MacCubbin and Paderewski (Child support)

[2020] AATA 3663

MacCubbin and Paderewski (Child support) [2020] AATA 3663 (22 June 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/PC018607

APPLICANT:  Mr MacCubbin

OTHER PARTIES:  Child Support Registrar

Ms Paderewski

TRIBUNAL:Member S Brakespeare

DECISION DATE:   22 June 2020

DECISION:

The decision under review is varied so that there is a departure determination in the following terms:

·     for the period 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr MacCubbin is to be increased by $1,597;

·     for the period 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr MacCubbin is to be increased by $2,392.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education - manner expected by both parents - cost of maintaining the children are significantly affected –decision under review varied

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. Mr MacCubbin is the parent liable to pay child support to Ms Paderewski in respect of [the child], who is five years old.

2. On 11 April 2019 Mr MacCubbin applied to the Child Support Agency to make a departure from the administrative assessment of child support due to special circumstances. He nominated as a ground for departure that the administrative assessment of child support would be unjust and inequitable because of the income, property and financial resources of either parent.

3. On 7 November 2019 an officer of the Child Support Agency refused to make a departure determination (the original decision).

4. Mr MacCubbin lodged an objection to the original decision. During the objection process he raised a further ground for departure being that the administrative assessment of child support would be unjust and inequitable because of the earning capacity of Ms Paderewski. Ms Paderewski also introduced a ground for departure being that the costs of maintaining the child are significantly affected because the child is being cared for, educated or trained in a manner that was expected by their parents.

5. On 28 February 2020 an objections officer allowed the objection and made a departure determination in the following terms (the objection decision):

   ·for the period 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr MacCubbin is to be increased by $2,382;

   ·for the period 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr MacCubbin is to be increased by $2,874.

1. The increase in the annual rate of child support was in respect of private school fees paid for the child.

2. Mr MacCubbin lodged an application for review of the objection decision with the tribunal on 11 March 2020. A hearing was held on 5 June 2020. Mr MacCubbin and Ms Paderewski gave evidence on affirmation to the tribunal via conference telephone. The Child Support Agency provided the tribunal and the parties with papers relevant to the review (517 pages). The tribunal also received extra documents from both parties which were exchanged prior to hearing. Documents provided by Mr MacCubbin are folioed A1 to A12. Documents provided by Ms Paderewski are folioed B1 to B19. After the hearing the tribunal deferred the matter and issued a direction to Ms Paderewski to provide further documents. Ms Paderewski provided documents folioed B20 to B23.  Mr MacCubbin’s response to those documents is folioed A13.[1]

   [1] Mr MacCubbin also sought to provide further documents regarding Ms Paderewski’s financial resources; the tribunal did not accept the documents as they were provided after the compliance date for lodging documents (14 days prior to the hearing date) and the tribunal did not direct that further documents could be provided after the hearing.

3. Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s consideration of the issues which it has to decide.

ISSUES

1. The statutory provisions relevant to these reviews are contained in the Child Support (Assessment) Act 1989 (the Act).

10.The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.

11.Under Part 6A of the Act the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).

12.Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and it establishes a three-step process such that the issues for determination by this tribunal are:

·whether a ground is established to depart from the administrative assessment of child support; and

·if so, whether it is just and equitable to make a particular departure determination; and

·if so, whether it is otherwise proper to make a particular departure determination.

13.The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.

14.Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman and Gyselman (1992) FLC 92-279 has held:

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 formula in the ordinary run of cases.

15.Likewise, in Phillippe and Phillippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.

16.If the tribunal is satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the tribunal may make one of the determinations prescribed in section 98S of the Act.

17.The range of determinations which can be made includes variations to: the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

Issue 1 – Is there a ground for departure?

18.Subparagraph 117(2)(b)(ii) of the Act provides a ground for departure exists where, in the special circumstances of the case, the costs of maintaining the child are significantly affected because the child is being cared for, educated or trained in the manner that was expected by their parents. 

19.In deciding this matter, the tribunal needs to consider the type of education intended by both parents for the children, rather than any particular school intended by the parents (Wild and Ballard (1997) FLC 92-771). The tribunal will also need to consider and determine whether both parents expected the children to be educated privately. The fact that a payer can afford to pay the fees is not in itself a reason for imposing a liability to contribute to school fees (Mee and Ferguson (1986) FLC 91-716).

20.It is not in contention, the tribunal finds, that the child is being educated at [School], which is a private school. The AAT, differently constituted, found on 5 July 2018 that this ground for departure was established and made a departure determination which increased the annual rate of child support payable by Mr MacCubbin for the period commencing 1 January 2017 and ending 31 December 2019.

21.Mr MacCubbin stated that he had signed the enrolment forms for the child to be educated at a private school. However, he said that he had no great desire for the child to be educated privately, he just wanted her to attend a good school. He said at the time the child was enrolled at [School] the parents were together and were both in the financial situation that made that choice affordable. He said now that he and Ms Paderewski are separated he is no longer in a financial situation to continue to contribute to the private school fees.

22.Ms Paderewski said that all of Mr MacCubbin’s children had been educated at private schools and he had contributed to the payment of their school fees. She said there was never an intention for the child to attend any school other than [School]. Mr MacCubbin signed the forms required to enrol the child at [School].

23.The tribunal is satisfied that the child is being educated in the manner intended by her parents; that is, at a private school. Whilst both parents remain liable for the fees Ms Paderewski is the parent who is paying the fees.

24.The amount of fees that Ms Paderewski is required to pay in respect of the child’s education is contested. Mr MacCubbin provided a document to the tribunal, obtained under subpoena, indicating that [School] undertook to provide Ms Paderewski with a fee reduction of 50% in respect of the child’s fees, for both the 2019 and 2020 school years. The fee reduction would cease once the child’s older sister had graduated. Mr MacCubbin believes that Ms Paderewski is overstating the amount of school fees she was required to pay for the child, and for this reason, she had failed to produce a statement of the fees actually levied in respect of the child. Ms Paderewski told the tribunal that the fee statement would give a false impression, as the 50% reduction would show against the child’s fees, when in fact the reduction was granted to enable her to keep her older daughter at the school to finish Year 12.

25.The tribunal directed Ms Paderewski to provide a statement from the school setting out her liability in respect of the child for the 2020 school year and her expected uniform costs. (The tribunal does not propose to revisit the decision made by the AAT in respect of the previous school years.)

26.Ms Paderewski provided a statement of account from [School] in respect of the child for the 2020 school year and an estimate of the uniform costs she is likely to incur. The statement of account shows that the total amount payable is $2,351.15.  This amount is arrived at after reductions have been applied for the second child discount, pension concession and fee concession. Ms Paderewski provided a summary of uniform requirements for the child for the school year and set out the likely cost of the items. The total is noted as $843.50 for a year. The tribunal finds the estimate to be reasonable.

27.Mr MacCubbin was given an opportunity to provide a written response to the extra documents provided by Ms Paderewski in response to the tribunal’s direction. Mr MacCubbin noted that it was his understanding that a similar total was charged for the child’s fees in 2019; however, the AAT had assessed him to pay $2,360 for that year which he considered to be $600 higher.

28.In her written submission to the tribunal Ms Paderewski stated that she did not believe that Mr MacCubbin should receive the benefit of the second child discount or the concession card discount as he only has one child at the school and does not hold a concession card.

29.The tribunal takes the view that it is the actual cost incurred in respect of the child’s education (and not the gross cost before deductions) that is relevant when determining whether the education costs significantly affect the cost of maintaining the child. The tribunal finds that the costs of the child’s education, in 2020 is $3,194 ($2,351 + $843).  In accordance with the administrative assessment Ms Paderewski is entitled to child support for the child of $13,230 from 1 January 2020. The cost of the child’s education equates to approximately a quarter of that amount. The tribunal therefore finds that the cost of the child’s education significantly affects the costs of maintaining the child.

30.The tribunal finds that there is a ground for departure in accordance with subparagraph 117(2)(b)(ii) of the Act.

Issue 2 – is it just and equitable to make a particular determination?

31.As the tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the children, the liable parent, and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to consider the matters discussed below[2], which are as set out in subsection 117(4) of the Act:

[2] The tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act re Tyagi & Meares (SSAT Appeal) [2008] FMCAfam 886

(4)  In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:

(a)  the nature of the duty of a parent to maintain a child (as stated in section 3); and

(b)  the proper needs of the child; and

(c)  the income, earning capacity, property and financial resources of the child; and

(d)  the income, property and financial resources of each parent who is a party to the proceeding; and

(da)  the earning capacity of each parent who is a party to the proceeding; and

(e)  the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:

(i)  himself or herself; or

(ii)  any other child or another person that the person has a duty to maintain; and

(f)  the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and

(g)  any hardship that would be caused:

(i)  to:

(A)  the child; or

(B)  the carer entitled to child support;

by the making of, or the refusal to make, the order; and

(ii)  to:

(A)  the liable parent; or

(B)  any other child or another person that the liable parent has a duty to support;

by the making of, or the refusal to make, the order; and

(iii)  to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.

32.In having regard to the proper needs of the child, regard must be had 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). The tribunal finds that there are extra costs to be taken into account in respect of the child’s needs which are in addition to the costs calculated by reference to Costs of the Children Table.[3]

[3] Provided for in section 155 of the Act.

33.Ms Paderewski requested that the tribunal make a departure determination that takes into account the school fees, as calculated by her, for the child up until the child finishes Year 12. Mr MacCubbin did not agree with that proposition. He advised the tribunal that he is taking legal action regarding the child’s schooling.

34.The tribunal finds that the parents should share equally in the cost of the child’s education. The tribunal has found that the cost for 2020 is $3,194. With respect to the 2021 school year the tribunal finds that the cost will be higher, as the second child concession and the fee concession will no longer apply. The tribunal assumes that the pension concession will apply. The actual fees for 2021 were not available to the tribunal. Based on the 2020 statement of fees for the child the tribunal calculated that after the pension concession is applied the fees will be approximately $3,940.  The tribunal also finds that the cost of uniforms is likely to be similar to the 2020 estimate of $843. This means the fees that are likely to be payable for the child in 2021 are estimated to be $4,783 ($3,940 + $843).

35.The tribunal therefore finds that Mr MacCubbin should contribute $1,597 for the child’s education costs in 2020 and $2,392 for the child’s education costs in 2021. Mr MacCubbin contends that he was required to pay too much for the fees in 2019. However, the tribunal does not propose to revisit the previous AAT determination as it was taken into account in a subsequent binding child support agreement which was accepted by the Child Support Agency on 9 September 2019.

36.The administrative assessment takes into account an income for Mr MacCubbin of $145,014 from 1 May 2019 (being his 2017/18 adjusted taxable income). It is replaced by a provisional income of $149,074 from 1 June 2020. Mr MacCubbin confirmed that he has worked full-time for the same employer for five years and his income has not changed significantly. He said that there is an occasional opportunity for overtime but it does not significantly affect his income.  Mr MacCubbin advised that he holds some shares from his employer on escrow. He has no other income, property or financial resources. He is awaiting payment of $10,942 from Ms Paderewski in respect of the settlement of the property in which she lives.

37.The administrative assessment takes into account an income for Ms Paderewski of $44,964 from 1 September 2019, increasing to $45,017 from 1 June 2020. Ms Paderewski confirmed that she has worked part-time for [Employer] for 27 years. Her other sources of income are parenting payment, family tax benefit, and child support paid by Mr MacCubbin and by the father of her other child. Mr MacCubbin contends that Ms Paderewski has access to an undisclosed financial resource. Ms Paderewski denies that this is the case. She said that she has received loans from family (in particular her parents) and friends and from [a work-related organisation] to help her with mortgage and other costs for her children. A close friend also purchased a car for her, because she did not have a reliable vehicle.

38.Ms Paderewski said that as part of the property settlement she will retain the home in which she lives. She will be solely responsible for the mortgage. She stated that she has no other property or financial resources.

39.Mr MacCubbin contends that Ms Paderewski has the capacity to increase her income by working full-time. The tribunal notes that  the earning capacity provisions can only be considered if a person does not work despite ample opportunity to do so; or the person has reduced their number of hours per week to below full-time; or the person has changed his or her occupation, industry or working  pattern (paragraph 117(7B)(a) of the Act). None of those criteria are satisfied in respect of Ms Paderewski and therefore it is not open to the tribunal to make an earning capacity determination.

40.Mr MacCubbin stated that his commitments include income tax of $800 per week, rent of $400 per week, child support payments of $1,330 per month for his children of a separate case, child support payments of $1,240 per month for the child of this case, $450 per month for credit card repayments, and loan repayments totalling $1,269 per month in respect of two [Bank] loans ($60,000 in total) that arose as a result of legal fees. Mr MacCubbin said that he also owes $30,000 for legal fees incurred in 2017; he is not currently repaying that loan and there is no payment plan in place. He also owes about $7,000 to family members; those amounts will be repaid when he in a position to do so. The tribunal calculated that the cost of Mr MacCubbin’s commitments equal approximately $1,913 per week. Mr MacCubbin told the tribunal that his Family Court matters are ongoing and whilst he is now self-represented he will need about $250 a week over the next couple of years to pay for legal advice. He said that he owes child support arrears of about $25,000 in both cases. The arrears in his other case arose as a result of estimates that were reconciled.

41.Ms Paderewski stated that her commitments include income tax of $106 per week, mortgage repayments of $625 per week, health care premiums of $39 per week and school fees for both her children of $130 per week. (The tribunal has calculated that the school fees for the child cost Ms Paderewski approximately $61 per week.) Ms Paderewski’s credit card statements indicate her minimum repayment amount is approximately $300 per month. Ms Paderewski told the tribunal that she meets the mortgage payments and living costs using the income she receives from employment, child support, family tax benefit and parenting payments. Her parents assist her from time to time to pay some of her bills so that she and the children can remain in the family home. Ms Paderewski said that she is not currently repaying any of the monies owed to her family and friends; she will repay them when she can afford to do so.

42.In respect of the child support owed to her by Mr MacCubbin, Ms Paderewski said that his account is likely to go into arrears because now that the property has been settled, the $10,492 she owes him is to be credited against his arrears as a non-agency payment putting the account into credit. Mr MacCubbin said he was unaware that the credit was being made.

43.The tribunal proposes to make a departure determination in the following terms:

·for the period 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr MacCubbin is to be increased by $1,597;

·for the period 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr MacCubbin is to be increased by $2,392.

44.The proposed determination will result in an approximate annual liability for Mr MacCubbin of $14,896 ($286 per week) from 1 January 2020, and $16,001 from 1 January 2021 ($307 per week).

45.The tribunal calculated that Mr MacCubbin’s commitments, including his child support are approximately $1,913 per week. As his gross income is not less than $2,500 per week the tribunal is satisfied that he has the capacity to pay the amount proposed under the assessment without causing him hardship. Whilst Mr MacCubbin states that he is unable to make ends meet the tribunal notes that section 3 of the Act provides that his child support commitments have priority over all commitments other than commitments necessary to enable him to support himself.

46.With respect to Ms Paderewski the tribunal finds that she has a significantly lower income and sole care of the child. The amount of child support that arises under the proposed determination is required by her to meet the proper needs of the child.

47.The tribunal decided not to extend the proposed determination beyond 31 December 2021 as circumstances, including the amount of school fees payable, may change.

48.The tribunal finds that the proposed determination is just and equitable.

Issue 3 – Is it otherwise proper to make a particular departure determination?

49.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 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. It focuses on the balance of support carried between the parents on 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. 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.

50.Ms Paderewski receives family payments in respect of the child. The proposed determination may result in a reduction in the amount of government support she receives. As this shifts the burden of supporting the child away from the taxpayer, and onto the parents, the tribunal finds the prosed determination to be otherwise proper.

51.The tribunal therefore makes the following departure determination:

·     for the period 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr MacCubbin is to be increased by $1,597;

·     for the period 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr MacCubbin is to be increased by $2,392.

DECISION

The decision under review is varied so that there is a departure determination in the following terms:

·     for the period 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr MacCubbin is to be increased by $1,597;

·     for the period 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr MacCubbin is to be increased by $2,392.