Sisley and Sisley (Child support)

Sisley and Sisley (Child support) [2021] AATA 3690 (9 August 2021)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2021/SC021009; 2021/SC021159
APPLICANT:  Ms Sisley
OTHER PARTIES:  Child Support Registrar
Mr Sisley

TRIBUNAL:Member S Letch
DECISION DATE: 9 August 2021
DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides that for the period 6 May 2020 to 6 November 2020 (a period of six months) Ms Sisley’s annual liability is increased by $4,900 costs (the net result being that an additional total sum of $2,450 will be added to her liability in recognition of a 50% contribution towards [Child 1]’s dental costs).

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of parents - costs of dental treatment for the child –- 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 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

Ms Sisley and Mr Sisley are the parents of [Child 1], born 2002. This matter concerns an application by both parents against a single objection decision dated 13 November 2020 concerning a “change of assessment”. From November 2019, Ms Sisley became the “paying parent” (when [Child 1]’s older brother, [Child 2], was no longer part of the assessment). Notably, the child support case ended in November 2020.
For the period 23 April 2020 to 30 June 2020, Ms Sisley is assessed on her 2019/20 reconciled estimate of income of $66,766. Mr Sisley is assessed on his adjusted taxable income (ATI) of $172,884 (as determined by the Administrative Appeals Tribunal on 2 April 2020). Ms Sisley was assessed to pay an annual child support rate of $6,283.
For the period 1 July 2020 until 31 June 2020, Ms Sisley is assessed on her 2018/19 ATI of $46,895. Mr Sisley is assessed on his ATI of $172,884. The annual rate is $3,467.
For the period 1 August 2020 to 6 November 2020, Ms Sisley is assessed on her 2019/20 ATI of $58 938, and Mr Sisley is assessed on his ATI of $172,884. The annual rate payable is $5,200.
Notwithstanding that he did seek a review of the decision of this Tribunal dated 2 April 2020, the Child Support Agency (CSA) proceeded to make another “change of assessment” decision on 21 July 2020, deciding there was no ground to depart.
On 19 August 2020, Mr Sisley objected to the decision. On 13 November 2020, an objections officer partly allowed Mr Sisley’s objection, deciding that, from 28 April 2020 and to when [Child 1] ceased being eligible for child support on 6 November 2020, Ms Sisley’s ATI was varied to $150,525.
Both Ms Sisley and Mr Sisley sought further review by the Tribunal. Both parties participated in the Tribunal’s hearing by conference telephone. In making its decision, the Tribunal took into account the CSA materials, and the additional materials submitted by both Mr Sisley and Ms Sisley.

CONSIDERATION
The legislative framework

The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Act). A formula is used. It takes into account variables including each parent’s ATI for the last relevant year of income, the number of children and the level of care provided by each parent.
Part 6A of the Act allows for a departure from an administrative assessment (a process commonly known as a “change of assessment”). Under subsection 98C(1), the Registrar may make such a departure determination if three matters are established:
·      one, or more than one, of the grounds for departure referred to in subsection 98C(2) exists (subparagraph 98C(1)(b)(i));
·      a departure is just and equitable as regards the children and each parent (sub-subparagraph 98C(1)(b)(ii)(A)); and
·      it is otherwise proper to make a departure decision (sub-subparagraph 98C(1)(b)(ii)(B)).
Subsection 98C(2) provides that the grounds for departure are the same as the grounds set out in subsection 117(2).

11.If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal may make one of the determinations prescribed in section 98S of the Act. It permits a range of determinations, including varying the rate of child support payable, the ATI or the cost percentage for a child.
Issue 1 – Is there a ground to depart?
12.Subparagraphs 117(2)(c)(ia) and (ib) of the Act, commonly referred to by the CSA as Reasons 8A and 8B, provide as grounds for departure:
(c) that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to 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 child:
…
(ia) because of the income, property and financial resources of either parent; or
(ib) because of the earning capacity of either parent

13.The matters which must be taken into account when assessing a person’s earning capacity are contained in subsection 117(7B) of the Act, which provides the following:
In having regard to the earning capacity of a parent of the child, the court may determine that the parent's earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:
(a) one or more of the following applies:
(i) the parent does not work despite ample opportunity to do so;
(ii) the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full-time work for the occupation or industry in which the parent is employed or otherwise engaged;
(iii) the parent has changed his or her occupation, industry or working pattern; and

(b) the parent's decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:
(i) the parent's caring responsibilities; or
(ii) the parent's state of health; and

(c) the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.

The starting proposition is that the child support formula should apply. Only in special circumstances should a departure be made. The words “in the special circumstances of the case” are not defined in the legislation. Whilst it is not possible to define with precision the meaning of that term, it is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the legislature is that the Tribunal will not interfere with the administrative formula result in the ordinary run of cases. In Gyselman and Gyselman (1992) FLC 92-279, it was held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. The Tribunal’s approach to the interpretation and application of the particular grounds in subsection 117(2) must be guided by that qualification.
Ms Sisley told the Tribunal that she does not understand how the CSA has arrived at the figure of $150,525 for her income; she said she has discussed the matter with her lawyers and she was contemplating involving a forensic accountant. She said she is a director for the Sisley Investment Trust; she was doing “background work” at the [clinic], and understood she had been made a director to “protect” Mr Sisley. She said since separation, Mr Sisley has been “increasing the debt” of the Sisley Holdings Trust; there are ongoing family law property matters yet to be resolved. Ms Sisley said she does not understand or agree with CSA assessment of her income, and that her income is reflective by the income [recorded] by the Australian Taxation Office.
Mr Sisley told the Tribunal he accepts the CSA assessment of Ms Sisley’s income as some $150,000. He said he has always argued her financial resources are much higher than what has been assessed. He said Ms Sisley is a “savvy investor”; he suggested she had not fully disclosed her resources to the CSA, and raised a number of issues associated with the family law property proceedings. He said he has been forced to draw down on credit to maintain his living expenses and meet his rent, and suggested Ms Sisley had been obstructing his arrangements. Mr Sisley told the Tribunal he has always maintained he has been happy to pay a fair level of child support; however, he does not believe the case has been fairly assessed.
Mr Sisley said the earlier Tribunal had mischaracterised amounts borrowed to pay his rent as a financial resource. He said he could not afford to take the AAT decision on appeal to Court. He said his income has been wrongly assessed, and that he has been largely living off government support and rental income.
Ms Sisley told the Tribunal she has not received any distributions from the Sisley Holdings Trust (folio 425 of the CSA materials refers); she does not understand why the CSA has attributed her with half the profit. Any amounts are “paper only”. Ms Sisley said she is not a “financial expert”; she could shed any light on the loan recorded to her of some $79,000 which has been “on the books” since at least 2018. Mr Sisley similarly was not sure on the details of that loan; he said he thought it might have arisen in around 2017. Mr Sisley was similarly not able to illuminate the increase in the loan recorded to him to some $104,000 in the 2019/20 financial year.
In relation to [Child 1]’s dental costs, Mr Sisley said he agreed with the objections officer’s analysis of his “out of pocket” cost, and the fact that the procedure was medically necessary. Ms Sisley did not raise any issue with the amounts or the fact the procedure was necessary; rather, she said she had met with medical costs with respect to [Child 2] (not a child of the case since 2019) and had not asked for a contribution from Mr Sisley. She also said [Child 2] requires a similar procedure but she had not been able to afford to pay for his proposed treatment.
Mr Sisley did not seek further review of the Tribunal’s decision of 2 April 2020, with only about seven months remaining in the case. There is an interest in finality in these determinations and giving certainty to the parties. There was only around five months left in the assessment when the CSA made another change of assessment decision, apparently in connection with another change of assessment application made on 7 August 2019 (the same day Mr Sisley applied to the Tribunal for review of the earlier objection decision 19 July 2019 regarding an earlier change of assessment application). Given the Tribunal was considering the totality of the parties’ circumstances in its decision of 2 April 2020, one approach might have been for the CSA to decide it should not proceed to disturb the AAT decision (not taken further by either party) by reagitating matters already considered by reviewing the change of assessment application made on 9 August 2019 which had, in effect, been overtaken by the Tribunal application and its ultimate decision on 2 April 2020.
In order for the Tribunal to effectively disturb the earlier decision of 2 April 2020, there would need to be a very material change which warrants making a change for the balance of the assessment. There is a legitimate interest in securing finality and not permitting re-litigation of settled matters. Whilst the evidence suggests a reduction in the range of Mr Sisley’s business income (2019 income was some $235,000 (folio 362); 2019/20 was tracking at some $200,000 (folio 425)), this does not necessarily demonstrate a significant reduction in Mr Sisley’s financial capacity. The CSA appears to have extended itself beyond a conventional approach in its backdating of the assessment of Ms Sisley’s income to achieve a “square ledger” (with Mr Sisley owing the same as Ms Sisley in the final result of the case).
The Tribunal does not agree with the CSA approach in calculating Ms Sisley’s financial capacity. There is no evidence she was able to access to any distributions from Sisley Holdings Trust; the loan attributed to her has been “on the books” in the same amount since at least 2018. Whilst there might be an argument such a sum advanced to a person as a loan might represent a “financial resource” at the time it is received, that could not be said of Ms Sisley’s financial position in 2020. Accordingly, it seems to the Tribunal that Ms Sisley’s financial capacity is adequately represented by her ATI, as assessed by the Australian Taxation Office (this was the same conclusion the Tribunal reached in its decision in its decision of 2 April 2020).
The Tribunal formed the view that the circumstances of this case do not warrant any adjustment to the assessment of the parties’ respective incomes. Those should be regarded as settled by the earlier decision of this Tribunal, and should be applied to the short period after the Tribunal’s decision and until the end of the case. As explained to Mr Sisley during the hearing, even if the balance of the assessment from the time of the CSA decision of 21 July 2020 was to be assessed on the ATI of both parties as assessed by the Australian Taxation Office, the difference in Ms Sisley’s liability would amount to little over $1,000 which, in scheme of the overall assessment, is not a significant amount giving rise to special circumstances which would render the assessment unfair.
But for [Child 1]’s dental costs, which the evidence reveals were met by Mr Sisley in July 2020 (after the Tribunal’s decision of 2 April 2020), the Tribunal would have been minded to find no ground to depart. However, the evidence reveals that [Child 1] had necessary dental treatment (such treatment was not purely cosmetic, or otherwise unnecessary); neither party took particular issue with the sums calculated by the CSA (see the objections officer’s decision at folio 7 of the CSA materials). The Tribunal finds Mr Sisley’s “out of pocket” cost to be $4,911; this is a significant sum which rendered the assessment unfair. There is a ground to depart.

Issue 2 – Is it just and equitable to depart from the administrative assessment?

The next relevant consideration for the Tribunal is whether a departure from the administrative assessment is just and equitable. This enquiry directs attention to what is fair to the parents and their children. Regard must be had to a variety of factors such as the needs of the children, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.
As the Tribunal has already observed, it is of the view that it is not just and equitable to make any adjustment to the assessment so far as it relates to the income for Mr Sisley varied by this Tribunal, nor the rolling assessment of Ms Sisley’s assessment of her income based on her ATI, which the Tribunal considers to be representative of her financial capacity. It is just and equitable to consider those matters settled by this Tribunal for the remainder of the assessment, and no adjustment should be made.
However, the Tribunal does consider it would be just and equitable for Ms Sisley to make a contribution for [Child 1]’s necessary dental costs. She ought fairly be required to contribute 50% of those costs, or a sum of $2,450 (rounded); the Tribunal considers she has the financial capacity to meet that expense. Towards that end, the Tribunal will set aside the decision under review. Given Ms Sisley was the “paying parent” for less than a 12-month period when the case ended, the Tribunal is not able to increase her annual liability by $2,450 from 6 November 2019 to 6 November 2020; instead, to arrive at the same outcome, the Tribunal will increase her annual liability by $4,900 (or double) for the last six months of the case (the end result being an addition of a total of $2,450 to her liability).
There were no other factors the Tribunal considered required any other adjustment to the assessment. The Tribunal regards the net outcome of its Decision as just and equitable in the circumstances of the case.

Issue 3 – Is it otherwise proper to make a departure determination?
29.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 a child.
30.The rate of child support should reflect the obligation of both parents to take financial responsibility for the children and, where increased, may decrease any income-tested benefits payable. A departure is therefore proper.
31.As the Tribunal has reached a different conclusion to the objections officer, the decision under review will be set aside.
DECISION

[2021] AATA 3690

9 August 2021

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Remedies

Judicial Review

Jurisdiction

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