Ogden and Benbow (Child support)

[2019] AATA 5737

Ogden and Benbow (Child support) [2019] AATA 5737 (12 November 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/SC015991

APPLICANT:  Mrs Ogden

OTHER PARTIES:  Child Support Registrar

Mr Benbow

TRIBUNAL:Member K Dordevic

DECISION DATE:  12 November 2019

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that:

• Mr Benbow’s adjusted taxable income is varied to $55,450 from 6 April 2018 to 31 October 2018;

• Mr Benbow’s annual child support liability is varied to $7,800 from 1 November 2018 to 8 October 2019; and

• Mr Benbow’s annual child support liability is varied to $6,240 per annum from 9 October 2019 until a terminating event occurs in relation to [Child 2].

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents - benefits derived from business – decision to depart - 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. Mrs Ogden and Mr Benbow are the parents of [Child 1] (born 2001), [Child 2] (born 2003), [Child 3] (born 2006) and [Child 4] (born 2009). From 6 February 2015 Mrs Ogden was recorded as having the sole care of [Child 1] and 72% of the younger children. From 15 October 2018 she is recorded as having sole care of all the children. [Child 1] ceased to be a child of the assessment on 9 October 2019. The case was registered with the Department of Human Services (the Department) on 13 March 2012 and has been collectable by the Department 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 6 April 2018 Mrs Ogden lodged a departure application with the Department.

4. On 25 May 2018 a senior case officer determined that for the period 6 April 2018 to 8 October 2019 Mr Benbow’s annual rate of child support is varied to $2,400 and for the period 9 October 2019 to 31 October 2020 to $1,800.

5. Mrs Ogden lodged an objection to that decision on 20 June 2018. On 31 August 2018 her objection was disallowed.

6. On 17 October 2018 Mrs Ogden sought further review with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal).

7. On 8 August 2019 Mr Benbow’s legal representative, Ms [A], Legal Aid requested that she and Mr Benbow’s support worker be present at the telephone directions hearing. After taking into account submissions from Mr Benbow’s and Mrs Ogden the tribunal granted the request for Mr Benbow to have a support person present during proceedings.

8. A telephone directions hearing was held on 22 August 2019. Both parties attended by conference telephone; Mr Benbow was legally represented and had his support worker, Ms [B] present. The matter was set down for hearing on 23 October 2019, with compliance with the directions required by 27 September 2019. On 4 September 2019, at the request of Mr Benbow, the matter was rescheduled to 29 October 2019. 

9. The tribunal heard the matter on 29 October 2019. Mrs Ogden appeared by conference telephone. Mr Benbow appeared in person and was represented by Ms [A] and supported by Ms [B]. The Child Support Registrar was not represented at the hearing. In reaching its decision the tribunal has considered the sworn evidence of Mrs Ogden and Mr Benbow. The tribunal also considered the documentation provided by the Department (folios 1 to 279), Mrs Ogden (folios A1 to A109) and Mr Benbow (folios B1 to B338).

10. The matter was deferred to allow Mrs Ogden sufficient time to consider documents Mr Benbow’s provided at the commencement of the hearing. The decision to defer the matter was necessary as Mrs Ogden was directed to provide legible 2018 partnership expenses and business records by 31 October 2019. She provided further documents (A111 to A162). Mr Benbow was given until 8 November 2019 to provide written submissions in response to the additional evidence provided by the applicant. The response was received by the tribunal on 11 November 2019 (B339 to B448). The tribunal reached its decision on 12 November 2019.

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

1. Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure if the administrative assessment would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent because of either party’s income, property and financial resources. The central issue in this matter is whether the administrative assessment accurately reflects Mr Benbow’s income and financial resources.

2. The tribunal finds that Mr Benbow’s 2017, 2018 and 2019 taxable income were $19,000, $9,646 and $13,522 respectively. He also received disability support pension of $21,196, $21,819 and $22,508 during the same financial years. Mrs Ogden’s 2017 and 2018 taxable income was $16 and nil. The tribunal understands that her 2019 income tax return has not been lodged.

3. At the time Mrs Ogden lodged her application Mr Benbow was assessed to pay a nil rate of child support based on his 2017 provisional income of $21,196 and Mrs Ogden’s 2017 adjusted taxable income of $16. As the tribunal understands it Mrs Ogden contends that Mr Benbow’s income from his self-employment is not accurately reflected in his adjusted taxable income. She seeks a minimum contribution of $150 per week (whilst [Child 1] was subject to the assessment) and $100 per week from 9 October 2019.

4. Mr Benbow is [an Occupation 1]. He is also in receipt of disability support pension ([general medical condition]) since [August] 2013 as he suffers from [specific medical condition], a  [disease] which affects [a body function]. Mr Benbow has worked as [an Occupation 1], including operating a [business] with Mrs Ogden prior to separation. [In] February 2015, after accruing a substantial liability, Mr Benbow declared bankruptcy. He was discharged from bankruptcy [in] February 2018. Mr Benbow continues to work as [an Occupation 1] and provides [a service] though [Business Name 1], with [services] at a local [venue], [Business Name 2].

5. The tribunal accepts the submission that the business income disclosed in Mr Benbow’s 2018 and 2019 income tax returns are not consistent with bank statements during the same period. It was explained that his poor record keeping and inaccurate declarations are a consequence of his poor financial literacy, his [medical condition] and that, on the basis of advice received from his accountant, as his income was below the tax threshold he was not required to compile a detailed list of business expenses. It was submitted that his ongoing declarations will be accurate as his National Disability Insurance Scheme (NDIS) funding now includes assistance with administrative matters and he has been provided with a business mentor by [an Organisation].

6. The tribunal analysed the bank statements in evidence. There is no evidence before the tribunal that Mr Benbow is in receipt of undeclared cash income. During the final quarter of the 2018 financial year Mr Benbow’s bank statements indicate that he received gross business income of $11,812; in his 2018 income tax return he declared business income of $9,600. In written submissions dated 26 September 2019 it was submitted that Mr Benbow was to investigate whether there were any business expenses for the 2018 and 2019 financial years and if so, evidence of these would be provided. A profit and loss statement was provided. It declares total income of $37,991.50 and expenses of $7,143.36. The bank statements in evidence indicate that during this financial year Mr Benbow’s net rental expense was $250 per week; he has claimed about 30% of his rent as a business deduction. Given Mr Benbow’s testimony at hearing and the nature of his business the tribunal is not persuaded that this accurately reflects an actual business expense and finds that it is more appropriate that he claim $1,500 in rental expenses. Furthermore, the claimed telephone and internet expenses of $1,458 are likely to include the provision of a personal benefit to Mr Benbow and the tribunal reduces the expense by half. The tribunal concludes that Mr Benbow’s net business profit in the 2018 financial year was provided by Mr Benbow with a financial resource of $33,830; he had declared net income of $9,600 in his 2018 income tax return. Clearly his income tax return cannot be relied upon. He also receives $21,619 in disability support pension during the same period. Thus, his total income and financial resources in the 2018 financial year were $55,450. The tribunal notes the Departmental policy that NDIS payments are not included as income or a financial resource for child support purposes.

7. The tribunal finds, on the basis of bank statements and PayPal summaries provided, that Mr Benbow received gross business income of $22,139 in the 2019 financial year (as stated at B81). Mr Benbow declared expenses of $5,218. Applying the same analysis as that to the 2018 financial year, the tribunal is of the view that a portion of the rent and telecommunication expenses include Mr Benbow’s personal expenses and so finds that his actual expenses are more accurately calculated to be $3,013, and so his net business income was $19,125. He had declared in his 2019 income tax return net business income of $13,428; again his income tax return cannot be relied upon to provide an accurate picture of his actual income and financial resources. Adding in his disability support pension of $22,508 the tribunal is satisfied that Mr Benbow’s income and financial resources during the 2019 financial year were $41,633.

8. Applying adjusted taxable incomes of $55,450 and $41,633 to the administrative assessment would result in annual child support liabilities of $9,892 and $5,312. At the time Mrs Ogden lodged her application Mr Benbow was assessed to pay a nil rate of child support. As Mr Benbow’s income and financial resources are not properly reflected in the child support assessment, there are special circumstances such that the application of the administrative assessment would result in an unjust and inequitable determination of child support payable. The tribunal therefore concludes that the ground provided for in subparagraph 117(2)(c)(ia) of the Act is established.

Just and equitable

1. 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.

2. In his Statement of Financial Circumstances dated 26 June 2019 Mr Benbow declares disability support pension of $485 and business income as $173 per week ($8,996 per annum). He also declares savings of $1,300 and no assets, with the exception of $28,000 in superannuation. He reports child support arrears of $39,000. Mr Benbow declares that he is making payments of $100 per week in child support, which is double that which he is assessed to pay. He declares average household expenses of $510 per week, none of which related to the children of the assessment. However, at hearing it was stressed that he provides mobile telephones to his two sons and then when he has contact he must purchase meals for them, as he cannot prepare food given his disability. It was also stressed that his NDIS funding does not meet all of his travel costs.

3. It was submitted that the tribunal must consider the impact of Mr Benbow’s unpaid child support arrears upon his capacity to meet his current child support liability. The tribunal understands there is currently an application before the Federal Court relating to the period June 2012 to July 2014 where much of the arrears arose. The tribunal is of the view that the question of unpaid arrears from several years ago is not relevant to the current matter. Certainly, there is case law that suggests that in making a decision a tribunal should have regard to whether the decision may cause significant arrears and therefore hardship for a parent. However, this relates to a situation where the tribunal’s decision relates to a past period and may in itself cause arrears. Thus, the tribunal did not consider it relevant to consider the quantum of arrears payable by Mr Benbow from over five years ago, when considering his current and ongoing capacity to contribute to the children’s costs.

4. Mr Benbow reported that his earning capacity is diminishing as his [body function] deteriorates. He is considering running overseas camps but is unsure if they will be viable. The tribunal accepts his evidence on this point. Consequently, though he feels he can currently meet a child support liability of $100 per week; he cannot do so on an ongoing basis. 

5. Mrs Ogden is self-employed as [an Occupation 2], through her business [Business Name 3]. In her Statement of Financial Circumstances dated 3 August 2019 she declares her average weekly income is $250 from her [occupation] work. She reports savings of about $100 and describes her interest in her business as -$156.42 and household contents valued at $60,000. She reports superannuation of $5,600 and her only liability as $830 in outstanding electricity accounts. She estimates personal expenditure of $63 per week and weekly household expenses of $890, of which about $500 relate to the children (excluding accommodation costs). She reports that she is in poor mental health, with a diagnosis of [specified conditions]. She reports no out of the ordinary expenses. Her husband works on a full-time basis for an employer as well as assisting her in her business, including in administration and creating a social media presence.

6. Mrs Ogden is in receipt of carer allowance in respect of [Child 4], who underwent a [medical procedure] in 2014, following a diagnosis of [medical condition] in 2011 and a relapse in 2014. Mrs Ogden states that [Child 4] has developmental delay and participates in tutoring and [an activity] to assist with her intellectual and motor skill development; the tutoring expense is met by [Organisation 2] and the [activity] cost by her husband’s mother. [Child 4] has a health care card and Mrs Ogden reports minimal other out of pocket expenses. The tribunal accepts her earning capacity is limited due to her caring responsibilities, particularly in respect of [Child 4].

7. Mr Benbow asserts that Mrs Ogden’s income is not as reflected in her income tax returns. The tribunal makes the following findings. In her 2018 income tax return Mrs Ogden declared a business loss $1,045, based on her share of the partnership distribution of $5,287 and declared deductions of $6,337. The profit and loss for the same period states that total income was $20,398 and total expenses were $12,845, including telephone and internet expenses of $2,328, which were likely to include Mrs Ogden’s personal expenses as well. The business bank statements indicate that Mrs Ogden uses this account to meet personal expenses, which she confirmed at hearing. Total deposits made into the business account in the final quarter of the 2018 financial year totalled $6,803. On balance, the tribunal is satisfied that the total business income was in the vicinity of $20,398. The bank statements in evidence indicate that Mrs Ogden’s business received gross income of $23,183 in the 2019 financial year. Even if the tribunal was to attribute 100% of the business income to Mrs Ogden and disregard all the business expenses this would have no bearing on the administrative assessment. The 2017 to 2019 self-support amounts were $24,154, $24,535 and $25,038; thus, the tribunal is not persuaded that it is just or equitable to depart from the administrative assessment on the basis of Mrs Ogden’s income and financial resources.

8. The parties agree that apart from [Child 1], [Child 3] and [Child 2] are generally in good health. [Child 3], [Child 2] and [Child 4] attend public schools. As stated above, [Child 1] ceased being a child of the assessment on 9 October 2019. The parties agreed that the children have no income, property or financial resources that would be relevant to the child support assessment, noting that [Child 1] and [Child 2] worked on a part-time basis.

9. The tribunal is of the view that it is appropriate to vary Mr Benbow’s adjusted taxable income to reflect his income and financial resources from the date Mrs Ogden lodged her application, being 6 April 2018. From this date until 31 October 2018 his adjusted taxable income is varied to $55,450, which will result in an annual rate of approximately $7,980 up to 14 October 2018, and approximately $9,732 from 15 October 2018. The tribunal considered the option of varying Mr Benbow’s adjusted taxable income to $41,633 from 1 November 2018, which results in an annual rate of $5,312. However, the tribunal is not persuaded that a contribution of less than $26 per child per week is appropriate and is satisfied that Mr Benbow has greater capacity to contribute towards the children. Thus, the tribunal determines that it is appropriate to vary his annual rate to $7,800 ($150 per week) from 1 November 2018 to 8 October 2019, appropriate given he had nil care of the children.

10. It is unlikely that Mr Benbow’s ongoing taxable income will accurately reflect his income and financial resources. Mrs Ogden declares weekly expenses relating to the children of $500 and seeks a minimum of $100 per week in child support for [Child 2], [Child 3] and [Child 4]. The tribunal is satisfied that Mr Benbow has capacity to contribute $120 per week ($40 for each child) in child support from 9 October 2019 (the date that [Child 1] ceased to be a child of the assessment) notwithstanding the fact that it accepts that Mr Benbow’s earning capacity is diminishing. Whilst it is acknowledged that Mr Benbow also meets the boys’ telephone expenses, the tribunal is not satisfied that this should be taken into account when determining his ongoing child support liability, nor that these costs should be given a greater priority than his liability. Furthermore, these funds are necessary for Mrs Ogden to adequately provide for the children. The tribunal is satisfied that from 9 October 2019 until a terminating event occurs in relation to [Child 2], Mr Benbow’s annual child support liability is varied to $6,240. This will provide certainty to the parties and minimise the need for repeat proceedings. Given Mr Benbow’s income and financial resources, the tribunal is satisfied that the payment of child support arrears and his ongoing child support liability will not cause him undue hardship.

1. The tribunal is satisfied that the administrative assessment is unfair given Mr Benbow’s income and financial resources and this results in an unjust and inequitable level of child support given the circumstances of each parent. For all the reasons above, the tribunal finds it just and equitable to depart from the administrative assessment.

Otherwise proper

1. 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. Mrs Ogden is in receipt of income-tested benefits. Departing from the administrative assessment by increasing the child support payable by Mr Benbow will result in a more appropriate apportionment of financial responsibility between the parents and the community.

2. The determination is otherwise proper.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that:

• Mr Benbow’s adjusted taxable income is varied to $55,450 from 6 April 2018 to 31 October 2018;

• Mr Benbow’s annual child support liability is varied to $7,800 from 1 November 2018 to 8 October 2019; and

• Mr Benbow’s annual child support liability is varied to $6,240 per annum from 9 October 2019 until a terminating event occurs in relation to [Child 2].