Simmonds and Simmonds (Child support)

[2019] AATA 5506

Simmonds and Simmonds (Child support) [2019] AATA 5506 (6 November 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/HC017025

APPLICANT:  Ms Simmonds

OTHER PARTIES:  Child Support Registrar

Mr Simmonds

TRIBUNAL:Member A Schiwy

DECISION DATE:  6 November 2019

DECISION:

The tribunal sets aside the decision under review and, in substitution, decides that:

• From 1 July 2018 to 30 June 2019 Ms Simmonds’ adjusted taxable income is varied to $90,760;

• From 1 July 2019 to 30 September 2020 Ms Simmonds’ adjusted taxable income is varied to $81,300;

• From 25 February 2019 to 24 March 2020 the child support liability is increased by $3,200; and

• From 25 March 2020 until the case terminates the child support liability is increased by $2,100 per annum.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents – costs of the children include private education – 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

1. Ms Simmonds and Mr Simmonds are the separated parents of four children.  The youngest, [Child 1], is 13 years old.  This review is about the child support payable by Mr Simmonds to Ms Simmonds for [Child 1].  (The second youngest child, [Child 2], turned 18 [in] December 2018.)

2. The Department of Human Services (‘Child Support’) has determined that Ms Simmonds has 100% care of [Child 1].

3. There have been several departure determinations made since the child support case was registered.  The most recent was made on 22 July 2016 and this increased the amount of child support payable to allow for private school fees for two of the children, [Child 3] and [Child 2]. (The eldest child had left school prior to this decision and [Child 1] was in public school.) The determination ended on 31 December 2017.

4. The administrative assessments issued for 1 January 2018 onwards have been based on the adjusted taxable incomes of both parents.  Their 2017-18 adjusted taxable incomes were $68,849 for Ms Simmonds and $84,998 for Mr Simmonds.

5. On 8 March 2019 Ms Simmonds lodged a departure application with Child Support. The application was made on the basis that the rate of child support payable under the administrative assessment was unfair because of the costs of caring for [Child 1] (orthodontic costs) and the costs of educating [Child 1].  Mr Simmonds ‘cross applied’ on the basis that the rate of child support payable under the administrative assessment was unfair because of Ms Simmonds’ income and financial resources; his need to support his wife; and his need to support [Child 2].

6. On 30 April 2019 a Child Support case officer decided to make the following departure determination:

   ·     For the period 11 November 2017 until 10 November 2018 Ms Simmonds’ adjusted taxable income is increased by $37,000; and

   ·     For the period 1 January 2019 to 31 December 2019 the annual rate of child support payable is increased by $3,197 – orthodontic costs and private school fees; and

   ·     For the period 1 January 2020 to 31 December 2024 the annual rate of child support payable is increased by $2,202 (increasing each year up to $2,675) – private school fees.

7. In May 2019 both parents objected to that decision.

8. On 26 July 2019 a Child Support objections officer partly allowed the objections.  The objections officer decided to make the following departure determination:

   ·     For the period 11 September 2017 to 30 June 2019 the parents’ adjusted taxable incomes were varied;

   ·     For the period 1 January 2019 to 31 December 2019 the annual rate of child support payable was increased by $3,197 – orthodontic costs and private school fees;

   ·     For the period 1 January 2020 to 31 December 2024 the annual rate of child support payable was increased by $2,202 (increasing each year up to $2,675) – private school fees.

9. On 29 July 2019 Ms Simmonds lodged an application with this tribunal for an independent review of the objections officer’s decision.  Mr Simmonds also enquired about making an application but was advised that it was not necessary as Ms Simmonds had already applied.

10. A hearing was held on 6 November 2019.  Both Ms Simmonds and Mr Simmonds gave evidence on affirmation at the hearing by conference telephone.

11. In considering this matter, the tribunal took into account the oral evidence of Mr Simmonds and Ms Simmonds, and the relevant documentation provided by the Child Support Registrar (numbered 1 to 702), Ms Simmonds (numbered A1 to A10) and Mr Simmonds (numbered B1 to B28). Copies of the papers were provided to all parties prior to the hearing.    

ISSUES

1. The statutory provisions relevant to this review are set out in the Child Support (Assessment) Act 1989 (the Assessment Act) and in the Child Support (Registration and Collection) Act 1988.

2. The Assessment Act provides for an administrative assessment of the child support payable. It uses a formula that contains variables including the parents’ adjusted taxable incomes; their percentages of care for the children; and costs of the children. The Assessment Act also makes provision for the Registrar to amend administrative assessments and to make a departure from the administrative assessment in certain circumstances.

3. The issues which arise in this case are:

   ·     does a ground for departure from the administrative assessment for child support exist; and if so,

   ·     is it just and equitable to make a particular determination; and

   ·     is it otherwise proper to make a particular determination?

CONSIDERATION

Issue 1 – Does a ground for departure from the administrative assessment for child support exist?

School fees

1. Subparagraph 117(2)(b)(ii) of the Assessment Act provides that a ground for departure exists where, in the special circumstances of the case, application of the provisions of the Assessment 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 children because the costs of maintaining the child are significantly affected because the child is being cared for, educated or trained in the manner that was expected by his or her parents.

2. The term ‘special circumstances’ is not defined in the Assessment Act. In Gyselman and Gyselman (1992) FLC 92-279 (Gyselman) the Full Court of the Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.

3. As noted by the Court in Mabry & Mabry (SSAT Appeal) [2010] FMCAfam 388 the first step for the tribunal is to determine whether the child is ‘being … educated … in the manner that was expected by his or her parents.’  Whether the fees can be met (and the proportions in which the parents must contribute), must be determined having regard to the parents’ actual financial positions, and is a matter to consider under ‘just and equitable’.

4. In this case Ms Simmonds is submitting that [Child 1] is being educated at a Catholic school ([School 1]) from Grade 7 onwards and this is in accordance with the expectation of both parents.  She has submitted information about tuition costs and these are $4,194 in 2019.

5. Ms Simmonds stated that:

   ·Mr Simmonds did not like the way in which his eldest son, [Child 4], was educated at [another school] (public school).

   ·They both agreed that their children would go to [School 1] for their high school education.

   ·The three eldest children all went to [School 1].

   ·It is not fair that their youngest child should not be able to attend the same school.  She, and [Child 1], have expected that he would attend [School 1], the same as his sisters.

6. Mr Simmonds has stated that:

   ·His son [Child 4] had some issues but they were nothing to do with his education.

   ·He never had much say in where the children attended school.

   ·At the time the parents separated they were broke due to the cost of the fees and also the cost of the dancing classes that the girls attended.

   ·He has not seen [Child 1] since separation, when [Child 1] was in grade 1 or 2, and he has had no input into [Child 1’s] education.

   ·He is remarried with two young children and cannot afford to contribute to the school fees.

7. A departure determination application was considered in August 2013 with school fees being an issue considered.  The decision maker stated that ‘Mr Simmonds confirmed he and Mrs Simmonds both agreed that the children be educated at [School 1] for their secondary education commencing with [Child 5] in Year 7 in 2009.  [Child 5] is currently in Year 11, [Child 3] in Year 8 and [Child 2] in Year 7.  Both parents also agreed the children’s primary school education be in the State school system and this continues with [Child 1] currently in Year 1 at [a school].  It is expected [Child 1] will commence education at [School 1] in Year 7 which is several years away.’

8. Mr Simmonds stated that he does not recall this conversation and does not agree that he told the Child Support officer that he had agreed for [Child 1] to attend [School 1].  When asked why he would agree to the three eldest being educated privately, but not [Child 1], Mr Simmonds noted that it was not necessary for siblings to all attend the same school.

9. Although he may not have had much input about the children’s education it is clear that prior to separation Mr Simmonds had agreed for the three eldest children to attend [School 1] college.  Given this fact, and the further evidence provided in the 2013 decision, the tribunal decided that it was more likely than not that Mr Simmonds did intend for [Child 1] to be educated in the same manner as his siblings.  The tribunal accepts that Mr Simmonds has had no input into [Child 1’s] care for several years but this does not alter the fact that prior to separation he had intended for [Child 1] to attend [School 1].

10. The tribunal was satisfied that the parents had mutual agreement to educate [Child 1] at [School 1] and that the tuition fees in 2019 are $4,194.  The fees are significant and the tribunal decided that there are special circumstances in this case that make the administrative assessment unjust and inequitable. The ground for departure does exist in this case.

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

1. As the tribunal is satisfied that a ground to depart from the administrative assessment exists, the tribunal must consider whether it is just and equitable as regards the children, the liable parent and the carer entitled to child support to make a particular determination (subparagraph 98C(1)(b)(ii) of the Assessment Act). Subsection 117(4) of the Assessment Act sets out a variety of factors that must be considered in deciding whether it would be ‘just and equitable’ to make a particular determination. These factors include the proper needs and costs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

2. Section 3 of the Assessment Act makes it clear that the parents have the primary duty to maintain their children and that this duty has priority over all commitments of the parents, other than commitments necessary for self-support or for the support of another person they have a duty to maintain. In this case Mr Simmonds and Ms Simmonds have the primary duty to support their children.

Ms Simmonds’ income, property and financial resources

Employment income

1. Ms Simmonds commenced working for [Company 1] in late 2015.  In April 2016 she suffered an injury at work and went onto workers compensation payments.  [Company 1] decided to dispute the case and compensation payments were only received for a few weeks.  Ms Simmonds commenced receiving sickness benefit (newstart allowance) and had to manage on a significantly lower income.  By late 2016 the case had not been resolved.  She was experiencing financial hardship given the reduction in her income and had borrowed money to get by.  The case was settled in November 2017 and compensation was received (see further below).

2. She commenced working for [another company] in January 2017 and she receives a salary and commission.  Her taxable incomes in 2017-18 and 2018-19 were $68,849 and $82,366.  She said her income has now reduced as the company restructured and the commission payments have halved.  She estimates her weekly income to be $1,514 ($78,728 per annum).

3. Ms Simmonds is provided with a work vehicle and Mr Simmonds submitted that the value of the private use of the car should be included in Ms Simmonds’ income.

4. Ms Simmonds stated that the car is a work vehicle only and she shares use of her daughter [Child 3’s] car for private travel.  She said the car is a utility and is used to deliver products to customers; it has the company’s logo.  Ms Simmonds is able to drive to and from work in the vehicle; she travels a lot with her job and drives straight to customers.  She is required to be on call at times and if called out uses the vehicle.  When asked if she is able to use the vehicle privately she said yes and then said ‘for emergencies’.  Mr Simmonds pointed out that he has seen Ms Simmonds using the vehicle on weekends and recently saw her visiting friends using the vehicle.  Ms Simmonds said she was on call at the time and had to use the work vehicle in case she was called out. 

5. The tribunal was satisfied that Ms Simmonds has some benefit from the car for private travel.  She does not have her own vehicle and her own evidence was that [Child 3] is often not staying with her anymore as she often stays with her partner.  It is difficult to give a value given the car is clearly a business vehicle and is used predominantly for work purposes.  The tribunal decided that it would be reasonable to assess a value of $50 per week.

6. Ms Simmonds’ reduced her income in 2018-19 by claiming deductions of $2,688 for car expenses and $3,114 for travel.  Ms Simmonds said her work vehicle is sometimes unavailable as it is used by other staff or in for a service and she is required to use her own vehicle.  She said she is not compensated for this.  The tribunal did not think it was credible that Ms Simmonds would incur such a significant expense using her own vehicle and not be reimbursed. 

7. Ms Simmonds said she travels a lot and has to stay overnight in accommodation.  She said she agreed with her employer that she would not claim the expense but claim it on her tax instead.  She said that this year she is being reimbursed.  Again, the tribunal did not think it was credible that an employee would be required to cover accommodation costs when travelling for work.  Claiming the expense as a tax deduction would only result in a partial reimbursement. 

8. Ms Simmonds’ salary in 2018-19 was $88,160.  The tribunal decided that an income of $90,760 would fairly reflect her income from 1 July 2018 to 30 June 2019 (including $50 per week for the work vehicle).  Ms Simmonds has stated that her income has now reduced due to a reduced rate of commissions.  Her income from 1 July 2019, after allowing for the work vehicle benefits) is around $81,300. 

9. In summary, at the time the departure application was made, Ms Simmonds was being assessed on a relatively low income as her taxable income in 2017 was much lower than she is currently receiving; around $90,760 in salary and benefits, reducing to $81,300 on 1 July 2019.

10. If a departure determination is made it should reflect her increased income and noting that it then decreases from 1 July 2019.  When Ms Simmonds lodges her 2019-20 income tax return her new income should adequately reflect her actual income (adding in the vehicle allowance makes very little difference to the child support liability).

Receipt of compensation

1. Ms Simmonds has had two lump sum compensation payments in recent years and Mr Simmonds has submitted that these should be taken into account when assessing her income and financial resources.

2. As discussed above Ms Simmonds settled a workers compensation case and in November 2017 she was awarded a lump sum payment of [amount].  After payment of medical expenses and legal fees she was left with [amount]. 

3. Ms Simmonds noted that she had to live on sickness benefits for several months and borrowed money including a loan of [amount] from a friend to pay for her daughters’ [Sports 1] fees in [a city].  When she received the payment she repaid her friend.

4. The tribunal noted that Ms Simmonds returned to work prior to the settlement and it is very doubtful that she was compensated for loss of future earnings.  It would appear she was compensated for loss of earnings in 2016 and for medical costs.  The tribunal did not consider the payment to be ‘income’ to cover a period after November 2017.  It is also not a significant amount of money.  If it had been banked, the interest would be around $300 per year (based on 2% return).

5. Ms Simmonds received a [amount] payment for [another type of] compensation in late 2018.  She used the money as part of a deposit on her current residence.  She noted that since separation she has had to rent a residence.  Again the tribunal did not consider this to be income or a significant financial resource; it has been spent, reasonably, on accommodation.

Financial situation and expenses

1. Ms Simmonds purchased a residence in late 2018 for $375,000 and she has a mortgage for $349,000.  Her other major asset is superannuation of around $78,000.  Ms Simmonds has a personal loan and four credit cards with around $31,000 owing.

2. Ms Simmonds pays tax of around $404 per week and $120 per week off her credit cards. 

3. Ms Simmonds lives with [Child 1] and her adult daughter, [Child 3].  She said that [Child 3] ‘comes and goes’, often staying with her partner.  Ms Simmonds said that [Child 2] often stays over, on average for three or four nights per week.  [Child 2] lives with Mr Simmonds and he disputed that it was so often.  Ms Simmonds listed her weekly living expenses to be $1,248 which included $220 for food and $383 for the mortgage.  It included $110 per week for discretionary items such as entertainment, holidays and gifts.  It also includes the school fees of $78 per week.  It was not clear how much of this weekly expense is for Ms Simmonds, [Child 1] or the daughters.

4. After deducting discretionary items, Ms Simmonds does have sufficient income to cover her weekly expenses, tax and credit card repayments.  Her income is also supplemented by family tax benefit.

5. The tribunal was satisfied that Ms Simmonds would not suffer any financial hardship if a departure was not made from the formula assessment.

6. The tribunal also noted that Ms Simmonds is under no legal obligation to support either of her adult daughters.

7. Mr Simmonds made comments about the fact that Ms Simmonds has taken several overseas holidays with the children and has a wealthy boyfriend.  The ‘boyfriend’ lives in [a city] and does not share a residence with Ms Simmonds.  The tribunal noted that Ms Simmonds’ boyfriend is not obligated to support [Child 1] and his wealth is immaterial.

8. Ms Simmonds said she went to [a location] with the family in around 2015 and this year she has taken two cruises.  Her eldest daughter works on a cruise ship and she gets the cruise for free.  She paid for herself, [Child 1] and [Child 2] to fly to the [a country] earlier this year to join a cruise at a cost of [amount].  Her daughter paid for the second trip as a 50^th birthday present.

9. Mr Simmonds believes she has had other holidays.  Regardless of this, as discussed above, it is clear that Ms Simmonds is not in any financial hardship. 

Mr Simmonds

1. Mr Simmonds is [employed in a position] for [a company].  His taxable income in 2017-18 was $84,998 and in 2018-19 it increased by a moderate amount to $88,140.  Mr Simmonds said he was paid $29 per hour and his actual hours worked depended on overtime. 

2. Ms Simmonds has submitted that Mr Simmonds earns additional money playing [Sport 2] and umpiring.  Mr Simmonds said he does the occasional game for [an association]; around four in 2019.  He nets about [amount] per game.  Ms Simmonds said he did it every week when they were together and she often sees him umpiring games.  The tribunal noted that any payments from the association would not be ‘cash in hand’ and therefore any net income would be included in his taxation return. 

3. Mr Simmonds plays [Sport 2] for [a town] and he said he is not paid for this; he also said he has only played twice this year, noting he is 47 years old.  The tribunal was satisfied that any earnings would be minimal and with no further evidence from Ms Simmonds, other than she has seen him playing, the tribunal decided that there was no significant amount of income from this activity.

4. The tribunal was satisfied that Mr Simmonds’ actual income is fairly reflected by his taxable income.

5. Mr Simmonds is married and has two children with his current wife, aged 4 years and 13 months.  His wife took 12 months maternity leave when the second child was born.  She received 16 weeks paid parental leave and then was on nil income.  Mr Simmonds has submitted that he had to support the family on one income while his wife was on maternity leave.  The tribunal noted that the child support formula does take into account a parent’s other dependent children but noted that his financial situation would have been difficult while his wife was on unpaid maternity leave.  She is now earning $640 per week but they have child minding expenses of $170 per week.

6. Mr Simmonds also submitted that he is required to support [Child 2], the 18-year-old daughter of he and Ms Simmonds.  Mr Simmonds said [Child 2] has two part-time jobs but does not pay any board.  He has to help her out.  The tribunal noted that Mr Simmonds has no legal obligation to support [Child 2].

7. Mr Simmonds jointly owns a house valued at $420,000 with a mortgage of $370,000.  He has superannuation of $68,000.  Mr Simmonds has credit card and personal loan debts of $9,500.  Mr Simmonds listed his weekly expenses to include $450 for tax and $20 per week for medical insurance.  He listed his household weekly expenses to be $1,540 (net of child minding).  This included $350 for food and therefore presumably includes [Child 2’s] food.  It also includes $400 for the mortgage.  Discretionary expenses of $145 (holidays, entertaining and gifts) were included.

8. The tribunal decided that after payment of his weekly expenses (excluding discretionary items) and assuming his spouse contributes to the household expenses, Mr Simmonds would have around $300 per week ($15,600) left over to meet his child support obligations.

9. Child support payable based on the parents’ income is around $8,800 per annum.  Mr Simmonds should be able to afford to pay child support based on the parents’ current incomes and contribute to the private school fees and dental costs (discussed below) without causing financial hardship.

10. Ms Simmonds submitted that Mr Simmonds has expensive hobbies; in particular, that he runs a boat.  Mr Simmonds categorically denies having a boat.  Regardless of whether he does or not, as discussed above, the tribunal is satisfied that Mr Simmonds has the financial capacity to contribute to the child’s school fees and dental costs.

The child

1. There is no evidence that [Child 1] has income or financial resources of his own.

2. The tribunal noted that the costs of children data used in the statutory formula for a child support period that commenced in 2019, indicate that the costs of caring for a child aged 13 years, where the parents’ income is as found by the tribunal, are approximately $21,500 per annum. Ms Simmonds is assessed as having 100% care of the child and would therefore incur the majority of his costs. 

3. In addition Ms Simmonds has provided evidence that [Child 1] required orthodontic treatment earlier this year and her out of pocket expenses were $2,200.  The tribunal decided that Mr Simmonds should contribute to this cost as it is significant and out of the ordinary.

Summary

1. After taking into account the above, the tribunal decided that it would be just and equitable to make a departure determination varying Ms Simmonds’ adjusted taxable income and increasing the resulting child support liability to allow for Mr Simmonds to pay for half of the orthodontic costs and half of the school fees.  This would ensure that Mr Simmonds and Ms Simmonds share in the costs of caring for the child at a level commensurate with their resources and both contribute to the extraordinary costs for [Child 1].  The tribunal did not consider that this would cause Mr Simmonds any financial hardship given his financial resources and earning capacity.

Issue 3 – Is it otherwise proper to make a particular determination?

1. The requirement to consider whether a departure would be otherwise proper directs attention to what is fair to the community.  It is necessary to consider the effect of any departure from the administrative assessment on entitlements to income-tested pensions, allowances and benefits.  Parents, rather than the community, have the primary duty to maintain their children.  Ms Simmonds is in receipt of family tax benefit.  Ms Simmonds will receive fewer government payments if her child support payments increase and the tribunal was satisfied that such a result would be otherwise proper.

Conclusion

1. The tribunal decided that it was just and equitable, and otherwise proper, to make the proposed departure determination.

2. The tribunal then considered what an appropriate start and end date for the departure determination would be. 

3. Ms Simmonds applied for a departure determination in March 2019 however Mr Simmonds has submitted that he has been raising questions about her income and financial resources for some time.

4. The previous departure determination ended on 31 December 2017.  Child Support have recorded that Mr Simmonds contacted Child Support on 8 August 2018 to say Ms Simmonds had received compensation and that it may not be included in her taxable income.  He was advised that he could lodge a departure determination but no further investigation would be made if he did not apply.  He rang again on 29 August 2018 to say his wife was on maternity leave and dependent on him.  The ability to add on relevant dependents was explained.  Ms Simmonds rang on 30 October 2018 about the orthodontic treatment needed and private school fees.  She was advised she could lodge a change of assessment application.  On 8 November 2018 Mr Simmonds rang about the costs of public school fees and [Sports 1] for [Child 2].  He was advised that public school fees would not be a reason to vary the formula but he could try re the [Sports 1] fees.  On 19 December 2018 Mr Simmonds rang to say Ms Simmonds had received [amount] in compensation.  He was again advised about change of assessment applications.  He rang again on 22 February 2019 and was again advised about change of assessment applications; he was sent a form.  Mr Simmonds lodged a form on or around 25 February 2019 (page 229 of the papers).  There was an error with the assessment at the time and the application was not acted upon.  Ms Simmonds lodged her application on 8 March 2019.

5. The tribunal could backdate a departure determination up to 18 months prior to the date of application.  A previous determination was in place until 31 December 2017. 

6. The tribunal noted that Ms Simmonds has been on a significantly increased income since around January 2017 when she returned to work and this was not fully reflected in the assessment until she lodged her income tax return for 2017-18 (which she did in a timely manner).  It was also open to both parents to apply for a departure determination earlier, and they were advised about the process and had been through it several times before. On balance the tribunal decided it would be fair to depart from the formula assessment from 1 July 2018.

7. The tribunal decided that the departure determination should be for a lengthy period in relation to the school fees given that [Child 1] will be in private school for 6 years.  Now that Ms Simmonds has returned to work full time her income should be adequately reflected by her taxable income once she lodges her 2019-20 tax return.  The tribunal therefore decided to vary her income until 30 September 2020 and increase the child support liability for school fees until the case is terminated. 

8. The current school fees are $4,194 and a 50% share would be around $2,100. Any increase over the years would not be material in the context of the overall child support liability. The orthodontic fees were $2,200 and a 50% share would be $1,100. 

9. Mr Simmonds owed $2,139 in child support as at 25 August 2019.  The proposed departure will not make any significant difference to the current amount owed given that the income figure for Ms Simmonds is not being varied greatly and does not have a significant impact on the amount of child support payable due to the fact that she has 100% care of the child.  Mr Simmonds has sufficient equity in his home and income to finance the resulting debt.

DECISION

The tribunal sets aside the decision under review and, in substitution, decides that:

• From 1 July 2018 to 30 June 2019 Ms Simmonds’ adjusted taxable income is varied to $90,760;

• From 1 July 2019 to 30 September 2020 Ms Simmonds’ adjusted taxable income is varied to $81,300;

• From 25 February 2019 to 24 March 2020 the child support liability is increased by $3,200; and

• From 25 March 2020 until the case terminates the child support liability is increased by $2,100 per annum.