Lapthorne and Barnbrook (Child support)

[2021] AATA 2294

Lapthorne and Barnbrook (Child support) [2021] AATA 2294 (19 May 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/HC020340

APPLICANT:  Ms Lapthorne

OTHER PARTIES:  Child Support Registrar

Mr Barnbrook

REVIEW NUMBER:  2020/HC020347

APPLICANT:  Mr Barnbrook

OTHER PARTIES:  Child Support Registrar

Ms Lapthorne

TRIBUNAL:Member M Baulch

DECISION DATE:  19 May 2021

DECISION:

The tribunal set aside the decision under review and, in substitution, decided that there is to be a departure from the administrative assessment of child support such that from 20 April 2020 to 30 November 2020:

• Ms Lapthorne’s adjusted taxable income is varied to be $101,148; and

• Mr Barnbrook’s adjusted taxable income is varied to be $129,109.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and 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 omitted 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. This application for review is about how much child support Mr Barnbrook should be assessed to pay to Ms Lapthorne.

2. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable by one parent to the other.  It uses a statutory formula which contains variables such as the parents’ adjusted taxable incomes, the number and ages of their children, and the percentages of care. 

3. Ms Lapthorne and Mr Barnbrook are the separated parents of two children.  Since 20 April 2020 Mr Barnbrook has been assessed as liable by Services Australia – Child Support (Child Support) to pay child support to Ms Lapthorne in respect of those children.

4. From 1 May 2020, Mr Barnbrook’s liability under the statutory formula would have been $0 per annum based upon his adjusted taxable income of $22,196 and Ms Lapthorne’s adjusted taxable income of $37,624, determined by reference to the parents’ 2018-19 taxable incomes.

5. The Act also provides for a departure from the administrative assessment of child support in certain circumstances.  On 4 May 2020, Ms Lapthorne applied to Child Support seeking a determination to depart from the administrative assessment of child support on the basis that she had high child care costs and that the child support assessment was unfair because of Mr Barnbrook’s income, property or financial resources and because of his earning capacity.

6. On 28 July 2020, a Child Support decision maker decided that there should be a departure determination from the administrative assessment from 20 April 2020 and set Ms Lapthorne’s adjusted taxable income at $93,000, Mr Barnbrook’s adjusted taxable income at $106,900, and increased the rate of child support to be paid by Mr Barnbrook by $3,095 per annum.

7. Mr Barnbrook objected to that decision and, on 13 November 2020, that objection was partly allowed.  The objections officer decided that there should be a departure determination such that:

   ·      From 20 April 2020 to 30 June 2020, Mr Barnbrook’s adjusted taxable income was set at $91,500.

   ·      From 1 July 2020 to 31 October 21, Mr Barnbrook’s taxable income was set at $106,500.

   ·      From 20 April 2020 to 30 September 2020, Ms Lapthorne’s adjusted taxable income was set at $93,829.

   ·      From 1 October 2020 to 31 October 21, Ms Lapthorne’s adjusted taxable income was set at $99,000.

   ·      From 13 July 2020 to 31 January 2021, the annual rate of child support to be paid by Mr Barnbrook was to be increased by $1,365.

   (The decision under review).

8. Ms Lapthorne and Mr Barnbrook have now both applied to this tribunal seeking an independent review of Child Support’s decision.

9. A hearing into the application for review was held by the tribunal on 19 May 2021.  Ms Lapthorne and Mr Barnbrook both discussed the application for review with the tribunal in person and both gave evidence during the hearing.  A representative of the Child Support Registrar (the Registrar) did not participate in the hearing. 

10. The tribunal had before it relevant documents provided to it, and the parties to the review, by the Registrar pursuant to sections 37 and 38AA of the Administrative Appeals Tribunal Act 1975, which were labelled folios 1 to 433.  The tribunal also had before it additional documents provided by Ms Lapthorne (labelled folios A1 to 261) and Mr Barnbrook (labelled folios B1 to B306).

ISSUES

1. The statutory provisions relevant to this review application are found within the child support law, in particular the Act.

2. Pursuant to section 98C of the Act, a determination to depart from the administrative assessment of child support may be made if the following three requirements are met:

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

   (ii)that 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; …

CONSIDERATION

1. The administrative assessment of child support that applied from 20 April 2020 required Mr Barnbrook to pay the minimum annual rate of child support of $435 per annum, based upon his adjusted taxable income of $22,196 and Ms Lapthorne’s adjusted taxable income of $37,624, determined by reference to the parents’ 2018-19 taxable incomes.

2. On 1 May 2020, the care arrangements for the children changed and Mr Barnbrook’s liability reduced to $0.  A further change in care occurred on 21 August 2020, and Mr Barnbrook’s child support liability increased to $756 per annum.

3. A new child support period commenced on 1 December 2020, and currently applies until 28 February 2022.  Had the decision now being reviewed not been made, I estimated that the administrative assessment that would have applied from 1 December 2020 would have resulted in Mr Barnbrook being liable to pay child support of approximately $11,540 per annum, based upon his adjusted taxable income of $129,109 and Ms Lapthorne’s adjusted taxable income of $101,148, determined by reference to the parents’ 2019-20 taxable incomes.

4. These, therefore, are the administrative assessments from which I am considering departing when considering the application for a departure determination made by Ms Lapthorne on 4 May 2020.

Is there a ground, or grounds, for departure?

1. All the grounds for departing from the administrative assessment of child support are prefaced by the term “… in the special circumstances of the case …”.  As noted by the Full Court of the Family Court:[1]

   Whilst it is not possible to define with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary.  That is, the intention of the Legislature is that the court will not interfere with the administrative formula result in the ordinary run of cases. In Savery's case (at Fam LR 815 FLC 77,897), Kay J, adopting the view in In the Marriage of Philippe (1977) 4 Fam LR 153; [1978] FLC 90-433 at Fam LR 155 FLC 77,202 in a different context, said that "special circumstances" were "facts peculiar to the particular case which set it apart from other cases" . The approach to the interpretation and application of the particular grounds in s 117(2) must be guided by that qualification.

   [1] See Gyselman and Gyselman [1991] FamCA 93

High costs of child care

1. Subparagraph 117(2)(b)(ib) of the Act (commonly referred to as “Reason 6” by Child Support) provides as a ground for departure where “… in the special circumstances of the case, the costs of maintaining the child are significantly affected … because of high child care costs in relation to the child”.  Also relevant to this ground for departure is subsection 117(3B) of the Act, which provides that the child must be less than 12 years old at the start of the child support period, and that:

   Child care costs for a parent can only be high for the purposes of subparagraph (2)(b)(ib) if, during a child support period, they total more than 5% of the amount worked out by:

   (a)   dividing the parent's adjusted taxable income for the period by 365; and

   (b) multiplying the quotient by the number of days in the period.

2. The two children in this case were born in 2013 and 2016 and I was satisfied that they are less than 12 years old.

Child support period 20 April 2020 to 30 November 2020

1. The first child support period to be considered is that which commenced on 20 April 2020 and applied until 30 November 2020; a period of 225 days.  For this child support period, Ms Lapthorne’s adjusted taxable income was $37,624 and Mr Barnbrook’s adjusted taxable income was $22,196.  Therefore, the costs of child care for this child support period will only be high if they exceed the amounts calculated below:

Ms Lapthorne	Mr Barnbrook
Adjusted taxable income divided by 365	$37,624 ÷ 365	$22,196 ÷ 365
=	$103.08	$60.81
multiplying by the number of days in the period	$103.08 x 225	$60.81 x 225
=	$23,193	$13,682
5% =	$1,159.65	$684.10

1. I therefore determined that Ms Lapthorne’s costs of child care for the period 20 April 2020 to 30 November 2020 will be high if they exceed $1,159.65 and Mr Barnbrook’s will be high if they exceed $684.10.

2. Having regard to the evidence provided by both parents about child care fees they had incurred from 20 April 2020 until 30 November 2020, I found that Ms Lapthorne had out-of-pocket child care costs of $2,051.32 and Mr Barnbrook had out-of-pocket child care costs of $1,302.58.

3. I determined that the child care costs incurred by both parents during this child support period exceeded the threshold calculated above and can be considered high.  I was satisfied that both parents are incurring child care costs that are a significant burden, when compared with their adjusted taxable income used in the administrative assessment, and makes this case out of the ordinary. 

4. I therefore found that the ground for departure set out in subparagraph 117(2)(b)(ib) of the Act has been made out for this child support period.

Child support period 1 December 2020 to 28 February 2022

1. A new child support period commenced on 1 December 2020 and currently applies until 28 February 2022; a period of 455 days.  For this child support period, Ms Lapthorne’s adjusted taxable income is $101,148 and Mr Barnbrook’s adjusted taxable income is $129,109.  Therefore, the costs of child care for this child support period will only be high if they exceed the amounts calculated below:

Ms Lapthorne	Mr Barnbrook
Adjusted taxable income divided by 365	$101,148 ÷ 365	$129,109 ÷ 365
=	$277.12	$353.72
multiplying by the number of days in the period	$277.12 x 455	$353.72 x 455
=	$126,089	$160,942
5% =	$6,304	$8,047

1. I therefore determined that Ms Lapthorne’s costs of child care for the period 1 December 2020 to 28 February 2022 will be high if they exceed $6,304 (equivalent to $5,057 per annum) and Mr Barnbrook’s will be high if they exceed $8,047 (equivalent to $6,455 per annum).

2. Having regard to the evidence, I identified that Ms Lapthorne had incurred out-of-pocket child care fees of $1,460.99 for the period 1 December 2020 to 29 March 2021, an average of approximately $86 per week or approximately $4,470 per year.  The evidence was also that the youngest child commenced attending school in 2021, and Ms Lapthorne is soon to reduce the number of days per week the children attend child care as she is now unemployed. 

3. I concluded that it is unlikely that Ms Lapthorne’s child care fees will exceed $5,057 per annum from 1 December 2020 and her child care costs are therefore not high for the child support period 1 December 2020 to 28 February 2022.

4. Mr Barnbrook estimated his out-of-pocket child care fees to be an average of $75 per week, or $3,900 per annum.  I concluded that it is unlikely that Mr Barnbrook’s child care fees will exceed $6,455 per annum and his costs are unlikely to be high for the child support period 1 December 2020 to 28 February 2022.

5. I therefore found that the ground for departure set out in subparagraph 117(2)(b)(ib) of the Act has not been made out for this child support period.

6. Subparagraph 98C(1)(b)(i) of the Act is satisfied if “one, or more than one” of the grounds for departure are established.  Having found one ground for departure established, I will now consider whether it is just and equitable to make a departure determination.  I will turn my mind to the issues raised by the other grounds for departure when considering whether or not it is just and equitable to make a departure determination.

Just and equitable

1. The requirement to consider whether a departure would be just and equitable directs that my attention is turned to what is fair to the parents and their children.  Regard must be had to a variety of factors, set out in subsection 117(4) of the Act, such as the needs of the children, the parents’ necessary commitments and any hardships that would be caused by departing, or not departing, from the statutory formula.

The children

1. As at 20 April 2020, the children were recorded as being in Ms Lapthorne’s care for 100% of the time.  On 1 May 2020, new care percentages applied in the child support assessment that recorded Ms Lapthorne as having 79% care of the children and Mr Barnbrook as having 21% care.  A further change to the care percentages occurred on 21 August 2020, and since then Ms Lapthorne has been recorded as having 65% care and Mr Barnbrook as having 35% care.

2. Under the administrative assessments of child support that applied from 20 April 2020 to 30 November 2020, the costs of maintaining the children were assessed in the statutory formula as being $3,022 per annum.  Once a new child support period commenced on 1 December 2020, I estimated that the costs of the children, had the statutory formula applied, would be $35,174 per annum.

3. The evidence was that the children have some medical conditions, but I was satisfied that those conditions do not significantly impact on the costs of maintaining the children.  The children attend a government school, and I determined that there are no out of the ordinary costs maintaining, educating or training the children as their parents intended.  There is no evidence that the children themselves have any income, property, earning capacity or financial resources of their own relevant to my consideration.

Ms Lapthorne

1. Ms Lapthorne’s adjusted taxable income for the 2019-20 income year was $101,148.  She did not dispute that this amount accurately reflected her income since 20 April 2020 until she became unemployed.  Ms Lapthorne’s employment ended on 15 January 2021, and her employment separation certificate indicates that she received 40 days (eight weeks) as a severance payment.  Ms Lapthorne has not worked since 15 January 2021.  Her claim for parenting payment single has been refused; however, it was her evidence that she has sought a review of that decision.

2. The parents’ property matters have not yet been resolved.  Ms Lapthorne, together with Mr Barnbrook, own the home in which Ms Lapthorne and the children live and a property in [Country 1] from which they receive rent payments.  Both properties are subject to mortgages.  Ms Lapthorne also has bank accounts in both Australia and [Country 1] and share investments held in [Country 1].

3. Subsection 117(7B) of the Act prescribes a test that must be satisfied before a parent can be attributed with an earning capacity.  In considering whether or not, since becoming unemployed, Ms Lapthorne should be assigned as having an earning capacity, I noted that her employment ended because her employer terminated a fixed term appointment.  I was satisfied that Ms Lapthorne’s loss of employment was not of her own instigation and determined that her current unemployment did not occur with the purpose of affecting the administrative assessment of child support (see paragraph 117(7B)(c) of the Act).  I found that Ms Lapthorne does not have earning capacity relevant to my consideration.

4. Ms Lapthorne’s Statement of Financial Circumstances (Child Support Reviews) form shows total weekly expenditure for her own and the children’s support as $2,593 per week.  I noted that the form was completed at a point in time when Ms Lapthorne was still employed.  Ms Lapthorne also reported an expenditure on income tax of $314 per week, superannuation contributions [amount illegible] and health insurance premiums of $201 per week.

5. Under the administrative assessment of child support that would have applied from 20 April 2020, Ms Lapthorne has the benefit of a self-support amount of $25,575 per annum.  I identified no evidence to persuade me that Ms Lapthorne’s necessary commitments to support herself should not be measured by $25,575 per annum.

6. Ms Lapthorne indicated that she is currently able to get by, not having employment, on the income from [Country 1] rental property.  Ms Lapthorne stated that hopefully she would soon obtain employment or be granted parenting payment.  She indicted that if necessary, she could sell shares, but she would incur a loss if she had to.

Mr Barnbrook

1. Mr Barnbrook’s adjusted taxable income for the 2019-20 income year was $129,109.  This includes income from employment, rental income for the property in [Country 1], capital gains from the sale of shares and dividend income.  Mr Barnbrook submitted that he should be assessed only on his income from employment.

2. Ms Lapthorne seeks to have funds realised by Mr Barnbrook from the sale of share’s included in the assessment of his income for child support purposes.  However, I was not persuaded that those funds should be considered here.  I noted that the capital gain made by Mr Barnbrook is included in his 2019-20 taxable income.  I considered it more appropriate that the funds realised by Mr Barnbrook from the sale of those shares should be addressed through the parents’ property settlement. 

3. As previously noted, the parents’ property settlement is unresolved.  Mr Barnbrook has an interest in the home in which Ms Lapthorne lives and the property in [Country 1] from which he receives a share of the rental income.  Mr Barnbrook also has bank accounts in both Australia and [Country 1] and share investments held in [Country 1].

4. Mr Barnbrook works full-time, and I was satisfied that he has no unutilised earning capacity relevant to my consideration.

5. Mr Barnbrook’s Statement of Financial Circumstances (Child Support Reviews) form shows total weekly expenditure for his own and the children’s support as $1,493 per week.  This includes Mr Barnbrook’s rental costs and the mortgage payments on the property in which Ms Lapthorne lives and [Country 1] property.  Mr Barnbrook also reported expenditure on income tax of $361 per week and health insurance premiums of $48 per week.

6. Under the administrative assessment of child support that would have applied from 20 April 2020, Mr Barnbrook has the benefit of a self-support amount of $25,575 per annum.  I identified no evidence to persuade me that Mr Barnbrook’s necessary commitments to support himself should not be measured by $25,575 per annum.

7. Mr Barnbrook’s submitted that any departure determination that increased his liability to pay child support would cause him hardship.  He pays rent and the mortgages on two properties on a limited income and might have to sell more assets to cover his costs.  Mr Barnbrook denied that it was open to him to cease making payments on the mortgages, noting that doing so would have a detrimental effect on his credit rating.

8. Having considered those matters set out in subsection 117(4) of the Act, I was satisfied that it would be just and equitable to make a departure determination.

Otherwise proper

1. The requirement to consider whether a departure would be otherwise proper is set out in subsection 117(5) of the Act, which directs my attention to what is fair to the community.  It is necessary to consider the effect, if any, that a departure from the administrative assessment would have on entitlements to income tested pension, allowance or benefit of the carer entitled to child support, in this case, that is Ms Lapthorne.  Parents, rather than the community, have the primary duty to maintain their children.

2. The evidence shows that Ms Lapthorne receives family tax benefit.  Family tax benefit, when paid at more than the base rate, is subject to a maintenance income test.  Any departure determination that increased Mr Barnbrook’s liability to pay child support would potentially lead to a reduction in the amount of family tax benefit paid to Ms Lapthorne.

3. I was satisfied that a determination that increased the amount of child support payable by Mr Barnbrook would be otherwise proper.

Conclusion

1. Section 4 of the Act sets out the objectives of the Act; these objectives include:

   ·      Parents of a child have a primary duty to maintain that child;

   ·      That duty has a priority over all commitments of the parent other than commitments necessary for self-support;

   ·      The level of financial support to be provided by parents to their children should be determined in accordance with the legislatively fixed standards; and

   ·      The level of financial support is to be determined according to the capacity to provide financial support and noting that parents with a like capacity to provide financial support should provide like amounts.

2. I have found that there is a ground for departure in this case, and it would be just and equitable and otherwise proper for me to make a departure determination.  Section 98S of the Act describes the determinations that I may make if a decision is made to depart from the administrative assessment of child support.

3. I was satisfied that since 20 April 2020, the parents’ income, property and financial resources are adequately reflected by their 2019-20 incomes.  I therefore decided that there should be a departure determination for the child support period 20 April 2020 to 30 November 2020 that:

   ·      Replaced Ms Lapthorne’s adjusted taxable income of $37,624 (derived from her 2018-19 taxable income) with the amount of $101,146 (derived from her 2019-20 taxable income); and

   ·      Replaced Mr Barnbrook’s adjusted taxable income of $22,196 (derived from his 2018-19 taxable income) with the amount of $129,109 (derived from his 2019-20 taxable income).

4. I declined to make a departure determination that adjusted the child support assessment for the parents’ child care expenses.  While the costs being incurred by the parents might be high in comparison to the 2018-19 incomes, they are not high if measured against their 2019-20 incomes and, in those circumstances, I considered a departure determination that had regard to those child care costs inappropriate.

5. I also declined to make a departure determination that reflected Ms Lapthorne’s unemployment and the subsequent reduction in her income.  The administrative assessment that has applied since Ms Lapthorne became unemployed renders Mr Barnbrook liable to pay child support of approximately $11,540 per annum.  I noted that Ms Lapthorne did not assert that she is currently in hardship (Child Support is currently collecting a liability of approximately $8,970 per annum) and I agreed with the proposition put forward by Mr Barnbrook that Ms Lapthorne’s living expenses have been ameliorated because he has met the mortgage costs for the property in which she lives. 

6. The effect of my not making a departure determination relating to Ms Lapthorne’s reduced income means that she has the option of making an estimate election under section 60 of the Act, which would apply to the child support assessment going forward, if she wishes to.

7. I estimated that my making a departure determination for the period 20 April 2020 to 30 November 2020, and not from 1 December 2020, might result in Mr Barnbrook having arrears of child support of approximately $2,400 (depending on when Child Support implements my decision).    I was satisfied that this results in the respective hardships of both parents being appropriately balanced.

8. Accordingly, pursuant to paragraph 98S(1)(g) of the Act, I decided that there is to be a departure from the administrative assessment of child support such that from 20 April 2020 to 30 November 2020:

   ·      Ms Lapthorne’s adjusted taxable income is set at $101,148; and

   ·      Mr Barnbrook’s adjusted taxable income is set at $129,109.

9. Therefore, and for these reasons, I decided to set aside the decision under review and substitute my own decision.

DECISION

The tribunal set aside the decision under review and, in substitution, decided that there is to be a departure from the administrative assessment of child support such that from 20 April 2020 to 30 November 2020:

• Ms Lapthorne’s adjusted taxable income is varied to be $101,148; and

• Mr Barnbrook’s adjusted taxable income is varied to be $129,109.