Mitton and Mitton (Child support)

[2024] AATA 2888

Mitton and Mitton (Child support) [2024] AATA 2888 (22 July 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/BC026280

APPLICANT:  Ms Mitton

OTHER PARTIES:  Child Support Registrar

Mr Mitton

TRIBUNAL:Senior Member R Ellis

DECISION DATE:  22 July 2024

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – registration details – registered overseas maintenance liability – particulars of the registration varied by reference to the average of the two Consumer Price Index (CPI) rates – conversion of foreign currency to Australian currency – decision under review affirmed 

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. This review is about a change to the monthly rate of child support and spousal maintenance under a registered overseas maintenance liability.

2. Ms Mitton and Mr Mitton are the parents of [Child 1] (born January 2008) and [Child 2] (born October 2009).  Mr Mitton is the liable parent under the assessment.

3. On 24 February 2021 Services Australia – Child Support (Child Support) accepted an application made by Ms Mitton to register an international court order dated [in] January 2014 relating to child support and spousal maintenance.

4. On 19 May 2022 Child Support made the decision to vary the assessment by reference to the average in the Consumer Price Index (CPI) of Hong Kong and Australia in accordance with the international court order.  The monthly amounts of child support and spousal maintenance payable by Mr Mitton were amended to A$2,502.98 from 1 January 2022.

5. On 10 November 2022 Ms Mitton objected to this decision and on 25 May 2023 Child Support disallowed the objection (the objection decision).

6. On 20 June 2023 Ms Mitton applied to the Administrative Appeals Tribunal (the Tribunal) for a review of the objection decision.

7. The Tribunal conducted a hearing into the application on 28 May 2024.  Ms Mitton and Mr Mitton gave evidence on affirmation by Microsoft Teams audio.  Child Support provided the Tribunal and the parties with papers relevant to the matter (274 pages).  The Tribunal received additional evidence from Ms Mitton (A1–A49) and Mr Mitton (B1–B51) prior to the hearing and copies were distributed to the parties.

8. Following the hearing, the Tribunal sought additional evidence from Child Support in accordance with section 33 and section 39AA of the Administrative Appeals Tribunal Act 1975.  This was received on 1 July 2024 and a copy sent to the parties for their consideration and response (C1–C55).  No further responses were received from Ms Mitton or Mr Mitton by the stipulated date.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Registration and Collection) Act 1988 (the Act) and the Child Support (Registration and Collection) Regulations 2018 (the Regulations).

2. A registrable maintenance liability is “a liability that is, under section 17, 17A, 18 or 18A, a registrable maintenance liability” (section 4 of the Act).  Certain overseas maintenance liabilities, including arrears payable under the liability, can be registered for collection under the Act.  Section 18A of the Act says that a liability is a registrable overseas maintenance liability if it is, amongst other things, one of the following:

   ·     a liability of a parent of a child to pay a periodic amount for the maintenance of the child and is an overseas maintenance liability (subsection 18A(1) of the Act); or

   ·     a liability of a party to a marriage to pay a periodic amount for the maintenance of the other party to the marriage and is an overseas maintenance liability (subsection 18A(2) of the Act).

3. A payee may apply under section 25 of the Act for the registration of a registrable overseas maintenance liability that is not registered.  A payee is defined, in relation to a registrable maintenance liability or an overseas maintenance liability, as the person who is entitled to receive payments under the liability (section 4 of the Act).

4. An overseas maintenance liability is first enforceable on the day on which the application for registration is received (paragraph 28(1)(d) of the Act).  Any amounts that are in arrears under the order are also enforceable under the Act and also become first enforceable on the day on which the application for registration is received (paragraph 28(1)(e) of the Act).

5. Upon registration of the overseas maintenance liability any amounts payable are debts due to the Commonwealth by the payer in accordance with the particulars of the liability (subsection 30(1) of the Act).  Such particulars may be varied in accordance with the international court order.  A parent can object to the particulars varied in relation to a registrable maintenance liability (subsection 80(1) item 3 of the Act).

6. The issue which arises in this case is whether or not Child Support has made the legally correct decision to vary the particulars of the registration by the indexed amounts.

CONSIDERATION

1. Ms Mitton told the Tribunal there was a Hong Kong court order in place which provided for monthly child maintenance and spousal maintenance with the amounts payable to be varied on an annual basis according to inflation.  Ms Mitton explained that she had applied to Child Support for the court order to be registered because Mr Mitton began paying less than the court ordered amounts and was in breach of the court order.

2. Ms Mitton submitted that according to her calculations there was a significant difference between the amount of child maintenance and spousal maintenance to be collected in accordance with the court order and the actual amount being collected by Child Support.  Ms Mitton said she disputed the exchange rate used by Child Support to convert the amount in Hong Kong dollars under the court order to Australian dollars when the court order was first registered.  Ms Mitton added that she could not understand how Child Support had arrived at the amount to be collected under the court order.

3. The Tribunal notes in evidence from Child Support a sealed copy of a court order handed down in the District Court of the Hong Kong Special Administrative Region and dated [in] January 2014.  The order states that Mr Mitton is to pay Ms Mitton an amount of HK$13,333 per month by way of maintenance for her benefit and an amount of HK$13,333 per month per child by way of maintenance for the benefit of the children.  The order stipulates these amounts are “to be varied from 1st January in each year, by reference to the average in the Consumer Price Index (CPI) of Hong Kong and the Consumer Price Index (CPI) of Australia”.  The Tribunal further notes the order at Clause O defines the average in the CPI of Hong Kong and Australia as meaning:

   the parties shall keep a record of the CPI of Hong Kong and of Australia, and shall calculate the average; by way of example if the CPI of Hong Kong is +1% and the CPI of Australia is +2%, then the maintenance shall be varied by +1.5% (being the average of 1 and 2).

4. Ms Mitton pointed out that at registration on 24 February 2021 the monthly rate of child maintenance and spousal maintenance was indexed to HK$15,595 or HK$46,785 in total.  Ms Mitton said she did not disagree with this amount but rather the exchange rate used by Child Support to then calculate the amount in Australian dollars payable by Mr Mitton of A$2,431.26 per month from 24 February 2021.

5. Ms Mitton told the Tribunal that Child Support had used an exchange rate of HK$1 to A$0.1559 which was the lowest rate in 2021 and this was extremely unfair.  Ms Mitton said this then flowed through all calculations made by Child Support.  Ms Mitton said as a consequence the current monthly rate collectible by Child Support of A$8,132.88 was too low.

6. Ms Mitton informed the Tribunal that Mr Mitton had applied to the Federal Circuit and Family Court of Australia to have the Hong Kong order varied. Ms Mitton said when considering this matter, the judge had relied upon an exchange rate of HK$5 to A$1 and so she had used this rate to calculate the monthly amount of child maintenance and spousal maintenance as well as the amount of arrears owed to her by Mr Mitton.

7. The Tribunal notes in evidence from Ms Mitton a copy of a court order handed down by the Federal Circuit and Family Court of Australia on 15 April 2024.  The order states that the order of the District Court of the Hong Kong Special Administrative Region dated [in] January 2014 relating to spousal maintenance be discharged “as and from 15 August 2024”.  The amended initiating application filed by Mr Mitton was otherwise dismissed.

8. Ms Mitton said she did not dispute the average CPI figures used by Child Support to arrive at the monthly rate of child maintenance and spousal maintenance payable at the time of registration or the average CPI figures used by Child Support since then.  Ms Mitton reiterated it was the exchange rate Child Support had used which was unfair.  Ms Mitton added that, as a consequence, she also disagreed with the arrears owed by Mr Mitton.

9. Mr Mitton told the Tribunal he agreed the Hong Kong court order dated [in] January 2024 currently remained in place and he was to pay child maintenance and spousal maintenance in accordance with the order.  Mr Mitton pointed out that spousal maintenance would no longer be payable from 15 August 2024 in accordance with the decision made by the Federal Circuit and Family Court of Australia on 15 April 2024.

10. Mr Mitton said he took issue with the average CPI rate used by Child Support when calculating the amount of child maintenance and spousal maintenance to be paid at the time the Hong Kong order was first registered.  Mr Mitton said as a result he disagreed with the monthly rate of child maintenance and spousal maintenance of HK$15,595 from 24 February 2021 as determined by Child Support.  Mr Mitton said the average CPI figures had been provided to Child Support by Ms Mitton.  Mr Mitton said he also disagreed with the average CPI used by Child Support when calculating the monthly amount of child maintenance and spousal maintenance from 1 January 2022.  Mr Mitton added the monthly amount could only be accurate if Child Support had applied the correct rate of CPI.

11. Mr Mitton told the Tribunal he had sought expert testimony from [Firm 1] in relation to the CPI used to calculate the indexed rate of child maintenance and spousal maintenance and this had been submitted to the Federal Circuit and Family Court of Australia.  Mr Mitton said by taking the CPI rates provided by [Firm 1] and using the exchange rate adopted by Child Support he had arrived at a different monthly payment.  Mr Mitton pointed out that he had provided this expert testimony to the Tribunal.

12. The Tribunal notes in evidence from Mr Mitton a copy of a report prepared by assurance, tax and advisory firm [Firm 1] dated 16 September 2022.  The report calculates a periodic payment liability for Mr Mitton from 2015 to 2022 using two different scenarios.  For the Australian CPI, the report relies upon information from the Australian Bureau of Statistics (ABS) and adopts the capital city measure for Brisbane, Queensland (rather than CPI information for Australia as a whole).  For the Hong Kong CPI, the report relies upon information from the Census and Statistics Department of the Government of the Hong Kong Special Administrative Region (SAR) and adopts two of four different measures (Index A, Index B, and Index C are based upon ranges of household expenditure and the fourth index is a Composite Index).  In scenario one, a CPI for Brisbane, Australia of 4.340 per cent is used and a CPI for Hong Kong of 2.405 per cent is used (the composite) arriving at an average change of 3.373 per cent as at 31 December 2021.  In scenario two a CPI for Brisbane, Australia of 4.340 per cent is used and a CPI for Hong Kong of 1.910 per cent is used (Index C) arriving at an average change of 3.125 per cent as at 31 December 2021.

13. Mr Mitton stressed that he did not dispute the exchange rate used by Child Support when converting the amount of child maintenance and spousal maintenance to Australian dollars as this was in accordance with the appropriate legislation.

14. Ms Mitton informed the Tribunal she refuted the calculations undertaken by [Firm 1] in the report.  Ms Mitton said this information was not taken into account by the Federal Circuit and Family Court of Australia during their hearing.

15. Child Support has, in accordance with the Act, registered an international court order relating to child support and spousal maintenance.  The liability was registered from 24 February 2021.  The Hong Kong court order established the rate of child maintenance and spousal maintenance and the process for indexing these rates on an annual basis.  The Tribunal is satisfied the Hong Kong court order currently remains in place.

16. Ms Mitton has told the Tribunal she disputes the exchange rate used by Child Support when converting the amount of child maintenance and spousal maintenance under the international court order to Australian dollars.  Ms Mitton argues the exchange rate used is unfair and this has caused the ongoing amount of child maintenance and spousal maintenance to be incorrect.  Ms Mitton believes the CPI used when indexing the amount to be collected is correct.  Mr Mitton submits the CPI used by Child Support to determine the amount of child maintenance and spousal maintenance at the time of registration and subsequently is incorrect.  He relies upon data in the report from [Firm 1].  Mr Mitton is satisfied the exchange rate used by Child Support is appropriate.

17. In light of the differing concerns of the parents the Tribunal sought confirmation from Child Support as to the matter currently under review.  The Tribunal is of the opinion that only the decision made by Child Support on 19 May 2022 to vary the monthly rate of child support and spousal maintenance from 1 January 2022 can be considered in these proceedings.  The Tribunal believes the decision made to register the international court order from 24 February 2021 is a separate decision with its own objection rights and subsequent appeal rights.

18. In responding to the direction from the Tribunal for such clarification Child Support submitted, relevantly:

    However, in the Child Support legislative scheme, for the reasons set out below, the Registrar submits that, overall, the legislation tends against a reading that would permit the Tribunal’s jurisdiction to extend to review of the original initial registration decision of 13 April 2021.  That is because those decisions have separate review rights under the Child Support (Registration and Collection) Act 1988 (Collection Act).  As the Tribunal has helpfully pointed out, a parent can seek review of the initial registration decision under item 2 of the table in subsection 80(1) of the Collection Act. Whereas review of a variation to the register arises under item 3 of the table in subsection 80(1) of the Collection Act. A review of the registration decision would also have required the objection officer to consider granting an extension of time for a delay of approximately 18 months.

    The Registrar considers that the only decision before the Tribunal is the decision made on 19 May 2022 to vary the particulars of the liability. The decision to register the liability was never objected to by Ms Mitton and has not been reviewed by an objection officer.

19. The Tribunal is satisfied it is the decision made by Child Support on 19 May 2022 to vary the monthly rate of child support and spousal maintenance to A$7,508.94 from 1 January 2022 that is under review (A$2,502.98 per child and spouse).  This is a decision to vary the particulars on the register.

20. At the time Child Support registered the Hong Kong court order a monthly amount of child support and spousal maintenance of HK$15,595 per child and spouse was applied as the court ordered rate (indexed from HK$13,333 as stated in the court order).  The international court ordered rate was then converted to Australian dollars using an exchange rate of HK$1 to A$0.1559.  The Tribunal notes that section 37 of the Regulations deals with the conversion of foreign currency to Australian currency.  If the amount of the overseas maintenance liability is expressed in foreign currency, the liability is taken to refer to the equivalent amount expressed in Australian dollars using a rate applicable on the day the application is received.  In this case the date was 24 February 2021.  The monthly rate of child support and spousal maintenance was determined to be A$2,431.26 per child and spouse.  In accordance with the Hong Kong order Child Support must apply CPI each year being the average in the CPI of Hong Kong and the CPI of Australia.

21. In this case Child Support applied a CPI increase of 2.95 per cent (the average of 2.4 per cent for Hong Kong and 3.5 per cent for Australia) to the previous monthly rate of A$2,431.26 per child and spouse to arrive at a new monthly rate of A$2,502.98.  This is equal to a total of A$7,508.94 (the rate per child and spouse times three).

22. Ms Mitton does not dispute the CPI increase applied, however, Mr Mitton believes it is incorrect.  Mr Mitton relies on the CPI increase as set out in the report from [Firm 1].

23. The Hong Kong court order states that the parties shall keep a record of the CPI of Hong Kong and Australia and calculate an average in order to determine a new rate of child support and spousal maintenance each year.  The Tribunal sought clarification from Child Support about the process used to verify CPI figures provided by the parties.  In responding to the direction from the Tribunal for such clarification Child Support submitted, relevantly:

    Operational Blueprint Registration of overseas maintenance liabilities (excluding New Zealand) (dept.local) (Attachment D) states that if inflation factors need to be added to the initial periodic amount to refer to Inflation adjustment (CS) (dept.local) (Attachment E). That operational guidance sets out the CPI to calculate if using an Australian CPI figure. It does state that if the order does not specify which CPI figure to confirm with both parents the city and quarter they want to use. The default position is to use the weighted average for the most recent quarterly figure available at the time adjustment is to be made. The usual practice is to refer to the arrears statement provided that was accepted by both parents, as if that is showing the increases due to inflation, this is accepted as an accurate reflection of the liability, and no further investigations occur where there is no conflicting information.

24. In relation to the CPI figure of 2.95 per cent used when making the decision on 19 May 2022, Child Support advised the Tribunal that these figures were initially provided by Ms Mitton and cross-checked by a service officer.  Child Support states in its advice:

    On 18 May 2022 an agency officer checked the CPI figures provided by the payee ([Ms Mitton]) and identified the same CPI figures from Hong Kong using the composite CPI for December 2021 of 2.4%, and for Australia, using the Annual CPI (weighted average across 8 capital cities) of 3.5% from the ABS website. In calculating the average the officer used the same formula as the customer, which is specified in section O of the Hong Kong orders dated [in] January 2014 - (HK CPI 2.4% + AUS CPI 3.5%) / 2 = 2.95%. This was then applied to the existing periodic liability:

    Current monthly rate (AUD$2431.26) x 2.95% = new rate AUD$2502.98 per child / spousal.

25. The Tribunal notes that in the [Firm 1] report, under scenario one, a composite index amount for Hong Kong of 2.405 per cent is used and a CPI for Brisbane of 4.340 per cent is used rather than a CPI for Australia.  The Hong Kong CPI figure used by Child Support is almost exactly the figure in the scenario painted in the [Firm 1] report.  While the [Firm 1] report uses a CPI figure for Brisbane, which is higher than the figure used by Child Support, the Hong Kong order stipulates a CPI for Australia is to be used to calculate the average of the two CPI rates.

1. The Tribunal also notes that, in relation to the CPI used to calculate the indexation at the time of registration, the figures were provided by Ms Mitton.  According to Child Support neither party raised any concerns and consequently these figures were not verified further.

2. The Tribunal is satisfied that Child Support has properly calculated the variation in the ongoing monthly rate of child support and spousal maintenance payable by Mr Mitton from 1 January 2022 in accordance with the international court order.

Other matters

1. Both parents have raised additional concerns about the registration of the Hong Kong court order and the amount of child support and spousal maintenance calculated at the time of registration.  As confirmed by Child Support, these are separate matters with objection rights and appeal rights.  For Ms Mitton or Mr Mitton to pursue their concerns either would need to submit an objection to Child Support and apply for an extension of time to object.

DECISION

The decision under review is affirmed.