Scaife and Orpen (Child support)

[2021] AATA 1972

Scaife and Orpen (Child support) [2021] AATA 1972 (16 April 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/SC019008

APPLICANT:  Mr Scaife

OTHER PARTIES:  Child Support Registrar

Ms Orpen

TRIBUNAL:Member F Hewson

DECISION DATE:  16 April 2021

DECISION:

The tribunal decided to set aside the decision under review and substitute its decision to refuse the application for departure from the administrative assessment of child support, on the basis that no ground for departure is established.

CATCHWORDS

CHILD SUPPORT – departure determination – special needs of the child – cost of educating the child in the manner expected by both parents – no 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 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. Mr Scaife and Ms Orpen are the parents of a child aged 12. A child support case in respect of the child commenced on 4 May 2010. Mr Scaife is assessed as liable to pay child support. 

2. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the child.

3. The Act provides for a departure from the administrative assessment of child support in certain circumstances. The administrative assessments in this case are as follows:

   ·     For the period from 5 March 2019 to 30 June 2019, Mr Scaife was assessed to pay an annual rate of child support of $1,416 on the basis of his estimated adjusted taxable income for 2018/19 of $19,292 and Ms Orpen’s adjusted taxable income for 2017/18 of $34,770.

   ·     For the period from 1 July 2019 to 31 January 2020, Mr Scaife was assessed to pay an annual rate of child support of $2,298, on the basis of his adjusted taxable income for 2017/18 of $38,052 and Ms Orpen’s adjusted taxable income for 2017/18 of $34,770.

·     For the period from 1 February 2020 to 30 April 2021, Mr Scaife was assessed to pay an annual rate of child support of $2,175, on the basis of his provisional adjusted taxable income for 2018/19 of $39,117 and Ms Orpen’s adjusted taxable income for 2018/19 of $84,334.

1. On 15 January 2019 Ms Orpen lodged an application with Services Australia (the Agency) for a departure from the administrative assessment of child support on the basis that the assessment was not fair because the costs of maintaining the child are significantly affected by the special needs of the child and because the child is being educated in the manner expected by the parents (Reasons 2 and 3).

2. On 14 May 2019 a decision maker of the Agency concluded that a ground for departure was not established and decided not to depart from the administrative assessment of child support.

3. Ms Orpen lodged an objection to the original decision maker’s decision. On 14 April 2020 an objections officer decided to set aside the original decisions and substitute a decision to depart from the administrative assessment of child support so that:

   ·     For the period from 3 February 2020 to 30 June 2021 Ms Orpen’s adjusted taxable income was varied to $100,000 per annum; and

   ·     For the period from 1 January 2020 to 31 December 2020 the annual rate of child support is increased by $2,664 per annum.

4. On 8 May 2020 Mr Scaife lodged an application for review with the Administrative Appeals Tribunal (the tribunal). The application was heard on 29 October 2020. Mr Scaife spoke to the tribunal by conference telephone. The Child Support Registrar did not attend the hearing. The tribunal was not able to contact Ms Orpen by telephone at the time scheduled for the hearing. It was satisfied Ms Orpen was properly advised of the details of the hearing, including via SMS message sent the day before the hearing. In the circumstances the tribunal decided to proceed to hear the matter in Ms Orpen’s absence.

5. In reaching its decision the tribunal considered the evidence of Mr Scaife at the hearing as well as the documentation provided by the Agency (numbered 1–402) and Mr Scaife (numbered A1–A175).   

CONSIDERATION

1. Pursuant to section 98C of the Act, a decision to depart from the administrative assessment may be made if the following requirements are met:

   (i)   that one, or more than one, of the grounds for departure referred to in subsection 117(2) 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.

Grounds for departure

1. As noted above Ms Orpen sought a departure from the administrative assessment of child support on the basis of Reason 2 (in relation to the child’s special needs) and Reason 3 (in relation to private school fees).

2. It is only necessary for the tribunal to find one ground for departure to be established before it considers whether a departure from the administrative assessment of child support is just and equitable. The tribunal first considered Reason 3, in relation to the school fees for the child.

Are the costs of maintaining the child significantly affected because they are being educated in the manner that was expected by their parents?

1. Subparagraph 117(2)(b)(ii) of the Act (commonly referred to as Reason 3) provides that 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. The term ‘significantly affected’ is not defined in the Act. In the decision of Potter & Burbage (SSAT Appeal) [2010] FMCAfam 1009, Riethmuller FM stated that when considering whether the costs of maintaining the child are ‘significantly affected’ because the child is being educated in the manner that was expected by the parents, it is necessary to take into account not only the rate of child support but also the income of the parents.

3. In this case, when Ms Orpen made her application for a departure from the administrative assessment of child support, the child was a year 6 student at [School 1] in [City 1]. Evidence before the tribunal indicates that the school fees for a year 6 student in 2020 amounted to $17,758. At that time Mr Scaife was assessed to pay an annual rate of child support of $2,298, on the basis of his adjusted taxable income for 2017/18 of $38,052 and Ms Orpen’s adjusted taxable income for 2017/18 of $34,770. This subsequently decreased to $2,175 per annum from 1 February 2020, based on Mr Scaife’s provisional adjusted taxable income for 2018/19 of $39,117 and Ms Orpen’s adjusted taxable income for 2018/19 of $84,334.

4. The documents provided by the Agency show that Mr Scaife’s adjusted taxable incomes for the 2017/18 and 2018/19 years, as assessed by the Australian Taxation Office, were $38,052 and $31,302. Ms Orpen’s adjusted taxable income for 2017/18 was assessed to be $34,770. The Agency’s records indicate that her adjusted taxable income for 2018/19 has not been assessed. A salary review letter dated 14 February 2020, provided by Ms Orpen to the Agency, states that her base salary is $104,591 from 3 February 2020.

5. At the hearing Mr Scaife said he worked at [Company 1] for five years until it closed in February 2018, following a dispute between the lessee and the property owner. He subsequently got a short-term contract position (six months to September 2018) with [Company 2], a [specified] company, as [Occupation 1] for a contract in relation to [specified project].  Mr Scaife said he had little work then until [Company 3] launched in [City 1] in 2019. He rents a vehicle, [specified year make model], for $275 a week from [a car rental company] for his [work]. This expense includes registration and comprehensive insurance. Mr Scaife said he has remained in [City 1] for 10 years, to be near the child, but it has been increasingly difficult to get work, especially as he is now aged over 50 years.   

6. Mr Scaife agreed that he signed the enrolment form for the child to attend [School 1] in May 2013, about nine months after Ms Orpen signed the form, as it was necessary for both parents to sign. He said the child was to attend prep/kindy at [School 1], but it was necessary for him to sign the enrolment form which applied to attendance at the school beyond prep. Mr Scaife referred the tribunal to the Pre-prep Registration Form which sets out the conditions for registration including (at A136) that: “All Pre-Prep registrations must include a full [School 1] enrolment application. Pre-Prep Registration Forms received that do not have an Application for Enrolment Form will not be processed”. The form indicates that it was processed on 24 August 2012, although Mr Scaife did not sign the form until May 2013.

7. The tribunal asked Mr Scaife what he thought would happen after the child completed her prep year. Mr Scaife said he believed other options would be considered, but if the child remained at [School 1], that he would not be liable for the school fees. He said he made it clear that he could not afford private school fees. He said he believed it was understood that any amounts he paid directly to the school would be accepted as payment of child support. He said payments he made in 2013 had been accepted as payment of child support and were offset against his child support liability; he did not make any direct payments for school fees after 2013. He referred to a letter from his solicitor in June 2014 (at 46), which included the following:

   Our client has spoken with child support staff and reconciled his liabilities payable through the Child Support Agency. Mr Scaife is meeting his child support obligations. If required, this can be confirmed by the Child Support Agency. We are instructed it has been discussed and agreed that our client will no longer pay his maintenance obligations directly to the school by way of school fees. He advises he is comfortable continuing with the current formal process of child support collection.

8. Mr Scaife said he did not receive invoices for school fees following his solicitor’s letter, and he continued to pay child support directly through the Agency. It was not until some time in 2018 that he received a letter of demand from the school about outstanding school fees.

9. The tribunal carefully considered the available evidence. Unfortunately, it did not have the opportunity to speak to Ms Orpen. The tribunal found the evidence of Mr Scaife to be credible. He conceded that he signed the Pre-Prep Registration form for [School 1] in 2013, but asserted that a subsequent offer of enrolment beyond the prep year was signed by Ms Orpen alone. The evidence shows that in 2014 Mr Scaife clearly communicated to Ms Orpen, through his solicitor, that he would not continue to pay school fees, which he considered to be in lieu of child support, directly to the school. This was also communicated to the school (A155), and it seems invoices for school fees were not sent to Mr Scaife for several years, until he received a letter of demand in about 2018. The documents provided by Mr Scaife demonstrated that he contested this liability, and the evidence suggests that this has not been resolved; in a letter to Mr Scaife dated 26 March 2019, [Dr A], Principal of [School 1], acknowledged that issues with the initial enrolment process had contributed to “the position we are faced with now” (in relation to the school fees), and noted that a notice from both parents to amend the enrolment agreement was necessary to resolve the situation. As things stand, the school maintains that Mr Scaife is personally liable for the school fees, and that any action to recover fees will be against both parties.

10. It is arguable, in the tribunal’s view, that regardless of any legal liability for school fees, it was no longer the expectation of the parents (although it clearly remained Ms Orpen’s expectation) that the child attend a private school following the prep year, in accordance with Mr Scaife’s evidence at the hearing, and as signalled by the letter in 2014 from Mr Scaife’s solicitor. It is clear from that letter that Mr Scaife regarded any contribution to school fees as in lieu of child support, and he determined not to continue payments on that basis.

11. The proposition that it is not open to a parent to change his or her expectations with respect to the child’s education due to financial reasons was rejected by Riethmuller FM in the decision of Dobbins & Devlin (SSAT Appeal) [2014] FCCA 1274:

    Throughout life people change their expectations both with respect to their own lives and their children as a result of the resources available to them...in this case the expectations of the parents had certainly changed at the time they enrolled the child in a government school due to their circumstances at the time. Whether these changes should be viewed as a temporary change, with the continuing underlying expectations, or a general change in expectations, is a matter of fact for the Tribunal. (at [43])

12. The tribunal accepted that Mr Scaife acquiesced to signing the enrolment form for the child to attend her prep year at [School 1], but did not consider that he had the financial capacity to contribute to school fees. He went to some effort in 2014 to make it clear that he would pay his child support liability through the Agency. His solicitor’s letter is not explicit about the implications of this for the child’s ongoing education. Mr Scaife’s evidence indicates that he did not take issue with the child remaining at the school, although he would have been happy for other options to be explored, but he resisted assuming any liability for school fees. The tribunal was persuaded that if it was Mr Scaife’s initial expectation that the child attend a private school, his expectation had changed by 2014, such that it was his expectation that whatever school the child attended, it was on the basis that he could not afford private school fees. The tribunal accepted that he did not make any payments to the school after 2013 and, following his solicitor’s letter in 2014, he did not receive invoices for school fees, until he received a letter of demand in 2018. The tribunal was of the view that even if a change of expectations, of the sort contemplated by Riethmuller FM in Dobbins & Devlin, had not crystallised in 2014, it had done so, in the tribunal’s view, by 2018.

13. The tribunal nevertheless considered, if there was a joint expectation in relation to the education of the child, whether Ms Orpen’s ability to maintain the child is significantly affected because the child is being educated in the manner expected by the parents.

14. The documents from the Agency include a copy of a tax invoice/fee statement submitted by Ms Orpen, which indicates that at 28 February 2020 an amount of $4,639 is owed to [School 1]. Ms Orpen did not comply with the tribunal’s directions to provide a copy of the most recent statement for school fees and other evidence in relation to her financial circumstances. The tribunal was not able to determine the expenses Ms Orpen has incurred in relation to the child’s education in the relevant period; it is not clear, for example, whether any part of the school fees have been waived, or whether the fee liability is reduced as the result of a scholarship or bursary. The current amount of school fees outstanding is unknown. It is difficult in these circumstances to judge whether Ms Orpen’s ability to maintain the child is significantly affected as a result of the manner in which the child is being educated. Ms Orpen’s adjusted taxable income increased significantly in the 2018/19 year (from $34,770 the previous year) and from February 2020 her base salary was $104,591 per annum. The tribunal could not be satisfied that Ms Orpen’s capacity to maintain the child is significantly affected because the child is being educated in the manner expected by the parents.

15. In the circumstances, the tribunal was not satisfied there are special circumstances such that the costs of maintaining the child are significantly affected because they are being cared for, educated or trained in the manner that was expected by their parents. A ground for departure from the administrative assessment of child support is therefore not established under subparagraph 117(2)(b)(ii) of the Act.  

Are the costs of maintaining the child significantly affected because of the special needs of the child?

1. The tribunal also considered whether the costs of maintaining the child are significantly affected because of the special needs of the child (subparagraph 117(2)(b)(ia)).

2. Ms Orpen advised the objections officer that the child has ADHD and suffers from anxiety. She has investigated assistance through the NDIS, but the child is not eligible. The child attends appointments with a psychiatrist, for which Ms Orpen receives a rebate through her private health insurance. The child was attending appointments with an occupational therapist, but these were not assisting the child and therefore ceased some time ago. The child has been prescribed [Medication 1] for her condition. Ms Orpen submitted a copy of a psychometric assessment conducted in 2011 and an evaluation report from [a named] Therapy Services, dated 6 February 2017, which indicated that the child would benefit from an occupational therapy program.

3. Mr Scaife said he has little knowledge of the child’s health issues, having only become aware of the ADHD diagnosis through the change of assessment process.

30.  As noted above, the tribunal did not have the opportunity to speak to Ms Orpen, and she did not comply with directions to provide documents, including in relation to her expenses for the child. While the tribunal was satisfied, on balance, that the child has special needs, it could not be satisfied that Ms Orpen’s costs of maintaining the child are significantly affected because of those special needs. The tribunal was not persuaded, therefore, that a ground for departure is established under subparagraph 117(2)(b)(ia).

Conclusion

1. Having regard to the particular circumstances of this case, the tribunal concluded that a ground for departure from the administrative assessment of child support is not established and decided to refuse the application for a change in the administrative assessment of child support.

DECISION

The tribunal decided to set aside the decision under review and substitute its decision to refuse the application for departure from the administrative assessment of child support, on the basis that no ground for departure is established.