Shovelton and Shovelton (Child support)

Shovelton and Shovelton (Child support) [2021] AATA 4785 (26 October 2021)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2021/SC021285
APPLICANT:  Ms Shovelton
OTHER PARTIES:  Child Support Registrar
Mr Shovelton

REVIEW NUMBER:  2021/BC021380
APPLICANT:  Mr Shovelton
OTHER PARTIES:  Child Support Registrar
Ms Shovelton

TRIBUNAL:Member M Douglas
DECISION DATE: 26 October 2021
DECISION:

The decision under review is varied such that the annual rate at which Mr Shovelton is to be assessed as liable to pay child support under the provisions of Part 5 of the Child Support (Assessment) Act 1989 is varied by increasing that rate by $2,500 for the period 1 January 2021 to 30 June 2022

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education – manner expected by both parents – orthodontic expenses – cost of maintaining the children are significantly affected – a ground for departure established – just and equitable to depart – decision under review varied

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

Mr Shovelton and Ms Shovelton are the parents of [Child 1], [Child 2] and [Child 3], for whom the Child Support Registrar has issued administrative assessments of child support.
An assessment of child support is made in accordance with the provisions of Part 5 of the Child Support (Assessment) Act1989 (the Act). Broadly speaking, those provisions prescribe a formula that applies to several variables to work out the amount of child support one parent must pay the other. Those variables include the parents’ incomes (which generally will be a parent’s taxable income for the financial year preceding the start of the child support period to which the assessment relates); the level of care that each parent provides for their children; and the cost to care for the children. If a parent believes there are special circumstances with respect to their case, the parent may apply to the Registrar under section 98B of the Act for a determination to depart from those provisions of the Act relating to the assessment of child support. The Registrar, who acts through staff employed at Services Australia - Child Support (Services Australia), describes such an application as a “change of assessment application”.
The Registrar, if satisfied that the criteria of subsection 98C(1) of the Act are met, can make one or more of the determinations listed in subsection 98S(1) to depart from the provisions of the Act relating to the assessment of child support. The criteria specified in subsection 98C(1) are firstly, that one of the several grounds for departure listed in subsection 117(2) of the Act is established in the particular case; secondly, that is just and equitable as regards the parents and the child to make a departure determination; and lastly, that it is otherwise proper to make a departure determination.
The matters that must be considered regarding the second criterion are listed in subsection 117(4) of the Act, but broadly speaking consideration of those matters ensures that any departure will be fair for both parents and fair for the child. The matters to be considered regarding the third criterion are listed in subsection 117(5) of the Act, and broadly speaking consideration of those matters ensures that any departure reflects that the parents of child, rather than the Australian community through the social security system, have primary responsibility for the cost of their child’s care.
On 9 August 2020, or possibly 13 August 2020[1], Services Australia received a change of assessment application from Ms Shovelton.
[1] The actual date upon which Services Australia received Ms Shovelton’s change of assessment application is unclear from the documents Services Australia produced to the Tribunal pursuant to sections 37 and 37AA of the Administrative Appeals Tribunal Act 1975 (the hearing papers). A copy of Ms Shovelton’s change of assessment application appears at pages 90-98 of the hearing papers and that is stamped “RCVD 09/08/20”. The initial decision Services Australia made in response on her application, which is at page 228 of the hearing papers, records however that her application was received on 13 August 2020.
The assessment of child support that was then in force had been varied by an earlier departure determination Services Australia made on 11 July 2020, which was to vary that the annual rate of child support payable by Mr Shovelton by increasing the rate by $1,915 for the period 1 July 2020 to 30 June 2022. That earlier departure determination was based on Services Australia finding a ground for departure established as a consequence of Ms Shovelton having incurred costs of $7,660 for orthodontic treatment provided to [Child 2], which Ms Shovelton was repaying by instalments over a 24-month period. The assessment was calculated using adjusted taxable incomes of $49,472 for Mr Shovelton and $34,052 for Ms Shovelton, which reflected their respective taxable incomes for the 2000 financial year. The assessment was based on Ms Shovelton having 100 per cent of the care of [Child 1] and [Child 2] and 86 per cent of the care of [Child 3] and Mr Shovelton having 14 per cent care of [Child 3]. Ultimately, once the earlier departure determination had been given effect, the assessment in force at the time Ms Shovelton made her change of assessment application required Mr Shovelton to pay child support at an annual rate of $6,624.
On 11 December 2020, Services Australia made a decision in response to Ms Shovelton’s change of assessment application. By that time there had been a change in [Child 3]’s care, such that since 6 September 2020 Ms Shovelton was recorded as providing 100 per cent of his care. Further, a child support assessment had also issued for a child support period commencing on 1 December 2020 that was calculated upon adjusted taxable incomes of $50,709 for Mr Shovelton and $36,884 for Ms Shovelton.
Services Australia found that a ground for departure had been established in that it found that the cost of maintaining [Child 3] was increased by $6,808 a year on account of her being educated at a private school in accordance with the expectation of Mr Shovelton and Ms Shovelton. Services Australia also found that it was just and equitable and otherwise proper to make a departure determination and determined that the annual rate at which Mr Shovelton should be assessed to pay child support for the children be increased by $3,440 for the period 1 July 2020 to 31 December 2020 and by $3,519 for the period 1 January 2021 to 31 December 2021, which was in addition to the increase of $1,915 that was effected by the earlier departure determination.
On 11 December 2020 Mr Shovelton objected to Services Australia’s decision of 11 November 2020. On 3 April 2021 Services Australia allowed Mr Shovelton’s objection “in part” and made the following decision:
I have made the decision to set aside the decision of Decision Maker (DM) [Ms A] made on 11 November 2020 and replace it with the following:
For the period 1 July 2020 until 31 December 2020, the annual rate of child support payable by Mr Shovelton is increased by $6,808.
It is apparent from the reasons that Services Australia published for their decision that the increase in Mr Shovelton’s child support liability pursuant to this departure determination was in addition to the increase in his child support liability that was consequent upon the departure determination it had made prior to Ms Shovelton lodging her change of assessment application with Services Australia in August 2020.
The hearing papers reveal that following the objection decision dated 3 April 2021 Mr Shovelton was ultimately assessed to pay child support for the children as follows:

Period	Annual rate of child support payable	Mr Shovelton’s ATI	Ms Shovelton’s ATI
12/04/2020 – 30/06/2020[2]	$4,422	$49,472	$37,867.98
01/07/2020 –05/09/2020[3]	$13,432	$49,472	$34,052
06/07/2020 – 30/11/2020[4]	$12,643	$49,472	$34,052
01/12/2020 – 07/12/2020[5]	$14,514	$60,849	$36,884
08/12/2020 – 31/12/2020[6]	$11,571	$45,714	$36,884
01/01/2021 – 15/03/2021[7]	$4,763	$45,714	$36,884
16/03/2021 – 30/06/2021[8]	$7,855	$45,714	$36,884
01/07/2021 – 28/02/2022[9]	$7,891	$45,833	$36,884

[2] Page 412 of the hearing papers

[3] Page 411 of the hearing papers

[4] Page 410 of the hearing papers

[5] Page 409 of the hearing papers

[6] Page 408 of the hearing papers

[7] Page 406 of the hearing papers

[8] Page 405 of the hearing papers

[9] Page 402 of the hearing papers

The Tribunal observes that in the periods before 8 December 2020 the adjusted taxable incomes used for Mr Shovelton comprised his taxable income from the preceding financial year. Since 8 December 2020 Mr Shovelton has elected that his adjusted taxable income be what he has estimated his taxable income will be for the respective financial year in which he made the election, and his adjusted taxable income has been set accordingly.
Both Mr Shovelton and Ms Shovelton have applied to the Tribunal for review of the objection decision of Services Australia. Ms Shovelton’s objection bears the Tribunal’s review number 2021/SC021285 and Mr Shovelton’s objection bears the Tribunal’s review number 2021/BC021380.
On 26 October 2021 the Tribunal conducted an audio hearing of Mr Shovelton’s and Ms Shovelton’s applications for review, using Microsoft Teams. Both Ms Shovelton and Mr Shovelton participated in that hearing and both gave sworn oral evidence. Mr Shovelton and Ms Shovelton also, before the hearing, provided the Tribunal, in accordance with directions the Tribunal had earlier made, with several documents. Ms Shovelton’s documents were marked B1-B77 and Mr Shovelton’s documents were marked A1-A27.
No one from Services Australia participated in the hearing, which is customary.
The Tribunal has had regard to the sworn evidence of Mr Shovelton and Ms Shovelton and also the documents they provided as well as the hearing papers Services Australia provided.

CONSIDERATION

Ms Shovelton relied on the ground provided in sub-subparagraph 117(2)(b)(ii), which is described as “Reason 3” in the change of assessment application form, and which reads:
117(2)(b) that in the special circumstances of the case the costs of maintaining the child are significantly affected:
...
(ii) because the child is being cared for, educated or trained in the manner that was expected by his or her parents.
On 20 February 2019 both Ms Shovelton and Mr Shovelton signed an enrolment contract with [School] for [Child 2] to attend that school. The contract contained an acknowledgement that both Mr Shovelton and Ms Shovelton had the opportunity to fully consider its contents and that they both understood their obligations arising under the contract. Clause 4 of the contract stipulated, in substance, that the college would charge tuition fees that it would determine from time to time for [Child 2]’s attendance at that school and that Mr Shovelton and Ms Shovelton would pay the fees within the time stipulated in the invoice the school would render for the fees.
Ms Shovelton’s evidence was that following the school accepting [Child 2]’s enrolment it awarded her a scholarship. Ms Shovelton presented the invoices that the school had issued for [Child 2] for the 2021 year[10] which revealed that the fees the school charged each semester, net of the scholarship, amounted to $1,898.25, which extrapolates to an annual figure of $7,593.00. Also in evidence is the invoice the school issued for [Child 2]’s attendance in term 3 of 2020,[11] which revealed that the fees and charges for [Child 2]’s attendance in that term, net the scholarship and an amount charged for a camp, amounted to $1,828.05. The Tribunal infers that the school would have invoiced Mr Shovelton and Ms Shovelton for similar amounts for tuition fees and charges for [Child 2]’s attendance at the school in the other terms of the 2020 academic year. In other words, the Tribunal considers that the fees and charges for [Child 2]’s attendance at that school in the 2020 year were of the order of $7,314.
[10] A15-A23
[11] Hearing papers page 114
In the Tribunal’s view that is an amount that significantly affects the cost of maintaining [Child 2].
Ms Shovelton contended that it is evident from Mr Shovelton signing and entering into the enrolment contract with [School] that it was his expectation that [Child 2] would be educated at that school.
Mr Shovelton’s evidence was to the effect that he only signed the contract to enable [Child 2] to obtain a scholarship were she to attend the school, but it was never his expectation that she would be educated at that school.
The Tribunal does not accept Mr Shovelton’s evidence. By signing the enrolment contract he acknowledged that the school would enrol [Child 2] and that [Child 2] would thereafter be educated at the school. He acknowledged that the school would charge fees for [Child 2]’s attendance at the school, that it would determine from time to time. No reference whatsoever is made within the enrolment contract to a scholarship. Mr Shovelton’s evidence to the Tribunal, to the effect that by signing the enrolment contract he was merely assisting in the process of providing [Child 2] an opportunity to be awarded a scholarship by the school and thereby enable Ms Shovelton to realise her expectation of having [Child 2] in the school is simply implausible.
The Tribunal considers that as a consequence of [Child 2] being educated at the school and the cost of maintaining her being consequently increased, that a special circumstance arises in this case. The Tribunal is therefore satisfied that this ground for departure is established.

Is it just and equitable to make a determination?

As already mentioned, the matters the Tribunal must take into account when considering whether it is just and equitable to depart from the provisions of the Act with respect to the assessment of child support are listed in subsection 117(4) of the Act. The Tribunal is not required to go slavishly through each of those matters but must have regard to those that are relevant to the particular circumstances of this case and do so in a practical and flexible way: Gyselman and Gyselman (1992) FLC 92-279; Ross & McDermott (1998) FLC 98-003; and Lawson and Edney [2017] FCWA 77. Rather than dealing separately with each matter that is relevant, it is convenient for the Tribunal to group the matters and consider them, insofar as the matters have relevance, by a reference to the following headings.

The children’s circumstances

The children have all the normal needs of children of their respective ages. Further, as indicated earlier, [Child 2] required orthodontic treatment, which was dispensed around December 2019. The total cost for the treatment was $7,660, which Ms Shovelton has been paying by monthly instalments over a two-year period.
[Child 1] also had orthodontic treatment in November 2020 to rectify a functional shift attributable to a posterior crossbite and to negate an asymmetric lower jaw growth.[12] The cost for the treatment was $1,500. As the Tribunal understood Ms Shovelton’s evidence, she paid $100 of that when the treatment was provided, and has been paying the balance of $1,400 by monthly instalments of $100 through a DentiCare payment plan.[13]
[12] Hearing papers page 307
[13] A35
There is no evidence that [Child 3] has any special needs.
As has been discussed above, [Child 2] attends [School]. [Child 1] and [Child 3] attend state schools, although for a brief time [Child 3] also attended [School]. As found earlier, the cost of maintaining [Child 2] is significantly increased as a consequence of her attending [School].
Ms Shovelton’s evidence to the Tribunal was that [Child 2] is excelling at the school and wants to remain at the school. In light of that, the Tribunal considers that if it were to refuse to make a determination departing from the provisions of the Act with respect to the assessment of child support, so as to require a contribution from Mr Shovelton towards the school fees, there would be the potential, because of Ms Shovelton’s very limited means, which will be discussed below, that [Child 2] may not be able to continue at the school. The Tribunal is satisfied that were that situation to eventuate, hardship would be caused to [Child 2].
The evidence does not indicate that any of the children have available to them financial resources or income or any property of significance.

Ms Shovelton’s circumstances

Ms Shovelton provided the Tribunal a Statement of Financial Circumstances that she signed on 20 May 2021 declaring the contents to be complete and correct. In that she declared that she receives a fortnightly income of $1,042 from employment. She also disclosed in that statement that receives an employment and youth student benefit of $314 a fortnight and family assistance of $736.41, but she noted that those amounts can vary from fortnight to fortnight.
She has no assets of significance and certainly none that would be reasonable for her to sell to provide funds to assist with the support of the children.
She listed her weekly expenditures in her statement, which were modest. They do not reveal she has any indulgences.
Ms Shovelton’s evidence to the Tribunal, which it accepts, is that she has experienced numerous occasions where by the end of the week she has no money remaining and has to wait until she receives her pay on a Tuesday before she can buy food or pay bills.
It is apparent that she is experiencing financial hardship as a consequence of the cost associated with caring for the children. Her evidence was that the child support she receives from Mr Shovelton essentially goes to paying the school fees for [Child 2].
It is apparent that were the Tribunal not to make a determination to depart from the provisions of the Act with respect to the assessment of child support so as to increase the annual rate at which Mr Shovelton is required to pay child support for the children, Ms Shovelton would experience financial hardship given her present financial situation.

Mr Shovelton’s circumstances

Mr Shovelton is employed as [an Occupation]. His taxable income for the 2019 year was $49,472. For the 2020 year it was $60,849.
In evidence is a letter from his present employer dated 9 February 2021, in which his employer states that Mr Shovelton commenced employment in July 2020 on a full-time basis as a senior [Occupation]. His employer further stated that because of the “financial impact consequent upon the COVID pandemic Mr Shovelton’s position became permanent part time with a consequent reduction in hours and a reduction is his salary”. Mr Shovelton’s employer also indicated that it was hopeful that, in course of time, the impacts of COVID-19 would reduce and that it would endeavour to provide Mr Shovelton with additional work hours if that occurred.[14]
[14] Hearing papers page 299
Mr Shovelton provided a copy of his weekly payslip for the pay period ending 29 August 2021, which revealed that his gross earnings in the financial year to that date were $7,916.58.[15] That is the ninth week in the current financial year and consequently his earnings in the financial year to that date extrapolate to an annual figure of $45,754.
[15] B11
Mr Shovelton’s evidence was that he was declared bankruptcy a few years ago. He said as a consequence he does not have any loans or credit cards. His only asset is a motor vehicle of which he estimates the value to be $3,000, household contents of which he estimates the value to be $500, and a bicycle of which he estimates the value to be $2,000.

Mr Shovelton’s evidence was that he resides with his partner and her two children from a separate relationship. Mr Shovelton said that his partner attends to payment of most of their household expenditures and he just contributes cash for his share when required. He withdraws the cash from ATMs when required by his partner to make these contributions. He listed his household expenditures in a Statement of Financial Circumstances that he had completed. His proportion of the household expenses amounted to roughly $600, which broadly correlated with his after tax income.
Mr Shovelton holds a bank account with [Bank]. As part of the process of considering Ms Shovelton’s change of assessment application, Services Australia obtained from that bank a statement for Mr Shovelton’s account for the period 14 February 2020 to 30 August 2020. That revealed that in that period Mr Shovelton made several withdrawals for the purposes of crediting a TAB account and purchasing alcohol.
Mr Shovelton’s evidence to the Tribunal was that he was then suffering mental illness and was not receiving treatment. His evidence was that around November 2020 he sought treatment and is now the subject of a GP Mental Health Treatment Plan. He said that he no longer gambles and has not done so since the Melbourne Cup of 2020. He did say, however, that he spends $40 a week on alcohol purchases.
Ms Shovelton contended that Mr Shovelton would be using the cash he withdraws from ATMs for gambling. She also contended that Mr Shovelton receives “cash income” beyond the wages that his employer pays him. Mr Shovelton denied both these matters. There is no evidence to support Ms Shovelton’s suspicions and to contradict Mr Shovelton’s denial. The Tribunal is satisfied, based upon Mr Shovelton’s evidence, that he no longer uses his wages to defray gambling debts. The Tribunal is also satisfied that Mr Shovelton does not receive any income other than the wages he receives from his employment.
The Tribunal considers that Mr Shovelton presently has a relatively modest income which limits the child support he can provide for the children. Any substantial increase in his child support obligation would cause him consequent hardship.
The Tribunal observes that for a very brief time between 1 December 2020 and 7 December 2020 Mr Shovelton’s child support obligation was assessed upon an income amount substantially more than what his actual income was. However, the contrary was the case for the 2020 financial year in which he was assessed to have a taxable income of $60,849.
The Tribunal notes that as at the date of the hearing Mr Shovelton had accumulated an arrears of child support of $3,325.55.

Conclusions regarding just and equitable

In the Tribunal’s view it would be just and equitable to make a determination to depart from the provisions of the Act with respect to the assessment of child support so as to increase the annual rate at which Mr Shovelton would be required to pay child support for the children based on the provisions of Part 5 of the Act.
The Tribunal notes that the Federal Magistrates Court in the case of Wales & Falls & Anor (SSAT Appeal) [2010] FCAfam 116 observed at [12] that it is wrong for the Tribunal to adopt a formulaic approach when determining what would be a just and equitable determination to make to an assessment of child support, once a ground for departure has been established. In other words, if a ground for departure is established because of the increased cost associated with the care of a child, due to the child’s education or health, the task does not then simply reduce to splitting that cost pari passu between the parents based on their respective incomes. The Tribunal must approach the matter by considering the income, expenses and property of all parties. Simply put, the Tribunal must, as the legislation requires, consider all matters listed in subsection 117(4) to the extent relevant when determining what would be a just and equitable adjustment to make to the assessment of child support.
The Tribunal considers that Mr Shovelton, on his present level of income and with his commitments needed for his own support, has only a very limited capacity to pay more child support. In the Tribunal’s view, it would be appropriate that he contribute to the costs Ms Shovelton incurred for the orthodontic treatment that was dispensed to [Child 1] and [Child 2]; costs she is still meeting given she is paying them by instalments. That cost was necessary to ensure the children’s health.
However, absent Mr Shovelton receiving an increase in his present wages, which may eventuate if the disruptive effects of the COVID-19 pandemic were to diminish, he is unable, in the Tribunal’s view, to make a contribution towards the cost of [Child 2]’s school fees. As mentioned earlier, that potentially may cause a hardship for [Child 2], were it to result in her having to leave the school.
In the Tribunal’s view, the balance of hardship is such that the just and equitable departure to make would be to make the determinations that Services Australia have made to date with a further determination that from 1 January 2021 Mr Shovelton make a contribution of $585 a year until 30 June 2022 in addition to the increase required by the departure determination made prior to Ms Shovelton lodging her change of assessment application in August 2020. This ensures Mr Shovelton contributes to the costs Ms Shovelton incurred for the orthodontic treatment [Child 2] and [Child 1] until she completes the instalments.
The Tribunal consequently varies the objection decision it is reviewing by varying the annual rate at which Mr Shovelton is required to pay child support by increasing it by $2,500 for the period 1 January 2021 to 30 June 2022. To ensure clarity, the Tribunal notes that this variation to the annual rate at which Mr Shovelton is to pay child support for the children from 1 January 2021 to 30 June 2022 effectively supersedes the determination Services Australia made by its decision of 11 July 2020. In other words, it incorporates the increase of $1,915 determined pursuant to that determination.

Is it otherwise proper to change the assessment?

In deciding whether it is otherwise proper to depart from the administrative assessment, the Tribunal must have regard to the fact that the primary obligation to support the children rests with Mr Shovelton and Ms Shovelton, and also have regard to whether, and if so how, any determination it makes would affect the entitlement of Ms Shovelton or the children to an income-tested pension, allowance or benefit.
The Tribunal understands that none of the children receive an income-tested pension, allowance or benefit and, also, that circumstance will not change whatever determination the Tribunal makes.
Ms Shovelton receives a family allowance from the Commonwealth Government. The Tribunal understands that the departure determination it considers it is just and equitable to make may result in a reduction in that allowance, but that reduction would be less than the increase in the child support Ms Shovelton will receive from Mr Shovelton.
The Tribunal considers the determination it considers it is just and equitable to make is also otherwise proper to make.

DECISION

[2021] AATA 4785

26 October 2021

Key Legal Topics

Areas of Law

Family Law

Legal Concepts

Costs

Remedies

Jurisdiction