Myerscough and Coombe (Child support)

[2019] AATA 6341

Myerscough and Coombe (Child support) [2019] AATA 6341 (17 December 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/SC016183

APPLICANT:  Ms Myerscough

OTHER PARTIES:  Child Support Registrar

Mr Coombe

TRIBUNAL:Member K Dordevic

DECISION DATE:  17 December 2019

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that for the period 10 April 2018 until a terminating event occurs in relation to [Child 1] a nil annual rate of child support is payable by Ms Myerscough to Mr Coombe and a nil annual rate of child support is payable by Mr Coombe to Ms Myerscough.

CATCHWORDS

CHILD SUPPORT – departure determination – special needs of children – income, property and financial resources of the both – 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 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. Mr Coombe and Ms Myerscough are the parents of three children - [Child 1], [Child 2] and [Child 3]. The care register initially reflected the parties shared the care of the children. From 11 March 2019 the care register was amended to reflect that Mr Coombe had 100% care of [Child 1]. The case was registered with the Department of Human Services – Child Support (the Department) on 20 March 2017. It was most recently re-registered on 16 February 2018 and has been collectable since that date.

2. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the 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. The Act also provides for a departure from the administrative assessment in certain circumstances.

3. On 10 April 2018 Ms Myerscough lodged a departure application with the Department. Mr Coombe lodged a cross application on 21 May 2018. On 16 July 2018 a senior case officer determined that:

   ·for the period 20 April 2018 to 30 June 2019 Ms Myerscough’s adjusted taxable income is varied to $248,026;

   ·for the period 20 April 2018 to 30 June 2019 Mr Coombe’s adjusted taxable income is varied to $78,835; and

   ·for the period 20 April 2018 to 30 June 2019 Ms Myerscough’s annual rate of child support is increased by $5,942.

4. Ms Myerscough Iodged an objection to that decision on 15 August 2018. She withdrew that application on 3 September 2018. She lodged a further objection application on 29 November 2018 and her extension of time request was granted on 18 December 2018.

5. On 25 February 2019 the objection officer determined that:

   ·for the period 20 April 2018 to 30 April 2020 Ms Myerscough’s adjusted taxable income is varied to $160,000;

   ·for the period 20 April 2018 to 30 April 2020 Mr Coombe’s adjusted taxable income is varied to $120,000; and

   ·for the period 20 April 2018 to 30 April 2020 Ms Myerscough’s annual rate of child support is increased by $5,000.

6. On 25 March 2019 Ms Myerscough sought further review with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal).

7. A telephone directions hearing was held on 23 October 2019. Both parties attended by conference telephone. The tribunal issued directions requiring compliance by 21 November 2019. The matter was scheduled to take place on 12 December 2019. However, due to the parties not being allowed sufficient time in which to consider the documents provided under the directions, the matter was rescheduled to 17 December 2019.

8. The tribunal heard the matter on 17 December 2019. Ms Myerscough and Mr Coombe appeared by conference telephone. The Child Support Registrar was not represented at the hearing. In reaching its decision the tribunal has considered the sworn evidence of Ms Myerscough and Mr Coombe. The tribunal also considered the documentation provided by the Department (folios 1-1,193), Ms Myerscough (folios A1-A81) and Mr Coombe (folios B1-B196).

ISSUES

1. The statutory provisions relevant to this review are outlined in section 98C of the Act, which states that a decision to depart from the administrative assessment may be made if the following three requirements are met:

   (i)that one, or more than one, of the grounds for departure referred to in subsection 117(2) exists; and

   (ii)that it would be:

   (A)just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   (B)otherwise proper;

   to make a particular determination under this Part …

2. Therefore, the issues which arise in this case are:

   ·     Does a ground exist for departure from the administrative assessment of child support? And, if so

   ·     Would it be just and equitable and otherwise proper to make a particular determination?

CONSIDERATION

A ground for departure

11.  Subparagraph 117(2)(b)((ia)) of the Act provides a ground for departure when, in the special circumstances of the case, the costs of maintaining the children are significantly affected because of the special needs of the child.

12.  There is no dispute, and the tribunal so finds, that [Child 1] and [Child 2] were diagnosed with attention deficit hyperactivity disorder (ADHD) by [Doctor A], developmental paediatrician, who reviews them at least quarterly

13.  The tribunal next considered the parties’ respective costs associated with [Child 1] and [Child 2’s] special needs. Mr Coombe submits that during the period April 2018 to November 2019 he incurred costs of $6,050 regarding [Child 2] and [Child 1’s] attendance at their paediatrician. His submissions indicate that his out of pocket expenses during that period were $4,002. During the period August 2018 to November 2019 Ms Myerscough incurred costs of $2,680, with out of pocket expenses totalling $1,093. Mr Coombe states that some of the Statement of Claim and Benefit Payment summaries provided by Ms Myerscough cannot be relied upon as they incorrectly refer to her as the paying parent. In the absence of supporting documentation to the contrary, the tribunal is not so persuaded. 

14.  During the same period Ms Myerscough reports out of pocket medication expenses of $417 and Mr Coombe reports $4,337. However, the tribunal is not satisfied that these relate solely to [Child 2] and [Child 1’s] ADHD medications. The tribunal considers that an allowance of $50 per month for [Child 2] (given he is in the parties’ shared care) and $100 for [Child 1] is more appropriate (about $2,700 from April 2018 to November 2019).

15.  The tribunal next considered Mr Coombe’s out of pocket expenses relating to the children’s psychological expenses. The tribunal calculates, based on Mr Coombe’s submissions, that during the period from 6 August 2018 to 10 October 2019 [Child 1’s] psychological costs totalled $3,140.90 and [Child 2’s] totalled $1,772.10. His submissions indicate that the Medicare rebates totalled $3,654, so Mr Coombe’s net out of pocket expenses totalled $1,259.

16.  It is also not in dispute that the parties agreed, following [Doctor A’s] recommendation, that [Child 2] and [Child 1] attend regular tutoring. It is also not in contention that since March 2018 Ms Myerscough has not contributed to that cost. Mr Coombe submits that his costs associated with the provision of tutoring totalled $8,861.75 during the period April 2018 to 18 November 2019. After careful consideration of the bank statement references, the tribunal is not persuaded that $4,195 paid to [Mr A] represents a tutoring expense; at hearing Mr Coombe stated that [Mr A] also provided child care. The tribunal disregarded the bank transfers where Mr Coombe has referred to “Babysitting” or “Manny” in the bank transfer references.  Only one of the payments made to [Mr A] ($165) refers to tutoring only. Another payment of $450 made to [Mr A] includes the reference “ChildcareTutor”, which the tribunal finds evidences that part of the payment represents Mr Coombe’s tutoring expense. The tribunal concludes that during the above 19-month period Mr Coombe incurred tutoring expenses totalling $4,667 for [Child 1] and [Child 2].

17.  The tribunal also notes that the parties do not dispute that [Child 1] and [Child 2] have undergone orthodontic treatment at Mr Coombe’s expense. The parties are in agreement that the procedures were for cosmetic and not medical reasons. Thus, the tribunal is not persuaded that the orthodontic works constitute a special need under the Act. The tribunal also considers, consistent with the Department’s policy, that Mr Coombe’s contribution to private health insurance does not render the administrative assessment unjust or inequitable. 

18.  Overall, Mr Coombe’s out of pocket expenses relating to [Child 1] and [Child 2’s] special needs total $12,628 during the period April 2018 to November 2019 (though this makes no allowance for private health insurance rebates he may have received). Ms Myerscough’s total $1,510. The tribunal is satisfied that, in the special circumstances of the case, Mr Coombe’s costs of maintaining [Child 1] and [Child 2] are significantly affected because of their special needs. Therefore, the ground provided for in subparagraph 117(2)(b)(ia) of the Act is established.

Just and equitable

19.  The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the child, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

20.  At the time Ms Myerscough lodged the change of assessment application she was assessed to pay an annual rate of child support of $18,924 based on Mr Coombe’s 2017 adjusted taxable income of $51,454 and her 2017 adjusted taxable income of $248,026. On 20 April 2018 Ms Myerscough lodged a nil income estimate, whereby Mr Coombe became the liable parent.

21.  Ms Myerscough submits that she is unable to work given her state of health. In order for a person to be assessed in accordance with their earning capacity rather than their actual income, the three tests set out in subsection 117(7B) of the Act must be satisfied:

In having regard to the earning capacity of a parent of the child, the court may determine that the parent's earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:

(a)one or more of the following applies:

(i)the parent does not work despite ample opportunity to do so;

(ii)the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full‑time work for the occupation or industry in which the parent is employed or otherwise engaged;

(iii)the parent has changed his or her occupation, industry or working pattern; and

(b)the parent's decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:

(i)the parent's caring responsibilities; or

(ii)the parent's state of health; and

(c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.

22.  Ms Myerscough has a [specified professional] background and her most recent employment was in a full-time corporate role. It is not in contention that Ms Myerscough took a three month leave of absence from her employment on 29 March 2018 and resigned from her position effective 1 July 2018. She remains unemployed. Subparagraph 117(7B)(a)(i) of the Act is satisfied.

23.  Ms Myerscough submits that she does not work because of her state of health.  In support of her assertion is a report from [Psychiatrist A], consultant psychiatrist, who confirms the diagnosis [specified]. [Psychiatrist A] states that Ms Myerscough requires ongoing treatment and her disorder will persist well into the future and that Ms Myerscough would have the capacity to work on a part time basis once the current exacerbation of her symptoms resolve. Despite this, [Psychiatrist A] states that her prognosis is poor and that any return to work would be gradual. [Psychiatrist A] concluded by stating that Ms Myerscough will require psychiatric review between two to four times per annum as well as ongoing intervention with her treating mental health social worker.

24.  There is also in evidence a report from [Social Worker A], dated 7 August 2018. [Social Worker A] reports that when employed Ms Myerscough was significantly distressed during meetings at work, has been emotional many times in front of her colleagues and membership and that her performance was suffering. She then left her work as her capacity to perform [in her specified role] had been compromised by significant levels of anxiety and stress. [Social Worker A] reported on 21 February 2019 that she continues to provide psychological counselling to Ms Myerscough and the ongoing assessment indicates that she is experiencing extremely severe symptoms of anxiety and severe symptoms of stress which significantly affect her capacity to seek work and engage in paid employment. In a report dated 15 November 2019 [Social Worker A] reports that Ms Myerscough continues to experience severe stress, anxiety and depression.

25.  [Doctor B], general practitioner, reported on 2 January 2019 that Ms Myerscough resigned from her employment in March 2018 as she was unable to cope with her anxiety and stress in addition to the high pressure of her work. 

26.  On the basis of the medical evidence before it, the tribunal accepts that Ms Myerscough’s decision not work from 29 March 2018 is justified on the basis of her mental health. Subparagraph 117(7B)(b)(i) of the Act is not satisfied. The tribunal concludes that Ms Myerscough’s earning capacity is not greater than is reflected in her income for the purposes of child support.

27.  In her Statement of Financial Circumstances dated 10 April 2019 Ms Myerscough declares nil income, savings of $324,000, a motor vehicle valued at $6,300 and household contents valued at $30,257. She reports superannuation valued at about $210,000. Her only liability is child support arrears of $5,600. She reports weekly personal expenditure of $817.25. She did not provide an estimate of her weekly household expenses.  At hearing Ms Myerscough submitted that she has about $220,000 to $230,000 from the property settlement remaining. She reports that her medication expenses are minimal, however her out of pocket expenses from attendance with her psychiatrist are about $320 each visit. Given the limited evidence before the tribunal, it is not persuaded that her medical costs render the administrative assessment unfair.

28.  The parties agree that [Child 3] has no costs that are out of the ordinary for a 10 year old child. All the children of the assessment attend public schools and, with the exception of [Child 1] and [Child 2’s] special needs, have no out of the ordinary expenses.

29.  Mr Coombe completed his Statement of Financial Circumstances on 11 April 2019. He declares weekly employment income of $1,407 and $84 in investment income. He is also in receipt of carer allowance and family tax benefit. He declares savings of $772,273, a motor vehicle valued at $46,000 and household contents valued at $15,000. At hearing he stated that his savings have reduced to $730,000. He has superannuation valued at $222,714, a credit card liability of $4,631 and a loan from his parents of $500,000. He states that his weekly personal expenditure is $568 and his household expenses are $2,812 per week, of which $1,819 relate to the children. After careful consideration of his submissions the tribunal determines that about $250 of these costs are not necessary. His 2017 and 2018 taxable incomes were $56,699 and $66,297 respectively; however his adjusted taxable income is $15,000 greater, as he makes voluntary superannuation contributions of $15,000 each year. Mr Coombe stated that whilst he considers that the objection officer’s decision to vary his income to $120,000 somewhat overstates his income and financial resources, he does accept that he was not using his lump sum payment from the property settlement in the most income producing manner available to him.

30.  Whilst the tribunal accepts that Ms Myerscough does not have an unused earning capacity, she has about $230,000 remaining from the property settlement. Given this financial resource, the tribunal is of the view that it is just and equitable that her adjusted taxable income reflects this financial resource. The tribunal initially considered that it is just and equitable that her income reflects the Male Total Average Weekly Earnings (MTAWE) of $73,606 from April 2018; however application of this to the administrative assessment would result in Mr Coombe being the liable parent, required to pay $5,946 to Ms Myerscough.

31.  Given their respective caring responsibilities and net proceeds from the property settlement, together with Mr Coombe’s current income and financial resources, the tribunal is not persuaded that it is just and equitable that Mr Coombe be the liable parent, particularly in light of his additional costs relating to [Child 1] and [Child 2’s] special needs. Equally, given Ms Myerscough’s fragile mental health, that her health prohibits her from currently undertaking any paid work and Mr Coombe’s considerable financial resources, the tribunal is not persuaded that she should be the liable parent nor that she should contribute to Mr Coombe’s out of pocket expenses relating to [Child 2] and [Child 1’s] special needs or tutoring.

32.  Given the tribunal’s conclusion regarding the parties’ respective income and financial resources, in addition to their respective costs associated with [Child 2] and [Child 1’s] tutoring and special needs, the tribunal is satisfied that it is appropriate to vary the parties’ respective child support liabilities to nil from 10 April 2018 until such a time that a terminating event occurs in relation to [Child 1] (which will be no later than [a date in] January 2021).  The tribunal is not persuaded that the departure period should begin from February 2018 as Ms Myerscough contends. It is unlikely that the circumstances of either party will alter significantly during this period. The extended departure will provide certainty to both parties.

33.  Setting a nil annual rate of child support creates a net overpayment of just over $42,000, payable by Mr Coombe. The tribunal has determined that Mr Coombe’s financial circumstances suggest that repayment of this sum will cause him no undue hardship.

34.  The tribunal is satisfied that the administrative assessment is unfair given the income and financial resources available to Ms Myerscough and Mr Coombe, as well as the special needs and education costs of [Child 1] and [Child 2]. For all the reasons above, the tribunal finds it just and equitable to depart from the administrative assessment of child support.

Otherwise proper

35.  The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents rather than the community have the primary duty to maintain a child. Mr Coombe is in receipt of income-tested benefits. Departing from the administrative assessment will result in a more appropriate apportionment of financial responsibility between the parents and the community.

36.  The determination is otherwise proper.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that for the period 10 April 2018 until a terminating event occurs in relation to [Child 1] a nil annual rate of child support is payable by Ms Myerscough to Mr Coombe and a nil annual rate of child support is payable by Mr Coombe to Ms Myerscough.