Pottinger and Bellevue (Child support)
[2018] AATA 5033
•27 November 2018
Pottinger and Bellevue (Child support) [2018] AATA 5033 (27 November 2018)
DIVISION:Social Services & Child Support Division
REVIEW NUMBER: 2018/SC014689
APPLICANT: Mr Pottinger
OTHER PARTIES: Child Support Registrar
Ms Bellevue
TRIBUNAL:Member W Kennedy
DECISION DATE: 27 November 2018
DECISION:
The Tribunal sets aside the decision under review and, in substitution, decides to:
set Mr Pottinger’s adjusted taxable income at $185,000.00 for the period from 26 February 2018 to 19 March 2018
set Mr Pottinger’s adjusted taxable income at $140,000.00 for the period from 20 March 2018 to 31 December 2019
set Ms Bellevue’s adjusted taxable income at $70,000.00 for the period from 26 February 2018 to 31 December 2019
increase the assessment by $6,597.00 per annum for the period from 1 January 2018 to 31 December 2018
increase the assessment by $6,795.00 per annum for the period from 1 January 2019 to 31 December 2019.
CATCHWORDS
CHILD SUPPORT – departure determination – income, property and financial resources of each parent – earning capacity - reduced working hours due to caring responsibilities – special needs of the child – whether sporting ability a special need – school fees – payment of fees from a discretionary trust – 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
This decision concerns an application for a departure from the formula assessment of child support. Mr Pottinger and Ms Bellevue are the parents of [Child 1], who was born in October 2008, and of [Child 2] and [Child 3], both of whom were born in March 2011. There has been a child support assessment in place for the children made by the Child Support Agency of the Department of Human Services (the Department) since 29 March 2017. The assessment is based on Mr Pottinger having regular care and Ms Bellevue having primary care of the children.
For the period from 5 February 2018 to 28 June 2018 the child support assessment required Mr Pottinger to pay annual child support of $27,693.00. This is based on Mr Pottinger having an adjusted taxable income (ATI) of $168,514.00 and Ms Bellevue having an ATI of $26,845.00.
On 26 February 2018 Ms Bellevue applied to the Department for a departure from the formula assessment of child support based on Reason 2 (the special needs of the children), Reason 3 (the cost of educating and training the children in the manner expected by the parents) and Reason 8A (the income, property and financial resources of one or both of the parents). On 28 March 2018 Mr Pottinger responded to the application and cross-applied under Reason 4 (the income, earning capacity, property and financial resources of the children), Reason 5 (payments made by Mr Pottinger for the benefit of the children), Reason 8A and Reason 8B (the earning capacity of one or both parents).
On 18 April 2018 a delegate of the Child Support Registrar considered the departure application and decided that Reason 8A in respect of Ms Bellevue’s application had been established and that Reason 8A in respect of Mr Pottinger’s application had also been established. The delegate decided to set Mr Pottinger’s ATI at $150,018.00 and to set Ms Bellevue’s ATI at $131,850.00, both for the period from 1 April 2018 to 30 June 2019.
On 18 May 2018 Ms Bellevue lodged an objection to that decision. On 19 July 2018 a Department objections officer allowed Ms Bellevue’s objection, finding that Reason 3 and Reason 8A in respect of both parents had been established. The objections officer decided to:
·set Mr Pottinger’s ATI at $176,000.00 and Ms Bellevue’s ATI at $55,000.00, both for the period from 1 April 2018 to 31 December 2019, and
·increase the child support assessment by $6,597.00 for the period from 1 January 2018 to 31 December 2018, and
·increase the child support assessment by $6,795.00 for the period from 1 January 2019 to 31 December 2019.
On 30 July 2018 Mr Pottinger lodged an application for a review of the decision of the Department with this Tribunal. The Tribunal had access to the statement and documents provided by the Department. The documents are at folios 1 to 637 of the hearing papers. At the hearing Mr Pottinger said that he had not received the second bundle of papers from the Department. That bundle consists of folios 515 to 637 and relates mainly to Mr Pottinger’s application to the Family Court for a stay on the decision of the objections officer. The Tribunal determined that Mr Pottinger was not disadvantaged in any way by not having received those papers prior to the hearing. Ms Bellevue acknowledged that she had received all of the papers.
The Tribunal directed Mr Pottinger and Ms Bellevue to provide specified documents. Mr Pottinger provided further documentation, which is at folios A1 to A186 of the hearing papers. Ms Bellevue provided further documentation, which is at folios B1 to B119 of the hearing papers. The documents were exchanged between the parties prior to the hearing. The matter was heard in Sydney on 27 November 2018. Mr Pottinger attended the hearing by telephone and gave his evidence under an affirmation. Ms Bellevue attended the hearing by telephone and gave her oral evidence under an affirmation. Ms Bellevue was represented by [Mr A] of [named law firm]. The Child Support Registrar did not attend and was not represented at the hearing.
CONSIDERATION
The legislative framework and issues for the Tribunal to determine
The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Act). This requires the application of a statutory formula which takes into account factors such as the number and ages of the children, the level of care provided and the income of each parent.
The liable parent or a carer may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Act. Section 98C of the Act provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process for considering applications to do so. The Registrar, and the Tribunal standing in place of the Registrar, must be satisfied:
·that one, or more than one, of the grounds for departure referred to in subsection 117(2) of the Act exist; and
·that it would be just and equitable as regards the child, the liable parent and the carer entitled to child support; and
·that it would be otherwise proper to make a particular determination.
The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act. Each of the grounds, which for administrative purposes are referred to as reasons, require that special circumstances be established. The term ‘special circumstances’ is not defined in the Act. In Gyselman and Gyselman [1991] FamCA 93 the Full Court of the 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.
If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal must make one of the determinations prescribed in section 98S of the Act. These include varying the annual rate of child support payable or a parent’s adjusted taxable income.
Issue one – Does a ground exist to depart from the administrative assessment?
The Tribunal’s first task is to determine whether a ground for departure from the administrative assessment can be established. In her application to the Department Ms Bellevue asserted that there are three grounds (or reasons) for a departure from the administrative assessment. In his cross-application Mr Pottinger asserted that there were further grounds for a departure from the administrative assessment. The Tribunal considered each of the grounds identified by the parents in turn.
Does a ground exist to depart from the administrative assessment under Reason 2?
In her application to the Department Ms Bellevue sought a departure from the administrative assessment on the ground that the children have special needs. This ground for departure, which for administrative purposes is known as Reason 2, is found in subparagraph 117(2)(b)(ia) of the Act:
(2) For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:
...
(b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
…
(ia) because of special needs of the child; or
…
In order to find the ground proven one of the children must have a special need. Commonly this special need is due to some disability or medical circumstance, however a special need may also arise where a child has some special ability that results in costs greater than is provided for in the formula assessment.
At the hearing Ms Bellevue said that [Child 1] is a gifted [sportsperson] and that he won a [specified] medal at the State Championship. She said that he had been [participating in the sport] now for a little over a year. The Tribunal is not persuaded that [Child 1]’s [sporting] ability is so great that it constitutes a special need. Ms Bellevue has provided an account for $2,799.00 for [sport equipment] (folio 92) but no other substantive evidence that [Child 1]’s [participation in sport] results in a cost that is so much greater than is presented by the hobbies or interests of other children that a departure from the formula assessment would be warranted.
Ms Bellevue has also said that there are substantial costs related to the children’s musical and [other] interests. In her application Ms Bellevue provided a list of expenses which total $58,468.40 (folio 48). Many of the costs have been disputed by Mr Pottinger. Most children have sporting and musical interests and it is up to parents to determine the extent to which they are able to satisfy those interests in light of the financial resources available. The child support assessment is not intended to provide financial resources that might otherwise not be available. In this regard the Tribunal notes that on occasion when Mr Pottinger has objected to some activities Ms Bellevue has stated that she will meet the cost (folio 229).
At the hearing and in the B Documents Ms Bellevue provided evidence of [Child 2] having been diagnosed with [Medical Condition 1] and also evidence of some costs. Ms Bellevue said that [Child 2] had attended tutoring twice a week but that she now attends no more than once a week at a cost of $120.00. There is no formal diagnosis in evidence and the assessment was done only in August 2018. The entire matter appears to have arisen since the application was lodged with the Department. At the hearing Mr Pottinger said that he was happy to assist with any costs related to assisting [Child 2] deal with [Medical Condition 1]. Although this may ultimately prove to be a circumstance that establishes Reason 2, at this point there is no substantial body of evidence.
The Tribunal finds that there is insufficient evidence of circumstances that would allow a departure from the administrative assessment under subparagraph 117(2)(b)(ia) of the Act.
Does a ground exist to depart from the administrative assessment under Reason 3?
In her application to the Department Ms Bellevue has sought a departure from the administrative assessment on the ground that there are extra costs involved in educating and training the children in the manner expected by the parents. This ground for departure, which for administrative purposes is known as Reason 3, is set out in subparagraph 117(2)(b)(ii) of the Act:
(b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
…
(ii) because the child is being cared for, educated or trained in the manner that was expected by his or her parents;
…
Ms Bellevue said at the hearing that the children attend a private school in accordance with the expectation of both parents. The evidence before the Tribunal is that the compulsory fees payable in 2018 total $29,137.00 but that the Bellevue Family Trust meets most or all of the cost. In his evidence Mr Pottinger acknowledged that the parents had agreed to the children being privately educated and that he had signed the relevant enrolment forms, but said that he could no longer afford the cost of educating the children at [School 1]. Mr Pottinger has provided evidence that at least as early as December 2016 he had stated that he was unable to meet the cost of the children attending [School 1], although he agreed to [Child 1] remaining there and [Child 3] and [Child 2] attending Catholic parochial school (folio 175). At the hearing Mr Pottinger said that Ms Bellevue enrolled [Child 3] and [Child 2] at [School 1] contrary to his wishes. Mr Pottinger has also provided an SMS exchange in which Ms Bellevue, apparently in reference to the cost of [Child 2] and [Child 3] attending [School 1], has stated “I’ll figure it out” (folio 182). Mr Pottinger said that he was happy for the children to continue at [School 1] but said that he is unable to contribute to the cost.
The evidence before the Tribunal is that the Bellevue Family Trust has been created to provide for Ms Bellevue but also to contribute to maintaining the children, and that the cost of their education is one of the expenses that the Trust may meet. At the hearing Mr Pottinger said that the Trust was meeting the full cost and that it should be considered a financial resource available to Ms Bellevue. At the hearing Ms Bellevue said that there was an agreement that the Trust would pay $10,000.00 towards the cost of the children’s education and that the parents would pay the rest. There is evidence before the Tribunal that on 12 March 2018 the Trust made a payment of $14,616.70 to Ms Bellevue who then immediately passed that payment on to the children’s school. At the hearing Ms Bellevue said that this represented half of the annual cost and that the Trust also contributed the other half.
The Tribunal finds that the parents expected that the children would be educated privately and that this affects the cost of maintaining the children. The Tribunal finds that as a result there are special circumstances relating to the children’s education that would allow a departure from the formula assessment of child support under subparagraph 117(2)(b)(ii) of the Act.
Does a ground exist to depart from the administrative assessment under Reason 8A?
In her application to the Department Ms Bellevue sought a departure from the administrative assessment on the ground that Mr Pottinger’s income, property and financial resources are greater than is reflected in the ATI used for him in the child support assessment in effect at the time of her application. This ground for departure, which for administrative purposes is known as Reason 8A, is set out at subparagraph 117(2)(c)(ia) of the Act:
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
…
(ia)because of the income, property and financial resources of either parent; or
…
In accordance with the Tribunal’s directions Mr Pottinger has provided a Statement of Financial Circumstances (SOFC) and other documentation. In his SOFC (folios A58 to A66) Mr Pottinger estimates his income at $2,212.00 per week. Including income tax, health insurance and child support, according to his SOFC, Mr Pottinger’s weekly expenses total $2,768.00. At the hearing Mr Pottinger said that the $2,212.00 was the amount that he calculated he would receive rather than what he was actually in receipt of. He said that he met any difference between his income and his expenses through borrowings. The Tribunal notes a [line of credit] that Mr Pottinger has now paid off and a [credit card] which was used as a finance arrangement and which Mr Pottinger is in the process of paying off.
Mr Pottinger has provided his personal income tax return (ITR) for 2017/18 and his taxation notices of assessment for earlier years. These show that his taxable income went from $166,151.00 in 2016/17 to $154,771.00 in 2017/18. At the hearing Mr Pottinger explained that his income fell because on 20 March 2018, as a result of a change of care, he reduced his work hours.
In response to the directions of the Tribunal Mr Pottinger has provided:
·Statement for [Bank 1] account for the period from 1 January 2018 to 30 June 2018 (folio A17)
·Statements for [Bank 2] account …[account number] for the period from 1 January 2018 to 31 March 2018 (folios A25 to A28)
·Transaction details for [Bank 2 credit card] account …[account number] for the period from 1 January 2018 to 31 March 2018 (folios A3 to A15).
The [Bank 1] account is inactive. The [Bank 2 credit card] account appears to meet most of Mr Pottinger’s day to day expenses. Repayments are sourced from the [Bank 2] account that is in evidence. Mr Pottinger’s salary is paid into his [Bank 2’s] account. Other deposits into this account include Mr Pottinger’s income tax refund, Medicare rebates and transfers from [Ms B], who is Mr Pottinger’s partner. In addition to credit card repayments the account is used to pay Mr Pottinger’s mortgage, repayments of a line of credit, repayments on the balance of [specified credit card], his child support and some other payments. The Tribunal finds that there is no evidence of unexplained financial resources and that the documentation in evidence provides an accurate picture of Mr Pottinger’s financial circumstances.
The [Bank 2] account shows that during the period covered, being the first three months of 2018, Mr Pottinger received $2,468.02 per week in salary. This annualises to $128,337.04. Grossing this up for income tax produces an annual taxable income of some $191,360.00. Mr Pottinger’s hourly rate of pay is $97.05509 (folio 210). At 38 hours per week this produces an annual gross income of $191,780.86.
At the hearing Mr Pottinger explained that with effect from 20 March 2018 he started on new employment arrangements which take into account his need for time off in order to care for the children. Mr Pottinger has provided a letter from his employer stating that from 20 March 2018 he will be paid for 28.5 hours per week in accordance with the firm’s flexible workplace policy (folio 208). Mr Pottinger has also provided a payslip for the week ending 27 March 2018 showing a gross payment of $2,766.08 (folio 210). This annualises to a gross figure of $143,836.16. The lower income is reflected in Mr Pottinger’s [Bank 2] account statements (folio A28).
Mr Pottinger has provided a “current salary estimated breakdown” which produces a result of $112,005.00 (folio A104). The Tribunal rejects that calculation on the basis that it includes tax deductions that may be allowable under the Income Tax Assessment Act 1997 but which are not necessarily relevant to the determination of income under the Act, and also because it makes allowance for a reduction in his hours of work spread over a year and then assumes a further reduction to allow for time off to care for the children.
Ms Bellevue applied for the departure from the formula assessment on 26 February 2018. At the time the assessment was based on an ATI of $168,514.00 for Mr Pottinger. The difference between an assessment based on an ATI of $168,514.00 and one based on an ATI of $191,780.86 (as Mr Pottinger’s income was at the time) is some $2,000.00. Although noting that shortly thereafter Mr Pottinger’s work arrangements changed, the Tribunal finds that the circumstance under which Mr Pottinger’s income, property and financial resources were not fully taken into account in the assessment at the time of the application is special. The Tribunal finds that this would allow a departure from the formula assessment under subparagraph 117(2)(c)(ia) of the Act in respect of Mr Pottinger’s income, property and financial resources.
In his cross-application Mr Pottinger also applied for a departure from the administrative assessment on the grounds that Ms Bellevue’s income, property and financial resources are greater than is reflected in the ATI used for her in the child support assessment.
In accordance with the Tribunal’s directions Ms Bellevue has provided an SOFC and other documentation. In her SOFC (folios B68 to B76) Ms Bellevue states that her weekly household income is $1,266.30, being derived from part-time work, income from the Bellevue Family Trust and child support paid by Mr Pottinger. She states that her weekly expenses total $1,378.83. At the hearing Ms Bellevue said that she had sold one of her son’s [equipment] and that she tailored her expenses to meet her means. At the hearing Ms Bellevue said that her income had changed significantly on 12 October 2018 when she had lost her job and one of her main sources of income.
In her SOFC Ms Bellevue stated that her weekly income is $1,266.30, which annualises to $65,847.60. At the time that Ms Bellevue applied for the departure from the formula assessment the assessment was based on an ATI of $26,845.00 for Ms Bellevue. Although noting Ms Bellevue’s oral evidence that her income has since changed the Tribunal finds that as there is a significant difference between the ATI used in the assessment and Ms Bellevue’s evidence as to her income at the time there is a special circumstance that would allow a departure from the formula assessment of child support under subparagraph 117(2)(c)(ia) of the Act.
The Tribunal finds that there are special circumstances in respect of the income, property and financial resources of both Mr Pottinger and Ms Bellevue.
Does a ground exist to depart from the administrative assessment under Reason 4?
In his cross-application Mr Pottinger sought a departure from the administrative assessment on the ground that the children’s income, property, financial resources and earning capacity make the formula assessment unfair. This ground for departure, which for administrative purposes is known as Reason 4, is set out at subparagraph 117(2)(c)(i) of the Act:
(2) For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:
…
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(i) because of the income, earning capacity, property and financial resources of the child; or
…
At the hearing Mr Pottinger said that there is documentary evidence that the Bellevue Family Trust pays $10,000.00 per annum to each of the children. Mr Pottinger said that this is because that amount can be paid tax free to Trust beneficiaries. Although Mr Pottinger has repeated this or similar assertions on a number of occasions the Tribunal was unable to identify any documentary evidence to support his position. The Tribunal finds that the evidence he has raised in this regard does not support his conclusion.
The original Trust Deed is not in evidence, however in an unexecuted Memorandum of Wishes of [Mr C], who together with Ms Bellevue is a trustee of the Trust, describes Ms Bellevue and the children as beneficiaries of the Trust (folios 213 to 217). According to the Memorandum the Trust is to be used to provide secure accommodation for the beneficiaries, to meet any emergency or financial catastrophe and to pay expenses for maintenance and education of the children. The children may receive the benefit of Trust expenditure but there is no evidence before the Tribunal that the children directly receive any income, property or financial resources from the Trust. The children are full-time students and have no earning capacity that needs to be taken into account in the assessment. The Tribunal finds that there are no special circumstances that would allow the Tribunal to make a finding under subparagraph 117(2)(c)(i) of the Act.
Does a ground exist to depart from the administrative assessment under Reason 5?
In his cross-application Mr Pottinger sought a departure from the administrative assessment on the ground that he had provided money, goods or property for the benefit of the children. This ground for departure, which for administrative purposes is known as Reason 5, is found in subparagraph 117(2)(c)(ii) of the Act:
(2) For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:
…
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
…
(ii) because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975 or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child.
Mr Pottinger has previously said that he had paid half of the children’s health insurance, at least until March 2018 when Ms Bellevue changed the health insurance arrangements. Mr Pottinger has also said that he has purchased furniture for the children and paid various expenses. He has provided documentary evidence to support his claims. The Tribunal accepts that Mr Pottinger has made the expenditure he claims, however the child support assessment is based on Mr Pottinger having regular care of the children. This means that the assessment makes provision for him to meet some of the children’s expenses. None of the expenses identified are unexpected or out of the ordinary and they are therefore considered to be provided for in the formula assessment.
As Mr Pottinger has provided no evidence of any out of the ordinary expenditure the Tribunal is unable to make a finding that there are any relevant special circumstances that would allow a departure from the administrative assessment under subparagraph 117(2)(c)(ii) of the Act.
Does a ground exist to depart from the administrative assessment under Reason 8B?
In his cross-application Mr Pottinger sought a departure from the assessment on the ground that Ms Bellevue’s earning capacity is not reflected in the formula assessment. This ground, which for administrative purposes is known as Reason 8B, is set out in subparagraph 117(2)(c)(ib) of the Act:
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
…
(ib)because of the earning capacity of either parent; or
…
Subsection 117(7B) of the Act provides:
(7B) In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:
(a)one or more of the following applies:
(i)the parent does not work despite ample opportunity to do so;
(ii)the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which the parent is employed or otherwise engaged;
(iii)the parent has changed his or her occupation, industry or working pattern; and
(b)the parent’s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:
(i)the parent’s caring responsibilities; or
(ii)the parent’s state of health; and
(c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.
At the hearing Ms Bellevue said that she did not work during her marriage and that she has only started to work since the separation. Mr Pottinger acknowledges that Ms Bellevue did not work during their relationship (folio 150). As Ms Bellevue has been working (albeit not full time) and has not reduced her hours of work or changed her industry or occupation paragraph 117(7B)(a) of the Act is not satisfied and it is not open to the Tribunal to make a finding as to Ms Bellevue’s earning capacity.
The Tribunal finds that there are no special circumstances that would allow a departure from the formula assessment of child support under subparagraph 117(2)(c)(ib) of the Act.
Issue two – Would departure from the administrative assessment be just and equitable?
Relevant law and evidence
As the Tribunal is satisfied that there are grounds to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable to depart from the assessment. In deciding whether it is just and equitable the Tribunal had regard to the following matters set out in subsection 117(4) of the Act:
(4) In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
(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; and
(iii) to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.
The Tribunal considered the evidence provided by both parties, including the documents and SOFC form that each party provided to the Tribunal, as well as the documents provided by the Department.
Assessment of evidence, findings of fact and application of the law
Section 3 of the Act states that it is the duty of both parents to financially support their children and that the children should receive a proper amount of financial support from their parents in accordance with their capacity to contribute.
The children’s needs
Paragraph 117(4)(b) of the Act requires the Tribunal to consider the proper needs of the children. The Tribunal has considered above the children’s special needs and has found that there are no special needs that must be taken into account in the assessment.
The children’s incomes and earning capacities
The children are full-time students and have no independent income or earning capacity that needs to be taken into account in the assessment.
The income, property and financial resources and earning capacity of Mr Pottinger and his necessary commitments
Mr Pottinger’s financial circumstances were closely examined by the Tribunal. The Tribunal examined the SOFC (folios A58 to A66) as well as the other documentation provided by the Department and by Mr Pottinger. At the hearing the Tribunal questioned Mr Pottinger about his financial circumstances. The Tribunal’s findings as to Mr Pottinger’s income, property and financial resources are described above. Ms Bellevue has said that she believes that Mr Pottinger had changed his work hours in order to reduce his child support assessment and that the assessment should be based on Mr Pottinger’s earning capacity rather than his taxable income. The Tribunal proceeded to assess the evidence in the context of subsection 117(7B) of the Act, which is extracted above.
Mr Pottinger acknowledges that he has reduced his hours of work thus satisfying paragraph 117(7B)(a) of the Act. Mr Pottinger asserts that he has done so in order to meet his caring responsibilities. An examination of the court orders suggests that Mr Pottinger would have some difficulty working full time and caring personally for the children when they are in his care. Although the court orders have not changed since they were issued in June 2017, the orders provide that Mr Pottinger’s caring responsibilities increased in December 2017. On 14 April 2018 the Department decided to change the care percentages used in the assessment with effect from 1 December 2017 (but only affecting the assessment from 14 March 2018, that being the date of notification of the change). Mr Pottinger’s percentage of care of the children went from 14% to 29%. The Tribunal accepts that the change in Mr Pottinger’s working hours is justified on the basis of his caring responsibilities. This means that paragraph 117(7B)(b) of the Act is not satisfied.
The Tribunal observes that the decision before it in relation to Mr Pottinger’s ATI is based on an earning capacity determination despite there being no finding by the objections officer that subsection 117(7B) of the Act had been satisfied. Having found that paragraph 117(7B)(b) of the Act is not satisfied the Tribunal is unable to make a determination as to Mr Pottinger’s earning capacity.
At the hearing Mr Pottinger said that he has caring responsibilities for his mother who has been diagnosed with [Medical Condition 2]. Mr Pottinger said that while his mother lives independently of him, he has an increasing level of responsibility. While it is reasonable to expect that there would be some financial implications there is no specific evidence of that before the Tribunal. The Tribunal finds that it is not necessary to make any special provision in the child support assessment.
The Tribunal is satisfied that Mr Pottinger has sufficient financial resources to meet his necessary commitments.
The income, property and financial resources and earning capacity of Ms Bellevue and her necessary commitments
Ms Bellevue’s financial circumstances were closely examined by the Tribunal. The Tribunal examined the SOFC (folios B68 to B76) and the other documentation provided by Ms Bellevue. At the hearing the Tribunal questioned Ms Bellevue about her financial circumstances. She said that although she had been working, she lost her job on 12 October 2018. She said that her financial resources now come from the Bellevue Family Trust and from the child support paid by Mr Pottinger. She said that she is looking for work but that her lack of experience makes it difficult.
Ms Bellevue has provided her personal ITRs for 2016/17 and 2017/18. The former shows taxable income of $19,817.00 while the latter shows taxable income of $18,490.00.
In response to the directions of the Tribunal Ms Bellevue has provided:
·Statements for [Bank 2] account …[account number] for the period from 21 December 2017 to 12 April 2018 (folios B21 to B29)
·Statements for [Bank 2] account …[account number] for the period from 5 November 2017 to 22 April 2018 (folio B30)
·Statements for [Bank 2] account …[account number] for the period from 1 January 2018 to 31 March 2018 (folio B31).
The last of these (account …[number]) is an account for the Bellevue Family Trust, which is considered further below. Account …[number] is relatively inactive, only transferring funds to and from account …[number]. [Bank 2] account …[number] receives Ms Bellevue’s child support and other relatively minor deposits. It has also received a single deposit of $14,616.70 from the Bellevue Family Trust [Bank 2] account …[account number]. That amount was immediately transferred to the children’s school.
Because of the variable nature and the discretionary nature of her income, it is difficult for the Tribunal to determine the income, property and financial resources available to Ms Bellevue. The Tribunal has in mind particularly the changing nature of her work (or her lack of work) and her ability, as trustee and beneficiary of a discretionary trust with a balance of at least $315,699.32, to vary her income. At the hearing Ms Bellevue said that she could no longer rely on the Trust because she has had a falling out with her father, who she identified as the Principal Trustee. There is no documentary evidence before the Tribunal which supports Ms Bellevue’s assertions in this regard and Ms Bellevue failed to provide financial accounts for the Trust, despite the directions of the Tribunal.
Mr Pottinger has suggested that the lack of evidence concerning the Trust would support a finding that Ms Bellevue has more income than she has declared. While the evidence relating to the Trust is limited and, notably, neither the Trust Deed nor a full set of financial accounts is in evidence, the Tribunal has before it ITRs for the Trust for 2016/17 and 2017/18 and other related documentation. The documentation available to the Tribunal shows that the Trust balance is sufficient to ensure that Ms Bellevue is able to meet all of the major expenses related to the children and herself, meeting those expenses apparently being consistent with the Trust Deed (as implied in the Memorandum of Wishes at folio 213). The Tribunal has decided that under the circumstances it would be appropriate to make a determination based on Ms Bellevue’s expenditure as disclosed by her in her SOFC, the inherent assumption being that she has the capacity to vary her income in order to meet her needs. Ms Bellevue has stated in her SOFC that her weekly expenditure is $1,378.83. This annualises to $70,555.16.
In her SOFC Ms Bellevue states that she owns her home, which she values at $1.35 million and that she has a half share in an investment property (Mr Pottinger owning the other half share). The relatively modest mortgage on the investment property is Ms Bellevue’s sole liability. The Tribunal is satisfied that Ms Bellevue is able to meet her necessary commitments.
The parents’ duty to support others
Neither parent has a duty to support any person other than the children of the assessment.
Hardship
The departure from the formula assessment contemplated by the Tribunal will result in the child support payable by Mr Pottinger changing from the $27,693.00 per annum that was in effect when Ms Bellevue applied to the Department, to some $30,411.00 per annum until 19 March 2018, then falling to some $25,701.00 per annum. Taking into account Mr Pottinger’s primary obligation to support his children, the Tribunal finds that the decision contemplated by it will not cause hardship to Mr Pottinger.
The departure results in a child support liability less than the liability that resulted from the decision of the objections officer. However, it results in the amount actually received by Ms Bellevue changing from the $275.12 per week she reported in her SOFC to some $584.00 per week, before falling to some $494.00, which is still some $219.00 per week greater than the amount Ms Bellevue reports receiving. Taking into account Ms Bellevue’s primary obligation to support her children, the Tribunal finds that the decision contemplated by it will allow Ms Bellevue to meet the needs of the children but will not cause hardship to Ms Bellevue.
Terms and period of departure
The Tribunal has decided to depart from the formula assessment by setting Mr Pottinger’s ATI at $185,000.00, that being his income less normal tax deductions up to 19 March 2018, and at $140,000.00, that being his income less normal tax deductions, with effect from 20 March 2018 and by setting Ms Bellevue’s ATI at $70,000.00, that being a rounding of her income derived from her evidence as to her expenditure.
The Tribunal has also decided that, in view of its findings in relation to Reason 3, it will increase the child support assessment to take into account the cost of private education. In Mee and Ferguson [1986] FamCA 3 the Full Court of the Family Court stated, at paragraph 78:
Where the non-custodian has agreed to the child attending such a school that person is liable to contribute to the fees involved so long as and to the extent that he or she has a reasonable financial capacity to continue to do so. Where the non-custodian has not agreed to the child attending such a school he or she is not liable to contribute to those expenses unless there are reasons relating to the child's welfare which dictate attendance at that school rather than at a non-private school. Then the non-custodian, as an aspect of the welfare and maintenance of the child, is required to contribute to the extent that he or she has a reasonable financial capacity to do so.
In this case Mr Pottinger has agreed to the children attending private school but, after separation, withdrew that support. That subsequent withdrawal of support does not affect the expectation of the parents which was held prior to separation. However, the evidence before the Tribunal is that, prior to separation, the cost of the children attending private school was to be borne, at least in part, by the Bellevue Family Trust. The separation means that only Ms Bellevue now has access to the resources of the Trust. Mr Pottinger states that:
·his financial resources are now insufficient to contribute half of the cost of the children attending [School 1], but
·he is able to contribute half of the cost of the children attending a Catholic parochial school, and
·his objection to [School 1] is only to the cost.
Mr Pottinger also acknowledges that he specifically agreed to [Child 1] attending [School 1] but states that he only agreed to [Child 2] and [Child 3] attending [School 2].
At the hearing [Mr A] drew the Tribunal’s attention to the decision of the Federal Magistrates Court in Newman and Caldwell (SSAT Appeal) [2009] FMCAfam 496. In that decision Riethmuller FM stated that in a similar case the proper procedure was for the Tribunal to determine the relevant fees and then to determine the extent to which the parties are able to contribute. The determination of the relevant fees is problematic as it is not entirely clear to the Tribunal whether or not Mr Pottinger agreed to [Child 2] and [Child 3] attending [School 1] or agreed only to them attending [School 2]. Additionally, the conditions attaching to any agreement must be taken into account. While the relevant fees for all of the children to attend [School 1] come to $29,137.00 in 2018 the relevant fees would be much lower if the younger children attended [School 2]. After careful consideration the Tribunal finds that Mr Pottinger is able to contribute an amount equivalent to half of the cost of [Child 1] attending [School 1] and half of the cost of [Child 2] and [Child 3] attending a Catholic parochial school. Accordingly the Tribunal will increase the assessment by $6,597.00 for the period from 1 January 2018 to 31 December 2018 and by $6,795.00 for the period from 1 January 2019 to 31 December 2019.
The child support assessment started on 29 March 2017. Ms Bellevue applied for the change of assessment on 26 February 2018. Having regard to the matters in subsection 117(4) of the Act, the Tribunal finds that it would be just and equitable for the new ATIs to apply from the date of Ms Bellevue’s application, being 26 February 2018. With regard to school fees the increase in the assessment will be spread over the full year and will therefore commence on 1 January 2018.
At the hearing Ms Bellevue said that her preference would be to extend the departure for a reasonably lengthy period. Mr Pottinger said that he would prefer a shorter period, possibly 12 months. Although predictability is always desirable and although it is also desirable to make it unnecessary for the parents to go through the change of assessment process, there is the possibility that a dynamic situation could result in the assessment losing touch with the circumstances and producing an injustice. In this case the income of both parents is somewhat unpredictable. Balancing the competing priorities the Tribunal has decided to end the departure on 31 December 2019. Thus the period of departure from the formula assessment will be from 1 January 2018 to 31 December 2019.
Issue three – Is it otherwise proper to depart from the administrative assessment?
The final step for the Tribunal to undertake is to determine whether it is ‘otherwise proper’ to depart from the administrative assessment. Subsection 117(5) of the Act 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 child support law recognises that each parent has a primary duty to maintain their children. In this case neither party receives social welfare benefits and this will not change as a result of the Tribunal’s decision. The Tribunal is satisfied that it is otherwise proper to depart from the administrative assessment in this matter.
DECISION
The Tribunal sets aside the decision under review and, in substitution, decides to:
set Mr Pottinger’s adjusted taxable income at $185,000.00 for the period from 26 February 2018 to 19 March 2018
set Mr Pottinger’s adjusted taxable income at $140,000.00 for the period from 20 March 2018 to 31 December 2019
set Ms Bellevue’s adjusted taxable income at $70,000.00 for the period from 26 February 2018 to 31 December 2019
increase the assessment by $6,597.00 per annum for the period from 1 January 2018 to 31 December 2018
increase the assessment by $6,795.00 per annum for the period from 1 January 2019 to 31 December 2019.
Key Legal Topics
Areas of Law
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Family Law
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Administrative Law
Legal Concepts
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Jurisdiction
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Judicial Review
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Statutory Construction
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Remedies
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