Pegler and Whetten (Child support)

Pegler and Whetten (Child support) [2021] AATA 4241 (29 September 2021)

DIVISION:Social Services & Child Support Division
REVIEW NUMBERS: 2021/SC022024
APPLICANT: Mr Pegler

OTHER PARTIES: Ms Whetten

Child Support Registrar

TRIBUNAL: Member S Cullimore

DECISION DATE: 29 September 2021

DECISION:

The Tribunal sets aside the decision under review and substitutes a new decision that the amount of $12,000 paid by Mr Pegler to Ms Whetten in July 2020 is to be credited to Mr Pegler as a non-agency payment, and his application for review is therefore successful.

CATCHWORDS

CHILD SUPPORT – non-agency payment – whether payment should be credited – whether mutual intention established by agreement – non-agency payment to be credited – 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 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

The following information is taken from the records of Services Australia – Child Support (“the CSA”) and is not in dispute, and the Tribunal finds each matter as fact.
Mr Pegler and Ms Whetten are the parents of one child, now aged 6.
The child support case started on 13 February 2020 and has been Registrar Collect since that date.
On 9 December 2020 Mr Pegler claimed credit for a non-agency payment (“NAP”) of $12,000, which amount was paid by him to Ms Whetten on 13 July 2020 and/or 14 July 2020.[1]
[1] See note 2.
On 14 December 2020 a delegate decided to give Mr Pegler an NAP credit of $12,000 for that payment.
On 4 January 2021 Ms Whetten objected to that decision.
On 23 April 2021 an objections officer allowed her objection and decided (in short) to refuse to credit the payment as an NAP.
On 3 June 2021 Mr Pegler sought further review by this Tribunal of the objection decision.

DOCUMENTARY EVIDENCE AND HEARING

The Tribunal had before it the original bundle of documents provided by the CSA (168 pages).
Both parties attended the hearing via teleconference and gave evidence and made verbal submissions.

ISSUES

11.The principal issues to be decided by the Tribunal are:
·Does the payment qualify as an NAP?
·If so, should the section 71D discretion (see below) be exercised to refuse to credit it?

CONSIDERATION

The relevant child support law

The relevant law for NAPs is contained in section 71 onwards of the Child Support (Registration and Collection) Act1988 (“the R & C Act”).
These provisions state that a person can be given an “NAP credit” in various circumstances.
So called “ordinary NAPs”, where the amount is paid directly by the payer to the payee, are provided for by section 71 of the R & C Act.
This provision provides that a payer will be given an NAP credit where, in a Registrar Collect case, the payee receives from the payer “an amount intended by both the payer and the payee to be paid in complete or partial satisfaction” of the payer’s liability to the payee under the child support case.
The credit is of the whole of the amount of the payment, dollar for dollar.
There is an overriding discretion to refuse to credit an NAP, of any type, even though it meets all of the relevant requirements.
This is set out in section 71D of the Act, as follows:
71DRegistrar may refuse to credit amounts in special circumstances
The Registrar may refuse to credit an amount under section 71 ….. if satisfied that, in the circumstances of the particular case, the amount ought not to be credited.
The provision is very broad. No specific factors are identified which might persuade the Tribunal to refuse or not to refuse an NAP credit.
Section 34B and sections 88 onwards of the Child Support (Assessment) Act1989 deal with legally binding child support agreements: see below.

DISCUSSION OF EVIDENCE, CONCLUSIONS AND REASONING

From the evidence, the Tribunal finds each of these matters as a fact:
·On 28 May 2020 Court Orders were made by consent resolving property matters between the parents;
·On 26 May 2020 (2 days earlier) the parents had signed a Legally Binding Child Support Agreement (“the Agreement”);
·The Agreement was supplied to the CSA on 28 July 2020;
·On 10 December 2020 the CSA accepted the Agreement, with effect for child support purposes, from 28 July 2020;
·In recent change of assessment proceedings between the parents, on 20 November 2020 a decision maker rejected the claim by Mr Pegler that Reason 5 should apply to the payment of the $12,000 to Ms Whetten;
·Reason 5 applies where, in the special circumstances of the case, the administrative assessment is unfair because the payer has given money to the child or to the payee for the benefit of the child;
·The assessment was in fact changed because of the income of Ms Whetten (Reason 8A);
·There has been no objection to that decision.
It was not disputed and the Tribunal finds that the payment of $12,000 was made by Mr Pegler to Ms Whetten on 13 July 2020 and/or 14 July 2020. The payment was made at the time of the payment to Ms Whetten of her agreed share of the sale proceeds of the former matrimonial home. That payment in fact occurred in two instalments, one being drawn from the deposit and then the balance from settlement.[2]
[2] Actual receipt of the $12,000 was conceded by Ms Whetten’s lawyers to the objections officer: see C87–88 and C125 onwards.
In what is a difficult and complex matter, the Tribunal has carefully considered the facts, the wording of the Court Orders and of the Agreement, and the submissions put to it by the parents.
The Court Orders provided in para 3.6 that Mr Pegler be paid 50% of the net proceeds of sale (as defined) “…less $12,000 to be paid to [Ms Whetten] by way of lump sum child support as provided for by the ..Agreement…”
It should also be noted that the parents were legally bound by the terms of those Orders to enter into the Agreement (which in fact they had already executed when the Court Orders were made).
The legal standing of, and the date of effect of, the Agreement is rather more complex.
The Agreement was signed 26 May 2020. It stated that it was operative from 14 days after the Orders. This would be 11 June 2020.
However, the Tribunal notes that paragraph 34B(2)(d) of the Child Support (Assessment) Act1989 states that, where an Agreement is not provided to the CSA within 28 days of being executed, the agreement is only operative – for child support purposes – from the date it is lodged with the CSA. In this case, this date is 28 July 2020. The Agreement becomes operative for child support purposes via the mechanism of a new child support period starting on that date.
Clauses 18 onwards of the Agreement are relevant in this case.
Clauses 18 and 19 state that Mr Pegler should be liable to pay the normal administrative assessment of child support.
Clauses 20 and 21 state that Mr Pegler should pay two lump sums to Ms Whetten, totalling $23,000. Of the $23,000 the sum of $12,000 was to come from the property sale and $11,000 from “super splitting”.
Clauses 22 onwards then deal with the parent’s responsibility for education, health and other expenses of the child.
Clause 26 is a key clause and states:
The payment of periodic and lump sum child support by [Mr Pegler] pursuant to this Agreement is to be credited against [his] liability under any assessment and is to count for 100% of the annual rate (payable by him) for any given year.
While that wording could have been clearer, for example by referencing the NAP provisions of the legislation, above, in the view of the Tribunal clause 26, when read with clauses 18 to 21, is clear enough to enable the Tribunal to find that the parents were in fact agreeing that the $12,000 of lump sum child support could be claimed as a 100% credit against the ongoing child support liability of Mr Pegler.
The Tribunal has also concluded that, while the Agreement was not strictly speaking legally operative for child support purposes as at the dates the payments were made (13 July 2020 and 14 July 2020), nevertheless, via the Court Orders, the parents were legally bound to proceed to enter into or make the Agreement (which in fact they had already executed), and therefore they were as between themselves bound by the terms of the Agreement from the point in time of the making of the Court Orders.
The Agreement was therefore legally binding as between them when the payments were made, and the payment of the $12,000 was, in the view of the Tribunal, made both “pursuant to” the Court Orders and “pursuant to” the Agreement.
The question then is whether the existence of some form of mutual agreement or mutual intention between the parents that the $12,000 was towards or in satisfaction of the child support which Mr Pegler was assessed by the CSA to pay to Ms Whetten, can be deduced or inferred from the conduct of the parents in entering into, and from the wording of, the Court Orders and the Agreement.
It is clear to the Tribunal and they confirmed in evidence that both parents intended that all property settlement and child support issues between them be resolved by the entering into of these arrangements in late May 2020.
The Tribunal finds that Mr Pegler made the payment of the $12,000 to Ms Whetten because he believed at the time that he had a legal obligation to do so under the terms of the Court Orders and the Agreement. He also subjectively “intended” that the lump sum should be credited to his ongoing child support liability under clause 26.
Ms Whetten gave evidence that the Court Orders and the Agreement had been prepared by Mr Pegler’s lawyers and that the documents had gone through several drafts, which had been provided to her lawyers, and discussed by them with her, before they were finalised.
She stated that she had perhaps overlooked or had certainly not understood the significance of or full significance of clause 26. She believed that what had been agreed was that any lump sum of child support from him was in addition to Mr Pegler paying the normal administrative assessment, and could not therefore be credited to him as an NAP.
The Tribunal has concluded that, as at the dates of the payment, there was “mutual intention” between the parents that the $12,000 was towards or in satisfaction of the ongoing child support which Mr Pegler was assessed by the CSA to pay to Ms Whetten.
That intention was clearly something which was in existence in the mind of Mr Pegler, and in the case of Ms Whetten should be found to exist based upon her conduct in entering into, and the wording of, the Court Orders and the Agreement, especially clause 26 of the Agreement.
Ms Whetten’s case effectively was that she did not (subjectively) realise that the Agreement provided for an NAP credit to be claimed by Mr Pegler in some circumstances.
To accept the submission of Ms Whetten that this would mean that there was no “mutual intention” in this matter would be to allow her to negate the intention which the Agreement showed that she had. It would be tantamount to rewriting the Agreement.
As a matter of general law, a party to a legally binding agreement should (in the absence of fraud or misrepresentation, or some other circumstances which do not apply here) be bound by a written agreement and not be allowed to resile from it by claiming later that they did not fully understand what they were signing, and/or did not “intend” the consequences which the written agreement provided for.
There was therefore mutual intention, in the relevant sense, in this matter, at the time of the payment, and so the payment of the $12,000 qualifies as an NAP under section 71.
The Tribunal then considered whether the section 71D discretion should be exercised in this case to refuse to credit it as an NAP.
The function, or at least a major function, of section 71D of the Act is to prevent an injustice or unfairness to a payee (and/or the child/ren of the assessment) where some special or unusual circumstances exist. In those circumstances, the credit may be refused.
As Mr Pegler is up to date with his payments, and as he will be given an NAP credit of $12,000, he will not have to pay Ms Whetten child support for almost a year.
The Tribunal finds in this case that there will be some degree of prejudice to Ms Whetten and the child in this matter if this NAP was now to be credited.
However, since February 2020, Mr Pegler has paid Ms Whetten both a lump sum of child support of $12,000 and ongoing fortnightly child support for some 20 months. In the period prior to the change of assessment decision he was paying $17,785pa. Since 5 July 2020 the rate has dropped to $13,928pa. This rate will run to 31 October 2021. To date, since the case started, he has therefore paid Ms Whetten somewhere in the region of $35,000 in child support, as well as her receiving a property settlement of in excess of $550,000. She has an income of about $92,000pa. While her living expenses are undoubtedly significant, the Tribunal cannot accept that she will suffer any significant financial hardship as result of this decision.
Ultimately, the Tribunal finds that the parents have entered a legally binding agreement on this issue of crediting the lump sum payment, and that agreement should not now be set aside.
The Tribunal has therefore concluded that the circumstances of this case do not justify refusing the NAP credit.

DECISION

[2021] AATA 4241

29 September 2021

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Statutory Construction

Judicial Review

Remedies

Intention