Trippier and Desmond (Child support)

[2020] AATA 4405

Trippier and Desmond (Child support) [2020] AATA 4405 (11 August 2020)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/SC018832

APPLICANT:  Mr Trippier

OTHER PARTIES:  Child Support Registrar

Ms Desmond

TRIBUNAL:Member M Douglas

DECISION DATE:  11 August 2020

DECISION:

The decision under review is varied so that the annual rate of child support payable by Mr Trippier is varied to $19,500 for the period 1 August 2020 to 31 December 2021

CATCHWORDS

CHILD SUPPORT – departure determination – costs of education – manner expected by both parents – cost of maintaining the children are significantly affected – financial resources of both parents – decision under review varied

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. Mr Trippier and Ms Desmond are the parents of [Child 1] and [Child 2].  They separated in August 2012, but lived under the one roof in the former matrimonial home until 18 October 2018, when Mr Trippier moved to his parents’ residence. The Child Support Registrar has issued administrative assessments of child support for their children, with the initial assessment taking effect from 26 March 2019.   

2. An assessment of child support is made in accordance with the provisions of Part 5 of the Child Support (Assessment) Act 1989 (the Act). Broadly speaking, those provisions prescribe a formula that applies to several variables to work out the amount of child support one parent has to pay the other. Those variables include such things as the parents’ incomes in the last financial year, the level of care the parents provide for their children, the parents’ costs to support themselves, and the costs of the children. If a parent believes there are special circumstances in their case, the parent may apply to the Registrar under section 98B of the Act for a determination to depart from those provisions of the Act relating to the assessment of child support. The Registrar describes such an application as a “change of assessment application”.

3. On 16 September 2019, the Department of Human Services (now Services Australia) – Child Support, which is the Commonwealth Government Department through which the Registrar acts, received such an application from Ms Desmond. The assessment of child support in force at that time obligated Mr Trippier to pay child support for [Child 1] and [Child 2] at an annual rate of $435.00.  That assessment was based on adjusted taxable incomes of $9,598.00 for Mr Trippier and $148,055.00 for Ms Desmond, which reflected their respective taxable incomes for the 2018 year.  The assessment was based on Ms Desmond having 95% care of the children and Mr Trippier having 5% of their care. 

4. On 12 December 2019, a delegate of the Registrar, in response to Ms Desmond’s change of assessment application determined that the following departures should be made to the assessment of child support:

   “Mr Trippier`s adjusted taxable income is set at $90,272 from 31 October 2019 until 31 December 2020.

   The annual rate of child support is increased by $6,242 from 1 January 2020 to 30 April 2020 in recognition of the children`s school fees.

   The annual rate of child support is increased by $12,484 from 1 May 2020 to 31 August 2020 in recognition of the children`s school fees.

   The annual rate of child support is increased by $18,726 from 1 September 2020 to 31 December 2020 in recognition of the children`s school fees.”

5. Mr Trippier lodged an objection to that decision, and on 18 March 2020 another delegate of the Registrar “allowed in part” his objection and set aside the determination of 12 March 2019 and determined that the following departures should be made:

   “For the period 31 October 2019 to 31 December 2021, Mr Trippier`s adjusted taxable income will be set at $94,177 per annum.

   For the period 25 February 2020 to 30 June 2020, Ms Desmond`s adjusted taxable income will be set at $154,588 per annum.

   For the period 1 January 2020 to 31 December 2020 the costs of children will increase by $58,001 per annum.

   For the period 1 January 2021 to 31 December 2021, the cost of children will increase by $64,772 per annum.”

6. Mr Trippier then applied to the Tribunal for review of that objection decision.

7. The hearing of Mr Trippier’s application for review was held on 11 August 2020. Both Mr Trippier and Ms Desmond participated by telephone and both gave sworn oral evidence. The Registrar did not appear.

8. In addition to the oral evidence of Mr Trippier and Ms Desmond, the Tribunal has also had regard to the following documentary evidence:

   ·Documents the Registrar has provided in accordance with subsections 37(1) and 38AA(1) of the Administrative Appeals Tribunal Act 1975.  These documents are paginated 1-431;

   ·Documents Mr Trippier provided which are marked A1-132; and

   ·Documents Ms Desmond provided which are marked B1-68.

THE REQUIREMENTS FOR DEPARTURE FROM AN ASSESSMENT

1. The Registrar, or the Tribunal in the Registrar’s place, may make one or more of the determinations listed in subsection 98S(1) of the Act to depart from the provisions of the Act relating to an administrative assessment of child support if satisfied that the criteria of subsection 98C(1) are met. The criteria specified in subsection 98C(1) are that:

   i.A ground for departure exists;

   ii.it would be just and equitable as regards the child, the liable parent, and the carer entitled to child support to make a determination [under subsection 98S(1)]; and

   iii.it would be otherwise proper to make a determination [under subsection 98S(1)].

2. The grounds for departure are listed in subsection 117(2) of the Act.  The matters that are to be considered in deciding whether it is just and equitable to make a determination to depart from the provisions of the Act are listed in subsection 117(4) of the Act.  The matters to be considered in deciding whether it is otherwise proper to make a determination to depart from the provisions of Part 5 are listed in subsection 117(5) of the Act.

CONSIDERATION

Is a ground for departure established?

1. In her change of assessment application Ms Desmond relied on the grounds for departure provided in subparagraphs 117(2)(b)(ii) and 117(2)(c)(ib) (which the Registrar describes as reasons 3 and 8B).  It is convenient to deal with the ground provided in subparagraph 117(2)(b)(ii).  That subparagraph reads as follows:

   “117(2)(b)(ii) 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. There is no controversy that from the start of the 2017 school year [Child 1] has attended [School 1] and that [Child 2] has attended that school since the start of the 2019 school year.  Both Mr Trippier and Ms Desmond signed an “enrolment acceptance agreement form” on 10 January 2017 for [Child 1] to attend that school.  They both signed a similar form on 3 July 2017 for [Child 2] to attend that school. 

3. The documents that Ms Desmond provided the Tribunal include a copy of a tax invoice dated 24 January 2020 in the amount of $58,001.03 that the school issued to her and Mr Trippier for the fees payable for both children to attend the school in the 2020 year.

4. Mr Trippier’s evidence to the Tribunal was that it was always his expectation that the children would receive their junior education at [School 2] and then proceed onto [School 3] for their secondary education.  He provided the Tribunal with a copy of an application that he and Ms Desmond signed on 4 April 2016 for [Child 1] to attend that school commencing in 2019.  He also provided a copy of a document the school had issued setting out its fee structure for the 2020 school year, which revealed that the fees for a student enrolled in either year 7 or 8 were $7,980.  [Child 1] is presently enrolled in year 8 and [Child 2] in year 6. 

5. Mr Trippier also gave evidence to the Tribunal to the effect that he only agreed to the children attending [School 1] subject to Ms Desmond paying the school fees.  His documentary evidence included an affidavit he swore in which he set out a conversation he had with Ms Desmond prior to his signing the enrolment acceptance forms.  He deposed in that affidavit that during the conversation Ms Desmond told him that she had spoken to the children about going to [School 1] and that they were keen to do so.  Mr Trippier deposed that he then asked Ms Desmond about the fees the school would charge, which he understood would “cost a fortune”.  He deposed that Ms Desmond responded by saying the fees were around $25,000 a year.  He deposed that after Ms Desmond asked him to sign the enrolment form he said:

   “I don’t want to stand in the way of the kids getting the best education possible.  I will sign if it is necessary for me to do so to enrol them, as long as you pay all the fees.  If I ever start earning a decent income, I’ll contribute what I can at my discretion.  Is your dad going to help you?”

6. Ms Desmond’s evidence to the Tribunal was that she could not recall having that specific conversation with Mr Trippier.  She submitted however, that Mr Trippier was aware from the fact that he signed the enrolment forms that the children would be attending the school.  She said that at no stage did Mr Trippier tell her that the children should not go to that school. 

7. Ms Desmond submitted to the Tribunal that in those circumstances, the Tribunal ought to find that it was Mr Trippier’s expectation that the children would be educated at the [School 1].

8. Mr Trippier’s submitted to the effect that it was always his expectation that the children would go to [School 3] and he only acceded to Ms Desmond’s request to do otherwise, by sending them to [School 1], provided she paid the fees. 

9. Based on that evidence, the Tribunal is satisfied that from a time before 2016, they expected the children would be educated outside the public school system.  The Tribunal finds Mr Trippier acceded to a request from Ms Desmond in 2017 that the children be enrolled at [School 1].  This necessarily follows from his signing the enrolment forms in 2017 for the children to attend the school.  He said he “did not want to stand in the way” of the children going to the school.  His signing that form enabled that to occur. 

10. The Tribunal accepts his evidence that he did not make any commitment to Ms Desmond to pay the fees associated with the children’s education at that school.  That however is not a requirement for this ground of departure.   What is required is firstly, that there are special circumstances in this case, secondly, that the children are being educated in the manner expected by their parents and, lastly, that the costs of maintaining the children are significantly affected as a consequence of that.  By virtue of the fact that the children are being educated at the [School 1], where the combined fees for their education are around $58,000 a year, the Tribunal is satisfied that there are special circumstances in this case.  Further, as said, the Tribunal is satisfied that both parents expected the children to be educated at the [School 1].  It is clear that as a consequence of their being educated at that school, the costs of maintaining the children are significantly affected. 

11. Even if it were the case that Mr Trippier’s expectation was only that the children would be educated at [School 3], and not [School 1], which the Tribunal does not consider is the case for reasons just stated, but is merely exploring this for the purpose of illustration, the cost of maintaining the children would still be significantly affected due to the cost that would be involved with the children’s education at [School 3].  In other words, this ground for departure would still be established even if it were the case that it was only ever the expectation of the parties that the children were to be educated at [School 3].  The issue of the ability of the parents to contribute to the fees of the children is explored when considering whether it is just and equitable to depart from the assessment of child support and if so what departure it is just and equitable to make.

12. The Tribunal finds that this ground for departure is established.  Given that, there is no purpose served in considering whether the other ground for departure upon which Ms Desmond relied is also established. 

Is it just and equitable to make a determination?

1. As already mentioned, the matters the Tribunal must take into account when considering whether it is just and equitable to depart from the provisions of the Act with respect to the assessment of child support are listed in subsection 117(4) of the Act. The Tribunal is not required to go slavishly through each of those matters but must have regard to those that are relevant to the particular circumstances of this case and do so in a practical and flexible way:  In Gyselman and Gyselman (1992) FLC 92-279; Ross v McDermott (1998) 23 Fam LR 613; and Lawson and Edney [2017] FCWA 77. Rather than dealing separately with each matter that is relevant, it is convenient for the Tribunal to group the matters and consider them, insofar as the matters have relevance, by a reference to the following headings.

Mr Trippier’s circumstances

1. Mr Trippier is a [Occupation 1] by profession and earns his income as such.  He practices from his residence, not having worked in [an office] since 2010. 

2. His taxable income for the 2016 year was $22,136, in the 2017 year $21,006, in the 2018 year $9,598 and in the 2019 year $43,368.  His tax return for the 2019 year revealed that in that year he received gross income of $55,100, against which he claimed expenses of $3,400 to run his motor vehicle and $8,187 on other work-related expenditure to result in the assessment of his taxable income in the amount of $43,368.  At the hearing he explained that his work-related motor vehicle expenses comprised driving to [other] offices for conferences.  He said that the amount he claimed of $8,187 for his other expenses covered the cost of office supplies, the cost of professional insurance and the cost of obtaining his [specified licence].

3. His business activity statement for the final quarter of the 2019 year is in evidence.  That reveals that his total income in that quarter comprised $54,120 which included GST.  The bulk of his gross income in the 2019 financial year was therefore received in the final quarter of that year, in that his receipts from the work he did in that quarter amounted to $49,200 exclusive of GST. 

4. His business activity statement for the September 2019 quarter, being the first quarter of the 2020 year, is also in evidence which revealed that his gross receipts including GST amounted to $76,394, which converts to $69,449 when GST is excluded.

5. Mr Trippier’s evidence was that in the June 2019 and September 2019 quarters he had been engaged by a very wealthy client to work fulltime in [specified matters] in which that client was involved.  He said however that his client did not like the advice he had given him and that the consequence of his client’s displeasure was that they both agreed to terminate his retainer.  His evidence was that since the termination of that retainer he has not earned any income.  His business statement for the December 2019 quarter is not in evidence, but his statement for the March 20 quarter is, which confirms that in that quarter his receipts were nil.

6. He said that he is currently in receipt of the JobKeeper payment, which the Tribunal notes is $750 a week but which will expire at the end of September 2020. 

7. When asked during the hearing why he has not been able to earn an income since the end of September 2019 he said that he has been caring for the children for two days a fortnight and his time has otherwise been occupied by preparing for this hearing before the Tribunal and preparing for proceedings between him and Ms Desmond in the Federal Circuit Court of Australia regarding an adjustment of their interests in their property in which he is representing himself.  His evidence was that he has not sought to obtain employment outside his practice as a [Occupation 1], for example by seeking employment as a [Occupation 2], because he does not consider he would obtain such employment.

8. The circumstances of Mr Trippier that the Tribunal must consider when weighing whether it is just and equitable to make a determination to depart from the provisions of the Act with respect to the assessment of child support include his capacity to earn an income.  The Tribunal can determine that he has a capacity to earn a greater income than his actual income if satisfied that:

   a.   He does not work despite ample opportunity to do so or he has reduced the numbers of hours of his work below the normal number of hours of work that constitutes full time work for his occupation;

   b.   His decision not to work or to change his working pattern is not justified because of his caring responsibilities or his state of health; and

   c.   He has not demonstrated that it was not a major purpose of that decision to affect the assessment of child support for the children.

9. The Tribunal considers that there is ample opportunity for Mr Trippier to work.  He is a [Occupation 1] of many years’ experience.  Within the documents the Registrar provided is a document relating to the job outlooks for [Occupation 2] which reveals that there is likely to be 13,000 job openings over the next five years for [Occupation 2], or 2,600 a year.  Given Mr Trippier’s experience as a [Occupation 1], the Tribunal considers that he would, if he wanted to, be able to obtain employment as a [Occupation 2].  Further, the Tribunal considers that there would be opportunity for him to increase his work in his present profession as a [Occupation 1].  The Tribunal does not consider that the work that he had to do to prepare for the hearing of his application for review by the Tribunal or the work he needs to do as a self-represented litigant in the proceedings before the Federal Circuit Court of Australia is such that he is unable to take on [work] as a [Occupation 1].  That is, his activities with respect to the proceedings in the Tribunal and the Federal Circuit Court are not such that he cannot earn income as a [Occupation 1].

10. His decision not to work is not justified on the basis of his caring responsibility for the children, given that he only has care of them for two days a fortnight.  Further there is no evidence that he suffers ill-health such that he cannot work.

11. He has not demonstrated that it was not a major purpose of his decision not to work full time or as much as he is able, to affect the administrative assessment of his child support with respect to the children.  Indeed, the impression the Tribunal formed of him whilst he was giving evidence is that the Registrar’s decision with respect to the assessment of child support is wrong and that he ought to be paying very little child support.  In other words, if anything, it would seem that his decision with respect to not seeking an income as a [Occupation 1] since September 2019 is at least partly motivated by his intent to have a reduction in his child support obligation from that at which it is presently assessed.

12. He has had historically low income as a [Occupation 1], other than for two quarters in the 2019 calendar year.  However, the Tribunal observes from the [Occupation 2]’ job outlook that is within the papers that the Registrar provided that the average weekly pay of a [Occupation 2] is $1,646 which extrapolates to an annual figure of around $85,592.  Noting that Mr Trippier has for some years worked as a [Occupation 1], and not as a [Occupation 2], it would seem were he to seek employment as a [Occupation 2] he may not achieve initially the average weekly wage for that occupation.  Doing the best the Tribunal can on the evidence before it, the Tribunal considers that, in all likelihood, Mr Trippier has a capacity to earn an income of $75,000 a year.

1. In a Statement of Financial Circumstances he signed on 29 April 2020 declaring the contents to be true, and which he said at the hearing remains true, he indicated that his assets consist of $10,000 in a bank account and a mobile phone.

2. He resides with his parents, to whom he does not pay a rent.

3. He committed himself to a lease of a [luxury brand] motor vehicle on 12 August 2019 which requires him to pay $1,616.36 a month.  The Tribunal observes that at that time he committed himself to that lease, he was earning a relatively large income, but he also had a child support obligation at that time of only $36.25 a month, which the Tribunal considers is well out of proportion to the amount he committed himself to pay each month to lease a motor vehicle.  The Act stipulates that his obligation to maintain his children is a primary obligation.  It ranks equally with his commitments necessary for self support, but the Tribunal does not consider the lease of a luxury vehicle is necessary for Mr Trippier’s self support.  He had the option of obtaining a much less expensive vehicle and thereby being in a position to contribute more towards the support of his children. 

4. As the Tribunal understood the evidence of Mr Trippier and Ms Desmond, the Federal Circuit Court recently made an interim order that Ms Desmond pay Mr Trippier an amount of $40,000, the purpose of which was to enable Mr Trippier to secure accommodation for himself.  Ms Desmond did not voluntarily pay that amount to Mr Trippier, but Mr Trippier was ultimately able to receive payment of it through enforcement proceedings he took.  Mr Trippier’s evidence was that he did not use any part of that to obtain rental accommodation for himself because he did not feel able to commit himself to a lease in his current financial situation.  His evidence was that Services Australia took approximately $15,000 of that amount to clear an arrears of child support he had accumulated on his account with Services Australia.  He initially told the Tribunal that he also used part of the money to clear debts he had to his family but subsequently changed that evidence to say that he had repaid the debts to his family prior to receipt of that money, and that he was able to clear those debts due to the large income he was earning in the period April to September 2019.

5. As the Tribunal understood Mr Trippier’s evidence the balance presently standing in his present bank account represents the remnants of the amount he received from Ms Desmond through the enforcement proceedings he took.

6. Other than his commitment to pay the [vehicle] lease, he has very modest expenses.

7. The Tribunal notes that were it to make a determination departing from the provisions of the Act with respect to the assessment of child support so as to increase Mr Trippier’s obligation towards his children, hardship would be caused to him, but the Tribunal considers that that in large part is due to his not exploiting his capacity to earn an income and to his committing himself to the lease of the [vehicle]. 

Ms Desmond’s circumstances

1. Ms Desmond is employed within [Industry 1].  She commenced her most recent employment on 21 July 2020.  She receives an annual salary of $117,000.

2. Her most recent employment before her present position came to an end on 29 November 2019 as a consequence of the position in which she was then employed being made redundant.  Her annual taxable income before that employment came to an end was around $150,000.  She received a lump sum payment of $71,777.81 upon her redundancy.  Her evidence was that the $40,000 that Mr Trippier received from her through the enforcement proceedings, came from that amount.  She also used part of the money to pay for school fees and part for living costs for herself and the children.  She said that she now no longer has any part of that money.  Her evidence was that she has drawn $20,000 from her superannuation, as allowed under the Federal Government’s COVID-19 early release of super scheme, so as to be able to continue to pay the school fees for the children and to continue to cover their living costs.

3. She said in between her two periods of employment she also had to rely upon job seeker payments to obtain money to cover her costs. 

4. She too completed a Statement of Financial Circumstances, which she signed electronically on 7 May 2020 declaring the contents to be correct.  That reveals that she owns a property of which she estimates the value to be $2,557,000.  She is the sole registered proprietor of that, however, as mentioned she and Mr Trippier are presently involved in proceedings in the Federal Court of Australia for orders to adjust their interests in their property and it may be that her interest in that asset will be adjusted.

5. The property is encumbered by a mortgage securing repayment of a loan of $580,562 which she repays by instalments of $750 a month.

6. Her only other asset of significance is a motor vehicle worth $35,000. 

7. Other than the mortgage payments she makes, and the amount she is paying for the children’s school fees, her expenses are modest.

8. The Tribunal notes however that [Child 2] has recently been diagnosed with anorexia nervosa and Ms Desmond explained that that will necessarily result in some increase in the cost of his care because his diet must be modified to ensure that he is being properly nourished.  She expects that that may add $100 a week to her expenses.

The children’s circumstances

1. The children have all the usual needs.  [Child 1] does not have any special needs.  As just said, [Child 2] has a special medical need that is likely to increase the costs of his care. 

2. The children’s ages are such that they do not have income nor any assets of significance.

3. As said above, the costs of maintaining the children are increased substantially as a consequence of their attending the [School 1].  The Tribunal is satisfied the children attend the school in accordance with the expectation of their parents.  The children’s enrolment at the school was at Ms Desmond’s instigation but Mr Trippier acquiesced to it and signed the enrolment forms to facilitate the children going to the school. The Tribunal accepts Mr Trippier’s evidence that he did not commit to Ms Desmond to contribute towards any of the fees associated with the children’s education.  Nevertheless, by agreeing for the children to go to that school, and thereby endorsing Ms Desmond’s decision for the children to go to that school, he was aware that the costs of maintaining the children would increase substantially.  Further, once a child commences at a school, there would be some hardship to the child to withdraw from the school, although it is not uncommon for that to occur.  Children are resilient with regard to such matters.

Conclusion with respect whether it is just and equitable to depart from the assessment

1. Weighing the above matters, the Tribunal is satisfied that it is just and equitable to make a determination to depart from the provisions of the Act with respect to the assessment of child support.  The more difficult question is what departure would be just and equitable to make.

2. Doing the best it can based on the evidence, the Tribunal considers that a just and equitable determination would be to vary the objection decision of the Registrar such that the annual rate of child support payable by Mr Trippier is varied to $19,500 from 1 August 2020 to 31 December 2021.  The rationale behind that is that Mr Trippier has a capacity to earn greater income than he currently does.  Given that he always had the expectation that the children would receive their secondary education at [School 3], there was always likely to be an increase in the cost of maintaining the children as a consequence of how they would be educated.  Were the children to be educated at [School 3] then the cost thereof would be around $15,000 a year.  Were he to be assessed to pay child support based upon his having an income of $75,000 a year and Ms Desmond having an income of $115,000 a year, then the annual rate at which he would be required to pay child support would be around $12,000 a year.  Adding half of what the cost would be were the children to be at [School 3] to that amount, then $19,500 is achieved.  That represents roughly the amount he is presently paying a year on his [vehicle] lease, which commitment the Tribunal considers does not have priority over his primary obligation to support his children.

3. Given that he has met his child support obligation in the main in the period to 31 July 2020, which as the Tribunal understands was from the monies that he received from Ms Desmond through the enforcement proceedings, the Tribunal considers that there ought to be no retrospective variation to the departure to the provisions of the Act that the Child Support Registrar’s delegate determined should occur by way of the objection decision.  To reduce Mr Trippier’s liability for the period preceding 1 August 2020 would mean either that Ms Desmond would have to repay monies already received for the support of the children, or otherwise receive a lesser amount going forward until such time as any overpayment was exhausted by means of being set off against from Mr Trippier’s ongoing child support obligation.  In the Tribunal’s view that would cause undue hardship to Ms Desmond and the children.

4. The Tribunal notes that the amount that it considers is just and equitable for Mr Trippier to pay going forward represents only a very small part of the costs of the children’s care, which have been substantially increased as a consequence of their attending the [School 1], the fees for which amount to $58,000 a year.  However, the Tribunal considers that Mr Trippier’s earning capacity and present financial situation with respect to his assets is such that he is unable to contribute any more.

Is it otherwise proper to change the assessment?

1. In deciding whether it is otherwise proper to depart from the administrative assessment, the Tribunal must have regard to the fact that the primary obligation to support the children rests with Mr Trippier and Ms Desmond, and also have regard to whether, and if so how, any determination it makes would affect the entitlement of Ms Desmond or the children to an income tested pension, allowance or benefit. 

2. Ms Desmond’s evidence is that she does not receive an income tested pension, allowance or benefit.  The Tribunal understands that the children do not receive an income tested pension, allowance or benefit.  This will not change if the determination the Tribunal considers it is just and equitable to make, is made. 

3. In the circumstances, the Tribunal considers it is otherwise proper to make the determination it has found is just and equitable to make.

DECISION

The decision under review is varied so that the annual rate of child support payable by Mr Trippier is varied to $19,500 for the period 1 August 2020 to 31 December 2021.