Raycroft and Child Support Registrar (Child support)

[2024] AATA 790

Raycroft and Child Support Registrar (Child support) [2024] AATA 790 (8 February 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/MC026731

APPLICANT:  Mrs Raycroft

OTHER PARTIES:  Child Support Registrar

TRIBUNAL:Senior Member S De Bono

DECISION DATE:  8 February 2024

DECISION:

The decision made on 4 August 2023 to refuse Mrs Raycroft’s application for an extension of time in which to object to a decision of a delegate of Services Australia made on 26 May 2023 is set aside, and in substitution, the application is granted.

CATCHWORDS

CHILD SUPPORT – refusal to grant an extension of time to object - reasonable explanation for the delay in lodging the objection late – 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. Mrs Raycroft and [Mr A] are the parents of [Child 1] and [Child 2] (‘the children’). There has been a registered child support case in place since 27 May 2022. The case has been registered for collection by Services Australia (Child Support) from the start of the assessment. From the start of the assessment the children are recorded as being in Mrs Raycroft’s 68% care and [Mr A]’s 32% care. Mrs Raycroft is the parent liable to pay child support. There was a decision made by the Administrative Appeals Tribunal (the Tribunal) by another member on 7 November 2023 in which it was determined Mrs Raycroft has 72% care and [Mr A] has 28% care of the children which applies from 5 September 2022.

2. On 1 July 2022 Child Support accepted an application for Child Support. Using the formula assessment Mrs Raycroft was assessed to pay [Mr A] $5,866 in child support annually.

3. On 15 September 2022 Mrs Raycroft lodged a change of assessment application on the basis of Reasons 3, 8A and 8B. In her application Mrs Raycroft wanted any decision of Child Support in departing from the administrative assessment of child support to apply from 1 July 2020.[1]

   [1] Page 115 of the hearing papers. The Tribunal notes this date predates the registration of the case with Child Support. Any departure determination can only be applied from the start of the administrative assessment of child support from 27 May 2022. 

4. On 26 May 2023 a delegate of the registrar found no reason established and refused to depart from the administrative assessment in place which was as follows:

   The assessment

   There is one child support assessment with two case numbers to reflect each parent’s role over different periods. The initial assessment was registered with Services Australia Child Support (the agency) on 27 May 2022.

   Case number 245200298:

   ·From 5 September 2022 to 30 November 2023, the annual rate of child support payable by [Mr A] is $nil. This assessment is based on [Mr A]`s adjusted taxable income (ATI) of $37,320 and Mrs Raycroft’s 2021–22 ATI of $107,722.

   Case number 245200169

   Mrs Raycroft is the parent assessed to pay child support to [Mr A].

   ·From 1 September 2022 to 4 September 2022, the annual rate of child support payable by Mrs Raycroft is $4,148. This assessment is based on Mrs Raycroft’s 2021–22 ATI of $107,772 and [Mr A]’s 2021–2022 ATI of $37,320. [Mr A]’s 2020–21 ATI of $118,854.

   ·From 27 May 2022 to 4 September 2022, the annual rate of child support payable by Mrs Raycroft is $4,586. This assessment is based on Mrs Raycroft’s 2021–2022 provisional ATI of $516,459 and [Mr A]’s 2020–2021 ATI of $118,854.

   * A provisional income is used when a parent has not lodged their tax assessment with the Australian Taxation Office (ATO). In this case, Mrs Raycroft had not lodged her tax return within the required ATO timeframe, nor did she advise the agency of her income. Therefore, the provisional income used for her in the above assessment was based on an agency deemed income. This was calculated based on her 2019–20 ATI of $502,392 plus inflation.

5. On 30 July 2023 Mrs Raycroft requested an extension of time to lodge an objection to the decision of the delegate made on 15 September 2022 to refuse to depart from the administrative assessment of child support. On 4 August 2023 the delegate refused to extend the time for Mrs Raycroft to lodge an objection. Mrs Raycroft was notified by post on 8 August 2023, she is deemed to have received the notification of the decision on 15 August 2023.

6. On 7 September 2023 Mrs Raycroft applied to the Administrative Appeals Tribunal (the Tribunal) for an independent review of this decision. On 8 February 2024 Mrs Raycroft gave evidence under affirmation during a telephone hearing. The Tribunal had before it a bundle of documents (401 pages – referred to as the hearing papers) which had been sent to Mrs Raycroft prior to the hearing.[2] The Tribunal also requested a copy of the telephone recording between Mrs Raycroft and Child Support which was provided to the Tribunal by Child Support on 21 December 2023 and sent to Mrs Raycroft. Relevant aspects of the material and evidence will be referred to in the Tribunal’s consideration of the issues to be decided.

ISSUES

[2] These are referred to as the hearing papers by the Tribunal and are the section 37(1) and the section 38AA documents provided by Child Support in accordance with that section of the Administrative Appeals Tribunal Act 1975.

1. The issue which arises in this case is:

   ·     whether Mrs Raycroft should be granted an extension of time to lodge an objection to a decision of Child Support.

LAW AND CONSIDERATION

1. The law that applies in this case is the Child Support (Registration and Collection) Act 1988 (the Act). Also relevant is the Child Support Guide which provides policy and guidelines for the application of the relevant legislation in order to promote consistency and transparency in decision-making. While the Tribunal is not bound by these guidelines it will follow them unless there is a cogent reason to do otherwise as found in Re Drake and Minister for Immigration and Ethnic Affairs(No 2) [1979] AATA 179.

2. A person’s right to object to a decision of Child Support contains a time limit of 28 days “after the notice of the decision is served on them” for a person living in Australia (section 81 of the Child Support (Assessment) Act 1989 (the Assessment Act)).

3. If an objection to a decision is made outside the 28-day period, “the person applies to the Registrar to consider the objection despite the period ending” (subsection 82(1) of the Act). Subsection 82(2) of the Act provides: “The application must state fully and in detail the grounds of the application, … and the reasons for, the failure by the person to lodge the objection [in accordance with] section 81” of the Act.

Should Mrs Raycroft be granted an extension of time to lodge her objection to the decision of Child Support?

1. In making this decision, I considered the guiding principles for the exercise of a discretion to allow an extension of time as set out in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 (Hunter Valley Developments) and subsequent cases. In Hunter Valley Developments the Federal Court said that an extension of time should not be granted unless it was proper to do so, noting that in general, applications or proceedings commenced outside of a prescribed time limit will not be considered. The Court also said that there must be an acceptable explanation for the delay and that it must be fair and equitable in the circumstances to extend time. The Federal Court identified six factors to take into account when deciding whether to grant an extension of time.

2. It is clear from Hunter Valley Developments that the prescribed period of 28 days is “not to be ignored” (Ralkon v Aboriginal Development Commission [1982] FCA 153) and that the prima facie rule is that in normal circumstances, proceedings commenced outside that period will not be entertained (Lukic v Nolan (1982) 45 ALR 411). In short, Wilcox J in Hunter Valley Developments at [18] stated that it would not be appropriate to “grant the extension of time unless positively satisfied that it is proper to do so”.

3. In Brown v Commissioner of Taxation [1999] FCA 563, Hill J reviewed the principles set out in Hunter Valley Developments in the context of a person seeking an extension of time to lodge an objection against an assessment of income tax. In that case, Hill J commented that Wilcox J in Hunter Valley Developments never suggested he was laying down a series of principles to be applied in every case, and that the factors would serve as a guide and were not exhaustive. Further, he commented: “Too slavish an adherence to them should, in my view, be avoided.” Hill J then sought to reshape the factors to be considered in the context of objecting to a tax assessment.

4. The Tribunal, differently constituted, applied the principles set out in Hunter Valley Developments in Mulheron and Australian Telecommunications Corporation (1991) 14 AAR 42 (Mulheron). The authorities, Hunter Valley Developments and Mulheron, establish that when considering whether to exercise the discretion to allow an extension of time, a decision maker should consider and balance a range of factors including:

   ·the reasons for the delay and whether the applicant rested on their rights;

   ·the merits of the substantive application;

   ·any prejudice to the other party including any difficulties that they will experience in providing evidence as a result of the delay;

   ·wider prejudice to the general public;

   ·fairness in granting an extension of time as between the applicant and other persons in a similar position; and

   ·whether it is proper to grant the extension of time.

The reason for the delay and whether Mrs Raycroft rested on her rights

1. Mrs Raycroft explained that after long and protracted court proceedings following separation which included preventing her from leaving Australia with the children, in late May 2023 she was permitted to travel to [Country 1] with the children to visit family. Mrs Raycroft said she had to arrange this quickly because she had to return to Australia [by] July 2023. Mrs Raycroft said she left for [Country 1] [in] June 2023.

2. Mrs Raycroft was notified of the decision via post and due to her overseas travel she did not open her mail until she returned to Australia. On 4 July 2023 Mrs Raycroft contacted Child Support.[3] Mrs Raycroft said during this conversation she understood that she had 28 days to lodge an objection to this decision. Mrs Raycroft asked the officer to record her date of contact with Child Support and she understood this to mean that she now had 28 days to object to the decision of Child Support from that day. This was the reason Mrs Raycroft gave for lodging her objection on 31 July 2023.[4]

   [3] Page 292 of the hearing papers.

   [4] Page 293 of the hearing papers. 

3. The Tribunal listened to the recording and it is satisfied that even though the officer told Mrs Raycroft to lodge the objection as soon as possible, Mrs Raycroft said she asked the officer to record that she contacted Child Support on 4 July 2023 because she understood that the 28 days to lodge an objection would start again from this date. The Tribunal accepts Mrs Raycroft believed this to be the case.

4. The Tribunal is satisfied that Mrs Raycroft has an acceptable reason for the delay and she has not rested on her rights.

The merits of the substantive application

1. Mrs Raycroft disagreed that her provisional income for the 2019–2020 financial year should be set at $502,392 for the period 27 May 2022 to 4 September 2022 because the income she received from the family business reduced substantially from the 2020–2021 financial year onwards and it was unfair for her provisional income to be set based on her income for the 2019–2020 financial year.

2. Mrs Raycroft said distributions from the family business in [Country 1] reduced due to the COVID-19 pandemic. Additionally, Mrs Raycroft said the company tax returns in [Country 1] were not often done until one or two years after the end of [Country 1’s] financial year which runs from 1 January to 31 December. Mrs Raycroft said when she lodged her tax returns in the subsequent financial years her ATI was $285,483 for the 2020–2021 financial year, $107,772 for the 2021–2022 financial year and $98,743 for the 2022–2023 financial year.[5]

   [5] Page 51 of the hearing papers.

3. Mrs Raycroft said [Mr A] was stood down as a [Occupation 1] for [Employer 1] during the COVID-19 pandemic but he secured employment which commenced on 5 September 2022. Mrs Raycroft submitted this was not included in [Mr A]’s administrative assessment of child support after 30 November 2023. Mrs Raycroft submitted this was grossly unfair given [Mr A] commenced employment on 5 September 2022 and when the case was reversed and Mrs Raycroft was assessed to pay child support to [Mr A], this was based on his 2020–2021 ATI of $118,854. Mrs Raycroft submitted that [Mr A]’s income with the new job was higher than this. The Tribunal notes that [Mr A]’s income for the purposes of the administrative assessment of child support was increased later, but Mrs Raycroft argued it should have been increased at an earlier date.[6]

   [6] The administrative assessment of child support shows that [Mr A] was assessed on a provisional income of $103,618 for the period 1 October 2023 to 31 December 2023 – page 373 of the hearing papers.

4. Mrs Raycroft also submitted that some of the assumptions made by the delegate in the decision of 26 May 2023 were not substantiated and some were factually incorrect.[7]

   [7] Pages 393–397 of the hearing papers.

5. It is for these Reasons that the Tribunal is satisfied there exists merit in Mrs Raycroft’s application for review.

Any prejudice to the other party

1. The Tribunal considered whether there exists prejudice to [Mr A] as the other party to the review given the departure period has now passed. Mrs Raycroft’s submission was that she paid increased child support to [Mr A] based on his provisional income that was incorrect. The Tribunal does not believe that the passage of time will disadvantage [Mr A]. Accordingly, the Tribunal is satisfied that there exists little prejudice to [Mr A] in allowing the extension of time.

Prejudice to the general public

1. Time frames for initiating legal proceedings do serve a useful public purpose. The principal objects of the Assessment Act are to ensure that children receive the financial support that their parents are able to provide; and that the periodic amounts payable by parents towards the maintenance of their children are paid on a regular and timely basis (subsection 3(1) of the Assessment Act).

2. To that end it is important that decisions and reviews of administrative assessments are made on a timely basis so that necessary financial support can be provided to the children of the assessment. Any delay may cause hardship for them and the parent providing care and any delay may also mean a parent is placed in a position where they are required to pay back money to the paying parent if it is determined they have paid too much. If an extension of time is allowed, this may place the parent in receipt of child support in a difficult position and cause undue hardship if much later a different determination was made after an objection to an application was lodged past the 28-day period. A 28-day time limit reduces uncertainty for both parties and the public has a general expectation that unless there is a good reason, time frames should be observed.

3. However, the Tribunal also recognises that the general expectation of the public would also be that the administrative assessment of child support is a just and fair reflection of both parents’ income and financial resources. The Tribunal also recognises that it is the responsibility of both parents to assist in the process of this determination.

4. Accordingly, the Tribunal is satisfied that extending the time in this instance promotes public confidence in decision making if assessments can be made with full and frank disclosure of the applicant. For this reason the Tribunal is satisfied that there exists no prejudice to the wider public in allowing an extension of time for Mrs Raycroft to lodge an objection to the decision of the delegate.

Otherwise proper

1. The Tribunal in allowing the extension of time balances these considerations about whether it is proper to grant an extension of time. As stated, the Tribunal accepts Mrs Raycroft’s submission that she believed once she informed Child Support that she disagreed with the decision of the delegate that she had 28 days from the time she phoned Child Support to lodge an objection. Given the circumstances outlined in these Reasons the Tribunal concludes it is proper to grant Mrs Raycroft an extension of time to object to the decision of the delegate given the particular circumstances of this matter.

DECISION

The decision made on 4 August 2023 to refuse Mrs Raycroft’s application for an extension of time in which to object to a decision of a delegate of Services Australia made on 26 May 2023 is set aside, and in substitution, the application is granted.