Toft and Toft (Child support)

[2020] AATA 1019

Toft and Toft (Child support) [2020] AATA 1019 (30 January 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/BC016163

APPLICANT:  Ms Toft

OTHER PARTIES:  Child Support Registrar

Mr Toft

TRIBUNAL:Member J Thomson

DECISION DATE:  30 January 2020

DECISION:

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

·for the period 1 January 2018 to 31 December 2018, Mr Toft’s annual rate of child support is increased by $6,000 in consideration of his contribution to [Child 1]’s grade 7 2018 [SCHOOL 1] tuition fees and compulsory charges;

·for the period 1 January 2019 to 31 December 2019, Mr Toft’s annual rate of child support is increased by $16,715 in consideration of his contribution to [Child 1] and [Child 2]’s 2019 [SCHOOL 1] tuition fees and compulsory charges (grades 8 and 7 respectively) and [Child 2]’s [dance] training costs;

·for the period 1 January 2020 to 31 December 2020, Mr Toft’s annual rate of child support is increased by $14,152 in consideration of his contribution to [Child 1] and [Child 2]’s 2020 [SCHOOL 1] tuition fees and compulsory charges (grades 9 and 8 respectively).

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education - manner expected by both parents - costs of maintaining the children are significantly affected – financial resources of both parents - 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. Ms Toft and Mr Toft are the parents of [Child 1], born 2005, and [Child 2], born 2007 (the children). Both children are in the primary care of Ms Toft.

2. On 9 October 2018, Ms Toft applied to the Department of Human Services – Child Support (the Department) for a change of assessment of child support payable by Mr Toft on the grounds commonly known as Reasons 2 and 3, with respect the significant costs of meeting [Child 1]’s [medical] special needs treatment, and the costs of educating and training her in the manner intended by the parents at [SCHOOL 1].

3. The administrative assessment of child support in place at the time Ms Toft applied to the Department for change of assessment, required Mr Toft to  pay child support at the annual rate of $34,964 for the period 1 October 2018 to 2 November 2018, based on his derived income of $273,488, and Ms Toft’s 2017/18 adjusted taxable income of $4,788, and for the period 3 November 2018 to 31 December 2019, he was required to pay child support at the annual rate of $38, 644, based on the same incomes for the respective parents, the increase in the annual rate being attributable to [Child 1] having turned 13 years of age in that period.

4. On 5 December 2018, a Department decision maker, DM [A], found Reasons 2 and 3 established. However, because Mr Toft’s annual rate of child support had been recently increased by $3,680 due to [Child 1] turning 13, and the net out of pocket cost to Ms Toft for the treatment of [Child 1]’s [medical] special needs had been determined by DM [A] at $2,282, DM [A] decided that the increase in Mr Toft’s rate of child support was sufficient to cover the those out of pocket costs, and no departure on that basis was justified. As Reason 3 had been established, DM [A] decided it was appropriate to determine Mr Toft should contribute 75% of the compulsory costs of educating [Child 1] at [SCHOOL 1], and increased the annual rate of his child support by $10,872 for the period 1 January 2019 to 31 December 2019, $11,144 for the period 1 January 2020 to 31 December 2010, and $11,422 for the period 1 January 2021 to 31 December 2021.

5. On 31 December 2018, Ms Toft objected to DM [A]’s decision of 5 December 2018

6. On 27 January 2019 Ms Toft made a further application for a change of assessment on the grounds commonly referred to as Reason 3, seeking a contribution from Mr Toft for the costs associated with [Child 1] and [Child 2]’s [dance] training.

7. On 21 March 2019, with Ms Toft’s consent, a Department objections officer determined both Ms Toft’s objection and her further application for a change of assessment made on 27 January 2019 with respect to [Child 2]’s [dance] training costs only, partially allowing Ms Toft’s objection, setting aside DM [A]’s decision and, in substitution, deciding that Mr Toft’s annual rate of child support for the period 1 January 2019 to 30 June 2020 should be increased by $8,659 in recognition of his contribution to the costs of [Child 2]’s [dance] training.

8. Ms Toft applied to the Tribunal for review of the objections officer’s decision on 22 March 2019.

9. The Tribunal heard the matter on12 November 2019. Both parents attended the hearing in person and gave affirmed evidence. The Tribunal had before it documentation provided by the Department and each parent. These documents were admitted into evidence, the Department’s documents were marked Exhibit 1, Ms Toft’s documents marked Exhibit A, and Mr Toft’s documents were marked Exhibit B. Both parents had copies of these documents with them at the hearing.

10. Both parents provided additional documents at the hearing. These documents were admitted into evidence and added, respectively, to Exhibits A and B. Ms Toft was directed to provide copies of pages 6, 7 and 8 of her [Business 1] loan application. She has complied with that direction. These documents have been added to Exhibit A. Copies of these documents will be provided to Mr Toft with a copy of the Tribunal’s decision. Mr Toft provided a copy of his employer, [Employer 1] ’s PAYG summary for the 2018/19 financial year, a copy of which was provided to Ms Toft from Mr Toft’s mobile phone at the hearing. This material has been added to Mr Toft’s documents, Exhibit B.

11. The Tribunal has obtained a copy of the 2020 [SCHOOL 1] tuition fees and charges schedule from [SCHOOL 1]. This document has been included in the evidence before the Tribunal. The Tribunal did not consider it necessary to provide a copy of this document to the parents for their consideration and comment.

CONSIDERATION

1. In reaching its decision, the Tribunal has considered the affirmed evidence of both parents, the documentation contained in Exhibits 1, A and B, and the GCL schedule of fees and charges referred to above.

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 Child Support (Assessment) Act 1989 (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 administrative formula will apply 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 ground (or more than one ground) for departure exists; and

   ·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).

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 may make one of the range of determinations prescribed in section 98S of the Act, which includes varying the rate of child support payable, the adjusted taxable income or the cost percentage of a child.

Grounds for departure

1. Subparagraphs 117(2)(b)(ia) of the Act provides as a ground for departure:

   (c) 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. Subparagraph 117(2(b)(ii) of the Act provides as a further ground for departure:

   (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;…

3. The words “in the special circumstances of the case” are not defined in the legislation. While 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. That is, the intention of the legislature is that the Tribunal will not interfere with the administrative formula result unless there is a special reason to do so. 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’s approach to the interpretation and application of the particular grounds of subsection 117(2) must be guided by that qualification. The Tribunal will consider whether the application of the administrative assessment would result in an unjust and inequitable determination of child support payable, having regard to the evidence relevant to the parents’ financial positions.

4. Subsection (1) of section 3 of the Act provides that the parents of a child have the primary duty to maintain the child, and without limiting that subsection, subsection (2) provides, relevantly, the duty of a parent to maintain a child has priority over all commitments of the parent other than commitments necessary to enable the parent to support him or herself, and any other child or another person that the parent has a duty to maintain.

5. Both parents acknowledged at hearing that the issues they require the Tribunal to determine related to Mr Toft’s contributions to the education and training costs of the children, in particular, the costs of educating the children privately at [SCHOOL 1], and [Child 2]’s [dance] training costs. Neither parent challenged the incomes determined by the objections officer in the decision under review.

6. At the hearing, Ms Toft sought contribution from Mr Toft to the costs of privately educating the children at [SCHOOL 1], and the costs associated with [Child 2]’s [dance] training at [SCHOOL 2], [SCHOOL 3], and [SCHOOL 4] in [State 1], [COUNTRY 1], where he was offered a one month full scholarship to prepare him for an [event] in [City 1], [Country 2], and subsequently, a full scholarship when he turns 16 years of age. In support of her case, Ms Toft provided the Tribunal with documentation evidencing [Child 1] and [Child 2]’s enrolment at [SCHOOL 1], and the associated tuition fees and compulsory charges for students at that school for the 2018 and 2019 academic years. She also provide the Tribunal with copies of enrolment documentation for placements in training programmes offered by [SCHOOL 2] and [SCHOOL 3] during in 2019, and testimonials from [SCHOOL 4] relating to that academy’s full time scholarship offer when [Child 2] turns 16, together with costings for those training programmes, and air fares and accommodation estimates for [Child 2]’s chaperoned travel to Melbourne for the [SCHOOL 3] training courses and to [State 1] to take up the [SCHOOL 4] scholarship training offer.

7. With respect to the issue of the parents’ mutual expectation that the children should receive a private education, there was no dispute that when the parents were living as a couple and prior to the children commencing their primary school education, they had decided the children would attend [SCHOOL 5], a private school in the area where the parents were residing at the time, and that the children attended that school for some time, until the parents encountered financial difficulties in or about 2012, falling behind in the payment of the school fees and charges, as a consequence of which, they withdrew the children from [SCHOOL 5], and sent them to [School 6].

8. The parents divorced [in] May 2015, and concluded a family law property settlement [in] August 2015. A copy of the deed recording the terms of that settlement was before the Tribunal as part of Ms Toft’s documents, Exhibit A. Under the terms of this document, Mr Toft agreed to indemnify Ms Toft for claims relating to mortgage and other debts incurred by the parents and the property trust entities they operated when they were a couple, including outstanding tuition fees due to [SCHOOL 5].

9. Ms Toft gave evidence that towards the end of 2017, she and the children had discussed a range of suitable private schools for the children’s secondary education, in [Child 1]’s case, to commence in the 2018 school year, following completion of her primary school education at [School 6], and in [Child 2]’s case, in 2019, following completion of his primary school education at that school. She said that because she had primary care of the children, the practice she and the children had adopted in approaching Mr Toft on such matters was to resolve on a preferred course or outcome and then communicate that decision as a proposal to Mr Toft for his consideration and response. She said this was because she had the primary care of the children, and because of the nature of Mr Toft’s job as an [Occupation 1], he was regularly out of the country, and not readily available for such discussions.

10. Ms Toft said [Child 1] and [Child 2] expressed their wish to attend [SCHOOL 1] for their secondary education, and that [Child 1] communicated her request to Mr Toft in late December 2017 – early January 2018. Ms Toft said she had a telephone conversation with Mr Toft at about the same time in which she informed Mr Toft of [Child 1]’s preference for [SCHOOL 1] as her choice of secondary school, Ms Toft’s endorsement of that decision, and her intention to enrol [Child 1] at [SCHOOL 1] to commence in grade 7 in January 2018. Ms Toft was unable to recall with precision Mr Toft’s response, but said that she does not recall him making any negative comment about the proposal, and she did not recall Mr Toft indicating his approval conditional upon Ms Toft accepting that any contribution from him to the [SCHOOL 1] school fees and charges would be considered as being covered by his administratively assessed child support payments.

11. Ms Toft had already completed a [SCHOOL 1] enrolment application for [Child 1] on 27 July 2017, the signature page of before the Tribunal in evidence as part of Exhibit 1. This copy was a poor reproduction and difficult to read. However, at hearing, Ms Toft handed up a clearer copy of that document which she said contained Mr Toft’s signature appearing opposite the date, 24 August 2018, on that document.

12. Ms Toft’s evidence was that she had completed the enrolment application form for [Child 1] on 27 July 2017. She said she had not obtained Mr Toft’s signature at that time, because his work as an [Occupation 1] meant that he was often away from home and not readily available to sign such documents. She also acknowledged in evidence that there had been no discussion with Mr Toft about enrolling [Child 1] at [SCHOOL 1] before she completed and signed the enrolment application form, and it was not until late December 2017/early January 2018 that [Child 1] informed Mr Toft that she would be commencing her secondary school education at [SCHOOL 1] in January 2018, which she duly did. She said Mr Toft had not indicated his objection to [Child 1] doing so, and she assumed his silence connoted his consent.

13. In about July-August 2018, Ms Toft initiated discussions with [SCHOOL 1] for [Child 2]’s enrolment to commence his secondary education at that school in January 2019, and in consequence of those discussions, the school sent Ms Toft [Child 1]’s original enrolment form completed and signed by Ms Toft in July 2017, together with written confirmation of [Child 2]’s enrolment for his commencement at [SCHOOL 1] in January 2019, and a request that Ms Toft arrange for Mr Toft to sign both documents. A copy of [Child 2]’s confirmation of enrolment form was before the Tribunal as part of Exhibit 1: Ms Toft produced the original of this document at hearing, which she said contained both parents’ signatures, and was dated 24 August 2018. Only the signature page of [Child 1]’s enrolment form was produced in evidence before the Tribunal.

14. Ms Toft gave evidence as the circumstances in which she said she arranged for Mr Toft to execute both of these documents. She said she arranged for [Child 2] to take both documents to Mr Toft when the children went to stay at Mr Toft’s house for a prearranged care weekend over the course of Friday 24 August 2018 until lunchtime, Sunday 26 August 2018. She acknowledged in her evidence that she sent only the signature page of [Child 1]’s enrolment form with [Child 2]’s Confirmation of Enrolment form with [Child 2] for signature by Mr Toft. She produced a contemporaneous diary note she said she made, recording the arrangements for Mr Toft to collect [Child 2] from his [dance] class after school on Friday afternoon, 24 August 2018, and a further diary note recording Mr Toft returning both children to her home at lunchtime on Sunday, 26 August 2018 with both enrolment documents which she said had been signed and dated by Mr Toft on 24 August 2018.

15. The Tribunal invited Mr Toft to inspect both of these documents, and the signatures thereon, and confirm or otherwise the authenticity of the signatures purporting to be his on those documents. Mr Toft perused both of the documents Ms Toft handed up at the hearing, and acknowledged that the document relating to [Child 1]’s enrolment at [SCHOOL 1] was signed by him and the dated 24 August 2018, but denied any recollection of signing the document. With respect to [Child 2]’s confirmation of enrolment form, Mr Toft denied the signature on that document was his, or that the date, 24 August 2018 following the signature, was in his hand writing. He also said he had no recollection of signing that document on 24 August 2018, or having care of the children over the weekend of 24 to 26 August 2018.

16. He attributed his lack of recall of these events to a fall he suffered on or about [date] August 2018 at his home, in which he said he sustained an injury to his[body part], requiring hospitalisation for treatment and the administration of pain killing medication which he said affected his memory and his recollection of events occurring at or about that time.

17. He produced a letter from [a]Hospital dated 21 August 2018 confirming his presentation at that hospital on [date] August 2018 for treatment of a diagnosed [body part] injury. This report records no fracture was identified on the CT scan taken at the hospital, and the ultimate diagnosis was recorded as a likely muscular/skeletal injury, for which he was prescribed [medicines] for breakthrough pain. The hospital’s letter does not suggest Mr Toft was admitted to hospital for treatment, although he gave evidence he was, and was discharged on [date] August 2018. However, Mr Toft admitted in evidence that it was possible he signed both enrolment documents referred to above on 24 August 2018.

18. The Tribunal is satisfied that the evidence, on balance, is that Mr Toft signed the document relating to [Child 1]’s enrolment at [SCHOOL 1], and the document relating to [Child 2]’s Confirmation of Enrolment at [SCHOOL 1] on 24 August 2018, evidencing his expectation that the children would be privately educated at secondary level at [SCHOOL 1] with [Child 1] commencing at that school in January 2018, and [Child 2] commencing at that school in January 2019. He also acknowledged in his evidence to the Tribunal that [Child 1] had informed him that she would be commencing her secondary education at [SCHOOL 1] in January 2018. He said he did not object to her doing so because he had already discussed the matter with the Department, and believed he would not be liable for any contribution to the additional costs of [Child 1]’s private school education at [SCHOOL 1], because the Department had informed him that his liability for those costs was covered in his child support assessment.

1. In summary, The Tribunal finds that the evidence, on balance, is that the parents’ initial expectation, prior to the children commencing their primary school education, was that they should receive a private education at [SCHOOL 5], but when their financial circumstances changed and they could no longer afford to pay that school’s the fees and charges, that expectation was suspended and they withdrew the children from that school, and sent them to a public school ([School 6] for the remainder of their primary schooling, until Ms Toft enrolled [Child 1] at [SCHOOL 1] in July 2017, and [Child 2] in or about August 2018. Mr Toft was made aware during the course of the 2017-18 Christmas/New Year school holiday period that [Child 1] would be attending [SCHOOL 1] for her secondary education, commencing in grade 7 in January 2018, and did not object to that course, and subsequently signed her [SCHOOL 1] enrolment form for her to commence at that school in January 2018 in grade 7, and [Child 2]’s [SCHOOL 1] Confirmation of Enrolment form for his commencement at that school in January 2019 in grade 7.

2. Having determined the parents’ mutual expectation that the children receive their private secondary education at [SCHOOL 1], the Tribunal will consider whether the costs associated with that standard of education significantly affect the cost of maintaining the children in the manner expected by the parents.

3. The evidence before the Tribunal regarding the [SCHOOL 1] school fees and compulsory charges for the children is as follows:

   [Child 1]:

   [SCHOOL 1] 2018 grade 7 compulsory fees and charges:

   Tuition fees: $6,980

   Capital levy: $220

   Resource levy: $340

   Camp levy: $325

   Technology access levy: $260

   subtotal: $8,125

   Less text book allowance: $125

   Total: $8,000

   [SCHOOL 1] 2019 grade 8 compulsory fees and charges:

   Tuition fees: $7,980

   Resource levy: $820 (including Capital levy)

   Camp levy: $580

   subtotal: $9,380

   Less text book allowance: $127

   Total: $9,253

   [SCHOOL 1] 2020 grade 9 compulsory fees and charges:

   Tuition fees: $8,520

   Camp levy: $860

   Resource levy: $860

   subtotal: $10,240

   Less text book allowance: $129

   Total: $10,111

   [Child 2]:

   [SCHOOL 1] 2019 grade 7 compulsory fees and charges:

   Tuition fees: $7,240

   Resource levy: $820

   Camp levy: $335

   subtotal: $8,395

   Less text book allowance: $127

   Subtotal: $8,268

   Less 2^nd child discount: $724

   Total: $7,544

   [Child 2]:

   [SCHOOL 1] 2020 grade 8 compulsory fees and charges:

   Tuition fees: $8,300

   Resource levy: $860

   Camp Levy: $580

   Subtotal: $9,740

   less text book allowance: $129

   subtotal: $9,611

   Less 2^nd child discount $852

   Total: $8,759

4. The Tribunal is satisfied that these costs are significant. Child support assessment under the Part 5 formula is intended to assist with the ordinary cost of education but does not contemplate the additional costs of private school education. The Tribunal is satisfied that, the costs of maintaining the children are significantly affected because they are being educated in a manner that was expected by their parents, making the case special, and a ground to depart from the administrative assessment established.

5. Ms Toft is also seeking a contribution from Mr Toft for the costs of [Child 2]’s [dance] training, on the basis that [Child 2] has demonstrated a level of proficiency commensurate with elite status, making his case special. At the hearing, she relied on two reports from Mr [B], the director of the [SCHOOL 4] in [State 1], [COUNTRY 1] the first of which was dated 17 December 2018, offering [Child 2] specialised training as the Academy’s chosen representative [to] prepare him for that event, and the second, dated 24 January 2019, offering [Child 2] a full scholarship to study at the Academy when he turns 16, in recognition of his [dance] talent and his performance at [an event] referred to above, for which he was awarded the silver medal.

6. Ms Toft contended for only those costs relating to [Child 2]’s attendance at special training programmes at the [SCHOOL 2] and the [SCHOOL 3], Melbourne in 2019. She had already enrolled [Child 2] for the [SCHOOL 2]’s 2019 associate programme in December 2018, and [Child 2] had auditioned for and been offered a place in the [SCHOOL 3]’s 2019 [Training] programme which he and Ms Toft accepted in October 2018. According to Ms Toft’s evidence at hearing, her mother paid the costs associated with [Child 2]’s trip to [City 1], [Country 2] in [2019] where he represented the [SCHOOL 4] in the [event] in [City 1], and was awarded the silver medal in his event. Ms Toft and her mother accompanied him on that trip. As Ms Toft did not incur any of the costs associated with that trip, the Tribunal will not consider the costs relating to that trip for the purposes of a contribution by Mr Toft to [Child 2]’s special [dance] training needs, and as noted above, she did not contend for a contribution from Mr Toft toward those costs.

7. Ms Toft also provided copies of [Child 2]’s [SCHOOL 2] boys’ [dance] level 1 performance assessments for terms 1 to 4 of 2018, and term 1 for 2019. These were admitted into evidence and added to Exhibit A. Mr Toft perused these copies and commented upon them at the hearing. He noted that most of the assessments were in the “satisfactory” to “good” category, with only one assessment in the “very good” category, which he said suggested that although [Child 2] was a talented [dance] performer, he was not of elite standard. Ms Toft responded, asserting that [Child 2] was performing above the normal range for his age, and progressing from level 2 in 2018 to level 1 in term 1 of 2019.

8. The Tribunal finds the report provided by Mr [B] dated 24 January 2019 significant and persuasive regarding [Child 2]’s [dance] career, attesting to [Child 2]’s outstanding level of achievement as a [dancer], commending in particular his performance at [the event] in [2019], which, he noted, was the basis for the decision by the Academy’s Examiner’s Committee to offer [Child 2] a full scholarship to study at [SCHOOL 4] when he comes of age (16 years old) (author’s emphasis). Mr [B] recommended that, in the meantime, [Child 2] continue rigorous study with the [SCHOOL 2] programme, into which he has been accepted, and continue with his [dance] studies at workshops, masterclasses and such other events in the professional [dance] world as may be available to him. Mr [B]’s report confirms that the [SCHOOL 4] scholarship offer is available to him for his lifetime as a student. The Tribunal considers these commitments, however, should be considered in the context of [Child 2]’s current circumstances as an adolescent at the commencement of his secondary school education.

9. Mr Toft gave evidence of a telephone conversation he had with Mr [B] regarding [Child 2]’s [dance] training schedule in which he said Mr [B] expressed the concern that [Child 2] may be undertaking an excessive level of training for his age, which could have a detrimental effect on his physical development. Mr Toft also expressed concerns regarding the effect [Child 2]’s current [dance] training schedule was having on his academic performance at [SCHOOL 1]. In response to questioning by the Tribunal, Ms Toft acknowledged that [Child 2]’s academic performance was “not flash”. She said he was lucky to achieve “C” levels in his subjects. However, she attributed this to his[medical conditions], for which she said he was receiving special assistance at [SCHOOL 1].

10. In response to further questioning by the Tribunal, Ms Toft provided details of [Child 2]’s weekly dance training schedule, comprising Monday afternoons from 3:45 PM to 4:30 PM, Wednesday evenings from 5:15 PM to 7:00 PM, Thursday evenings from 5:15 PM to 7:30 PM, and Fridays from 4:00 PM to 6:45 PM. She said he is also currently preparing for a performance with [a] premier youth [dance] company, requiring him to attend rehearsals between 9 AM and 5 PM on Sundays. She acknowledged that this was an intense schedule.

11. The Tribunal finds that [Child 2] is a 12 year old talented [dancer] with a promising future career in that discipline, but agrees with the conclusion reached by the objections officer in the decision under review that the level of training should be restricted to the current weekly schedule of training referred to in the preceding paragraph, the course for which Ms Toft enrolled [Child 2] at the [SCHOOL 2] in 2019 and the 1 July 2019 to 4 July 2019 course at the [SCHOOL 3] in Melbourne.

12. With respect to the [SCHOOL 3]’s 2019 training programme, 1 July to 4 July 2019, for which [Child 2] was enrolled, the Tribunal finds those costs to be $2,644, comprising tuition fees of $540, return air fares, Brisbane to Melbourne for [Child 2] and chaperone of $604, and Melbourne accommodation costs of $1,500. The Tribunal has excluded the clothing and footwear items claimed by Ms Toft for the reasons enunciated in the objections officer’s decision under review. However given [Child 2]’s age, the Tribunal considers it reasonable and appropriate that he be accompanied for the Melbourne training programme by a chaperone, and the associated air fares and accommodation costs should be allowed.

13. The Tribunal finds the costs associated with [Child 2]’s enrolment in the [SCHOOL 2] training programme, level AP1 are $1,300 for clothing and footwear as itemised at page 168 of Exhibit1, and annual fees for the training programme of $1,545, totalling $2,845.

14. The combined cost of both training programmes as set out above is therefore $5,489. The Tribunal is satisfied [Child 2]’s exceptional level of talent as a [dancer] makes the case special, the costs associated with his level of training in that discipline significantly affect the cost of maintaining the child, and consistent with the provisions of section 117(2)(b)(ia), commonly referred to as Reason 2, a further ground for departure from the administrative formula is established.

15. The Tribunal will now consider whether it is just and equitable to make a departure order, having regard to the parents’ financial capacity to meet the children’s private education and [dance] training costs.

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, including the costs of education, and, in [Child 2]’s case, the costs of his [dance] training, the parents’ commitments and any hardship that would be caused by departing or not departing from the formula.

2. Both parents gave evidence of their financial circumstances following their return from [Region 1] to reside permanently in Australia, prior to their separation and divorce in May 2015. Both had worked in the [same] industry where Ms Toft was a [Occupation 2] with [Employer 1]  on a good salary. Mr Toft gave evidence that he was an [Occupation 1] with [Employer 2] and also in receipt of a substantial salary. Upon return to Australia, the parents mutually agreed that Ms Toft would cease working [this] industry and commence running a trust based [business] she and Mr Toft had established, while Mr Toft continued working as an [Occupation 1]. He gave evidence that he is currently employed as a [Occupation 1] with [Employer 1] and provided his 2018/19 employer’s PAYG summary reflecting his gross income for that year of $282,965.

3. Ms Toft gave evidence that [the] [business] she and Mr Toft had established encountered serious financial difficulties from about 2012 onward, resulting in the sale of most of the[assets], with only one of the trust properties surviving.

4. Mr Toft gave evidence of substantial debts arising from the failure of the trust based [business], for which he said he assumed responsibility under the terms of the property settlement concluded between the parents on 7 August 2015, referred to above. A summary of those debts totalling approximately $275,462 was provided by Mr Toft as part of his undated statement of financial circumstances (SOFC) before the Tribunal as part of his documents, Exhibit B. A number of these debts related to Australian Taxation Office (ATO) income tax, PAYG and superannuation debts owed by [Business 2] Pty Ltd ([Business 2]) and [Business 3] Pty Ltd ([Business 3]), companies established by the parents as part of their [business]. He also listed a debt for funds he had borrowed from [a bank] in [Region 1]. However, he acknowledged in evidence that it was unlikely he would be pursued by [the bank] for its debts totalling $38,010.

5. He gave evidence that he has already repaid [Business 2]’ superannuation debt of $31,000 to the ATO, but, in response to questioning by the Tribunal, he  acknowledged that although [Business 2] and [Business 3] had been deregistered, they had not been formally liquidated, and he admitted that he has not taken appropriate steps to mitigate his liability for the income tax, PAYG and unpaid superannuation debts of those companies referred to above, amounting to approximately $229,917, by re-registering them, formally liquidating them and approaching the ATO to negotiate an acceptable settlement, or the possibility of the ATO’s abandonment of its claims for those debts. He acknowledged that the ATO was not currently pursuing him for those debts, and that his accountants had advised him not to take any action to mitigate his liability for those debts. He also said that he could not afford the cost of approximately $7,000 to engage a liquidator to undertake the reregistration and liquidation of the companies as a prelude to seeking a negotiated resolution to his liability for these debts.

6. Ms Toft gave evidence that she had raised these issues with her accountants who had recommended the re-registration of the companies, their formal liquidation, and the opening of negotiations with the ATO outlined above.

7. At hearing, Mr Toft sought to rely on his indebtedness as a ground for financial hardship and a reason for not being able to contribute more that the current administratively assessed child support for the support of the children, in particular, his inability to borrow funds because of his parlous financial situation, and lack of capacity to contribute to the cost of their private education and [Child 2]’s [dance] training special needs.

8. Section 3 of the Act set out above provides that the parents of a child have the primary duty to maintain the child, and that the duty of a parent in that respect has priority over all commitments of the parent other than commitments necessary to enable the parent to support himself, or any other child or another person that the parent has a duty to maintain. The debts set out above upon which Mr Toft relies to shield himself from his exposure to having to contribute to his children’s private education costs and special needs arise from the terms of his property settlement with Ms Toft. The Tribunal will comment further on this aspect of his case later in these reasons.

Ms Toft’s SOFC

1. Ms Toft’s SOFC dated 2019 reflects her occupational status as an unemployed homemaker receiving family tax benefit Parts A and B of $219.50 per week and parenting payment of $392.50 per week. She amended her statement to reflect child support payments currently received from Mr Toft of $906.50 per week, and $50 per week from her current partner, Mr [C], for the support of their child, [Child 3], for total weekly income of $1,268.35, annualised to $65,954. There was evidence before the Tribunal in the form of her 2017/18 income tax return indicating that her taxable income for that financial year was $18,938, comprising Australian Government pensions and allowances, against which she claimed deductions for interest charges by the ATO and donations totalling $14,150, resulting in a net taxable income of $4,788. Based on the information she provided in her SOFC, her only income for the 2018/19 financial year would appear to be her parenting payment of $392.50 per week, annualised to $20,410.

2. She gave evidence that her current partner, Mr [C], is not currently employed, but is in receipt of Centrelink [allowance], from which he contributes $50 per week for the support of their child, [Child 3].

3. She listed assets totalling $545,403 comprising a residential property valued at $485,000, modest bank savings totalling $403, a [motor] vehicle, purchased for her by her father, valued at $35,000, household contents to a value of $5000 and livestock (horses) valued at $20,000. She reports no superannuation, and lists liabilities totalling $599,107, comprised of a mortgage debt to [Business 1] of $280,000 (for which she provided copies of her finance application as directed by the Tribunal at the hearing), a second mortgage securing a debt of $220,000 to her father, a further debt to her parents’ company [of] $55,000, a tax liability of $35,607, and a veterinarian’s bill of $8,500. A summary of personal weekly expenditure items reflected unremarkable life insurance premiums of $25, and health insurance premiums of $67.50, totalling $92.50.

4. Ms Toft’s summary of average weekly household expenses totalling $2,124 (annualised to $110,448) reflected mortgage payments of $458 per week and education expenses, including fees and levies of $409 per week. When questioned by the Tribunal is to how she managed to afford weekly expenses totalling $2,124 on a gross weekly income of $1,268.35, Ms Toft said she relied on assistance from her parents of between $50 and $100 per week, and that [SCHOOL 1] was currently carrying a debt of $10,000 for outstanding school fees for the children. She also acknowledged that she was not making any repayments to her father pursuant to the second mortgage debt on her home, nor was she actually paying the education expenses item listed at $409 per week, resulting in a reduction in her average weekly household expenditure to approximately $1,715 per week. Otherwise, Ms Toft affirmed the contents of her SOFC.

5. Ms Toft did not list her joint liability with Mr Toft for the ATO [Business 2] and [Business 3]  income tax, PAYG and superannuation debts, although she did assert in the course of Mr Toft’s evidence regarding his assumption of liability form these debts pursuant to the terms of the parties’ family law property settlement agreement that she would be liable for those debts in the event that Mr Toft defaulted on his indemnity for those debts, amounting to approximately $195,283.

6. Mr Toft challenged Ms Toft’s evidence regarding her income particulars set out in her SOFC, asserting she had derived income from the surviving trust [enterprise] known as the [Project 1] which she and her father took over following the financial crisis in 2012, and managed to completion. Mr Toft said he was largely excluded from the management of that development in which he asserted Ms Toft’s brother provided [specified] services. However, he conceded in evidence that he was not able to offer any reliable evidence to support his assertion, and did not pursue that issue further. Ms Toft denied she derived any financial or other benefit from the completion of the [Project 1], other than the satisfaction of seeing the family’s friends and her father recoup their respective investments in that project from the sales of the completed development.

Mr Toft’s SOFC

1. As noted above, Mr Toft provided an undated SOFC listing his occupation as a [Occupation 1] employed by [Employer 1], on a gross weekly income of $4,146, annualised to $250,592. However, at the direction of the Tribunal, Mr Toft provided a copy of his 2018/19 financial year [Employer 1] PAYG summary reflecting his gross salary at $282,965. The Tribunal will adopt this figure as the more accurate reflection of Mr Toft’s income. He listed his current partner, [Ms D], as an income earner residing in his household on an average weekly income of $1,530, annualised to $79,560. He reported assets comprising modest bank savings, a [motor] vehicle valued at $7,000 and household contents to a value of $5,000, totalling $12,000. He reported superannuation of $42,400, and total liabilities of $403,526, including $234,520, the liability he assumed pursuant to the terms of his property settlement with Ms Toft summarised above. He also listed borrowings [of] $3,089 and $17,846 respectively. Credit card debt [was] listed as $62,007 and $72,205 [which] he said he has since discharged, reducing his liabilities to $331,321, suggestive of a capacity to continue to borrow funds.

1. Mr Toft reported personal average weekly expenditure items totalling $3,277, comprising income tax instalments of $1,432, superannuation contributions of $394, life insurance premiums of $284, child support of $906.56, credit card repayments of $141 and health insurance premiums $119, none of which were remarkable. His average weekly household expenses totalling $3,534 included mortgage payments of $500 per week. In response to questioning from the Tribunal, Mr Toft disclosed that the property where he resides includes the former matrimonial home, transferred to him pursuant to the terms of the family law property settlement with Ms Toft. He gave evidence that he has since transferred the property to [Business 2], the corporate trustee for the [Business 2] Trust (the Trust), of which his current partner, [Ms D], is the sole director and shareholder. She is also the sole beneficiary of the Trust.  He gave evidence the Trust has since constructed a new residence on the property for their occupation, utilising funds borrowed from the[bank], and the former matrimonial home is now rented out at $695 per week, which is returned to the Trust.

2. Mr Toft conceded that the amounts of $500 and $100 listed as his and his partner’s rent/mortgage payments are in fact characterised as rent paid to the Trust which in turn pays $600 per week to [BANK] in reduction of the Trust’s mortgage debt currently standing at approximately $870,000, secured against the [Business 2] property and improvements valued at approximately $1.1m to $1.2m. He also acknowledged that his actual weekly household expenditure was $2,144, contrasted against weekly gross income of $5,442, based on his PAYG summary of $282,965, leaving disposable weekly income of $3,298 before tax.

3. The evidence available at hearing regarding Mr Toft’s tax deductions, based on his 2017/18 income tax return, suggests he has allowable deductions of approximately $10,000 to $15,000 to set off against his 2018/19 gross income reflected in his PAYG summary for that year referred to earlier herein, suggesting a taxable income of between $267,965 and $272,963.

4. The administrative assessment upon which Mr Toft is currently being assessed to pay child support at the rate of $34,964 for the period 1 October 2018 and 2 November 2018, and $34,964 for the period 3 November 2018 to 31 December 2019, increased to $38,644 as a result of [Child 1] turning 13 years of age, is based on Mr Toft’s derived income of $273,488, and Ms Toft’s 2017/18 adjusted taxable income of $4,788. The Tribunal is satisfied that Mr Toft’s income is accurately reflected in the assessment, and no ground for departure as regards his income is warranted. Ms Toft’s income reported in her SOFC appears to be $20,410, based on her parenting payment. As this is below the self-support threshold, varying her adjusted taxable income used in the assessment would not affect Mr Toft’s rate of child support, and consequently, the Tribunal will not change her adjusted taxable income reflected in the administrative assessment.

Conclusions

1. The primary issues in this case are whether the there was a mutual expectation on behalf of both parents, and in particular, Mr Toft, that the children, [Child 1] and [Child 2] should be educated privately, whether [Child 2]’s level of achievement as a [dance] student is sufficient to amount to a special talent or ability, constituting special needs, whether the additional costs associated with the private education of the children and the additional costs associated with [Child 2]’s [dance] tuition or training significantly affect the cost of maintaining the children, and, ultimately, whether it is just and equitable to require Mr Toft to contribute to the additional costs associated with the private education of the children and [Child 2]s special [dance] tuition, having regard to his current rate of child support and the income and financial resources of the parents.

2. The Tribunal is satisfied on the balance of evidence before it as set out above, that there was a mutual expectation that the children would be privately educated, and that although the implementation of that expectation in sending the children to the [SCHOOL 5] was interrupted when the parents encountered adverse financial circumstances in or about 2012, the evidence suggests Mr Toft agreed to both children being enrolled at [SCHOOL 1] for their secondary education, commencing in January 2018 for [Child 1], and 2019 for [Child 2]. The Tribunal is also satisfied that the costs of educating the children at [SCHOOL 1] significantly affect the costs of maintaining the children, making the case special and a ground for departure established.

3. As regards [Child 2]’s [dance] training and tuition, the Tribunal is satisfied the evidence suggests that [Child 2] level of [dance] attainment based on the testimonial provided by Mr [B], the director of the [SCHOOL 4], and his performance [in]  2019, meets the criteria for special talent, and the costs associated therewith constituting special needs which significantly affect the costs of maintaining the child, but for the reasons articulated above, those costs should be confined to the costs of attending the special training courses for which he was enrolled in 2019 at the [SCHOOL 3] in Melbourne and the [SCHOOL 2] in Brisbane set out above.

4. The evidence suggests that Ms Toft ceased work as an [Occupation 2] in or about 2010 on the parents’ return from [Region 1] and took up a management role in the [trust] business the parents had established, while Mr Toft continued with his career as a [Occupation 1] with [Employer 1]. This arrangement continued until the trust’s [business] encountered serious financial difficulties resulting in the foreclosure and sale of most of the trust’s[assets], and the finalisation of the last of the [projects], [by] Ms Toft and her father and brother recently. There is no evidence Ms Toft derived any financial benefit from the completion of that project, and she is currently unemployed, living off weekly payments of family tax benefit Parts A and B of $219.50, parenting payment of $392.50, child support from Mr Toft of $906.50, and her current partner’s contribution of $50.00, a total of $1,268.35 per week, annualised to $65,954. She owns her own home valued at $485,000 with mortgage debts of $280,000 to [Business 1] and a loan from her father secured by a second mortgage for $220,000. In addition, her SOFC records an unsecured further loan of $55,000 from her parents’ [company]. Her SOFC also reports her average weekly expenses as $2,124, against average gross weekly income of $1,268.35; she explains the shortfall as financial support coming from her parents.

5. The evidence before the Tribunal reflects Mr Toft’s taxable income as being between $267,965 and $272,965. Although he lists no real property in the assets section of his SOFC, he gave evidence of his having disposed of his interest in the former matrimonial home he received pursuant to the Family Law property settlement with Ms Toft to the Trust controlled by his current partner, the value of which has since been increased to between $1.1m and $1.2m, comprising a newly constructed dwelling on the former matrimonial home site, and the former matrimonial home, which, according to his evidence, is currently rented, and against which he and his partner have secured a loan from the [BANK] of approximately $870,000.

6. Mr Toft gave evidence of the debts he assumed pursuant to the family law settlement (articulated above) should be taken into account with respect to his capacity to provide support for his children. Section 3 of the Act set out above places the priority of a parent’s responsibility for the support of their children above all other commitments, including debts contracted pursuant to a family law property settlement. The evidence suggests that Mr Toft has sought to shield his capacity to provide for the support of his children behind his family law property settlement debts. Instead of utilising the assets he derived from the matrimonial settlement to either discharge or reduce his debt level to better position himself to provide for his children, he has transferred the former matrimonial property and improvements to a trust, the consideration for which was not disclosed by him in his evidence, constructed a new residence on the former matrimonial home property for himself and his current partner, and rented the former matrimonial home the income from which flows to the Trust holding those assets and the ultimate benefit of his current partner, which would otherwise been available to him for child support purposes, suggestive of an intention on his part to avoid his responsibilities for the payment of the debts he undertook to satisfy under the terms of the family law property settlement, which, the evidence suggests, he has failed to properly address, leaving Ms Toft, as she noted in her evidence, contingently liable, in the event Mr Toft defaults in discharging those debts.

7. The Tribunal is satisfied Mr Toft has the income and financial capacity to contribute to the costs associated with the private education of his children at [SCHOOL 1], and the costs associated with [Child 2]’s [dance] tuition and training, in addition to the level of child support he is currently assessed to pay.

8. Ms Toft seeks contribution from Mr Toft of 75% of the children’s education and [dance] costs, including [Child 1]’s [SCHOOL 1] tuition and compulsory charges for the 2018 academic year. The Tribunal is satisfied the parents’ mutual expectation was that the children be educated privately, and that Mr Toft accepted that [Child 1] would be commencing her secondary education at [SCHOOL 1] in January 2018. Having regard to the respective incomes of the respective parents, the Tribunal considers the apportionment of the education and training costs proposed by Ms Toft reasonable. Ms Toft initially applied for a change of assessment on 9 October 2018, seeking, amongst other things, contribution from Mr Toft for the children’s private education costs. The Tribunal is satisfied it is appropriate to apportion the liability for the additional [SCHOOL 1] tuition fees and the [SCHOOL 3] and [SCHOOL 2] tuition and training fees referred to above as proposed by Ms Toft, and that it is appropriate to capture [Child 1]’s [SCHOOL 1] tuition fees and compulsory charges for the 2018 academic year by backdating the commencement date for Mr Toft’s contribution to the children’s education costs to 1 January 2018 pursuant to section 98S(3B) of the Act.

9. The Tribunal will therefore increase the annual rate of child support payable by Mr Toft in consideration of his contribution to the children’s education and training costs as follows:

   ·for the period 1 January 2018 to 31 December 2018, Mr Toft’s annual rate of child support is increased by $6,000 in consideration of [Child 1]’s grade 7 2018 [SCHOOL 1] tuition fees and compulsory charges calculated as follows:

   [Child 1]’s tuition fees and compulsory charges - $8,000 x 75 / 100 = $6,000;

   ·for the period 1 January 2019 to 31 December 2019, Mr Toft’s annual rate of child support is increased by $16,715 in consideration of [Child 1] and [Child 2]’s grades 7 and 8 2019 [SCHOOL 1] tuition fees and compulsory charges: and [Child 2]’s [SCHOOL 2] and [SCHOOL 3] costs calculated as follows

   [Child 1]’s tuition fees and compulsory charges - $9,253

   [Child 2]’s tuition fees and compulsory charges - $7544

   [Child 2]’s [SCHOOL 2] [dance] training costs - $2,845

   [Child 2]’s [SCHOOL 3] [dance] training costs - $2,644

   Total - $22,286 x 75 / 100 = $16,715);

   ·for the period 1 January 2020 to 31 December 2020, Mr Toft’s annual rate of child support is increased by $14,152 in consideration of [Child 1] and [Child 2]’s grades 8 and 9 2020 [SCHOOL 1] tuition fees and compulsory charges calculated as follows:

   [Child 1]’s tuition fees and compulsory charges - $10,111

   [Child 2]’s tuition fees and compulsory charges - $8,759

   Total - $18,870 X 75 / 100 = $14,152).

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 main a child. Increasing the annual rate of child support payable by Mr Toft based on his income and financial resources to reflect his contribution to the education and [dance] training costs for [Child 1] and [Child 2] as set out above, will result in an appropriate apportionment of financial responsibility between the parents and the community. Such a result would be otherwise proper.

DECISION

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

·for the period 1 January 2018 to 31 December 2018, Mr Toft’s annual rate of child support is increased by $6,000 in consideration of his contribution to [Child 1]’s grade 7 2018 [SCHOOL 1] tuition fees and compulsory charges;

·for the period 1 January 2019 to 31 December 2019, Mr Toft’s annual rate of child support is increased by $16,715 in consideration of his contribution to [Child 1] and [Child 2]’s 2019 [SCHOOL 1] tuition fees and compulsory charges (grades 8 and 7 respectively) and [Child 2]’s [dance] training costs;

·for the period 1 January 2020 to 31 December 2020, Mr Toft’s annual rate of child support is increased by $14,152 in consideration of his contribution to [Child 1] and [Child 2]’s 2020 [SCHOOL 1] tuition fees and compulsory charges (grades 9 and 8 respectively).