Monachin and Bucanan (Child support)

[2024] AATA 2529

Monachin and Bucanan (Child support) [2024] AATA 2529 (16 May 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2024/SC027578

APPLICANT:  Ms Monachin

OTHER PARTIES:  Mr Bucanan

Registrar Child Support Agency

TRIBUNAL:  Member D Tucker

DECISION DATE:  16 May 2024

DECISION:

The decision under review is affirmed. (This means that the application is not successful.)

CATCHWORDS

CHILD SUPPORT – child support assessment – multi-case allowance for  father – overpayment by father and debt for mother – administrative error by Child Support using incorrect formula – undetected for three years – mother’s financial circumstances, personal stress and hardship if required to pay debt – child studying at university and not financially independent – no remedy in legislation – availability of compensation for detriment caused by defective administration – 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

BACKGROUND

1. The following information is taken from the records of the Department of Human Services – Child Support (Child Support), is not in dispute and the Tribunal finds each matter as a fact.

2. Ms Monachin and Mr Bucanan are the parents of [the child], born 30 November 2005. The child support assessment for [the child] was registered on 9 December 2005 and ended on 29 November 2023 when she reached 18 years.

3. On 31 August 2023 Child Support decided to update the assessment to include a multi‑case allowance for Mr Bucanan, with effect from 20 August 2020. This generated an overpayment by Mr Bucanan, and an equivalent debt for Ms Monachin.

4. On 26 September 2023 Ms Monachin objected to this decision. On 7 December 2023 Child Support disallowed her objection. On 10 January 2024 Ms Monachin lodged an application for further review by this Tribunal.

5. On 16 May 2024 Ms Monachin and Mr Bucanan gave affirmed evidence via a telephone hearing. The Tribunal also considered relevant documents provided by Child Support. Shortly before the Tribunal’s hearing Ms Monachin made a brief written submission which she materially reiterated in her oral submissions at hearing.

LEGISLATION AND ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act) and the Child Support (Registration and Collection) Act 1988 (the Registration Act). The Tribunal also had regard to the Child Support Guide (the CS Guide), which sets out Child Support’s policies.

2. The issues that arise in this matter are: Does Ms Monachin owe a debt as calculated by Child Support, and if so, are there any grounds for not recovering her debt?

CONSIDERATION

1. Section 5.5.5 of the CS Guide accurately summarises the relevant provisions:

   An overpayment occurs when a payee receives an amount of child support that exceeds the amount of child support payable for that period. Overpayments usually occur when a child support assessment is reduced for a past period.

   …

   An overpayment in an agency collect arrangement, is a debt due by the payee to the Commonwealth (CSRC Act section 69B(1), subject to section 69B(2)):

   ·if a payee of a registered maintenance liability is paid an amount, or is taken to be paid an amount because of a debt offset (5.3.2), and

   ·the payee was not entitled to be paid an amount at the time it was paid (including because the registered maintenance liability was subsequently retrospectively reassessed).

   The debt due by the payee to the Commonwealth is a 'carer debt'. The payee of the registered maintenance liability becomes the payer of a carer debt and has a 'carer liability' (CSRC Act section 4(1)). Any carer debt amount that is collected by Services Australia under section 69B(1) is paid to the payer of the registered maintenance liability (section 69B(3)).

   Example: The monthly liability is $1,000, and Services Australia collected the full amount due by the payer for the month of March. In May, the monthly liability for March was updated and retrospectively changed to $800. This results in an overpayment of $200 (section 69B(1)). Services Australia contacts the payee and explains that they owe a carer debt. The payee pays the amount of $200 to Services Australia under section 69B(1).

2. In this case, it appears likely that the overpayment by Mr Bucanan occurred due to administrative error on the part of Child Support. There is no suggestion or evidence of error or misrepresentation on the part of either parent.

3. There are variants of the child support formula used to calculate child support liabilities. According to section 37 of the Act, Formula 3 is used to work out the annual rate of child support payable when one parent is part of another child support case – in other words, they have a responsibility to support a child from another relationship in another assessment. Formula 3 provides for a multi-case allowance to be deducted from the paying parent’s adjusted taxable income to accommodate their additional liability.

4. It appears that in this instance Child Support used the incorrect formula. Although the objections officer does not make this explicit, it is likely that Formula 1 was used. The result was that Mr Bucanan was asked to pay more than he should have. According to Ms Monachin’s calculations, the overpayment amounted to approximately $30 per week. The error was undetected for approximately three years.

5. Ms Monachin told the Tribunal that Child Support raised a debt against her of $4,500. Child Support’s documents include a letter to Ms Monachin dated 1 April 2024 indicating she owed a balance of $3,955.53, and after a repayment of $13.05, this balance was reduced to $3,942.48. However, it is not clear to the Tribunal whether $3,955.53 was the original debt or the outstanding balance at that point in time.

6. Whatever the total amount of the overpayment, according to section 69B of the Registration Act, it became a debt owed by Ms Monachin to the Commonwealth, which is in turn obliged to repay it to Mr Bucanan.

7. Ms Monachin’s evidence regarding the impact of the debt can be summarised as follows:

   ·   It has caused her considerable distress and anxiety. Repaying the debt would prevent her providing essential support to her children and could cause her to lose her house.

   ·      She carefully and frugally managed her budget during the child support assessment. The amount she was overpaid was around $30 per week. If she had been paid correctly, she would have budgeted accordingly with no difficultly. However, now she faces financial hardship because she has a large debt.

   ·      She is concerned that an error of this type could go undetected by Child Support for a period of three years. She felt that Child Support had failed to be accountable for its error.

   ·      The debt was imposed when she was already under great stress from other life events, including the death of her mother, the suicide of another family member and her own health issues, which require surgery.

   ·   [The child] is now studying at university but is not considered financially independent for social security purposes until she reaches 22 years. Therefore, unlike Mr Bucanan, Ms Monachin is responsible for supporting her in the meantime.

8. In summary, Mr Bucanan’s evidence is that he met whatever liability Child Support calculated during the assessment and was not aware of the overpayment until the debt was raised in 2023. He confirmed that he became a party in another child support assessment. He observed that while the debt was obviously an unwelcome impost for Ms Monachin, he has ongoing costs for children in his care and the monies he overpaid would be useful in meeting them.

9. The Tribunal has sympathy for both parents, as both have been disadvantaged through an administrative oversight not of their own making.

10. According to subsection 69B(2) of the Registration Act, if the assessment retrospectively changed because (i) the assessment should never had existed, or (ii) the payer ceased to be a resident of Australia or a reciprocating jurisdiction, then the overpayment is not repayable by the payee. These circumstances are not present in the current matter. The only other grounds for not pursuing a debt is that it is uneconomical to do so, or it is not legally recoverable. Neither of these grounds exist in this instance.

11. The Tribunal must apply the same law as Centrelink. The debt raised against Ms Monachin must be recovered.

Defective administration

1. Ms Monachin says she will face financial hardship if she is obliged to repay her debt. For reasons set out above, there is no remedy for her in legislation. She may wish to explore whether she can be compensated via the Scheme for Compensation for Detriment caused by Defective Administration (the CDDA Scheme). This is a discretionary scheme for people who have suffered financial loss due to defective administration by a Commonwealth agency, for whom there is no other remedy under the law. The Tribunal has no power to order compensation via the CDDA Scheme or any other mechanism.

2. The following is a link to information about the CDDA Scheme and other compensatory mechanisms on the Department of Finance’s website:

   >

   The Tribunal notes that applications for compensation under the CDDA Scheme must be made directly to the Commonwealth entity involved, rather than to the Department of Finance. The following is a link to information about applying to Services Australia:

   decision under review is affirmed. (This means the application was not successful.)