Sears and Alston (Child support)
[2019] AATA 4861
•10 September 2019
Sears and Alston (Child support) [2019] AATA 4861 (10 September 2019)
DIVISION:Social Services & Child Support Division
REVIEW NUMBER: 2019/MC015768
APPLICANT: Ms Sears
OTHER PARTIES: Child Support Registrar
Mr Alston
TRIBUNAL:Member P Noonan
DECISION DATE: 10 September 2019
DECISION:
The Tribunal sets aside the decision under review and, in substitution, decides that:
·From 1 January 2018 until 31 December 2018 the annual rate of child support payable by Mr Alston is varied by increasing it by $5,046.
·From 1 January 2019 until 31 December 2019 the annual rate of child support payable by Mr Alston is varied by increasing it by $5,940.
·From 1 January 2020, until a terminating event occurs with respect to the eldest child of the assessment, the annual rate of child support payable by Mr Alston is varied by an annual increase of 8% with respect to the varied amount from the previous calendar year.
CATCHWORDS
CHILD SUPPORT – departure determination – costs of education – manner expected by both parents – cost of maintaining the children are significantly affected – 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
Ms Sears and Mr Alston are the parents of two children who constitute the children of this child support assessment.
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 children. The Act also provides for a departure from the administrative assessment in certain circumstances.
A child support case was first registered with the Department of Human Services (the Department) on 8 December 2005 and child support is registered for collection by the Department. Care of the children is registered as being 281 nights per year to Ms Sears and 84 nights per year to Mr Alston.
On 8 August 2018 Ms Sears applied for a departure from the assessment of child support payable at that time. The applicable assessment at that time was:
· For the period 1 August 2018 to 27 August 2018 Mr Alston is assessed to pay an annual rate of child support of $8,206. This assessment is calculated using a 2017–18 deemed income of $69,881 for Mr Alston and a 2017–18 taxable income of $nil for Ms Sears.
On 3 November 2018 a Department officer, acting as a delegate of the Child Support Registrar, found that a ground for departure was established and decided to depart from the assessment in the following terms:
· That during the period 1 January 2018 to 31 December 2018 the annual rate of child support payable by Mr Alston is increased by $8,462 as his contribution to the special education costs of the children at [named school] for the 2018 academic year.
· That during the period 1 January 2019 to 31 December 2027 the annual rate of child support payable by Mr Alston be increased by 76% of the tuition fees and compulsory building and resource levies for the children at [named school] and amended assessments of support issue accordingly.
Mr Alston objected to this decision and on 27 November 2018 a Department objections officer partly allowed his objection. The officer decided a ground for departure had not been established and accordingly that the application must be refused under section 98F of the Act.
On 16 January 2019 Ms Sears applied to the Administrative Appeals Tribunal (the Tribunal) for an independent review.
A hearing for the matter was held on 4 September 2019. The Child Support Registrar did not attend the hearing. Ms Sears attended the hearing by conference telephone and gave evidence on affirmation. Mr Alston also attended the hearing by conference telephone and gave evidence on affirmation. Mr Alston attended at the commencement of the hearing and gave submissions and some evidence in respect to his position and the evidence of Ms Sears to the Tribunal, however halfway through the eventual total duration of the hearing he stated that he would not participate any further as he needed to attend to work commitments. The Tribunal decided to proceed with the remainder of the hearing in Mr Alston’s absence.
Pursuant to paragraph 98C(1)(b) 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; …
Preliminary considerations
Prior to the hearing and during the hearing Mr Alston submitted that the Tribunal did not have jurisdiction to hear the application of Ms Sears due to an application he has made to the Federal Circuit Court for clarification of words used in Final Orders issued [in] February 2016.
At the commencement of the hearing Mr Alston contended that the Final Orders issued [in] February 2016 (the Orders) by the Federal Circuit Court provided for Ms Sears to have sole parental responsibility for the education arrangements of the children. He contended that sole parental responsibility includes meeting the expenses associated with the education of the children. He has sought clarification on this point from the Federal Circuit Court and noted that a Final Hearing in this respect has been set for [March] 2021.
Ms Sears contended that it was never contemplated that the Orders absolved Mr Alston from contributing to the costs of educating the children.
The Tribunal considers that the Orders do not clearly set out any individual responsibility in respect to the costs of educating the children. The Court has noted [in] August 2019 that the costs associated with the children’s schooling is a matter which will require determination at trial. The Tribunal considers this is a Note to interim orders and does not form part of orders made by the Court. The Tribunal determined to proceed on the basis that the education costs of the children is open for it to consider according to the application of the applicable legislation pertaining to Ms Sears’ application.
The Tribunal further considered that Ms Sears has made a valid application under section 98B of the Act. Further the Tribunal noted Mr Alston advised he had applied for a Stay Order from the Federal Circuit Court in respect to the collection of child support, however had been unsuccessful in this application. The Tribunal advised both parties that it is obliged to hear the application of Ms Sears and would proceed on that basis. The Tribunal notes that the Tribunal is afforded jurisdiction in this matter pursuant to section 89 of the Child Support (Registration and Collection) Act 1988.
The Tribunal also noted Mr Alston’s lack of compliance with Directions for information issued by the Tribunal and his stated intention prior to the hearing not to participate in the hearing or disclose any financial information to the Tribunal. The Tribunal decided to discuss further evidence supplied by Ms Sears prior to the hearing during the hearing and proceeded on this basis.
CONSIDERATION
Evidence and relevant discussions at the Tribunal hearing
Ms Sears informed the Tribunal that she seeks a departure from the administrative assessment of child support payable on the basis of the education costs she is incurring in respect to the children.
Mr Alston informed the Tribunal that he will not disclose any of his personal financial information as requested in the Tribunal Directions unless he can be assured that Ms Sears will not have access to that evidence. The Tribunal explained that the requirements of procedural fairness necessitate that all evidence to be considered by the Tribunal must be exchanged between the parties to the hearing. Mr Alston rested upon his statement in this regard.
Mr Alston contended that Ms Sears always took care of the children’s education. He never had any idea of the costs involved and never really had a relationship with her. Ms Sears submitted that Mr Alston had given his permission for the children to attend their school by email. He had then contacted the school and agreed to pay 50% of the fees. Mr Alston contended his decision in this regard was made prior to the Orders he contends now give Ms Sears sole responsibility for education costs.
Mr Alston informed the Tribunal he commenced new work in November 2018. He is employed as an ordinary PAYG taxpayer at arms-length. He noted he had been without work for four weeks prior to this. He submitted that his salary is reflective of his 2017–18 adjusted taxable income of $69,881.
Ms Sears submitted that Mr Alston has not disclosed any relevant financial information to this Tribunal or previously when the matter has been heard by the Tribunal (differently constituted) or to the Department. She contended that she believes that as a result he is not disclosing his true financial position and has the financial capacity to make a contribution towards the education costs of the children. She contended that he was previously involved in his [siblings]’s business and she queries what the financial benefit to him of this is. She submitted that the Tribunal should consider drawing adverse inferences against Mr Alston for his lack of disclosure in this matter. She contended that Mr Alston maintains an expensive gym membership and as such has a demonstrated financial capacity to make a further contribution in respect to education costs. If such a contribution is not made she will not be able to afford to keep the children at the school. The Tribunal put to Ms Sears that it may consider a contribution in excess of 50% of the fees payable may risk causing hardship to Mr Alston on the basis of his adjusted taxable income. Ms Sears contended that fees should be payable proportional to their respective incomes, however was prepared to accept a minimum contribution of 50% by Mr Alston.
The Tribunal discussed the fee statements supplied by Ms Sears and her related bank account statements. She submitted that she is solely paying for the education costs of the children by running a very tight budget. She utilises her parenting payment single, family tax benefit and child support received to achieve this outcome. She has plans to start paid employment next year [once] she has completed her studies.
A ground for departure
There may be a reason for changing an assessment if, in the special circumstances of the case, the costs of maintaining a child are significantly affected because the child is being cared for, educated or trained in the manner that was expected by the parents (subparagraph 117(2)(b)(ii)) of the Act, commonly referred to as Reason 3.
The term “manner expected” is not defined in the legislation. In Mee v Ferguson [1986] FamCA 3, the Full Court of the Family Court considering a similar provision in the Family Law Act 1975 said:
It refers to the manner in which the child “is being”, and which the parties to the marriage "expected" the child to be educated. That provision appears to have direct relevance to the issue of private school education, particularly its reference to the manner in which the parties “expected” the child to be educated. The word “expected” in the past tense presumably relates to some expectation of the parties at a point in time earlier than the hearing. [at [37]]
The Court then went on to say:
Where the non-custodian has agreed to the child attending such a school that person is liable to contribute to the fees involved so long as and to the extent that he or she has a reasonable financial capacity to continue to do so.
One of the factors for the Tribunal to consider is the circumstance at the time of separation. If the child was attending a particular school, or was participating in a particular extracurricular activity, then it may be evidence of the manner expected by the child’s parents. The parents’ expectations, however, can be created at any time, not just during the period that the parents lived together. The “simplistic argument” 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 in Dobbins & Devlin (SSAT Appeal) [2014] FCCA 1274 (Dobbins & Devlin). In that case, Judge Riethmuller went on to observe:
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]]
In this case it is accepted that Mr Alston agreed to the children attending the school in question. Mr Alston was employed at that time and on his own evidence continues to be employed at a similar rate of remuneration. Mr Alston contended that his expectations in respect to his own payment of education costs changed upon issuance of the Orders. The Tribunal considered that Mr Alston’s overall circumstances have not changed in any demonstrable manner since his agreement to the children being educated in the manner in which they currently are being educated. On the face of the evidence the Tribunal did not accept that Mr Alston’s expectations in respect to the manner in which the children are being educated have changed for reasons linked to a significant change in his own circumstances. The Tribunal therefore rejects his argument that his expectations have changed and finds that the children are currently being educated in the manner intended by their parents.
The term “significantly affected” is not defined in the Act. While referring to this term in the context of Reason 3 in 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.
The Tribunal was satisfied that currently Ms Sears solely pays private school fees in respect to the children of the assessment. The Tribunal was satisfied on the evidence before it that in 2018 basic school fees totalled $10,093. Under the applicable administrative assessment of child support payable Mr Alston’s income is $68,310 and Ms Sears’ income is $19,266. The costs of the children were around $25,187 in 2018.[1] The Tribunal was satisfied that the education costs of around 40% of the costs of the children significantly affect the costs of maintaining the children and that special circumstances exist. Accordingly the Tribunal concluded that a ground for departure in subparagraph 117(2)(b)(ii) of the Act does exist.
[1] align="left">Would departure from the assessment be just and equitable?
Mr Alston
Prior to the hearing Mr Alston was directed by the Tribunal to provide his latest three payslips, his 2017–18 taxation return and a fully completed Statement of Financial Circumstances by 2 August 2019. Mr Alston did not comply with those directions and informed the Tribunal he would not disclose financial information as he did not want Ms Sears to have access to it.
The Federal Magistrates Court has observed in K & M (No.2) [2007] FMCA fam 920 at [9] that:
The law is clear: there is a duty in proceedings of this type on every party to provide full disclosure of their financial position. If full disclosure is not provided the Court is at liberty to make appropriate inferences and findings from the non-disclosure, and not to be unduly cautious in doing so when making findings or drawing inferences against the non-disclosing party (see Tate & Tate [200] FamCA1040 and Chang v Su [2002]FamCA 156)
Further in Thomas & Harry (SSAT Appeal) [2010] FMCAfam 310 the Court noted that, in the event the SSAT comes to a conclusion that for whatever reason a party has failed to disclose relevant information, then the Tribunal should not be unduly hampered in the exercise of its discretion.
Other than Mr Alston’s reported adjusted taxable income, which in 2018–19 is $72,225, as maintained by the Department, the Tribunal had no current information in respect to his overall financial circumstances other than that which he provided in his oral evidence. The Tribunal considered it was entitled to infer that Mr Alston has some spare financial capacity and accordingly can make a contribution to the education costs of the children while still meeting his necessary costs for self-support.
Ms Sears
The Tribunal accepted on the evidence before it that Ms Sears is currently reliant upon government income support. She rents her accommodation and the Tribunal accepted she has minimal savings and no access to further undisclosed financial resources. Clearly any child support payable to her in respect to the education costs of the children would be of assistance.
The children
In determining the proper needs of the child it is necessary to have regard to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Act). In Eades & Cadell (SSAT Appeal) [2009] FMCAfam 275, at paragraph 22, Slack FM stated as follows:
In considering the proper needs of the child [s 117(4)(b)], the SSAT:
a.would ordinarily consider the evidence of the parties about the needs of the children to assess the reasonableness and quantum of those needs;
b.may have regard to publish guidelines as to the needs of the children (see Hallinan & Witynski at 94.323).
c.may also have regard to the costs of children used in the assessment of child support under the existing formula arrangements (although it is not sufficient or appropriate to rely upon the formula to perform that task, Lindenmayer J in Dwyer & McGuire (1993) FLC92-420 (and see also Gyselman (supra) at 79.078).
The Tribunal has already considered education costs in respect to the children at the time of the departure application. In respect to considerations of the ongoing split of the education costs of the children the Tribunal considered a 50/50 split of the basic fees to be a just and equitable outcome. In coming to this conclusion the Tribunal notes that levies and other ancillary costs associated with schooling are expected to be met from the ordinary application of the child support formula which is based on social science research giving the average costs of children in various family income brackets. The Tribunal was mindful that Mr Alston had agreed in the past to pay 50% of the fees payable in respect to the children’s school and Ms Sears has indicated she will commence paid employment in the next year. Further Mr Alston will be required to make a contribution to child support according to the child support formula and the education costs will be paid by him in addition to this amount payable. The Tribunal is cautious when applying further costs such as education costs over which the paying parent will have no choice but to pay on an ongoing basis. The Tribunal has considered Mr Alston’s adjusted taxable income in this respect. The Tribunal rejects Mr Alston’s contention that he is unable to make such a contribution and, as noted earlier in these reasons, has drawn adverse inferences from his non-disclosure in coming to this conclusion.
Conclusion
It is open to the Tribunal to vary the rate of child support payable or vary some of the variables that are used in the administrative assessment formula.
The principal object of the Act is to ensure that children receive a proper level of financial support from their parents. Further, I note the statements contained in sections 3 and 4 of the Act to the following effect:
· Parents of a child have a primary duty to maintain the child;
· The duty has a priority over all other commitments of the parent other than commitments necessary for self-support;
· The level of financial support to be provided by parents to their children should be determined in accordance with the legislatively fixed standards; and
· The level of financial support is to be determined according to the capacity to provide financial support and noting that parents with a like capacity to provide financial support should provide like amounts.
The Tribunal has considered the evidence given by each party in respect to the questions posed to them about any potential hardship that may be caused to them by a departure determination. Ms Sears asked for a longer period of departure to enable her to plan her affairs with some certainty. Mr Alston rejected that any length of time of departure was appropriate given his action in the Federal Circuit Court. The Tribunal concluded that it is appropriate to commence this departure determination from 1 January 2018, being the same date adopted by the original decision maker of the Department and which the Tribunal agreed with. The Tribunal will continue the departure determination through to such time as a terminating event occurs with respect to the eldest child of the assessment.
The Tribunal noted that in 2019 basic school fees payable are $11,880 which is an 8% increase from 2018. The Tribunal considers an 8% increase is reflective of annual fee increases as well as increasing levels of fees payable as the children advance in their respective year levels. The Tribunal will adopt this 8% increase for the years following on from 2019 as a just and equitable increase.
With regard to all of the reasoning, as set out above, the Tribunal determined to make the following departure determination:
·From 1 January 2018 until 31 December 2018 the annual rate of child support payable by Mr Alston is varied by increasing it by $5,046.
·From 1 January 2019 until 31 December 2019 the annual rate of child support payable by Mr Alston is varied by increasing it by $5,940.
·From 1 January 2020, until a terminating event occurs with respect to the eldest child of the assessment, the annual rate of child support payable by Mr Alston is varied by an annual increase of 8% with respect to the varied amount from the previous calendar year.
With regard to the care records outlined earlier in these reasons, the amount of child support payable by Mr Alston in 2019 is around $15,372 per annum or $295 per week. By his own evidence Mr Alston is employed. Further he has not disclosed his overall assets, liabilities or expenditure and the Tribunal has inferred from this that he will not be placed in undue hardship by this decision or by any arrears created as a result of this decision.
The Tribunal also did not consider Ms Sears will be placed in undue financial hardship by this decision. She will be paid child support that is commensurate with the Tribunal’s analysis of the parents’ overall access to financial resources.
The Tribunal considered this departure determination is a just and equitable outcome in regard to the respective situations of each parent.
Otherwise proper
An increase in child support payable may reduce the cost to the community. There is also nothing improper in adjustments to the amount of child support payable to reflect the parents’ actual respective capacities to provide support to their children.
DECISION
The Tribunal sets aside the decision under review and, in substitution, decides that:
·From 1 January 2018 until 31 December 2018 the annual rate of child support payable by Mr Alston is varied by increasing it by $5,046.
·From 1 January 2019 until 31 December 2019 the annual rate of child support payable by Mr Alston is varied by increasing it by $5,940.
·From 1 January 2020, until a terminating event occurs with respect to the eldest child of the assessment, the annual rate of child support payable by Mr Alston is varied by an annual increase of 8% with respect to the varied amount from the previous calendar year.
Key Legal Topics
Areas of Law
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Family Law
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Administrative Law
Legal Concepts
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Appeal
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Costs
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Judicial Review
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Remedies
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Statutory Construction
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