Stidolph and Stidolph (Child support)

[2019] AATA 5738

Stidolph and Stidolph (Child support) [2019] AATA 5738 (26 November 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/BC016394

APPLICANT:  Mr Stidolph

OTHER PARTIES:  Child Support Registrar

Ms Stidolph

TRIBUNAL:Member K Buxton

DECISION DATE:  26 November 2019

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education - manner expected by both parents - cost of maintaining the children are significantly affected – property settlement - financial resources of both parents – decision to depart - decision under review affirmed

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 Stidolph and Mr Stidolph are the parents of [Child 1], aged 9, in respect of whom a child support case has been registered with the Child Support Agency (CSA). [Child 1] is recorded as being in the 70% care of Ms Stidolph and the 30% care of Mr Stidolph. Mr Stidolph has sought review by this tribunal of a decision of the CSA about the amount of child support which had been assessed as payable by him to Ms Stidolph in respect of [Child 1].

2. On 9 November 2018 Ms Stidolph applied for a departure from the administrative assessment, under Part 6A of the Child Support (Assessment) Act 1989 (the Act), on the basis of the high cost of privately educating [Child 1]. She sought a departure from the commencement of the 2019 academic year. Mr Stidolph cross-applied on the basis that he had already made provision for [Child 1]’s education in the parents’ property settlement, and on the basis of his own high costs of self-support.

3. The administrative assessments of child support calculated child support payable as follows:

   a.   For the period 1 October 2018 to 31 December 2018 Mr Stidolph was assessed to pay $18,451 per annum for [Child 1], based on 2018/19 adjusted taxable incomes of $170,013 for Mr Stidolph and $124,024 for Ms Stidolph, and with an increase of $9,254 per annum for private school fees (resulting from an earlier departure decision dated 12 May 2017);

   b.   For the period 1 January 2019 to 31 December 2019, Mr Stidolph was assessed to pay $7,945 per annum for [Child 1], based on the adjusted taxable incomes set out above.

4. On 18 February 2019 a decision maker at the CSA determined that a ground existed to depart from the administrative assessment and decided to increase the rate of child support payable by Mr Stidolph on account of private school fees for [Child 1] as follows:

   a.   For the period 1 January 2019 to 31 December 2019 the annual rate of child support payable by Mr Stidolph is increased by $9,485;

   b.   For the period 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr Stidolph is increased by $9,770.

5. Mr Stidolph objected to the decision and, on 29 March 2019, an objections officer disallowed the objection. Mr Stidolph sought review of the objection decision by the tribunal. A hearing took place on 26 November 2019. Mr Stidolph and Ms Stidolph participated in the hearing by telephone and gave sworn evidence. In reaching its decision, the tribunal has considered that sworn evidence together with the subsection 37(1) of the Administrative Appeals Tribunal Act 1975 Statement and Documents prepared by the CSA (Exhibit 1) and documentation provided by Mr Stidolph (Exhibit A) and Ms Stidolph (Exhibit B).

CONSIDERATION

The legislative framework

1. The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Act. A formula is used which takes into account variables including each parent’s adjusted taxable income for the last relevant year of income, the number of children and the level of care provided by each parent. The legislative intent is that the tribunal will not interfere with the administrative formula result in the ordinary run of cases.

2. 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), a change of assessment can be made only if:

   a.   a ground (or more than one ground) for departure exists; and

   b.   departure from the administrative assessment would be:

   i.just and equitable as regards the children and each parent; and

   ii.otherwise proper.

3. Subsection 98C(2) of the Act provides that the grounds for departure are the same as those set out in subsection 117(2). 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 range of determinations, prescribed in section 98S of the Act, which include varying the rate of child support payable, the adjusted taxable income or the cost percentage for a child.

Costs of educating the children

1. The Act provides as a ground for departure (subparagraph 117(2)(b)(ii)):

   (b)that, in the special circumstances of the case, the costs of maintaining the child are significantly affected: …

   (ii)because the child is being cared for, educated or trained in the manner that was expected by his or her parents; …

2. 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. 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 will consider whether the private school fees give rise to special circumstances having regard to the manner of education expected by the parents.

3. At the time of separation [Child 1] was a primary school student in Year One at [School 1]. In a previous departure decision made by the CSA on 12 May 2017 it was determined that [Child 1]’s attendance at [School 1] was consistent with the parents’ mutual expectation that she would each be educated in that manner. Neither party sought review of that decision. However, Mr Stidolph sought to revisit this issue in this review application.

4. In order for Ms Stidolph’s application for a departure from the administrative assessment of child support to proceed, the threshold question for the tribunal is whether [Child 1] is being educated in the manner that was expected by the parents. The child support legislation does not expressly enquire into parents’ desire, or preference, or even, expressly, intention. The relevant departure ground is established if, in the special circumstances of the case, the costs of maintaining the child or children are significantly affected because they are being educated in the manner that was expected by the parents: that is, what did the parents expect? The question whether, or to what extent, the parents may be able to contribute towards those costs is relevant to a consideration as to whether it is just and equitable to make a departure. This issue is discussed later in these reasons.

5. Mr Stidolph submitted during the hearing that the decision to educate [Child 1] at [School 1] had been made by Ms Stidolph alone, and that she had completed all the enrolment forms and forged his signature on those forms. Ms Stidolph denied doing so and submitted that the decision had been jointly made by the parents. The tribunal notes that Mr Stidolph earlier admitted to having signed the enrolment forms, telling the decision maker of the 12 May 2017 decision that he had been “lured” into doing so. In either event, Mr Stidolph must have expected that, once [Child 1] began at [School 1], she would be educated there. She began her preparatory year in 2015 and the parents did not separate until mid-2016, some 18 months later. Mr Stidolph stated that he had agreed to pay half of the school fees for 2017 before the property settlement was finalised, and stated that it was his “silly mistake” not to object to the decision requiring him to contribute to those fees for both the 2017 and 2018 years. However, the tribunal finds that, whilst Mr Stidolph may be dissatisfied with the notion of ongoing contribution to [Child 1]’s private primary education, it is nonetheless the manner of education that each of the parents “expected” for her.

6. The tribunal is satisfied that the actions of both parents are consistent with the conclusion that [Child 1]’s attendance at a private primary school for girls, such as [School 1], is the manner that they each expected. Ms Stidolph produced documents which established that the amount of the compulsory tuition fees and levies for [Child 1] at [School 1] in 2019 were in excess of $19,000 annually. The tribunal accepts that tuition fees of that magnitude would fall into the category of costs which parents would not have to expend in the education of a child in the public system.

7. The tribunal is satisfied that the costs of educating [Child 1] are of such a magnitude as to significantly affect the costs of maintaining her, and that special circumstances exist as those fees are not taken into account in the administrative assessment. The tribunal is therefore satisfied that the cost of [Child 1]’s education provides a ground to depart from the administrative assessment.

Just and equitable

1. As the tribunal is satisfied that the costs of privately educating the child provides a departure ground, 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 proper needs of the children of the assessment, the parents’ financial circumstances and commitments and any hardship that would be caused by departing or not departing from the formula.

2. Mr Stidolph submitted that he had already made provision for [Child 1]’s education costs in the parents’ property settlement (a submission which the tribunal notes is somewhat at odds with his earlier submission that he did not intend [Child 1] to be educated privately). Mr Stidolph also stated that he had agreed prior to the property settlement to contributed 50% to [Child 1]’s school fees. The property settlement was reflected in court orders that were signed by Ms Stidolph on 4 May 2017 and by Mr Stidolph on 17 May 2017 and reflected in Consent Orders issued by the Court on 1 June 2017. Those orders make no specific provision for child support or specifically for education costs, and represent orders splitting the assets of the marriage in accordance with the agreement reached between the parents. On 14 May 2017 Mr Stidolph’s lawyers wrote to him an extensive letter of advice dealing with all aspects of the proposed property settlement. Mr Stidolph’s letter of advice from his own legal representative expressly states that issues of child support were separate from the property settlement and could be determined by the CSA. On 12 May 2017 the CSA had made a decision in relation to child support, including private school fees, in the context of the departure applications. Therefore at the time Mr Stidolph signed the Consent Orders for property settlement he knew, or ought to have known, that the property settlement did not deal with child support issues and that the CSA had determined that he was to contribute half of [Child 1]’s school fees. The tribunal therefore finds that Mr Stidolph has not made financial provision for private school fees outside the child support assessment.

3. Mr Stidolph is employed as a [Occupation 1] in [Industry 1]. He stated during the hearing that his adjusted taxable income for the 2018/19 year, of $178,498, comprised base salary of about $146,000 and an annual bonus of around $20,000 together with voluntary superannuation contributions above the untaxed threshold.

4. Mr Stidolph explained that he had [Body Part 1] surgery during September of 2019 and had taken paid leave from work during his early recovery. He had returned to work, but not yet to site. Mr Stidolph stated that he did not anticipate that his income, including his bonus, would be affected by this time off work. However, he stated that he was uncertain how much longer he would continue in his current role as he was now past retirement age, being [age] years of age. He stated that he has superannuation of about $80,000 and was concerned for his financial position in retirement. Mr Stidolph raised various issues in relation to the property settlement with Ms Stidolph the terms of which he agreed to some years ago. This proceeding is not a de facto reconsideration of that settlement and any dissatisfaction Mr Stidolph has with his current financial position as a result of that settlement is irrelevant to the review application before the tribunal.

5. Mr Stidolph prepared a statement of financial circumstances in which he stated that his main asset was of a block of land worth around $500,000 and his main liability was a loan secured by that land in the sum of about $750,000, suggesting a position of negative equity. Mr Stidolph was questioned during the hearing about his asset position. Mr Stidolph explained that he has used the loan to construct a dwelling on the land and was marketing the property for sale. Mr Stidolph had not disclosed this information to the tribunal prior to the hearing, despite his obligation to provide full and frank disclosure of his financial position. Initially, when questioned by the tribunal, Mr Stidolph declined to estimate the value of the house and land. When pressed, Mr Stidolph gave sworn evidence that he was marketing the property for offers in excess of $1,310,000. This information was not disclosed willingly by Mr Stidolph.

6. Mr Stidolph lives in rented accommodation with [Child 1], when in his care, and intends to continue to rent for the foreseeable future. He stated that he is marketing the house empty and staged with hire furniture in an attempt to maximise the sale price. Therefore, once his newly constructed house is sold and the home loan and associated sale costs are met, Mr Stidolph will be in a position where he has access to significant cash assets, likely to be well in excess of $500,000 in addition to his superannuation. He is currently employed and, despite the issue raised by him as to the longevity of his employment given his age, the tribunal will assume for the foreseeable future that Mr Stidolph’s income and financial circumstances will remain as described above. Either party may apply for a further departure if Mr Stidolph’s circumstances, including his income, genuinely change.

7. Mr Stidolph incurred out-of-pocket cost of his [Body Part 1] surgery of around $5,500 which he has met from his savings. He is also meeting some ongoing rehabilitation expenses. Although these costs may have been higher than the usual costs, Mr Stidolph was able to meet those costs from his savings and income. There is no basis in the evidence otherwise to conclude that the amount allowed for self-support in the formula, of about $24,000 per annum, is not a reasonable measure of Mr Stidolph’s needs, although he disclosed expenses in excess of this amount, including the costs of maintaining and marketing he house which will come to an end when the property is sold.

8. Ms Stidolph is employed on a full-time basis and earns a base salary plus commission. Her 2017/18 adjusted taxable income was $124,024 and her 2018/19 adjusted taxable income was slightly lower, at $117,637, which was reflective of slightly lower commission than in the preceding year. Ms Stidolph lives in her home with [Child 1] when in her care and meets home loan expenses. Although Ms Stidolph reported regular expenses in excess of the self-support allowance in the formula, of about $24,000 per annum, there is no basis to conclude that this would not be a reasonable measure of Ms Stidolph’s needs.

9. The tribunal is satisfied that it is just and equitable to increase the amount of child support payable by Mr Stidolph to Ms Stidolph on account of [Child 1]’s private school fees. Ms Stidolph meets the costs directly to the school and the tribunal is satisfied that Mr Stidolph has the capacity to assist with those costs at the level of $9,485 in 2019 and $9,770 in 2020, being about half the annual costs.

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. The rate of child support should reflect the obligation of both parents to take financial responsibility for the child. The tribunal is satisfied that the departure proposed is therefore proper.

CONCLUSIONS

1. The administrative assessment did not include the cost of privately educating the children. The tribunal is satisfied that a departure ground exists in relation to school fees for [Child 1] and has found that it is just and equitable to depart from the assessment on account of those school fees. The tribunal has found that it is just and equitable, and otherwise proper, to increase the annual rate of child support payable by Mr Stidolph to Ms Stidolph by $9,485 per annum from 1 January 2019 to 31 December 2019 and $9,770 per annum for the period 1 January 2020 to 31 December 2020 on account of [Child 1]’s private schooling costs.

2. As the tribunal has reached the same decision as that of the objections officer, that decision is affirmed.

DECISION

The decision under review is affirmed.