Stilton and Starkton (Child support)

[2022] AATA 314

Stilton and Starkton (Child support) [2022] AATA 314 (28 January 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/BC022069

APPLICANT:  Mr Stilton

OTHER PARTIES:  Child Support Registrar

Ms Starkton

TRIBUNAL:  Member P Jensen

DECISION DATE:  28 January 2022

DECISION:

The decision under review is set aside and, in substitution, Mr Stilton’s departure application is refused.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent – no ground for departure established – decision not to depart – 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. Mr Stilton and Ms Starkton are the parents of two children. A child support case was registered in 2015 with what is commonly called the Child Support Agency or CSA. Each parent is recorded as providing 50% care for both children.

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 for the children. The Act also provides for a departure from the administrative assessment in certain circumstances. In January 2020 the CSA made a departure decision to vary Mr Stilton’s adjusted taxable income to $145,000 per annum from 2 December 2019 to 1 December 2021. Neither parent objected to that decision.

3. From 1 September 2020 the administrative assessment was based on Mr Stilton’s adjusted taxable income of $145,000 per annum and Ms Starkton’s 2019-20 adjusted taxable income of $51,174. Mr Stilton was required to pay $10,058 per annum in child support. From 24 January 2021, when one of the children turned 13, Mr Stilton was required to pay $11,086 per annum in child support.

4. Mr Stilton lodged a departure application on 9 February 2021. He stated that he had become unemployed. The CSA granted his application and made a departure decision. He objected to that decision. An objections officer varied the decision slightly, so that:

   ·    from 22 January 2021 to 6 May 2021, Mr Stilton’s adjusted taxable income was varied to $88,500 per annum; and

   ·    from 7 May 2021 to 31 October 2022, Mr Stilton’s adjusted taxable income was varied to $142,982 per annum.

5. Mr Stilton applied to the Tribunal for further review. I conducted a directions hearing on 7 December 2021 and a full hearing on 21 January 2022. Mr Stilton and Ms Starkton gave sworn evidence by conference phone.

6. 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)(c)(ia) of the Act, commonly referred to as Reason 8, provides as grounds for departure:

   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; …

2. It is convenient to focus firstly on Mr Stilton’s earning capacity. The Tribunal can only find that a parent’s earning capacity is greater than their actual income if the requirements of subsection 117(7B) of the Act are satisfied. That subsection states:

   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.

3. On 9 February 2021, Mr Stilton lodged a departure application. On 1 March 2021 the CSA contacted Mr Stilton to discuss his application and noted:

   [Mr Stilton] is currently unemployed after his employer had no more work available.

4. The CSA asked Mr Stilton to provide a copy of his separation certificate and he did so. The certificate stated that Mr Stilton had been employed by [Company 1] from 11 September 2019 to 6 January 2021. The certificate included eight possible reasons for separation, including “Shortage of work” and “Other”. [Company 1] ticked: “Employee ceasing work voluntarily”. The certificate also asked: “Has a claim been made, or is a claim likely to be made, for workers’ compensation?” [Company 1] ticked: “No”.

5. At the directions hearing, Mr Stilton provided a different explanation as to why he had stopped working for [Company 1]. He said he had been subjected to prolonged harassment by fellow workers. He stated: “For my mental health I had to get out of there.”

6. According to the separation certificate and Mr Stilton’s second explanation as to why his employment ended, he had ongoing employment and he decided to end that employment. I consider that evidence to be more reliable that Mr Stilton’s first explanation, and I find accordingly. Paragraph 117(7B)(a) is satisfied.

7. Mr Stilton said that after he ceased working for [Company 1], he was unemployed until August 2021 when he obtained employment with [Company 2]. He said that employment ended in October 2021 and he had remained unemployed up until the date of the full hearing. At the directions hearing I questioned him about why his employment with [Company 2] had ended. My notes of the directions hearing (which was also audio recorded) included the following:

   [Mr Stilton]: [Company 2] employed me in Aug 2021. I was employed as a [Occupation 1]. That stopped in Oct 2021. It stopped for mental health issues. The company just stopped my employment.

8. I subsequently issued directions which included the following (with two obvious typographical errors - I wrote “2020” instead of “2021”):

   -Documentary evidence, if it exists, in support of Mr Stilton’s statements during the directions hearing that he ceased employment in January 2020 and October 2020 due to the state of his mental health. Such documentary evidence could include:

   -    copies of the photographs that Mr Stilton referred to during the directions hearings;

   -    letters, medical reports etc from doctors, counsellors and the like concerning the state of Mr Stilton’s mental health, its causes, and the extent to which the state of his mental health justified his decision to cease employment; and

   -    letters, emails, text messages and the like from Mr Stilton’s ex‑employers concerning the circumstances that led to him ceasing employment.

9. Mr Stilton provided some poor-quality photographs of graffiti which he said had been in the toilets at [Company 1]’s worksite. There are a few derogatory references to “[Name 1]” or a similar name, which Mr Stilton said is his nickname.

10. Mr Stilton also provided screenshots of text messages and the like from [Mr A]. Mr Stilton said that [Mr A] had been the superintendent at [Company 1]’s worksite. Mr Stilton did not provide any documentary evidence in support of that statement. It appears that there were six unanswered calls from [Mr A] on 7 December 2020, and then he left the following message: “Have tried to call a few times mate but your phone has been off I’m Just checking in. I’m worried about you and want to make sure you are feeling ok. If you need to talk mate I’m here, give me a call. As we spoke about yesterday [Mr B] is available to speak to someone also.” The message did not say why [Mr A] was worried about Mr Stilton.

11. Mr Stilton provided a letter dated 6 January 2022 from his general practitioner, [Dr C]. It states:

    This is to certify that I have examined [Mr Stilton] today. I would like to confirm that he has been suffering from psychiatric problems in form [sic] of reactive depression & anxiety with insomnia and he is on antidepressant medication now.

12. The letter does not state when Mr Stilton started to suffer from those medical conditions, the circumstances that led to his reactive depression, or when he started taking medication. Importantly, [Dr C] does not indicate to what extent his diagnoses were based on information provided by Mr Stilton and an assumption that the information provided by Mr Stilton was reliable.

13. Mr Stilton also provided four medical certificates from [Dr C] which collectively stated that Mr Stilton was “unfit for work” from 25 October 2021 to 20 February 2022 as he was suffering from “a medical condition”. At the full hearing, Mr Stilton said he had been a patient of [Dr C] for many years. Mr Stilton confirmed that he had not consulted [Dr C] (or any other doctor) around the time that he ceased his employment with [Company 1]. Mr Stilton claimed he had phoned an (unidentified) 1-800 helpline around that time.

14. After the full hearing, Mr Stilton sent an email to the Tribunal Registry in which he made an uncorroborated statement about his mental health. He effectively applied for leave to provide post-hearing evidence. Such applications will usually be refused, but each application must be assessed on its own merit: section 30 of the Child Support Review Directions. Mr Stilton could have provided such evidence prior to the hearing or during the hearing. I decided to refuse his application to provide that post-hearing evidence.

15. If, as Mr Stilton claims, his mental state had deteriorated to the point where he felt that he was unable to continue with his employment with [Company 1], I consider it likely that he would have consulted his general practitioner about his health. I am not persuaded that Mr Stilton’s decision to terminate his employment with [Company 1] was justified on the basis of his state of health. Mr Stilton did not suggest that it was justified on the basis of his caring responsibilities. Paragraph 117(7B)(b) is satisfied.

16. The third issue is whether Mr Stilton ended his employment with [Company 1] for a major purpose of affecting the rate of child support payable.

17. On 5 January 2021, which, according to the separation certificate, was the day before Mr Stilton’s employment with [Company 1] ended, he contacted the CSA. It noted:

    Customer wanted to lodge an estimate as he is no longer working, but I advised him that we are unable to lodge an estimate as there is a [departure decision] in place.

18. On 9 February 2021, Mr Stilton lodged a departure application. The application included various questions about his financial circumstances. He was asked: “Do you own or partly own any shares, bonds or other investments?” He ticked: “No”. That answer was false. He was the sole shareholder of a private company. I will return to that issue shortly.

19. As noted earlier, the CSA contacted Mr Stilton on 1 March 2021. Its file note includes the following:

    [Mr Stilton] is currently unemployed after his employer had no more work available.

20. For the reasons stated above, I find that that statement to the CSA was false.

21. On 8 April 2021, Ms Starkton contacted the CSA and it noted:

    She advised that she went to pick up the children they were with [Mr Stilton]’s mother because he had returned to work yesterday.

22. On 6 July 2021, Mr Stilton’s then-partner, [Ms D], gave birth to their twins. According to Mr Stilton, he and [Ms D] subsequently separated.

23. On 30 July 2021 an objections officer varied Mr Stilton’s adjusted taxable income. On 10 August 2021, Mr Stilton applied to the Tribunal for review of that decision. On 17 August 2021 the CSA conducted a computer search and discovered that Mr Stilton had commenced employment with “THE TRUSTEE FOR [Company 2] TRUST”.

24. On 21 August 2021, Mr Stilton completed a Statement of Financial Circumstances. He stated that he had been employed by [Company 2] on a full-time basis for three days. He stated that he was not self-employed. He was asked whether he had an interest in a business including “a business operated by you as a sole trader, in a partnership or through a proprietary company or trust.” He answered: “—". He did not squarely answer the question, but implied that he did not have an interest in a business, and that implication was false.

25. Mr Stilton provided his payslips from [Company 2]. According to those payslips, he was employed from 12 August 2021 to 20 October 2021 on a full-time basis and he was paid $7,980 during that period. It is worth repeating what Mr Stilton said during the directions hearing:

    [Mr Stilton]: [Company 2] employed me in Aug 2021. I was employed as a [Occupation 1]. That stopped in Oct 2021. It stopped for mental health issues. The company just stopped my employment.

26. After the directions hearing, Ms Starkton provided a company extract for [Company 2]. It is dated 8 December 2021, and as at that date, Mr Stilton was [Company 2]’s sole director and sole shareholder. At the full hearing, Mr Stilton claimed he did not fully understand concepts such as director, shareholder, trust, beneficiary and the like. He said he left such matters to his accountant. I do not accept his evidence on that issue.

27. After the full hearing I obtained an historical company extract for [Company 2]. I provided a copy to the parents and gave them with an opportunity to respond to that additional evidence. Neither parent did so. [Company 2] was registered on 15 October 2020. [Ms D] was its sole director from 15 October 2020 until 12 October 2021, at which point Mr Stilton became its sole director. Mr Stilton has always been its sole shareholder. Prior to Ms Starkton providing the company extract to the Tribunal, Mr Stilton had not disclosed his sole ownership or his more recent sole directorship of [Company 2] to the CSA or the Tribunal. At the full hearing I asked him why he had not disclosed those facts. He said he did not consider them relevant. I do not accept his evidence on that issue. The fact that he owned the company that was paying him a wage was obviously relevant to an assessment of his income and financial resources. Further, Mr Stilton did not only omit to disclose that relevant information — he provided false information when asked whether he had a shareholding in a company or an interest in a business.

28. The relevant chronology can be summarised as follows. Mr Stilton was in full-time employment with [Company 1] and he was earning approximately $145,000 per annum. He was the payer of child support. In October 2020, [Company 2] was registered. Mr Stilton was, and remains, its sole shareholder. A few months later, Mr Stilton decided to end his employment with [Company 1]. On the day before his employment formally ended, he contacted the CSA to lodge an estimate of income on the basis of his imminent unemployment. It is clear that he expected to become the payee of child support and he was unaware that the existing departure decision prevented the CSA from accepting his estimate of income. He told the CSA that his employment had ended due to a shortage of work. His separation certificate stated that he had ceased work voluntarily (and, by implication, there had not been a shortage of work). Mr Stilton later stated that his mental health had deteriorated to the point where he felt he could not continue working at [Company 1]. However, there is no dispute that he did not consult his general practitioner, or any other doctor, about his mental health. On 9 February 2021 he falsely stated he did not own any shares. He was the sole shareholder of [Company 2]. In April 2021, while Mr Stilton claimed to be unemployed, Ms Starkton informed the CSA that she had become aware that Mr Stilton was working. On 21 August 2021, Mr Stilton completed a Statement of Financial Circumstances in which he falsely stated that he did not have an interest in a business. He later provided payslips from [Company 2] which stated that he had been employed by it on a full-time basis from 12 August 2021 to 20 October 2021. The evidence suggests, and I find, that Mr Stilton knew that his ownership of [Company 2] was relevant to the proceedings before the CSA and the Tribunal, he intentionally did not disclose that fact to the CSA or the Tribunal, and he provided false information in an attempt to prevent those facts coming to light. As a result of that deception, the financial resources available to Mr Stilton via his involvement in [Company 2] have not been disclosed. I find that he engaged in that deception in an attempt to reduce his rate of child support payable. More generally, to return to the legislative test in paragraph 117(7B)(c) of the Act, he has not demonstrated that it was not a major purpose of his decision to end his employment with [Company 1] to affect the administrative assessment of child support payable.

29. The requirements of subsection 117(7B) of the Act are satisfied in respect of Mr Stilton’s decision to stop working for [Company 1]. Regard can be had to his earning capacity. The departure decision dated 23 January 2020 varied his adjusted taxable income to $145,000 per annum from 2 December 2019 to 1 December 2021. That decision fairly reflected his actual income while he was employed by [Company 1] and it fairly reflected his earning capacity once he decided to end his employment with [Company 1]. When he lodged his departure application, the administrative assessment remained just and equitable. Reason 8 was not established in respect of Mr Stilton when he lodged his departure application.

30. I also considered whether Reason 8 was established from 25 October 2021 when Mr Stilton once again claimed that he was unable to continue with his employment, this time with [Company 2], due to the state of his mental health. [Dr C] opined that Mr Stilton has been unable to work since 25 October 2021. However, it is not clear to what extent [Dr C] has based his opinion on information provided by Mr Stilton. I do not consider Mr Stilton to be a reliable witness. Further, even if there was reliable evidence that Mr Stilton was not earning an income from 25 October 2021, Reason 8 would still require a consideration of Mr Stilton’s income and financial resources. If Mr Stilton had disclosed his true relationship with [Company 2], he would have been directed to provide its financial statements and bank account statements. I could have issued those directions after the first hearing day with a view to subsequently reconvening for a second hearing day once Mr Stilton had complied with those directions. However, the preferable approach is note that Mr Stilton failed to comply with his legal obligation to fully and frankly disclose his financial circumstances, and to conclude that he has failed to demonstrate that there are special circumstances such that the administrative assessment has resulted in an unjust and inequitable determination of child support payable. Reason 8 is not established in respect of Mr Stilton.

1. No other potential ground for departure arises from the evidence provided to the Tribunal. However, for the sake of completeness, I note that Mr Stilton disputed Ms Starkton’s evidence concerning her interest in her home. On her account of events, she has a 50% interest in the home, which she estimated to have a total value of approximately $2,000,000, and she has a related home loan with a balance of approximately $205,000. Her mother has the other 50% interest in the home. Mr Stilton submitted that the home is effectively a duplex and Ms Starkton owns her half of the duplex. On either view, her equity in her home would be approximately ($2,000,0000 / 2) - $205,000 = $795,000. As I noted during the hearing, Ms Starkton’s equity in her home is not a liquid asset. Her interest in her home and her associated home loan are unremarkable. She has been in full-time employment with her current employer for four years. She has earned a reasonably consistent income since at least 2015-16. Her income and financial resources are fairly reflected for child support purposes in her adjusted taxable incomes as assessed by the Australian Taxation Office from time to time. Reason 8 is not established in respect of Ms Starkton.

2. Paragraph 98C(1)(b)(i) of the Act is not satisfied. Mr Stilton’s departure application must be refused.

DECISION

The decision under review is set aside and, in substitution, Mr Stilton’s departure application is refused.