Pandey and Pandey (Child support)

[2019] AATA 5021

Pandey and Pandey (Child support) [2019] AATA 5021 (23 September 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/MC016996

APPLICANT:  Mrs Pandey

OTHER PARTIES:  Child Support Registrar

Mr Pandey

TRIBUNAL:Member P Sperling

DECISION DATE:  23 September 2019

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that the amount of $14,594.04, being 12-monthly amounts of $1,216.17 for the period 1 April 2018 to 1 March 2019, paid by Mr Pandey for Mrs Pandey’s share of the mortgage, is not to be credited as a prescribed non-agency payment under section 71C of the Child Support (Registration and Collections) Act 1998.

CATCHWORDS

CHILD SUPPORT – non-agency payment - whether mortgage payments should be credited as prescribed payments – 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 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 Pandey and Mrs Pandey are the separated parents of two children and Mr Pandey is the parent liable to pay child support to Mrs Pandey. According to the records provided, the child support assessment was registered with the Department of Human Services – Child Support (‘the Department’) on 13 March 2018.

2. On 26 March 2019, Mr Pandey applied to the Department for payments made by him in respect of the home mortgage repayments for their family home to be credited against his child support liability.

3. On 2 April 2019, an officer of the Department decided to credit 12-monthly payments of $1,086.21, made by Mr Pandey between 1 April 2018 and 1 March 2019 in respect of Mrs Pandey’s share of mortgage repayments, against his child support liability as prescribed non‑agency payments.

4. On 14 April 2019, Mr Pandey objected to this decision on the basis that he believed that the amount the Department had credited him with was too low and instead he should have been credited with 12-monthly payments of $1,216.17 over the same period.

5. On 14 June 2019, an objections officer allowed the objection. As a result, Mr Pandey was credited with 12-monthly payments of $1,216.17 in respect of payments he made from 1 April 2018 to 1 March 2019, totalling $14,594.04.

6. On 24 July 2019, Mrs Pandey lodged an application with this tribunal seeking an independent review of the objections officer’s decision. On 23 September 2019, the tribunal held a hearing. Mr Pandey and Mrs Pandey attended the hearing via conference telephone and provided evidence on affirmation.

7. In considering this matter, the tribunal took into account the oral evidence of the parties given at the hearing and the documents provided by the Department in accordance with the Administrative Appeals Tribunal Act 1975 numbered 1 to 166.

ISSUES

1. The law relevant to this review is contained in the Child Support (Assessment) Act 1989 (the Act) and the Child Support (Registration and Collection) Act1988 (the Registration Act).

2. The issues before the tribunal are as follows:

   ·     can Mrs Pandey’s share of mortgage repayments for the family home, which were made by Mr Pandey between 1 April 2018 and 1 March 2019 inclusive, be credited against his child support liability as non-agency payments? and, if so,

   ·    is there any reason why they should not be credited as non-agency payments?

CONSIDERATION

Issue 1 – Can any of the payments made by Mr Pandey, from 1 April 2018 to 1 March 2019 in respect of Mrs Pandey’s share of the family home mortgage repayments, be credited against Mr Pandey’s child support liability as non-agency payments?

1. A payment can be credited as a non-agency payment pursuant to section 71A of the Registration Act if certain requirements are satisfied, including a requirement that both parents intended the payment to be credited against the payer’s child support liability. The tribunal is satisfied that Mrs Pandey did not intend any of her share of the mortgage payments made by Mr Pandey to be credited against his child support liability. Accordingly, the payments cannot be credited as non-agency payments pursuant to section 71A.

2. Section 71C of the Registration Act provides for the crediting of payments even if the payee did not intend the payments to be credited as non-agency payments. Such non-agency payments are called prescribed non-agency payments. The section states, relevantly:

   Other payments of up to 30% of child support liability

   (1)    If:

   (a)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 of the liability, or to another person; and

   (b)the payment is a payment of the kind specified in the regulations; and

   (ba)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; and

   (c)the sum of those payments exceeds the sum of all such payments previously credited under this section against the amount payable under the liability for all past periods; and

   (d)the payer does not, at the time at which the Registrar applies this section, have at least regular care of any of the children to whom the relevant administrative assessment relates;

   then the Registrar must, despite section 30, credit the excess amount mentioned in paragraph (c) against the amount payable under the payer's liability for the period, up to a maximum of 30% of the amount payable.

   Note: Subsection (1) is subject to section 71D.

3. There is no dispute that at all relevant times (1 April 2018 to 1 March 2019) Mr Pandey had an enforceable maintenance liability (i.e. an enforceable child support liability) in accordance with the definitions under subsection 4(1) of the Registration Act. In addition, according to departmental records, Mr Pandey had 0% care of the children until 8 June 2019 and therefore at all relevant times related to this review Mr Pandey did not have at least regular care of the children as Mrs Pandey had 100% care of the children. This was not disputed by the parties. Furthermore, there has been no previous prescribed non-agency payment credited against the child support liability of Mr Pandey. Therefore, the tribunal finds that the requirements of sections 71C(1)(a), 71C(1)(ba), 71C(1)(c) and 71C(1)(d) of the Registration Act are met.

4. The tribunal then turned to the question of whether the requirements of section 71(1)(b) are met. Regulation 19 of the Child Support (Registration and Collection) Regulations 2018 (the Regulations) prescribes the kinds of payments that will satisfy paragraph 71C(1)(b) of the Registration Act as follows:

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

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

   (c)    amounts payable for uniforms and books required by a school or pre‑school 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.

5. As noted above, it is undisputed that from 13 March 2018, Mr Pandey was the payer of an enforceable maintenance liability. Evidence in support of the monthly mortgage repayments made by Mr Pandey from 1 April 2018, the first monthly payment after the date upon which the child support liability became enforceable, was provided to the Department and includes bank statements showing the payments he made, which were not disputed by Mrs Pandey.

6. On the basis of the available evidence, the tribunal finds that Mr Pandey made payments of $2,432.34 on the first day of each month from 1 April 2018 to 1 March 2019 inclusive. The tribunal notes that the original decision made by the Department accepted that the bank’s minimum required repayment amount at the time, being $2,172.42 per month, was the amount of non-agency payment for which Mr Pandey was to be credited. However, having reviewed the evidence provided, the tribunal is satisfied that Mr Pandey actually made monthly repayments of $2,432.34, of which 50% represented Mrs Pandey’s share. The tribunal finds that 12-monthly mortgage repayments of $2,432.34 were made by Mr Pandey on the first day of each month from 1 April 2018 to 1 March 2019 inclusive, which equates to a total of $29,188.08. Further, the tribunal finds that Mrs Pandey’s 50% share of these mortgage repayments made by Mr Pandey equates to 12-monthly payments of $1,216.17, or a total of $14,594.04.

7. As set out in paragraph 13 of these Reasons, the payee’s share of repayments on a loan that financed the payee’s home are specified in 5D(f) of the Regulations. It is not disputed that the family home and the corresponding mortgage are held in the joint names of Mr Pandey and Mrs Pandey or that Mrs Pandey resided in the family home during the relevant period, that is, between April 2018 and March 2019. Consequently, it is clear that, in paying the full amount of the monthly mortgage payments, Mr Pandey has paid Mrs Pandey’s 50% share also. Therefore, the requirements of sections 71C(1)(b) of the Registration Act are met.

8. As all of the conditions under subsection 71C(1) of the Registration Act are met, the tribunal finds that Mrs Pandey’s 50% share of the mortgage payments, made by Mr Pandey between 1 April 2018 and 1 March 2019, must be credited as prescribed non-agency payments. Importantly, however, application of subsection 71C(1) of the Registration Act is also subject to section 71D of the Registration Act which provides that the crediting of non-agency payments and prescribed non-agency payments is discretionary. This means that the Registrar (or the tribunal standing in the shoes of the Registrar) may refuse to credit an amount under section 71, 71A or 71C of the Registration Act if satisfied that, in the circumstances of the particular case, the amount ought not to be credited.

Issue 2 – Is there any reason why the payments made by Mr Pandey, from 1 April 2018 to 1 March 2019 in respect of Mrs Pandey’s share of the family home mortgage repayments, should not be credited as non-agency payments?

1. In response to a question from the tribunal as to why the mortgage payments ought not be credited against Mr Pandey’s child support liability, Mrs Pandey gave the following evidence:

• she isn’t sure exactly when the home loan was taken out but confirmed that it was taken out in both their names;

• in their culture, women care for the home and the children and men are responsible for business and financial matters;

• in their culture it is not appropriate for women to question their husband about financial matters;

• while they were still living together their family business was sold;

• after this Mr Pandey refinanced the family home without properly explaining any of the financial transactions to her at the time;

• she only found out later that he had purchased two investment properties, in his name only, using redraw funds from their home loan;

• Mr Pandey told her in general terms that he might look for some investment properties to buy after the sale of the family business, but he didn’t discuss any of the details with her and she wasn’t aware that he had gone ahead with this plan;

• she never asked Mr Pandey many questions about their family finances at the time and he didn’t explain what he was doing when he purchased the investment properties;

• in particular Mr Pandey didn’t discuss the actual investment properties with her or asked for her agreement prior to purchasing them;

• prior to the purchase of the investment properties they had nearly repaid their family home loan;

• she is aware that she has a legal obligation to repay the home loan, because it is in joint names, but she never agreed to redraw any home loan repayments to purchase additional investment properties in Mr Pandey’s name;

• at the time she ‘blindly trusted him’ to make good financial decisions on behalf of herself and her children;

• since Mr Pandey first applied to the Department to have these mortgage repayments credited as non-agency payments, there have been two court hearings: an interim court hearing on 8 May 2019 and a further hearing on 21 August 2019;

• the outcome of the May 2019 interim court hearing was that Mr Pandey had to continue to pay all of the home loan repayments;

• the outcome of the August 2019 hearing was that the investment properties have to be sold and the proceeds used to discharge the mortgage on the family home;

• while she was still living with him, Mrs Pandey trusted Mr Pandey and thought he was doing his best for her and the children;

• it is not fair now that Mrs Pandey should have her child support payments reduced for the period 1 April 2018 to 1 March 2019.

1. In response to a question from the tribunal as to why he considers the mortgage payments should be credited against his child support liability, Mr Pandey gave the following evidence:

• the original home loan of about $400,000 was taken out in joint names in 2010;

• in 2016 the family business was sold and the proceeds from the sale were deposited into their home loan redraw account;

• Mr Pandey planned to buy some investment properties with some of these funds and, at the time, he told Mrs Pandey about this plan in general terms;

• in 2017 he purchased two investment properties, one in [Suburb 1] for $150,000 and one in [Suburb 2] for $180,000;

• he purchased these investment properties in his name only but Mrs Pandey agreed at the time and he didn’t hide anything from her;

• the family home was not refinanced at the time to enable the purchase of the investment properties as he was able to redraw sufficient funds.

1. The tribunal had regard to the bank statements in the Department’s documents which show that from September 2017 to November 2017, approximately $70,000 was withdrawn from the home loan redraw account. During the hearing, Mr Pandey confirmed that these redraw transactions provided the funds used to purchase the investment properties. He also confirmed that the investment properties were purchased in his name only.

2. The tribunal considered all of the available evidence, including the evidence provided by Mrs Pandey and Mr Pandey during the hearing. On the basis of this evidence, the tribunal was persuaded that at the time the investment properties were purchased, Mrs Pandey was not made fully aware of the details of these financial transactions, nor was she provided with detailed advice about the properties that were purchased or advised that the purchases would be made in Mr Pandey’s name only. Further, the tribunal is satisfied that Mr Pandey did not actively seek Mrs Pandey’s consent to the use the funds in their jointly held redraw account for these purchases. The tribunal concludes that Mr Pandey used the home loan redraw facility to redraw funds for his personal benefit.

3. In addition, the tribunal notes the interim court order made on 8 May 2019 which provided that Mr Pandey was to make all repayments on the mortgages encumbering properties owned by the parties as and when they fall due until further orders were made. The tribunal also notes Mrs Pandey’s advice, which was not disputed by Mr Pandey during the hearing, that in August 2019 the court ordered that the investment properties be sold and the proceeds used to discharge the family home mortgage.

4. The tribunal is satisfied that the recent court orders in May 2019 and August 2019 show that the court was also disturbed by the financial transactions undertaken by Mr Pandey in respect of the redraw of funds from the joint home mortgage and the subsequent purchase of the investment properties in his name only. This further reinforces the tribunal’s view that Mr Pandey’s financial transactions at the time were for his personal benefit and were not in the interests of Mrs Pandey and that Mr Pandey used the home loan redraw facility to redraw funds for his personal benefit. Accordingly, the tribunal is satisfied that the home mortgage repayments that Mr Pandey is seeking to have credited as non-agency payments were largely repayments on equity that Mr Pandey drew down from the joint loan account for his own purposes.

5. In the particular circumstances of this case, the tribunal therefore finds it appropriate to exercise its discretion under section 71D and refuses to credit as a prescribed non-agency payment any the portion of Mrs Pandey’s share of the mortgage repayment made by Mr Pandey between 1 April 2018 and 1 March 2019 inclusive.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that the amount of $14,594.04, being 12-monthly amounts of $1,216.17 for the period 1 April 2018 to 1 March 2019, paid by Mr Pandey for Mrs Pandey’s share of the mortgage, is not to be credited as a prescribed non-agency payment under section 71C of the Child Support (Registration and Collections) Act 1998.