McMillan and McMillan (Child support)

[2021] AATA 2901

McMillan and McMillan (Child support) [2021] AATA 2901 (13 July 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/SC021549

APPLICANT:  Ms McMillan

OTHER PARTIES:  Child Support Registrar

Mr McMillan

TRIBUNAL:Member P Jensen

DECISION DATE:  13 July 2021

DECISION:

The decision to assess Mr McMillan as being required to pay child support of $26,089 per annum (i.e. $500 per week) from 20 March 2020 is affirmed.

CATCHWORDS

CHILD SUPPORT – child support agreement – interpretation of binding child support agreement – whether periodic rate ought to reduce once child turned 18 – decision under review affirmed

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

1. Mr McMillan and Ms McMillan are the parents of [Child 1] who was born on 20 March 2002 and [Child 2] who was born on 11 February 2004. At all relevant times, Mr McMillan has also provided care for [Child 3].

2. Ms McMillan and Mr McMillan married in 2001. They separated in 2016. In June 2017 they entered into a binding child support agreement (“the Agreement”) which included the following:

   Recitals

   ...

   D     The parties are the parents of [Child 3, Child 1 and Child 2] (“the children”).

   …

   Periodic child support

   (a)    From the date of this Agreement, the payer will pay the payee, on a fortnightly basis:

   (b)    The sum of $1,200 per week until 31 December 2017; and

   (c)    The sum of $1,000 per week until 28 February 2022.

   Non-periodic child support

   The payer will pay the payee non-periodic child support for each of the children as follows:

   (a)    School fees at [School];

   (b)    Extra Curricular activities;

   (c)    Intrastate, interstate and international school excursions;

   (d)    Private health insurance at the current level; and

   (e)    The gap in all medical, dental, optical [and] orthodontic health expenses …

   …

   Duration of the agreement

   This agreement will cease to operate on 28 February 2022.

3. On 10 July 2017 the Agreement was registered with what is commonly called the Child Support Agency or CSA. Mr McMillan was assessed to pay $1,200 per week until 31 December 2017 and $1,000 per week from 1 January 2018. (The CSA calculated the annual rates, but it is convenient for present purposes to refer to the weekly rates.)

1. On 1 July 2018, section 86A of the Child Support (Assessment) Act 1989 (“the Act”) came into force. It states:

   Apportioning amounts payable under child support agreements

   (1)This section applies if: 

   (a)an agreement is made in the same document in relation to 2 or more children; and 

(b)the agreement does not explicitly provide, and it is not possible to work out, the amount payable under the agreement in relation to each of the children to whom the agreement relates. 

(2)The agreement is taken to provide that the total amount payable under the agreement in relation to each of the children to whom the agreement relates is worked out using the following formula: 

Total amount payable under the agreement

The number of children to whom the agreement relates

(3)To avoid doubt, if the agreement ceases to relate to a child, the amount worked out under subsection (2) continues to apply in relation to each of the remaining children to whom the agreement relates.

1. On 20 March 2020, [Child 1] turned 18. Between March and October 2020 the CSA wrestled with whether Mr McMillan was required to pay child support of $500 per week or $1,000 per week from 20 March 2020. It ultimately decided that he was required to pay $500 per week. Ms McMillan objected to that decision. An objections officer disallowed her objection. She applied to the Tribunal for further review. I heard the matter on 13 July 2021. Ms McMillan and Mr McMillan gave sworn evidence by conference phone.

2. Ms McMillan stated that the parents had agreed that Mr McMillan would make certain payments, as per the Agreement, and it was unfair to reduce those payments on the basis of legislation that post-dated the Agreement and produced a result that was clearly contrary to the parents’ intentions. She also stated, in effect, that the payments that were to be made pursuant to the Agreement constituted both child support payments and a de facto property settlement.

3. There are reasons to accept Ms McMillan’s evidence on those issues. First, the CSA contacted Ms McMillan on 10 July 2017 about the application to register the Agreement and noted (with typographical errors in the original):

   - ISSUE: Clarified the agreement has child [Child 3] who is a [relevant dependent child] for her current active case.
   - [Ms McMillan] advised that child is not [Mr McMillan]’s rel dep but he treats her as his own child and he has always included child. When parties signed the agreement the amount was to cover all 3 children as he was happy to pay for her.

   - advised that as the amount is as set amount, no apportioned, then regardless of 2 or 3 children the amount will be the same, if [Mr McMillan] is happy to agree to the agreement amount then agreement can go haead to be registered.

4. The CSA contacted Mr McMillan on 14 July 2017 and noted (with underlining added):

   ISSUE confirmed:
   The agreement has listed a rel dep child ([Child 3]) and that child is not a child of the assessment/AGR.
   [Mr McMillan] confirmed child [Child 3] is not his biological child but he has been supporting child since she was a baby and acknowledged the periodic amount is set and not apportioned.

   [Mr McMillan] agreed to the agreement amount.

5. Second, the agreed rate of periodic payments exceeded any possible administrative assessment of child support payable. For example, if, on 20 March 2020, Mr McMillan’s adjusted taxable income had been $1,000,000 per annum (rather than his 2018-19 adjusted taxable income of $181,122), Ms McMillan’s adjusted taxable income had been $0, and Ms McMillan had been recorded as providing 100% care for [Child 2], Mr McMillan would have been administratively assessed to pay about $29,150 per annum in child support.

6. Nevertheless, the CSA was required to apply the relevant legislation, and so is the Tribunal. Section 82 of the Act limits the categories of children in relation to whom a child support agreement may be made. Mr McMillan and Ms McMillan could not make a child support agreement in relation to [Child 3]. She is to be disregarded so far as the Agreement is concerned: subsection 82(2) of the Act. Her inclusion in the Agreement does not affect its validity in respect of [Child 1] and [Child 2]: subsection 82(3) of the Act.

7. Relevantly, the CSA’s acceptance of the Agreement in respect of [Child 1] and [Child 2] had the same effect as an acceptance of an application for an administrative assessment of child support in respect of each child. Child support was payable in respect of each child:

   … until the earlier of the following days:

   (i)the day immediately before the day on which a child support terminating event happens in relation to the child, the carer entitled to child support, the liable parent or all three of them;

   (ii)the day immediately before the day on which the agreement is terminated under section 80D or 80G.[1]

   [1]Paragraphs 93(1)(c) and (h) of the Act. See also subsections 95(2) and 142(1) of the Act.

8. As matters currently stand, a child support terminating event happened in respect of [Child 1] on 20 March 2020 when she turned 18: paragraph 12(1)(c) of the Act.[2] From that date, [Child 2] was the only child in respect of whom child support was payable.

   [2]During the hearing, Ms McMillan stated, in effect, that she had asked the CSA to extend the administrative assessment in respect of [Child 1] beyond her 18th birthday pursuant to section 151B of the Act. It was not clear whether she had made a formal application pursuant to that section, or, if she had, whether the CSA had made a formal decision in respect of such an application. However, they are matters that are not under review in the current proceedings. It is sufficient for present purposes to note that the CSA has not accepted any such application.

9. Returning to section 86A of the Act, the Agreement was in relation to two eligible children. Paragraph 86A(1)(a) is satisfied. The Agreement does not explicitly provide, and it is not possible to work out, the amount payable under the Agreement in relation to each of the children to whom the Agreement relates. Indeed, the parents intentionally avoided structuring the Agreement on the basis of amounts payable in relation to each child. Paragraph 86A(1)(b) is satisfied. Section 86A therefore applies and the formula contained in subsection 86A(2) reduces the rate of child support payable from 20 March 2020 to $500 per week. Once the requirements of subsection 86A(1) are satisfied, there is no discretion to not apply section 86A. It follows that the decision under review is correct according to law.

DECISION

The decision to assess Mr McMillan as being required to pay child support of $26,089 per annum (i.e. $500 per week) from 20 March 2020 is affirmed.