Perkins and Perkins (Child support)

[2022] AATA 5090

Perkins and Perkins (Child support) [2022] AATA 5090 (15 December 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/SC022903

APPLICANT:  Ms Perkins

OTHER PARTIES:  Child Support Registrar

Mr Perkins

TRIBUNAL:Senior Member K Dordevic, Presiding

Senior Member J Cipolla

DECISION DATE:  15 December 2022

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that Mr Perkins’s child support liability is varied to:

• $28,000 per annum from 13 April 2021 to 30 March 2022;

• $20,000 per annum from 31 March 2022 to 31 December 2024.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education – income, property and financial resources of both parents – a ground for departure established – 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. 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.

2. Ms Perkins (the mother) and Mr Perkins (the father) are the parents of three children, an older son [Child 1] and twins [Child 2] and [Child 3]. This case was first registered with Child Support (the Agency) on 6 June 2016 and was collectable from 25 March 2019. From 14 September 2018 the care of the children was consistent with court ordered care of 62% to the mother and 38% to the father. The care percentages were amended on 18 April 2022 to reflect that the eldest child was residing solely with the father from 31 March 2022.

3. The mother lodged a departure application on 13 April 2021 on the basis of the older child’s private schooling and the father’s income, property, financial resources and earning capacity. The father lodged a cross application on 24 May 2021 on the basis of the mother’s income, property, financial resources and earning capacity.

4. On 6 July 2021 a senior case officer determined that for the period 1 April 2021 to 30 June 2023 the father’s adjusted taxable income is to be varied to $215,118 and the mother’s adjusted taxable income is to be varied to $67,835. On 15 September 2021 the father lodged an extension of time application to object to that decision. On 8 October 2021 the extension of time was granted and on 18 November 2021 his objection was allowed, whereby the decision was set aside and it was determined that it was neither in the interests of justice or equity to depart from the administrative assessment.

5. On 8 December 2021 the mother sought further review with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the Tribunal). Following a directions hearing, the matter was heard on 31 May 2022. On 29 June 2022 the Tribunal (differently constituted) affirmed the decision under review.

6. On 2 August 2022 the mother lodged an appeal with the Federal Circuit and Family Court (the Court). On 12 September 2022 the Court ordered, by consent, that the Tribunal’s decision of 29 June 2022 be set aside and that the matter be remitted to the Tribunal for redetermination according to the law.

7. On 12 October 2022 directions were issued requiring compliance by 28 October 2022. The hearing took place on 16 November 2022. The mother and father appeared by MS Teams audio and gave their evidence under oath. The Tribunal also considered the documentation provided by the Agency (folios 1 to 903), the mother (folios A1 to A524) and the father (folios B1 to B78).

8. The father was provided with a further opportunity to comply with the Tribunal’s directions, including the provision of his personal bank accounts. The Tribunal issued further directions on the day of hearing, requiring compliance by 1 December 2022. Additional documents were provided in response to the post-hearing directions: the mother (folios A525 to A625) and the father (folios B78 to B187). Following the exchange of those documents between the parents the Tribunal gave the parties until 14 December 2022 to provide submissions in response.

9. The Tribunal reached its decision on 15 December 2022. It is noted that the mother provided additional material on 20 December 2022 which was not considered or exchanged.

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?

RELEVANT HISTORY

The first Tribunal decision

1. As outlined above, by decision dated 29 June 2022, the first Tribunal affirmed the decision of the objections officer.

2. In examining whether the costs of maintaining the children are significantly affected by the cost of educating them in the manner that was expected by the parents (as outlined in subparagraph 117(2)(b)(ii) of the Act) the first Tribunal determined that the eldest child was being educated in the manner expected by his parents. The mother sought a contribution from the father in respect of the non-tuition costs associated with the child’s attendance at the private school, including uniforms, shoes and the provision of a laptop. The father’s position was that there was no agreement that the non-tuition costs would be borne equally by the parents, though it was agreed between the parents that they would each meet half of the child’s private school tuition costs.

3. The first Tribunal concluded (at paragraph 19):

   Ms Perkins argues that the child support payable by Mr Perkins should be increased to take account of all of the other expenses of the child’s education, which have been borne by her. The child support assessment in its usual form is intended to cover all costs that are common to raising children, regardless of the manner of their education. This includes things like school uniforms, school transport, electronic devices and computers, excursions, sport, and a degree of extra-curricular activity. While Ms Perkins has raised issues in relation to these ancillary costs that she is incurring, under the law it is only private school tuition fees which fall outside those usual costs and which can be considered under Reason 3. None of the other expenses raised by Ms Perkins such as laptops and uniforms would be for consideration under Reason 3.

4. The Tribunal undertook an examination of the father’s income, financial resources and earning capacity (reflected in subparagraph 117(2)(c)(ia) of the Act) and determined that the financial resources available from the father’s business (of which he is a 49% shareholder) were not accurately reflected in the administrative assessment, and in the special circumstances of the case determined that this rendered the administrative assessment of child support unfair, and therefore a ground was established.

5. The first Tribunal went on to then consider whether it was just and equitable and otherwise proper to depart from the assessment. In undertaking that examination it determined that the mother’s income and financial resources were also not accurately reflected in the administrative assessment, finding that her financial resources from 19 March 2020 to 6 February 2022 were in the vicinity of $150,000 per annum and that until early May 2022, despite her business closing on 7 February 2022, she continued to receive deposits into her account, which, if applied to the administrative assessment, would not result in a higher level of child support than that was administratively assessed.

6. The Tribunal then applied its findings regarding the parents’ financial resources to the administrative assessment and calculated that it would result in the mother receiving less child support than that was payable under the administrative assessment. It concluded that it would not be just and equitable to depart from the administrative assessment and that the objection decision was correct.

7. The mother was dissatisfied with the outcome of this review and sought judicial review of that decision with the Court.

8. The Court determined that the previously constituted Tribunal committed an error of law in its decision of 29 June 2022. The identified error related to the grounds for departure outlined in Reason 3, which as noted pertain to the costs of educating the children. The Court determined that in considering s.117(2)(b)(ii) of the Act, the first Tribunal’s findings that “under law it is only private school tuition fees which fall outside those usual costs and which can be considered… None of the other expenses raised by the applicant such as laptops and uniforms would be for consideration” were an error of law.

9. Indeed, the Court found that “in limiting its consideration to the tuition fees and excluding all other expenses associated with the education of the children, the Administrative Appeals Tribunal imposed limitations not found in the legislation. The wording of s.117(2)(b)(ii) is broad and does not exclude consideration of the expenses sought by the applicant.”

10. The Court went on to find that the decision of the first Tribunal was infected by legal error and that the matter should be remitted back to the Tribunal (differently constituted) for redetermination.

CONSIDERATION

A ground for departure

1. Subparagraph 117(2)(b)(ib) of the Act provides a ground for departure when, in the special circumstances of the case, the costs of maintaining the children are significantly affected because the children are being educated in the manner that was expected by their parents.

2. The Tribunal notes that the Child Support Guide states at Chapter 2.6.9 that the usual costs associated with a child attending a government school would not normally constitute special circumstances. The Tribunal acknowledges that, while it may be guided by policy, it is not bound to follow it: Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634. In the recent case of G v MIBP [2018] FCA 1229, the Federal Court observed that it is clear from earlier authorities that in the absence of any statutory indication to the contrary, any lawful executive policy enacted to guide the exercise of a statutory power is a relevant factor for the Tribunal to take into account in performing its review task.

3. It is not in dispute that the child [Child 1] was enrolled in Year 7 at [College 1] (the College) in 2022. In evidence is a declaration “Application for Enrolment” form completed by both parents to enrol [Child 1] in the school. The Tribunal is satisfied that [Child 1] is being educated in the manner expected by his parents by attending the College.

4. The Tribunal accepts the College invoice dated 22 February 2022 as evidencing the costs associated with [Child 1]’s private schooling, being $4,935 for the 2022 year and an enrolment fee of $250.

5. The father does not dispute that he had agreed to, and does meet, half of all the tuition costs associated with [Child 1]’s attendance at school. He is of the view that he is under no obligation to meet any additional costs associated with [Child 1]’s attendance at the school, including uniform costs or provision of a laptop.

6. The Tribunal enquired of the mother about laptop requirements for [Child 1]’s school and she advised that she purchased an Apple Mac for the child; there is in evidence a credit card statement which indicates that the mother purchased the laptop on 1 February 2022 totalling $1,329.95.[1] The Tribunal is satisfied that this was a requirement for [Child 1] to attend the College, as evidenced by the technology requirements outlined by the school.[2]

   [1] At folio A278

   [2] At folio A206

7. The father advised that he had also purchased a computer for [Child 1]; it is located at his residence and is primarily used for gaming purposes. The father’s testimony on this point indicates that this computer is ancillary to [Child 1]’s educational needs, which are met by the laptop provided by the school and paid for by the mother. The Tribunal also accepts that, due to COVID-19 lockdowns and home-schooling requirements, it was necessary to the children’s education that the mother purchased three laptops on 20 March 2020 at a cost of $3,781.[3]

   [3] At folios A586 to A588

8. The Tribunal finds that the mother incurred costs totalling $1,122[4] to purchase the required school uniform for [Child 1]. The Tribunal compared the costs associated with the purchase of the uniform with that of [High School 1], a local government high school located near the parents’ home, and determined that the costs associated with the purchase of shirts, trousers, ties and school shoes for [Child 1] to attend the College are costs are similar to those of attending a public high school.[5] However, the Tribunal finds that the cost of a blazer, being $209.95[6] is a compulsory requirement and not a requirement of attending a public high school. The mother also submits that she met the child’s stationery and book requirements of $294.65,[7] which are considerably more than those associated with a high school. The parents’ testimony at hearing was that neither provides a uniform for the child to wear whilst in the other parents’ care; however, the father did not submit that he purchased a separate blazer for the child.

   [4] At folios A218 to A221

   [5] [Source redacted].

   [6] At folio A218

   [7] At folio A407

9. At hearing the Tribunal elicited evidence from the mother pertaining to other receipts she had provided with respect to the education costs. The costs quantified by the mother included the purchase of a cake, party costs, inclusion in performing arts and marital arts programs, swimming lessons and music tuition. In clarifying these costs, the mother stated that the cost of the cake and the party were wrongly included. It was explained that the evidence of the martial arts and performing arts programs,[8] swimming lessons,[9] some of the tutoring costs,[10] school holiday care[11] and a school readiness program[12] were in respect of a period more than 18 months prior to her departure application (being 13 October 2019), and therefore would not be considered.

   [8] At folios 189 and 185

   [9] At folio 190, in respect of the period 13 January 2016 to 21 June 2017

   [10] At folios 210 to 218, in respect of period 7July 2016 to December 2019

   [11] At folios 191 to 209, in respect of the period October 2017 to January 2019

   [12] At folios 219 to 223, in respect of the period 12 October 2016 to 19 January 2017

10. The mother explained that more recently she had engaged an online tutor for [Child 1] as he was struggling academically. She stated that he had a number of learning and behavioural problems and that despite the fact that he was not residing with her, she believed that it was necessary for her to meet this cost so as to provide support to the child. The Tribunal finds that during the period 29 September to 26 November 2022 the child attended seven online tutoring classes at an out-of-pocket cost to the mother of $483.[13] At hearing the father indicated that he agreed for the child to attend the tutoring but was not aware of the company used or the fee. He thought it appropriate that he contribute to half of this cost.

    [13] At folios A308 to A312, A509 and A561 to A562

11. The mother submits that in 2022 she paid $1,840 in compulsory and other costs associated with the younger children’s attendance at public primary.[14] A certified copy of payments made by the parents from 2016 to 2020 certainly suggests that the mother meets nearly all costs associated with the younger children’s education. There is also in evidence a statement of account relating to Term 1, 2021 which evidences that the children’s costs were $310[15] in respect of the tuition and other costs and $192.50 in respect of their uniforms. In respect of the 2022 calendar year the Tribunal accepts that the mother’s 2022 out-of-pocket costs associated with [Child 3] and [Child 2] attending the school was $946[16] and $808[17] respectively. However, much of these costs appear to be related to non-compulsory activities such as sport and dance and attendance at a school camp. Whilst these activities are part of the school curriculum, they are not strictly compulsory; that is, a child need not attend. The Tribunal notes that the children’s uniform costs in the same period were $583.[18]

    [14] At folio A408

    [15] At folio A449

    [16] At folios A563 to A564

    [17] At folios A565 to A566

    [18] At folios A569 and A570

12. Under the administrative assessment, the costs of each child were calculated to be about $2,311 each for the period 1 October 2021 to 29 June 2022.[19] The mother’s 2022 adjusted taxable income was $30,936; thus, the younger children’s necessary public schooling costs (excluding the uniform costs and non-compulsory activities) do not, in the Tribunal’s view, and after having regard to the policy, significantly affect the mother’s costs associated with the younger children attending a government school such to constitute special circumstances.

    [19] At folio 34

13. In respect of the older child, the documentary evidence establishes that the mother incurred private education costs of $4,302 in 2022 (including tuition fees and the provision of compulsory stationery, books, laptop and blazer). Thus, [Child 1]’s private education costs represent 14% of her income for the same period and are nearly double the costs of the child as calculated under the assessment.[20]

    [20] At folio 34

14. The Tribunal concludes that, in the special circumstances of the case, that the mother’s costs in maintaining the older child [Child 1] are significantly affected because he is being educated in the manner expected by his parents. Therefore, the ground provided for in subparagraph 117(2)(b)(ib) of the Act is established. The Tribunal notes that it need only establish one ground before moving on to the consider just and equitable factors: Marsh & Eccles [2008] FMCAfam 1417.

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 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.

2. At the time that the mother lodged her departure application the father was liable to contribute $4,815 per annum in child support for the period 1 October 2020 to 31 December 2021 based on the parents’ 2020 adjusted taxable incomes of $51,882 (the father) and $26,615 (the mother).  This reduced to $3,190 upon the care change in respect of [Child 1] on 31 March 2022.

3. Neither party submits that the children have access to income or financial resources that render the administrative assessment unfair. There is also no evidence to suggest that either parent has received money, goods or property for the benefit of the children that would render the administrative assessment unfair or unjust or that they have a duty to maintain other children. The Tribunal finds accordingly.

1. The mother’s 2021 and 2022 adjusted taxable incomes are $23,553 and $30,936 respectively. The mother provided the first Tribunal with a Statement of Financial Circumstances dated 6 January 2022[21] declaring that she is in receipt of gross employment income of $450 per week from her part-time employment and nil income from the trust; the business ceased trading some two months after she completed this statement. She lists savings of $682, a motor vehicle valued at $10,285, her interest in [Business 1] as $70,000, household contents valued at $6,000 and superannuation of $5,511. She reports liabilities totalling $310,000, made up of a [specified] business loan of $70,000, credit card debts totalling $54,000, a personal loan totalling $50,000 and outstanding taxation and superannuation liabilities of $60,000 and business supply debts of $76,000. She reports personal expenditure of $2,760 per week, made up of taxation of $431, credit card payments of $1,900 and private health insurance of $283. She reports household expenses of $2,420 per week. It is not apparent what portion of these costs are associated with her care of the children, with the exception of her declaration of $150 per week in education costs and $100 in respect of the children’s clothing.  Apportioning the expenses indicates that her costs associated with the children’s care is about $1,600 per week.

   [21] At folios A6 to A14

2. In filing her application for review of the Tribunal’s first decision with the Federal Circuit Court[22] the mother provided an updated weekly expense listing dated 17 August 2022. She declared weekly income of $604 (made up of jobseeker of $334, rental assistance of $80, child support of $68 and family tax benefit of $122) and personal expenditure of $4,353 (including $810 in rent per week). She holds assets of $136,178 and liabilities of $494,124 (to her sister $6,940, her grandmother $50,000, her mother $89,920, credit card liabilities of $40,541, vehicle finance of $93,000, outstanding legal fees of $41,310, and in respect of her business [Company 1] an unpaid tax liability of $93,366, business loan of $58,585 and superannuation guarantee of $21,062). She reports household expenses of $1,311 of which $846 is in respect of the children, but this does not include the provision of accommodation. It is apparent that these declared costs are only in relation to the younger children, as the statement does not include [Child 1]’s education expenses.

   [22] At folios A392 to A406

3. The Tribunal makes the following findings in respect of the mother’s financial position. It is not in dispute that the mother applied the funds from the property settlement to purchase a business, [Business 1], operating under [Company 1], with the corporate trustee [Trust 1] (the trust), just before the first of the COVID-19 lockdowns in March 2020. Thus, the business was limited to takeaway purchases only. In March 2021 the business was flooded causing extensive damage, loss of stock and cessation of normal business operations. Periodically after this first flooding event the business incurred further damage when it rained which caused the electricity to shut down and food spoilage. The insurance company denied her claim, stating that the flooding was caused by defective roof plumbing. The mother is taking action through NSW Civil and Administrative Tribunal to attempt to recoup some of her losses from her landlord, with the matter set down for hearing in December 2022. The mother advised that if the action in NCAT was not successful her barrister had suggested pursuing further action in the Supreme Court, The mother has testified that the business folded in February 2022 and since that time she has been in receipt of Centrelink benefits. 

4. The Tribunal is satisfied that the mother does not have an unused earning capacity. Her business has folded largely due to a series of circumstances beyond her control. The Tribunal accepts the medical evidence before it that the mother suffers acute anxiety and depression and that this rendered her unfit for work or study during the period 6 June to 30 September 2022[23] and from 2 November to 2 December 2022.[24] She is in receipt of Centrelink benefits which require her to actively seek employment (excluding the periods that she is deemed medically unfit to do so). The Tribunal is not satisfied that the mother’s current circumstances were brought about by a motivation to affect the administrative assessment.

   [23] At folios A505 to A506

   [24] At folio 504

5. The trust’s 2021[25] and 2022[26] income statements in evidence indicate gross income of $734,881 and $332,517 and net losses of $257,144 and $92,956 respectively. It is not in dispute that in addition to adjusted taxable incomes of $23,553 and $30,936 in the same periods the mother derived personal benefits from the business that are not reflected in her adjusted taxable income, including provision of food, petrol, telephone and internet.  The business account #7852 indicates that the business also met the mother’s personal expenses, including chemist costs,[27] beautician,[28] personal clothing and makeup,[29] gym membership[30] and Foxtel.[31] The Tribunal calculates that the mother conservatively received benefits totalling $25,000 from the business and that these benefits are not reflected in her adjusted taxable income. A PAYG income earner would need to earn an additional $32,500 to receive such benefits.

   [25] At folios A442 to A443

   [26] At folios A449 to A450

   [27] At folio 778

   [28] At folio 776

   [29] At folio 789 and 790

   [30] At folio 128

   [31] At folio A129

6. The Tribunal next turned its mind to the deposits made into the children’s bank accounts. It is clear that the total deposits to the children’s accounts are not reflected in the mother’s summary of loans from her family members totalling $146,860.[32] By way of example, a cash deposit of $1,000 into [Child 1]’s account on 13 July 2021[33] is not reflected in the family loan summary. It is quite possible that this deposit reflects cash income from the business or from another undeclared source and so is a financial resource available to the mother not reflected in her adjusted taxable income; certainly, having these sums deposited into the children’s accounts and not her own personal account supports such a finding. However, it is apparent that the loans and unexplained deposits into the children’s accounts were then transferred into the trust account and used to meet its liabilities and are reflected (in part) in the balance sheet as the liability entitled “Owner A drawings” of $123,256[34] in the 2021 financial year and “Loan” of $200,004[35] in the 2022 financial year. 

   [32] At folios A407 to A408

   [33] At folio 724

   [34] At folio A444

   [35] At folio A451

7. When reviewing such opaque arrangements, it is difficult to reach any definitive conclusion regarding the mother’s income and financial resources in the 2021 and 2022 financial years. Neither is it necessary for the Tribunal to undertake a forensic audit of the mother’s financial circumstances. Certainly, they are greater than her adjusted taxable incomes for the same period suggest. However, her dire financial circumstances also support a finding that the loans from her family members were applied to the trust in a futile attempt to prop up the business. In such a context, the Tribunal is not satisfied that it would further affect justice or equity to increase the mother’s adjusted taxable income to reflect the loans and unexplained deposits during the 2021 and 2022 financial years. However, it is just and equitable to increase her adjusted taxable incomes in the 2021 financial year and from 1 July 2021 to 28 February 2022 during the same period by $32,500 to reflect the other benefits she received from the business as outlined at paragraph 42 above.

8. The Tribunal next examined the children’s special needs and whether the costs associated with their treatment significantly affect the costs of maintaining the children. 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. In Gyselman v 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.

9. The Tribunal is not satisfied that the mother incurred the expense of $429.96 in respect of an ambulance service provided on 21 January 2021,[36] given that she has private health insurance.

   [36] At folio 278

10. There is in evidence a letter from [Dr A], paediatrician, dated 5 November 2019[37] which states that [Child 1] was diagnosed with oppositional defiant disorder (ODD) and a mild degree of inattentive attention-deficit hyperactivity disorder (ADHD). At the time of writing the report [Dr A] stated that it was being treated with supplements and dietary measures, but medication would be considered depending on how the child progresses at school. On the same day [Dr A] also authored a letter in respect to [Child 3],[38] stating that he was also diagnosed with ODD, but appears to be improving. [Dr A] asked for a report regarding his ability to follow instructions, complete tasks and whether he displayed disruptive behaviour in the classroom. The documentary evidence before the Tribunal indicates that, relevant to this application, the mother incurred out of pocket costs associated with both sons attending [Dr A] on 1 November 2019 and 17 February 2022 totalling $1,020.[39]

    [37] At folio 301

    [38] At folio 302

    [39] At folios 262 to 263 and 266 to 267

11. The mother advised that as a result of [Child 1]’s diagnosis with ADHD that he requires ongoing psychological intervention and medication. In her written submissions dated 27 October 2022[40] she reported that [Child 1] was awaiting review by a paediatrician, with medication being a possibility. She confirmed the same at hearing. The documents provided post hearing indicate that [Child 1] attended appointments with a behavioural therapist, [Ms B], at [named healthcare provider] on 24 November and 13 December 2022.[41] The total cost per session is $190, with the mother stating that she paid $100 and the father $90 towards the cost.[42] It is clear that it is imperative that [Child 1] receive appropriate treatment for his ADHD and ODD to address his behavioural issues, which in turn assist in maintaining his school enrolment. The Tribunal is also satisfied that the mother incurred costs of $100 for the children to attend a paediatric appointment at [the] Clinic on 19 October 2022.[43] The Tribunal notes that at hearing the father confirmed that it was just and proper that he meet 50% of [Child 1]’s therapy, medical intervention and medication costs over and above his child support liability and acknowledged that this was a special need of the child.

    [40] At folio A517

    [41] At folios A549 and A550

    [42] At folios A551 to A552

    [43] At folio A560

12. Despite [Child 1] being in the father’s sole care since 30 March 2022, the mother has met his tutoring expenses of $69 per week from 29 September 2022 (with no tutoring taking place the week of 20 October 2022). The father characterised the provision of tutoring for [Child 1] as a necessary educational expense and stated that he thought it fair that he contribute to half this cost.

13. The Tribunal makes the following findings with respect to the father’s income and financial resources. He is a self-employed builder and director of [Company 2], established in 2009. Following the breakdown of the marriage the mother was removed as a director of the business. From November 2018 and until May 2019 the father was the sole director and shareholder of the business. On 6 June 2019 the father’s mother became a shareholder. The ASIC record shows that as of 6 April 2021 the father has 51 ordinary and his mother has 49 A class shares.[44] In her statutory declaration dated 29 November 2022[45] the father’s mother stated that she purchased all the retained profits and market value of [Company 2] on 20 May 2019 for $421,582.10.

    [44] At folios B175 to B177

    [45] At folio B169

14. The business 2022 profit and loss statement[46] in evidence indicates total income of $226,994.61, declared expenses of $167,808.11 and a net profit of $14,430.[47] The assets of the business include cryptocurrency of $180,000.[48] The father advised that he has been investing in cryptocurrency, using his personal and business funds, with volatile returns.

    [46] At folio B72

    [47] At folios B75

    [48] At folio B74.

15. The father’s 2021 and 2022 adjusted taxable incomes were $52,422 and $50,873 respectively. In his Statement of Financial Circumstances form dated 1 May 2022 the father reports that he is a self-employed builder/project manager where he works on a part-time basis. He reports $1,000 in salary. He declared sole ownership of property worth $1,800,000, savings of $8,500, a motor vehicle valued at $37,000, a nil interest in [Company 2], nil household contents, a dinghy valued at $16,000 and superannuation of $48,237. His liabilities include a mortgage on his property of $750,000, a liability owing to [Company 2] of $160,862.17 and unpaid capital gains tax of $105,400. He reports weekly personal expenses of $253 and declared household expenditure of $605 per week but did not specify how much of these costs relate to his care of the children.

16. The Tribunal put to the father that his bank accounts in evidence indicate that he has little self-support expenses. Whilst the father disagreed with this proposition, he did confirm that his mother provides most of his and the children’s meals, provides his cleaning supplies and cleans for him and that he lives frugally. By way of example, he states that he has not bought clothing for some years. He states that he usually withdraws large amounts of cash, such as $5,000 at a time, and will use those funds until they are exhausted, and this also explains why usual household and personal expenses are not reflected in his bank records. 

17. The father suffers from cystic fibrosis, requiring regular treatment, medications and hospital admissions. The Tribunal finds on the basis of the medical evidence[49] before it that the father no longer works on a full-time basis and this is justified on the basis of his health. The Tribunal understands the condition has severely limited his life expectancy and that despite medical advice to cease work, he continues to manage the business on a part-time basis.

    [49] At folio B76

18. The mother submits that the father had access to $600,000 in cash he had hidden which he used to purchase the former marital home. At hearing the father explained that the change to the business arrangements was made as he required funds to purchase the former marital home. In addition to purchasing the equity of the business, his parents also loaned him additional funds. At hearing the father had difficulty in recalling the specifics of the arrangement or the quantum of the loans. The Tribunal was left with the impression that the father was not willing to make a full and frank disclosure of arrangements regarding the financial support he receives from his parents.

19. Post-hearing the father provided evidence of a caveat over the property dated 29 November 2022,[50] which appears to have been created for the purposes of this application. There is also in evidence a Deed of Acknowledgement of Debt,[51] again apparently created for the purpose of this application, which states that the father’s parents provided him with a loan of $728,417.90 to purchase the former martial home on 25 July 2019 which is supported by bank statements in evidence. At hearing the father confirmed that he makes no mortgage payments; instead, as it is assumed that he will pre-decease his parents, they will recover the sum from his estate. It is noted that the deed states that the sum is to be repaid on the earlier of either 1 November 2024 or within three months of the death of either the father or his parents. 

    [50] At folio B161 to B162

    [51] At folios B163 to B169

20. After provision of bank statements and other documents provided post-hearing the Tribunal is satisfied that the transfer of funds from the father’s parents, the shareholding of the father’s mother and the purchase of the former marital home are bona fide arrangements.

21. Whilst the change in the company arrangements has not resulted in a change to the father’s adjusted taxable income (and so, his child support liability), it is apparent that his ability to access retained profits has changed. Nevertheless, there is a blending of personal and business. By way of example, his mother’s purchase of the equity of the business assisted (in part) to purchase the mother’s share of the former marital home; the purchase cheque in evidence of $1,800,000 was from the business.[52]  What is not in dispute is that the father finds himself in a secure financial position. He possesses an appreciating asset and has no mortgage repayments as well as regular income from [Company 2]. This is largely because of the financial support he has received from his family.

    [52] At folio A538

22. The father’s [Bank 1] account #6624 indicates that during the period 16 June to 30 September 2022 (106 days) the father received total deposits from [Company 2] totalling $33,372, made up of $838 in weekly wages, $11,478 with the descriptor “Wages Q3”, $5,000 with no descriptor and $6,000 with the descriptor “wages”. When annualised this suggests that the father receives net income of about $115,000 from the business. A PAYG income earner would need to receive about $149,500 to access such a financial resource. Examination of the business’s [Bank 2] account suggests that the only possible personal expense met by the business is the father’s telephone and motor vehicle expenses. The Tribunal is of the view that the additional personal benefits the father receives are modest and so do not render the administrative assessment unfair or unjust.

23. The mother’s evidence is that her costs associated with the care of the children are $83,400 per annum whilst all three children were in her care, reducing to about $75,000 per annum when [Child 1] left her care. The administrative assessment dictates that the father is liable to pay about $4,100 in child support, reducing to $2,392 when the care of the older child changed. Application of the mother’s income and financial resources of $63,400 (her 2022 adjusted taxable income $30,936 + $32,500 in personal benefits from the trust) and the father’s apparent income and financial resources of $149,500 would result in an annual liability payable by the father of about $19,000. From March 2022 the care arrangement of the older child changed and the mother’s benefits from the business ceased, resulting in the father’s liability reducing to about $14,000. However, this does not take into account the additional educational costs and special needs costs that the mother incurs.

24. It is clear that the mother finds herself in a precarious financial position, largely brought about by events outside her control. She is in receipt of jobseeker payment and her living expenses are more than seven-fold her income.  She is dependent on significant financial support from her family and it is highly unlikely that in the foreseeable future she will be in a position to meet her and the children’s ongoing expenses and meet even the minimum repayments in respect of her debts.

25. The Tribunal is satisfied that in the circumstances where the parents’ adjusted taxable incomes are not reflective of their income and financial resources and that the mother meets additional education costs for the [Child 1] along with all of [Child 1]’s special needs costs the most appropriate course is to vary the annual rate of child support payable by the father.

1. The Tribunal is satisfied that the father’s income and financial resources and modest self-support costs indicate that he has capacity to meet $28,000 of the children’s costs per annum from the date the mother lodged her departure application, being 13 April 2021 until 30 March 2022 and that this is the appropriate level of support given the additional education and special needs costs that the mother meets. From 31 March 2022, the date on which the older child left the mother’s care, the father’s liability is appropriately reduced to $20,000 per annum. This variation to the annual rate is made on the basis that the father will continue to meet 50% of the [Child 1]’s tuition costs (as he is legally obliged to under his agreement with the school) and 50% of his medical and therapy costs.   The Tribunal is satisfied that the father has capacity to meet this liability given his income, financial resources and limited self-support costs.

2. Given the desirability of predictability and of avoiding repeated proceedings, the Tribunal has decided that it is appropriate that the father’s capacity to contribute towards the children’s costs is reflected in the administrative assessment until 31 December 2024. It seems unlikely that the circumstances of either party will alter significantly during this period, notwithstanding the fact that it is anticipated that the father’s health will continue to deteriorate. The extended departure period will provide certainty to both parties but also takes into account the father’s testimony regarding his life-expectancy.

3. The Tribunal’s decision will create arrears of about $30,000. Given his current income and financial resources, the Tribunal is not persuaded that this will place the father in a position of undue hardship. Furthermore, the mother requires this financial support in order to adequately care for the children.

4. The Tribunal is satisfied that the administrative assessment is unfair given the parents’ income and financial resources, [Child 1]’s special needs and the children’s education costs. 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

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.

2. The mother is in receipt of income-tested benefits. Departing from the administrative assessment will result in a more appropriate apportionment of financial responsibility between the parents and the community.

3. The determination is otherwise proper.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that Mr Perkins’s child support liability is varied to:

·     $28,000 per annum from 13 April 2021 to 30 March 2022;

·     $20,000 per annum from 31 March 2022 to 31 December 2024.