Scoggins and Elwes (Child support)

[2021] AATA 3611

Scoggins and Elwes (Child support) [2021] AATA 3611 (29 July 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/MC020860

APPLICANT:  Mr Scoggins

OTHER PARTIES:  Child Support Registrar

Ms Elwes

TRIBUNAL:Member M Martellotta

DECISION DATE:  29 July 2021

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – whether there was a ground for departure – earning capacity of the liable parent – ground for departure established – decision to depart - decision under review affirmed

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. This review concerns a change of assessment decision made by Services Australia – Child Support (the Agency).

2. Mr Scoggins and Ms Elwes are the parents of two children born [in] 2017 and [2019]. The children are in the mother’s primary care and the fathers regular care. Ms Elwes applied for a child support assessment which the Agency accepted. A child support case commenced as from 6 November 2019.[1]

   [1] Page 25

3. The following administrative child support assessments were in place:

Child Support Period	Mr Scoggins	Ms Elwes	Annual Liability
6 Nov 2019 -10 Nov 2019	$71,107 2018/19 ATI	$27,472 2018/19 ATI	$10,954
11 Nov 2019-30 June 2020	$2,221 2019/20 Estimate	$27,472 2018/19 ATI	$2,886
1 July 2020 – 7 July 2020	$71,107 2018/19 ATI	$27,472 2018/19 ATI	$8,186
8 July 2020 – 31 August 2020	$29,304 2019/20 Estimate	$27,472 2018/19 ATI	$638
1 Sept 2020 – 30 June 2021	$29,304 2019/20 Estimate	$40,628 2019/20 ATI	$0

1. On 24 August 2020 Ms Elwes lodged a change of assessment application on the grounds of reasons 8A, 8B and 6. She withdrew reason 6. In order to establish the ground under reason 8A a parent is required to demonstrate that the parent’s income, property and financial resources make the administrative assessment unfair. Reason 8B relates to a parent’s earning capacity.

2. On 9 October 2020 an Agency decision maker decided that no ground had been established. Ms Elwes successfully objected to that decision. On 15 February 2021 another Agency decision maker decided to depart from the administrative assessment so that for the period 24 August 2020 to 30 November 2022 Mr Scoggins was to be assessed on an ATI of $71,107. That decision maker decided that both grounds had been established – in effect the decision reflected Mr Scoggins’ earning capacity.

3. Mr Scoggins now seeks independent full merits review of the Agency’s decision. The tribunal held a telephone directions hearing and issued directions. The parental parties attended a hearing on 29 July 2021. The hearing was conducted by conference telephone and the parental parties gave evidence on affirmation.

4. The following documents were received; Agency (268 pages); Mr Scoggins A1-98 and Ms Elwes B1-B27. Post-hearing Mr Scoggins of his own volition provided documents A92-98. The tribunal decided to accept these as they related to matters discussed at the hearing. The tribunal was satisfied that it was not necessary to obtain post hearing submissions from Ms Elwes in relation to these documents as they raised no adverse matters requiring her response. [2]

ISSUES

[2] See AAT Child Support Review Practice Direction 30

1. The statutory provisions relevant to this review are contained in the Child Support (Assessment) Act 1989 (the Act). The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.

2. Child support legislation is interpreted by the Agency with the aid of the Child Support Guide (the Guide). The tribunal is not bound by law to apply the policy as set out in the Guide, but provided the policy is consistent with the legislation, it is required to have regard to it and in the ordinary course follow it.[3]

   [3] See Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634

3. The issues for the tribunal to determine in this case are:

   ·     Does a ground for departure exist? If so,

   ·     Would it be just and equitable as regards the children, the liable parent, and the carer entitled to the child support determination to depart from the administrative assessment of child support?

   ·     Is it otherwise proper to make a particular departure determination?

CONSIDERATION

Issue 1 – is there a ground to depart from the administrative assessment?

1. The rate of child support payable by a liable parent is usually based on an administrative assessment calculated using the relevant formula under Part 5 of the Act. This involves the application of a statutory formula, which takes into account factors such as the number of children, the age of each child, the level of care provided and the income of each parent. The income used in the calculation has a number of components making up the adjusted taxable income, which is worked out using section 43 of the Act. The general approach is that the Child Support Registrar (“the Registrar”) will utilise a parent’s ATI as assessed by the Australian Taxation Office (ATO) for the last relevant year of income.

2. Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a change of assessment). The liable parent or a carer may apply to the Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Act (section 98B). Section 98C of the Act provides that the Registrar may make a determination to depart from the formula assessment and as noted, establishes a three-step process.

3. The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act. Only one ground is required in the special circumstances of the case to depart from the administrative assessment and thereby satisfy the requirements of subsection 117(2) of the Act.[4] The tribunal decided to consider if a ground was established pursuant to reason 8B which, as noted, relates to a parent’s earning capacity.

   [4] The phrase “special circumstances of the case” is not defined in the Act. However, the Family Court has held that “it is intended to emphasise that the facts of the case must establish something special or out of the ordinary” (Gyselman and Gyselman (1992) FLC 92-279). 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” 

4. The legislation provides that all three of the follow criteria are to be established:[5]

   [5] The Guide at 2.6.4.  Subsection 117(7B) of the Act

   (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.

5. All three of the above criteria are required to be established for there to be a ground to depart on this basis.

6. In this matter it is not in dispute and the tribunal finds that prior to Ms Elwes’ application for a child support assessment being accepted by the Agency Mr Scoggins was employed by [Family Trust 1]. Mr Scoggins told the tribunal that he had worked there as a farm hand for about 12 months. It is also accepted, and the tribunal finds that Mr Scoggins ceased employment in that role on 18 November 2019.

7. Mr Scoggins told the tribunal he was unemployed and without any source of income until he was granted jobseeker payments in about May 2020 and that in the last couple of months of this year he has  commenced employment with his father on the family farm.

8. According the Agency, Mr Scoggins initially advised that his employment had been terminated by his employer. He told the Agency that he was asked or compelled to leave because Ms Elwes kept turning up at his place of employment asking him to look after the children and his employers told him that the arrangement was not working[6] an allegation denied by Ms Elwes.

   [6] Page 162

9. At hearing Mr Scoggins told the tribunal that his reason for leaving his employment was due to him losing his driver licence and not being able to cycle to his employment. Later in response to  tribunal questions he stated that he had actually lost his licence some three years ago.  He agreed that this meant that when he started his employment with the [Family Trust 1] he was already not driving so this was not a new circumstance. He then stated that, as he had moved to his father’s property, it was an extra 5km bike ride to work and this was not sustainable. Mr Scoggins also stated that he was depressed after his relationship with Ms Elwes ended and this was also why he left his employment.

10. The Agency contacted Mr Scoggins’ employer, according to that record of interview:

    Spoke to [Ms A] who provided the details of [Mr Scoggins’] employment ending to [Ms Elwes]. I confirmed they were still running the [Family Trust 1] and had employed [Mr Scoggins] for approximately one year before he resigned from his employment. She said they were working with [Mr Scoggins] around the issues of separation and caring for the children and at no stage was it contemplated that his employment would be terminated. She advised they were actually shocked that he had quit his job as they had been accommodating to his needs. [Ms A] confirmed that [Mr Scoggins] had ceased on 18/11/2019 and had been paid out all of his entitlements at that time. She reiterated that they had no intent of termination and had been accommodating to [Mr Scoggins] and [Ms Elwes’] situation.[7]

    [7] Page 176 and 194

11. The tribunal put this evidence to Mr Scoggins at hearing. Mr Scoggins told the tribunal that his former employers were lying and their advice to the Agency was not true. The tribunal asked Mr Scoggins whether he’d put in place any alternative income arrangements prior to deciding to resign or turned his mind as to how he would meet his costs of living including his child support liability. Mr Scoggins said that due to his state of mind he did not really consider that aspect nor think about how he would cover his expenses if he resigned.

12. The tribunal asked Mr Scoggins about the timing of his decision to resign from his employment given that his decision coincided with the acceptance of Ms Elwes’ application for a child support assessment; that the initial assessment  (commencing 6 November 2019) utilised his 2018/19 ATI of $71,107 and shortly thereafter on 11 November 2019 he lodged an income estimate of $2,221.[8] Mr Scoggins said that the child support liability had nothing to do with his decision.

    [8] Page 234

13. Ms Elwes told the tribunal that Mr Scoggins’ decision had nothing to do with her dropping the children off to him at his employment and that his decision to stop work was due to the child support assessment and this was apparent by the timing of his resignation and also demonstrated by him lodging an estimate of income on 11 November 2019 in reaction to the assessment.

14. The tribunal did not find Mr Scoggins to be a credible witness on this aspect. In reaching this conclusion the tribunal noted that he has given various accounts as to why he left his employment, none of which in the tribunal’s view were especially compelling. His explanation to the tribunal that he had lost his driver licence, and this impacted on being able to travel to work was later amended when he conceded that he had lost his licence some three years previously.

15. In this matter the tribunal is satisfied that Mr Scoggins had changed his pattern of work and that this was not due to either childcare responsibility or health reasons. Whilst Mr Scoggins told the tribunal that he was depressed, there was no medical or other evidence to demonstrate that this was the reason for him leaving his employment. The tribunal is also not satisfied that, on the available evidence, Mr Scoggins has demonstrated that it was not a major purpose of his decision to affect the administrative assessment.

16. In reaching this conclusion, the tribunal notes that Mr Scoggins’ decision to resign closely follows the Agency accepting Ms Elwes’ application for a child support assessment and in fact according to the Agency records he lodged his first estimate of $2,221 on 11 November 2019 a week before he resigned on 18 November 2019 - at that point in time he was actually still employed. He gave no thought as to how he would meet his costs of self-support or his child support liability. He has given no other compelling or credible reason as to why he left his employment.

17. According to Mr Scoggins’ 2018/19 ATO issued tax return he earned a taxable of $71,107 for the year that he worked with [Family Trust 1]. The tribunal concludes that Mr Scoggins has an earning capacity of $71,107.

18. The administrative assessment in place at the time Ms Elwes made her change of assessment application utilised a subsequent 2019/20 estimate of $29,304 lodged by Mr Scoggins. The tribunal has concluded that a ground based upon Mr Scoggins’ earning capacity is established. Utilising an earning capacity of $71,107 in place of the estimate would result in a significant change in the child support payable by Mr Scoggins.[9]

    [9] The assessment results in an annual liability of $638 using Mr [Scoggins’] earning capacity results in an annual liability of $7,324

19. For this reason, the tribunal concludes that a ground of departure exists because in the special circumstances of the case, application of the provisions of the Act relating to the 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 because of Mr Scoggins’ earning capacity.

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

1. As the tribunal is satisfied that there is a ground to depart from the assessment of child support as set out above, the next step for the tribunal is to consider whether it is just and equitable as regards the child and the parental parties 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 set out in subsection 117(4) of the Act, which is discussed in the following paragraphs.[10]

   [10] The tribunal notes the Federal Magistrates Court case of Tyagi & Meares [2008] FMCAfam 886 which directs that in considering the matters set out in subsection 117(4) the section need not be ‘slavishly followed, each of the relevant factors listed … should be considered’

Proper needs of the child

1. In determining the proper needs of the child it is necessary to have regard at a broad level to the manner in which the child is being, and in which the parents expect the child to be, cared for, educated or trained, and also any other needs of the child. No submissions were made on this and the tribunal concluded that there is no basis for any adjustment pursuant to this consideration.

Income, earning capacity, property and financial resources of the child

1. In having regard to the income, earning capacity, property and financial resources of the child the tribunal must disregard any entitlement of the child or the carer entitled to child support to an income tested pension, allowance or benefit (subparagraph 117(7)(b)(ii) of the Act).

2. There was no evidence presented to the tribunal that the child has any income or unused earning capacity that needs to be taken into account in the child support assessment and as such the tribunal concludes that  on the available evidence there is no basis for any adjustment pursuant to this consideration.

Other party receiving money, goods and property for the benefit of the child

1. Neither party made submissions in this regard and the tribunal concludes on the available evidence there is no basis for any adjustment pursuant to this consideration.

The income, property and financial resources of each parent who is a party to the proceeding

1. As noted under issue 1 Mr Scoggins’ evidence was as follows:

   a)    He was employed as a farm hand until ceasing employment in November 2019.

   b)    He was unemployed and had no income until he was granted jobseeker in about May 2020.

   c)    He now is employed by his father on the family farm. He started that employment in about May 2021.

2. The tribunal noted the following evidence from the provided documents:

   a)Payslips provided by his father showing gross monthly wages of $4,186 for the period commencing 16 April 2021 and reporting a base annual salary of $52,000.

   b)Cash and cheque deposits made to his personal bank account of $6,500 in the period March 2020 to March 2021.

   c)Deposits totalling $20,000 from his superannuation fund.

   d)A 2019/20 personal income tax return declaring taxable income of $20,537 made up of employment income from [Family Trust 1] and jobseeker payments.

3. The tribunal referred Mr Scoggins to cheque and cash deposits made into his bank account during the period he stated that he was without income. Mr Scoggins said that he could not remember where those funds came from. He later said that he sold a vehicle and that might account for some of the money. Post hearing he submitted documents that he states show that his father gave him money to pay for one of the children to have [an operation]. According to that information there were out of pocket expenses of $971.

4. Mr Scoggins told the tribunal that he accessed his superannuation and that cash withdrawals totalling $11,000 were cash amounts he paid his family lawyer. Mr Scoggins did not provide any evidence to confirm that these were amounts paid into his lawyer’s trust account nor did he provide any clear explanation why large amounts were paid by cash and not by bank transfer.

5. According to a Statement of Financial Circumstances provided to the tribunal, Mr Scoggins:

   a)Is the sole registered owner of the former matrimonial home. Ms Elwes and the children currently live in that property. He values the property at about $300,000.

   b)Has a superannuation balance of about $68,000.

   c)Owes two personal loans totalling about $50,000.

   d)The home mortgage is currently about $260,000. Mr Scoggins is not making mortgage payments on the property.

   e)He estimates that his weekly household expenses total about $75.

6. At hearing Mr Scoggins confirmed that his father bought a new [Vehicle 1] to which he (Mr Scoggins) has exclusive use. He says that he sometimes pays fuel and maintenance costs but later conceded that those costs went through the business accounts of his father’s farm. Mr Scoggins says he lives with his father and does not pay any rent or board.

7. Mr Scoggins says that he has defaulted on his personal loan and that he may be declared bankrupt. He did not provide any evidence in support of this assertion. A letter provided by Mr Scoggins from his bank dated 25 June 2021 states that it has been unable to respond to his request for assistance in relation to the loan because he has failed to provide information which would allow the bank to make an assessment of his request. [11]

   [11] A14

1. Ms Elwes told the tribunal that she believes that Mr Scoggins is financially supported by his father and that he was receiving income or financial resources during the period he says he was unemployed. She says that she also believes that he is earning more than what has been disclosed in the payslips provided by his father. Ms Elwes says she lives in the former matrimonial home and is also not meeting the mortgage repayments but is paying the outgoings and maintenance costs. She drives a [Vehicle 2] which was formerly a joint asset, she pays for the fuel and maintenance of the vehicle. Issues relating to the division of joint assets are yet to be resolved.

2. In term of her circumstances she says that she continues to earn income from employment with [Employer 1] where she has a part time role. She has recently completed studies to qualify as [an occupation 1]. She rejected Mr Scoggins’ assertion that she earns cash income from [occupation 1 jobs]. Ms Elwes says that she is yet to be certified and cannot earn income until her certification is completed. Her recent increase in income was due to being able to undertake extra shifts at [Employer 1]. She otherwise receives family tax benefit.

3. Ms Elwes’ Statement of Financial Circumstances and personal income tax returns were consistent with her oral evidence. She estimates weekly household expenses of about $575. She does not own any real property.

4. Both parents stated in their Statement of Financial Circumstances that they pay child care costs for the children. Ms Elwes says $318 per week, Mr Scoggins says $158 per week.

5. The tribunal is satisfied that for the purposes of the assessment, Ms Elwes’ income and financial resources are as reflected in her personal income tax returns. In relation to Mr Scoggins the tribunal notes that he is now employed by his father and this will be reflected in this next income tax return for the 2020/21 financial year. Mr Scoggins said he has not prepared or lodged that return because the accountant told him to wait for the AAT process to conclude.

6. The tribunal is not satisfied that Mr Scoggins’ personal income tax return for the 2019/20 financial year is a reliable reflection of his financial circumstances. In that financial year the tribunal concluded that the evidence demonstrates that Mr Scoggins had access to financial resources[12] other than jobseeker and part income from his previous employment. This is demonstrated by the cash and cheque deposits made into his bank account. He also has the benefit of living rent and board free at this father’s home and also, on the evidence, has the benefit of a new vehicle for which he does not have to pay running costs given that those costs are put through the business.

   [12] According to authorities a financial resource refers to something that is not property but from which a financial benefit is or may be gained. The term is to be broadly defined and refers to any financial benefit that would enhance the capacity of a parent to provide a proper level of support for their children

7. On the above evidence the tribunal concluded that in 2019/20 Mr Scoggins would have access to the following income and financial resources:

2019/20
Employment (and jobseeker)	$21,544
Cash and cheque deposits	$5,500 (less money for the medical costs)
Access to superannuation	$20,000
Free rent and board[13]	$15,600
Free vehicle running costs[14]	$15,600
Total	$78,244

[13] estimated at $300 per week

[14] estimated at about $300 per week for fuel, maintenance and general running costs see rac.com.au/motoring/running costs

1. The tribunal concluded that Mr Scoggins’ income and financial resources are a relevant consideration in any departure determination.

Earning capacity

1. A ground for departure exists if, in the special circumstances of the case, the 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 because of the earning capacity of either parent (subparagraph 117(2)(c)(ib)). The tribunal does not repeat its findings in this regard other than to conclude that Mr Scoggins’ earning capacity is a relevant consideration.

The commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support himself or herself, or any other child or another person that the person has a duty to maintain

1. No specific submissions were made at hearing. The tribunal is satisfied taking into account the relevant costs of self-support utilised in the assessments and based upon evidence provided at hearing, that neither party has extraordinary costs of self-support that are relevant to the assessment.

Any hardship that would be caused

1. Mr Scoggins says that assessing him on his earning capacity is unfair due to financial circumstances. In this regard the tribunal raised with Mr Scoggins discretionary expenditure related to his [gambling] account. Mr Scoggins stated that this was due to his depression. Ms Elwes told the tribunal that when the assessment relied upon Mr Scoggins’ estimates it caused her and the children financial hardship.

Proposed departure

1. In this matter the tribunal is considering a departure determination which reflects Mr Scoggins’ earning capacity. The tribunal is satisfied that to rely upon income estimates and the taxable income as assessed by the ATO in the 2019/20 financial year would not be fair and equitable in the circumstances of this particular matter.

2. In terms of the period of any departure the tribunal does have the ability to backdate any departure for a period of up to 18 months prior to the change of assessment application. It is open, particularly in a case in which the tribunal has concluded that a departure is warranted on earning capacity, to backdate the decision in this case to 11 November 2019.

3. This would have the impact of creating a higher level of arrears in child support. On the other hand, Ms Elwes did not object to the estimate and did not bring her change of assessment application until 24 August 2020 and in that regard it can be said that Mr Scoggins should be entitled to rely upon the assessment in place until being placed on notice of her application. On balance the tribunal concluded it is fair and equitable to commence the departure from 24 August 2020.

4. In terms of concluding any departure, the tribunal notes that Mr Scoggins has lodged his 2019/20 return. The ATO assessed taxable income for that year was only $21,544 which is less that the amount he estimated. As noted above, the tribunal has concluded that based upon the income and financial resources available to him Mr Scoggins’ ATI for 2019/20 was actually in the vicinity of $78,244.

5. Overall the tribunal concluded that for all concerned it is fair and equitable to vary Mr Scoggins’ ATI to the earning capacity of $71,107 as this represents the most reliable figure of what he is able to earn as a farm hand which in effect is the [role] he is now undertaking at his father’s farm (but being paid a lower amount).[15]

   [15] If the tribunal were to utilise a 2019/20 ATI of $78,244 this would not result in any significant change to the annual liability payable.

6. Mr Scoggins has not yet lodged a 2020/21 return but as noted he is now in employment with he says, an annual income of about $52,000.[16] As noted however, that income is less than what he was previously earning as a farm hand and does not necessarily reflect his access to financial resources that he may continue to have by living and working for his father.

   [16] Assuming that he still has access to the financial resources as found by the tribunal he potentially could have access to income and financial resources closer to $90,000 once his base income of $52,000 is taken into account.  

7. There is however some uncertainty going forward as the parties are yet to conclude any final property settlement of their former joint assets and this may impact upon their future financial circumstances. For this reason, the tribunal concluded that to end the departure to 30 November 2022 provides the parties some certainty going forward, gives time for the parties to resolve their property settlement matters and will also allow for some clarity of Mr Scoggins’ future income.

8. The tribunal is satisfied that Mr Scoggins has the financial capacity to meet his child support liability generated by this variation. As noted, Mr Scoggins reports minimal weekly expenses, he lives rent free and has the costs of his car met by his father’s business. He is not paying the mortgage and has also stopped servicing his personal loan. Whilst he said that the lender is going to bankrupt him for defaulting on the loan, the letter he provided records that due to Mr Scoggins failing to engage with the bank they have been unable to come to an alternative payment plan. Mr Scoggins is earning income again and clearly has other financial resources available to him which have allowed him to engage in a level of discretionary spending. The tribunal is satisfied that he will not suffer financial hardship.

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

1. The final step is for the tribunal to determine whether it is ‘otherwise proper’ to make a particular departure determination. Subsection 117(5) requires the tribunal to take into account whether the proposed departure is proper in the context of public interest and welfare expenditure of the community. A prime objective of the legislation is that parents are obliged to support their own children to the extent of their real capacity and such obligation should not be unnecessarily abrogated to the public welfare system.

2. According to her Statement of Financial Circumstances Ms Elwes is in receipt of family tax benefit and the proposed departure from the administrative assessment may impact upon any entitlement to government assistance. In this case the tribunal finds that the requirements under paragraph 117(5)(a) of the Act are met. The tribunal concludes that it is otherwise proper to depart from the administrative assessment.

3. In effect, the tribunal’s decision is to affirm the decision under review, namely that, for the period 24 August 2020 to 30 November 2022, Mr Scoggins’ ATI is varied to $71,107. This means that the decision under review is affirmed.

DECISION

The decision under review is affirmed.