Ryder and Ryder (Child support)

[2020] AATA 1758

Ryder and Ryder (Child support) [2020] AATA 1758 (28 April 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/SC018212

APPLICANT:  Mr Ryder

OTHER PARTIES:  Child Support Registrar

Ms Ryder

TRIBUNAL:Member Y Webb

DECISION DATE:  28 April 2020

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – child support agreement – the interpretation of a clause in the binding child support agreement – the clause was correctly interpreted - decision under review affirmed

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. This review is about the interpretation of a binding child support agreement between Mr Ryder and Ms Ryder.

2. Mr Ryder and Ms Ryder are the parents of two children who are 15 and 12 years old.

3. The child support case commenced on 23 March 2017 and has been collectable by the Department of Human Services (“Child Support Agency”) since 14 March 2019.

4. The binding child support agreement (“the agreement”) was made on 1 May 2017 and on 25 February 2019 Mr Ryder made an application to the Child Support Agency for the agreement to be accepted.

5. On 19 March 2019 a delegate of the Registrar made a decision to accept the agreement effective from 25 February 2019.

6. Pursuant to clause 3(a) of the agreement, it was determined on 19 March 2019 that the amount payable for the two children by Mr Ryder was $0 per annum for a period of five years ending on 30 April 2022 and effective upon Mr Ryder paying a lump sum of $35,880.

7. On 3 April 2019 Ms Ryder objected to that decision.  Briefly, she did so on the basis that clause 3(a) of the agreement meant that if the child support assessment calculated a payment in excess of $138 per week then the difference between the assessment and the $138 per week was payable by Mr Ryder. 

8. Mr Ryder responded that all parties had agreed that no additional payments would be payable until 2022 and that no liability of a periodic nature could arise until that date.

9. On 19 December 2019 an objections officer of the Child Support Agency allowed Ms Ryder’s objection.

10. On 14 January 2020 Mr Ryder requested review by the Administrative Appeals Tribunal (the Tribunal).

11. Both parents attended the hearing by way of a telephone conference on 24 March 2020.  Mr Ryder gave evidence on affirmation and Ms Ryder gave sworn evidence.

12. The Child Support Agency provided documents relevant to this matter and these documents were marked as a bundle as Exhibit C1.  More recent documents were also provided by the Child Support Agency and these were marked as a bundle as Exhibit C2.  Ms Ryder also provided a copy of the legal advice she obtained regarding the interpretation of the agreement and this was marked as Exhibit B1.

13. The Tribunal deferred making a decision pending further information being provided by the Child Support Agency.  Upon receipt of that information the Tribunal requested written submissions from the Registrar.  The parents were then provided with an opportunity to respond to the additional material from the Child Support Agency and the written submissions from the Registrar.  Neither Mr Ryder nor Ms Ryder responded.

14. On 28 April 2020 the Tribunal made its decision.

CONSIDERATION

1. The law relating to child support and binding child support agreements is detailed in the Child Support (Assessment) Act 1989 (the Assessment Act) and the Child Support (Registration and Collection Act 1988 (the Registration and Collection Act).

2. A child support agreement can only be made in relation to specific matters listed in the Assessment Act. Section 84 details the types of provisions which may be included in a child support agreement. Subsection 84(1) provides:

   84Provisions that may be included in agreements

   Provisions that may be included

   (1)An agreement is a child support agreement only if it includes one or more of the following kinds of provisions:

   (a)provisions under which a party is to pay child support for a child to another party in the form of periodic amounts paid to the other party;

   (b)provisions under which the rate at which a party is already liable to pay child support for a child to another party in the form of periodic amounts paid to the other party is varied;

   (c)provisions agreeing between parties any other matter that may be included in an order made by a court under Division 4 of Part 7 (departure orders);

   (d)provisions (the non‑periodic payment provisions) that state:

   (i)that a party (the liable party) is to provide child support for a child to another party otherwise than in the form of periodic amounts; and

   (ii)that the annual rate of child support payable for the child by the liable party under any relevant administrative assessment is to be reduced, in the manner specified under subsection (6), by the amount of child support to be provided by the liable party;

   (e)provisions (the lump sum payment provisions) that meet the requirements of subsection (7) and that state:

   (i)that a party (the liable party) is to provide child support for a child to another party in the form of a lump sum payment (including by way of transfer or settlement of property); and

   (ii)that the lump sum payment is to be credited against the amount payable under the liable party’s liability under the relevant administrative assessment;

   (f)provisions under which a party is to provide child support for a child to another party otherwise than in the form of periodic amounts and that are not non‑periodic payment provisions or lump sum payment provisions;

   (g)provisions under which the liability of a party to pay or provide child support for a child to another party is to end from a specified day.

3. In this case there is no dispute that the parents entered into a binding child support agreement on 1 May 2017 and that the agreement was accepted by the Child Support Agency on 19 March 2019 effective from 25 February 2019.  The issue which is in dispute is the interpretation of certain clauses of that agreement.  The relevant clauses are:

   3.       Periodic child support

   (a)The payer will pay the payee the lump sum of $35,880 calculated at $138 per week over a five (5) year period in total for the children.

   4.        Non-periodic child support

   …

   4.2During the currency of this Agreement, the child support payable by the payer pursuant to 3(a) is to be credited against the payer’s liability under any assessment provided such crediting per annum does not result in a negative figure.

4. Mr Ryder contended that clause 3(a) should be interpreted as meaning the lump sum payment of $35,880 was in satisfaction of all child support payments until 30 April 2022 and that no additional periodic payments were payable.  Mr Ryder in his written submissions stated that he considered clause 3 to be “self-contained” and that “all obligations under that clause have been met”.  In relation to clause 4.2 Mr Ryder submitted that this was incorrectly linked to clause 3 by the objections officer.  Mr Ryder asserted that clause 4.2 of the agreement merely reaffirms that the lump sum amount of $35,880 was to offset any assessment.  He submitted that clause 4.2 should be interpreted as being extinguished or if not, to operate under the maximum cap of clause 4. 

5. At the hearing Mr Ryder explained that the agreement that he would pay a lump sum of $35,880 in total satisfaction of periodic child support for a five-year period was made in the context that, when the agreement was made in 2017, he was experiencing significant health issues and it was considered unlikely that he would return to work in the foreseeable future.  Mr Ryder explained that he received a payout in relation to his incapacity and it was agreed that he would allocate $35,880 in full satisfaction of periodic child support for a five-year period.  He contended that this was a “compromise solution” which Ms Ryder accepted because the alternative was likely to be that he would not return to work and the amount of periodic child support he would be able to pay would be minimal.  It transpired that he did in fact return to work after about 18 months but that was not anticipated at the time that the agreement was made.   In summary, Mr Ryder contended that the agreement was agreed and accepted by both parents based on the interpretation which he had advised.

6. In his application for review by the Tribunal Mr Ryder also claimed, in reference to the objections officer’s decision which included that section 69A of the Registration and Collection Act was relevant, that there was no evidence of indexing of the lump sum amount as section 69A requires.

7. Ms Ryder, on the other hand, contended that clause 3(a) meant that if the child support assessment calculated a payment in excess of $138 per week then the difference between the assessment and the $138 per week was payable by Mr Ryder.  She stated that she had a clear memory of the discussions between the parents, their legal advisers and the mediator prior to the parents entering into the agreement.  She stated that Mr Ryder received a payout of more than $500,000 when he was unable to work due to health reasons.  She stated that a lump sum of $35,880 was paid to her by Mr Ryder as assistance in raising the children as a minimum amount over a five-year period.  She stated that everyone attending the mediation agreed that if Mr Ryder was to return to work the $138 per week would be credited against any amount he was assessed to pay under the child support assessment.  She stated that it was agreed that if the child support assessment was calculated to be in excess of $138 per week then the difference would be payable by Mr Ryder.  Ms Ryder asserted that she did not agree for Mr Ryder to use the lump sum amount of $35,880 as a replacement of his assessed child support.  Instead, in accordance with clause 4.2 of the agreement and if Mr Ryder returned to work, the weekly amount of $138 per week would be credited against the child support assessment. Ms Ryder submitted that “nothing in our agreement states that [Mr Ryder] would forgo his assessment under the law”.

8. In support of her submissions Ms Ryder also provided a letter from her lawyer, [Lawyer A] who contended that the agreement dealt with two types of payment: periodic child support at clause 3(a) and non-periodic child support at clause 4.  She stated that clause 4.2 explained the interplay between the periodic child support lump sum in clause 3(a) and any child support assessment.  She stated that the effect was that the amount already paid by Mr Ryder was to be credited against the annual assessment and that this meant that any excess in the assessment still needed to be paid by Mr Ryder.  She added that clause 4.2 also stated that there was not to be a negative figure as a result of the calculation and this meant that Ms Ryder would not have to pay back any of the lump sum if Mr Ryder’s assessment was lower than the assessment nor would the negative amount be credited into the future.

9. [Lawyer A] conceded that the numbering in clause 4 of the agreement could, ideally, have been re-ordered under the suggested headings of “Additional Payments” relating to clause 4.1 and “Impact on Child Support Assessment” for clauses 4.2, 4.3 and 4.4 but nevertheless she argued that the actual agreement words were very clear and the obligations precise.

10. The Tribunal considered all of the information including the submissions of the parents. Section 84 of the Assessment Act itemises the types of provisions that may be included in child support agreements. Hence the Tribunal considered which aspects of subsection 84(1) of the Assessment Act applied to these disputed clauses and therefore how these clauses should be interpreted. The Tribunal acknowledges that clause 3(a) of the agreement is headed “Periodic child support” and clause 4 is headed “Non-periodic child support” and that there is a distinction between the headings in the agreement. The Tribunal considered whether the clauses were best described by paragraph 84(1)(a) of the Assessment Act being “provisions under which a party is to pay child support for a child to another party in the form of periodic amounts paid to the other party”. The Registration and Collection Act defines a “periodic amount” as a weekly, monthly, yearly or other periodic amount. However, the wording of clause 4.2 of the agreement militates against a determination that paragraph 84(1)(a) applies to the relevant clauses in the agreement. Clause 4.2 states that “…child support payable by the payer pursuant to 3(a) is to be credited against the payee’s liability under any assessment” but periodic child support does not contemplate this type of provision and hence the Tribunal finds that paragraph 84(1)(a) is not applicable to the agreement. This is so despite the headings in the agreement. Headings are included for convenience and reference but do not dictate the meaning of the relevant clauses and in this case the Tribunal is satisfied that the headings are unhelpful as, when considered in isolation, they tend to suggest that the relevant clauses have a different meaning than their actual meaning in terms of the legislation.

11. The Tribunal also considered whether paragraph 84(1)(e) of the Assessment Act was applicable. The objections officer’s decision and reference to section 69A of the Registration and Collection Act appears to suggest that the officer had characterised the relevant clauses of the agreement by reference to paragraph 84(1)(e). The officer referred to the payment of a lump sum pursuant to section 69A in the reasons for the decision and ended the decision by stating “We have therefore made the decision that the lump sum payment of $35,880 is to be credited against [Mr Ryder’s] ongoing child support liability under the child support formula assessment payable to [Ms Ryder] as per section 69A of the Child Support (Registration and Collection) Act.”

12. However, the Tribunal finds that the relevant agreement clauses cannot be reconciled with the wording of paragraph 84(1)(e) of the Assessment Act which requires that “the lump sum payment is to be credited against the amount payable under the liable party’s liability under the relevant administrative assessment”. Instead the Tribunal interprets the relevant clauses of the agreement as meaning that a payment of $35,880 is paid up-front and then an amount of $138 per week is to be credited against any child support liability with Mr Ryder paying the difference (unless the underlying liability is less than $138 per week in which case the amount to pay reduces to nil).

13. This means, as the Registrar has submitted and with which the Tribunal agrees, that the amount of $35,880 “…is not to be reduced by crediting 100% of the full amount against the annual rate owed under an assessment (and then indexing it each year) until the full amount is exhausted, as occurs for genuine lump sum payment provisions provided for by paragraph 84(1)(e) and subsections 84(7) or 84(8) of the Assessment Act and section 69A of the Child Support (Registration and Collection) Act 1988”. Instead clause 4.2 of the agreement provides that the annual rate of child support payable by the payer under any relevant administrative assessment is to be credited against the specified amount of $138 per week. This process is consistent with the requirements of subparagraph 84(1)(d)(ii) and paragraph 84(6)(a) of the Assessment Act and reinforces the Tribunal’s view that the correct characterisation of the relevant clauses in the agreement is that clauses 3(a) and 4.2 of the agreement are non-periodic payment provisions and that subparagraph 84(1)(d)(ii) and paragraph 84(6)(a) of the Assessment Act are applicable in this case.

14. In addition, as the Registrar submits and with which the Tribunal agrees, if the lump sum amount of $35,880 was treated as a lump sum payment under section 69A it could result in the amount of $35,880 lasting longer (or shorter) than the stipulated five years. It could also result in a higher or lower annual amount being credited towards the amount calculated under an administrative assessment for the year rather than the specified $138 per week ($7,200.64 annually) as detailed in clause 3(a) of the agreement. The Tribunal agrees that the specified dollar amounts for a specified period are not contemplated by the lump sum provisions detailed in paragraph 84(1)(e) of the Assessment Act and in section 69A of the Registration and Collection Act.

15. Furthermore, if the amount of $35,880 was a lump sum payment as that is defined under section 69A of the Registration and Collection Act and paragraph 84(1)(e) of the Assessment Act this would render superfluous that part of clause 4.2 of the agreement which states that “providing crediting per annum does not result in a negative figure” as crediting under subparagraph 84(1)(e)(ii) and subsection 84(8) of the Assessment Act and section 69A of the Registration and Collection Act would never produce a negative figure. Rather, a negative figure could only ever occur where a dollar amount is being deducted against an administrative assessment.

16. Therefore, the Tribunal finds that the correct characterisation of the agreement provisions is that they are covered by the non-periodic payment provisions as detailed in paragraph 84(1)(d) and subsection 84(6) of the Assessment Act. It is strengthened in that view by the fact that the crediting arrangements do not require that the lump sum be used until exhausted and do not require a percentage of crediting towards the underlying assessment. Instead the crediting of $138 per week or $7,200.46 per year for five years is a clear and unambiguous method of crediting which can only be achieved through the application of subparagraph 84(1)(d)(ii) and paragraph 84(6)(a) of the Assessment Act.

17. Mr Ryder had submitted that if section 69A of the Registration and Collection Act was relevant to the lump sum of $35,880 the remaining lump sum had not been correctly indexed. However, the Tribunal has found that section 69A of the Registration and Collection Act does not apply to this type of lump sum where clauses 3(a) and 4.2 of the agreement combine to provide for a specified dollar amount reduction over a specified period rather than for a crediting for a specified percentage (or where no percentage is specified, for a 100% crediting). As the amount of $35,880 is not a lump sum under section 69A of the Registration and Collection Act, the issue of indexing does not arise and is not applicable.

18. The Registrar has confirmed that it has not treated the agreement provisions as a “true” lump sum provision (as described in paragraph 84(1)(e) of the Assessment Act and section 69A of the Registration and Collection Act) despite the objections officer’s reference to section 69A of the Registration and Collection Act. It has instead interpreted clauses 3(a) and 4.2 as non-periodic payment provisions under paragraph 84(1)(d) of the Assessment Act. The Tribunal agrees with that determination and so finds.

19. In relation to Mr Ryder’s contention that if clause 4.2 of the agreement gives rise to additional monies payable then clause 4 operates to limit the total payments per year to $2,500 per child the Tribunal’s view is that the wording of the agreement clearly links clause 4.2 to clause 3(a) rather than to clauses 4 and 4.1 despite the somewhat clumsy numbering in the agreement.    

20. The Tribunal therefore concludes that section 69A of the Registration and Collection Act is not relevant in this case and that the correct interpretation of clauses 3(a) and 4.2 of the agreement is that the payment of $35,880 up-front is a minimum payment for a five-year period with an amount of $138 per week credited against any child support liability. If the underlying child support liability is less than $138 per week, the liability reduces to nil but not to a negative amount. If the liability is more than $138 per week, Mr Ryder is liable for the difference.

1. While the Tribunal’s reasoning and analysis differs to some degree from the objections officer’s the outcome is the same and therefore the Tribunal affirms the decision under review.

DECISION

The decision under review is affirmed.