Lucena and Lucena (Child support)

[2020] AATA 3658

Lucena and Lucena (Child support) [2020] AATA 3658 (23 July 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/MC018394

APPLICANT:  Mr Lucena

OTHER PARTIES:  Child Support Registrar

Ms Lucena

TRIBUNAL:Member P Noonan

DECISION DATE:  23 July 2020

DECISION:

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

·From 20 August 2019 to 14 May 2020 Mr Lucena’s adjusted taxable income is varied to $64,626.

CATCHWORDS

CHILD SUPPORT – departure determination – earning capacity of paying parent – reduction in income not due to state of health or caring responsibilities - 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

BACKGROUND

1. Mr Lucena and Ms Lucena are the parents of two children under the age of 13. Ms Lucena also has three other dependent children in her care not subject to this child support assessment.

2. 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.

3. A child support case was first registered with the Department of Human Services (the Department) on 17 June 2019 and child support has been registered for collection by the Department since then. The Department maintains a case end date of 1 July 2035.

4. On 20 August 2019 Mr Lucena applied for a departure from the assessment of child support payable. The relevant assessment of child support payable at that time, based upon an administrative assessment was that Mr Lucena pay Ms Lucena an annual amount of child support of $5,458, based upon an estimated income of $54,958 for Mr Lucena.

5. On 7 November 2019 a delegate of the Child Support Registrar found that a ground for departure was established and decided that for the period 20 August 2019 to 30 June 2020 the adjusted taxable income of Mr Lucena be set at $64,626 per annum.

6. An objection was lodged by Mr Lucena and on 30 January 2020 a department objections officer part allowed the objection and decided that for the period 20 August 2019 to 30 November 2021, Mr Lucena’s adjusted taxable income be set at $64,626 per annum.

7. Mr Lucena subsequently lodged an appeal with the Tribunal for an independent hearing of the Department’s decision. A hearing for the matter was subsequently held on 22 July 2020. The Child Support Registrar did not attend the hearing. Mr Lucena attended the hearing by conference telephone and gave evidence to the Tribunal on affirmation. Ms Lucena also attended the hearing by conference telephone and gave evidence to the Tribunal on affirmation.

8. Pursuant to paragraph 98C(1)(b) of the Act, a decision to depart from the administrative assessment may be made if the following 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; …

CONSIDERATION

Mr Lucena’s earning capacity

1. Subparagraphs 117(2)(c)(ia) and (ib) of the Act, commonly referred to as Reason 8, provide as grounds for departure:

   (c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:

   ...

   (ia) because of the income, property and financial resources of either parent; or

   (ib) because of the earning capacity of either parent…

2. The term “special circumstances” is not defined in the Act. In Gyselman and Gyselman (1992) FLC 92-279, the Full Family Court indicated that for special circumstances to exist, the facts of the case must establish something which is special or out of the ordinary.

3. A parent’s earning capacity can only be taken into account in limited circumstances, as set out in subsection 117(7B) of the Act which requires the Tribunal to consider three criteria in determining that the parent’s earning capacity is greater than is reflected in their income used in the administrative assessment:

   ·Whether the parent is:

   o   not working despite ample opportunity to do so (subparagraph 117(7B)(a)(i)); and/or

   o   has reduced their weekly hours of work to below full-time work (subparagraph 117(7B)(a)(ii)); and/or

   o   has changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii)); and

   ·If the parent’s decision about their work arrangements is not justified by either their caring responsibilities (subparagraph 117(7B)(b)(i)) or their state of health (subparagraph 117(7B)(b)(ii)); and

   ·If the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to stop working, reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support (paragraph 117(7B)(c)).

4. All three of the above criteria must be met before a departure determination can be made to take into account whether the parties have a greater earning capacity. If the above criteria are satisfied then the Tribunal may determine the actual earning capacity of the parent.

5. There is no dispute in this matter that Mr Lucena has reduced his hours of work from October 2019.  

6. I note that on 20 August 2019 Mr Lucena reported an estimated income of $54,958 and then on 21 October 2020, Mr Lucena reported an estimated income of $27,270 for the 2019/20 financial year. He submitted a medical certificate from his GP, dated 25 October 2019, in which the GP stated that it his professional medical opinion that Mr Lucena is currently not fit for regular work duties at full hours due to psychological stress and that he recommends Mr Lucena reduce his hours over the following eight weeks. In addition, in November 2019 Mr Lucena was twice referred to a psychologist under a mental health treatment plan, however Mr Lucena did not sign the patient agreements or contact the psychologists.

7. Mr Lucena submitted to me a medical opinion from a treating counselling psychologist, dated 26 March 2020 from [Ms A], which is addressed to the Tribunal and as such has been prepared for the purposes of the Tribunal’s consideration. The opinion states that Mr Lucena was referred by his GP under a Mental Health Care Plan dated 14 November 2019. [Ms A] states that she has seen Mr Lucena over three sessions and expects treatment to be ongoing. She concurs with his GP in encouraging Mr Lucena to make significant adjustments to his lifestyle (such as nutrition, exercise, reduction of working hours and sleep) in order to treat his (redacted condition). I have assessed this expert opinion with reference to the Tribunal’s guideline for Persons Giving Expert and Opinion Evidence.[1]

   [1] >

   Mr Lucena informed me that he had lost all contact with the children on 11 October 2019. This had caused his mental health to deteriorate. I put to Mr Lucena that it appears he had delayed following up on his medical referrals for some time. He submitted that he had tried to follow up but getting an appointment had proven difficult. He also informed me that since the three appointments he has had little contact with [Ms A] which he stated is due to her lack of availability due to the COVID-19 pandemic. I noted that I had some concerns about the medical reports provided with respect to the level of detail contained within them. No submissions were made in response by Mr Lucena.

17.  With respect to the weight to be attributed to Mr Lucena’s medical evidence I note that [Ms A] has a limited history of examination with Mr Lucena being three sessions, the length and dates of which are not specified. I note that [Ms A] sets out her qualifications and that she is a registered counselling psychologist and I accept that she provides the report on matters within her area of expertise. Unfortunately, the report is very limited in its factual detail. It provides no factual information about Mr Lucena’s condition, other than the redacted condition and does not set out a detailed treatment plan or prognosis. It provides no details of the examinations, tests or other investigations which were relied upon in preparing the report or details of any material relied upon in preparing the report. [Ms A] merely sets out that she concurs with the referring doctor in encouraging Mr Lucena to make significant adjustments to his lifestyle (including a reduction in working hours). There is no consideration of the type of work Mr Lucena undertakes and how this impacts upon his condition. Overall, while acknowledging [Ms A] is qualified to provide an opinion about Mr Lucena’s mental health impacting upon his ability to work, she simply has not provided a concluded opinion or provided her reasons for not having done so. As such I place no weight upon this evidence.

18.  With respect to the medical opinions supplied by Mr Lucena’s treating GP these merely provide an opinion that Mr Lucena is not fit for regular work and that he reduce his work hours due to stress. Unfortunately, when it comes to family law situations, stress is a common and unavoidable emotion experienced by nearly all participants. Indeed, Ms Lucena gave evidence that she is also experiencing high levels of stress, for which she has received medication, while continuing with her work. Without details of the examinations, tests or other investigations which were relied upon, the recommendation that Mr Lucena reduce his work hours is no more than an opinion, for which it is not clear the GP has the requisite expertise to provide regardless. As such I place no weight upon this evidence.

19.  After considering the evidence before me I am not satisfied that Mr Lucena’s reduced hours of work are justified by his state of health. There is also no suggestion that until 15 May 2020, when he began four nights of care per fortnight of the children, Mr Lucena’s decision to reduce his hours of work was due to his caring responsibilities. I accept Mr Lucena’s undisputed evidence that he works in [Occupation 1] and he now works around six night shifts a fortnight and has care of the children four nights a fortnight. Therefore, from 15 May 2020, I find that Mr Lucena’s reduced hours of work are justified by his caring responsibilities.

20.  Finally, Mr Lucena submitted that he signed an undertaking that he would not pass within 200 metres of any place that Ms Lucena lives, works or attends and that accordingly, his [work] options are limited. Ms Lucena submitted there is no active intervention order in place and her workplace is shut when Mr Lucena is conducting his [work]. I am not satisfied that Mr Lucena’s voluntary undertaking is plausible justification for his reduction in hours. I find that Mr Lucena has not demonstrated that it was not a major purpose of his decision to reduce his hours of work to affect the administrative assessment of child support.

21.  On the basis of the above reasoning I find that the conditions set out at subsection 117(7B) of the Act are met. I am satisfied that Mr Lucena was working continuously in the same job during the 2018/19 financial year and that his taxable income was $64,626. I consider this to be an appropriate figure upon which to assess Mr Lucena’s earning capacity as at the date of the departure application.

Ms Lucena’s income and access to financial resources

22.  There is no dispute in this matter that Ms Lucena is employed as a PAYG taxpayer at arm’s length and that she also receives various Commonwealth income benefits. I am satisfied that her 2018/19 taxable income of $19,070 is a reasonable reflection of her overall access to financial resources and as such her capacity to support the children financially.

1. Under the applicable assessment, the annual rate of child support payable by Mr Lucena is $5,458 per annum. I have found that Mr Lucena’s earning capacity at the time of his departure application was $64,626. Using this figure and Ms Lucena’s annual income of $19,080, the annual amount of child support payable by Mr Lucena is approximately $7,206 per annum. Such a difference in the child support payable means that application of the applicable assessment results in an unjust and inequitable determination of the level of financial support to be provided by Mr Lucena in support of the children. As a result, a ground for departure in subparagraph 117(2)(c)(ib) of the Act does exist.

Other grounds

24.  I note that Mr Lucena raised another ground for departure in regard to payments to Ms Lucena he has made in support of the children.

25.In Marsh & Eccles [2008] FMCAfam 1417, Riethmuller FM stated, in regard to determining multiple grounds for departure from the administrative assessment, as follows (at paragraph 13):

Once a ‘special circumstance’ is established, it is then necessary to determine what would be a just and equitable and otherwise proper child support assessment … once a special circumstance has been established for each period, as only one special circumstance in the period is sufficient to satisfy the first step of the departure process.

26.  I will therefore consider this ground in the context of whether it is just and equitable and otherwise proper to depart from the administrative assessment.

Would departure from the administrative assessment be just and equitable?

Mr Lucena

1. Mr Lucena gave evidence that he is servicing a personal loan at a cost of $163 per week. He submitted this is in respect to a consolidation of debt that he and Ms Lucena undertook. Ms Lucena entirely disputed that the personal loan is serviced for her benefit. I accept that this debt is being paid by Mr Lucena. Further there appears to be no reasonable prospect of property settlement between the parents. This is largely attributable to their respective lack of financial resources and minimal assets. Accordingly, I am satisfied that Mr Lucena will continue to service the loan, with a balance of around $24,000.

2. Mr Lucena also made submissions in respect to other payments he has been making. I note that he is able to make a non-agency payment claim to the Department in respect to such items. I prefer to refer to Mr Lucena’s statement of expenses totalling around $470 per week in household expenses and $67 per week in other personal expenses in assessing just and equitable considerations in this matter. I accept as reasonable this evidence of expenditure from Mr Lucena as disclosed in his Statement of Financial Circumstances and also note that he disclosed minimal assets. I also accept that Mr Lucena is a PAYG taxpayer employed at an arm’s length arrangement and that he does not have access to further financial resources apart from his wages.

Ms Lucena

1. Ms Lucena also supplied a Statement of Financial Circumstances. She disclosed minimal assets and a significant Centrelink debt of $36,830, stemming from her time in a relationship with Mr Lucena and a car loan of $7,000. She disclosed weekly total expenditure of around $880. I accept as reasonable her disclosures in respect to her overall financial position.

The children

1. In determining the proper needs of the child it is necessary to have regard to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Act). In Eades & Cadell (SSAT Appeal) [2009] FMCAfam 275 at paragraph 22, Slack FM stated as follows:

   In considering the proper needs of the child [s 117(4)(b)], the SSAT:

   a.would ordinarily consider the evidence of the parties about the needs of the children to assess the reasonableness and quantum of those needs;

   b.may have regard to publish guidelines as to the needs of the children (see Hallinan & Witynski at 94.323).

   c.may also have regard to the costs of children used in the assessment of child support under the existing formula arrangements (although it is not sufficient or appropriate to rely upon the formula to perform that task, Lindenmayer J in Dwyer & McGuire (1993) FLC92-420 (and see also Gyselman (supra) at 79.078).

2. There were no special needs costs or education costs raised in respect to the children. Overall, I consider this an appropriate case to largely distribute the costs of raising the children using the relevant child support formula, which is based on social science research giving the average costs of children in various family income brackets.

Otherwise proper

1. I am satisfied that changing the amount of child support payable would not have any adverse effect upon the community as this decision results in the parents being required to pay child support according to their actual capacity to do so. Such a result would be otherwise proper.

Conclusion

1. It is open to the Tribunal to vary the rate of child support payable or vary some of the variables that are used in the administrative assessment formula. As concluded earlier in these reasons, Mr Lucena has an earning capacity such that it is reasonable to expect him to provide some additional child support.

2. The principal object of the Act is to ensure that children receive a proper level of financial support from their parents. Further, I note the statements contained in sections 3 and 4 of the Act to the following effect:

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

   ·         The duty has a priority over all other 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.

3. I have had due regard to submissions made by both parents in respect to hardship considerations and departure dates.

4. In respect of appropriate dates for a departure determination, I agree with the start date of 20 August 2019 when Mr Lucena provided his reduced income estimate. However, I will end the departure determination with respect to Mr Lucena’s earning capacity on 14 May 2020 when Mr Lucena commenced his regular overnight care of the children. I am satisfied that from that date an administrative assessment of child support is the most appropriate basis upon which to assess the parents’ capacity to support the children, which allows for estimates of income to be lodged and a further reconciliation of those estimates. Accordingly, I will depart from the administrative assessment in the following terms:

   ·From 20 August 2019 to 14 May 2020 Mr Lucena’s adjusted taxable income is varied to $64,626.

5. For the period of this departure determination Mr Lucena will be required to pay child support of $7,206 per annum or $138 per week. I am satisfied Mr Lucena will not be placed in financial hardship by this decision. No arrears will be created and the amount payable is within his capacity to earn before his caring responsibilities reduced that capacity. I also do not consider that Ms Lucena will be placed in undue hardship by this decision. She will be paid child support that is commensurate with my analysis of the parents’ current overall access to financial resources.

1. Overall, I consider that both parents will be provided with certainty in planning their respective finances to adequately support the children by the implementation of this departure determination, and that it is a just and equitable outcome in regard to the respective situations of each parent.

DECISION

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

·From 20 August 2019 to 14 May 2020 Mr Lucena’s adjusted taxable income is varied to $64,626.