Rodham and Rodham (Child support)

Rodham and Rodham (Child support) [2023] AATA 1188 (3 April 2023)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2022/HC024427
APPLICANT:  Ms Rodham
OTHER PARTIES:  Child Support Registrar
Mr Rodham

TRIBUNAL:Member M Baulch
DECISION DATE: 3 April 2023
DECISION:

The tribunal set aside the decision under review and, in substitution, decided that there is to be a departure from the administrative assessment of child support, such that:

From 1 January 2022 to 22 April 2022, the annual rate of child support otherwise payable by Ms Rodham is to be increased by $11,166; and
From 12 September 2022 to 31 December 2022, the annual rate of child support otherwise payable by Ms Rodham is to be increased by $11,166.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education - manner expected by both parents - cost of maintaining the children are significantly affected – a ground for departure established – 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

This application for review concerns the amount of child support paid by Ms Rodham to Mr Rodham in respect of [Child 1] and [Child 2], who were born in 2005 and 2006.
The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable by one separated parent to the other. It uses a statutory formula which contains variables such as the parents’ incomes, the number of children, their ages and their percentages of care.
From 18 January 2020, Ms Rodham was assessed, by Services Australia – Child Support (Child Support), as liable to pay child support to Mr Rodham in respect of [Child 1] and [Child 2]. From 1 October 2021, that assessment required Ms Rodham to pay the statutory minimum rate of child support of $446 per annum, based upon Ms Rodham’s adjusted taxable income of $16,164, an amount estimated by Ms Rodham, and Mr Rodham’s adjusted taxable income of $141,143, an amount determined by Child Support because Mr Rodham has not lodged his 2020–21 income tax return.
A parent can make an application to Child Support for a change to the administrative assessment based on the statutory formula in the special circumstances of their case – referred to in the Act as a departure determination. Mr Rodham made such an application on 9 February 2022. The grounds relied upon by Mr Rodham were:
·      The children had special needs;
·      There are extra costs in caring for, educating or training the children in the way both parents intended;
·      The child support assessment did not correctly reflect one or both of the parents’ income, property or financial resources; and
·      The child support assessment did not correctly reflect one or both parents’ earning capacities.
The application was considered by a Child Support decision maker who decided, on 22 April 2022, that there was to be a determination departing from the administrative assessment of child support such that for the period 1 January 2022 to 31 December 2022, the annual rate of child support otherwise payable by Ms Rodham was to be increased by $39,000 (the decision under review).
Ms Rodham objected to that decision and, on 17 July 2022, that objection was disallowed. Ms Rodham has now applied to this tribunal for an independent review of that decision.
Hearings into the application for review were held on 9 February 2023 and 22 February 2023. Ms Rodham and Mr Rodham participated in both hearings by conference telephone, and both gave evidence during the hearing. A representative of the Child Support Registrar (the Registrar) did not participate in the hearings.
On 22 February 2023, the tribunal deferred determining the application for review to allow Mr Rodham time to provide additional documents and make comment on additional material lodged by Ms Rodham (folios A395 to A404). The material lodged by Mr Rodham in the permitted time was labelled folios B130–B186 and was sent to Ms Rodham to allow her to provide any comment she might like to make, in writing, by close of business 31 March 2023. No comments were received from Ms Rodham and, on 3 April 2023, the tribunal determined the application for review.
The tribunal had before it relevant documents provided to it by the Registrar pursuant to sections 37 and 38AA of the Administrative Appeals Tribunal Act 1975 (the AAT Act) (685 pages). The tribunal also had regard to additional material provided by Ms Rodham (folios A1 to A404) and Mr Rodham (B1 to B186). There was also additional information obtained by the tribunal from Child Support (C1–C2).

RECUSAL REQUEST

At the commencement of the second hearing held on 22 February 2023, Mr Rodham made a request that I recuse myself from the application for review on the ground of apprehended bias. A number of issues were raised by Mr Rodham to support his request that I recuse myself, as I understand it these related to:
·      My refusal to adjourn the hearing listed for 22 February 2023 to enable proceedings initiated by Mr Rodham in the Federal Circuit and Family Court of Australia (the FCFCA) to conclude.
·      My attitude to redactions made by Mr Rodham to documents that he supplied to the tribunal.
·      Enquiries initiated by myself relating to Mr Rodham’s income, property or financial resources.
·      My refusal to issue summonses, and enable Mr Rodham to cross examine witnesses, in particular [Dr A].
I will address each of these issues in turn.

Refusal to adjourn

Mr Rodham has made a number of requests that these proceedings be adjourned at various times.
His most recent request, made at the commencement of the hearing held on 22 February 2023, relates to proceedings he has initiated in the FCFCA challenging a decision made by Judge [B] of the FCFCA on [date] December 2022 in relation to the disposition of the marital property of Ms Rodham and Mr Rodham.
Mr Rodham disputes some of the findings made by Judge [B] about Ms Rodham’s capacity to engage in employment and asserts that Ms Rodham has made false statements to both this tribunal and the FCFCA. He asserts that the FCFCA’s findings on those false statements would be relevant in this proceeding and that section 62A of the AAT Act has been enlivened. I noted that I have no power to investigate, or adjudicate, on alleged offences under section 62A of the AAT Act. I do, however, have the ability to form my own views about the credit of a party and the reliability of any evidence given in the review.
The tribunal being seized of a matter, which it is subsequent to Ms Rodham’s application for review, the tribunal has an obligation to determine the application for review (subsection 43(1) of the AAT Act). In doing so, I must have regard to the tribunal’s objectives, set out in section 2A of the AAT Act which include, amongst other things, providing a mechanism of review that is fair, just, economical, informal and quick. Adjourning proceedings to await an outcome in another forum may frustrate the objective to be “quick” and should only be contemplated if it is proper to do so.
This tribunal’s proceedings are within the discretion of the tribunal (paragraph 33(1)(a) of the AAT Act). Ultimately, Mr Rodham was given the opportunity to make submissions on Ms Rodham’s capacity to work and he referred me to evidence which, he states, supports the conclusion that false statements were made.
I was satisfied that I can form my own view on the evidence before me and determining the issues of earning capacity as they relate to these proceedings. I did not consider that I needed to await the outcome of other proceedings that might be on foot in the FCFCA.
My refusal to adjourn these proceedings was entirely reasonable and does not, in my view, give rise to a reasonable apprehension of bias.

Redactions

On 23 November 2022, I held a telephone directions hearing with the purposes of proceeding to a substantive hearing into Ms Rodham’s application for review. On that same date I issued written directions in relation to documents I wanted the parties to provide to assist me determine Ms Rodham’s application for review. My written directions included information about redactions that the parties were permitted to make to the documents I directed they supply.
During that directions hearing, Mr Rodham asked about making additional redactions. I informed him he needed to supply the documents without additional redactions and indicate what information he was seeking to redact. Mr Rodham now says that he cannot recall being given that advice. Nevertheless, that advice was given on 23 November 2022 and was repeated again during the hearing of 9 February 2023.
The reasons given by Mr Rodham for his redactions are his concerns about the safety of him and the children. I noted that Ms Rodham is aware of the address at which Mr Rodham and the children reside, and the information redacted by Mr Rodham would appear to be information about where the children attend school, medical appointments, or retail premises which Mr Rodham has frequented. Ms Rodham is subject to a family violence order, and while the facts giving rise to that order are the subject of dispute between the parties, it is sufficient to note for the purposes of these proceedings that an order exists.
I advised Mr Rodham that where he lands between his obligation to comply with my directions and his expressed safety concerns is a matter for him. However, I made Mr Rodham aware that excessive redactions may have the effect of reducing the evidentiary value of a document upon which he seeks to rely.
Mr Rodham refers to an email sent by the Registry before the hearing held on 9 February 2023 and suggested that this email indicated that the redactions he sought to make were approved. However, irrespective of the content of any email from the Registry to Mr Rodham or how it was interpreted by him, it would have been clear to Mr Rodham after the hearing on 9 February 2023 that the extent of redacting undertaken by Mr Rodham was not done with my permission. I noted that Mr Rodham has continued to rely on documents with additional redactions, and this suggests that he has had little regard to my views on the extent of his redactions.
My view on redactions, and the process to seek permission for additional redactions, has been clearly communicated to Mr Rodham in the directions hearing on 23 November 2022 and the substantive hearing on 9 February 2023 and does not, in my view, give rise to a reasonable apprehension of bias.

Enquiries into Mr Rodham’s income, property and financial resources

When considering an application for a departure determination, subsection 117(4) of the Act requires that I consider what is just and equitable, which includes having regard to the income, property and financial resources of both parents (paragraph 117(4)(d) of the Act). Thus, Mr Rodham’s income, property and financial resources are directly relevant to the decision being reviewed.
At hearing on 9 February 2023, Mr Rodham confirmed that he was the sole director and shareholder of [Company 1] Consulting Pty Ltd ([Company 1]), but he refused to confirm that [Company 1] was his employer. His evidence was that he had not had financial statements prepared. He also stated that he used no accounting software to keep business records. He also said that there were no records held by his accountant. He estimated that his income was the amount used in the administrative assessment and undertook to provide some evidence about his income and expenses. I queried how authoritatively I should view something he himself prepared.
Mr Rodham’s evidence suggested that he possessed no documents that could be viewed as independent evidence to corroborate his stated income. Paragraph 33(1)(c) of the AAT Act says that I am permitted to inform myself in such manner as I think appropriate. Accordingly, I exercised the statutory power available to me under section 95J of the Child Support (Registration and Collection) Act 1988 to require the Registrar to obtain information from the Australian Taxation Office (the ATO) about Mr Rodham and [Company 1]. The information sought, and the response, is found in folios C1 and C2.
In light of Mr Rodham’s stated inability to provide independent evidence to assist me in forming a view about his income, property and financial resources, it is entirely appropriate for me to look elsewhere for evidence on a matter directly relevant to these proceedings. My doing so does not, in my view, give rise to a reasonable apprehension of bias.

Refusal to issue a summons

Mr Rodham’s submissions suggested that he contests the opinion of [Dr A], who wrote a report about Ms Rodham’s psychiatric conditions on 28 August 2022.
I noted that I am not bound by the rules of evidence and, as mentioned above, may inform myself on any matter in such manner as I think is appropriate (paragraph 33(1)(c) of the AAT Act). One of the options I have for informing myself is to issue a summons pursuant to section 40A of the AAT Act to obtain a document or thing from a person who is not a party to the review, or to require a person to appear before the tribunal to answer questions.
Ms Rodham’s psychiatric condition is relevant to my consideration of Ms Rodham’s earning capacity. The factors I need to consider relating to earning capacity are set out in subsection 117(7B) of the Act, and Ms Rodham’s “state of health” is only one of a matrix of matters that I need to turn my mind to when contemplating subsection 117(7B) of the Act.
I was satisfied that the evidence that is already before me is sufficient for me to form a view for the purposes of subsection 117(7B) of the Act and I was satisfied that I did not need to seek additional evidence from [Dr A] and, in those circumstances, declined to issue a summons to obtain additional medical information about Ms Rodham’s state of health.
Having identified no need to issue a summons, in my view my refusal to do so does not give rise to a reasonable apprehension of bias.

Conclusion

The starting point is, that once I have been constituted as the tribunal in Ms Rodham’s application for review, I have a duty to hear and determine the matter unless a proper basis for recusal exists. It is wrong to refuse to step aside where a proper basis for recusal exists. It is equally wrong to accede to a demand for recusal, however forcefully expressed, where the legal basis for that step is lacking.
Mr Rodham may not have appreciated my refusal to accede to some of his requests. However, I was not persuaded that those refusals give rise to any apprehension of bias. I decided not to recuse myself because, finding no proper basis for doing so is made out.

COMPLIANCE WITH DIRECTIONS

During the directions hearing held on 23 November 2022, I advised the parties that the courts have found that parties to proceedings before this tribunal have a duty to the tribunal to make full and frank disclosure of their financial affairs and assets to the tribunal to allow it to come to its determination. That duty extends to presenting the material in a way that the true nature of the person’s financial affairs can be readily understood and examined.[1]
[1] See Humphries & Barry (SSAT Appeal) [2008] FMCAfam 409.
My written directions issued on 23 November 2022 (at 1.4) included a direction that the parties comply with this duty.
On 22 February 2023, I directed in writing that Mr Rodham provide evidence on a number of matters, including (at 1.1.4) evidence disclosing the gross income, deductable expenses, assets and liabilities of [Company 1] for the 2019–20, 2020–21 and 2021–22 financial years. Mr Rodham is the director of [Company 1], and, based upon the evidence before me, [Company 1] would appear to be Mr Rodham’s employer from whom he draws a wage.
Mr Rodham was required to provide information in response to the directions issued on 22 February 2023 by close of business on 16 March 2023.
On 15 March 2023, Mr Rodham contacted the registry seeking additional time to respond to the directions on the basis that he had suffered from ill health for “the past couple of weeks” and had consulted a doctor on 9 March 2023. I asked the Registry to advise Mr Rodham that he could have until close of business on 20 March 2023 to comply with my directions, but I would only consider a longer extension if medical evidence was provided. Mr Rodham was advised in writing that:
The Presiding Member will only consider a longer extension to the compliance date for the Directions if you provide medical evidence to confirm your period of ill health.
On 22 March 2023, Mr Rodham submitted a medical certificate that stated that he was “unable to participate in legal proceedings due to medical reasons from 20/03/2023 to 27/03/2023 inclusive”. This medical certificate did not indicate that Mr Rodham suffered from ill health during the weeks prior to 16 March 2023.
In the absence of any evidence to suggest that Mr Rodham was affected by ill health prior to 16 March 2023, such that he was unable to provide the evidence I sought by 16 March 2023, I declined to grant Mr Rodham a longer period of time within which to comply with the directions I made on 22 February 2023.
My decision refusing Mr Rodham’s request for more time to comply with my directions was communicated to Mr Rodham in writing on 24 March 2023.
Since 24 March 2023 Mr Rodham has lodged further medical evidence, none of which confirm his claim of ill health in the weeks prior to 16 March 2023. Having regard to the medical certificates he has provided, I stand firm on my view that ill health did not prevent Mr Rodham complying with my directions by 16 March 2023 and I am not minded to grant his requests for more time to comply with my directions.
I therefore concluded that Mr Rodham has not complied with my directions made on 22 February 2023 as he has not provided evidence about the gross income, deductable expenses, assets and liabilities of [Company 1].
Having regard to Mr Rodham’s oral evidence at hearing and the evidence in documents before me, I concluded that Mr Rodham has not complied with his obligation to make full and frank disclosure of his financial affairs and assets. In the directions hearing held on 23 November 2022, Mr Rodham was advised of the consequences of failing to comply with the obligation of full and frank disclosure, including I should not be unduly cautious about making findings in favour of the other party if satisfied that full disclosure has not been made.

ISSUES

The statutory provisions relevant to this review application are found within the child support legislation, in particular, the Act.
Pursuant to section 98C of the Act, a determination to depart from the administrative assessment of child support 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) of the Act] 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; …

CONSIDERATION

Mr Rodham made his application for a departure determination on 9 February 2022. At the time Mr Rodham made his application the administrative assessment of child support required Ms Rodham to pay child support of $446 per annum, based upon Ms Rodham’s adjusted taxable income of $16,164, an amount estimated by her, for the 2021–22 income year and Mr Rodham’s adjusted taxable income of $141,143, an amount determined by the Registrar because Mr Rodham has not lodged his 2020–21 income tax return.

On 1 July 2022, Ms Rodham’s estimate election lapsed, and she was assessed to pay child support of $446 per annum, based upon her adjusted taxable income of $21,554, determined by reference to her 2020–21 taxable income and Mr Rodham’s adjusted taxable income of $141,143.
On 1 January 2023, a new child support period commenced. The administrative assessment of child support required Ms Rodham to pay child support of $12,632 per annum, based upon Ms Rodham’s adjusted taxable income of $77,405, determined by reference to her declaration of her taxable income for the 2021–22 income year, and Mr Rodham’s adjusted taxable income of $145,179, determined by the Registrar because Mr Rodham has not lodged his income tax return for the 2020–21 or 2021–22 income years.
On [date] February 2023, [Child 1] turned 18 years of age and ceased to be an eligible child under the assessment. The administrative assessment of child support required Ms Rodham to pay child support of $8,300 per annum, based upon the same adjusted taxable incomes for both parents.
These, therefore, are the administrative assessments of child support from which I am considering departing.

Is there a ground, or grounds, for departure?

All the grounds for departing from the administrative assessment of child support are prefaced by the term “in the special circumstances of the case”. As noted by the Full Court of the Family Court:[2]
Whilst it is not possible to define with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the court will not interfere with the administrative formula result in the ordinary run of cases. In Savery's case (at Fam LR 815 FLC 77,897), Kay J, adopting the view in In the Marriage of Philippe (1977) 4 Fam LR 153; [1978] FLC 90-433 at Fam LR 155 FLC 77,202 in a different context, said that "special circumstances" were "facts peculiar to the particular case which set it apart from other cases". The approach to the interpretation and application of the particular grounds in s 117(2) must be guided by that qualification.
My consideration will be guided by this principle.
[2] See Gyselman and Gyselman [1991] FamCA 93.

Special needs of the child

Mr Rodham’s application for a departure determination relied upon the ground for departure set out in subparagraph 117(2)(b)(ia) of the Act. This provision – commonly referred to as “Reason 2” by Child Support – provides that, in the special circumstances of the case, a ground for a departure from the statutory formula may be established if the costs of maintaining the child are significantly affected “because of the special needs of the child”.
The term special needs is not defined in the Act. In the Matter of Lightfoot and Hampson,[3] the Full Court of the Family Court of Australia stated that:
‘special needs of the child’ - encompasses a wide range of needs of a child which are seen as ‘special’ in the sense of necessary or at least desirable for that child's welfare but outside the ‘normal’ needs of a child which would be catered for within the formula. This would include such things as unusual medical expenditure, facilities for a handicapped child, etc. If necessary it could include ‘special needs in education.
[3] [1996] FamCA 8.
The evidence shows that both children were diagnosed with post-traumatic stress disorder in 2019.[4] The reasons behind the diagnosis are not relevant here. It also appeared that Ms Rodham did not dispute that [Child 1] suffers from an eating disorder. Mr Rodham has also supplied evidence that both children required orthodontic treatment for functional, not merely cosmetic, purposes.[5]
[4] Folios 269 to 271 (Evelyn) and folios 272 to 274 (Theodore).
[5] Folio 603.
I was satisfied that both children have special needs in relation to treatment for psychiatric conditions and orthodontic treatment. However, the evidence on the costs of the treatment addressing those special needs is scant.
Mr Rodham was directed, on 22 February 2023, to provide further evidence of any medical costs relating to [Child 1] and [Child 2] that Mr Rodham believes are relevant to the decision being reviewed. He did not provide any additional evidence by the date specified, and my reasons for not granting Mr Rodham a longer period of time to comply with my directions of 22 February 2023 are detailed above.
In relation to the evidence of the costs of addressing the special needs that is before me, a letter by general practitioner, Dr [C] shows that [Child 1] and [Child 2] require medication at a cost of $150 per month;[6] equivalent to $1,800 per annum. While other evidence of costs for prescription medication has been provided, I relied on the overall monthly costs stated by Dr [C].
[6] Folio 612.
There is also evidence of each child engaging in a counselling session in 2022, costing $250 and $200;[7] while professional reports reference a need for counselling, there is no evidence that either child has engaged in sustained treatment.
[7] Folios 239, 288 (Evelyn) and 240 (Theodore).
Mr Rodham has provided evidence that [Child 2] attended a specialist medical practitioner, that would appear not to be a psychiatrist, on 25 July 2022 for the cost of $485.[8] There is nothing to indicate what, if any Medicare rebate was paid for this consultation.
[8] Folio B106
There is evidence that costs have been incurred for orthodontic treatment. For [Child 1], those costs start in May 2019[9] and end in November 2020.[10] I noted that only four payments of $340.53 (a total of $1,362.12) occurred in the 18 months prior to Mr Rodham making his application for a departure determination.
[9] Folio B114.
[10] Folio B117.
For [Child 2], while there is evidence costs were incurred for orthodontic treatment,[11] there is no evidence of the dates on which those costs were paid by Mr Rodham and I was consequently not satisfied that those costs were incurred within the 18 months prior to Mr Rodham making his departure application.
[11] Folios B118 to B121.
On the available evidence before me, I was satisfied that the costs of meeting the children’s special needs are no more than $1,362 in 2020 (orthodontic treatment for [Child 1]) and $1,847 in 2022 (medication, counselling costs and a specialist appointment).
The costs of the children under the statutory formula are about $30,000 per annum. I was not persuaded that those costs are significantly affected because the children have special needs.
I therefore found the ground for departure set out in subparagraph 117(2)(b)(ia) of the Act has not been established in this case.

Educating the children in the manner expected by their parents

Subparagraph 117(2)(b)(ii) of the Act provides a ground for departure, referred to as “Reason 3” by Child Support, where “in the special circumstances of the case, the costs of maintaining the child are significantly affected … because the child is being cared for, educated or trained in the manner that was expected by his or her parents”.
Mr Rodham’s evidence is that [Child 1] attended a private school. Highly redacted tax invoices suggested that the fees for [Child 1] were $5,447 per term, for three terms, in 2021 and $7,444 per term for three terms in 2022.[12] I therefore found that the private school fees for [Child 1] were $16,341 for 2021 and $22,444 in 2022.
[12] Folios B76 to B81.
Mr Rodham’s evidence is that [Child 2] also attends a private school. Ms Rodham expressed her belief that [Child 2] attends a public school, but I noted that it is some time since she has had contact with the children, and I placed no reliance on that belief.
There is an undated statement of fees for [Child 2] at folio 234 indicating tuition fees of $12,462 were charged at some point in time.[13] However, it is impossible to identify what point in time those fees relate to. The school in question was the same school at which both parents enrolled [Child 2] in 1015, however the evidence suggests that [Child 2] no longer attends that school.
[13] Folio 234.
In relation to the current costs of [Child 2]’s private education, Mr Rodham has provided two statements of fees dated 27 February 2022 and 24 September 2023 showing amounts outstanding of $35,355.80 and $38,970.70 respectively.[14] At hearing, Mr Rodham submitted that the balances outstanding represented the amounts charged by the school for each school year, and were not a cumulative total of the amounts outstanding at the end of the two years, and denied that this would suggest charges for the 2023 school year were $3,614.90 ($38,970.70 less $35,355.80).
[14] Folios B82 and B83.
To clarify the situation relating to the costs of [Child 2]’s education, on 22 February 2023, I directed Mr Rodham to provide evidence of the amounts charged by [Child 2]’s school for tuition fees for the 2021, 2022 and 2023 school years. No evidence was provided in the required time, and I have already discussed the reasons why a longer time for Mr Rodham to comply with my directions of 22 February 2023 was not granted.
In the absence of any evidence that Mr Rodham has incurred costs meeting tuition fees for [Child 2] to attend a private school in 2021, 2022 or 2023, I found that the ground for departure set out in subparagraph 117(2)(b)(ii) of the Act has not be made out in respect of [Child 2].
In relation to whether or not the ground is made out in respect of [Child 1], I noted that the evidence shows that both parents signed an enrolment form for [Child 1] to attend a private school in 2014.[15] In considering whether or not [Child 1] is being educated in the manner expected by the parents (paragraphs 117(4)(b) and 117(6)(a) of the Act), the legislation uses the past tense – “expected” – and it is reasonable to look at what was occurring in the past (Mee v Ferguson [1986] FamCA 3 at [37]).
[15] Folios 251 to 256,
While [Child 1] would appear to attend a different school to that which she was originally enrolled in 2014, I noted that the lack of agreement about a specific school does not necessarily imply there was not a past expectation that [Child 1] attend a particular class of school; such as a Catholic or independent school (see Mabry & Mabry & Anor (SSAT Appeal) [2010] FMCAfam 388).
I therefore found that in 2021 and 2022 [Child 1] was being educated in a manner that had been expected by both her parents.
The costs of both children are approximately $30,000 per annum, or $15,00 per annum each. The costs of [Child 1]’s school fees were $16,341 for 2021 and $22,444 in 2022. I was satisfied that the costs of maintaining [Child 1] are significantly affected in 2021 and 2022 because [Child 1] is being educated in a manner that had been expected by both her parents.
[Child 1]’s attendance at the school requires the payment of fees which do not apply to children who attend government schools. I was satisfied that the requirement to pay private school fees makes this case different from the usual case and satisfies the requirement for there to be special circumstances.
I therefore found that the ground for departure set out in subparagraph 117(2)(b)(ii) of the Act has been satisfied in this case in respect of [Child 1] alone.

The income, property and financial resources of Ms Rodham

This ground for a departure determination is set out in subparagraph 117(2)(c)(ia) of the Act and is referred to by Child Support as “Reason 8A”. It provides a ground to depart from the statutory formula may be established if, in the special circumstances of the case, the child support assessment results in an “… unjust and inequitable determination of the level of financial support to be provided by the liable parent …” due to the income, property and financial resources of either parent.
At the time Mr Rodham made his application for a departure the administrative assessment of child support had reference to Ms Rodham’s adjusted taxable income of $16,164, an amount estimated by her for the 2021–22 income year. On 1 July 2022, Ms Rodham’s estimate election lapsed, and she was assessed to pay child support upon her adjusted taxable income of $21,554, determined by reference to her 2020–21 taxable income.
On 1 January 2023, a new child support period commenced. The administrative assessment of child support was based upon Ms Rodham’s adjusted taxable income of $77,405, determined by reference to her declaration of her taxable income for the 2021–22 income year.
Ms Rodham has had periods of unemployment.
The evidence shows that she was employed by [Company 2] from December 2021 to April 2022 and earned about $6,000 in total during this time. From 23 April 2022, Ms Rodham was unemployed and in receipt of jobseeker payment. She returned to work on 12 September 2022 on a salary of $73,000 per annum, but this employment ended after about one month. On 31 October 2022 Ms Rodham commenced employment with [Company 3], on a salary of $130,000. As of the date of the second hearing, Ms Rodham remained in this employment.
As of 12 September 2022, Ms Rodham’s income from employment was at least $73,000 per annum, increasing to $130,000 per annum from 31 October 2022. At those points in time Ms Rodham’s adjusted taxable income applying under the administrative assessment of child support was $21,554 per annum and Ms Rodham was required to pay the minimum annual rate of child support of $446 per annum. However, in light of Mr Rodham’s own failure to make full and frank disclosure of his own financial affairs and assets, I was not persuaded that the increase in Ms Rodham’s income from 12 September 2022 renders the administrative assessment of child support unjust and inequitable.
The evidence shows that Ms Rodham has borrowed money from her father and her former partner. She explained that the funds were used to meet her living costs while unemployed and to pay for legal costs associated with her and Mr Rodham’s marital property issues. The loans are documented in loan agreements, and the evidence shows that Ms Rodham owes about $93,000 to her father and about $157,000 to her former partner.
Mr Rodham submitted that the funds obtained by Ms Rodham under these loans could have been used to pay child support and should be treated as income.
A loan is a financial resource and is relevant in the context of contemplating a departure determination. I noted that Mr Rodham also borrowed about $200,000 from a parent for meeting legal fees. To the extent that I might potentially treat loans to Ms Rodham as a financial resource, Ms Rodham’s loans exceed Mr Rodham’s loans by only about $50,000.
To the extent that Ms Rodham received financial support from her former partner, whether formalised as a loan or otherwise, I noted that the Federal Magistrates Court stated, in Jordan & Verne (SSAT Appeal) [2012] FMCAfam 21, that:
There is nothing special or out of the ordinary about one spouse meeting another’s expenses and providing financial support during periods when the supported spouse has no income. Indeed, I would venture to suggest that it is an entirely ordinary circumstance that is one of the key elements of a spousal relationship. That there is therefore a disparity between the supported spouse’s income (nil) and the financial support received from the supporting spouse is nothing more than the natural consequence of the provision of support. Again, it is nothing out of the ordinary.
I found that to the extent that Ms Rodham has benefited from financial support provided by her former partner, there are no special circumstances necessary to enliven subparagraph 117(2)(c)(ia) of the Act. To the extent that Ms Rodham has benefited by borrowing money under the loans from her father and former partner, I was not persuaded that this makes the administrative assessment of child support unjust and inequitable in circumstances where Mr Rodham has also borrowed $200,000 from a parent.
Mr Rodham also submitted that Ms Rodham has benefited from the proceeds of the sale of a property at [Suburb 1] in around March 2020 and has disposed of shares in a family company, [Company 4] Pty Ltd ([Company 4]), for a consideration less than those shares were worth in early 2020 and that her income should be adjusted accordingly.
Mr Rodham made his application for a departure determination on 9 February 2022. Subsection 98S(3B) of the Act prohibits me from making a departure determination that applies for any period prior to 9 August 2020. Ms Rodham’s disposition of the [Suburb 1] property and her shares in [Company 4] were events that occurred prior to 9 August 2020. Mr Rodham does not dispute that the disposition of the [Suburb 1] property and Ms Rodham’s shares in [Company 4] are relevant in the context of the distribution of their marital property. They were address by Judge [B] of the FCFCA in their decision of 21 December 2022. I noted that Mr Rodham has taken futher action in the FCFCA proceedings and disputes many of Judge [B]’s findings.
I concluded that matters relating to the [Suburb 1] property and Ms Rodham’s former shareholding in [Company 4] are best addressed in the context of the parties’ family law proceedings, rather than by the making of a departure determination.
Mr Rodham submitted that Ms Rodham may, in future, benefit in some way from [Company 4]. I noted that there is no evidence that Ms Rodham has owned shares in [Company 4] since at least August 2020. [Company 4] is owned by third persons who have no duty to maintain [Child 1] or [Child 2].
Subparagraph 117(7A)(b)(i) of the Act says that when considering the income, property and financial resources of Ms Rodham, I am to disregard “the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child … unless, in the special circumstances of the case, the court considers that it is appropriate to have regard to them”.
As Ms Rodham owns no shares in [Company 4], I was not satisfied that [Company 4] is relevant for the purposes of considering Ms Rodham’s income, property and financial resources.
Mr Rodham also raised the issue of a number of shares owned by Ms Rodham which were not disclosed by [her]. Ms Rodham’s evidence was that she had forgotten about those shareholdings, and I noted that all correspondence in relation to those shares would appear to have been addressed to Ms Rodham at the marital home.
Having considered the evidence, any shareholdings overlooked by Ms Rodham would appear to be modest. In light of Mr Rodham’s failure to make full and frank disclosure of his financial affairs and assets, I was not satisfied that these shareholdings make the administrative assessment of child support unjust and inequitable.
I was not persuaded that Ms Rodham has income, property and financial resources that give rise to special circumstances and/or render the administrative assessment of child support unjust and inequitable. I therefore found that the ground for departure set out in subparagraph 117(2)(c)(ia) of the Act has not been made out in relation to Ms Rodham.

The earning capacity of Ms Rodham

This provision, set out in subparagraph 117(2)(c)(ib) of the Act – commonly referred to as “Reason 8B” by Child Support – provides that a ground to depart from the statutory formula may be established if, in the special circumstances of the case, the child support assessment results in an “… unjust and inequitable determination of the level of financial support to be provided by the liable parent …” due to the earning capacity of either parent.
A parent can only be assessed on their capacity to earn if subsection 117(7B) of the Act is satisfied, which relevantly 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.
All three paragraphs need to be satisfied before a person can be assessed as having a greater capacity to earn.

The evidence shows that Ms Rodham ceased working for [Company 2] in April 2022. Ms Rodham’s evidence was that she was terminated from this employment as she was no longer required. This is supported by an email contained within the documents, indicating that Ms Rodham’s employment was terminated due to “strategic and reorganisation reasons”.[16]
[16] Folio 334.
Mr Rodham submitted that Ms Rodham’s evidence was an instance where she has made a false statement as she gave different reasons for her employment being terminated in an affidavit in FCFCA proceedings. I noted that it was possible for both reasons to be true. Ms Rodham has provided evidence stating that she was the person chosen to be terminated because her troubles with alcohol were impacting on her work performance.
Irrespective, I was satisfied that through provision of the email at folio 334, Ms Rodham has demonstrated that her loss of employment was a decision of her employer and was not caused by her for the major purposes of affecting the administrative assessment of child support.
Therefore, paragraph 117(7B)(c) of the Act is not satisfied and it is not open for me to assess Ms Rodham as having a higher capacity to earn following the cessation of her employment with [Company 2] ().
Ms Rodham had another short period of unemployment between ceasing work with [Company 5] in early October 2022 and commencing her current employment with [Company 3] on 31 October 2022. Given the brevity of this period of unemployment, and that Ms Rodham attained a new position with a higher salary, I was satisfied that she has demonstrated that the purposes of leaving her employment with [Company 5] was not to affect the administrative assessment of child support.
Therefore, paragraph 117(7B)(c) of the Act is not satisfied in respect of either instance when Ms Rodham ceased employment and it is not open for me to assess Ms Rodham as having a higher capacity to earn following the cessation of her employment with [Company 5].
I therefore found that the ground for departure set out in subparagraph 117(2)(c)(ib) of the Act has not been made out in respect of Ms Rodham’s earning capacity.

Just and equitable

The requirement to consider whether a departure would be just and equitable directs that my attention is turned to what is fair to the parents and their children. Regard must be had to a variety of factors, set out in subsection 117(4) of the Act, such as the needs of the children, the parents’ necessary commitments and any hardships that would be caused by departing, or not departing, from the statutory formula.

The children

At all material times, the children have been in Mr Rodham’s sole care. Under the administrative assessments of child support, the cost of raising the children has been assessed as approximately $31,400 annum from 1 October 2021, $42,400 per annum from 1 January 2023 and $27,800 per annum from [date] February 2023, once [Child 1] turned 18 years of age.
The costs of educating the children, their special needs and associated costs are discussed in detail above, and it is unnecessary to repeat that information here. There is no evidence that the children themselves have any income, earning capacity, property or financial resources that are relevant here.

Ms Rodham

Ms Rodham’s income, property and financial resources, and her capacity to earn, have been considered earlier in these reasons and do not need to be restated here.
Under the statutory formula, Ms Rodham has the benefit of a self-support amount of approximately $26,000 to $27,000 per annum. Ms Rodham submitted that she has high living costs, and this amount was insufficient. There is no other person or child in respect of whom Ms Rodham has a duty to maintain.
In relation to whether or not the making of a departure determination would cause Ms Rodham any hardship, Ms Rodham submitted that she does not dispute that she should contribute to the children’s costs when she is in paid employment but submitted that she cannot afford the amount that was set in the decision under review.

Mr Rodham

Under the administrative assessments of child support, Mr Rodham’s adjusted taxable income has been assessed as:
· $141,143 as of 9 February 2022, being the date Mr Rodham made his application for a departure determination, determined by the Registrar because Mr Rodham has not lodged his income tax return for the 2019–20 income year; and
· $145,179 from 1 January 2023, the start of a new child support period, an amount determined by the Registrar because Mr Rodham had not lodged income tax returns for either the 2020–21 or 2021–22 income years.
Mr Rodham is employed by a company he owns, but he refused to acknowledge that his employer is [Company 1]. He has provided evidence to show that a company he previously operated was deregistered on 14 March 2020. As there is no other company in respect of which Mr Rodham is a director or shareholder, I inferred that [Company 1] is his employer.
Mr Rodham’s evidence was that he uses no accounting software, keeps no business records and has not had financial statements prepared. The evidence shows that [Company 1] does not report any salary or superannuation entitlements paid to, or on behalf of, Mr Rodham to the ATO.[17] Mr Rodham’s evidence was that the ATO has permitted [Company 1] not to report his salary and superannuation entitlements while his business recovers from the COVID-19 pandemic. Mr Rodham advised me that these arrangements with the ATO were entered into by telephone.
[17] Folios C1 – C2.
Mr Rodham has provided bank statements, which are heavily redacted, which he says show the amounts of wages he has drawn from his company. Given the extent of the redactions made by Mr Rodham, it is impossible to ascertain whether or not the amounts he says are wages are the only income or financial benefit that Mr Rodham derives from [Company 1].
On 22 February 2023, I directed Mr Rodham provide:
Evidence disclosing the gross income, deductable expenses, assets and liabilities of [Company 1] Consulting Pty Ltd for the 2019-20 2020-21 and 2021-22 financial years
by close of business 16 March 2023. Mr Rodham did not comply with that direction and I have discussed my reasons for not allowing him a longer time to provide the required information above.
As discussed, above, I am satisfied that Mr Rodham has failed to comply with his duty to make full and frank disclosure of his financial affairs and assets. As a consequence, I draw an inference that Mr Rodham’s income is likely to be greater than the amounts of his adjusted taxable income determined by the Registrar and used in the administrative assessment.
I identified no evidence to suggest that there are any issues relating to Mr Rodham’s earning capacity that are relevant to my consideration.
Under the statutory formula, Mr Rodham has the benefit of a self-support amount of approximately $26,000 to $27,000 per annum. Mr Rodham stated that he has medical costs that make this amount insufficient. Other than the two children who are the subjects of the child support assessment, there is no other person or child that Mr Rodham has a duty to maintain.
Mr Rodham submitted that a refusal to make a departure determination would cause him financial hardship.

Conclusion

Having considered the matters set out in subsection 117(4) of the Act, I was satisfied that it would be just and equitable to make a change to the child support assessment.

Otherwise proper

The requirement to consider whether a departure would be otherwise proper is set out in subsection 117(5) of the Act, which directs my attention to what is fair to the community. It is necessary to consider the effect, if any, that a departure from the administrative assessment would have on entitlements to any income tested pension, allowance or benefit of the carer entitled to child support. Parents, rather than the community, have the primary duty to maintain their children.
Under the administrative assessment Mr Rodham is the carer entitled to receive child support. However, Mr Rodham does not receive family tax benefit so any decision to make, or not make, a departure determination will have no impact on any income tested pension, allowance or benefit. I was satisfied that the departure determination I am contemplating is otherwise proper.

Conclusion

Section 4 of the Act sets out the objectives of the Act; these objectives include:
·      Parents of a child have a primary duty to maintain that child.
·      That duty has a priority over all commitments of the parent other than commitments necessary for self-support.
·      The level of financial support to be provided by parents to their children should be determined in accordance with the legislatively fixed standards.
·      The level of financial support is to be determined according to the capacity to provide financial support and noting that parents with a like capacity to provide financial support should provide like amounts.
I have found that there is a ground for departure in this case, that it would be just and equitable and otherwise proper for me to make a departure determination. Section 98S of the Act describes the determinations that I may make if a decision is made to depart from the administrative assessment of child support.
The only ground for departure I am satisfied exists is the ground referred to by Child Support as “Reason 3” as it pertains to [Child 1]; that is, there are extra costs in caring for, educating or training [Child 1] in the way both parents intended.
I decided to make a departure determination which results in Ms Rodham paying half of [Child 1]’s school fees for the 2022 school year, but only for those periods when she is in paid employment. I declined to make a departure for the period Ms Rodham was unemployed, because I considered that the relative hardships of the parents would be unfairly weighted towards Ms Rodham, when Mr Rodham’s failure to make full and frank disclosure of his financial affairs and assets is considered.
Mr Rodham submitted that I should backdate any departure determination that I make. The reasons given were that information about Ms Rodham’s financial circumstances was not known to him, so it was not possible for him to make his application earlier than he did.
I did not find a ground for departure arising on the basis of Ms Rodham’s financial circumstances. The only ground I found made out was the ground that relates to school fees; information about the school fees was known to Mr Rodham and I identified no evidence that he was prevented from making an application for a departure determination relying on “Reason 3” earlier than he ultimately did so. I therefore decided to make a departure determination for the 2022 school year only, and not backdate my determination to include the 2021 school year.
My decision will result in Ms Rodham’s child support arrears being considerably reduced. It is possible that my decision might result in Mr Rodham having incurred an overpayment of child support. Mr Rodham submitted that any decision that I might make that resulted in him having an overpayment would be something that he could not afford. Given Mr Rodham’s failure to make full and frank disclosure of his financial affairs and assets, I inferred that Mr Rodham incurring a child support overpayment as a result of my decision will not cause him any undue hardship.
Therefore, and for these reasons, I decided to set aside the decision under review and substitute my own decision.

DECISION

The tribunal set aside the decision under review and, in substitution, decided that there is to be a departure from the administrative assessment of child support, such that:

From 1 January 2022 to 22 April 2022, the annual rate of child support otherwise payable by Ms Rodham is to be increased by $11,166; and
From 12 September 2022 to 31 December 2022, the annual rate of child support otherwise payable by Ms Rodham is to be increased by $11,166.

[2023] AATA 1188

3 April 2023

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Jurisdiction

Remedies

Judicial Review

Statutory Construction