Pickwick and Nickins (Child support)

Pickwick and Nickins (Child support) [2022] AATA 5012 (11 November 2022)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2022/SC023413
APPLICANT:  Mr Pickwick
OTHER PARTIES:  Child Support Registrar
Ms Nickins

TRIBUNAL:Member D Tucker, Presiding
Senior Member K Dordevic

DECISION DATE: 11 November 2022
DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that for the period from 25 June 2020 until a terminating event occurs in relation to the child, Mr Pickwick’s annual child support liability is varied to $29,878.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – special needs – 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 omitted from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of child support, using a formula which includes variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. The Act also provides for a departure from this administrative assessment in certain circumstances.
Ms Nickins (the mother) and Mr Pickwick (the father) are the parents of one child, [Child 1] (the child), born [in] February 2008. This case was registered with Services Australia – Child Support (the CSA) on 14 October 2017 and registered for collection from that date. The care record reflects that the mother has 100% care of the child.
On 23 September 2021 the mother lodged a departure application. Her position was that the administrative assessment did not adequately accommodate the cost of meeting the child’s special needs (Reason 2) or the extra costs of educating the child in the way both parents intended (Reason 3).
The same day, the CSA rejected the departure application, deciding that it was not just and equitable to change the assessment.
On 13 December 2021 the mother lodged an objection to this decision, which the CSA disallowed on 10 February 2022.
On 3 March 2022 the mother sought further review with the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal).
A directions hearing was held on 26 July 2022. The mother reiterated that a departure from the administrative assessment was justified based on Reason 2 and Reason 3. The father contended that the mother had enrolled the child in a private boarding school without his agreement. He questioned whether the extent of the child’s psychotherapy was warranted and stated that he simply could not afford any increase in his child support payments.
Directions were issued on the next day requiring compliance by 22 August 2022.
The hearing took place on 14 September 2022. Both the father and mother appeared via telephone and gave affirmed evidence. The tribunal also considered the documentation provided by the CSA and both parties.
On 23 September 2022 the tribunal issued a notice to the solicitor who represented the estate of [Mr A], for information about a bequest to the father. A response was received on 27 September 2022.
On 11 November 2022 the tribunal also conducted a title search with the assistance of New South Wales Land Registry Services in relation to any property held by the father. The tribunal reached its decision on the same date.

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

Reason 8: The parents’ financial resources

Subparagraph 117(2)(c)(ia) of the Act provides a ground for departure if the administrative assessment does not reflect an accurate assessment of either party’s income, property or financial resources.
The father provided a Statement of Financial Circumstances (SoFC) that indicated gross weekly income of $1,104 per week. He provided no details about his household expenses, assets or liabilities. Based on his tax assessment for 2020/2021, the tribunal finds that his ordinary taxable income was $64,195.
The father told the tribunal he is unemployed and unfit for work due to a work-related injury for which he receives regular compensation payments, which are his only income. He provided statements from icare to corroborate this. In the absence of any firm evidence to the contrary, the tribunal accepts that the father is currently unable to engage in gainful employment.
The mother speculated that the father owned other real estate that he had not disclosed to the CSA or to the tribunal but was unable to identify any particular property. The father rejected this speculation. He explained that he had part ownership of a farm in [Town 1] that was originally acquired by his father and uncle approximately 45 years ago. However, he did acknowledge that 25 years ago he and his two brothers bought the property for $90,000 and it is now used as a hobby farm. The mother speculated that this property would be worth more than $200,000 but did not provide any firm evidence to support this.
The tribunal conducted a title search with the assistance of New South Wales Land Registry Services, which revealed a significant number of titleholders with the same given and family name as the father. The tribunal does not have the remit or resources to conduct the investigation that would be required to differentiate these titleholders. In the absence of any more specific allegation, the tribunal finds there is insufficient evidence to demonstrate that father owns property that he has not disclosed.
The mother also told the tribunal that she had been told that the father inherited a substantial sum from the estate of his maternal grandfather, [Mr A], and that this is not reflected in the administrative assessment.
As directed, the father provided a copy of the will of [Mr A], dated 12 November 2016, which bequeathed his estate in equal parts to his son and daughter, and states that in the event of his children dying before him, their share of his estate would pass to their children.
The father confirmed that he was the beneficiary of one quarter of the estate, along with his [siblings], which consisted only of his grandfather’s house. He denied the mother’s suggestion that he inherited other property. The father told the tribunal that he received only $750,000 as his share of the sale of his grandfather’s house.
The tribunal viewed the online registry of the New South Wales Supreme, District and Local Courts, which confirmed the details of [Mr A’s] death and the granting of probate on 25 June 2020.
At the tribunal’s request the legal representative for the estate confirmed that the inheritance consisted of a single property but did not know what it was sold for. On the balance of probabilities, the tribunal accepts the father’s evidence that his share of the estate was $750,000, given that this represents a sale price of $3 million, which is within the normal price range for houses in Sydney.
The Act requires the tribunal to consider not just a parent’s income and earning capacity, but also their property and financial resources (subparagraph 117(2)(c)(ia)). This reflects the intention behind the Act that a parent’s responsibility to provide financially for their children is not limited to income alone, but also includes financial resources.
The term financial resource is not defined in the Act. However, it has received judicial consideration. In Costa & Fairbank (SSAT Appeal) [2010] FMCAfam 39 (Costa), the Court found that a “financial resource" is something which is not property but from which financial benefit is, or may be gained, and that considering the objects of the Act, it should be broadly defined to refer to any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children.
The term was considered further in the matter of Walker & Fielding (SSAT Appeal) [2010] FMCAfam 320 (18 June 2010), where it was held:
71. A financial resource, in my consideration, refers to something which is not property but from which a financial benefit is or may be gained [see Kennon v Spry (2008) FLC93-388, Gummow and Hayne JJ (@ 83035)].
72. The principle object of the Assessment Act (ss.4) is to ensure the children receive a proper level of financial support from their parents.
73. A particular object of the Assessment Act includes ensuring:
a. That the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and in particular, the parents with a like capacity to provide financial support for their children should provide like amounts of financial support.
74.The term financial resource in the light of the objects of the Assessment Act should be broadly defined and would, in my consideration, refer to any financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children.
The tribunal is satisfied that the inheritance received by the father is a “financial benefit that would enhance the capacity of parents to provide a proper level of financial support for their children” as envisaged in Costa. In the tribunal’s view, such a conclusion is consistent with the objects of the Act and with the broad definition of the term “financial resource”.
The father’s bank statements indicate that on 5 January 2022 he had a balance of $414,340, which by 5 August 2022 had reduced to a balance of $152,536. His account revealed some large withdrawals, including one on 7 July 2022 for $200,000.
The father told the tribunal he had used his inheritance money to repay a debt to his wife’s parents of $200,000, which they had loaned him years before to buy his house. He also used $400,000 to settle the mortgage on his residence and gambled away an unspecified portion of the remainder at the casino. The tribunal was not inclined to accept the father’s claim regarding his gambling, given the lack of any other evidence, and the casual demeanour with which he described his losses.
When asked if he had considered making some gift of money to the child from his inheritance, the father said he had not, and opined that his inheritance should not be considered a financial resource available for child support purposes as it was effectively a gift from his father. The tribunal does not accept this, given that child support legislation reflects the intention that parents prioritise the financial support of their children above the retention or building of assets.
The tribunal accepts that the $200,000 the father used to settle a private loan to his in-laws is no longer available to him. However, he also used $400,000 to pay off his mortgage on his residence. This now unencumbered asset is not immune from consideration as a financial resource for child support purposes. He is free to borrow against it, or sell it, or otherwise arrange his finances to access its value. In the tribunal’s view, $550,000 of the father’s inheritance is available for child support purposes and should be treated as income over the departure period.
The father is required to pay $8,540 per annum under the administrative assessment. Applying $550,000 of the father’s inheritance to the administrative assessment would require him to pay $24,380 per annum in child support.
Given this, the tribunal is satisfied that the father’s financial resources are not properly reflected in the administrative assessment and this would result in an unjust and inequitable determination of the level of financial support he is liable to pay. Reason 8A is therefore established and there are special circumstances that warrant a departure from the administrative assessment (subparagraph 117(2)(c)(ia) of the Act).

Just and equitable

Before departing from an administrative assessment, decision makers are obliged to consider the following matters set out in subsection 117(4) of the Act:
(a)the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b)the proper needs of the child; and
(c)the income, earning capacity, property and financial resources of the child; and
(d)the income, property and financial resources of each parent who is a party to the proceeding; and
(da) the earning capacity of each parent who is a party to the proceeding; and
(e)the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i) himself or herself; or
(ii) any other child or another person that the person has a duty to maintain; and
(f)the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g)any hardship that would be caused:
(i) to:
(A)the child; or
(B)the carer entitled to child support; by the making of, or the refusal to make, the order; and
(ii) to:
(A)the liable parent; or
(B)any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order.
The tribunal accepts that the parents have a duty to maintain their children. There is no dispute about whether the children’s proper needs are being met.

Education costs

The mother claims her decision to enrol the child at [School 1] was done with the father’s agreement. She told the tribunal that she met with the father, on 4 December 2018, so he could sign the enrolment form for [School 1], a copy of which is in evidence[1]. The mother also provided a photocopy of an entry in her diary for that date. However, this does not corroborate the content of any discussion she may have had with the father.
[1] page 27 of the hearing papers
The mother claimed that she and the father had discussed the child’s education on previous occasions, and he suggested, after she had advised that her mental health was having a significant impact on her capacity to care for the child, that the child be enrolled in a boarding school. The mother suggested that the child be enrolled at [School 1] because it was a boarding school and close to her home, and that the father agreed to this.
The father agreed that he had met with the mother from time to time but did not specifically recall meeting on 4 December 2018 as described by the mother. He could not confirm or deny that he suggested the child be sent to boarding school. He reflected that he may have done so without considering whether he would have to contribute to the cost.
The father could not recall signing the [School 1] enrolment form. He pointed out that the form incorrectly states his name as “[name 1 variant]” rather than “[name 1]” and his level of schooling and other spoken language. The father reasoned that he would not have signed the enrolment form because he knew he could not afford the fees at [School 1], as his only income is workers compensation payments, and he does not anticipate being able to work again.
The tribunal notes that the mother provided a scan of the father’s NSW driver licence (expired [in] December 2019) that states his given name as “[name 1 variant]”, while the scan the father provided of his current driver licence uses “[name 1]”.
When asked, the father conceded to the tribunal that he had sent his older daughter (now aged [age] years) to be educated at an independent Catholic school but qualified this by saying that this decision was made when he was working and could afford the fees and in acquiescence to his wife’s wishes.
There are no other documents in evidence created for the purpose of the child’s enrolment at [School 1] that bear the father’s signature, or otherwise indicate his involvement.
In response to the tribunal’s directions, the father provided specimens of his signature on copies of his passport and his New South Wales driver licence. His signature also appears on WorkCover documents he submitted. The tribunal compared these signatures to the one on the enrolment form for [School 1], as appended to these reasons.
The tribunal is not a court with powers of forensic investigation, and its members are not experts in handwriting. However, after comparing these signatures, the tribunal is not satisfied that the signature on the [School 1] enrolment form is authentic, or that the child is being educated in the way both parents intended.
The tribunal therefore concludes that the child is not being educated in the manner expected by the parents and for this reason it would not be just and equitable for the father to be required to contribute to the child’s private education costs.

Special needs

The mother told the CSA that the child requires psychological treatment with out-of-pocket costs of around $969 per annum. Her evidence on this point can be summarised as follows:
·      When the child was in Year 1 one at school he was diagnosed with epilepsy. He was treated by a paediatrician who prescribed anti-epileptic medication but the child continued to suffer frequent seizures and other symptoms, including enuresis (wetting himself).
·      The symptoms of the child’s epilepsy had a significant impact on him socially and academically at school. He lost all self-confidence and self-esteem. As a result, he developed compensating behavioural problems in the classroom and at home. On one occasion the mother was forced to call the police because the child was hitting her. By Year 5 his teachers were “sick of him” because he would not participate in class.
·      The mother found it especially difficult to cope with the child because of her own mental health problems and a lack of any other adult support. Occasionally she would call the father for help, and he would talk to the child on the phone.
·      Her intention was for the child to board at [School 1] because she could no longer cope with parenting him alone. This was due to a combination of the child’s oppositional behaviour and her own significant mental health problems. (The father told the tribunal that the mother had called him on more than one occasion seeking his support to deal with the child’s aggressive behaviour.)
·      The child tried twice to board at [School 1], but on each occasion lasted only a few nights, because he was terrified of being abandoned by the mother. Since then, he has not boarded overnight, but instead attends an after-hours program at school until 8 PM each day before he returns to stay with the mother at home.
·      The mother explained that she needs this level of support from [School 1] because of her fragile mental health. She described how in 2021, when she required inpatient treatment, several families within the [School 1] community took the child into their homes for a week at a time. Furthermore, the school hours give her the weekday respite required given the child’s behavioural problems.
·      The mother also told the tribunal that although the child has experienced some difficulties at [School 1], he is attached to his school and is adamant he does not want to go to school anywhere else.
·      During school holidays, the mother sends the child to full-time [sport] camps and holiday camps. These activities, uniforms, stationery and books cost a total of approximately $10,000 per annum, additional to $35,000 of school fees.
·      An account from [Doctor A], the child’s treating psychologist[2], dated 9 August 2021, corroborates that his treatment cost $175 per session, amounting to a total of $4,900 per annum in 2020/2021.
[2] page 32 of the hearing papers

The tribunal notes that the mother first raised the issue of the child’s treatment costs with the CSA in October 2020[3].
[3] page 15 of the hearing papers
The father questioned whether the child needed to see a psychologist every fortnight but did not dispute the mother’s account of the child’s needs or behavioural problems and said that he accepted the psychologist’s opinion about the child’s treatment needs.
The mother told the tribunal that most of these costs continued to be met via a Medicare rebate. However, her out-of-pocket expenses - the gap between the rebate and the psychologist’s fees - had increased in proportion to the increase in [Doctor A’s] rates.
In a letter dated 11 March 2022, [Doctor A] states that the child is engaged in treatment for mood, anxiety, adjustment and behavioural dysregulation difficulties and estimates the total cost of this in 2022 at $4,752. Extrapolating from the mother’s out of pocket costs in 2020/2021, the tribunal estimates that her likely costs for this treatment will be $820 in 2022.
The tribunal is familiar with the holiday camps the child attends each school vacation period. They are not designed purely as recreation, but also have a pastoral purpose. They provide a safe and caring environment for children to develop social skills with same age peers with input from positive adult role models. According to the mother, these programs are part of her strategy to deal with the child’s emotional and behavioural issues. The tribunal accepts this is the purpose and benefit of these activities. The mother has provided evidence that the annual cost of these programs during 2022 was $3,594.
By combining this with the out-of-pocket costs for the child’s psychological treatment, the tribunal finds that the cost of meeting the child’s special needs is $4,415, which is a significant financial impost and significantly affects the cost of maintaining the child overall. In the tribunal’s view, the father should meet half this cost.

Income, earnings, property and financial resources

There is no question of the child having any income, earnings, property or financial resources which would affect the child support assessment.
In accordance with the tribunal’s directions, both parties provided their personal financial records.
In her SoFC, the mother indicated a total average gross weekly income of $693, comprised of Centrelink payments and a small amount of earnings from casual work as [an occupation 1]. She reported assets consisting of property and savings with the total value of $1,359,000. The two properties she owns are encumbered with mortgages of $30,000 and $88,000. She also has superannuation of $643,800. Her SoFC corresponded with her bank statements, which show the usual household expenses. Based on the mother’s notice of amended assessment for the year ended 30 June 2020, the tribunal finds that her amended taxable income was $25,838. Given her caring responsibilities and fragile mental health, as corroborated by a letter from her psychiatrist, the tribunal is satisfied that she does not have unused earning capacity.

Date of departure

The mother asks for a departure from the administrative assessment until the child finishes year 12, which he is due to complete at the end of 2025. The tribunal understands that the mother sought this departure period because her application was based chiefly on the costs of the child’s education. The tribunal finds it more appropriate to extend the departure period to the end of the assessment when the child turns 18 years old, [in] February 2026. The tribunal is satisfied that this is appropriate to provide certainty to the parties and minimise the need for repeat proceedings.
The mother told the tribunal that in April 2020 she started getting legal advice about whether the child could be a beneficiary of [Mr A’s] estate. She explained that the father had stopped answering her calls and appeared unwilling to speak with her. She applied unsuccessfully to the court for a copy of [Mr A’s] will, incurring significant legal costs in the process. She eventually obtained a copy in December 2020.
The tribunal is satisfied that from at least 1 April 2020, the mother put the father on notice that she was seeking a contribution towards the child’s costs from the proceeds of [Mr A’s] estate. Given this, the tribunal finds that it is appropriate to depart from the administrative assessment from 25 June 2020, being the date probate was granted in relation to [Mr A’s] estate.
The departure period is five years and eight months (68 months). Dividing $550,000 over the departure period gives the father additional income of $97,059 per annum. A pay as you go income earner would need to earn about $128,603 to have access to such income. When this is added to the father’s 2021 adjusted taxable income of $66,095, he has a total income for child support purposes of $194,698 per annum.
This income on its own translates to an annual liability of $27,671. As outlined above, the tribunal finds that it is also just and equitable that the father pay half the costs of the child’s special needs, which is $2,207 per annum. This results in an annual liability of $29,878 ($27,671 + $2,207).
The tribunal is satisfied, after considering all the matters which it must, that it is appropriate that the father’s annual child support liability be varied to $29,878 per annum from 25 June 2020 until a terminating event occurs in relation to the child.
The variation to the child support assessment on this basis will create arrears of $71,134 for the 869 days from the departure date to the date of this decision. The father’s financial disclosures indicate that he has the funds to meet this cost. The tribunal is satisfied that this will not place him in a position of undue hardship given his income and financial resources. Furthermore, these funds are necessary for the mother to adequately provide for the child.
The tribunal is satisfied that the father can meet this liability and his ongoing necessary expenses.

Is it otherwise proper to make a change to the administrative assessment?

Subsection 117(5) requires the tribunal to take into consideration the following matters:
(a)the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and
(b)the effect that the making of the order would have on:
(i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
(ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.
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. Departing from the administrative assessment will result in a more appropriate apportionment of financial responsibility between the parents and the community.
The determination is otherwise proper.

DECISION

ATTACHMENT

Enrolment form [Signature copy Deleted.]

Passport [Signature copy Deleted.]

Statutory declaration [Signature copy Deleted.]

Workers’ compensation declaration [Signature copy Deleted.]

Elsewhere in workers’ compensation declaration [Signature copy Deleted.]

Driver’s licence [Signature copy Deleted.]

[2022] AATA 5012

11 November 2022

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Judicial Review

Remedies

Statutory Construction