Lander and Selly (Child support)

[2018] AATA 3283

Lander and Selly (Child support) [2018] AATA 3283 (11 July 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/BC012964

APPLICANT:  Mr Lander

OTHER PARTIES:  Ms Selly

Child Support Registrar

TRIBUNAL:Member P Jensen

DECISION DATE:  11 July 2018

DIRECTION TO ALTER THE REASONS FOR THE DECISION:

Pursuant to section 43AA of the Administrative Appeals Tribunal Act 1975, all references to “2018/BC012964” are replaced with “2017/BC012964” in the written statement of reasons for the decision.

Member P Jensen
30 August 2018

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/BC012964

APPLICANT:  Mr Lander

OTHER PARTIES:  Ms Selly

Child Support Registrar

TRIBUNAL:  Member P Jensen

DECISION DATE:  11 July 2018

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that:

• Mr Lander’s rate of child support payable is varied to $9,671 per annum from 1 October 2017 to 31 December 2017;

• Mr Lander’s rate of child support payable is varied to $11,675 per annum from 1 January 2018 to 31 December 2018;

• Mr Lander’s rate of child support payable is varied to $12,225 per annum from 1 January 2019 to 31 December 2019; and

• Mr Lander’s rate of child support payable is varied to $15,048 per annum from 1 January 2020 to 31 December 2020.

CATCHWORDS
Child support – Departure determination – Child support payable in accordance with previous departure determination – Costs of education in the manner expected by the parents – Change of school results in higher costs – Ground for departure exists – Failure of parent to make full and frank disclosure in relation to financial circumstances - 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

Introduction

1. Mr Lander and Ms Selly are the parents of [Child 1] who was born in 2001 and [Child 2] who was born in 2003. A child support case was registered with the Department of Human Services – Child Support (“the CSA”) on 28 January 2016.

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. The Act also provides for a departure from the administrative assessment in certain circumstances. Mr Lander lodged a departure application in May 2016 which ultimately made its way to the Tribunal and on 4 April 2017 I made the following departure decision (“the first departure decision”):

   ·       Mr Lander’s rate of child support payable is varied to $16,146 per annum from 28 January 2016 to 31 December 2016;

   ·       Mr Lander’s rate of child support payable is varied to $7,085 per annum from 1 January 2017 to 31 December 2017; and

   ·       Mr Lander’s rate of child support payable is varied to $8,127 per annum from 1 January 2018 to 31 December 2018.

3. My reasons for making the first departure decision included the following at paragraph 35:

   There have been a number of changes in the parents’ recorded care of the children. Notwithstanding those recorded changes, both parents agreed that shortly after the child support case was registered, Mr Lander has been solely responsible for [Child 1]’s day-to-day costs and Ms Selly has been solely responsible for [Child 2]’s day-to-day costs. Both parents agreed that it would be fair to not require one parent to pay child support to the other parent in respect of the children’s day-to-day costs. I also agree with that observation.

4. The first departure decision effectively required Mr Lander to pay half of [Child 2]’s [specialist] fees and half of the children’s private school tuition and boarding fees. When the first departure decision was made, [Child 1] had transferred from being a boarder at [School 1] to being a day student at [School 2] and it was expected that he would remain at that school. [Child 2] was a boarder at [School 3] and it was expected that she would remain at that school.

5. On 21 July 2017, Mr Lander lodged another departure application. The CSA decided to refuse his application. He objected to that decision. An objections officer allowed his objection and made the following departure decision (which I have paraphrased):

   ·       Mr Lander’s rate of child support payable is varied to $3,495 per annum from 1 October 2017 to 31 December 2018.

6. Mr Lander applied to the Tribunal for further review. I conducted a directions hearing on 14 June 2018 and a full hearing on 10 July 2018. After the hearing, Mr Lander provided further documentation to the Tribunal registry. It was documentation that could have been provided prior to the hearing and I decided not to accept it into evidence. In reaching that decision I had regard to points 1.7 and 2 of my written directions dated 14 June 2018, section 30 of the Child Support Review Directions and Mr Lander’s repeated failures to comply with his legal obligations to the Tribunal, which are detailed below.

7. Subsection 98C(1) of the Act relevantly provides that a decision to depart from the administrative assessment may be made 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. My reasons for the first departure decision included the following at paragraph 15:

   Mr Lander stated that he never expected the children to receive private school educations. I consider the fact that he (and Ms Selly) enrolled the children in private schools, arranged for them to attend those private schools, and paid the associated fees, to be the more probative evidence of his expectations at the time. There is no dispute that Ms Selly expected the children to receive private school educations and to receive those educations as boarders when they reached secondary school and, based on Mr Lander’s actions, I find that he also held those expectations.

3. On 20 July 2017 the Federal Circuit Court “order[ed] by consent” that [Child 2] commence school at [School 4] as a weekly boarder from the start of Term 4 of 2017, and she did so. Mr Lander was legally represented in the proceedings that concluded with the making of that order.

4. At the Tribunal hearing, Mr Lander stated, in effect, that he had not consented to the making of the Court order and [Child 2] was not being educated in a manner that he had expected.

5. The first departure decision was based on a finding that the parents had expected the children to be educated as boarders at private schools. None of the parties appealed against that decision. For those reasons alone, I would find that [Child 2] being educated at [School 4] and receiving that education as a boarder is in accordance with the parents’ previous expectations. Further, the Court order states that the order was made with the consent of the parents, and I consider that statement to be the more reliable evidence on point. I find that the parents consented to [Child 2] being educated at [School 4] and receiving that education as a weekly boarder. I find that she is being educated in a manner that was expected by both parents.

6. In 2017, [Child 2] was in Year 9. The Term 4 tuition fees, less a bursary, were $2,497.00 - $749.10 = $1,747.90. The boarding fees were $3,087.50. Those two fees total $4,835.40.

7. [Child 2] is currently in Year 10. The tuition fees are 4 x $2,750.00 = $11,000.00. Ms Selly stated, and I accept, that [Child 2] is not receiving a bursary or other subsidy. She also stated, and I accept, that the boarding fees have not increased. The boarding fees are $3,087.50 x 4 = $12,350.00. Those two fees total $23,350.00.

8. Those costs significantly affect the costs of maintaining [Child 2].

9. The first departure decision required Mr Lander to pay $7,085 in child support during 2017 and $8,127 per annum in child support during 2018, which represented half of Ms Selly’s out-of-pocket costs in respect of [Child 2]’s tuition and boarding fees during those years. [Child 2]’s transfer to [School 4] has resulted in Ms Selly incurring significantly higher out-of-pocket costs. That change in circumstances constitutes special circumstances.

10. For those reasons, 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. My reasons for the first departure decision included the following at paragraphs 22 to 27 and 30:

   Prior to separation the parents owned and operated a [farm] in [Queensland]. The business was run as a partnership. In 2012‑13 the partnership made a loss of $32,007. Mr Lander’s taxable income was $28,009 and Ms Selly’s taxable income was $6,039. In 2013-14 the partnership made a loss of $21,833. Mr Lander’s taxable income was $20,818 and Ms Selly’s taxable income was $29,879.

   The partnership’s 2014-15 and 2015-16 financial statements and tax returns have not been finalised; key information remains in dispute and there are ongoing court proceedings in respect of the division of the matrimonial assets. Mr Lander remains on the farm. Ms Selly is renting accommodation in [another town].

   Mr Lander’s 2014-15 taxable income was $9,755. Ms Selly’s 2014-15 taxable income was $68,967; she commenced full-time employment with an unrelated third party in 2014‑15. The parents’ taxable incomes are subject to amendment once the partnership’s 2014-15 tax return has been finalised.

   Both parents were required to make full and frank disclosure of their financial circumstances. In response, Ms Selly completed a statement of financial circumstances. She provided corroborative documentation including copies of her payslips and a copy of a detailed schedule of the matrimonial assets that was prepared by her lawyer. It lists assets totalling $3,152,311. Ms Selly claims there are no liabilities. Mr Lander claims the partnership owes debts to his parents. Many of Mr Lander and Ms Selly’s bank accounts are “frozen” pending the property settlement but there is no dispute each parent had access to more than $400,000 when they separated in July 2015.

   Ms Selly earned approximately $63,000 during 2015-16. She is likely to earn approximately $70,000 this financial year. As at September 2016 she had approximate $145,000 in cash. For the reasons that follow, there is no utility in recounting further details of Ms Selly’s income and financial resources.

   A central issue in dispute since Ms Selly lodged her departure application almost one year ago has been Mr Lander’s income and financial resources. He has continually failed to provide detailed evidence that would allow a decision-maker to make relevant findings on that issue. He has not provided draft financial statements. He has not provided relevant bank account statements. Apparently he has been lodging business activity statements but he had not provided copies of those documents. ...

   ...

   On 17 November 2016, Mr Lander signed a Statement of Financial Circumstances. It was largely left blank. For example, he did not list any funds in any bank accounts. He was directed to complete and return another Statement of Financial Circumstances. He signed another Statement of Financial Circumstances on 26 February 2017. It was not completed. ...

3. On 23 November 2017, Mr Lander applied to the Tribunal for review of the decision currently under review. The Tribunal registry wrote to both parents and informed them that they were required to complete and return a Statement of Financial Circumstances (“SoFC”). Ms Selly promptly did so. Mr Lander did not do so. On 15 December 2017, Mr Lander contacted the registry and stated that he would be providing supporting documentation. He provided over 500 pages of documentation which consisted almost entirely of copies of Ms Selly’s bank account statements which she had provided to the Court in compliance with her obligation to make full and frank disclosure of her financial circumstances in respect of the court proceedings concerning the parents’ disputed division of matrimonial assets. Mr Lander did not return his SoFC. I conducted a directions hearing on 14 June 2018. I asked Mr Lander why he had not returned his SoFC. He said he did not receive the document. I informed him that I would direct him to provide a completed SoFC. I informed Ms Selly that I would direct her to provide an updated SoFC. Written directions and SoFCs were sent to both parents. Ms Selly promptly completed and returned another SoFC. Mr Lander did not return the SoFC. At the full hearing, Mr Lander said he did not receive the SoFC. I do not accept his evidence on that issue. I find that he has repeatedly refused to provide a completed SoFC.

4. The parents were directed to provide any other evidence they wished to rely upon at the full hearing by 29 June 2018. On 6 July 2018, Mr Lander provided bank account statements for two of his bank accounts. Notwithstanding Mr Lander’s late provision of that documentation and absence of any satisfactory explanation as to why the documentation was not provided by 29 June 2018, I decided to allow the documentation into evidence.

5. Mr Lander provided statements for the period from 16 July 2015 (when the account was opened) to 30 June 2018 for a Commonwealth Bank of Australia account ending with account number #7366. He provided statements from 20 February 2018 to 29 June 2018 for a National Australia Bank account ending with account number #5312. I asked him why he had not provided statements for account #5312 for an earlier period. He said the bank would have charged him for additional statements. In response to further questions, he acknowledged that he had kept those earlier statements and he had provided them to his accountant and he had not asked his accountant for copies to provide to the Tribunal.

6. Mr Lander lodged an undated departure application on 21 July 2017. The form asked him if he had any cash assets and it provided him with two boxes in which to provide the relevant details. He only completed one of the boxes, which would suggest that he only had cash in one account. He stated that the balance of account #7366 was $400. As at 21 July 2017, the balance was actually $11,722. I asked Mr Lander about that discrepancy and he said the balance of the account fluctuated. I noted that, as at 21 July 2017, the balance of the account had not been $400 or less since it was opened on 16 July 2015. Mr Lander then stated that he transferred money between his bank accounts. I noted that he had only disclosed one bank account. He said he may not have had a second bank account at that time because he transferred $235,000 to his parents to repay a loan but later cancelled the transfer, or had the money transferred back to him. (His evidence was not clear on that issue and I gather that the existence of the purported loan was an issue in the proceedings concerning the parents’ disputed division of matrimonial assets.)

7. Mr Lander lodged another departure application on 25 September 2017. In response to the same question in the form, Mr Lander acknowledged that he had cash assets. The question stated: “Give details below”. Mr Lander wrote: “Don’t want to disclose at this stage”.

8. On 2 May 2018 the CSA spoke to Mr Lander about his financial circumstances and noted his reply: “He claims he has no job and no money.” At the time he had $20,430 in account #5312 and $4,101 in account #7366. There is no reason to believe that Mr Lander has disclosed the existence of all of his bank accounts.

9. Once again, Mr Lander has continually failed to provide detailed evidence that would allow a decision-maker to make relevant findings concerning his income and financial resources. Further, some of the information he has provided is clearly false.

10. Ms Selly commenced full-time employment with another unrelated third party in February 2018. Her salary package, which includes limited use of a company vehicle, is valued at $89,500 per annum. She and her partner also operate a farm. She stated, and I accept, that it is not yet profitable. I note that in Mr Lander’s discussions with the CSA on 2 May 2018 he was also of the opinion that Ms Selly’s farm was not profitable: page 436 of the hearing papers. In any event, once again, there is no utility in recounting further details of Ms Selly’s income and financial resources, given Mr Lander’s failure to fully and frankly disclose his income and financial resources.

11. As was noted earlier, the parents had previously agreed that it would be fair to not require either parent to pay child support to the other parent in respect of the children’s day-to-day costs. At the hearing on 10 July 2018, Mr Lander stated that he had not understood that agreement. I do not accept his evidence on that issue. [Child 1] remains in Mr Lander’s full-time care and [Child 2] remains in Ms Selly’s full-time care. In light of Mr Lander’s failure to fully and frankly disclose his financial resources, and his failure to provide a SoFC which would have detailed his expenses (including the expenses he incurs in respect of [Child 1]), and the parents’ previous agreement that it would be fair to not require either parent to pay child support to the other parent in respect of the children’s day-to-day costs, I consider it appropriate to continue to not require either parent to pay child support to the other parent in respect of the children’s day-to-day costs.

12. Ms Selly submitted that Mr Lander should be required to pay half of [Child 2]’s tuition fees and boarding fees via child support payments. The CSA observed that [Child 2]’s boarding fees could effectively be considered to be Ms Selly’s general costs, or at least a large portion of Ms Selly’s general costs, in respect of [Child 2], and Mr Lander should not be required to contribute to the boarding fees. There is some merit in that observation, at least in the abstract, but it appears that when the CSA made that observation, Mr Lander had not disclosed that [Child 1] had also changed schools at the start of Term 4 of 2016. Since then, he has been attending [School 5] and residing in [Town 1] during the week at a local hostel.

13. The Commonwealth government operates an Assistance for Isolated Children Scheme (“AICS”) and the Queensland government operates a Living Away From Home Allowance Scheme (“LAFHAS”). Mr Lander successfully applied for those government payments while [Child 1] was attending [School 1] and [Child 2] was attending [School 3]. Neither parent qualifies for those government payments in respect of [Child 2]’s attendance at [School 4], which is why Ms Selly’s out-of-pocket expenses in respect of [Child 2]’s tuition fees and boarding fees have increased. Mr Lander stated that he qualifies for those government payments in respect of [Child 1]’s accommodation at the [Town 1] hostel and he (Mr Lander) does not incur any out-of-pocket expenses in respect of that accommodation. In summary, both children effective board at or near their respective schools during the week and they spend their weekends with a parent. In that regard, the parent’s direct costs in respect of the child in their care are likely to be similar, but Ms Selly also pays [Child 2]’s significant tuition and boarding costs, i.e. the costs associated with the provision of an education in a manner that both parents had expected. Mr Lander asked that I also take into account that he drives approximately 400 kilometres per week to take [Child 1] to and from [Town 1]. In the absence of any other information about the costs that Mr Lander incurs in respect of [Child 1] – information that Mr Lander has repeatedly refused to provide – I am not persuaded that an adjustment should be made for that expense.

1. Both parents expected [Child 2] to receive her education as a boarder at a private school and it is appropriate that they share the costs equally. It is appropriate to require Mr Lander to pay $4,835.40 / 2 = $2,417.70 in child support during the final quarter of 2017, which equates to $9,671 per annum, and it is appropriate to require him to pay $23,350.00 / 2 = $11,675 in child support during 2018.

2. Ms Selly stated, and Mr Lander did not dispute, that [Child 2] is likely to continue with her schooling and complete Year 12 in 2020. It is likely that the child support case will end in 2021 when [Child 2] turns 18. It is appropriate to make a decision that addresses Ms Selly’s likely out-of-pocket costs in respect of [Child 2]’s tuition and boarding fees for the rest of her secondary schooling. [School 4]’s tuition fees increased by 10% and its weekly boarding fees did not increase from 2017 to 2018, and I consider that evidence to be the best evidence of likely future increases. Half the 2019 tuition and boarding fees is likely to be ($11,000 x 1.1 + $12,3500) / 2 = $12,225. [School 4] imposes higher tuition fees for Year 12 students and in 2018 those fees were $3,666.67 x 4 = $14,667. Ms Selly has not provided evidence of the boarding fees for weekly boarders and I will proceed on the basis that those fees will remain the same for Year 12 weekly boarders. Half the 2020 tuition and boarding fees is likely to be ($14,667 x 1.1 x 1.1 + $12,350) / 2 = $15,048.

3. Ms Selly noted that [School 4] imposes other miscellaneous fees. Most State and private schools impose miscellaneous fees. I am not persuaded that a further adjustment should be made in respect of those fees.

4. At the hearing, Mr Lander said that the CSA had recently made a care decision which had led to Centrelink concluding that he had not qualified for the AICS and LAFHAS payments that he had successfully applied for when [Child 1] was attending [School 1] and [Child 2] was attending [School 3]. Mr Lander said Centrelink had raised a debt of $10,717. He was unable to state when the debt was raised. I note that he told the CSA on 17 May 2018 that he owed Centrelink $9,500. Obviously, if he disputed the CSA care decision, he had review rights in respect of that decision, and if he disputed Centrelink’s decision to raise the debt, or not waive recovery of the debt, he had review rights in respect of that decision.

5. Mr Lander was aware of his Centrelink debt prior to the parents commencing a four-day trial on 25 June 2018 in the Federal Circuit Court. The purpose of those proceedings was to enable an equitable and final distribution of the parents’ general assets and liabilities. I note that Ms Selly prepared a Schedule of Assets and Liabilities on 18 June 2018 as part of those proceedings and she listed the debts that Centrelink had raised against her: a family tax benefit debt of $6,097; a 2015‑16 family assistance debt of $2,389; and a schoolkids bonus debt of $214. On 2 July 2018, Mr Lander sent an email to the Tribunal registry which commenced as follows: “... I’m emailing to inform u of our out come at court last week that is miss Selly received 1 million dollars in cash I’m in debt and keep my farm ...” I did not consider it necessary to ask the parents about the details of those orders. It is not the role of the Tribunal to review Court orders. I will proceed on the basis that the Court made equitable orders concerning the distribution of the parents’ general assets and liabilities, including their Centrelink debts, as at the date the orders were made. It is not appropriate to vary the rate of child support payable between the parents on the basis of Mr Lander’s Centrelink debt.

6. Mr Lander also reiterated submissions that he made to the Tribunal in 2017 and which I dealt with in paragraphs 43 to 45 of my reasons for the first departure decision:

   Mr Lander claimed that shortly before the parents separated, Ms Selly took funds from one of their joint bank accounts. He provided documentary evidence in support of his claim. He also claimed that Ms Selly used those funds to pay the school fees. He did not provide any documentary evidence in support of that claim. Ms Selly said she initially paid the school fees from her $400,000 and later from her mixed funds.

   Ms Selly claimed that [School 1] refunded some fees and mistakenly paid them into Mr Lander’s bank account. She provided documentary evidence in support of that claim.

   The tracing of funds, and the fair distribution of those funds, are matters that the parents can pursue in the current court proceedings concerning their property settlement. ...

7. As at 20 June 2018, Mr Lander owed child support arrears of $19,912. The proposed departure decision will increase his arrears by approximately $5,900. He has not demonstrated that the proposed decision would cause him financial hardship. The proposed departure decision would be just and equitable.

8. [Child 1] is two years older than [Child 2]. It is likely that at some point, [Child 1] will cease to be a child of the child support case and [Child 2] will be the only child of the child support case. If that occurs, and either parent considers that that change in circumstances causes the proposed departure decision to be unfair, they can lodge another departure application. In the absence of such an application, the proposed departure decision will hopefully provide both parents with some stability.

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. Ms Selly is the recipient of child support. According to her SoFC, she does not receive family tax benefit. The proposed departure decision would be otherwise proper.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that:

• Mr Lander’s rate of child support payable is varied to $9,671 per annum from 1 October 2017 to 31 December 2017;

• Mr Lander’s rate of child support payable is varied to $11,675 per annum from 1 January 2018 to 31 December 2018;

• Mr Lander’s rate of child support payable is varied to $12,225 per annum from 1 January 2019 to 31 December 2019; and

• Mr Lander’s rate of child support payable is varied to $15,048 per annum from 1 January 2020 to 31 December 2020.