Leyton and Leyton (Child support)

[2022] AATA 2058

Leyton and Leyton (Child support) [2022] AATA 2058 (27 May 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:   2021/SC022915

APPLICANT:  Mr Leyton

OTHER PARTIES:  Child Support Registrar

Ms Leyton

TRIBUNAL:Senior Member J Longo (Presiding)

Member H Moreland

DECISION DATE:  27 May 2022

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides to vary the annual rate of child support payable by Mr Leyton as follows:

·     For the period 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr Leyton is increased by $7,664;

·     For the period 1 January 2022 to 31 December 2022, the annual rate of child support payable by Mr Leyton is increased by $7,735;

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education - manner expected by both parents - cost of maintaining the children are significantly affected – 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 issue to be determined in this application is whether there is a reason to change the administrative assessment of child support and whether it is just and equitable and otherwise proper to do so.

2. Mr Leyton and Ms Leyton are the parents of [Children 1-4]. Mr Leyton the parent currently liable to pay child support under the administrative assessment. The payment of child support is currently subject to collection by the Services Australia – Child Support (the Department). [Children 1-4] are in the care of Ms Leyton (269 nights) and Mr Leyton (96 nights).

3. For the periods immediately prior to the departure application, Mr Leyton was assessed to pay child support as follows:

   ·     For the period 19 January 2021 to 31 July 2021, Mr Leyton was assessed to pay the annual rate of child support of $16,408. This was based on Mr Leyton’s 2019–20 adjusted taxable income of $111,082 and Ms Leyton’s 2019–20 adjusted taxable income of $56,310.

   ·     For the period 1 August 2021 to 31 October 2022, Mr Leyton is assessed to pay the annual rate of child support of $16,860. This is based on Mr Leyton`s 2020–21 adjusted taxable income of $108,544 and Ms Leyton`s 2020–21 provisional adjusted taxable income of $42,000.

4. Ms Leyton applied to the Department for a departure from the administrative assessment on 31 May 2021 on the basis of, in the special circumstances of the case, the costs of educating the children in a particular manner (reason 3).

5. On 26 September 2021, the Department decided to depart from the administrative assessment and made a departure determination as follows:

   ·     For the period 31 May 2021 to 31 December 2021, the annual rate of child support payable by Mr Leyton is increased by $9,899; and

   ·     For the period 1 January 2022 to 31 December 2023, the annual rate of child support payable by Mr Leyton is increased by $7,775.

6. Mr Leyton objected to the decision on 15 October 2021. An objections officer of the Department disallowed the objection on 8 December 2021.

7. On 10 December 2021, Mr Leyton lodged an application to this Tribunal for review of the objections officer’s decision. Directions for this matter were made on 10 March 2022. The application was heard on 28 April 2022.

8. The Tribunal considered the documents and information, including the oral evidence of Mr Leyton and Ms Leyton, which were provided to the parties prior to the hearing.[1] The Tribunal deferred its decision and reconvened and made its decision on 27 May 2022. Relevant aspects of the evidence and material will be referred to in the Tribunal’s decision.

CONSIDERATION

[1] Administrative Appeals Tribunal Act 1975 subsection 37(1) and section 38AA Statement and Documents provided by the Department numbered 1 to 411; Mr Leyton’s documents numbered A1 to A263; and Ms Leyton’s documents numbered B1 to B214.

The legislative framework and issues for the Tribunal to determine

1. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act1989 (the Assessment Act). The liable parent or a carer may apply for a determination departing from the administrative assessment under Part 6A of the Assessment Act. Section 98C establishes a three-step process to be satisfied prior to a departure determination being made: that there is a ground for a departure from the administrative assessment; that it is just and equitable to depart; and that it is otherwise proper. Once satisfied, the Tribunal may make one of the determinations prescribed in section 98S of the Assessment Act.

Reason 3 – [Children 1-4] being cared for, educated or trained in the manner expected by the parents

10.Subparagraph 117(2)(b)(ii) of the Assessment Act provides that a ground for departure from an administrative assessment exists if:

(b) 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;

11.The term “special circumstances” is not defined in the Assessment Act. In Gyselman v Gyselman [1991] FamCA 93 the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary. Likewise, in Philippe and Philippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”. In considering whether the ground is established in this case the Tribunal was guided by these cases.

12.In accordance with Wild v Ballard [1997] FamCA 41 in determining whether this ground was established, the Tribunal considered the type of education intended by both parents, rather than the child’s attendance at any particular school.

13.In F & S [2003] FMCAfam 531, Brant CFM summarised the principles identified in Mee and Ferguson (1986) 84 FLR 179 as follows:

15. The principles that emerged from the case in relation to school fees can be summarised as follows:

a) where the non-custodian has agreed to the child attending a private school, that person is liable to contribute to the fees so long and to the extent that he or she has a reasonable financial capacity to continue to do so;

b) where the non-custodian has not agreed to the child attending such a school, he or she is not liable to contribute to those expenses unless there are reasons relating to the child’s welfare which dictate attendance at the school rather than a non-private school. Then the non-custodian is required to contribute to the extent that he or she has a reasonable financial capacity to do so; and

c) the mere fact that a non-custodian can afford the fees or is a wealthy person is not in itself a reason for imposing that liability. Although Mee v Ferguson was decided prior to the introduction of the Child Support (Assessment) Act, the reasoning has been applied to child support cases [see Lightfoot v Hampson (1996) 20 FamLR 69 and Wild v Ballard (1997) 22 FamLR 291.

14.It is uncontroversial that Mr Leyton and Ms Leyton signed enrolment forms for all four children to attend [School]. Mr Leyton’s oral evidence, to which Ms Leyton also agreed, was that when they moved to the [area] they consulted people in the community and looked at a number of schools. At the time, they enrolled [Child 1], the eldest, at [School] and it was implied that his siblings would attend the same school. Mr Leyton stated that there was no discussion at the time regarding secondary schooling but he understood that [School] offered both a primary and secondary schooling. Mr Leyton further confirmed in his oral evidence that all four children commenced at [School] prior to separation.

15.Mr Leyton confirmed in his oral evidence that both he and Ms Leyton signed enrolment forms for each of the children prior to their commencement at primary school at [School]. While a copy of the original enrolments at the time was not before the Department and is not before the Tribunal, both parties confirmed that [Child 1] commenced primary school at [School] in 2012; [Child 2] commenced primary school in 2014; and [Child 4] and [Child 3] commenced primary school in 2017. The Tribunal notes that [Child 1] and [Child 2] are currently in secondary school at [School] and [Child 4] and [Child 3] are in primary school at [School].

16.While there was some difficulty following Mr Leyton’s other submissions to the Tribunal regarding whether there was a ground established to depart from the administrative assessment, the Tribunal summarises those relevant to the departure determination as follows:

• That Mr Leyton, since separating in 2018, had not signed an enrolment form for the children’s continued attendance but contributed to the education costs until December 2018;

• That he was no longer responsible for the fees as [School] no longer holds him responsible for these fees;

• That as the court, as he expresses it, awarded ‘sole parenting’ to Ms Leyton it was no longer his decision for the children to continue at [School] but rather Ms Leyton’s decision without requiring his involvement;

• That Mr Leyton did not intend for the children to continue at [School] after they separated and that there was no mutual consent to have the children continue at [School]. Mr Leyton had sent an email to Ms Leyton in October 2021 stating that he no longer supported the children attending [School] and also suggesting alternate schools for the children at both primary and secondary school[2];

  [2] Page A25, Mr Leyton’s documents to the Tribunal.

• That [School], being an independent [Church] school, was no different to Catholic schooling and therefore could not be considered as a private school and does not meet the ground for departure;

17.  In reference to the signing of enrolment forms, the Tribunal clarified which documents Mr Leyton was referring to in regard to this submission. Mr Leyton stated that he was referring to the [school] fee Information forms provide to the Department by Ms Leyton and Mr Leyton to the Tribunal[3]. The Tribunal notes that these are not enrolment forms and that the enrolment forms for each of the children were not provided to the Department nor the Tribunal. The Tribunal finds that, based on the oral evidence of both parties as discussed above, that they signed enrolment forms for each of the children prior to commencing primary school at [School]. The Tribunal also notes the email correspondence provided to Mr Leyton by [School][4] clarifies this contention:

[3] Pages 69 to 72 of subsection 37(1) documents and pages A8 to A12, Mr Leyton’s documents to the Tribunal.

[4] Page A251, Mr Leyton’s documents to the Tribunal.

‘4. Our process is not to have new enrolment documents signed each year. The enrolment signed when students are first enrolled is enduring. Our Fee Information Sheet is what parents sign to provide legal commitment for the School fees. We have not yet received any updated Fee Information document from Ms Leyton.’

As clearly stated by the information provided to Mr Leyton by [School], the  school fee information forms are not annual enrolment forms but rather an indication to the school who is legally liable for the school fees. To put it another way, it clarifies against whom the school may initiate legal proceedings to recover outstanding school fees if they remain unpaid.

18.Ms Leyton stated that [Child 1] started attending [School] in 2010 in its early learning centre and continued through primary and secondary. Ms Leyton stated that it was always intended that all the children would study at [School] and that they did discuss the children attending both primary and secondary school at [School]. Ms Leyton told the Tribunal that when they toured the school, they looked at both the primary and secondary school facilities. Ms Leyton further told the Tribunal that prior to the email on 1 October 2021, they had not discussed the children being educated at other schools.

19.The Tribunal is satisfied that the children are attending [School] school and that both Mr Leyton and Ms Leyton signed enrolment forms for the children to attend [school]. The Tribunal further finds that the children are being educated in the manner that was expected by Mr Leyton and Ms Leyton when they were enrolled. The Tribunal is satisfied that there was an expectation that the children would undertake both primary and secondary schooling at [School] prior to separation. This conclusion is based on their evidence of their understanding of the education offered by [School] at the time the children were enrolled; that Mr Leyton and Ms Leyton toured all of the school’s primary and secondary facilities; and that the children’s enrolment was enduring and did not require further enrolment to undertake secondary schooling. While Mr Leyton’s view regarding the children’s education has changed since separation, the Tribunal is satisfied that they are being educated in the manner that was expected by both parents.

20.The costs for the children attending [School] were not in dispute and accepted by both Mr Leyton and Ms Leyton. The Tribunal finds that the total cost of tuition for [Children 1-4] to attend [School] for the 2021 academic year, after fee discounts, was $15,329. The Tribunal further finds that the total cost of tuition for all four children to attend [School] for the 2022 academic year is $15,470.80 after fee discounts are applied.

21.While it is clear that [School] is a religious school, it is not a public (government) school. It is a private independent school. The costs associated with children attending a government school do not constitute special circumstances. The school fees for the children’s education in this matter are not costs associated with a government school but rather a private independent school. These costs are such, in the Tribunal’s view, that in the special circumstances of the case, the costs of maintaining the children are significantly affected by these education costs as specified in paragraph 20 above. The Tribunal has concluded, therefore, that a ground for departure from the administrative assessment is established on this basis.

Would departure from the administrative assessment be just and equitable?

22. As the Tribunal is satisfied that there is a ground to depart from the administrative assessment, the next step is to consider whether it is just and equitable to depart from the administrative assessment. In deciding whether it is just and equitable, the Tribunal had regard to the matters set out in subsection 117(4) of the Assessment Act.

The needs of the children

23. Section 3 of the Assessment Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain (Ashcroft and Ashcroft (SSAT Appeal) [2008] FMCAfam 1250). In this case Mr Leyton and Ms Leyton have the primary duty to financially support [Children 1-4] and that contributing to these costs should take priority over all other costs other than their “necessary” costs of self-support. Neither party stated that they have a legal duty to contribute to the needs of another person.

24.In determining the proper needs of the child, subsection 117(6) of the Assessment Act also requires the Tribunal to have regard to the manner in which the parents expected the child to be cared for, educated, and trained as well as a consideration of any special needs of the child.

25.It was undisputed that the children are in good health and have no special needs. The Tribunal found earlier in these Reasons for Decision that special circumstances do exist in this case to warrant a change to the administrative assessment in respect of the corresponding private education costs.

26.Ms Leyton estimated the weekly costs she incurs in respect of herself and the children to be $1,538. This included discretionary costs in respect of holidays ($50 per week) and activities, entertainment, and gifts, ($78 per week). The Tribunal has estimated that the costs of the children are approximately $1,128 per week. These are the total costs, less the discretionary expenses, divided amongst Ms Leyton and the four children. Mr Leyton did not provide an estimate of the costs of the children in his Statement of Financial Circumstances, other than $941 per week total household costs, less discretionary costs in respect of entertainment ($25), and gifts ($20 per week).  

27.Based on the adjusted taxable incomes of Mr Leyton and Ms Leyton as discussed below, the Costs of the Children Table estimates that the children’s costs are, in respect of 2021 and 2022, $33,754 and $34,707 respectively. This is significantly less than the costs of the children as estimated by the parents and indicates that their needs are prioritised and that their “necessary” and “discretionary” needs are being comfortably provided for.

The earning capacity, income, property and financial resources and commitments of each parent

28.  Mr Leyton stated in his Statement of Financial Circumstances that he is currently working on a full-time basis as [an Occupation]. Mr Leyton’s Statement of Financial Circumstances shows his income as $2,078 per week[5], however at hearing he stated that this is the nett amount he receives from employment. His payslips provided to the Tribunal[6], confirm that this is his gross income. Mr Leyton’s annual salary is $106,371 per annum or $4,157 ($2,078 per week). Apart from salary from employment, he has no other income.

[5] Page A50, Mr Leyton’s documents to the Tribunal.

[6] Pages A186 to A188, Mr Leyton’s documents to the Tribunal.

29.  Mr Leyton’s Statement of Financial Circumstances also shows personal expenditure of $1,143, which includes income tax, child support payments and health insurance. A small amount of $60 per week is included as pre-tax contributions towards his superannuation. His household expenditure of $1,037 per week. In his Statement of Financial Circumstances, he lists approximately $290,000 interest in residential land and other assets of motor vehicles ($6,000 and $6,000); household contents ($5,000) and a small amount in his bank account ($270). The statement indicates he has around $57,000 in superannuation. In regard to his liabilities, Mr Leyton indicated a mortgage of $227,000 (50% share); and a PayPal debt of $225. While not listed, Mr Leyton stated that he also owes his father $68,000 which he is required to repay. The Tribunal notes that Mr Leyton is repaying this loan, as indicated in his Statement of Financial Circumstances, at $125 per week.

30. Ms Leyton’s Statement of Financial Circumstances shows gross income of $944 per week ($49,088) from her employment. Ms Leyton is also in receipt of family assistance payment; however this is excluded as income for the purpose of the Assessment Act.

31.  Her household expenditure is $1,538 per week, which she is able to meet with her family assistance payments, child support and her income. She indicated personal expenditure of $153, which included income tax and health insurance. Superannuation contributions listed in her Statement of Financial Circumstances were those paid by her employer and have been excluded. In relation to Ms Leyton’s assets, she listed savings ($14,000); a car (valued at $12,500); household contents ($3,500); a caravan ($12,000); and a trailer ($200). Ms Leyton discloses liabilities including a car loan ($13,800) and a Zip Pay debt ($2,200). The Tribunal also notes from other documents that school fees remain outstanding ($15,426 as at 4 February 2022)[7]. She also stated that she has around $50,000 in superannuation.

[7] Page B142, Ms Leyton’s documents to the Tribunal.

32.  Mr Leyton stated in a written submission that Ms Leyton is not working full-time. The information provided by Ms Leyton indicates that she is employed on a full-time basis. Accordingly, the Tribunal has not considered that Ms Leyton has a greater earning capacity than what her circumstances suggest.

33.The Tribunal is satisfied that it is just and equitable to depart from the administrative assessment and determines that the annual rate of child support payable by Mr Leyton should be increased commensurate with half the cost of the children’s education for the 2021 and 2022 academic years. The Tribunal has determined that it is just and equitable based on Mr Leyton and Ms Leyton’s circumstances that these costs are shared equally.

34.The Tribunal notes the principle that emerged from the case of Mee v Ferguson (1986) FLC91-716 where the Full Court of the Family Court found that where a parent agreed to the child attending a private school, that parent is liable to contribute to the fees so long and to the extent that he or she has a reasonable financial capacity to do so. It is clear on the evidence before the Tribunal that Mr Leyton does have financial capacity to contribute to these costs. While Ms Leyton has received funds from the property settlement, these funds were paid into her superannuation fund and the Tribunal has not considered these funds in determining contributions to the children’s education costs.

35.  The above determination recognises that Ms Leyton is also required to contribute to the school fees for the children. The above determination is an increase in the child support payable from the administrative assessment which was in place prior to the application for a departure determination. Prior to the current departure determination, Mr Leyton was required to pay Ms Leyton an annual rate of $16,860. The Tribunal’s decision, while taking into account Mr Leyton’s circumstances and capacity to meet the children’s education costs, also recognises that Ms Leyton will be solely responsible for the education costs for [Children 1-4] if they continue at [School]. The Tribunal has also taken into account both Mr Leyton and Ms Leyton’s income and financial resources, including costs for the children and their level of indebtedness.

36. The Tribunal has carefully considered all the written and oral evidence and costs regarding the children’s proper needs. The income, resources, benefits, and assets, together with the commitments and liabilities of both parties, were also scrutinised to determine the above departure determination. In considering all of the factors in subsection 117(4) of the Assessment Act, the Tribunal has taken the view that both parties experience hardship, based on the above considerations.

37.  The Tribunal has determined not to extend the period beyond 31 December 2022 and the assessment will revert to the administrative assessment from 1 January 2023. This is due to the information provided at hearing from Mr Leyton and Ms Leyton that [Child 1] will no longer be at [School] and also due to the absence of any information relating to the potential education costs for the other children from 2023 onwards. While Mr Leyton has raised issues relating to the children continuing at [School], including the children’s views on this issue, these are not considerations which can be determined before the Tribunal. As circumstances change, it is open to either party to seek a further departure determination based on the changes in circumstances. 

Is it otherwise proper to make a particular departure determination?

38. The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Assessment Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be ‘otherwise proper’ to make a departure determination. Subsection 117(5) focuses on the balance of support carried between the parents on the one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. Paragraph 117(5)(b) of the Assessment Act means that the Tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support. In the circumstances of this matter, the Tribunal has concluded that it is otherwise proper to depart from the administrative assessment as specified in the decision.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides to vary the annual rate of child support payable by Mr Leyton as follows:

·     For the period 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr Leyton is increased by $7,664;

·     For the period 1 January 2022 to 31 December 2022, the annual rate of child support payable by Mr Leyton is increased by $7,735;