Sandoval and Sandoval (Child support)

[2019] AATA 3850

Sandoval and Sandoval (Child support) [2019] AATA 3850 (31 July 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/PC016110

APPLICANT:  Ms Sandoval

OTHER PARTIES:  Child Support Registrar

Mr Sandoval

TRIBUNAL:Member S Brakespeare

DECISION DATE:  31 July 2019

DECISION:

The tribunal varies the decision under review so that there is a departure determination in the following terms:

• for the period 26 July 2018 to 31 December 2019, the adjusted taxable income of Ms Sandoval is varied to $146,000;

• for the period 1 November 2018 to 31 December 2019, the adjusted taxable income of Mr Sandoval is varied to $108,992;

• for the period 26 July 2018 to 31 December 2018, the annual rate of child support payable by Mr Sandoval is increased by $7,154;

• for the period 1 January 2019 to 31 December 2019, the annual rate of child support payable by Mr Sandoval is increased by $7,316;

• For each calendar year from 1 January 2020 to 31 December 2022, Mr Sandoval’s annual child support liability is increased by one half of the tuition fees and compulsory resource/subject levies as those listed in the annual fee statement issued by the school each year for [Child 2] at [School].

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education – manner expected by both parents – cost of maintaining the children are significantly affected – financial resources of both parents – 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 removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

1. This review is about whether there should be a departure from the administrative assessment of child support.

2. Mr Sandoval is the parent liable to pay child support to Ms Sandoval in respect of the children [Child 1] who is [age] and [Child 2] who is [age].

3. On 26 July 2018, Mr Sandoval applied for a change of assessment on the ground relating to Ms Sandoval’s income, property and financial resources. Ms Sandoval cross applied on the ground relating to the children’s private school tuition costs.

4. The administrative assessments relevant to the change of assessment application are as follows:

   ·     for the period 16 July 2018 to 30 September 2018 Mr Sandoval was liable to pay an annual rate of child support of $22,850 which was based on his 2016/17 adjusted taxable income of $163,763 and Ms Sandoval’s 2016/17 adjusted taxable income of $58,559;

   ·     for the period 1 October 2018 to 31 December 2019, Mr Sandoval was liable to pay an annual rate of child support of $22,394, which was based on his 2017/18 provisional income of $170,599 and Ms Sandoval’s 2017/18 adjusted taxable income of $65,946.

   ·     During the relevant periods, the assessments were based on the children being in the shared care of parents.

5. On 2 October 2018, an officer of the Child Support Agency made a departure determination in the following terms:

• for the period 16 July 2018 to 31 October 2019 Ms Sandoval’s adjusted taxable income is varied to $146,398;

• for the period 1 January 2018 to 31 December 2018 Mr Sandoval’s annual child support liability is increased by $7,863;

• during the period 1 January 2019 to 31 December 2022, Mr Sandoval’s annual child support liability is increased by one half of the tuition fees and compulsory levies plus subject levies as those listed in the annual fee statement issued by the school each year for [Child 1] and [Child 2] at [School] and amended assessments of support issue accordingly.

1. Mr Sandoval lodged an objection to the original decision.

2. On 27 February 2019, an objections officer allowed the objection and made a departure determination in the following terms:

• for the period 26 July 2018 to 31 December 2019, the adjusted taxable income of Ms Sandoval is varied to $146,000;

• for the period 26 July 2018 to 20 November 2018, the annual rate of child support payable by Mr Sandoval is increased by $7154;

• for the period 1 November 2018 to 31 December 2019, the adjusted taxable income of Mr Sandoval is varied to $108,992.

1. Ms Sandoval lodged an application for review of the objection decision with the tribunal. A hearing was held on 31 July 2019. Ms Sandoval attended and gave sworn evidence to the tribunal.  Mr Sandoval attended and gave evidence on affirmation to the tribunal. The Child Support Agency provided the tribunal and the parties with documents relevant to the review (888 pages). Both parties also provided extra documents to the tribunal and the tribunal folioed and exchanged these documents with the parties prior to hearing.  [1]

   [1] The documents provided by Ms Sandoval were numbered A1 to A10 and the documents provided by Mr Sandoval were numbered B1 to B47.

2. Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s consideration of the issues which it has to decide.

ISSUES

1. The statutory provisions relevant to these reviews are contained in the Child Support (Assessment) Act 1989 (the Act).

2. The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.

3. Under Part 6A of the Act the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).

4. Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and it establishes a three step process such that the issues for determination by this tribunal are:

   ·whether a ground is established to depart from the administrative assessment of child support; and

   ·if so, whether it is just and equitable to make a particular departure determination; and

   ·if so, whether it is otherwise proper to make a particular departure determination.

5. The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.

6. Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman and Gyselman [1991] FamCA 93 has held:

   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 formula in the ordinary run of cases.

7. Likewise, in Phillippe and Phillippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.

8. If the tribunal is satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the tribunal may make one of the determinations prescribed in section 98S of the Act.

9. The range of determinations which can be made includes variations to: the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

Issue 1 – Is there a ground for departure?

1. Subparagraph 117(2)(b)(ii) of the Act provides a ground for departure exists 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. 

2. In deciding this matter, the tribunal needs to consider the type of education intended by both parents for the children, rather than any particular school intended by the parents (Wild v Ballard (1997) FLC 92-771). The tribunal will also need to consider and determine whether both parents expected the children to be educated privately. The fact that a payer can afford to pay the fees is not in itself a reason for imposing a liability to contribute to school fees (Mee v Ferguson (1986) FLC 91-716).

3. It is not in contention, and the tribunal finds that the children attend a private school, [School], and have been in private schooling since primary school. It is anticipated that both children will remain at [School] until such time as they finish their secondary education. The elder child is currently in Year [number] and the younger child is currently in year [number]. It is not in dispute, and the tribunal finds, that it was the intention of both parents for the children to be educated in that manner.

4. The objections officer, relying on annual school fees statements provided by Ms Sandoval, found that the costs of the tuition and compulsory resource levies for both children totalled $14,308 in 2018 and $14,633 in 2019. These amounts were not contested by either party at the hearing. The tribunal finds that the private school costs significantly affect the costs of maintaining the children.

5. At hearing, both parties advised that they remain jointly liable for the private school costs; however, Mr Sandoval has not made a contribution to the fees in respect of either the 2018 or the 2019 school years. It is his contention that he can no longer afford the school fees.

6. Ms Sandoval told the tribunal that she has paid the school fees but it is her contention that Mr Sandoval should contribute 50% of those costs and his child support liability should be adjusted to reflect that contribution.

7. The tribunal finds that the ground for departure is established as there are special circumstances in that the children are being educated in a manner expected by their parents, and the educations costs significantly affect the costs of maintaining the children.

8. Whether a parent can afford to contribute to those costs is a matter to be considered in determining what a just and equitable determination is.

Issue 2– Is it just and equitable to make a particular determination?

1. As the tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the children, the liable parent, and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to consider the matters discussed below[2], which are as set out in subsection 117(4) of the Act:

   [2] The tribunal is required to give “overt consideration” to relevant factors listed in section 117(4) of the Act Tyagi & Meares [2008] FMCAfam 886

   (4)  In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:

   (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. In having regard to the proper needs of the children, regard must be had to the manner in which the children are being, and in which the parents expected the children to be, cared for, educated or trained, and any special needs of the children (subsection 117(6) of the Act). The tribunal finds that, other than the costs of the private education, there are no extra costs to be taken into account in respect of the children’s needs and therefore it is appropriate to calculate the costs of their needs by reference to Costs of the Children Table.[3]

   [3] Provided for in section 155 of the Act.

3. The eldest child is working on a casual basis whilst completing her education. The tribunal does not find that income earned on a casual basis by a full-time student is sufficient to affect the child support assessment.

4. Over a period of time Ms Sandoval’s father deposited amounts of money (in total $40,000) to a bank account jointly held by the parties. After separation Ms Sandoval returned the money to her father for safe-keeping as in her view the money was for the children and not the property of either parent. Mr Sandoval claims that Ms Sandoval stole the money from their joint account when she returned it to her father. In his view because the money was for the benefit of the children it should have been used for school fees. Ms Sandoval said it was never intended for the money to be used for the school fees, and her father has no obligation to pay the children’s school fees. It is not in dispute however that the only contributors to the account were Ms Sandoval and her father, and not Mr Sandoval. The parties agreed that the $40,000 was not included in the property settlement (finalised on 16 May 2019)[4]. The $40,000 remains in the possession of Ms Sandoval’s father, and there is no trust deed in favour of the children. Ms Sandoval said that is unlikely that the children will get any of the money until they are over 18. The tribunal therefore finds that the children do not have any income, property or financial resources that should be taken into account for the purpose of child support.

   [4] Mr Sandoval provided the tribunal with the Minute of Consent Orders dated 16 May 2019.

5. The objections officer varied Ms Sandoval’s adjusted taxable income from $58,559 to $146,000 from 26 July 2018 and Mr Sandoval’s provisional taxable income from $170,599 to $108,992 from 1 November 2018. Both parties agree that those changes are an accurate reflection of their current incomes. Ms Sandoval was concerned that Mr Sandoval’s income may increase once he is no longer on sick leave.  The tribunal does not find it appropriate to make a prospective determination based on an event that may, or may not happen.

6. At the time the change of assessment application was made Ms Sandoval was living in the family home and was paying the mortgage and Mr Sandoval was living in rental accommodation.

7. Property settlement has now taken place. The family home has also been sold with settlement due on [date] August 2019. It is anticipated that Ms Sandoval will receive about $374,000 in cash and Mr Sandoval will receive about $150,000 in cash.

8. There was dispute between the parties as to the actual value of Mr Sandoval superannuation post separation. However the tribunal is satisfied that Mr Sandoval retained a greater portion of the superannuation pool and Ms Sandoval received more funds from the sale of the family home (after costs etc).

9. The tribunal proposes to make the following determination:

• for the period 26 July 2018 to 31 December 2019, the adjusted taxable income of Ms Sandoval is varied to $146,000;

• for the period 1 November 2018 to 31 December 2019, the adjusted taxable income of Mr Sandoval is varied to $108,992;

• for the period 26 July 2018 to 31 December 2018, the annual rate of child support payable by Mr Sandoval is increased by $7,154;

• for the period 1 January 2019 to 31 December 2019 the annual rate of child support payable by Mr Sandoval is increased by $7,316;

• For each calendar year from 1 January 2020 to 31 December 2022, Mr Sandoval’s annual child support liability is increased by one half of the tuition fees and compulsory resource/subject levies as those listed in the annual fee statement issued by the school each year for [Child 1] at [School].

1. The tribunal finds that such a determination is likely to result in a weekly liability for Mr Sandoval of approximately $350 per week from 26 July 2018, reducing to approximately $271 per week from 21 November 2018.

2. Ms Sandoval indicated on her Statement of Financial Circumstances that her net weekly pay is $1,753. Her weekly commitments include health fund payment of $94.60, superannuation contribution of $74.00, mortgage repayment of $550 and school fees of $420. She has credit card debts of approximately $2,500 and is paying a minimum monthly amount of $300. She owes her father $35,000 which she is repaying on an ad hoc basis. She said that she drives a motor vehicle owned by her father but is currently responsible for the running costs, including fuel.

3. Ms Sandoval told the tribunal that she has not yet found another place to live once she has to vacate the family home.

4. Mr Sandoval provided an updated Statement of Financial Circumstances to the tribunal and Ms Sandoval during the hearing (folio B48-B57). His pay advices indicate that that his net weekly pay (since his reduction in November 2018) is $1,521. His weekly commitments are rent of $400 per week, superannuation contributions of $155 and health insurance premiums of $87.04. He indicated that he had a credit card debt of almost $8,000 for which he makes a minimum payment of $150 per week.  Mr Sandoval told the tribunal that he had just entered into an agreement to purchase a motor vehicle for $49,900 (nil deposit) and will be liable for weekly repayments of $170.18. He said that he required a vehicle suitable for himself and his two children and his partner and her two children. He also indicated that he potentially has a superannuation debt of $20,000. In his view the $150,000 he will receive from settlement should not be taken into account for child support purposes as it is money to set himself up again (e.g. purchase a new home).

5. The tribunal finds that Mr Sandoval has the capacity to pay the child support assessed according to the income of both parents, and the additional amount. being one half of the children’s school fees.  Given the income and the assets of both parents the proposed determination is not likely to cause either party hardship. Their income and liquid assets (from property settlement) are more than adequate for their self-support needs and necessary commitments. It is just and equitable that they both contribute to the proper needs of the children, which includes the private school fees.

Issue 3 – Is it otherwise proper to make a particular departure determination?

1. The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination. It focuses on the balance of support carried between the parents on one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. The tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support.

2. The tribunal is satisfied that the parents are not in receipt of family assistance payments in respect of the children and therefore there are no consequences for the public purse. The proposed determination is therefore otherwise proper.

DECISION

The tribunal varies the decision under review so that there is a departure determination in the following terms:

• for the period 26 July 2018 to 31 December 2019, the adjusted taxable income of Ms Sandoval is varied to $146,000;

• for the period 1 November 2018 to 31 December 2019, the adjusted taxable income of Mr Sandoval is varied to $108,992;

• for the period 26 July 2018 to 31 December 2018, the annual rate of child support payable by Mr Sandoval is increased by $7,154;

• for the period 1 January 2019 to 31 December 2019 the annual rate of child support payable by Mr Sandoval is increased by $7,316;

• For each calendar year from 1 January 2020 to 31 December 2022, Mr Sandoval’s annual child support liability is increased by one half of the tuition fees and compulsory resource/subject levies as those listed in the annual fee statement issued by the school each year for [Child 2] at [School].