Peradon and Peradon (Child support)

Peradon and Peradon (Child support) [2024] AATA 2768 (6 June 2024)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2023/SC026908
APPLICANT:  Ms Peradon
OTHER PARTIES:  Child Support Registrar
MrPeradon

TRIBUNAL:Senior Member K Dordevic
DECISION DATE: 6 June 2024
DECISION:

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

Ms Peradon’s self-support amount is increased by $7,781 from 8 February 2023 until a terminating event occurs;
Mr Peradon’s annual rate of child support is increased by $27,600 for the period 1 December 2022 to 30 November 2023; and
Mr Peradon’s adjusted taxable income is varied to:
a.$82,524 for the period 8 February 2023 to 31 December 2023; and
b.$85,389 for the period 1 January 2024 until a terminating event occurs.

CATCHWORDS
CHILD SUPPORT – change of assessment – there are special circumstances – special needs of one child – mother does not have an unused earning capacity – mother’s medical condition – unreasonable to vary the mother’s adjusted taxable income – just and equitable – earning capacity – father’s adjusted taxable income is varied – 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 theChild Support (Registration and Collection) Act 1988

REASONS FOR DECISION

BACKGROUND

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.
Ms Peradon (the mother) and Mr Peradon (the father) are the parents of three children, [Child 1] (born [date] 2003), [Child 2] (born [date] 2005) and [Child 3] (born [date] 2006). This case was first registered with Services Australia – Child Support (Child Support) on 4 April 2022 and has been collected by Child Support from 21 April 2022.
For the purposes of the Child Support assessment the children are recorded as being in the mother’s 100% care. [Child 2] (hereafter referred to as the older child) was no longer a child of the assessment on 16 December 2023. The administrative assessment will end on 6 November 2024, the day before [Child 3] (hereafter referred to as the younger child) turns 18 years of age. The Tribunal shall refer to [Child 2] and [Child 3] collectively as the children.
The mother lodged a departure application on 8 February 2023. On 6 July 2023 a senior case officer determined that for the period:
·8 February 2023 to 2 June 2023 the father’s annual rate of child support was increased by $10,000; and
·8 February 2023 to 31 October 2024 the father’s adjusted taxable income was varied to $131,000.
The father lodged a timely objection to that decision and the objection was partly allowed on 5 October 2023, whereby for the period:
·8 February 2023 to 2 June 2024 the cost of children amount is increased by $30,099;
·8 February 2023 to 2 June 2024 the father’s adjusted taxable income was varied to $66,000; and
·8 February 2023 to 2 June 2024 the mother’s adjusted taxable income was varied to $161,371.
On 13 October 2023 the mother sought further review of the objection decision with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal). A telephone directions hearing was convened on 21 February 2024, where directions were issued on the same day requiring compliance by 14 March 2024. The father’s request for an extension of time to comply with the directions was granted on 17 March 2024, whereby he was given until close of business on 19 March 2024 to comply with the directions.
The Tribunal heard the matter on 3 April 2024. Both parents appeared by MS Teams audio. The Child Support Registrar was not represented at the hearing. The Tribunal also considered the documentation provided by Child Support (folios 1 to 782), the mother (folios A1 to A284) and the father (folios B1 to B180).
The matter was deferred to allow the Tribunal to issue an order pursuant to subsection 95J(1) of the Child Support (Registration and Collection) Act 1988 (the Registration Act), asking that the Child Support Registrar exercise the Registrar’s powers under section 161 of the Act or section 120 of the Registration Act to obtain the information and/or documents listed below:
NSW Long Service Leave Corporation
·A statement, with supporting documentation, evidencing Mr Peradon’s (DOB [date]) entitlement to long service leave, including details of gross amounts and number of days he is entitled to.

iCare
·A copy of all compensation applications lodged by Mr Peradon (DOB [date]) from 4 April 2022 to date, as well as all relevant documents outlining all payments that Mr Peradon is eligible for or received, including payments for loss of earnings, medical, hospital and rehabilitation payments, return to work assistance payments and work injury damages.

A response was received on 8 May 2024. The documents (marked folios C1 to C4) were exchanged with the mother and the father who were both invited to provide written submissions in response.
On 13 May 2024 the Tribunal issued an order, pursuant to subsection 95H(1) of the Registration Act, to GIO Insurance to provide by close of business 24 May 2024:
A copy of all compensation applications lodged by Mr Peradon from 4 April 2022 to date, as well as all relevant documents outlining all payments that Mr Peradon is eligible for or received, including payments for loss of earnings, medical, hospital and rehabilitation payments, return to work assistance payments and work injury damages.
On 16 May 2024 the father provided written submissions and additional documents (marked folios B181 to B194).
On 28 May 2024 GIO provided its response to the statutory notice (marked folios D1 to D15).
The Tribunal reached its decision on 6 June 2024.

ISSUES

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 …
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

Subparagraph 117(2)(b)(ia) of the Act provides a ground for departure if, in the special circumstances of the case, the cost of maintaining the child are significantly affected because of the child’s special needs.
The term ‘special needs’ is not defined in the Act. In the matter of Lightfoot and Hampson (1996) 20 Fam LR 69, the Full Family Court stated that needs are special if they are necessary or desirable for that child’s welfare and outside the normal needs of a child that is catered for within the formula. The Court went on to note that a special need can include a disability or a special talent or ability of the child. In Gyselman and Gyselman (1992) FLC 92-279 the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.
The parents agree that the older child is an elite [athlete] and was competing at state and national levels prior to the breakdown of the marriage. It is hoped that she will represent Australia at the Paris 2024 Olympics.
In evidence is confirmation that the older child was selected to attend [Paris] 2024 Camp in July 2022[1] and [a] National Championship in December 2022.[2] She was categorised as an emerging athlete by the Australian Institute of Sport (AIS) in 2023, in recognition of the AIS’s prioritising athletes “with the most significant potential to contribute to Australia’s high performance targets”.[3] In April 2023 the older child was selected to represent NSW at [a national] Championships.[4] She was also selected to attend [a competition] and [a] Development Camp in January 2024[5] and was selected in the Australian team to compete at [specified] Championships in April 2024.[6]
[1] Folios 212 to 213
[2] Folios 208 to 209
[3] Folio 215
[4] Folio 365
[5] Folios A166 to A167
[6] Folios A170 to A171
After consideration of the parents’ consistent testimony and the documentary evidence the Tribunal finds that the older child is an elite athlete and that this constitutes a special need.
The mother submits that her capacity to support the older child is significantly affected because of the older child’s special needs. She has provided evidence that her total out-of-pocket costs associated with the child’s participation in [sports] during the period 15 September 2022 to the date the administrative assessment ends in respect of the older child, being 15 December 2023, was $32,881.27.[7]
[7] Folios 208, 216 to 217, 358 to 363, 373, A141, A147 to A149, A151, A153, A156 to A158, A163 to A164 and including $1,000 in accommodation costs [from] 8 to 14 May 2023
At the time the mother lodged her departure application, the total costs of the older child was assessed as $14,368.[8] The actual cost to the mother arising from the older child’s special needs is more than double the assessed costs of the child. The mother’s 2023 adjusted taxable income was $45,987,[9] so the mother was required to apply over 72% of her total income to meeting the older child’s special needs.
[8] Folios 55 to 57
[9] Folios A27 to A29
The Tribunal is satisfied that the older child’s special needs reduced the capacity of the mother to provide financial support to the children of the case. Therefore, in the special circumstances of the case, the costs of maintaining the older child are significantly affected because of her special needs.
The Tribunal concludes that the ground provided for in subparagraph 117(2)(b)(ia) of the Act is established.

Just and equitable

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 parties’ respective earning capacities, the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula assessment.
The Tribunal has considered all the factors outlined in subsection 117(4) of the Act but will only refer to those considerations pertinent to the application, noting that both parents provided testimony, documents and submissions that whilst obviously important to them were simply not relevant to the matters requiring determination. In the Tribunal’s view most, but not all, of those irrelevant submissions are more appropriately addressed in the pending property settlement.
The mother’s 2021 to 2023 adjusted taxable incomes are $57,360, $32,528 and $45,987 respectively. The mother completed a Statement of Financial Circumstances form dated 5 November 2023.[10] She declares average weekly income of $1,000 and average jobseeker income of $10. She reports that the former marital home is registered in her name; however, her share of the home is currently in dispute and will be determined in the parents’ property settlement. She reports savings of $572.51, a motor vehicle valued at $30,000, household contents valued at $7,500 and superannuation of $53,394.99. She reports her half share of the home mortgage is $143,133.09[11] and she that she owes her parents $143,424.46 as well as an additional $54,171.43 in unpaid rent of. She reports personal expenditure of $201 per week, made up of income tax and private health insurance.[12] She reports household expenses totalling $2,744 per week, of which $1,932 relates to her care of the children.
[10] Folios A16 to A26
[11] At folio A24
[12] Noting that she has declared her employer’s superannuation guarantee payment. Her payslips at folios A35 to A40 indicate that she does not make an additional superannuation contribution from her income.
The Tribunal notes that the mother has provided copies of her payslips; the most recent indicates her year-to-date income as at 24 January 2024 was $25,088.89.[13] This suggests her 2024 adjusted taxable income will be about $44,750, including jobseeker payments.
[13] At folio A35
The mother declares that she is in poor health, which impacts on her earning capacity as well as increasing her necessary self-support costs.
The mother provided a letter from [a] neurologist, who reported on 25 January 2023 that the mother has a very complex [medical condition]. Her recurrent high dose supressing therapy places her at ongoing risk for infective illness. When this occurs, treatment requires high dose antibiotics, surgical intervention and many months of therapy. Despite maximal therapy her exercise tolerance is limited, as the condition involves her muscles, generating fatigue and weakness. She has difficulties in being able to continue with full-time employment and her ability to continue employment into the future is questionable.[14]
[14] Folio A121
The mother also provided a comprehensive report from [a named] immunology and allergy specialist, dated 26 May 2023. It is on the basis of this report that the Tribunal finds that the mother is diagnosed with [a medical condition]. She is treated with immunotherapy, which predisposes her to recurrent infection. Her episodes are unpredictable and interfere with her mood, cognition, mobility and energy levels in addition to organ specific problems which required her to move from regular part-time work to casual work. She requires regular and frequent review and treatment, including infusions, which impact on her capacity to regularly attend work in addition to the intermittent, unpredictable flares which also impact on her capacity to undertake work. There will be a progressive reduction in her work capacity and ultimately, in the interests of her health, cessation of all employment. [15]
[15] Folios A117 to A120
The Tribunal finds on the basis of the medical evidence from [the specialists] that the mother does not have an unused earning capacity even though she does not work on a full-time basis.
The Tribunal finds that the mother’s total out-of-pocket costs associated with her medical condition is about $7,781 per annum.[16] This represents 17% of her 2023 adjusted taxable income. The Tribunal is satisfied that in the special circumstances of the case, the capacity of the mother to provide financial support to the children is significantly reduced because of her necessary costs associated with her medical condition. In the circumstances, the Tribunal is satisfied that the mother’s self-support amount should be increased by $7,781 from the date she lodged her departure application until a terminating event occurs.
[16] Folios A122 to A128: Her Medicare costs from 17 October 2023 to 22 February 2024 (128 days) were $1,487.38, which annualises to $4,241.36 per annum. Folios A139 to A140: Her out-of-pocket private health treatment was $2,058.6 in the 244 days from 1 August 2023 to 1 April 2024 (about $3,079.46 per annum) and her annual medication costs were $459.80 from 20 February 2023 to 19 February 2024 (folios A142 to A143).
It is apparent, after having the benefit of the parents’ testimony, that they are involved in a long and acrimonious dispute as to the distribution of the marital assets. The father remains living in the former marital home and the mother and children live with the maternal grandparents. In order to fund her legal fees in addition to her own and the children’s ongoing expenses she has borrowed funds from her parents. The mother and the maternal grandparents entered into a loan agreement on 30 May 2022, with the total sum borrowed on that date being $19,582.60.[17] As at 17 November 2023 the quantum of the loan had apparently increased to $137,306.16.[18] It is noted that the mother declared in her Statement of Financial Circumstances form that she owed her parents $143,424.46 on 5 November 2023. For the reasons outlined below, it is not necessary for the Tribunal to make a determination as to exact sum loaned by the mother from her parents.
[17] Folios 652 to 656
[18] Folio 661
The Tribunal is persuaded that it is either just or equitable to consider the sum borrowed by the mother from the maternal parents as a financial resource available to her to support herself and the children for the following reasons. The father has made no contribution at all to the costs of the children since 8 July 2023 and as at 29 February 2024 is in child support arrears of $18,537.81.[19] Furthermore, the father does not contest that he has made no contribution to the older child’s special needs. The Tribunal has already found that the mother does not have an unused earning capacity and her income when compared to her self-support costs is modest. In the Tribunal’s view it would be unreasonable in the circumstances to vary the mother’s adjusted taxable income to include all or part of her borrowings, the bulk of which appear to be made necessary because of the father’s refusal to meet any of the costs of the children. Even if this were not the case, the Tribunal is satisfied that the loan and unpaid rent are repayable by the mother to the maternal grandparents. The Tribunal accepts the mother’s evidence that repayment will occur upon the finalisation of the property settlement. For all these reasons, the Tribunal does not consider these loans represent a financial resource available to the mother and so no variation should be made to her adjusted taxable income on this basis.
[19] Folio 782
The mother’s position is that the father’s income is understated. She states that the father’s personal expenses are met by his business but are not claimed as a wage and so are not reflected in his adjusted taxable income. She also submits that the father’s testimony that there has been a reduction in his income is not true; instead, he has continued to be awarded substantial [contracts] and so is earning money.
The father’s 2021 and 2022 adjusted taxable incomes were $100,341, $20,817 and $20,800 respectively. The father provided a Statement of Financial Circumstances form completed on 31 October 2023.[20] He declared gross weekly income of $403 from his full-time [work] and nil income from his company [name](the company). He declares that he owns no real estate assets, has savings of about $6, shares valued at $6,005, a 92% interest in the company valued at $81,433, a 10% interest [valued] at $0, household contents valued at $7,500, personal property valued at $8,000 and superannuation of $62,900. His liabilities include a loan from the company of $35,046, a mortgage of $143,398 which he is 50% liable for, and loans from his mother dated 9 May 2008 and 29 July 2010 in the sum of $295,930, of which he is 50% liable, in addition to a separate loan from his mother of $115,000. He reports another liability to the company of $29,335 of which the mother is also apparently equally liable. He declares a nil interest in the paternal grandparents’ discretionary trust, a weekly income tax liability of $522 (which exceeds his declared income by $119) a weekly child support liability of $340 and weekly private health insurance payments of $204. He declares household expenditure of $983 per week, including $530 in mortgage repayments, which exceed the required minimum repayments by about $700 per month.[21] His declaration does not accord with the bank statements in evidence, which show significant discretionary expenditure.[22]
[20] At folios B5 to B13
[21] Folio B64
[22] Folios B23 to B52

The Tribunal next considered the father’s submissions and testimony regarding his income, earning capacity and financial resources and the financial evidence before it.
It is not in dispute that the father is a self-employed [occupation], operating through his company. He is the sole director and shareholder of the company.[23] He declared to Child Support on 22 May 2023 that his only source of income is $1 per week in interest and dividends that he was unable to work for four months in 2022 due to his poor psychological and physical health and the company has never recovered. Since then he has been required to support himself with loans from the company and his parents.[24] At hearing, the father testified that his adjusted taxable income of about $20,800 reflects his actual income and financial resources. In contradiction to this statement, he also declared that he and the mother’s incomes are on par, at about $45,000 per annum.
[23] Folio B2
[24] Folios 12 and 381 to 388
The Tribunal put to the father a third-party statement in evidence which indicates that he was observed overseeing a [project] from May to September 2023,[25] even though he had made statements to Child Support that he was not working during that same period. In response, the father said he tried to work when he could, including overseeing [projects]. He stressed that he was not “on the tools”. He employed subcontractors during the same period and that the project had been booked some two years previously. It was not that he was not working, it was more likely that he had some downtime because of bad weather or waiting on materials.
[25] Folio A176
The father provided Child Support with the company’s 2023 financial statements. The profit and loss statement indicates gross income of $368,665.12, operating expenses of $70,966.54 and cost of sales of $306,739.46, including subcontracting costs of $204,348.57.[26] The balance sheet indicates that the company owes the father $69,560.97, increasing from $48,042.75 the previous financial year.[27] It is apparent that the liability recorded as owed by the mother to the company of $15,838.23[28] comprises payments made by the company towards the mortgage on the former marital home, as well as the home telephone, council rates and water account.[29] This is curious, as it is the father who has continued to reside in the family home since the breakdown of the marriage and so he derives a significant benefit from these payments. In the Tribunal’s view at least half of the loan recorded against the mother’s name in the 2023 financial year represents a financial resource available to the father. Of course, what portion, if any, of this represents a loan payable by the mother is best determined in the parent’s property settlement. Nevertheless, the Tribunal is satisfied that a portion of this loan is a financial resource available to the father for the support of the children. In his written submissions to the Tribunal the father declared that he ceased debiting the mother’s loan account with the mortgage and associated home payments in May 2023.[30]
[26] Folios 490 to 491
[27] Folio 492
[28] Folio 492
[29] Folios 642 to 643
[30] Folio B4
The joint liability to the company from both parents of $68,636.59 (up from $64,841.17 the previous financial year) declared in the balance sheet apparently comprises some of the father’s personal expenses including attending breweries, clothing and food purchases, medical and private health insurance as well as gym membership in addition to the other personal expenses outlined in the transaction statements.[31] Without further evidence the Tribunal is not persuaded the father has correctly allocated these expenses as a liability owed by the mother to the company
[31] Folios 441 to 446, 644 to 649, B153 to B157
As for the father’s own loan to the company, this is apparently in respect of other personal expenses met by the company for the benefit of the father.[32] The Tribunal has already found that the company meets the mortgage repayments on the former marital home[33] and insurance payments.[34] The father’s child support liability, private health insurance and utilities are also paid directly from the company cheque account.[35] In addition, direct deposits from the company account are paid into the father’s personal account. By way of example, a total of $7,100 was deposited into the father’s personal account during the period 20 December 2022 to 14 March 2023.[36]
[32] Folios B158 to B168
[33] Folios 139 to 145
[34] Folio 148
[35] Folios 197 to 203
[36] Folios 182 to 196
It is noted that manual journal entries credited this loan on 18 May 2022 with the father’s 2022 wages[37] and on 30 June 2023 with his 2023 wages[38] which does not reconcile with the bank statements in evidence that show that the father applied the wages deposited into his personal bank account during the same financial years to his personal expenses. There is no apparent corresponding transfers from his personal accounts to the company accounts to substantiate these credits to his loan account. The Tribunal finds that these are mere book entries and that the father did not credit the company accounts with his 2022 and 2023 salary.
[37] Folio B167
[38] Folio B166
The father’s evidence was that he runs his company from the former marital home. In response to the question of what contribution the company makes to the mortgage as rent, the father simply replied that he is borrowing from the company to meet the mortgage costs and will repay these loans in the future. He stated that he has not declared this as income or drawings so as to minimise the income tax payable.
The Tribunal put to the father that the discretionary spending evident in his bank accounts is not consistent with his assertions that he has limited income and is unable to meet his necessary expenses. He replied “I have to have a life too”. When it was put to him that his discretionary expenditure may be indicative of his capacity to contribute to the children’s costs, the father replied “To an extent, I guess”, but stressed that his discretionary spending was limited and that the mother also had discretionary spending.
The bank statements indicate that the company’s credit card is used to meet the father’s personal expenses such as mobile telephone (whilst the Tribunal accepts that this is also a part business expense), hotels and bars, petrol (again, a part business expense), subscriptions, pharmacies, optometry, pet food and nutritional supplements.
It is also apparent that a loan of $30,000 made by the paternal grandparents to the father was deposited into the company account, of which $10,000 was used to immediately pay the father’s legal fees associated with family law proceedings.[39] As the remaining $20,000 loan from the paternal grandparents is not recorded as a liability in the 2023 balance sheet the Tribunal assumes that the father repaid this sum before the conclusion of the financial year, though there is no evidence of this repayment in the transaction statements.
[39] Folio 340
The Tribunal asked the father to explain the deposit into the company account from the paternal grandparents of $18,000 on 30 June 2023 and why then, on the same day, a payment was made to the paternal grandparents of $14,117.65.[40] The father explained that the paternal grandfather is the company’s bookkeeper and he had not been paid for a “couple of years”. When asked the urgency in paying the father, given that he also apparently needed borrowed funds from him on the same day, the father replied that he had to pay his father, as he owed him money and he could not afford to do it before this day. The Tribunal found the father’s explanation unsatisfactory and in the absence of any corroborating evidence was not satisfied that the payment to the paternal grandfather was in respect of unpaid bookkeeping expenses.
[40] Folio A187
During the period 15 December 2022 to 14 March 2023 deposits totalling $43,232.61 were made into an account to which the father is a signatory; a $10,000 deposit made during that period was directly from the father with the descriptor “re payment”.[41] Redactions prohibit the Tribunal from determining in whose names this account is held, but a transfer of $10,000[42] from the father’s company account to the paternal grandparents correlates with the $10,000 deposit outlined above. Therefore, the Tribunal is confident in assuming that this account is held by the paternal grandparents and the father is one of five signatories to the account. It is unclear whether this account is associated with the paternal grandparent’s discretionary trust, which the father confirms he is a beneficiary of, and whether any of the loans apparently made from the paternal grandparents either to the father, to the company or to the father and mother whilst still married are in fact distributions from this trust. The father has made separate statements he has not received any distributions from that trust.[43]
[41] Folios 176 to 179
[42] Folio 200
[43] Folio B2
Given the findings (below) regarding the weight to be given to the father’s evidence, the Tribunal is of the view that his statements should only be accepted when corroborated by independent documentary evidence. As such, the Tribunal is not satisfied that the deposits from the paternal grandparents into either the father’s accounts or the company accounts in evidence are sufficient to establish that these are loans repayable by the father to the paternal grandparents. In any event, such matters are more appropriately addressed in the pending property settlement and do not require determination in the context of this review.
For all the above reasons, the Tribunal does not accept that the company’s 2023 financial statements accurately reflect the company’s financial position or the father’s financial position.
The father declares that he has not received any income from the company in the 2024 financial year as the company cannot afford to do so.[44] At hearing, the father confirmed the same. However, the part 2024 profit and loss statement for the company provided by the father indicates that there was a net profit of $57,057.28.[45] Moreover, his evidence is in direct contradiction to his personal bank statements for the period 3 July 2023 to 31 January 2024,[46] which demonstrate that direct deposits are made from the company account into the father’s personal account. Furthermore, the company bank statements for the period 1 July 2023 to 30 January 2024[47] indicate that the father continued to charge personal expenses through the company, including streaming services, bicycle repair, pet food, hotel and medical expenses, health insurance and child support.[48]
[44] Folio B4
[45] Folios 490 and B177
[46] Folios B23 to B41
[47] Folios B69 to B90
[48] Folios B69 to B114
In his written submissions to the Tribunal the father stated that he had no choice but to cease work and undergo bilateral knee surgery on 1 March 2024. The father testified that he was unable to work from the date of surgery and so his adjusted taxable income should be varied to nil. He anticipates that it will take him between three to nine months to recover and return to work and he will have no income during this period.
The father provided a letter from Dr [A], orthopaedic surgeon, dated 12 February 2024 which states:[49]
I saw Mr Paradorn today to further discuss the management of his knees. He had a long think about everything we talked about few days back and has decided not to go ahead with Cingal injections and instead proceed with surgery. He is after a more definitive long-term solution and not just a temporary fix. I feel that is very reasonable given the extent of his symptoms and radiographic changes. As such we plan to ahead with bilateral MAKO robotic assisted Unicompartment knee replacements (UKR). I have discussed the perioperative journey with him at length today, including the surgical procedure, the immediately post-operative period and the more long term recovery/rehab. He understands that full recovery may take 6-9 months, however; by 3months he’ll be 80-90% of the way there.
[49] Folio B171
The Tribunal finds on the basis of an operation report the father underwent bilateral knee replacement on 1 March 2024.[50] The Tribunal accepts Dr [A]’s clinical judgement that proceeding to surgery, rather than exhausting Cingal injections first, was reasonable.
[50] Folio B180
On 12 March 2024 Dr [A] reported that the father will be unable to work for six weeks post-surgery. From then he will be able to undertake office duties only for a further six weeks and after that he will be able to commence a gradual return to work program.[51]
[51] Folio B170
The father declared at hearing that the company has not commenced any projects nor did it undertake any work in January or February 2024, apparently as there was no work available. This suggests that the part 2024 profit and loss statement that indicates a net profit of $57,057.28 represents net income for the first half of that financial year.
At hearing, the Tribunal put to the father the mother’s assertions that he is entitled to long service leave, and so he could draw on this income whilst he is incapacitated following his surgery. In response, the father confirmed that he does have long service leave, but that he did not need to use it. He then went on to state “I have not even thought about it. And I don’t want to claim on it”. Later he stated that he prefers not to consider his long service leave as income available to him and for this reason chose not to draw on it. He also reported at hearing that he has lodged a claim for workers’ compensation.
The Tribunal issued post-hearing notices to the NSW Long Service Leave Corporation, who confirmed that the father has, as at 8 May 2024, 24.6181 weeks of long service leave at the award rate for his work classification.[52] The Fair Work Ombudsman website indicates the father’s weekly award rate is at least $1,095.[53] The Tribunal finds that this is a financial resource available to the father. It does not follow that, as he has chosen not to access it, it is not a resource available to him to support the younger child whilst he is recuperating from his surgery. Further, that he declared a nil income and did not access these payments left the Tribunal with the impression that he did so in order to affect the administrative assessment.
[52] Folios C1 to C4
[53] >
The Tribunal also issued a notice to the father’s insurer regarding his workers’ compensation claim. The response indicates that the father lodged a workers’ compensation claim in respect of bilateral knee injuries, seeking compensation for past and future days lost at work and medical expenses. This was rejected on the basis that his claim was time-barred and, additionally, there was no evidence that his injuries arose in the course of his employment. However, a report was requested from his general practitioner and the father is required to attend an independent medical examination.[54] The Tribunal accepts the evidence from the insurer that the father is not eligible for workers’ compensation payments in respect of his bilateral knee injuries.
[54] Folios D1 to D4
The Tribunal has carefully considered the father’s submissions, his testimony at hearing and the financial evidence before it.
The Tribunal has found that the father is not a witness of credit. His evidence regarding his income and financial resources to Child Support and this Tribunal has been inconsistent, evasive and generally self-serving. It is also inconsistent with the financial and bank statements in evidence.
The Family Court has established the principle that in the case of self-employed parents, their taxable income may not be an accurate reflection of their earning capacity and financial resources. Several cases in particular have examined this issue closely, including Scott and Scott (1994) FLC 92-457 and Carey and Carey (1994) FLC 92-489. The Courts consider that self-employed people are able to derive additional benefits from their business in addition to wages. They also have greater control over the structure of their finances than an employee receiving salary or wages, and so may be able to use the income of the business in ways other than paying wages.
Under child support law, other than the basic expenses necessary for self-support there are very few expenses which take precedence over the support of children. There is considerable divergence between the taxation system, which is intended to provide general support for many, and the child support system, which is intended to provide specific support for the children of relationships.
The Tribunal is hampered in determining the income and financial resources available to the father given its findings about his credibility and his failure to make a full and frank disclosure. There has been a marked reduction in his adjusted taxable income since the child support case was registered. In the same period, the company continued to operate and was able to meet its financial obligations and provide a salary and financial resources to the father, despite the father’s statements to Child Support and this Tribunal to the contrary. The father’s bank statements indicate that his self-support costs and his discretionary expenditure is largely met by the company and in sums that are far in excess of his declared adjusted taxable income.
In Agrippa & Horton(SSAT Appeal) [2010] FMCAfam 1144, Halligan FM (as he was then) explained that parties in child support proceedings have a duty of full and frank disclosure and explained how decision makers are to deal with non-disclosure:
24. …In financial proceedings under the Family Law Act 1975 a party has a duty of full and frank disclosure of all of his or her financial circumstances (Black & Kellner, (1992) 15 Fam LR 343, (1992) FLC 92-287, Weir & Weir, (1992) 16 Fam LR 154, (1993) FLC 92-338). If it is established to the Court's satisfaction that there has been deliberate non-disclosure, “then the court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud” (Weir, above, FamLR at 158, FLC at 79,593).
25. In my view the same principle must apply in the assessment of child support for the same reason. If the SSAT is satisfied that a parent has made a deliberate non-disclosure of his or her financial circumstances, it should be reasonably robust in assessing the non-disclosing parent's financial circumstances adversely to that parent and in favour of the other parent. That is not to say that it may arrive at an entirely arbitrary result, but rather that it may draw generous inferences adverse to the non-disclosing party about that party's financial circumstances.
It is difficult to ascertain the father’s income and financial resources with any accuracy given the way in which he has arranged his financial affairs and the contradictory documentary evidence before the Tribunal. His declaration of personal and household expenditure[55] would require a net income of $106,500, on par with his adjusted taxable income prior to the breakdown of the marriage. The company apparently made no profit in 2023 and its 2024 half-year profit is $57,000. In both periods the father’s necessary and discretionary expenditure was met by the company and apparently supplemented by loans from his parents.
[55] Folios B11 and B12
In the circumstances, the Tribunal finds that it is both just and equitable that the father’s adjusted taxable income be varied to the male total average weekly earnings (MTAWE) for the 2023 year, being $82,524 from the date that the mother lodged her departure application being 8 February 2023 and increased to the 2024 MTAWE ($85,389) from 1 January 2024. Of course, this may underrepresent the father’s actual income and financial resources given the Tribunal’s findings regarding his historical income and his declared necessary and discretionary expenses. In the absence of any reliable evidence as to the father’s actual income and financial resources, the Tribunal is of the view that this strikes the correct balance and results in a just and equitable outcome for the father, the mother and the children.

Application of the MTAWE to the administrative assessment would require the father to contribute about $15,714 per annum towards the costs of the children from 2 February 2023, an increase of $3,042 per annum when compared to the administrative assessment. The Tribunal is satisfied that it is appropriate that the 2024 MTAWE be applied from 1 January 2024 until a terminating event occurs, likely to be 7 November 2024. This will increase the father’s child support liability from $1,720 per annum to $12,850 per annum. This aspect of the decision will create arrears of about $15,700. Given the father’s income and financial resources and necessary expenses, the Tribunal is certain these arrears will not cause him undue hardship.
The Tribunal directed the father to provide evidence to support his contention that his expenses, including his minimum and actual loan repayments, medical or pharmaceutical costs significantly impact on his capacity to support the children. At hearing, the father replied that he did not do so as he had no such evidence, though he estimated that his out-of-pocket costs associated with his surgery was about $11,500, which he borrowed from the company. Without evidence that his necessary costs impact on his capacity to support the children, the Tribunal was not persuaded that it would be just and equitable to depart from the administrative assessment on this basis.
Similarly, the Tribunal had directed the father to provide evidence that he has transferred money, goods or property to the mother and or children that renders the administrative assessment unfair. At hearing, the father testified that he continues to meet the mortgage, rates and insurance costs associated with the former marital home, in which he still lives. The father was unable to quantify what, if any, allowance should be made for the fact that he continues to live in the home. In the Tribunal’s view, such matters are more appropriately addressed in the property settlement and so the Tribunal will not consider these costs for the purposes of its determination.
There is no evidence that the children have income or financial resources that would render the administrative assessment unjust or unfair and the Tribunal finds accordingly. The Tribunal accepts that the older child will complete her Year 12 studies in 2024 and the younger child is undertaking a [qualification].
It is not in dispute that the younger child has been diagnosed with mental health disorders[56] and requires regular medication, costing about $28.60 per month.[57] The mother also has organised a gym membership that costs $18.95 per fortnight[58] and personal training that costs about $3,960 per annum.[59] The mother reports that physical activity offers the younger child an appropriate outlet to manage her emotions and has provided her a positive focus. In response to the mother’s evidence regarding the younger child’s special needs, the father stated that he did not disagree that he should contribute to the younger child’s gym based costs.
[56] Folio A145
[57] Folios A143 to A144
[58] Folio A75
[59] Based on (2 x $45 sessions per week) x 44 weeks PA
In response to the Tribunal’s questioning as to what, if any, contribution he should make to the older child’s special needs the father made the following statements. He does not disagree with the older child’s decision to compete in [the sports], but he does not get any information about her training. He stressed that he and the mother must also meet the needs of the other children. He could not state what financial contribution he could make with the exception of stating “I would like to offer a lot more than I can”.
On 9 March 2023 the father advised Child Support that he had offered to meet all of the older child’s [training] costs.[60] At hearing, the Tribunal asked the father why he did not meet at least some of the older child’s special needs expenses from the company, as he did for his own self-support needs and discretionary expenditure. The father initially stated that he had not considered that as an option; instead, he was preoccupied with thoughts about his operation and not working and “things like that”. He did state that he was concerned that should he fund the older child’s special needs in this manner he would be liable to pay income tax on that contribution.
[60] Folio 166
Section 3 of the Act stipulates that a parent’s duty to maintain their children has priority over all other commitments, other than their necessary commitments to support themselves.
The Tribunal is satisfied that it would be both just and equitable that the father contributes to the costs associated with the older child’s special needs commensurate with his and the mother’s respective income percentages, after disregarding their self-support costs.[61] This results in the mother being liable to contribute to 16% of the older child’s special needs and the father 84% or $27,600. The Tribunal is satisfied that the father has capacity to meet this cost given its findings regarding his income and financial resources, including his unclaimed long service leave. The Tribunal is satisfied that it is appropriate to increase the father’s annual rate by this amount from 1 December 2022 to 30 November 2023. Having reached this conclusion the Tribunal is not satisfied, given its variation to the father’s adjusted taxable income and the sum he is required to contribute to the older child’s costs, that it is appropriate to also increase his rate of child support to meet the younger child’s special needs. The Tribunal is satisfied that the mother can meet the younger child’s special needs given the variation to the father’s adjusted taxable income.
[61] The mother’s adjusted taxable income of $45,987 – ($27,508 + $7,781) = $10,698. The 2023 MTAWE of $82,524 - $27,508 = $55,016.
The Tribunal has reached the requisite level of satisfaction that the father has capacity to meet his ongoing necessary expenses and child support liability in addition to the arrears created by this decision, being around $38,000. The Tribunal concludes that the father will not suffer undue hardship in meeting these arrears. Certain hardship would be caused to the mother and the children were the father not to contribute to the extent that his income and financial resources allowed.
The Tribunal is satisfied that the administrative assessment is unfair given the older child’s special needs, the mother’s self-support costs and the father’s income and financial resources. This results in an unjust and inequitable level of child support given the circumstances of each parent. For all these reasons, it is just and equitable to depart from the administrative assessment.

Otherwise proper

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.
The mother is in receipt of income-tested benefits. Changing the child support payable by the father may not affect the mother’s rate of family tax benefit, depending on how Centrelink treats the increase in the administratively assessed rate of child support. As there has been an increase to the annual rate on the basis of the older child’s special needs, Centrelink may determine that this increase in the child support payable should be excluded from the maintenance income amount.
It is open to the mother to provide a copy of this decision to Centrelink so it may determine if the increase in the rate of child support payable should be excluded from the maintenance income amount used to calculate her entitlement to family tax benefit.
The determination is otherwise proper.

DECISION

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

Ms Peradon’s self-support amount is increased by $7,781 from 8 February 2023 until a terminating event occurs;
Mr Peradon’s annual rate of child support is increased by $27,600 for the period 1 December 2022 to 30 November 2023; and
Mr Peradon’s adjusted taxable income is varied to:
a.$82,524 for the period 8 February 2023 to 31 December 2023; and
b.$85,389 for the period 1 January 2024 until a terminating event occurs.

[2024] AATA 2768

6 June 2024

Key Legal Topics

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Family Law

Legal Concepts

Jurisdiction

Statutory Construction

Remedies