McSorley and Ledger (Child support)

[2022] AATA 3369

McSorley and Ledger (Child support) [2022] AATA 3369 (19 July 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/AC023499

APPLICANT:  Ms McSorley

OTHER PARTIES:  Child Support Registrar

Mr Ledger

TRIBUNAL:Member J Bakas

DECISION DATE:  19 July 2022

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that the payment for school fees of $4,015.50 made on 16 February 2021, $3,441 made on 18 May 2021 and $3,440.50 made on 9 August 2021 by Mr Ledger should be refused as a prescribed non-agency payment.

CATCHWORDS

CHILD SUPPORT – non-agency payment – prescribed payment of school fees – all conditions to credit are satisfied – whether there are special circumstances to refuse – special circumstances exist - prescribed payments refused - 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. Ms McSorley and Mr Ledger are the parents of [Child 1] (born [July] 2007), [Child 2] (born [May] 2009) and [Child 3] (born [February] 2012).

2. There has been a child support assessment in place since 16 November 2020 with collection by the Child Support Agency (CSA) from the same date. Mr Ledger was the parent liable to pay child support under the assessment.

3. On 24 January 2022 Mr Ledger applied to the Child Support Agency for credit of three payments totalling $10,897. These payments consisted of $4,015.50 made on 16 February 2021, $3,441 made on 18 May 2021 and $3,440.50 made on 9 August 2021. These payments were accepted as prescribed non-agency payments (PNAPs) by the CSA on 9 February 2022.

4. On 10 February 2022 Ms McSorley objected to this decision and on 2 March 2022 the CSA disallowed the objection (the objection decision).

5. On 18 March 2022 Ms McSorley applied to the Administrative Appeals Tribunal (the Tribunal) for a review of the objection decision.

6. The Tribunal conducted a hearing into the application on 19 July 2022. Ms McSorley and Mr Ledger gave evidence on affirmation by MS Teams audio. The Child Support Agency provided the Tribunal and the parties with papers relevant to the review.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Registration and Collection) Act 1988 (the Act).

2. When a child support liability is registered under the Act for collection, the amount payable is a debt due to the Commonwealth and must be paid to the Child Support Agency, not the payee.

3. In some circumstances, the Child Support Agency may credit payments made directly to a payee or to a third party against a child support liability that is registered for collection (sections 71, 71A or 71C of the Act). The Child Support Agency refers to the credits under sections 71 and 71A as non-agency payments. Credits under section 71C are known as prescribed non-agency payments as this section applies to payments of the kind specified in section 19 of the Child Support (Registration and Collection) Regulations 2018 (the Regulations).

4. Section 71C of the Act provides a mechanism whereby payments made by a liable parent to the payee or to another person for items specified in the Regulations may be taken into account in partial satisfaction of the liable parent’s child support liability. A number of specific criteria must be satisfied for this provision to apply. Even where all the criteria are met, there is still a discretion in section 71D of the Act to refuse to credit amounts that would otherwise be able to be credited against the liability.

5. The issue which arises in this case is whether or not the payment made by Mr Ledger can be accepted as a non-agency payment and credited against his child support liability.

CONSIDERATION

1. Ms McSorley told the Tribunal that she and Mr Ledger had agreed to each pay 50% of school fees for the children and that this was in addition to Mr Ledger’ child support liability. She referred to two emails contained in the hearing papers, dated 16 February 2021 and 24 February 2021, in which Mr Ledger notes that he will pay child support as assessed by the CSA and pay half the school fees and health insurance for the children. He has been paying 50% of the school fees since November 2020 and only lodged for the PNAPs when Child Support reassessed his income. She is not disputing that he made the payments but rather she is disputing their classification as PNAPs.

2. Mr Ledger told the Tribunal that he agreed to pay his child support liability and half of the school fees but that he always intended to claim the school fees as a PNAP. It was a very busy year with various family law issues and proceedings and he did not get around to pursuing the PNAP until the end of 2021. He also said that there was no binding agreement requiring him to pay school fees in addition to the child support.

3. I note that a court order, dated [in] September 2021, provides that Ms McSorley and Mr Ledger will equally share the children’s school fees at [a named] College. However, this post-dates the PNAP before this Tribunal.

4. It is not in contention and the Tribunal finds that Mr Ledger made payments totalling $10,897 between 16 February 2021 and 9 August 2021 towards school fees for the three children.

5. Section 71A of the Act provides for payments made by the payer of an enforceable maintenance liability to a third party to be credited against the amount payable under the child support liability. The amount paid by the payer to the third party must partially or completely satisfy a debt owed by the payee, the payer or both the payer and the payee (paragraph 71A(1)(a)). It must be the intention of both parties that the amount paid, or part of the amount paid, be credited against the payer’s enforceable child support liability in relation to the child support enforcement period (paragraph 71A(1)(c)).

6. The Tribunal is satisfied the payment made by Mr Ledger for school fees was not intended by both parents to be in lieu of child support and credited against the enforceable child support liability. The Tribunal finds the payment made by Mr Ledger cannot, therefore, be considered as a non-agency payment under section 71A of the Act.

7. Where such a payment cannot be credited under section 71A of the Act, it may be credited under section 71C even if there is no mutual intention between the parents. Section 71C was introduced to give payers more choice regarding the form in which child support is paid. It provides, subject to section 71D, for an amount to be credited against a payer’s child support liability regardless of the intention of the parents at the time the payment was made. Under subsection 71C(1) of the Act, the Child Support Agency must credit an amount when all the conditions set out in paragraphs 71C(1)(a) to 71C(1)(d) are met.

8. The payment to be credited must be a payment of the kind specified in section 19 of the Regulations. This section states that for the purposes of paragraph 71C(1)(b) of the Act, specified payments are payments of the following kinds in relation to an enforceable maintenance liability:

   (a)   child care costs for the child who is the subject of the enforceable maintenance liability;

   (b)   fees charged by a school or preschool for that child;

   (c)   amounts payable for uniforms and books required by a school or preschool for that child;

   (d)   fees for essential medical and dental services for that child;

   (e)   the payee’s share of amounts payable for rent or a security bond for the payee’s home;

   (f)    the payee’s share of amounts payable for utilities, rates or body corporate charges for the payee’s home;

   (g)   the payee’s share of repayments on a loan that financed the payee’s home;

   (h)   costs to the payee of obtaining and running a motor vehicle, including repairs and standing costs.

9. The Tribunal finds the payment totalling $10,897 made between 16 February 2021 and 9 August 2021 for school fees is a payment of the kind specified in the Regulations.

10. The condition in paragraph 71C(1)(a) of the Act is that the payer of an enforceable maintenance liability in relation to a payment period or initial period has made one or more payments to the payee, or to another person. The Tribunal is satisfied this is the case.

11. The condition in paragraph 71C(1)(ba) is that at the time the payment is made, the payer does not have at least regular care of any of the children to whom the relevant administrative assessment relates. It is also a condition that the payer does not have at least regular care of any of the children at the time at which the Registrar applies section 71C (paragraph 71C(1)(d)). The Tribunal is satisfied that at the time the payment was made, Mr Ledger had less than 14 per cent care, or regular care, of the children.

12. Where the conditions in subsection 71C(1) are met, the Registrar must credit any amount that has not already been credited against the amount payable under the payer's liability for the period, up to a maximum of 30 per cent of the amount payable for that period.

13. In this case, the Tribunal finds the payments made by Mr Ledger of $10,897 for school fees meet all the conditions set out under the Act and must, therefore, be credited under section 71C.

14. Even where all the criteria under section 71C are met, there is still a discretion in section 71D of the Act to refuse to credit amounts that would otherwise be able to be credited against the liability. Section 71D of the Act states that the Registrar “may refuse to credit an amount under section 71, 71A or 71C if satisfied that, in the circumstances of the particular case, the amount ought not to be credited”. The title of section 71D is “Registrar may refuse to credit amounts in special circumstances”.

15. Chapter 5.3.1 of the Child Support Guide contains a non-exhaustive list of circumstances in which the discretion to refuse to credit an amount may be exercised. These include:

    ·      the payee’s agreement to credit an amount paid to a third party or payment made as a transfer of property was obtained through coercion or harassment;

    ·      the payer is claiming a credit under section 71C for an expense they regularly meet that was taken into account in a change of assessment decision;

    ·      the payer is claiming credit under section 71C for an expense which they have undertaken to pay in addition to their liability as specified in an agreement between the parents (this does not have to be a child support agreement);

    ·      the payer is claiming credit under section 71C for an expense that they are responsible to pay under the terms of a court order;

    ·      the payer is claiming credit under section 71C for expenses for the child for which they are separately responsible. For example, the payer claims credit for child care costs for the days when the child resides with the payer; and

    ·      the payer is claiming credit under section 71C for loan repayments and they have a history of regularly withdrawing funds from the loan account using its redraw facility.

16. Although not bound by policy as set out in the Child Support Guide, the Federal Court has held that a Tribunal should take into account relevant government policy which is not inconsistent with the provisions or objects of the legislation.

17. Ms McSorley has argued that Mr Ledger is claiming credit for school fees for which he had agreed to be responsible for prior to the payments being made.

18. The Tribunal considered all of the evidence before it and finds that the email exchanges between the parties constitute an agreement for Mr Ledger to pay school fees in addition to his child support liability.

19. After taking into account the circumstances of this case, the Tribunal is satisfied that the payment made for school fees by Mr Ledger totalling $10,897 between 16 February 2021 and 9 August 2021 should be refused as a prescribed non-agency payment under section 71D of the Act.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that the payment for school fees of $4,015.50 made on 16 February 2021, $3,441 made on 18 May 2021 and $3,440.50 made on 9 August 2021 by Mr Ledger should be refused as a prescribed non‑agency payment.