Thorley and Corliss (Child support)

[2019] AATA 1748

Thorley and Corliss (Child support) [2019] AATA 1748 (16 April 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/SC014442

APPLICANT:  Mr Thorley

OTHER PARTIES:  Child Support Registrar

Ms Corliss

TRIBUNAL:Member W Kennedy

DECISION DATE:  16 April 2019

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides to set Mr Thorley’s ATI at $83,150.00 and to set Ms Corliss’ ATI at $65,000.00, both for the period from 13 December 2017 to 31 December 2019 and to increase the assessment by $5,580.00 per annum for the period from 1 January 2018 to 31 December 2018 and by $6,262.00 for the period from 1 January 2019 to 31 December 2019.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of both parents - benefits derived from business – costs of the children include private education - 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. This decision concerns an application for a departure from the formula assessment of child support.  Mr Thorley and Ms Corliss are the parents of three children, two of whom are currently children of the assessment, one having ceased to be a child of the assessment [in] January 2018.  There has been a child support assessment in place for the children made by the Child Support Agency of the Department of Human Services (the Department) since 2007.  Since that time there have been at least five applications by the parents for departures from the formula assessment, at least four of which have drawn objections from the parents.

2. At the time of Mr Thorley’s relevant application the assessment was based on the children being in the shared care of the parents.  The annual rate of child support payable by Mr Thorley at the time of his relevant application to the Department was $12,441.00.  However, at that time the eldest child was still a child of the assessment.  After the eldest child ceased to be a child of the assessment, [in] January 2018, the annual rate of child support was reduced to $10,434.00.  This was based on Mr Thorley’s adjusted taxable income (ATI) of $89,500.00 and Ms Corliss’ ATI of $31,091.00, the former having been set by a change of assessment decision made by the Department on 9 April 2017 and the latter being a provisional figure.

3. On 13 December 2017 Mr Thorley applied to the Department for a departure from the formula assessment based on reason 8A (the income, property and financial resources of one or both of the parents) and reason 8B (the earning capacity of one or both of the parents).  In his covering letter Mr Thorley advised that the former related to his own income while the latter related to Ms Corliss’ earning capacity.  On 11 February 2018 Ms Corliss cross-applied on the basis of reason 3 (the costs of educating the children in the way expected by both parents).

4. On 2 March 2018 a delegate of the Child Support Registrar considered the departure application and decided that reasons 8A and 3 had been established and that it would be just and equitable and otherwise proper to depart from the formula assessment.  The delegate decided to:

   ·set Mr Thorley’s ATI at $85,000.00 for the period from 13 December 2017 to 31 March 2019, and

   ·set Ms Corliss’ ATI at $60,417.00 for the period from 13 December 2017 to 31 December 2019, and

   ·to increase the annual rate of child support payable by Mr Thorley by:

   o$5,790.00 for the period from 1 January 2018 to 31 December 2018, and

   o$3,131.00 for the period from 1 January 2019 to 31 December 2019, and

   o$3,582.00 for the period from 1 January 2020 to 31 December 2020.

5. On 3 April 2018 Ms Corliss lodged an objection to that decision, stating that relevant evidence had not been fully considered.  On 31 May 2018 a Department objections officer considered Ms Corliss’ objection, finding that reasons 8A and 3 had been established.  The objections officer decided to vary the decision of the delegate, deciding to:

   ·set Mr Thorley’s ATI at $87,975.00 for the period from 13 December 2017 to 31 March 2019, and

   ·set Ms Corliss’ ATI at $47,923.00 for the period from 13 December 2017 to 31 December 2019, and

   ·increase the rate of child support payable by Mr Thorley by $5,790.00 for the period from 1 January 2018 to 31 December 2018.

6. On 27 June 2018 Mr Thorley lodged an application for a review of the decision with this Tribunal, stating that Ms Corliss was not required to reduce her working hours due to her caring responsibilities.  The Tribunal had access to the statement and documents provided by the Department.  The documents are at folios 1 to 478 of the hearing papers and were provided to the parties in advance of the hearing. 

7. Before the hearing Mr Thorley provided the documents at folios A1 to A158 of the hearing papers while Ms Corliss provided the documents at folios B1 to B36 of the hearing papers.  At the hearing the parents acknowledged that they had received copies of the additional documents.  The matter was heard and determined in Sydney on 16 April 2019.  Mr Thorley attended the hearing in person and gave his oral evidence under affirmation.  Ms Corliss attended the hearing by telephone and gave her oral evidence under affirmation.  The Child Support Registrar was not represented at the hearing.

CONSIDERATION

The legislative framework and issues for the Tribunal to determine

1. 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).  This requires the application of a statutory formula which takes into account factors such as the number and ages of the children, the level of care provided and the income of each parent.

2. The liable parent or a carer may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Act.  Section 98C of the Act provides that the Registrar may make a determination to depart from the formula assessment and establishes a three step process for considering applications to do so.  The Registrar, and the Tribunal standing in place of the Registrar, must be satisfied:

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

   ·     that it would be just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

   ·     that it would be otherwise proper to make a particular determination.

3. The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act.  Each of the grounds, which for administrative purposes are referred to as reasons, require that special circumstances be established.  The term “special circumstances” is not defined in the Act.  In Gyselman and Gyselman [1991] FamCA 93 the Full Court of the Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.

4. 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 must make one of the determinations prescribed in section 98S of the Act.  These include varying the annual rate of child support payable or a parent’s adjusted taxable income or varying the self-support amount.

Issue one – Does a ground exist to depart from the administrative assessment?

1. The Tribunal’s first task is to determine whether a ground for departure from the administrative assessment can be established.  In his application to the Department Mr Thorley asserted that there are two grounds (or reasons) for a departure from the administrative assessment.  In her cross-application Ms Corliss asserted that there was a ground to depart from the administrative assessment.  The Tribunal considered each of these in turn.

Does a ground exist to depart from the administrative assessment under reason 3?

1. Ms Corliss has sought a departure from the administrative assessment on the ground that there are extra costs involved in educating and training the children in the manner expected by the parents.  This ground for departure, known as reason 3 for administrative purposes, is set out in subparagraph 117(2)(b)(ii) of the Act:

   (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. At the hearing both parents accepted that it was their expectation that the children would be educated privately.  Mr Thorley states that the expectation was that they would be educated at a Catholic parochial school rather than a far more expensive independent Catholic school.

3. The Tribunal considers below the level of contribution that would be just and equitable under subsection 117(4) of the Act.  For the purpose of subparagraph 117(2)(b)(ii) of the Act it finds that there is conclusive evidence that the parents expected that the children would have a private education and this affects the cost of maintaining the children.  The Tribunal finds that this constitutes a special circumstance that allows a departure from the formula assessment of child support under subparagraph 117(2)(b)(ii) of the Act.

Does a ground exist to depart from the administrative assessment under reason 8A in respect of Mr Thorley?

1. Although he seemed to change his position at the Telephone Directions Hearing, in his original application to the Department Mr Thorley sought a departure from the administrative formula assessment on the grounds that his income, property and financial resources are less than is reflected in the ATI used for him in the child support assessment in effect at the time of his application.  This ground for departure, which is known as reason 8A for administrative purposes, is set out at subparagraph 117(2)(c)(ia) of the Act:

   (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; …

2. Mr Thorley has provided a Statement of Financial Circumstances (SOFC) (folios A1 to A9).  Mr Thorley states that his income amounts to $1,692.00 per week, which annualises to $87,984.00.  Mr Thorley’s bank account statements, in particular his statement for [Bank 1] account …2745 (folios A84 to A110) fully support Mr Thorley’s SOFC in this regard.  Mr Thorley’s 2017/18 income tax return shows a gross income of $84,887.00 and a net income of $83,157.00.  As the child support regime is based on the last relevant year of income (and the Tribunal’s analysis of Ms Corliss’ income relies on past figures) the Tribunal places more weight on Mr Thorley’s most recent income tax return than on his current payslip.

3. The assessment in place at the time of Mr Thorley’s application was based on an ATI of $89,500.00 for Mr Thorley.  The Tribunal finds that the difference between these figures is a special circumstance and that the impact is sufficient to establish a reason under subparagraph 117(2)(c)(ia) of the Act.

Does a ground exist to depart from the administrative assessment under reason 8A in respect of Ms Corliss?

1. At the Telephone Directions Hearing and at the hearing Mr Thorley was somewhat unsure as to the grounds on which he was applying.  This was due to some misunderstanding as to the legal technicalities.  It was however clear that Mr Thorley’s main concern is with regard to Ms Corliss’ income.

2. Ms Corliss has provided a SOFC (folios B4 to B13).  Ms Corliss states that her income is $800.00 per week from her business and $100.00 per week from FTB.  She does not provide a figure for child support, but the evidence before the Tribunal is that the assessed rate at the time of Mr Thorley’s relevant application was $238.43 per week and that at the time she completed the SOFC it was $246.08 per week.  Mr Thorley said at the hearing that he is paying $625.00 per fortnight in child support and this is confirmed by the bank account statement provided by Ms Corliss (folio B21) and by the Department’s ledgers.  However these payments include an additional amount above the assessment which Mr Thorley is paying in order to clear his arrears.  FTB is not counted as income for the purposes of child support. 

3. The combination of $800.00 per week income from the business and some $240.00 per week in child support produces an income of $54,080.00 per annum.  In her SOFC Ms Corliss states that her weekly expenditure (including life, trauma and health insurance) amounts to $1,432.71.  This is $74,500.00 per annum.  This level of disposable income would require a taxable income of some $101,920.00 per annum.  At the hearing Ms Corliss said that it would not be fair to set her ATI on the basis of her expenditure because she is using her savings to meet her day to day expenses.

4. Following a Telephone Directions Hearing conducted on 12 February 2019 Ms Corliss was directed by the Tribunal to provide the following documentation:

   ·     personal income tax return for 2017/18

   ·     business financials for 2017/18, including profit and loss, balance sheet and depreciation schedule

   ·     statements for all bank and credit card accounts which Ms Corliss is authorised to use for the period from 1 July 2018 to 31 December 2018

   ·     rates notice for trust property

5. At the Telephone Directions Hearing Ms Corliss advised the Tribunal that she would have no difficulty providing the documentation required, subject only to her accountant being able to prepare the income tax return and associated accounts promptly.  She did not raise any issue with regard to bank and credit card statements.  In the event Ms Corliss has failed to respond fully to the Tribunal’s directions.  In particular she has failed to provide business financials and she has failed to provide statements for bank and credit card accounts.  The Tribunal notes that she has provided her tax return, a rates notice and statements for one bank account.  At the hearing Ms Corliss said that she was uncomfortable providing documentation that disclosed her clients or her personal expenditure details.  She said that she was also uncomfortable with the transmission of documents to the parties by the Tribunal and for those reasons she had decided to not follow the directions of the Tribunal.

6. In Humphries & Berry (SSAT Appeal) [2008] FMCAfam 409 Federal Magistrate Slack dealt with the issue of the disclosure of financial information in matters before the Tribunal. His Honour stated that the principle of full and frank disclosure applicable to proceedings in the Family Court was also applicable to proceedings before the Social Security Appeals Tribunal, the predecessor to the Social Services and Child Support Division of this Tribunal. His Honour stated as follows at paragraphs 26 and 27:

   Although the SSAT has the power to obtain information (s.103K) and the power to require the Child Support Registrar to exercise powers under the Assessment Act and the Child Support Registration and Collection Act for the purposes of gaining information relevant to a review (s.103L), there nevertheless remains a primary duty and obligation on the parties to the review to make a full and complete disclosure of their financial affairs relevant to the matter before the hearing and a duty to assist the Tribunal to come to its determination in the application. The obligation to disclose information and documents extends to the presentation of that material in a way that the true nature of their financial affairs can be readily understood. The obligation extends not just to providing financial records but also includes presenting the information in a way that can be reasonably and readily understood and examined.

7. His Honour stated as follows at paragraphs 30 and 31:

   In circumstances where a party (in this case the appellant) places before the SSAT                    inconsistent, confusing and incomplete financial information, the fact that the SSAT can             and may exercise its powers to obtain further information that might clarify the financial               circumstances of a party does not relieve a party of their primary obligation to disclose                 their financial affairs in a manner that can readily be understood. The extent to which the   SSAT should exercise its powers of information gathering and testing of evidence in each       case will depend on the circumstances of the matter but   the exercise of such power or               the failure to exercise such power does not in any way derogate from the immutable                  obligation and duty of both parties throughout the proceedings before the SSAT to make           full, frank and cogent disclosure of all relevant information pertaining to their financial                 affairs in order that the Tribunal can make a proper assessment of their respective      capacities to provide for the needs of their children.
   
   In financial proceedings under the Family Law Act, the authorities make it clear that a Court should not be unduly cautious about making findings in favour of the other party if it is not satisfied that proper disclosure has been made (see Chang & Su (2002) FLC93- 117). Such principles, in my consideration, have similar application to these matters before the SSAT.

8. Ms Corliss’ tax return for 2017/18 shows that her gross income was $84,956.00, which she generated as a sole trader.  Against this income Ms Corliss deducted the following amounts which are of interest to the Tribunal:

   ·depreciation  $4,748.00

   ·office expenses  $2,881.00

   ·motor vehicle expenses         $5,116.00

   ·rent  $7,226.00

   ·professional development      $8,760.00

   ·telephone  $1,422.00

   ·travel and accommodation     $2,206.00

   ·wages and salaries                $5,388.00

   ·disbursements  $4,616.00       

9. Following the deduction of these and other amounts Ms Corliss declared a net business income of $37,123.00 and, following the addition of income from interest bearing deposits and dividends and a deduction for a charitable gift, she declared taxable income of $38,156.00.

10. As depreciation is an allowance rather than an expense the Tribunal has decided to consider it to be a financial resource available to Ms Corliss.  At the hearing Ms Corliss explained that she operates her business from her home and that the deduction for rent represents one-quarter of the rent of the house.  She said that the motor vehicle expenses relate to a car that she also uses for personal transport and that the telephone is also her personal telephone.  She said that the deductions relate only to a proportion of the overall cost of those items.  Ms Corliss had difficulty describing exactly what was included in the item for professional development and was not able to enlighten the Tribunal at all as to what was included in the item described as disbursements.  She said that the wages and salaries were paid to her partner and two of her children for routine tasks such as data entry.  Although the documentation is somewhat deficient, as a result of Ms Corliss’ failure to fully respond to the Tribunal’s directions, the Tribunal has formed the view that some of the expenditure under all of these headings delivers some personal benefit to Ms Corliss, and that that personal benefit, representing a financial resource, should be taken into account in the assessment.  The Tribunal finds that it would be fair and reasonable to attribute 20% of the expenses, leaving aside depreciation which will be included in its entirety, as a financial resource available to Ms Corliss.  Adding these amounts to Ms Corliss’ taxable income produces a figure of $50,427.00.

1. The Tribunal notes that the original decision maker (ODM) used a similar methodology to arrive at a figure of $60,417.00, the difference being that the ODM applied a percentage of gross income to produce a deductible expense figure.  The objections officer applied a different percentage and arrived at a figure of $47,923.00.

2. The actual ATI for Ms Corliss used in the assessment at the time that Mr Thorley applied for the departure from the assessment was $31,091.00.  As this is significantly less than all of the figures before the Tribunal, the Tribunal finds that there is a special circumstance that would allow a departure from the formula assessment of child support under subparagraph 117(2)(c)(ia) of the Act.

Does a ground exist to depart from the administrative assessment under reason 8B?

1. Mr Thorley sought a departure from the administrative assessment on the ground that Ms Corliss’ earning capacity is not reflected in the formula assessment.  This ground, known as reason 8B for administrative purposes, is set out in subparagraph 117(2)(c)(ib) of the Act:

   (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:

   …

   (ib)   because of the earning capacity of either parent; …

1. Subsection 117(7B) of the Act provides:

   (7B)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.

2. At the hearing Mr Thorley said that Ms Corliss had reduced her working hours and that the Department had accepted Ms Corliss’ claim that she had to reduce her working hours in order to provide extra care for [Child 1].  In fact the original decision maker did not really consider reason 8B, finding that the issues were addressed effectively through a consideration of reason 8A.  The objections officer accepted that Ms Corliss had reduced her working hours on the basis of her caring responsibilities but, in the opinion of the Tribunal, it was not necessary to make that finding in respect of paragraph 117(7B)(b) of the Act because the application fails under paragraph 117(7B)(a) of the Act.   

3. At the hearing Ms Corliss said that she had reduced her working hours somewhat in the period from 2016 to early 2018 and that this was because she felt that [Child 1] needed more direct care.  She acknowledged that there is no medical evidence before the Tribunal.    The evidence before the Tribunal is that Ms Corliss’ business income has been relatively stable, being $84,610.00 in 2014/15 (folio 274), $70,551.00 in 2015/16, $80,662.00 in 2016/17 and $84,956.00 in 2017/18 (folio B27).  The differing taxable income results are due to the increase in deductions claimed by Ms Corliss.  While she claimed business expenses of $28,364.00 in 2014/15, in 2017/18, on a similar gross income, she claimed business expenses of $47,833.00. 

4. The Tribunal finds that despite the oral evidence of the parties the documentary evidence does not support the conclusion that Ms Corliss has reduced her working hours in a way that significantly affects the assessment.  Certainly there is no evidence that any such reduction would have been with the intent of affecting the assessment.  Given the actual earnings, it would not be possible to support the alternative suggestion.  Ms Corliss continues to work and has not changed her occupation or working pattern.  As a result paragraph 117(7B)(a) is not satisfied and it is not open to the Tribunal to make a finding as to Ms Corliss’ earning capacity.  The Tribunal finds that there are no special circumstances that would allow a departure from the formula assessment of child support under subparagraph 117(2)(c)(ib) of the Act.

Issue two – Would departure from the administrative assessment be just and equitable?

Relevant law and evidence

1. As the Tribunal is satisfied that there is a ground to depart from the administrative assessment of child support under reason 3 and also under reason 8A, the next step is to consider whether it is just and equitable to depart from the assessment.  In deciding whether it is just and equitable the Tribunal had regard to the following matters set out in subsection 117(4) of the Act:

   (4)  In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:

   (a)    the nature of the duty of a parent to maintain a child (as stated in section 3); and

   (b)    the proper needs of the child; and

   (c)    the income, earning capacity, property and financial resources of the child; and

   (d)    the income, property and financial resources of each parent who is a party to the proceeding; and

   (da)  the earning capacity of each parent who is a party to the proceeding; and

   (e)    the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:

   (i)himself or herself; or

   (ii)  any other child or another person that the person has a duty to maintain; and

   (f)     the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and

   (g)    any hardship that would be caused:

   (i)      to:

   (A)  the child; or

   (B)  the carer entitled to child support;

   by the making of, or the refusal to make, the order; and

   (ii)       to:

   (A)  the liable parent; or

   (B)  any other child or another person that the liable parent has a duty to support;

   by the making of, or the refusal to make, the order; and

   (iii)  to any resident child of the parent (see subsection (10) by the making of, or the refusal to make, the order.

2. The Tribunal considered the evidence provided by both parents, including the documents and SOFC form that each party provided to the Tribunal, as well as the documents provided by the Department.

Assessment of evidence, findings of fact and application of the law

1. Section 3 of the Act states that it is the duty of both parents to financially support their children.  The children should receive a proper amount of financial support from their parents in accordance with their capacity to contribute.

The children’s needs

1. Paragraph 117(4)(b) of the Act requires the Tribunal to consider the proper needs of the children.  At the hearing the parties agreed that the children are healthy and have no special needs or extraordinary costs that need to be taken into account by the Tribunal.

2. With regard to education the parents acknowledge that it was their expectation that the children would be educated privately, but Mr Thorley states that the expectation was that they would be educated at a Catholic parochial school.  He states the education of the older children has always been at a parochial school but that Ms Corliss decided to send [Child 1] to [School 1], a far more expensive Catholic independent school.  Mr Thorley said that he had advised Ms Corliss before she enrolled [Child 1] at [School 1] that he could not afford to contribute any more than $3,000.00 per annum, similar to the amount he had contributed in respect of the education of the other children.  Ms Corliss has confirmed that Mr Thorley advised her that he would limit his contribution and the conversation between them is documented in an email exchange that took place in June 2016 (folio 138).  That exchange makes it clear that both parents were aware that the agreement to enrol [Child 1] at [School 1] was subject to having available adequate resources when [Child 1] commenced study there in 2018.

3. At the hearing Ms Corliss said that she enrolled [Child 1] in [School 1] because no other school had offered a place.  She acknowledged that she had not inquired of any other school as to whether a place would be available.

4. The Tribunal has closely examined Mr Thorley’s finances.  He appears to have been fully forthcoming, providing all of the documentation directed by the Tribunal, and as a result the Tribunal is confident of its findings in respect of his finances.  The Tribunal finds that on his SOFC Mr Thorley has somewhat overestimated his expenditure.  However it is clear from the bank and credit card statements that Mr Thorley’s finances are not particularly favourable, and certainly less favourable than those of Ms Corliss.  He has no significant assets other than his superannuation and he has significant debt.  It is notable that he has some $18,000.00 in credit card debt, the most expensive debt to maintain.  His income covers his expenses, but barely, and the household budget is only sustainable with the ongoing contribution of his partner.  His bank balance is minimal.

5. When the parties discussed [Child 1’s] education in 2016 it appears to have been clear that the parties would not be able to afford the tuition at [School 1].  Mr Thorley agreed to register [Child 1] on the basis that, unless his circumstances changed, his liability would be limited.  Mr Thorley’s financial circumstances have not since improved.  The Tribunal finds that a contribution by Mr Thorley towards the education of [Child 1] of an amount equivalent to half of the cost of tuition at a Catholic parochial school from 2018, and increasing in line with parochial school fees, is appropriate in all of the circumstances.

The children’s incomes and earning capacities

1. The children are full-time students and have no independent income or earning capacity that needs to be taken into account in the assessment.

The income, property and financial resources and earning capacity of Mr Thorley and his necessary commitments

1. Mr Thorley’s financial circumstances were closely examined by the Tribunal.  The Tribunal finds that although the SOFC provided by Mr Thorley overestimates his expenses, the other documentation provided by him, together with his oral evidence presents an accurate picture of his financial circumstances.  Mr Thorley continues to work full-time and the Tribunal is satisfied that he has no further earning capacity that needs to be taken into account in the assessment.  Despite the expensive credit card debt he is carrying the Tribunal is satisfied that Mr Thorley has sufficient financial resources to meet his necessary commitments.

The income, property and financial resources and earning capacity of Ms Corliss and her necessary commitments

1. Ms Corliss’ financial circumstances were closely examined by the Tribunal.  The Tribunal was hampered in its efforts by Ms Corliss’ failure to respond to the Tribunal’s directions.  The Tribunal cannot be satisfied that the information provided by Ms Corliss fully accounts for the resources available to her.  However, the Tribunal does have before it Ms Corliss’ 2017/18 income tax return and her SOFC together with the documentation previously obtained by the Department.  Ms Corliss’ oral evidence is also of some assistance in allowing the Tribunal to arrive at a decision that is just and equitable and fair to the parties.

2. The previous decisions made by the Department, both in respect of this application and the many previous applications by the parties provide the Tribunal with some further insight into Ms Corliss’ financial circumstances.  In this regard the Tribunal notes that Ms Corliss has complained that the Department’s decision makers scrutinised her business expenses “unfairly” (folio B2).  The Tribunal has closely examined the decision statements of the delegate and of the objections officer and finds that in both cases the decision makers were hampered by Ms Corliss’ failure to provide full information.  The delegate and the objections officer both had no choice but to make some assumptions as to the nature of her business expenses.  The Tribunal finds that both decision makers were fair to Ms Corliss and that it was open to them, as it is open to the Tribunal, to make a decision less favourable to Ms Corliss than the decisions they made.

3. In her SOFC Ms Corliss discloses that in order to fund her level of expenditure she would require a taxable income of more than $100,000.00.  She has disclosed an income of $46,800.00 but has not taken into account the child support payments made by Mr Thorley.

4. In her SOFC Ms Corliss states that she has some $38,314.00 in bank deposits and some $23,806.00 in investments.  These figures are consistent with ATO screen shots disclosing Ms Corliss’ investment income (folios 146 to 148).  The Tribunal is satisfied that Ms Corliss has sufficient financial resources to meet her necessary commitments.

The parents’ duty to support others

1. At the hearing Ms Corliss said that she does not have the legal duty to support any person other than the children of the assessment.

2. At the hearing Mr Thorley said that he has the legal duty to support other children.  The Tribunal notes that this is taken into account in the assessment and finds that it is not necessary to make any further provision.

Hardship

1. The Tribunal has found that both parents have incomes that are sufficient to meet their necessary commitments.

2. Relying mainly on his 2017/18 income tax return and taking into account the substantial financial documentation provided by Mr Thorley the Tribunal has decided to set Mr Thorley’s ATI at $83,150.00. 

3. In respect of Ms Corliss the task is more difficult due to Ms Corliss’ failure to cooperate fully with the Tribunal.  In the income part of her SOFC (with an adjustment for child support) Ms Corliss discloses financial resources of $54,080.00 per annum, however the expenditure part of her SOFC discloses financial resources of $101,920.00 per annum.  The Tribunal notes that the original decision maker used the average wage of an [occupation 1] as a reference point.  However Ms Corliss is not an [occupation 1] but rather a [related occupation].  She has a Diploma in [her occupational field] rather than a degree.  According to [a salary reference tool] the average hourly wage for [the related occupation] in Australia is $27.23, which produces an annual wage of $56,638.00.  Of course there is a wide variation.  There is evidence that Ms Corliss charges clients between $70.00 and $90.00 per hour (folio 294) but of course the cost of running the business must be deducted from this.  Taking into account all of the evidence before it, as well as the advice of the courts that the Tribunal should not be unduly cautious in these circumstances, the Tribunal has decided to set Ms Corliss’ ATI at $65,000.00.  

4. The Tribunal has also decided to increase the child support assessment to reflect the cost of educating the children privately.  The evidence before the Tribunal is that [Child 2’s] fees at [School 2] are $5,580.00 in 2018.  The Tribunal finds that Mr Thorley should contribute half of those fees, that amount being $2,790.00.  Reflecting the findings of the Tribunal in respect of the agreement between the parents and Mr Thorley’s financial resources the Tribunal finds that he should contribute the same amount towards [Child 1’s] fees.  As a result the assessment will be increased by $5,580.00 for the 2018 calendar year.  The Tribunal notes that in 2019 [Child 2] commenced Year [number] and that this increased the fees payable to $6,262.00, a figure beyond the normal yearly general increase.  It could be argued that Mr Thorley’s contribution towards [Child 1’s] education should increase by a smaller amount.  However, because the contribution towards [Child 1’s] education is a nominal amount it is not necessary to keep it in strict alignment with general increases.  The Tribunal finds that it is appropriate for Mr Thorley’s contribution to increase in line with increases in the fees paid for [Child 2’s] education.  This means that his contribution will be increased to $6,262.00 for the 2019 calendar year.   

5. At the time that Mr Thorley applied for the departure he was assessed to pay Ms Corliss $12,441.00 per annum but this reduced to $10,434.00 when the eldest child reached 18.  Since then there has been a change of care which has affected the assessment.  The varying decisions of the original decision maker and the objections officer have introduced further complications.  Because of the changing circumstances it is complex and confusing to illustrate the exact impact of the Tribunal’s decision.  However, the decision contemplated by the Tribunal may be summarised as resulting in a modest reduction in Mr Thorley’s child support liability compared with what it would have been had Mr Thorley not applied for a change of assessment.

6. The Tribunal is satisfied that Mr Thorley has access to sufficient financial resources to meet the child support liability contemplated by the Tribunal.  Taking into account Mr Thorley’s primary obligation to support the children the Tribunal finds that the decision contemplated by it will not cause hardship to Mr Thorley.  Because of her refusal to cooperate fully the Tribunal is not in a strong position to assess the impact on Ms Corliss, however because the outcome is a relatively modest change the Tribunal is satisfied that it will not cause hardship to Ms Corliss.

Terms and period of departure

1. The Tribunal has decided to depart from the formula assessment by setting Mr Thorley’s ATI at $83,150.00 and by setting Ms Corliss’ ATI at $65,000.00.  The Tribunal has also decided to increase the assessment to take into account the cost of private education. 

2. At the hearing both parents said that any departure from the formula assessment could commence on the date Mr Thorley applied for the departure, that being 13 December 2017.  This seems an appropriate date given that [Child 1] commenced school at [School 1] in 2018.  At the hearing Mr Thorley said that he would like the departure to extend for a reasonable period so that the parents do not have to go through the process again in the immediate future.  Ms Corliss said that she would prefer a shorter period to take into account changing circumstances.  Having regard to the matters in subsection 117(4) of the Act, the Tribunal finds that it would be just and equitable for the departure to commence from the date of Mr Thorley’s application, which was 13 December 2017, and to extend to the end of 2019.

Issue three – Is it otherwise proper to depart from the administrative assessment?

1. The final step for the Tribunal to undertake is to determine whether it is ‘otherwise proper’ to depart from the administrative assessment. Subsection 117(5) of the Act requires the Tribunal to take into consideration the following matters:

   (a)      the nature of the duty of a parent to maintain a child (as stated in section 3) and,   in particular, the fact that it is the parents of a child themselves who have the   primary duty to maintain the child; and

   (b)      the effect that the making of the order would have on:

   (i)       any entitlement of the child, or the carer entitled to child support, to an                    income tested pension, allowance or benefit; or

   (ii)       the rate of any income tested pension, allowance or benefit payable to   the child or the carer entitled to child support.

1. The child support law recognises that each parent has a primary duty to maintain their children.  In this case Ms Corliss receives FTB but no other benefits.  As a result of the Tribunal’s decision Ms Corliss’ FTB is unlikely to change.  The Tribunal finds that this is appropriate and is satisfied that it is otherwise proper to depart from the administrative assessment in this matter.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides to set Mr Thorley’s ATI at $83,150.00 and to set Ms Corliss’ ATI at $65,000.00, both for the period from 13 December 2017 to 31 December 2019 and to increase the assessment by $5,580.00 per annum for the period from 1 January 2018 to 31 December 2018 and by $6,262.00 for the period from 1 January 2019 to 31 December 2019.