to correlate with what he is likely to earn this year in income.

4. Mr Ketchum completed a Statement of Financial Circumstances on 13 August 2020 declaring the contents of that to be complete and correct.  He revealed in that that he has no significant assets.  He declared that he has a superannuation entitlement valued at $67,342.  As the Tribunal understands it, that figure was net of an amount of $6,000 he had drawn in June 2020; $3,000 of which he used to discharge his debt to the orthodontist who had administered treatment to [Child 1].  His evidence was that he used the balance to meet household expenditures.  The Tribunal understands that he can draw no more from his superannuation entitlement until he reaches retirement age.

5. He listed his weekly expenditures in his Statement of Financial Circumstances and they were particularly modest, which accords with the fact that he has a very modest income.  He provided copies of his bank statements and credit card statements for the three-month period to January 2021.  They confirmed that he has modest expenditures and revealed that he does not expend any of his income on indulgences. 

Ms Ferko’s circumstances

1. Ms Ferko’s evidence was that she has employment as a casual [Occupation 2].  Her evidence, which the Tribunal accepts, is that her employment is sporadic and she cannot predict when she will be offered employment.  As the table set out above reveals, she has been revising her estimate of income which she has elected to be used for her in the assessment of child support, and her evidence was that she does so depending upon what work she is presently performing for her employment.  She provided the Tribunal with her payslip for the fortnight ending 4 February 2021 which revealed that her year to date gross earnings in the current financial year to that date were $19,501.04.  She is consequently likely to have only a relatively modest income in the current financial year.  The Tribunal also considers that given that her employment is not consistent, which has the consequence of her having an unpredictable income, that of itself would cause her problems in managing her household budget.

2. She also completed a Statement of Financial Circumstances in September 2020 declaring the contents to be complete and correct.  The only asset of significance she declared in that was her motor vehicle which was then worth slightly less than $15,000.  That is not something that the Tribunal considers that she could readily sell or which would reasonable for her to sell, so as to meet the cost of caring for the children.  Indeed, were she to do so, that could inhibit her ability to provide care for the children in that it would affect her mobility, and consequently her ability to take employment when offered by her employer. 

3. She too has very modest expenditures for her household.  She also produced bank statements to the Tribunal that confirmed that she does not indulge herself which is consistent with her having a relatively modest income.

4. Ms Ferko’s evidence was that preceding the COVID-19 pandemic she had applied to the trustee of her superannuation fund to withdraw $6,000, which was approved.  She said she did so at the time because she was unable to meet household expenditures and she needed the money to do so. 

1. She advised that she now has less than $8,000 accumulated in superannuation.  She said that she cannot further draw upon that entitlement, and the Tribunal accepts that is the case. 

2. The evidence of both her and Mr Ketchum was that they did not adjust their interest in their property or superannuation following their separation. 

3. Noting that Mr Ketchum had accumulated a far greater, although still relatively modest, superannuation entitlement than Ms Ferko and that he was able to draw upon that to meet approximately half of the cost of [Child 1]’s orthodontic treatment, and noting at that time that Ms Ferko was incurring most of the cost with respect to the care of the two youngest children, and that she has only modest income, the Tribunal considers that undue hardship would be caused to her if it were to make a determination to depart from the assessment of child support so as to require to make a contribution to the cost Mr Ketchum incurred relating to [Child 1]’s orthodontic treatment.  Further, to do so it seems to the Tribunal, would also cause undue hardship to [Child 3] and [Child 2] whilst in the care of Ms Ferko in that she would have less money from her income to apply towards the cost of their care.

4. In those circumstances, the Tribunal considers it would not be just and equitable as regards the parents and the children to make a departure from the provisions of the Act with respect to the assessment of child support.

5. Accordingly, the Tribunal affirms the decision of Services Australia.

DECISION

The decision under review is affirmed.