Lebleu and Lebleu (Child support)

[2021] AATA 1688

Lebleu and Lebleu (Child support) [2021] AATA 1688 (28 April 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/SC020224

APPLICANT:  Mr Lebleu

OTHER PARTIES:  Child Support Registrar

Ms Lebleu

TRIBUNAL:Member K Dordevic

DECISION DATE:  28 April 2021

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that: from 31 August 2019 to 30 June 2025 the father’s adjusted taxable income is varied to $117,500.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – earning capacity of the liable parent – a ground for departure established – decision to depart – 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. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the 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.

2. This case was registered with Services Australia – Child Support on 29 June 2004 and has been collectable since 8 May 2014. The parties are the parents of two children, who are recorded as being in the mother’s 100% care and the father’s 0% care from 1 December 2013.

3. After an application was lodged by the mother on 8 October 2019 a senior case officer determined on 6 February 2020 that the father’s adjusted taxable income is to be varied to $113,006 for the period 31 August 2019 to 10 October 2019 and his annual child support rate varied to $10,436 for the period 11 October 2019 to 30 November 2020.

4. The father sought a review of that decision on 19 August 2020.  An extension of time in which to lodge his application was granted on 1 September 2020. On 10 November 2020 an objections officer partly allowed the objection, determining that the father’s adjusted taxable income is to be varied to $138,965 for the period 31 August to 8 September 2019 and to $113,007 for the period 9 September 2019 to 31 October 2022. 

5. On 11 November 2020 the father sought further review with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal). A directions hearing was held on 17 February 2021 and directions were issued, requiring compliance by 7 April 2021.

6. Following the directions hearing the tribunal issued an order, pursuant to subsection 95J(1) of the Child Support (Registration and Collection) Act 1988, asking the Child Support Registrar to exercise its powers to obtain from [Sports betting company] statements for the period 1 October 2019 to 28 February 2021 for all accounts held by the father, jointly by him and another person, or accounts to which he is a signatory. On 7 April 2021 Child Support advised that no response was received from [Sports betting company]. The tribunal proceeded to hear the matter without this evidence, as it had also directed the father to provide the same.

7. The tribunal heard the matter on 28 April 2021. The father and mother appeared by conference telephone. The Child Support Registrar was not represented at the hearing. The tribunal has considered the sworn evidence of the parents. The tribunal also considered the documentation provided by Child Support (folios 1–484 and C1), the father (folios A1–A104) and the mother (folios B1–B25).

ISSUES

1. The statutory provisions relevant to this review are outlined in section 98C of the Act, which states that a decision to depart from the administrative assessment 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) 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 …

2. Therefore, the issues which arise in this case are:

   ·     Does a ground exist for departure from the administrative assessment of child support? And if so,

   ·     Would it be just and equitable and otherwise proper to make a particular determination?

CONSIDERATION

A ground for departure

1. Subparagraphs 117(2)(c)(ia) and (ib) of the Act provide a ground for departure if the administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent because of either parent’s income, financial resources or earning capacity.

2. For the period 1 to 30 August 2019 the father was liable to pay $25,182 per annum in child support, based on the parents’ 2019 adjusted taxable incomes of $130,695 (the father) and $55,402 (the mother).  At the time that the mother lodged the departure application under review the father was liable to pay $435 in child support per annum based on his income estimate of $0 and the mother’s 2019 adjusted taxable income. The father’s 2020 taxable income was $45,943; he also received non-taxable income from the Army Reserve of $20,650.

3. It is not in contention that the father resigned from his permanent full-time employment on 30 August 2019 and was in receipt of income support payments from 3 July 2020. In the interim he worked with the Army Reserve. He reportedly advised Child Support that he did not apply for income support at an earlier date, as he did not “feel right” doing so.

4. The father’s submissions are as follows. After nearly 20 years of working for the same company, and a lot of deliberation, he resigned in August 2019. In June 2019 he had been placed in a new role, managing a different [job responsibility] (in which he had no experience) with a demanding staff member. As a consequence, he suffered stress. He was also finding the commute from Wollongong to Sydney arduous and this was a factor in his decision-making.  When asked why he resigned rather than taking paid or unpaid leave whilst awaiting an internal transfer, the father responded by stating that he only had minimal leave entitlements and he was concerned that taking leave as a consequence of workplace stress would hinder his ability to secure another job. It was put to the father that a more prudent approach may have been to continue working until he secured alternate work. He responded by stating that he was “told not to” and that his circumstances made it necessary to make an immediate change to his employment. He decided to resign and then look for work locally, but has not found any work commensurate with his skills. He confirmed that he had called Child Support prior to resigning, so as to understand the change to his liability should he resign.

5. Upon resignation he worked in his partner’s [workplace] (“I chipped in when I could”) for only a few hours per week, in return for the provision of free accommodation. He met his expenses from his savings of over $186,000 held in a [Superannuation] account in his name only. He states that he only had a 50% entitlement to those funds, as he and his partner saved this amount together over their four-year relationship. He confirmed that by 5 March 2020 this account balance was $138.12. He was forced to give his now former partner half of this sum when they separated in early February 2020. He confirmed that his bank statements will not evidence this transfer; rather, they are shown by cash withdrawals, as she preferred to receive the payments in cash “to dribble in slowly”. Similarly, there is no evidence of his payment of $40,000 to clear his car finance, as he prefers to deal in cash only. He also spent $15,000 on an overseas holiday (“I needed the space”) and the remainder, again in cash, purchasing [subject] classes and meeting other education expenses. There are no invoices or receipts available as these payments were all made in cash. He refuted the suggestion that this was an unusual way to manage such large sums of money, stating that cash was his preferred method of payment. He also vehemently denied the mother’s allegation that he and his partner have not actually separated, implying that it was just a ruse to justify the apparent depletion of his savings. He stated that the pictures posted on [Social media] with him and his former partner celebrating Christmas together with her family on 25 December 2020 do not suggest that they remain a couple, rather it shows that they remain friends.

6. The father explained that he worked in the Army Reserve from 1998 to 2003. He then rejoined as a [job task 1] in 2013. He has always undertaken this work whilst he was employed on a full-time basis, usually receiving a non-taxable income of between $3,000 to $6,000 per annum. He secured a couple of weeks of work in the Army Reserve after his resignation, whilst also applying for full-time roles more generally. Then there was a compulsory call up of the Army Reserve personnel following bushfires in January 2020. He undertook such work until mid-February 2020. He then went to visit a friend in [Country] where he explored the possibility of retraining as [an Occupation 1]. He returned to Australia on 21 March 2020. He then received a call from the Army Reserve for a COVID-19 operation, [doing job task 2]. From [April] to [June] 2020 he worked on a full-time basis with the Army Reserve. He only then applied for income support payments and decided to study [subject] and a [Qualification]. From August to September 2020 he only was offered sporadic work with the Army Reserve. In late December 2020 he was offered some contract work with the [Employer]. He began on [in] January 2021. His work hours fluctuate depending on stand down periods.

7. The father stated that he estimates that his ongoing annual income will be $66,000 and so he should be liable to only pay a “couple of hundred per week” in child support. He stressed that any assessment must be based on his actual income.

8. In order for a person to be assessed in accordance with their earning capacity rather than their actual income, the three tests set out in subsection 117(7B) of the Act must be satisfied:

   In having regard to the earning capacity of a parent of the child, the court may determine that the parent's earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:

   (a)   one or more of the following applies:

   (i)the parent does not work despite ample opportunity to do so;

   (ii)the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full‑time work for the occupation or industry in which the parent is employed or otherwise engaged;

   (iii)the parent has changed his or her occupation, industry or working pattern; and

   (b)   the parent's decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:

   (i)the parent's caring responsibilities; or

   (ii)the parent's state of health; and

   (c)   the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.

9. It is not in dispute that the father resigned from his full-time employment on 30 August 2019.  The tribunal is satisfied that the father has changed his occupation, industry and working pattern. Subparagraph 117(7B)(a)(ii) of the Act is satisfied.

10. The father asserts that his stress levels contributed to his decision to resign from his employment. He has no medical evidence to support this assertion; he apparently spoke to an Army Reserve chaplain, friends and his partner. There is no evidence before the tribunal to suggest that the father’s caring responsibilities or health support a finding that justifies his decision to change his working pattern. Paragraph 117(7B)(b) of the Act is satisfied.

11. The tribunal next considered whether the father has not demonstrated that it was not a major purpose of his decision to change his working pattern to affect the administrative assessment.

12. The effect of his change in working pattern has seen the father’s taxable income reduce from $130,695 in 2019 to $45,943, with non-taxable income from the Army Reserve of $20,650. This resulted in a reduction of his child support liability of $24,747. He has not provided any correspondence between himself and his employer regarding the difficulties he was facing in his new role nor what steps, if any, he took to address the situation with management. He has made statements that his decision was justified on the basis of his health, but was unable to provide any medical evidence. On 31 August 2019, the day after his resignation took effect, he contacted Child Support and lodged an income estimate of nil, despite being entitled to annual and long service leave of over 208 hours (equivalent to being paid until 7 October 2019 based on a 38-hour week and his hourly rate of $57.19 as outlined in his final payslip). The tribunal is satisfied that the father’s statements about the reasons behind his decision to resign from his employment demonstrate that the effect on the administrative assessment of child support was indeed a major purpose behind his decision. Thus, the third criteria in subsection 117(7B) of the Act is met.

13. The tribunal concludes that the father has a greater capacity to meet the children’s costs than his adjusted taxable income suggests. As his earning capacity is not properly reflected in the child support assessment, there are special circumstances such that the application of the administrative assessment would result in an unjust and inequitable determination of child support payable. The tribunal therefore concludes that the ground provided for in subparagraph 117(2)(c)(ib) of the Act 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 child, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

2. In her Statement of Financial Circumstances dated 1 December 2020 the mother declares that she is employed on a permanent full-time basis as an administration officer. She declares gross weekly income of $1,160. Her home is valued at approximately $500,000, with a mortgage of $363,072. She reports minimal savings, a motor vehicle valued at $7,000 and household contents valued at $20,000. Her superannuation balance is $189,000. Her personal expenditure is $378 per week and average household expenses are $1,463. She declares that her necessary expenses in relation to both children are $995 per week. She is in good health. Her 2020 adjusted taxable income was $60,316.

3. The parties agree that both children are in good health and have no out of the ordinary expenses. They both attend public schools. The younger child is in Year 11 and has worked on a part-time basis since November 2019. Neither party submits that the child’s income has any bearing on the administrative assessment. The tribunal finds that this is appropriate in the circumstances.

4. In his Statement of Financial Circumstances dated 18 December 2020 the father estimated average weekly income of $380, jobseeker income of $458.78, savings of $400, a motorbike valued at about $1,500, household contents of $2,500 and superannuation valued at $180,000. He reported no liabilities, weekly personal expenditure of $75, and household expenditure of $955, of which $400 relates to his [subject] and [Qualification] expenses. In his second Statement of Financial Circumstances dated 14 February 2021 the father amended his previous statement, declaring weekly income from his casual position as a [contractor] of $1,250, a motorbike valued at about $7,000 and household contents of $4,000. He reports a personal loan of $5,000 from his parents, weekly personal expenditure of $384, of which $135 relates to his child support payments, and household expenditure of $1,125.

5. The tribunal had directed the father to provide evidence of his employment applications submitted immediately prior to, and after, his resignation from his full-time role. The father provided undated applications, with the exception of two dated 25 and 30 November 2020. The mother submitted that the applications were not in the father’s usual field, suggesting that this was a deliberate ploy. At hearing the father stated that what he had provided was a mere fraction of what he had actually applied for; he had simply not kept a record. He also stressed that during the periods he was working with the Army Reserve he was unable to seek work as he was not permitted to have his mobile telephone. He will continue with his current [contract] work and his studies in [subject] and his diploma. He anticipates completing his [subject] studies by 2025.

6. The tribunal next considered the law in relation to cases where a parent may have substantial property and assets but a low income is applied to the assessment. The Child Support Guide states at Chapter 2.6.14 that the Registrar, and the tribunal in its place, must consider the parent’s property and assets, as well as any income, in deciding the appropriate rate of child support: Abela and Abela (1995) FLC 92-568 and Bendeich and Bendeich (1993) FLC 92-355. The father states that he simply cannot meet the liability as determined by the senior case officer and objections officer; he can only contribute to the costs of the children commensurate with his employment income. As outlined above, he asserts that he has exhausted his savings of $186,000.

7. Firstly, the tribunal is not persuaded that the father’s former partner had any entitlement to any portion of the father’s savings. The funds were held in a [Superannuation] account #0547 in the father’s name only. The tribunal is not persuaded that it was a mere coincidence that the decision made by the senior case officer coincided with the breakdown of the father’s relationship and the apparent need to provide half of his liquid assets to his former partner. In reaching this conclusion, the tribunal placed particular weight on the fact that the father was advised orally of the decision of the senior case officer on 6 February 2020, and that in particular that he has a duty to contribute to the children’s costs from his savings.

8. Prior to being advised of the senior case officer’s decision, account #0547 shows that before January 2020 the largest cash sum that the father had withdrawn from the account was $300. Anything larger was electronically transferred to his savings account. There are only two exceptions to this, when on 2 January 2020 he withdrew $9,800 in cash and on 4 February 2020 when he withdrew $10,000 in cash, deposited it into another [Superannuation] account and then immediately withdrew the same amount with the description “[Sports betting] cash”.  

9. However, immediately following the advice from the senior case officer there was a flurry of withdrawals from account #0547.  On 6 February 2020, the same day he was orally advised of the decision, he withdrew $10,000 in cash from this account and then deposited the cash into another [Superannuation] account (#0546), and then immediately withdrew $10,000 with the description “[Sports betting] cash”. In the following four days he withdrew a further $54,300 in cash from account #0547, deposited the cash into account #0546, and then immediately withdrew $50,000 from the account with the description “[Sports betting] cash”. From 1 to 5 March 2020 the father then withdrew a further $101,000 from account #0547, deposited the cash into account #0546 and then withdrew $40,000 on 1 and 2 March 2020 with the description “[Sports betting] cash”. In his statements to Child Support and to this tribunal the father denied ever moving any money into his [Sports betting] account. He was unable to explain the above pattern of withdrawals and deposits and in particular the reason behind the descriptor “[Sports betting] cash”. 

1. The father was directed to provide his [Sports betting] statements for the period commencing 1 April 2020 to 28 February 2021. In response he provided screenshots of the tabs “Overview”, “My Bets” and “Transactions” all of which stated “Nothing available There is currently nothing to show here”. It is noted that screenshots from the tabs “Deposit”, “Withdraw” and importantly “Cash Card” were not provided. As the tribunal understands from the [Sports betting] website, a cash card allows the holder to purchase items in stores or electronically, as long as the initial deposits were turned over. It remains unclear whether the father did deposit any of the “[Sports betting] cash” withdrawals into his [Sports betting] account.

2. Taking into account the father’s evidence and the lack of corroborating documentary evidence, the tribunal is not satisfied that the father has exhausted his liquid assets, as he contends. On balance, the tribunal formed the view that the father’s pattern of withdrawals from his savings was motivated to establish that he did not have capacity to meet his child support liability from his savings, as he was advised by the senior case officer. Thus, the tribunal concludes that the father has capacity to meet his child support liability calculated on the basis of his earning capacity, particularly in circumstances where he reports his necessary expenses are modest. 

3. The tribunal is not satisfied that it is either just or equitable that the father’s child support liability be calculated on the basis of his taxable income alone; certainly, his earning capacity is significantly greater than his 2020 taxable income suggests. To find otherwise would result in a disproportionate amount of the children’s costs being borne by the mother.

4. The tribunal considers that the father’s adjusted taxable income should be varied to reflect his earning capacity of $117,500 from the date he lodged his income estimate, being 31 August 2019. The tribunal determined his earning capacity by applying his hourly rate to a 38-hour week plus $4,467, which represents his 2019 non-taxable income from the Army Reserve, which was not included in the father’s adjusted taxable income for the purposes of determining his child support liability under the formula assessment. The Child Support Guide states at Chapter 2.6.14 that generally the Registrar will increase the parent’s taxable income by their tax-exempt salary, unless there are other circumstances that suggest that it would not be just or equitable to do so. The tribunal finds that there is no cogent reason not to apply this policy.

5. The tribunal is satisfied that it is appropriate to vary the father’s adjusted taxable income on the basis of his earning capacity until 30 June 2025, as this coincides with the completion of his [subject] studies. This determination will provide certainty to the parties and minimise the need for repeat proceedings. It is noted that during this period a terminating event will take place in respect of the parents’ oldest son in November 2022 (assuming the mother will lodge an application to extend the assessment until the child completes his Year 12 studies).  The tribunal’s decision will place the father in arrears of about $1,530. The tribunal is satisfied that this will not place him in a position of undue hardship given his financial resources.

6. The tribunal is satisfied that the administrative assessment is unfair given the father’s income, financial resources and earning capacity. This results in an unjust and inequitable level of child support given the circumstances of each parent. For all these reasons it is just and equitable to depart from the administrative assessment.

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. The mother is in receipt of income-tested benefits. Departing from the administrative assessment will result in a more appropriate apportionment of financial responsibility between the parents and the community.

2. The determination is otherwise proper.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that: from 31 August 2019 to 30 June 2025 the father’s adjusted taxable income is varied to $117,500.