Rutcliffe and Princhard (Child support) - [2024] ARTA 930

Rutcliffe and Princhard (Child support) [2024] ARTA 930 (23 October 2024)

Applicant: Ms Rutcliffe

Respondent: Child Support Registrar

Other Party: Mr Princhard
Tribunal Number: 2024/AC027811
Tribunal: Member P Jensen

Place: Brisbane

Date of Decision: 23 October 2024

Decision:The decision under review is varied so that Mr Princhard’s adjusted taxable income is varied to $450,000 per annum from 1 July 2023 to 13 September 2028.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources – profitable business – far exceeded previous ATI – special circumstances – ground for departure – special needs of a child – ground abandoned – request to continue determination until last child is 18 – unfair – profitability is likely to fluctuate – not appropriate to extend – accused domestic violence – fear of physical violence dissuaded sooner departure application – earlier date of effect – decision under review varied

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 pursuant to subsection 16(2AB) of the Child Support (Registration and Collection) Act 1988.

Statement of Reasons

Introduction

Ms Rutcliffe and Mr Princhard are the parents of [the children]. A child support case was registered with Services Australia – Child Support (Child Support) from 13 April 2019. Since that date, Ms Rutcliffe has been recorded as providing 100% care for the [children].
The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care for the children. From 1 July 2023 to 30 September 2023, the administrative assessment was based on Ms Rutcliffe’s 2021–22 adjusted taxable income of $91 and Mr Princhard’s 2021–22 adjusted taxable income of $50,334. Mr Princhard was assessed to pay $6,844 per annum in child support.
The Act also provides for a departure from the administrative assessment in certain circumstances. Ms Rutcliffe lodged a departure application on 14 September 2023. An original decision-maker granted the application and varied Mr Princhard’s adjusted taxable income to $450,000 per annum from 14 September 2023 to 13 September 2028. Mr Princhard objected to that decision. An objections officer disallowed the objection.
Ms Rutcliffe applied to the Administrative Appeals Tribunal (AAT) for further review. On 14 October 2024 the AAT was replaced by the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the Transitional Act), an application for review to the AAT that was not finalised before 14 October 2024 is taken to be an application for review to the Tribunal. The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed by the AAT.
I conducted a directions hearing on 30 August 2024 and a substantive hearing on 18 October 2024. On each occasion, Ms Rutcliffe attended via MS Teams and Mr Princhard did not attend despite being notified of the hearing.

Paragraph 98C(1)(b) of the Act relevantly provides that a departure decision may be made in respect of a departure application if:
(i)... one, or more than one, of the grounds for departure referred to in [subsection 117(2)] exists; and
(ii)... 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; …

A ground for departure

Subparagraph 117(2)(c)(ia) of the Act, commonly referred to as Reason 8, provides as a ground for departure:
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; …
According to Child Support’s searches, the trustee for [Family Trust A] operates a [type of] business. During 2022–23 the business generated revenue of $3,730,422 and made a net profit of $453,961: page 150 of the hearing papers. The trust is a discretionary trust and Mr Princhard is a beneficiary of the trust. Further, the trustee is a company and Mr Princhard is the sole director and shareholder of the company. In that way, the original decision-maker and the objections officer reached the unremarkable conclusion that the net profit of $453,961 formed part of Mr Princhard’s overall income and financial resources. Further, both decision-makers concluded that the information obtained in respect of 2022–23 was the best available evidence of Mr Princhard’s ongoing income and financial resources. If either parent had disputed that conclusion in the current proceedings, I would have directed Mr Princhard to provide further documentation on the issue. However, Ms Rutcliffe did not dispute that conclusion and Mr Princhard did not have any involvement in the Tribunal proceedings. I agree with that conclusion.
When Ms Rutcliffe lodged her departure application on 14 September 2023, the administrative assessment was based on Mr Princhard’s 2021–22 adjusted taxable income of $50,334. His income and financial resources for child support purposes far exceeded that income. That discrepancy constitutes special circumstances such that the application of the administrative assessment resulted in an unjust and inequitable determination of child support payable. Reason 8 is established.

Just and equitable

The requirement to consider whether a departure would be just and equitable directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.
During the directions hearing I explained that the primary purpose of the directions hearing was to ascertain what additional documentation needed to be provided prior to the substantive hearing so that, after hearing oral evidence during the substantive hearing, I would be in a position to make my decision. Ms Rutcliffe explained that her only reason for applying to the Tribunal was to have the departure decision commence from an earlier date. The matter was listed for a substantive hearing on that basis.
During the substantive hearing, Ms Rutcliffe raised two new issues. First, she sought to have Mr Princhard’s rate of child support payable increased on account of [Child A’s] current orthodontic fees and the other [children’s] future orthodontic fees. Such matters could potentially constitute a separate ground for departure, commonly referred to as Reason 2: see subparagraph 117(2)(b)(ia) of the Act. Reason 2 concerns the special needs of a child. Child Support discussed Reason 2 with Ms Rutcliffe on 8 September 2023: page 112 of the hearing papers. Ms Rutcliffe said that two of the children have learning difficulties. The matter was left on the basis that Ms Rutcliffe would provide evidence of the associated costs. She did not do so. On 12 December 2023, Child Support contacted Ms Rutcliffe and discussed various matters including Reason 2 in respect of orthodontic fees: page 138 of the hearing papers. Ms Rutcliffe did not take the matter any further.
Ms Rutcliffe did not provide any documentary evidence in respect of [Child A’s] braces prior to the substantive hearing. There was no documentary evidence from a relevant health professional that [Child A] needed braces and there was no documentary evidence of the associated costs. Ms Rutcliffe said the treatment started in February 2024 and will cost $12,000 over three years. Ms Rutcliffe offered to provide documentary evidence of the cost.
Ms Rutcliffe lodged her departure application more than one year ago. She was aware that she could apply to have Mr Princhard’s rate of child support increased on account of the cost of orthodontic braces. She was aware of the general need to provide documentary evidence in support of her claims. With respect, I was left with the impression that Ms Rutcliffe had not properly prepared for the substantive hearing. For example, Child Support provided a bundle of documents which constituted almost the entirety of the hearing papers: pages 1 to 437 of the hearing papers. Ms Rutcliffe had that bundle of documents with her for the directions hearing but not for the substantive hearing.
As I explained during the substantive hearing, I had a discretion to allow Ms Rutcliffe to provide further documentation during the substantive hearing. However, Mr Princhard had been provided with a copy of the hearing papers and a thorough reading of that documentation suggested that Ms Rutcliffe had considered and abandoned the idea of applying to have Mr Princhard’s rate of child support payable increased on account of [Child A’s] orthodontic costs. There are obvious reasons why parties are required to provide all relevant documentation to the Tribunal at least 14 days prior to the substantive hearing: section 10 of the AAT’s Child Support Review Directions and section 5 of the Administrative Review Tribunal (Child Support) Practice Directions 2024. If I had allowed Ms Rutcliffe to provide additional documentation during the substantive hearing, it would have been necessary to provide Mr Princhard with a copy of the documentation and an opportunity for him to consider and respond to that documentation. That process would have delayed the finalisation of the matter. It may have resulted in the need to reconvene for a second day of hearing. I decided to not allow Ms Rutcliffe to provide that additional documentation.
There is no expert evidence that [Child A] required orthodontic treatment. Some children receive orthodontic treatment for aesthetic reasons. There is no documentary evidence of the associated costs. Ms Rutcliffe said it will cost $12,000 over three years, which equates to $4,000 per year. Mr Princhard’s child support is intended to assist Ms Rutcliffe in meeting the children’s ordinary costs, including their medical costs. Mr Princhard is currently assessed to pay $54,054 per annum in child support, which is the highest rate payable by Mr Princhard under the general administrative assessment formula, i.e. he would not be required to pay a higher rate if his adjusted taxable income were varied to, say, $1,000,000 per annum. Given the procedural and financial matters to which I have referred, I do not consider it appropriate to increase Mr Princhard’s rate of child support payable on account of [Child A’s] orthodontic costs. The other two children have not started their orthodontic treatments and there is no clear evidence of when that might occur.
The second new issue that Ms Rutcliffe raised during the substantive hearing was the date on which any new departure decision should end. The decision under review ends on 13 September 2028. Ms Rutcliffe submitted that it should continue until the child support case ends (which is likely to be when [Child B] turns 18, in [year]). Ms Rutcliffe said Mr Princhard’s business is likely to continue to be very profitable. She did not provide any corroborating evidence.
As I explained during the substantive hearing, setting the date on which a departure decision will end usually involves two competing considerations. On the one hand, most parents would prefer to be involved in the departure application process as infrequently as possible. On the other hand, it is difficult to predict the future, and the more prospective the departure decision, the less likely it is that it will remain fair. Mr Princhard’s ongoing income and financial resources are largely determined by the profitability of the business in which he is involved. That profitability is likely to fluctuate. I do not consider it appropriate to extend the departure decision beyond 13 September 2028. In the absence of any submissions by Mr Princhard, I consider it appropriate to make a departure decision with effect until that date.
Ms Rutcliffe’s primary submission was that the departure decision should commence from an earlier date. When she lodged her departure application on 14 September 2023 she was informed that any departure decision could not commence more than 18 months prior to the date of the application unless there was a relevant court order: page 115 of the hearing papers and section 98S of the Act. There has never been such a court order. Ms Rutcliffe sought a departure decision with effect from 1 January 2016.
A question arises as to why Ms Rutcliffe did not lodge her departure application sooner. She said it was because she was scared of Mr Princhard’s possible response. She said she had been subjected to his physical violence, and threats of physical violence, for many years. I note that Ms Rutcliffe’s primary submission was clear from the hearing papers. Mr Princhard elected to not participate in the substantive hearing and give sworn evidence on the issue.
Ms Rutcliffe gave details of some of the domestic violence to which she said she had been subjected. Ms Rutcliffe’s friend, [Friend A], also gave evidence on the issue, although her evidence was almost entirely hearsay evidence.
During the directions hearing, Ms Rutcliffe said she could provide her general practitioner’s consultation notes which, she said, would support her account of events. She said she saw her general practitioner in June 2024. I informed her that I would not direct her to provide those consultation notes, but she could do so. She did not do so. After the substantive hearing she effectively applied to provide the consultation notes. They are dated 2 June 2024. They could have been provided prior to the hearing. Ms Rutcliffe did not explain why she did not provide them prior to the hearing. I decided to not accept the post-hearing documentation into evidence and I have not had regard to the consultation notes when making my decision.
I accept Ms Rutcliffe’s oral evidence that she was scared of Mr Princhard. It is difficult to determine the extent to which Mr Princhard’s conduct dissuaded Ms Rutcliffe from lodging a departure application sooner. Ms Rutcliffe could not recall when she first learnt that she could apply for a departure decision. She said that when she learnt that she could make such an application, she contacted Child Support “a few times”. She could not recall the dates of the phone calls and she did not provide any receipt numbers. She said Child Support told her that it would investigate Mr Princhard’s financial resources. She said she was concerned that Mr Princhard would retaliate if she started a process that investigated his financial circumstances. In response to further questions, she said that she and Mr Princhard had been in legal proceedings concerning the division of their assets and liabilities for nine and a half years. Mr Princhard had made settlement offers during those proceedings but Ms Rutcliffe had considered the offers to be too low, and the proceedings had continued until July 2024 when the matter was finalised via a consent court orders. The orders gave Ms Rutcliffe more than he had previously offered. I noted that, on her account of events, she had refrained from lodging a departure application for fear of Mr Princhard’s possible reaction but she had persevered in protracted legal proceedings concerning the parents’ property settlement. She explained that Mr Princhard considered the property settlement process to be “black and white” but he was more emotive about the suggestion that he should be required to pay child support.
Ms Rutcliffe said that, in very broad terms, the court orders resulted in her retaining an apartment worth approximately $[amount] (and an associated loan of approximately $[amount]) and a house worth approximately $[amount] (and an associated loan of approximately $[amount]), and Mr Princhard will pay her $50,000 per annum for four years (which is part of the property settlement, and not ex-spousal maintenance).
One of the difficulties in this case is the timing of the original departure decision (in February 2024), the objections officer’s decision (in March 2024) and the consent orders (in July 2024). It is not known to what extent the departure decision influenced Mr Princhard’s decision to consent to the proposed property settlement.
Another observation is that child support is intended to assist with the children’s day-to-day costs. With the passage of time, Ms Rutcliffe’s request for a retrospective increase in the rate of child support payable becomes more removed from that intended purpose. If Ms Rutcliffe were in financial hardship, that would weigh in favour of making a more retrospective decision. However, that is not the case. She explained that she owns her primary home and a holiday home. When she is not using one of those homes, it sits vacant; it is not used as a rental property. She has savings of approximately $[amount]. She will receive $50,000 per year for four years as part of the property settlement. She also receives approximately $54,000 per annum in child support to assist her in meeting the children’s costs. She said she runs a [type of] business but it has not made a profit since the start of 2020, i.e. for almost five years. She did not obtain any paid employment during that period. She has been living off savings.
I accept that Ms Rutcliffe delayed her lodgement of her departure application because she was scared of Mr Princhard’s possible response. Taking all of the above matters into account, it is appropriate to make a departure decision with effect from a date that predates 14 September 2023, which was when Ms Rutcliffe lodged her departure application. I consider it appropriate to make a departure decision with effect from 1 July 2023. The proposed decision will increase Mr Princhard’s child support arrears by approximately $9,500. The original decision-maker’s decision increased Mr Princhard’s child support arrears by almost $20,000 and brought the outstanding balance to $20,112: page 430 of the hearing papers. As at 23 September 2024 the outstanding balance had been reduced to $3,119: page 448 of the hearing papers. I am satisfied that Mr Princhard has the financial capacity to comply with the proposed decision, which will be just and equitable.

Otherwise proper

The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community. It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits. Parents rather than the community have the primary duty to maintain a child.
Ms Rutcliffe receives family tax benefit in respect of the children of the assessment: page A7 of the hearing papers. Changing the child support payable by Mr Princhard will result in a more appropriate apportionment of financial responsibility between the parents and the community. The proposed decision will be otherwise proper.

DECISION

The decision under review is varied so that Mr Princhard’s adjusted taxable income is varied to $450,000 per annum from 1 July 2023 to 13 September 2028.