Reagan and Sadowski (Child support)

[2019] AATA 2184

Reagan and Sadowski (Child support) [2019] AATA 2184 (23 May 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/AC016056

APPLICANT:  Mr Reagan

OTHER PARTIES:  Child Support Registrar

Ms Sadowski

TRIBUNAL:Member Y Webb

DECISION DATE:  23 May 2019

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – non-agency payment – whether payments made to third parties were in lieu of child support – intention of both parents – decision under review affirmed

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. This review is about whether payments made to third parties by Mr Reagan should be accepted and credited as non-agency payments (NAPs) against Mr Reagan’s child support liability.

2. This review relates to the three children (the children) of Mr Reagan and Ms Sadowski.  The children are aged 10, 9 and 7 years old.

3. Mr Reagan and Ms Sadowski separated on 14 July 2018 and the child support case was registered for collection from 27 August 2018.

4. On 24 October 2018, Mr Reagan contacted the Department of Human Services (“Child Support Agency”) to request that NAPs totalling $4,217.86, which he stated he paid post 27 August 2018, be credited against his child support liability.  The detail of the requested NAPs to third parties was:

Description	Amount
Miscellaneous transactions	$1,637.14
Novated car lease payments	$1,995.36
House insurance payments	$308.56
Private health insurance	$276.80

1. On 3 December 2018, a delegate of the Registrar of the Child Support Agency decided to credit  $500 of the miscellaneous transactions as NAPs and to refuse the remaining payments totalling $3,717.86.

2. Mr Reagan objected to that decision and on 1 March 2019 an objections officer of the Child Support Agency disallowed Mr Reagan’s objection.

3. On 6 March 2019, Mr Reagan requested a review by the Administrative Appeals Tribunal (the Tribunal).

4. He attended the hearing by way of a telephone conference on 23 May 2019 and gave sworn evidence.

5. Ms Sadowski could not be reached on the date and time of the hearing. The Tribunal was satisfied that she had been advised in writing and via text message of the hearing date and time. In accordance with subsection 40(1) of the Administrative Appeals Tribunal Act 1975 the Tribunal proceeded to hear the review in her absence.

ISSUES

1. The issues for the Tribunal to determine are:

   (i)whether Mr Reagan has made payments to third parties and if so, the amount of those payments;

   (ii)whether there was any agreement between Mr Reagan and Ms Sadowski that the payments were intended to be taken into account for child support purposes;

   (iii)whether the payments were of a type specified in the Child Support (Registration and Collection) Regulations 1988 (the Regulations);

   (iv)whether the various requirements of the legislation have been met;

   (v)whether there are circumstances that mean an amount ought not to be credited.

CONSIDERATION

1. The legislation relevant to this decision is contained in the Child Support (Registration and Collection) Act 1988 (the Act).

2. When the Child Support Agency registers a child support liability for collection, the amounts payable become a debt to the Commonwealth and are payable to the Child Support Registrar pursuant to section 30 of the Act.In some circumstances the Child Support Agency may credit payments made directly to a payee or to a third party against a child support liability that is registered for collection by the Child Support Agency if they were intended as child support.  The Child Support Agency may also credit the value of non-cash payments or the provision of services in the same way.  These credits are referred to as NAPs and the relevant provisions are found in sections 71, 71AA, 71A, 71B, 71C and 71D of the Act.

3. Of relevance in this review is section 71A of the Act.  It relevantly provides:

   71APayments to third persons by payer

   (1) Subject to section 71D, if:

   (a)the payer of an enforceable maintenance liability pays a third party an amount that partially or completely satisfies a debt owed by:

   (i)the payee of the enforceable maintenance liability; or

   (ii)the payer; or

   (iii)both the payer and payee; and

   (b)the payer or the payee applies to the Registrar, in the manner specified by the Registrar, to have the amount, or part of the amount, received by the third party treated as having been paid to the Registrar; and

   (c)the amount paid, or a part of the amount paid, was intended by both the payer and the payee to be paid in complete or partial satisfaction of an amount payable under the enforceable maintenance liability in relation to the child support enforcement period;

   the Registrar must, in spite of section 30 and in accordance with subsections (2) and (3), credit the amount, or part of the amount, received by the third party against the amount payable under the enforceable maintenance liability.

   Note:Section 16A provides for the Registrar to specify the manner in which an application may be made.

   (2) If:

   (a)the application referred to in paragraph (1)(b) specifies that the amount, or part of the amount, received by the third party is to be credited against a specified percentage (that is less than 100%) of the amount payable under the liability; and

   (b)the Registrar is satisfied that the payer and the payee agree that the amount received is to be so credited;

   then the Registrar must credit the amount, or the part of the amount, received against that percentage of the amount payable under the liability.

   (3)Otherwise, the Registrar must credit the amount, or the part of the amount, received against all of the amount payable under the liability.

   (4)This section does not apply to an enforceable maintenance liability of a kind referred to in paragraph 18A(3)(a).

4. Central to the crediting of payments under section 71A (above) is that the payments were intended by both the payee (Ms Sadowski) and the payer (Mr Reagan) to be payments to be credited against Mr Reagan’s child support liability.  If that common intention is present, 100% of the payments can be so credited. 

5. The Child Support Agency documents in this matter show that Ms Sadowski agreed on 26 October 2018 to $500 of the miscellaneous transactions being accepted in lieu of child support.  There is some ambiguity about whether Ms Sadowski later changed her mind about the $500 being credited against Mr Reagan’s child support liability.  On 22 November 2018 Ms Sadowski emailed the Child Support Agency stating that she did not “agree to any deductions” although it is unclear whether this included the $500 to which she had previously agreed or not. 

6. However, the original decision maker decided that there was a mutual intention that $500 be credited against Mr Reagan’s child support liability but that there was no mutual intention in relation to the remaining payments of $3,717.86 (miscellaneous transactions of $1,137.14; novated car lease payments of $1,995.36; house insurance payments of $308.56; and private health insurance payments of $276.80) and therefore that those remaining payments were refused.

7. Section 80 of the Act specifies the decisions against which objections may be lodged.  Subsection 80(1) provides that an objection may be lodged against particular decisions and by whom.  Item 5 in the table (in subsection 80(1)) specifies (relevant to Ms Sadowski and the $500 which was credited) that a payee may object to a decision to credit under section 71A, an amount received by a third party of a registrable maintenance liability against the amount payable under the liability.

8. Item 6 in the table permits either a payer or a payee of the registrable maintenance liability to object to a refusal to credit an amount.

9. In this case, only Mr Reagan objected and his objection was to the refusal to credit $3,717.86.  In the Tribunal’s view the objections officer’s jurisdiction was limited by section 80 to considering whether the decision to refuse to credit $3,717.86 (miscellaneous transactions of $1,137.14; novated car lease payments of $1,995.36; house insurance payments of $308.56; and private health insurance payments of $276.80) was correct.  The objections officer did not have jurisdiction to consider whether the crediting of $500 was correct or incorrect as the decision to refuse to credit NAPs is a different decision from the decision to credit NAPs.  In the Tribunal’s view its jurisdiction is also limited, in the absence of any objection to the decision to credit NAPs of $500, to considering whether the decision to refuse to credit NAPs of $3,717.86 was correct according to law. 

10. The Tribunal is satisfied, from her clear statements within the Child Support Agency papers, that Ms Sadowski did not agree that payments totalling $3,717.86 made by Mr Reagan to third parties were in lieu of child support and should be credited against his child support liability. The Tribunal finds that Ms Sadowski and Mr Reagan had no mutual intention to treat the payments of $3,717.86 which were made to third parties as counting for child support liability purposes.  As there was no common agreement about this between them, the payments cannot be counted as NAPs under section 71A of the Act and were correctly refused under this section.

11. The Tribunal then considered whether the payments could be considered to be what are known as prescribed non-agency payments (“prescribed NAPs”).  Under section 71C of the Act, payments made by a parent for purposes specified in the Regulations can be credited against the child support liability.  This can occur regardless of the consent of the other parent.  An amount of up to 30% of the total child support liability can be credited until the total amount to be credited has been exhausted. 

12. Subsection 71C(1) details the prerequisites for crediting this type of payment.  The prerequisites are summarised as follows:

    ·     There is an enforceable maintenance liability

    ·     There has been a payment to the payee or another person

    ·     The payment is a kind specified in the Regulations

    ·     The payments have not previously been credited against the child support liability; and

    ·     The payer does not have at least regular care of the child either at the time the payments were made or the time he applied for the payments to be credited.

13. One of the prerequisites specified in section 71C is that the payment must be of a kind specified in the Regulations.  Regulation 5D of the Regulations specifies the type of payments that can be credited under section 71C. They are:

    Specified payments (Act s 71C)

    For paragraph 71C (1) (b) of the Act, specified payments are payments of the following kinds:

    (a)    child care costs for the child who is the subject of the enforceable maintenance liability;

    (b)       fees charged by a school or pre‑school for that child;

    (ba)amounts payable for uniforms and books prescribed by a school or pre‑school for that child;

    (c)       fees for essential medical and dental services for that child;

    (d)the payee's share of amounts payable for rent or a security bond for the payee's home;

    (e)the payee's share of amounts payable for utilities, rates or body corporate charges for the payee's home;

    (f)the payee's share of repayments on a loan that financed the payee's home;

    (g)costs to the payee of obtaining and running a motor vehicle, including repairs and standing costs.

14. Mr Reagan referred to the novated car lease payments and house insurance payments as possibly being within the list of prescribed payments.

15. However, Mr Reagan told the Tribunal that although he and Ms Sadowski sold their respective properties a few years ago and bought a block of land from Ms Sadowski’s mother on which they jointly built a house, the property is still registered in the name of Ms Sadowski’s mother. 

16. In relation to the novated lease payments for the car, Mr Reagan confirmed that the car lease is in his name and the payments which he makes through salary deductions cover all of the costs associated with the car including fuel and maintenance.  He stated that Ms Sadowski is in possession of the car even though he is paying for the car and all of its expenses.

17. The Tribunal had regard to the Child Support Guide (“the Guide”) in relation to NAPs at 5.3.1.  This states that “prescribed payments can only be made in relation to a home …for which the payee is jointly or solely responsible”.  In this case, the Tribunal finds that the payment of house insurance does not fall into the category of prescribed NAPs as both Mr Reagan and Ms Sadowski have confirmed that the legal owner of the house is Ms Sadowski’s mother.

18. In relation to the novated lease costs, Mr Reagan confirmed that he is the party to the novated lease agreement and that the costs are deducted from his salary.  The Guide advises that in circumstances where the payee is not a party to the lease agreement the payer has no obligation for the leasing costs of the car.  The Tribunal finds that because Ms Sadowski is not a party to the lease agreement and has no legal liability for the car payments, the novated lease payments do not fall into the category of prescribed NAPs.

19. In conclusion therefore, the Tribunal finds that none of the payments to third parties made by Mr Reagan are prescribed NAPs and that there is no mutual intention to credit the payments to third parties totalling $3,717.86 against Mr Reagan’s child support liability.  Hence, the Tribunal concludes that the decision to credit $500 of miscellaneous transactions and the decision to refuse to credit miscellaneous transactions of $1,137.14; novated car lease payments of $1,995.36; house insurance payments of $308.56 and private health insurance payments of $276.80 are correct.

DECISION

The decision under review is affirmed.