Ryalls and Burakowski (Child support)

[2024] AATA 3574

Ryalls and Burakowski (Child support) [2024] AATA 3574 (15 August 2024)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2024/AC027380

APPLICANT:  Ms Ryalls

OTHER PARTIES:  Child Support Registrar

Mr Burakowski

TRIBUNAL:Member S Irvine

DECISION DATE:  15 August 2024

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that for the period 1 November 2023 to 31 August 2025, the adjusted taxable income for Mr Burakowski is varied to $47,792.

This decision does not affect the departure decision made by the Tribunal (differently constituted) on 7 June 2023, and that decision remains in place.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources – ground for departure – earning capacity of a parent – costs of special needs – 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

1. Ms Ryalls and Mr Burakowski are the parents of [Child 1] (13), in respect of whom a child support assessment has been in place since 29 April 2011. As at 15 August 2023, under that assessment, Mr Burakowski was assessed to pay child support to Ms Ryalls at an annual rate of $1,000 based on Mr Burakowski’s estimated income of $0 and Ms Ryalls’s adjusted taxable income for the 2021/22 year of $68,971, and based on a previous decision of this Tribunal (differently constituted), which increased Mr Burakowski’s annual rate of child support by $1,000 for the period 9 November 2022 to 8 November 2027.

2. On 15 August 2023 Ms Ryalls applied to Services Australia – Child Support (Child Support) for a departure from the administrative assessment. In her application Ms Ryalls raised the grounds known as reason 8A (relating to the income, assets and financial resources of a parent) and 8B (relating to the earning capacity of a parent). Mr Burakowski opposed Ms Ryalls’s application.

3. On 3 November 2023 a Child Support decision maker decided to allow Ms Ryalls’s application, and made a decision that:

   ·      In the period from 1 November 2023 to 30 June 2024 Mr Burakowski’s adjusted taxable income is set at $45,095; and

   ·      In the period from 1 November 2023 to 8 November 2027 the annual rate of child support payable by Mr Burakowski is increased by $1,000 to reflect his share of orthodontic costs for [Child 1].

4. On 29 November 2023 Mr Burakowski objected to the decision made on 3 November 2023. On 16 January 2024 a Child Support objections officer allowed the objection. The objections officer found that no ground for a departure from the assessment had been made out, and consequently they set aside the original decision and replaced it with a new decision that there should be no departure from the administrative assessment.

5. On 18 January 2024 Ms Ryalls applied to this Tribunal for an independent review of Child Support’s decision.

6. A directions hearing was held in this matter by telephone on 17 June 2024. Both parties were given notice of the time and date of the directions hearing at the addresses held by the Tribunal, however Mr Burakowski did not attend the directions hearing and no communication was received from him by the Tribunal. Ms Ryalls spoke to the Tribunal at the directions hearing by telephone. Following the directions hearing I issued directions setting out the date and time for the hearing of the matter and requiring each party to provide further documentary evidence to the Tribunal. Ms Ryalls has complied with those directions. Mr Burakowski did not comply with the directions and no communication was received from Mr Burakowski by the Tribunal.

7. A hearing was held in this matter on 30 July 2024. Ms Ryalls attended the hearing by telephone and gave sworn evidence. Mr Burakowski did not attend the hearing. I was satisfied that Mr Burakowski had received proper notification of the date and time of the hearing, and I proceeded with the hearing in his absence. I had before me documents submitted by the Child Support Registrar in accordance with the provisions of the Administrative Appeals Tribunal Act 1975, numbered 1 to 336. I also had before me documents submitted by Ms Ryalls in response to the directions issued on 17 June 2024.

8. Following the hearing I adjourned the matter to seek further information from Child Support. I reconvened the matter on 15 August 2024 and made a decision.

9. In making my decision I had regard to the oral evidence provided by Ms Ryalls at the hearing. I also had regard to the documents provided by Child Support in accordance with the requirements of the Administrative Appeals Tribunal Act 1975, numbered 1 to 336, and further documents provided by Child Support in response to a direction from the Tribunal numbered C1 to C67.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act) and in the Child Support (Registration and Collection) Act 1988. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Act. This requires the application of a statutory formula which takes into account factors such as the number and age of children, the level of care provided and the income of each parent.

2. Under section 98B of the Act, if special circumstances exist, a liable parent or a carer entitled to child support may apply to the Registrar in writing, requesting a departure from the administrative assessment in relation to a child.

3. Under section 98C of the Act, before making a departure determination on an application made under section 98B of the Act, the Registrar must be satisfied that in the special circumstances of the case, one or more of the grounds set out in subsection 117(2) of the Act exist, and that it would be just and equitable and otherwise proper to make a particular determination.

4. The issues to be determined in this case are therefore:

   ·Whether one or more of the grounds for departure referred to in subsection 117(2) of the Act exists; and, if so

   ·Whether it would be just and equitable as regards the child, the liable parent and the carer entitled to child support, and otherwise proper, to make a particular determination to depart from the administrative assessment of child support.

CONSIDERATION

Is there a ground to depart from the administrative assessment?

1. The grounds for departure raised in this application are the grounds known by Child Support as ‘Reason 8A’, relating to the income, property and financial resources of the parents, and ‘Reason 8B’ relating to the earning capacity of the parent.

2. As to reason 8A, subparagraph 117(2)(c)(ia) of the Act provides that a ground for departure is that, in the special circumstances of the case, application of the legislative provisions relating to administrative assessment ‘result 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.

3. As to reason 8B, subparagraph 117(2)(c)(ib) of the Act provides that a ground for departure is that, in the special circumstances of the case, application of the legislative provisions relating to administrative assessment ‘result 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.

Mr Burakowski’s income, property and financial resources

1. As at the date of application for a change of assessment, under the administrative formula, Mr Burakowski’s financial capacity to maintain [Child 1] was measured by reference to his estimated income of $0. According to the documents provided by Child Support, Mr Burakowski elected to have his estimated income of $0 used in the child support assessment on 19 July 2023. Prior to the lodgement of his estimated income, Mr Burakowski was assessed to pay child support on the basis of his 2021/22 adjusted taxable income of $72,750.

2. Also contained in the documents provided by Child Support is the following information:

   ·      A payslip submitted to Child Support by Mr Burakowski on 11 September 2023, showing that in June 2023 he received a gross payment of $24,322.49, which included, in addition to ordinary monthly and public holiday pay, a “long service termination payment” of $2,841.84 and an “annual leave termination payment” of $17,191.62. In total, this appears to mean that Mr Burakowski was paid out approximately 10 weeks of work, assuming full time work of 8 hours per day, 5 days per week, plus leave loading at 17.5%.

   ·      A mental health care referral dated 5 September 2023.

   ·      A document purporting to be from Mr Burakowski’s former employer stating that Mr Burakowski had not been employed with that employer since 27 June 2023, and describing the events leading up to the end of Mr Burakowski’s employment.

3. Following the hearing of this matter, I sought further documents from Child Support. According to the additional documentation provided by Child Support, Mr Burakowski’s actual taxable income in the 2022/23 financial year was $76,342. It appears Child Support has not yet been advised of Mr Burakowski’s taxable income for the 2023/24 financial year by the Australian Taxation Office, which may indicate that Mr Burakowski has not yet lodged a tax return for that year.

4. The additional documents provided by Child Support also indicate that Mr Burakowski lodged a further estimate of his income on 4 July 2024, in which he indicated that he expects to receive total income in the 2024/25 financial year of $18,719.

5. I also note that according to the documents provided by Child Support, Mr Burakowski indicated in his written objection to Child Support’s decision that he was at that time receiving a Centrelink payment of $700 per fortnight.

6. At the hearing, Ms Ryalls said that she is not really aware of Mr Burakowski’s current circumstances as she has very little contact with him. Her understanding is that he quit his job in June 2023, then he went back for a period of time and then he quit again, however she doesn’t have any direct evidence of that.

7. Ms Ryalls said that she believes Mr Burakowski is able to make some contribution toward [Child 1’s] support. He does see [Child 1] sometimes, and he recently took her out and bought her an expensive pair of shoes, so on that basis Ms Ryalls believes he has some capacity to contribute.

8. Prior to the hearing of this matter, I directed the Child Support Registrar to obtain information from the Australian Taxation Officer to ascertain whether Mr Burakowski had lodged a tax return for the 2023/24 financial year, and whether any income statements were available in relation to income earned by Mr Burakowski in the 2023/24 financial year. Information received from Child Support indicates that Mr Burakowski’s 2023/24 tax return had not been lodged and no income statements were available.

9. In the absence of any other information, I am unable to make a finding about Mr Burakowski’s current income. There is no evidence that Mr Burakowski has returned to employment since he ceased his previous employment on 27 June 2023, and on balance I am satisfied that Mr Burakowski is not currently working, and is likely in receipt of a Centrelink payment. There is no information available to me to indicate whether Mr Burakowski is currently seeking work.

Mr Burakowski’s earning capacity

1. A determination based on earning capacity may only be made if the relevant requirements of the legislation are satisfied. Subsection 117(7B) of the Act provides that a determination that Mr Burakowski’s earning capacity is greater than is reflected in his income may only be made if:

   (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.

1. I have found that Mr Burakowski is not currently working. I am satisfied that up to 27 June 2023 Mr Burakowski was employed on a full-time basis. According to the letter provided by Mr Burakowski’s former employer, Mr Burakowski’s employment was terminated from 27 June 2023, but the employer states at the end of that letter that:

   [Mr Burakowski] and I both agreed that for his current mental state it was better that he take time away from work and get himself sorted. I said to him that I am happy to talk about re employment once he is back on track, stable and has these issues sorted out.

2. I am satisfied that prior to 27 June 2023 Mr Burakowski was employed full-time as [an occupation 1], and that he left that employment voluntarily and not because of a lack of available work. I therefore find that Mr Burakowski currently does not work despite ample opportunity to do so.

3. I must next consider whether Mr Burakowski’s decision not to work is justified on the basis of his caring responsibilities or his state of health. I note that the child support assessment reflects that Ms Ryalls has 100% care of [Child 1]. At the hearing Ms Ryalls’s evidence was that Mr Burakowski does not have any regular care of [Child 1] and sees her only occasionally. There is no evidence that Mr Burakowski has caring responsibilities for anybody else. I am satisfied that Mr Burakowski’s decision not to work is justified on the basis of caring responsibilities.

4. According to the documents provided by Child Support:

   ·      A Child Support officer spoke with Mr Burakowski on 4 September 2023 about Ms Ryalls’s application for a departure from the child support assessment. According to the notes made by the Child Support officer Mr Burakowski said he left his job due to stress and anxiety due to child support matters, and that he had mental health difficulties that were preventing him from sleeping, and he felt like he was too stressed to work at the moment. Mr Burakowski also said that he did not consult with a doctor about his mental health.

   ·      On 11 September 2023 Mr Burakowski provided a referral from his GP dated 5 September 2023.

   ·      On 12 September 2023 Mr Burakowski provided a letter from his former employer which documents that in the last few months of his employment Mr Burakowski appeared stressed and anxious, and it appeared to be affecting his performance at work.

   ·      On 29 November 2023, as an attachment to his objection to the departure decision, Mr Burakowski provided a Centrelink medical certificate signed by Mr Burakowski’s GP indicating that Mr Burakowski was suffering from a temporary medical condition with symptoms of depression, low mood and financial issues, and that he was unfit for work for the period from 29 November 2023 to 25 December 2023. The certificate indicates that any past treatment for the condition is unknown, and that in terms of current and future treatment Mr Burakowski was waiting to see a psychologist.

5. On 17 June 2024 I issued written directions in this matter directing Mr Burakowski to provide, among other things, the following evidence:

   If Mr Burakowski has been unable to work for medical reasons in the 2023/24 financial year, evidence supporting his inability to work from a qualified medical practitioner.

6. Mr Burakowski did not comply with the direction and no evidence was received from Mr Burakowski.

7. On the basis of the evidence before me, I cannot be satisfied that Mr Burakowski’s decision to stop work is justified by his state of health. The evidence is that Mr Burakowski did not seek any medical advice or assistance prior to making the decision to leave his employment in June 2023, and it appears he first consulted a medical practitioner on around 5 September 2023 in response to Ms Ryalls’s application to Child Support. There is evidence from Mr Burakowski’s former employer that Mr Burakowski appeared to be stressed and anxious before he resigned his employment, but I am not satisfied that that is sufficient for me to make a finding that his decision to leave his employment was justified by his state of health.

8. I acknowledge that there is evidence from Mr Burakowski’s GP that Mr Burakowski was suffering from a medical condition in the period from 29 November 2023 to 25 December 2023. However, I am not satisfied on the basis of that evidence alone that Mr Burakowski’s decision to leave his employment, or to subsequently remain out of employment, is justified on the basis of his illness. In particular there is no evidence of his fitness for work prior to 29 November 2023 or after 25 December 2023.

9. I note that at the time he left his employment Mr Burakowski had access to a significant amount of paid leave. On the evidence before me it appears that even if there was a period when Mr Burakowski was unable to work due to his state of health, it is likely that he could have taken the option to take some leave from his employment and seek treatment for his medical condition. In circumstances where Mr Burakowski has not provided any further evidence, I find that Mr Burakowski’s decision to not work is not justified by his state of health.

10. Finally, I must be satisfied that Mr Burakowski has not demonstrated that it was not a major purpose of his decision to cease work to affect the administrative assessment of child support. This provision was considered in the decision of the Federal Magistrates Court of Australia in Carlson & Acuff & Anor (SSAT Appeal) [2010] FMCAfam 677. The court said in relation to paragraph 117(7B)(c) of the Act (at [68] and [69]):

    The very technical and convoluted wording of the section hides its practical meaning. The section can be seen in a simplified or practical form as requiring consideration of the question of whether the person has proved that their major purposes did not include a desire to simply affect child support. That is, to reframe the consideration into loose colloquial language: was the person’s action motivated (wholly or significantly) by a desire to shirk their child support obligations. If the Tribunal is not satisfied one way or the other, the person with the onus fails. It is important to note that my colloquial reframing of the section is to illustrate the focus of the provision, and not intended to be a precise restatement of the actual provisions of the section which must be carefully applied.

    The Tribunal must assess the evidence starting from a blank canvas, not an assumption that the person acted with a major purpose of simply affecting child support. If the Tribunal is unable to be satisfied whether or not a major purpose was to affect child support, then the onus has not been discharged, not a finding of shirking in accord with a presumption.

11. Prior to leaving his employment Mr Burakowski was assessed to pay child support for [Child 1] at an annual rate of $6,331. That rate increased to an annual rate of $8,344 on 1 July 2023. The annual rate of child support Mr Burakowski was required to pay included an amount calculated by formula assessment based on his income, and was further increased by an amount of $1,000, being a contribution to [Child 1’s] orthodontic treatment. That amount was set by a previous departure from the assessment which was ultimately determined by a decision made by this Tribunal (differently constituted) in a decision made on 7 June 2023. Mr Burakowski had opposed that application. Mr Burakowski resigned from his employment and left work on 27 June 2023, and lodged his estimate of income on 19 July 2023, which ultimately had the effect of reducing his annual rate of child support to $1,000.

1. I am satisfied that Mr Burakowski’s decision to leave his employment did in fact significantly affect the administrative assessment of child support for [Child 1]. Mr Burakowski has not provided any evidence to demonstrate whether affecting the child support assessment was a major purpose of his decision to leave his employment, and so I am unable to be satisfied on that point. Mr Burakowski has not discharged the onus in paragraph 117(7B)(c) of the Act.

2. I am satisfied that the criteria for making an earning capacity determination are established in this matter.

3. In respect of what earning capacity Mr Burakowski has, I note that at the time he resigned from his employment he was earning, according to the payslip that he submitted to Child Support, an annual salary of $59,740. The letter from Mr Burakowski’s employer suggests that due to performance issues Mr Burakowski was likely to be demoted had he not resigned, and presumably that would have involved a reduction in his income, although there is no evidence before me in relation to how much Mr Burakowski would have earned had that occurred. In the absence of any other evidence, I will allow a reduction of 20% from the salary Mr Burakowski was earning prior to leaving his employment. I therefore find that Mr Burakowski’s earning capacity is $47,792.

4. Using an income for Mr Burakowski of $47,792, and taking into account the previous departure decision, which increased Mr Burakowski’s annual rate of child support by $1,000, would result in an annual rate of child support to be paid by Mr Burakowski as at the date Ms Ryalls made her application for a departure determination of $4,402.

5. I find in the circumstances of this case that Mr Burakowski’s earning capacity is a special circumstance and that the ground for departure set out in subparagraph 117(2)(c)(ib) of the Act is established.

Is a departure determination just and equitable?

1. In deciding whether it is just and equitable to make a particular departure determination, I must have regard to the following matters set out in subsection 117(4) of the Act:

   (a)the nature of the duty of a parent to maintain a child (as stated in section 3); and

   (b)the proper needs of the child; and

   (c)the income, earning capacity, property and financial resources of the child; and

   (d) the income, property and financial resources of each parent who is a party to the proceeding; and

   (da)the earning capacity of each parent who is a party to the proceeding; and

   (e)the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:

   (i)    himself or herself; or

   (ii)    any other child or another person that the person has a duty to maintain; and

   (f)the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and

   (g)any hardship that would be caused:

   (i)    to:

   (A) the child; or

   (B) the carer entitled to child support;

   by the making of, or the refusal to make, the order; and

   (ii)    to:

   (A) the liable parent; or

   (B) any other child or another person that the liable parent has a duty to support;

   by the making of, or the refusal to make, the order; and

   (iii)   to any resident child of the parent (see subsection (10)) by the making of, or the refusal to make, the order.

2. I am mindful of the principles set out at section 3 of the Act, which provides that the duty of a parent to maintain their children has a priority over all other commitments of the parent other than commitments necessary to support other children and themselves.

3. I am satisfied that no issue arises in respect of the income, property or financial resources of [Child 1], who I am satisfied relies solely on her parents for her maintenance.

4. There is no evidence before me as to any other person that Mr Burakowski has a legal duty to maintain. In addition to [Child 1], Ms Ryalls has a legal duty to maintain her other daughter who also lives with her. No issues have been identified in respect of the parents’ commitments to support themselves.

5. In respect of Ms Ryalls’s income and earning capacity, Ms Ryalls’s evidence, which I accept, is that she is employed full-time and currently earns an annual salary of $88,000 per year. I am satisfied that Ms Ryalls does not have any unexercised earning capacity. Ms Ryalls’s current income is slightly higher than the adjusted taxable income used for her in the child support assessment, which is currently based on Ms Ryalls’s adjusted taxable income from the 2022/23 financial year of $81,241, but I am satisfied that the difference in terms of the effect on the child support assessment is minimal. I am satisfied that Ms Ryalls’s income is adequately reflected in the administrative assessment.

6. In respect of the proper needs of [Child 1], I am satisfied that [Child 1] has the usual needs of a child of her age. Ms Ryalls’s evidence is that [Child 1] attends a public school and is in good health. I note that a previous departure determination has determined that [Child 1] requires orthodontic treatment, which significantly increases the costs of maintaining [Child 1], and consequently the rate of child support otherwise payable by Mr Burakowski is increased by $1,000 per year for the period from 9 November 2022 to 8 November 2027.

What determination should be made taking into account the above factors?

1. Having regard to my findings concerning Mr Burakowski’s earning capacity, I consider it would be just and equitable to make a departure determination that varies Mr Burakowski’s adjusted taxable income to $47,792 for the period from 1 November 2023 to 31 August 2025.

2. That decision will result in an annual rate of child support to be paid by Mr Burakowski of approximately $3,300. In addition, Mr Burakowski’s annual rate of child support will continue to be increased by $1,000 per year as set by the previous departure determination, giving him a total annual rate in the region of approximately $4,300 per year. Ms Ryalls’s submission at the hearing of the matter was that she felt that was a reasonable contribution for Mr Burakowski to make and I am satisfied that a decision in those terms will not cause hardship to Ms Ryalls or to [Child 1].

3. It appears that Mr Burakowski is not currently working and is reliant on Centrelink benefits. However, I have found that Mr Burakowski has unexercised earning capacity which, if exercised, would enable him to earn an income of approximately $47,792. It is possible that if he chose to return to work full-time Mr Burakowski would be able to earn a higher income than that. I am satisfied that any hardship caused to Mr Burakowski can be mitigated by Mr Burakowski exercising his earning capacity.

4. I am satisfied that it is appropriate to commence my decision from 1 November 2023. This is some seven weeks after Ms Ryalls made her initial application to Child Support for a departure determination; however, to commence the departure from an earlier date would increase the amount of arrears that will be created for Mr Burakowski. Commencing the decision from 1 November 2023 will still create an amount of arrears for Mr Burakowski to pay, and I acknowledge that that may be difficult for Mr Burakowski to meet in the short term, but commencing the decision from a later date would in my view unduly disadvantage Ms Ryalls and [Child 1]. I will also extend my decision to 31 August 2025, to provide the parents with some certainty in the child support assessment going forward, although I note that section 98J of the Act provides that either parent may apply for a further departure from the assessment if circumstances change.

Is it otherwise proper to depart from the administrative assessment?

1. Finally, I must be satisfied that the departure determination is “otherwise proper”. Subsection 117(5) of the Act requires me to take into consideration the nature of the duty of a parent to maintain a child, and the effect that any change to the assessment would have on the rate of any Centrelink benefits being received by the parties or the child.

2. The child support law recognises that each parent has a primary duty to maintain their children.  In the case that they cannot, the government may assist in the form of family assistance payments.  This decision may reduce the amount of family assistance Ms Ryalls receives for [Child 1].  I am satisfied that the departure from the assessment will better reflect the ability of Mr Burakowski to support [Child 1]. I am satisfied that the departure determination is otherwise proper.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides that for the period 1 November 2023 to 31 August 2025, the adjusted taxable income for Mr Burakowski is varied to $47,792.

This decision does not affect the departure decision made by the Tribunal (differently constituted) on 7 June 2023, and that decision remains in place.