Sheridan and Child Support Registrar (Child support)

[2017] AATA 2905

Sheridan and Child Support Registrar (Child support) [2017] AATA 2905 (5 December 2017)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/BC012702

APPLICANT:  Mr Sheridan

OTHER PARTIES:  Child Support Registrar

TRIBUNAL:  Member P Jensen

DECISION DATE:  5 December 2017

DECISION:

The decision under review is affirmed.

CATCHWORDS

Child Support – Refusal to grant an extension of time to object to a departure decision – Rested on rights – Long delay in lodging objection – Extension not granted – Decision under review affirmed

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

REASONS FOR DECISION

1. Mr Sheridan and Ms Everett are the parents of [Child 1] and [Child 2]. A child support case was registered in 2011. The Child Support (Assessment) Act 1989 (“the Act”) provides for an administrative assessment of child support payable. It uses a formula which contains variables such as the parents’ adjusted taxable incomes. From 23 August 2016 the administrative assessment was based on Mr Sheridan’s provisional income of $40,000 per annum and Ms Everett’s estimate of income of $0, and Mr Sheridan was required to pay child support of $1,620 per annum.

2. The Act also provides for a departure from the administrative assessment in certain circumstances. On 21 October 2016, Mr Sheridan lodged a departure application. On 8 December 2016 the Department of Human Services – Child Support (“the CSA”) granted his application and varied his adjusted taxable income to $78,728 per annum from 21 October 2016 to 31 October 2017 and to $80,575 per annum from 1 November 2017 to 31 January 2019 (“the substantive decision”). On the same day the CSA wrote to Mr Sheridan and informed him of the substantive decision. It also informed him of the following:

   You can ask us to review the decision (we call this an objection) within 28 days from the date you receive this letter. For more information about how to object go to our website humanservices.gov.au/reviewsandappeals

3. The requirement for an objection to be lodged within 28 days after notice of the decision has been served on the person arises from section 81 of the Child Support (Registration and Collection) Act 1988. There is no dispute that notice of the substantive decision was promptly served on Mr Sheridan.

4. On 3 August 2017, Mr Sheridan objected to the substantive decision. He also applied for an extension of time in which to object to the substantive decision. On 13 September the CSA decided not to grant Mr Sheridan’s extension of time application. He promptly applied to the Tribunal for review of that decision. I heard the matter on 5 December 2017. I spoke to Mr Sheridan by phone.

5. The principles to be applied when deciding an extension of time application were summarised in Phillips v Australian Girls’ Choir and Another [2001] FMCA 109:

   1.There is no onus of proof upon an applicant for extension of time though an application has to be made. Special circumstances need not be shown, but the court will not grant the application unless positively satisfied it is proper to do so. The "prescribed period" of 28 days is not to be ignored …

   2.It is a prima facie rule that the proceedings commenced outside the prescribed period will not be entertained … It is not a pre-condition for success in an application for extension of time that an acceptable explanation for delay must be given. It is to be expected that such an explanation will normally be given as a relevant matter to be considered, even though there is no rule that such an explanation is an essential pre-condition …

   3.…It is relevant to consider whether the applicant has rested on his rights and whether the respondent was entitled to regard the claim as being finalised. …

   4.Any prejudice to the respondent … is a material factor [which goes] against the grant of an extension.

   5.The mere absence of prejudice is not enough to justify the grant of an extension. …

   6.The merits of the substantial application are properly to be taken into account in considering whether an extension of time should be granted. …

   7.Considerations of fairness as between the applicant and other persons otherwise in a like position are relevant to the manner of exercise of the court's discretion …

6. The CSA’s substantive decision was primarily based on the following findings. Mr Sheridan is the sole director and shareholder of Sheridan Holdings Pty Ltd which is the trustee of the Sheridan Family Trust. Mr Sheridan is the primary beneficiary of that trust. Mr Sheridan is also the sole director and shareholder of [Company 1]. Sheridan Holdings Pty Ltd’s primary business is leasing equipment to [Company 1] and its primary business is road construction and repair. As at December 2016, [Company 1]’s most recently lodged business activity statement was for the fourth quarter of 2014-15. The CSA obtained a sample of the bank account statements to which Mr Sheridan was a signatory. [Company 1]’s annualised revenue was $664,241. The decision-maker concluded that “Mr Sheridan’s finances are somewhat intermingled and I have also had difficulty reconciling information from Mr Sheridan’s bank statements.” The decision-maker noted that [plant] operators earn an average of $78,728 per annum. The decision-maker varied Mr Sheridan’s adjusted taxable income to that income from 21 October 2017 and increased that income by 1.3% (which was the child support inflation factor) from 1 November 2017.

7. While other decision-makers might have approached the matter differently, there was nothing remarkable in the decision-maker’s methodology given that the decision-maker had concluded that Mr Sheridan’s finances were somewhat intermingled and the information in the bank account statements was difficult to reconcile.

8. At the Tribunal hearing, Mr Sheridan stated that his business was struggling financially at the time and is continuing to struggle financially. On that issue, Mr Sheridan has an arguable case.

9. The decision-maker also noted that the administrative assessment was based on Ms Everett’s estimate of income of $0 but she was actually receiving paid parental leave. The decision-maker elected not to vary Ms Everett’s adjusted taxable income because her estimate of income would be reconciled against her actual income in due course. At the Tribunal hearing, Mr Sheridan did not take issue with that aspect of the substantive decision. I also note that Mr Sheridan had separate objection rights in respect of the CSA’s decision to accept Ms Everett’s estimate of income.

10. The decision-maker also declined to vary the rate of child support payable on the basis of Ms Everett’s claim that she was incurring additional expenses in respect of [Child 1]’s special needs. Ms Everett did not provide any evidence in support of her claim that [Child 1] had special needs. At the Tribunal hearing, Mr Sheridan did not take issue with that aspect of the substantive decision.

11. In summary, Mr Sheridan’s objection to the substantive decision is arguable, but it is not readily apparent that there is positive merit in his objection.

12. It is also necessary to consider Mr Sheridan’s delay in lodging his current objection to the substantive decision. On 8 December 2016 the decision-maker phoned Mr Sheridan and attempted to explain the decision to him. Mr Sheridan refused to discuss the matter and told the decision-maker: “whatever it is you have to say to me, please put it in writing.” On 4 January 2017, Mr Sheridan phoned the CSA and stated that he disagreed with the substantive decision. He was advised to lodge a written objection. On 17 January 2017, Mr Sheridan lodged a written objection. On 11 February 2017 the CSA phoned Mr Sheridan and left a message asking him to return its call. It appears that Mr Sheridan did not respond to that message. On 9 March 2017 the CSA phoned Mr Sheridan and discussed his departure application. The CSA noted:

    Mr Sheridan has been advised the objection process at this time and I have explained the approaches taken as he has not provided any current financials

    Discussed how cs assess his income very differently to that of the ATO and that we consider items that can offer a level of personal benefits (Mr Sheridan confirmed the business pays for [some of his personal expenses] in addition to wages etc and I explained how the approach taken in the initial [departure decision] was likely conservative I advised without differing financials it may be an outcome of no change or potential contrary in regards to a greater amount

    Advised once docs scrutinised it could be a situation that his income may be slightly less however on balance of probs with the work undertaken in general it seems light

    ...

    explained to Mr Sheridan it is up to him about what happens however he appeared to have a misunderstanding about what can be considered as income etc and what isn’t (i.e. ATO advised income)

    he is going to withdraw at this point and has been advised of the 48 hour cooling off period and is very aware of the need to contact me prior to 12:40 on Monday 13/03/2017 if he wishes to proceed ...

    Additional information: discussed debt in general case manager is following up the debt explained enforcement measures

13. On 20 March 2017 the CSA wrote to Mr Sheridan and confirmed that he had withdrawn his objection to the substantive decision.

14. Mr Sheridan stated at the Tribunal hearing that he was advised to withdraw his objection. He said he was told that if he withdrew his objection the matter would not go any further, but if he continued with his objection “we’ll go through you with a fine-tooth comb”. He said he was bullied into withdrawing his objection.

15. On balance, I consider the CSA’s contemporaneous file note to be the more reliable evidence of what was said on 9 March 2017. It was quite appropriate for the CSA employee to alert Mr Sheridan to the possibility that if he continued with his objection, the objections officer might increase his rate of child support payable; parents sometime hold a mistaken belief that if they object to a decision, the objections officer can only affirm the decision under review or vary it in the parent’s favour. Importantly, the CSA employee recorded that Mr Sheridan was informed that the decision whether to withdraw his objection or proceed with his objection was ultimately a decision that he needed to make. I do not accept Mr Sheridan’s evidence that he was bullied into withdrawing his objection.

16. On 17 May 2017, Mr Sheridan contacted the CSA to enter into an arrangement concerning the payment of his child support arrears. During the course of that conversation he stated that he disagreed with the substantive decision. He was informed that he could object to the substantive decision and he would also need to apply for an extension of time in which to object because he would be objecting more than 28 days after being notified of the substantive decision.

17. On 3 August 2017, some two and a half months after the conversation on 17 May 2017, Mr Sheridan lodged his objection and his extension of time application. At the Tribunal hearing I asked Mr Sheridan about that delay. He stated that he had been “traumatised” by the CSA; his business had continued to struggle; and he had been dealing with “family issues”.

18. Viewing the matter as a whole, I find that Mr Sheridan promptly objected to the substantive decision and he made a considered decision to withdraw his objection when he was made aware that an objections officer might decide to further increase his adjusted taxable income, which would further increase his rate of child support payable. He then rested on his rights until May 2017 when he discussed his child support arrears with the CSA, and he continued to rest on his rights after that discussion until August 2017.

19. Mr Sheridan has an arguable case in respect of the substantive decision. However, he made a considered decision to withdraw an earlier objection and there has been an inordinate delay in the lodgement of his second objection. The interests of justice favour the refusal of his application for an extension of time in which to lodge his second objection to the substantive decision. The CSA’s decision to refuse that application was the preferable decision.

DECISION

The decision under review is affirmed.