Mclaughlin and Mclaughlin (Child support)

Mclaughlin and Mclaughlin (Child support) [2018] AATA 3983 (30 August 2018)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2018/BC014226
APPLICANT:  Ms Mclaughlin
OTHER PARTIES:  Mr Mclaughlin
Child Support Registrar

TRIBUNAL:Member P Jensen
DECISION DATE: 30 August 2018
DECISION:

The decision under review is varied so that a half of each of the three payments of $1,561.50 that were made on 28 March 2017, 28 April 2017 and 29 May 2017 are credited as non-agency payments pursuant to section 71A of the Child Support (Registration and Collection) Act 1988, and the balance of the payments are not credited as non-agency payments.

CATCHWORDS
Child support - Non-agency payments - Whether payments made for school fees should be credited - Half of the payments should be credited in lieu of child support liability - Decision under review varied

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

Ms Mclaughlin and Mr Mclaughlin’s two youngest children are [Child 1] and [Child 2]. A child support case was registered with the Department of Human Services – Child Support (“the CSA”) in 2014. These proceedings involve a review of a decision concerning three payments, each of $1,561.50, that Mr Mclaughlin made to [Child 1] and [Child 2]’s school on 28 March 2017, 28 April 2017 and 29 May 2017. However, to properly review that decision, it is necessary to discuss the child support case more broadly.
The Child Support (Assessment) Act 1989 (“the Assessment Act”) provides for an administrative assessment of 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. When the child support case was registered in 2014, Mr Mclaughlin was required to pay the administratively assessed rate of child support payable.
The Child Support (Registration and Collection) Act 1988 (“the Registration Act”) provides that the payment of child support can be a private matter between the parents. Alternatively, the child support payable can be registered for collection by the CSA, in which case it becomes a debt that is owed to the CSA. If a parent applies to have the CSA collect the ongoing child support payable, they can also apply to have the CSA collect the child support arrears in respect of a preceding period.
On 23 March 2017, Ms Mclaughlin applied to have the CSA collect the ongoing child support payable. She also applied to have the CSA collect the child support arrears in respect of the period from 23 December 2016 to 22 March 2017 (“the three-month period”). On 6 June 2017 the CSA decided to collect the ongoing child support payable, with effect from 23 March 2017. It also decided to collect arrears of $909.56 in respect of the three-month period. Mr Mclaughlin objected to the second decision. An objections officer allowed his objection and decided that there had not been any arrears owing in respect of the three-month period. Neither parent sought review of the objections officer’s decision.
The Assessment Act also provides for a departure from the administrative assessment in certain circumstances. Section 98C of the Assessment Act relevantly provides that a decision-maker can make a departure decision if a ground for departure is established and it would be just and equitable and otherwise proper to make a particular determination. Ms Mclaughlin lodged a departure application on 23 March 2017. One of her grounds for departure was subparagraph 117(2)(b)(ii) of the Assessment Act, commonly referred to as Reason 3, which is satisfied if:
..., 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 …
On 6 June 2017 a senior case officer concluded that Reason 3 was established but he nevertheless refused Ms Mclaughlin’s departure application for reasons that included the following (with minor typographical errors corrected):
[Mr Mclaughlin submitted]:
Since Administrative Assessments were initially determined by the Agency, to afford the tuition fees, I have:
·for 10 months each year, deducted the value of the tuition fees from the monthly assessed periodic child support, paying the required monthly tuition fees directly to [School 1] and [School 2] (while [Child 2] attended that school) and the balance of the monthly assessment to Ms Mclaughlin;
·for the remaining 2 months of each year, paid directly to Ms Mclaughlin the monthly periodic child support as assessed by the Agency; and
·paid additional costs for the children.
...
[Mr Mclaughlin provided a copy of an email that he had sent to [School 1] on 2 June 2017, which stated]:
For my daughters [Child 1] (Year 12 – M3) and [Child 2] (Year 7 – M3), due to issues with child support instigated by the girls’ mother, Ms Mclaughlin, I now hereby amend my authority to you for my credit card to only be debited 50% of the school fees instalment for each relevant month, currently $1,581.50 due approximately 26^th of each relevant month. I note the next monthly instalment is due approximately 28 June 2017.
...
Tuition costs
At the time Ms Mclaughlin’s application [to register the child support payable for collection by the CSA] was received, the parents had a private arrangement for the collection of child support and the school fees were deducted from the child support payments. Now child support payments are collected through the department and in addition, Mr Mclaughlin has initiated a 50% apportionment of the children’s school fees payable directly to the school.
I acknowledge the assessment was unfair to Ms Mclaughlin prior to her application. The school fees should not have been deducted from the annual rate of child support before depositing the balance to Ms Mclaughlin’s bank account. The child support scheme provides that payment of child support shall be made by periodic payments to the payee for the day-to-day care of a child. The payee then determines how that money is spent. Given the case was private collect for a number of years, I am not able to create arrears for that past period.[1] Ms Mclaughlin has now taken steps to ensure child support payments are collected by the department and Mr Mclaughlin has set up a payment arrangement effective July 2017 for the payment of 50% of the children’s school fees.
[1]As an aside, it is not immediately apparent that that statement is correct: subsection 98S(3B) of the Assessment Act. Increasing Mr Mclaughlin’s rate of child support payable during the three-month period may have resulted in him owing child support arrears in respect of that period.
The Registration Act allows for the crediting of certain payments against a child support payer’s child support liability. Such payments are referred to as non-agency payments. On 6 June 2017, Mr Mclaughlin applied to have the three payments in question credited as non‑agency payments. On 14 December 2017 the CSA decided to credit those three payments in full. Ms Mclaughlin objected to that decision. An objections officer allowed her objection and decided to credit the first two payments in full and to credit a half of the third payment. Ms Mclaughlin sought further review and I heard the matter on 30 August 2018. Ms Mclaughlin submitted that only a half of each of the three payments should be credited.
Payments can be credited as non-agency payments pursuant to section 71A of the Registration Act if certain requirements are satisfied, including a requirement that “the amount paid, or a part of the amount paid, was intended by both the payer and the payee to be paid in complete or partial satisfaction of” the child support payable. There appears to be no dispute that, at least prior to 2017, both parents had intended the payments that Mr Mclaughlin was making to the school to be credited against his child support payable. Mr Mclaughlin stated that he first became aware that Ms Mclaughlin no longer held that intention on 11 May 2017 when he was contacted by the CSA. Ms Mclaughlin stated that Mr Mclaughlin would have first become aware that she no longer held that intention when he received her solicitor’s letter to his solicitor dated 24 January 2017, which relevantly stated:
Currently, your client pays to our client periodic child support as assessed by the child support agency but deducts his half share of the school fees from that payment. Our client is unable to continue to meet the costs associated with the children’s ongoing attendance at the school without further assistance from your client.
That paragraph does not clearly state that Ms Mclaughlin will no longer accept the payments to the school as part-payments of child support, or words to that effect. Mr Mclaughlin stated, and I accept, that he considered the contents of the letter to be part of the ongoing negotiations that were occurring between the parents. Ms Mclaughlin acknowledged that apart from the letter dated 24 January 2017, there was no other evidence to suggest that Mr Mclaughlin was aware, prior to 11 May 2017, that she had changed her intention.
In my opinion, once parents reach a mutual intention to credit payments to a third party against the child support payer’s child support liability, and they communicate that mutual intention to each other, then the requirement of section 71A referred to above remains satisfied until a parent informs the other parent that they no longer hold that intention. There is no dispute that the other requirements of section 71A were satisfied in respect of all three payments. For those reasons, the requirements of section 71A were satisfied in respect of the first two payments. Mr Mclaughlin made the third payment after 11 May 2017. When he made that payment, he was aware that Ms Mclaughlin no longer intended such payments to be credited against his child support payable, and the requirements of section 71A were not satisfied in respect of that third payment. However, at the hearing, Ms Mclaughlin submitted that a half of each of the three payments should be credited. The requirements of section 71A are therefore satisfied in respect of a half of that third payment.
A payment can also be credited as a non-agency payment pursuant to section 71C of the Registration Act if certain requirements are satisfied, including a requirement that the payment falls within one of a number of prescribed categories. Such payments are often referred to as prescribed non-agency payments. The prescribed categories include “fees charged by a school or preschool for that child”. It is clear that the three payments satisfy the requirements of section 71C.
If a payment satisfies the requirements of section 71A and section 71C, it is preferable to credit the payment pursuant to section 71A, which allows the credit to be given immediate effect, rather than section 71C, which requires the credit to be applied incrementally, subject to the rate at which the payer also makes payments directly to the CSA.
The application of sections 71A and 71C are expressly stated to be subject to section 71D, which relevantly provides that:
The [decision-maker] may refuse to credit an amount under [section 71A or 71C] if satisfied that, in the circumstances of the particular case, the amount ought not to be credited.
Mr Mclaughlin submitted that the objections officer’s decision to credit the first two payments and a half of the third payment should be affirmed because the parents had an agreement whereby he could meet his child support obligations by making payments to the school and paying the balance of his child support payable directly to Ms Mclaughlin. He stated that he made the payments on 28 March and 28 April 2018 in reliance upon that agreement and it would be unfair to only credit a half of the payments in those circumstances. He also stated that it was his understanding that the senior case officer had refused Ms Mclaughlin’s departure application to avoid such unfairness.
With respect, the senior case officer’s written reasons do not clearly state why he refused Ms Mclaughlin’s departure application. However, in the senior case officer’s opinion, the assessment was unfair to Ms Mclaughlin “prior to her application” and “[g]iven the case was private collect for a number of years, I am not able to create arrears for that past period.”[2] Those comments appear to be directed to the period prior to 23 March 2017. As for the period from 23 March 2017 to 6 June 2017, the senior case officer was aware that Mr Mclaughlin had paid all the school fees for March, April and May 2017, and had made arrangements to pay a half of the school fees from June 2017 onwards (in addition to being required to pay the administratively assessed rate of child support payable from 23 March 2017 to the CSA), and it was in that context that the senior case officer decided to refuse Ms Mclaughlin’s departure application. That suggests that the senior case officer intended the status quo as at 6 June 2017 to be preserved. Crediting the three payments, or a portion of those payments, would disrupt that status quo.
[2]As an aside, the senior case officer may have been mistaken on that point, but it is unnecessary to consider that issue further: see subsection 98S(3B) of the Assessment Act.
Mr Mclaughlin queried why I was focusing on the senior case officer’s decision and his reasons for his decision. Neither parent objected to the senior case officer’s decision, and if the senior case officer had clearly stated what final outcome he had intended, then those circumstances would have strongly supported an exercise of the discretion contained in section 71D in a manner that achieved that intended outcome. As it is, the matter is not so simple.
During the hearing I identified a number of reasons as to why it might be appropriate to credit less than a half of the three payments. At the end of the hearing, Ms Mclaughlin reiterated her initial submission that it would be appropriate to credit a half of the three payments. In light of her submission, I consider it appropriate to credit a half of each of the three payments and, for the reasons stated earlier, that crediting will be made pursuant to section 71A of the Registration Act.

DECISION

[2018] AATA 3983

30 August 2018

Key Legal Topics

Areas of Law

Family Law

Legal Concepts

Jurisdiction