Siegel and Sarto (Child support)

[2021] AATA 3182

Siegel and Sarto (Child support) [2021] AATA 3182 (22 June 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBERS:  2021/SC021294

2021/SC021295

2021/SC021296

APPLICANT:  Mr Siegel

OTHER PARTIES:  Child Support Registrar

Ms Sarto

TRIBUNAL:Member M Douglas

DECISION DATE:  22 June 2021

DECISION:

The decisions under review are affirmed.

CATCHWORDS

CHILD SUPPORT – non-agency payment – payment made while no enforceable maintenance liability – 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. The Tribunal is reviewing, on Mr Siegel’s application, three decisions of a delegate of the Child Support Registrar dated 29 March 2021 that disallowed Mr Siegel’s objections to earlier decisions of another delegate that were dated 6 January 2021.  Those earlier decisions were to refuse to credit against the child support that Mr Siegel is assessed as liable to pay for his and Ms Sarto’s daughter, [Child 1]:

   ·     two payments that Mr Siegel had made to Ms Sarto in consideration for a sale by Ms Sarto to Mr Siegel of shares in a company known as [Business 1]; and

   ·     a payment Mr Siegel had made to the school at which [Child 1] attends for fees that that school had charged for [Child 1’s] attendance.

2. The Tribunal notes that the Child Support Registrar acts through staff employed with the Government department known as Services Australia – Child Support.  That Department was previously known as the Department of Human Services – Child Support.  It is convenient to refer to the Registrar as Services Australia for these reasons and hence, hereafter, a reference to Services Australia is to be taken as a reference to the Child Support Registrar.

3. The earliest payment that Mr Siegel made to Ms Sarto was an amount of $854,000, that occurred on 1 October 2011. As said, that was in consideration for Ms Sarto transferring to Mr Siegel shares in [Business 1].  The Tribunal’s review of Services Australia’s decision to disallow Mr Siegel’s objection to Services Australia’s decision of 6 January 2021 to refuse to credit any part of that payment against his child support liability bears Review Number 2021/SC021296. 

4. The next payment that Mr Siegel made to Ms Sarto was for the sale of further shares in that company.  The amount Mr Siegel paid was $889,000, which occurred on 1 July 2012.  The Tribunal’s review of the objection decision relating to Services Australia’s refusal to credit any part of that payment against Mr Siegel’s child support obligation bears Review Number 2021/SC021294.

5. The payment of school fees that Mr Siegel made to the school at which [Child 1] attends was for an amount of $3,755 and was made on 12 February 2018.  The review of the objection decision relating to that payment bears Review Number 2021/SC021295.

6. It is convenient to deal with all matters together.

7. The Tribunal conducted a hearing of Mr Siegel’s applications on 22 June 2021. Both he and Ms Sarto participated in that hearing using Microsoft Teams. Mr Siegel gave affirmed oral evidence and Ms Sarto gave sworn oral evidence. Ms Sarto was represented [Representative A] of counsel, who made submissions on Ms Sarto’s behalf. No one from Services Australia participated on behalf of the Registrar, which is customary. However, Services Australia, in accordance with its obligation under subsection 37(1) of the Administrative Appeals TribunalAct1975 provided the Tribunal and also Mr Siegel and Ms Sarto with three identical bundles of documents, numbered 1-180 (the hearing papers), which related to the objection decisions under review.

8. Mr Siegel also provided the Tribunal with a bundle of documents before the hearing which are marked A1- 84.  Similarly, Ms Sarto provided a bundle of documents to the Tribunal before the hearing, which included written submissions [Representative A] prepared dated 9 June 2021.  The documents that Ms Sarto provided have been marked A1-23.

9. The Tribunal has had regard to the oral evidence of Mr Siegel and Ms Sarto and also to the documents detailed above.

Relevant Factual Background

1. Mr Siegel and Ms Sarto separated on 31 July 2006.  An administrative assessment of child support for [Child 1] commenced on 2 October 2007.[1]

   [1] Pages 14 and 160 of the hearing papers

2. On 3 January 2008 Mr Siegel and Ms Sarto entered into a child support agreement, the key provisions of which required Mr Siegel to pay:

   a)    periodic child support to Ms Sarto in the sum of $1,417 a month until [Child 1] attained18 years of age, with that amount to be varied each year in accordance with the Consumer Price Index published by the Commonwealth Statistician for all groups for Sydney,

   b)    one half of the school fees for [Child 1’s] attendance at any Government, private or non-Government school Mr Siegel and Ms Sarto agreed upon commencing when [Child 1] started year 7,

   c)    one half of the cost of private health insurance for [Child 1], and

   d)    one half of the gap between any benefit paid by the health insurer for treatment for [Child 1] and the actual cost incurred for that treatment.[2]

   [2] A31-A36

3. At some time after Mr Siegel and Ms Sarto made that agreement, but before 18 March 2008, an application was made to Services Australia to accept the child support agreement.  On 18 March 2008 Services Australia notified Mr Siegel and Ms Sarto that the child support agreement had been accepted.[3] 

   [3] A54

4. In accordance with subsection 94(1) of the Child Support (Assessment) Act1989 (the Assessment Act), as enacted at 18 March 2008, Services Australia took immediate action to give effect to the child support agreement, which, in accordance with subsection 34B of the Assessment Act as enacted at 18 March 2008, was to amend the assessment of child support such that Mr Siegel was assessed as liable to pay child support for [Child 1] in accordance with the rate Mr Siegel and Ms Sarto had agreed upon in their child support agreement.[4] 

   [4] A54-55

5. As already mentioned on 1 October 2011 Mr Siegel paid Ms Sarto an amount of $854,000 in consideration of Ms Sarto transferring to him part of her shareholding in [Business 1].  On 1 July 2012 Mr Siegel also paid Ms Sarto an amount of $889,000 in consideration of Ms Sarto transferring to Mr Siegel further shares in [Business 1]. 

6. It was Ms Sarto’s evidence to the Tribunal that she used that money to provide part of the funds needed for her purchase of a house that she and [Child 1] used as their residence.  It was the evidence of both Mr Siegel and Ms Sarto to the Tribunal that at the time Mr Siegel made each payment to Ms Sarto, and thereafter, they had not discussed how Ms Sarto would apply the money she received from Mr Siegel for her transfer of shares to him. 

7. [Child 1] has been enrolled at [College 1] for several years, and at all times since, Mr Siegel has paid half of the fees the school has charged for her attendance.  Ms Sarto has paid the other half. 

8. At all relevant times, Mr Siegel has had less than 14% care of [Child 1].

9. Prior to 18 December 2020, Mr Siegel’s liability to pay child support to Ms Sarto had not been registered under the Child Support (Registration and Collection) Act 1988 (the Registration & Collection Act). This is apparent from:

   a)    the objection decisions under review, wherein it is stated that Services Australia accepted an application Ms Sarto had made “for collection” on 18 December 2020,[5]

   b)    the case summary-production that Services Australia provided, wherein it is noted in the box for collection details that the liability has been “collect from 18/12/2020”,[6] and

   c)    the case liability rates for case 254213371 that Services Australia provided wherein under the column titled ‘collection’ it is noted that the child support payable by Mr Siegel is “N”, meaning not to be collected by Services Australia for the period 2 October 2007 until 17 December 2020.[7] 

   [5] Hearing papers page 14

   [6] Hearing papers page 160

   [7] Hearing pages 163-165

10. Ms Sarto’s application on 18 December 2020 for Mr Siegel’s child support liability to be registered for collection was an application made under subsection 25(1) of the Registration & Collection Act. The consequence of Ms Sarto making her application for Mr Siegel’s child support liability to be registered under this Act was that, in accordance with subsection 25(2) of the Registration & Collection Act, the particulars of Mr Siegel’s child support liability would have been entered in the Child Support Register and, in accordance with paragraph 28(1)(c) of the Registration & Collection Act, Mr Siegel’s liability first became enforceable from that date as a debt due to the Commonwealth in accordance with subsection 30(1) of the Registration & Collection Act.

11. On 6 January 2021 Mr Siegel sought, through Services Australia online portal, that the payments he had made to Ms Sarto of $854,000 on 1 October 2011 and of $889,000 on 1 July 2012 and the payment of school fees of $3,755.88 he made on 12 February 2008 be credited against his child support liability.[8]  The Tribunal observes that the date he specified for the payment of [Child 1’s] school fees in the online portal was 12 February 2008 but he has subsequently corrected that date to 12 February 2018.  With respect to the payments Mr Siegel made on 1 October 2011 and 1 July 2012, he described the payments as being “mortgage”. 

CONSIDERATION

[8] Hearing pages 56-58

1. Mr Siegel contends, in substance, that Services Australia was required under subsection 71C(1) of the Registration & Collection Act to credit against his child support liability for each payment period after 18 December 2020 the payments he had made both to Ms Sarto and to [Child 1’s] school up to a maximum of 30% of the amount he was liable to pay to Services Australia in child support for the particular period.

2. Subsection 71C(1) of the Registration & Collection Act reads as follows:

   (1) If

   (a)the payer of an enforceable maintenance liability in relation to a payment period or initial period has made one or more payments to the payee of the liability, or to another person; and

   (b)the payment is a payment of the kind specified in the regulations; and

   (ba)at the time the payment is made, the payer does not have at least regular care of any of the children to whom the relevant administrative assessment relates; and

   (c)the sum of those payments exceeds the sum of all such payments previously credited under this section against the amount payable under the liability for all past periods; and

   (d)the payer does not, at the time at which the Registrar applies this section, have at least regular care of any of the children to whom the relevant administrative assessment relates;

   then the Registrar must, despite section 30, credit the excess amount mentioned in paragraph (c) against the amount payable under the payer’s liability for the period, up to a maximum of 30% of the amount payable.

3. Regulation 19 of the Child Support (Registration and Collection) Regulations 2018 specifies what payments can be credited against a child support liability under subsection 71C(1). They include payments of fees charged by a school for a child and payments of a payee’s share of repayments of a loan that financed the payee’s home.

4. The term “enforceable maintenance liability” is defined in section 4 of the Registration & Collection Act to mean “a registered maintenance liability that is enforceable under this Act”.

   The term “registered maintenance liability” is defined in section 4 to mean “a registered maintenance liability that is registered under this Act”. The term “registered maintenance liability” is defined to be “a liability that is, under sections 17, 17A, 18 or 18A, a registerable maintenance liability”. Section 17(2) stipulates that a liability arising under a child support assessment is a registerable maintenance liability.

5. Hence in order that there is an enforceable maintenance liability, it is necessary that there be a liability arising under a child support assessment that is registered under the Registration & Collection Act and that is enforceable under the Registration & Collection Act.

6. In this case there is a liability on the part of Mr Siegel to pay child support arising under a child support assessment, which commenced on 2 October 2007, and is current and that since 18 March 2008 has been assessed in accordance with the child support agreement. His liability however was not registered under the Registration & Collection Act until such time as Ms Sarto applied under subsection 25(1) of the Registration & Collection Act, which did not occur until 18 December 2020. It is only then that Mr Siegel’s obligation to pay child support first became enforceable under the Registration & Collection Act in accordance with subsection 28(1) of the Registration & Collection Act. The payments that Mr Siegel made to Ms Sarto on 1 October 2011 and 1 July 2012 and the payment that he made to the [College 1] on 12 February 2018 were, of course, all made before he had an enforceable maintenance liability. Accordingly, no part of these payments can be credited against his child support liability under subsection 71C(1).[9]

   [9] See BVG17 v BVH17 [2019] FCAFC 17 at [90]

7. The Tribunal notes that Mr Siegel submitted that his child support liability was registered with Services Australia from 2 October 2007 and in support of that he referred to Services Australia’s objection decisions wherein Services Australia said that “evidence from child support records: 1. [Mr Siegel] and [Ms Sarto] (sic) have had a registered child support assessment for [Child 1] – since 2 October 2007...”. 

8. The Tribunal considers that this use by Services Australia of the word “registered” in its objection decision is inaccurate, and it is unfortunate that care was not taken by Services Australia with respect to the terminology it used. It is clear from the evidence that Services Australia were not collecting child support from Mr Siegel preceding 18 December 2020. The inference from that is that either Mr Siegel was the party who initially made the application for a child support assessment for [Child 1] or that Ms Sarto made the application but opted not to have the liability enforced, such that the registerable maintenance liability created by the acceptance of the application for child support did not create an obligation on Services Australia to register the liability under the Registration & Collection Act under subsection 24A(1). The evidence demonstrates that, as at the time Mr Siegel made the relevant payments, his liability was not registered to be enforced under the Registration & Collection Act. At all times before then he did not have a debt to the Commonwealth against which the payments might potentially be credited.

9. Mr Siegel also referred to the following paragraph appearing in 5.3.1 of the Child Support Guide:

   The payee of a private collect case later applies for registration of the maintenance liability and collection of arrears, the Registrar will calculate the unpaid amounts by taking into account any credit for prescribed payments that would have been available if the case were registered for collection.

10. What that passage is intended to convey, in the Tribunal’s view, is not readily comprehensible. It seems to the Tribunal that, most likely, it is to be understood such that it states a policy position of Services Australia that if there are any “opt in arrears” when a payee applies to have a child support liability registered to be enforced under the Registration & Collection Act then Services Australia will give credit under subsection 71C for any prescribed payments that were made from the date upon which the opt in arrears accumulated. Whatever it means, it cannot override the requirements of the legislation or indeed the authority of BVG17 v BVH17 to the effect that payments made by Mr Siegel prior to his having an enforceable maintenance liability cannot be credited under subsection 71C(1).

11. That is sufficient to deal with Mr Siegel’s applications for review. However, even if the Tribunal were wrong regarding its interpretation of subsection 71C(1), there are other reasons why the payments that Mr Siegel made cannot be credited against his child support liability.

12. Firstly, the payments he made on 1 October 2011 and 1 July 2012 were not payments of a kind specified under regulation 19 that can be credited against an enforceable maintenance liability.  Ms Sarto made these payments to Ms Sarto in consideration of her transferring her shares in a company to Mr Siegel.  It was at her discretion what she did with the money.  The payments cannot be characterised as payments made by Mr Siegel for repayments that Ms Sarto made on a loan to finance the purchase of her home.

13. The payment Mr Siegel made to the [College 1] on 12 February 2018 falls within the description of regulation 19(c).  However assuming, in arguendo, that payments made before Mr Siegel had an enforceable maintenance liability could be credited under section 71C against his child support liability, then it seems to the Tribunal that in that circumstance it would be appropriate for the Tribunal to exercise its discretion under section 71D to refuse to credit the amount under section 71C. 

14. Section 71D reads “the Registrar may refuse to credit an amount under section 71, 71A or 71C if satisfied that, in the circumstances of a particular case, the amount ought not to be credited”.  Here, the child support agreement made between Mr Siegel and Ms Sarto required him to pay half of the school fees in addition to the periodic amounts of child support he was to pay in accordance the agreement.  The Tribunal observes that the Child Support Guide lists in 5.3.1 certain circumstances in which Services Australia, as a matter of policy, may refuse to credit an amount under section 71D.  These include “the payer is claiming credit under section 71C of the [Registration & Collection ] Act for an expense which they have undertaken to pay in addition to their liability as specified in an agreement between the parents”.  That is the circumstance here.

15. The Tribunal notes that Mr Siegel contended that the assessment of his child support liability in accordance with the child support agreement is requiring him to pay more child support than what he would be assessed to pay were the agreement not to apply and his liability were to be assessed under the usual provisions of the Assessment Act. His submission was, as the Tribunal understood it, to the effect that it is unfair to him to require him to pay child support based upon the agreement and for him not to get any credit for the school fees he is paying. There is not sufficient evidence before the Tribunal to make a finding in that regard, in that there is no evidence that would reveal the property and financial resources of both parents such that the Tribunal could make a finding regarding the fairness of the child support assessment. The Tribunal observes that it is open to Mr Siegel to make an application under section 136 of the Assessment Act to a Court having the appropriate jurisdiction to set aside the agreement.

16. In the circumstances, the Tribunal would not, as a matter of discretion, and consistent with the policy of Services Australia as articulated in the Child Support Guide, have credited any part of the school fees Mr Siegel paid on 18 February 2018 against his child support liability, even if it were able to do so under subsection 71C(1) of the Registration & Collection Act.

DECISION

The decisions under review are affirmed.