Stansfield and Stansfield (Child support)

[2018] AATA 1239

Stansfield and Stansfield (Child support) [2018] AATA 1239 (12 March 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2017/MC012523

APPLICANT:  Mr Stansfield

OTHER PARTIES:  Child Support Registrar

Ms Stansfield

TRIBUNAL:Member P Noonan

DECISION DATE:  12 March 2018

DECISION:

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

·From 1 January 2017 until a terminating event has occurred in respect to both [Child 1] and [Child 2], Mr Stansfield’s adjusted taxable income is varied to $65,676 and Ms Stansfield’s adjusted taxable income is varied to $78,082.

·For the period 1 January 2017 to 31 December 2017, the annual rate of child support payable by Mr Stansfield is increased by $5,556 and by $5,834 from 1 January 2018 until a terminating event occurs in respect to Lily.

CATCHWORDS
Child support – Departure from assessment – Income and financial resources of parents – Business income – Education costs of child – Period of departure – 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. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable. It uses a formula, which contains variables such as the parents’ adjusted taxable incomes and their percentages of care of the children. The Act also provides for a departure from the administrative assessment in certain circumstances.

2. Mr Stansfield and Ms Stansfield are the parents of [Child 1] aged 17 and [Child 2] aged 15. [Child 1] is currently in year 12.

3. A child support case was registered with the Department of Human Services (the Department) for collection of child support on 5 March 2014. The care of the children is recorded as being 51% to Ms Stansfield and 49% to Mr Stansfield.

4. On 24 February 2016 the Administrative Appeals Tribunal (the AAT) (differently constituted) decided to depart from the administrative assessment of child support payable in the following terms:

   ·For the period 1 July 2015 to 31 December 2015 no child support is payable by either parent;

   ·For the period 1 January 2016 to 31 December 2016 an annual rate of child support of $9,199 is payable by Mr Stansfield;

   ·For the period 1 January 2017 to 31 December 2017 an annual rate of child support of $9,542 is payable by Mr Stansfield.

5. On 30 January 2017 Mr Stansfield applied for a departure from the decision of the Tribunal, (which for the purposes of this review effectively constitutes the underlying administrative assessment).

6. On 5 May 2017, a Department officer, acting as a delegate of the Child Support Registrar, found that a ground for departure was established due to the costs of educating the children. The officer decided to depart in the following terms:

   ·The decision of the AAT dated 24 February 2016 ends on 31 December 2016. From 1 January 2017 to 31 December 2017 Mr Stansfield’s annual child support liability is set at $5,556 and from 1 January 2018 until a terminating event occurs in respect of [Child 1], Mr Stansfield’s annual child support liability is set at $5,834.

7. On 5 June 2017 Mr Stansfield objected to this decision and on 11 August 2017 his objection was disallowed by an objections officer.

8. On 15 September 2017 Mr Stansfield applied to this tribunal for an independent review.

9. A hearing for the matter was held on 8 March 2018. The Child Support Registrar did not attend the hearing. Mr Stansfield attended the hearing in person and gave evidence on affirmation. Ms Stansfield also attended the hearing in person and gave evidence on affirmation.

10. In making my decision I considered the verbal evidence of all parties and the various documents supplied by the Department and the parties, copies of which have been exchanged.

11. Pursuant to paragraph 98C(1)(b) of the Act, a decision to depart from the administrative assessment may be made if the following requirements are met:

    (i)that one, or more than one, of the grounds for departure referred to in subsection 117(2) exists; and

    (ii)that it would be:

    (A)     just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

    (B)     otherwise proper;

CONSIDERATION

A ground for departure

Are the costs of maintaining the children significantly affected because the children are being cared for, educated or trained in the manner that the parents expected?

1. The grounds for departure are set out in subsection 117(2) of the Act.  Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act,  but the Family Court in Gyselman & Gyselman (1992) FLC 92-279 has held: “as a generality 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 court will not interfere with the formula in the ordinary run of cases.” Likewise, in Philippe & Philippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.  In considering whether the relevant grounds set out in subsection 117(2) were established in this case I was guided by these cases.

2. The grounds for departure argued before me by Mr Stansfield are as follows: 

   ·application of the provisions in the 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 because of the income, property or financial resources of either parent; (reason 8);

   ·the costs of maintaining the children are significantly affected because the children are being cared for, educated or trained in the manner that the parents expected; (reason 3)

3. Subparagraph 117(2)(b)(ii) of the Act provides a ground for departure exists where, in the special circumstances of the case, 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. 

4. There was no dispute that the children were being educated in the manner intended by the parents at the time of the departure application. That is, they were being educated privately at[School1]. However there has since been a clear change in circumstances. From the commencement of the 2017 school year [Child 2] has transferred to a public school. [Child 1’s] 2017 school fees were $11,112.

5. Under the previous decision of the Tribunal the annual rate of child support payable was $9,542. I have found that the annual costs of educating the children in the manner intended by the parents is $11,112 as at the date of Mr Stansfield’s departure application. I noted that Mr Stansfield submitted that he considered he had paid for his share of the school costs by transferring $50,000 as part of property settlement to Ms Stansfield for that purpose. I found that there was no such express provision contained in the final property settlement orders. Further Ms Stansfield’s denied Mr Stansfield’s submission. As the costs of educating the children exceed the annual rate payable I considered the costs of maintaining the children are clearly significantly affected. As such I determined that the ground at subparagraph 117(2)(b)(ii) of the Act to depart from the administrative assessment is established. I will consider issues raised by Mr Stansfield, in respect to his capacity to contribute to the school fees, later in these reasons under just and equitable considerations.

Other grounds

17.I noted that a ground for departure from the administrative assessment was also raised in regard to the overall income, property and access to financial resources of each parent. In Marsh & Eccles [2008] FMCAfam 1417, Riethmuller FM stated, in regard to determining multiple grounds for departure from the administrative assessment, as follows:

Once a ‘special circumstance’ is established, it is then necessary to determine what would be a just and equitable and otherwise proper child support assessment … once a special circumstance has been established for each period, as only one special circumstance in the period is sufficient to satisfy the first step of the departure process (at para 13).

1. I will therefore consider this further reason for departure that was raised in the context of whether it is just and equitable and otherwise proper to depart from the administrative assessment.

Would departure from the administrative assessment be just and equitable?

Mr Stansfield income and access to financial resources

1. It is a well-established principle in the Family Court that the taxable income of a person who is self-employed may not be an accurate reflection of their earning capacity and financial resources for child support purposes (DJM & JLM [1988] FamCA 97; Scott v Scott (1994) FLC 92-457; Carey v Carey (1994) FLC 92-489).

2. Mr Stansfield is the controller of a Trust which derives its income from his personal services business. The business maintains fire fighting equipment. His 2016-17 taxable income was $48,206. His gross business income was $86,157. Mr Stansfield agreed that he derives some personal benefit from his business expenses. This includes personal use of his full deducted work vehicle. He also uses a phone. Personal use on these items is around 10% or $626. He also claims depreciation which rose from $7,219 in 2015-16 to $16,844 in 2016-17. This relates to the purchase of a vehicle on 20 June 2015 for $28,310. I considered it appropriate that claimed depreciation be added back to an assessment of Mr Stansfield’s overall access to financial resources. There was no compelling evidence before me that such an amount was set aside by Mr Stansfield for the purposes of meeting ongoing capital replacement expenditure items. This is therefore a financial resource available to Mr Stansfield when considering his overall capacity to pay child support. I accepted all other claimed expenses as reasonable. The effect of these ‘add backs’ is that Mr Stansfield’s business delivered a net financial advantage of $65,676 to him in 2016-17.

3. In considering Mr Stansfield’s assets and liabilities he listed ownership of a home valued at $277,500. He listed $630 in funds in the bank, two vehicles worth $3,500 and a caravan worth $500. He has superannuation of around $105,000. His listed liabilities include taxation debts of around $12,000, and a personal loan of $50,000. He owes $5,000 on his credit card. In regard to expenditure he listed $300 in weekly personal expenditure, consisting of $200 in tax and $100 in credit card payments. He also listed $923 in weekly household expenditure or $47,996 per annum. The main expenses listed were $148 in children’s education costs, $130 in food and $100 in petrol. I considered Mr Stansfield’s disclosed weekly expenditure to be reasonable and reflective of my overall assessment of his access to financial resources. As a result I considered Mr Stansfield’s overall access to financial resources to be appropriately reflected by an adjusted taxable income of $65,676. I considered that Mr Stansfield has access to sufficient financial resources to make a contribution to the children’s education costs, as set out earlier in these reasons, without him being placed in undue hardship. His weekly contribution will be less than that which he listed in the Statement of Financial Circumstances of $148. I note that ordinary expenses associated with the costs of the children’s education, such as books and uniforms are expected to be accounted for by the application of the child support formula.

Ms Stansfield’s income and access to financial resources

1. Ms Stansfield is employed as a primary school teacher at [School 2]. Her annual salary is currently $84,302. Her 2016-17 taxable income was $73,082. Ms Stansfield submitted that she paid for around $5,000 in class room supplies, which she claims on her taxation return. She also leases a computer. I considered Ms Stansfield’s claims proportionally high expenses relative to her gross income. I did not consider the purchase of class room supplies should take precedence over child support considerations and accordingly it is appropriate to add $5,000 back to Ms Stansfield’s adjusted taxable income.

2. In considering Ms Stansfield’s assets and liabilities she listed a home worth $300,000. Bank account balances of $175, and household contents of $20,000. Her superannuation balance is around $118,000. She has a mortgage of $153,898, credit card debt of $2,668.39 and Federal Circuit Court costs of $4,478, which she noted Mr Stansfield had been ordered to pay her but had not.

3. Ms Stansfield listed personal expenditure of $427 per week being $380 in tax and $22 in superannuation and $25 payments to her credit card. She also listed $1,707 in weekly household expenditure. This includes $320 in education expenses, $197 in mortgage payments, $200 in food and $100 in holidays. She confirmed she is not behind in her mortgage payments. I considered Ms Stansfield’s disclosed expenses, assets and liabilities to be reasonable.

The children

1. In determining the proper needs of the children it is necessary to have regard to the manner in which the children are being, and in which the parents expected the children to be, cared for, educated or trained, and any special needs of the children (subsection 117(6) of the Act). In Eades & Cadell (SSAT appeal) [2009] FMCAfam 275 at [22], Slack FM stated as follows:

   In considering the proper needs of the child [s 117(4)(b)], the SSAT:

   a.    would ordinarily consider the evidence of the parties about the needs of the children to assess the reasonableness and quantum of those needs;

   b.    may have regard to publish guidelines as to the needs of the children (see Hallinan & Witynski at 94.323).

   c.    may also have regard to the costs of children used in the assessment of child support under the existing formula arrangements (although it is not sufficient or appropriate to rely upon the formula to perform that task, Lindenmayer J in Dwyer & McGuire (1993) FLC92-420 (and see also Gyselman (supra) at 79.078).

2. There were no special needs costs raised in respect to the children. Education costs have already been considered earlier in these reasons. Overall I considered each parent should meet the costs of raising the child according to their respective financial capacity. I considered this an appropriate case to largely distribute the costs of raising the children using the relevant child support formula, which is based on social science research giving the average costs of children in various family income brackets, with a variation to cover the education costs of [Child 1].

Otherwise proper

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 a child.

2. Both Mr Stansfield and Ms Stansfield receive family tax benefit in respect of the children. Accordingly, a change in child support will likely have no cost to the community. As such I was satisfied that changing the amount of child support payable would not have any adverse effect upon the community. Such a result would be otherwise proper.

Conclusion

1. It is open to me to vary the rate of child support payable or vary some of the variables that are used in the administrative assessment formula. I recognise that the principal object of the Act is to ensure that children receive a proper level of financial support from their parents. Further, I note the statements contained in sections 3 and 4 of the Act to the following effect:

   ·     Parents of a child have a primary duty to maintain the child;

   ·     The duty has a priority over all other commitments of the parent other than commitments necessary for self-support;

   ·     The level of financial support to be provided by parents to their children should be determined in accordance with the legislatively fixed standards;

   ·     The level of financial support is to be determined according to the capacity to provide financial support and noting that parents with a like capacity to provide financial support should provide like amounts.

2. Mr Stansfield submitted that he could not pay child support at the level currently assessed by the Department and he is broke. He has to borrow money from a friend. He gets about $1,000 a month in cash and he pays it back when he can. In contrast, he submitted that Ms Stansfield has plenty of money and has received more from their property settlement.

3. Ms Stansfield submitted that in her view Mr Stansfield is using the child support appeals process as a means to harass her. She submitted Mr Stansfield’s income is similar to hers. He has a small loan and no mortgage. If child support payable fell she would struggle to see [Child 1] through to the finish of school.

4. I considered both parents have reasonable incomes and are not experiencing financial hardship. With regard to all of the reasoning, as set out above, I decided to vary the adjusted taxable income of Mr Stansfield to $65,676 from 1 January 2017 until a terminating event occurs in respect to the child support case. I will also vary the adjusted taxable income of Ms Stansfield to $78,082 from 1 January 2017 until a terminating event occurs in respect to the child support case. Further, that for the period 1 January 2017 to 31 December 2017 the annual rate of child support payable by Mr Stansfield is increased by $5,556 and by $5,834 from 1 January 2018 until a terminating event occurs in respect to [Child 1].

5. The departure start date is in line with that set by the Department, which I agreed with. The length of the departure determination will provide both parents with some immediate certainty in planning their respective finances.

6. Using the care percentages outlined earlier in these reasons, under the application of the child support formula, Ms Stansfield would be required to pay Mr Stansfield child support of $1,716 in 2017. However the addition of [Child 1’s] education costs means that Mr Stansfield must pay child support of $3,840, or $74 per week to Ms Stansfield in 2017 and $4,114 or $79 per week in 2018. I noted this is a drop from the current rate of around $121 per week being paid by Mr Stansfield. I also noted Mr Stansfield is in arrears of child support by some $6,800. From 1 January 2019 Ms Stansfield may be required to pay Mr Stansfield annual child support of around $1,251 or $24 per week (depending on how much Mr Stansfield is in arrears at the time and the care situation in respect to [Child 2]).

7. I did not consider either parent will be placed in undue hardship by this departure decision. Both parents have reasonable and secure income and some spare financial capacity. Overall I considered both parents will be provided with certainty in planning their respective finances to adequately support the children by the implementation of this departure determination, and that it is a just and equitable outcome in regard to the respective situations of each parent.

DECISION

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

·From 1 January 2017 until a terminating event has occurred in respect to both [Child 1] and [Child 2], Mr Stansfield’s adjusted taxable income is varied to $65,676 and Ms Stansfield’s adjusted taxable income is varied to $78,082.

·For the period 1 January 2017 to 31 December 2017, the annual rate of child support payable by Mr Stansfield is increased by $5,556 and by $5,834 from 1 January 2018 until a terminating event occurs in respect to [Child 1].