Sterling and Sterling (Child support)

[2019] AATA 3859

Sterling and Sterling (Child support) [2019] AATA 3859 (1 July 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/BC015556

APPLICANT:  Ms Sterling

OTHER PARTIES:  Mr Sterling

Child Support Registrar

TRIBUNAL:  Member P Jensen

DECISION DATE:  1 July 2019

DECISION:

The decision under review is set aside and, in substitution, Mr Sterling’s rate of child support payable is increased by $2,885 per annum from 16 April 2018 until the end of the child support case on account of [Child 1]’s special needs.

CATCHWORDS

CHILD SUPPORT – departure determination – whether there was a ground for departure – costs of special needs significantly affect the cost of maintaining the child – ground for departure established – 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

Introduction

1. Ms Sterling and Mr Sterling are the parents of [Child 2] who was born on 4 May 2000 and [Child 1] who was born on 17 December 2002. A child support case was registered with the Department of Human Services – Child Support (“the CSA”) in 2013.

2. The Child Support (Assessment) Act 1989 (“the Act”) provides for an administrative assessment of 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.

3. From 13 February 2018 the administrative assessment was based on Ms Sterling’s 2016-17 provisional income of $21,174, Mr Sterling’s 2016-17 adjusted taxable income of $52,548, Ms Sterling’s 58% care of [Child 2] and 91% care of [Child 1], and Mr Sterling’s 42% care of [Child 2] and 9% care of [Child 1]. Mr Sterling was required to pay $6,628 per annum in child support.

4. The Act also provides for a departure from the administrative assessment in certain circumstances. On 16 April 2018, Ms Sterling lodged a departure application.

5. On 4 May 2018, [Child 2] turned 18 and ceased to be a child of the child support case. Mr Sterling’s rate of child support payable increased to $6,531 per annum.

6. In July 2018 an original decision-maker refused Ms Sterling’s departure application. She objected to that decision. An objections officer disallowed her objection. She applied to the Tribunal for further review. I conducted a directions hearing on 17 May 2019 and a full hearing on 1 July 2019. Ms Sterling attended the full hearing in person. Mr Sterling attended the full hearing by conference phone.

7. Paragraph 98C(1)(b) of the Act relevantly provides that a departure decision may be made in respect of a departure application if:

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

   (ii)... 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;

   to make a particular determination under this Part; …

A ground for departure

1. Subparagraph 117(2)(b)(ia) of the Act, commonly referred to as Reason 2, provides as a ground for departure:

   that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:

   …   

   (ia)because of special needs of the child …

2. There is no dispute that [Child 1] has special needs. In April 2018, [Child 1]’s general practitioner stated that [Child 1] had been diagnosed with [numerous medical conditions].

3. Ms Sterling incurs the out-of-pocket costs in respect of [Child 1]’s treatments; they are not shared between the parents. During the directions hearing, Ms Sterling noted that her out-of-pocket costs fluctuated. I suggested that she provide evidence of her out-of-pocket costs in respect of a sample period, and I suggested the three-month period from 1 March 2019 to 31 May 2019. Neither parent opposed that suggestion. Ms Sterling subsequently provided calculations and supporting evidence in respect of that three-month period. She calculated that the household’s out-of-pocket medical costs were $1,550.88, of which $108.40 was referrable to her and $1,442.48 was referrable to [Child 1]. Mr Sterling did not dispute that calculation, and I accept it as correct. Ms Sterling’s out-of-pocket costs in respect of [Child 1]’s special needs are approximately $1,442.48 x 4 = $5,770 per annum.

4. The question then arises as to whether there are special circumstances.

5. Mr Sterling submitted to the CSA that some of [Child 1]’s treatments are not necessary, and that Ms Sterling therefore incurs unnecessary costs. He did not provide any medical evidence to the CSA in support of his submission. At the directions hearing he reiterated his submission. I noted that Ms Sterling had provided medical evidence concerning [Child 1]’s need for his various treatments, and, if Mr Sterling wished, he could provide medical evidence that some of the treatments were not necessary. He did not subsequently provide any such evidence. Nevertheless, at the very end of the full hearing, he reiterated his submission. I noted the absence of any supporting medical evidence. He replied that “part of me didn’t want to pursue it.” However, he stated that if my decision was not favourable to him, he would pursue it.

6. Mr Sterling has had ample opportunity to provide medical evidence that some of [Child 1]’s treatments are not necessary, if that were in fact the case, and he has failed to provide any such evidence. Ms Sterling has provided evidence that [Child 1]’s various treatments are necessary, and I find accordingly.

7. In 2015, Ms Sterling applied to the Family Court for consent orders in respect of the parents’ property settlement. Her application, which both parents signed, included the following:

   The Applicant and the children suffer from substantial health issues. The Respondent has future earning capacity. The Applicant relies solely on Centrelink benefits for her income. The Applicant is the main carer for the child [Child 1], who is a special needs [child], and who has other substantial health issues.

   The parties believe the settlement contained herein is just and equitable in the circumstances.

8. Pursuant to the first order of the consent orders, Ms Sterling received $224,540 from funds held in trust and Mr Sterling received the balance of the funds held in trust, “(estimated to be $77,000)”. Mr Sterling submitted that Ms Sterling had already received funds to assist her in meeting the costs of [Child 1]’s treatments, and it would be unfair to require him to contribute to the same costs twice.

9. Notwithstanding those facts, section 66R of the Family Law Act 1975 relevantly provides that a court can make an order “to make provision for the maintenance of a child or children”, but if the order does not state that it is an order made pursuant to section 66R, then the order “is to be taken not to make provision for the maintenance of a child.” The consent orders that were made in respect of Ms Sterling and Mr Sterling’s property settlement do not refer to section 66R, and I am consequently required to proceed on the basis that the consent orders did not make provision for the maintenance of [Child 1].

10. In summary, the costs of maintaining [Child 1] are significantly affected by the costs associated with his special needs, and Ms Sterling incurs those costs, and the circumstances as a whole constitute special circumstances. Reason 2 is established.

Just and equitable

1. The requirement to consider whether a departure would be just and equitable 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.

2. Ms Sterling receives carer payment and care allowance in respect of the care she provides to [Child 1]. She also receives interest on her savings. She lives in rented accommodation. Her household consists of herself and [Child 1]. She completed a Statement of Financial Circumstances in May 2019, at which time she had savings of approximately $110,000.

3. Mr Sterling is a [occupation 1]. He is employed on a permanent casual basis. His 2015-16, 2016‑17 and 2017-18 adjusted taxable incomes were $58,053, $52,548 and $55,460 respectively. At the full hearing he submitted that his income had recently decreased. He acknowledged that his earnings typically fluctuate, and that he had the option of lodging an estimate of income with the CSA if his income had decreased significantly. After some discussion, both parents effectively submitted that if I were to make a departure decision, it should not include a variation to Mr Sterling’s adjusted taxable income. I agree with those submissions.

4. Mr Sterling lives in rented accommodation. His household consists of himself and [Child 2]. He completed a Statement of Financial Circumstances in December 2018, at which time he had savings of approximately $41,000. At the full hearing he said his savings were approximately $26,000. I asked him how he had spent approximately $15,000 of his savings over approximately six months. He referred to an overseas holiday with [Child 1], the repayment of a credit card debt of $3,000, and the partial repayment of a loan from his parents (the existence of which Ms Sterling doubted).

5. Ultimately, Ms Sterling sought a contribution from Mr Sterling towards [Child 1]’s medical costs. Mr Sterling stated that he lacked the capacity to make a contribution, but that is obviously incorrect. Even if he did in fact spend approximately $15,000 of his savings during the last six months, he still has sufficient savings from which to make a significant contribution towards [Child 1]’s past and future medical costs.

6. Ms Sterling has significant capital but is reliant on income support payments. Mr Sterling has less capital but earns a significant income. I consider it appropriate that the parents share equally in the out-of-pocket costs of [Child 1]’s treatments. Mr Sterling’s rate of child support payable will be increased by $5,770 per annum / 2 = $2,885 per annum.

7. Ms Sterling lodged a departure application on 13 September 2017. She relied on Reason 2. An original decision-maker refused her application on 30 November 2017 on the basis that she had failed to provide evidence of her out-of-pocket costs. She had the right object to that decision, but did not do so. She lodged another departure application on 16 April 2018, thereby once again formally disputing the fairness of the administrative assessment. It is appropriate to increase Mr Sterling’s rate of child support payable from 16 April 2018. [Child 1]’s special needs are ongoing. He will turn 18 on 17 December 2020, and the child support case will probably end on that date. It is appropriate to increase Mr Sterling’s rate of child support payable until the end of the child support case.

8. The proposed decision will increase Mr Sterling’s child support arrears, if any, by approximately $3,485. It is appropriate that he make that additional contribution towards the costs that Ms Sterling has been incurring in respect of [Child 1]’s special needs since she lodged her most recent departure application.

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. Ms Sterling receives family tax benefit in respect of her care of [Child 1]. In the ordinary course, increasing Mr Sterling’s rate of child support payable to Ms Sterling would result in a decrease in Ms Sterling’s rate of family tax benefit. However, an exception potentially applies if the increase in the rate of child support payable is in respect of the costs associated with the special needs of the child. Centrelink will decide whether that exception applies to Ms Sterling. In any event, the proposed departure decision will be otherwise proper.  

DECISION

The decision under review is set aside and, in substitution, Mr Sterling’s rate of child support payable is increased by $2,885 per annum from 16 April 2018 until the end of the child support case on account of [Child 1]’s special needs.