Truong and Truong (Child support)

[2019] AATA 6346

Truong and Truong (Child support) [2019] AATA 6346 (11 December 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/PC017145

APPLICANT:  Mr Truong

OTHER PARTIES:  Child Support Registrar

Ms Truong

TRIBUNAL:Member S Brakespeare

DECISION DATE:  11 December 2019

DECISION:

The tribunal sets aside the decision under review and makes a departure determination in the following terms:

·For the period 4 September 2018 to 3 September 2019 Mr Truong’s annual child support liability is increased by $2,202.50;

·For the period 4 September 2019 to 31 December 2020 Mr Truong’s annual child support liability is increased by $1,250.

CATCHWORDS

CHILD SUPPORT – departure determination – special needs of child – 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. Mr Truong is the parent liable to pay child support to Ms Truong in respect of their children [Child 1], who is 15, and [Child 2] who is 13. The children are in the shared care of the parents. Mr Truong also has another child who is considered a relevant dependant child in the calculation of the administrative assessment.

2. On 4 September 2018 Ms Truong lodged a change of assessment application with the Child Support Agency on the basis of the special needs of the children. Mr Truong responded with a cross-application on the basis of Ms Truong’s income, property and financial resources. Ms Truong added Mr Truong’s earning capacity as another ground. On 15 February 2019 Mr Truong made a further cross-application citing as a ground the cost of school fees.

3. The administrative assessments that were under consideration at the time of the application were:

   ·For the period 1 September 2018 to 5 November 2018 Mr Truong was assessed to pay an annual liability of $10,263 per annum. The assessment was based on his 2017/18 adjusted taxable income of $128,015; Ms Truong’s 2017/18 adjusted taxable income of $40,611 and included an additional liability of $1,267 per annum.[1]  

   ·For the period 6 November 2018 to 21 February 2019 Mr Truong was assessed to pay an annual rate of child support of $1,267. The assessment was based on his estimate of $40,097 per annum; Ms Truong’s 2017/18 adjusted taxable income was $40,611 and included the additional liability of $1,267 per annum.

   [1] A departure determination made on 8 February 2018 provided that Mr Truong’s annual rate of child support be increased by $1,267 to reflect his contribution toward [Child 1’s] school fees.

4. On 9 May 2019 an officer of the Child Support Agency made a departure application in the following terms (the original decision):

   ·For the period 1 January 2018 to 31 August 2018 the annual rate of child support payable by Mr Truong be increased by $3,836;

   ·For the period 1 October 2019 to 31 December 2019 the annual rate of child support payable by Mr Truong be increased by $1,396;

   ·For the period 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr Truong be increased by $1,466.

5. Mr Truong objected to the original decision. On 1 August 2019 an objections officer of the Child Support Agency disallowed the objection (the objection decision).

6. A telephone directions hearing was held on 8 November 2019 and both parties participated.

7. A hearing was held on 11 December 2019. Mr Truong and Ms Truong each gave evidence on affirmation to the tribunal via conference telephone. The Child Support Agency provided the tribunal and the parties with documents relevant to the review (669 pages in total). The parties both provided extra documents to the tribunal which the tribunal folioed and exchanged prior to the hearing. Mr Truong provided documents A1 to A10 and Ms Truong provided documents B1 to B41.

8. Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s consideration of the issues which it has to decide.

ISSUES

1. The statutory provisions relevant to these reviews are contained in the Child Support (Assessment) Act 1989 (the Act).

2. The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.

3. Under Part 6A of the Act the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).

4. Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and it establishes a three step process such that the issues for determination by this tribunal are:

   ·whether a ground is established to depart from the administrative assessment of child support; and

   ·if so, whether it is just and equitable to make a particular departure determination; and

   ·if so, whether it is otherwise proper to make a particular departure determination.

5. The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.

6. Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman and Gyselman [1991] FamCA 93 has held:

   as a generality 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 court will not interfere with the formula in the ordinary run of cases.

7. Likewise, in Philippe and Philippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.

8. If the tribunal is satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the tribunal may make one of the determinations prescribed in section 98S of the Act.

9. The range of determinations which can be made includes variations to: the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

Issue 1 – Is there a ground for departure?

1. Ms Truong initially cited Mr Truong’s earning capacity as a ground for departure. At hearing she advised that she was not pursuing that ground.

2. With respect to the special needs of the children, both parties advised that they had each paid one half of the costs for [Child 1’s] orthodontic treatment and therefore they did not wish the tribunal to include these costs in any departure determination.  [Child 2’s] speech therapy costs remained as a ground for departure, as did the issue of school fees.

3. Where multiple grounds for departure are put forward the tribunal is only required to satisfy itself that one ground exists, before moving on to determine whether it is just and equitable and otherwise proper to make a particular determination.  That process is comprehensive and the factors the tribunal is required to consider include, but are not limited to, the same issues as arise under the grounds for departure.

4. In relation to subparagraph 117(2)(b)(ia), a ground for departure exists where, in the special circumstances of the case, the costs of maintaining a child are significantly affected because of the special needs of the child.  The term “special needs” is not defined in the legislation and the tribunal requires some evidence that the needs of the child relate to a condition or disability that is out of the ordinary.

5. Ms Truong told the tribunal that [Child 2] required 12 months of weekly speech therapy sessions to assist with a potential dyslexia diagnosis. She said that he has now ceased the speech therapy sessions, as he has been given a diagnosis. This means that he now gets extra assistance and support at school. She would like to continue with the weekly sessions but she cannot afford them. For five sessions per annum she received a discount from Medicare of $50, leaving an out-of-pocket expense each week of $55. For the remaining sessions she got a discount of $40 through [her health insurance] but as the sessions cost $110, her out-of-pocket costs were $70 per session.

6. Mr Truong agreed that [Child 2] has special needs, however he wanted to ensure that only the out-of-pocket costs, after Medicare and private health rebates had been deducted, were taken into account.

7. The tribunal had regard to the documentation provided by Ms Truong and was satisfied that Ms Truong has paid out-of-pocket expenses for [Child 2’s] speech therapy of $1,905 from [Child 2’s] initial treatment on 9 August 2018 until his recent dyslexia diagnosis.

8. For a substantial part of that period from (6 November 2018 to 30 June 2019) Mr Truong’s annual liability under the administrative assessment would have been $978 and later, $1038, based on his reconciled estimate of $52,544.59 and Ms Truong’s 2017/18 adjusted taxable income of $40,611. Added to that annual liability would have been the $1,267 increase in respect of school fees. As Ms Truong would have been entitled to an annual rate of child support under the administrative assessment of between $2,245 and $2,305, the tribunal therefore finds that the cost of [Child 2’s] special needs significantly affects the costs of maintaining him.

9. This means that a ground for departure is established.

Issue 2 – Is it just and equitable to make a particular determination?

1. As the tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the children, the liable parent, and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the tribunal to consider the matters discussed below,[2] which are set out in subsection 117(4) of the Act:

   [2] The tribunal is required to give “overt consideration” to relevant factors listed in subsection 117(4) of the Act: Tyagi & Meares (SSAT Appeal) [2008] FMCAfam 886

   (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. In having regard to the proper needs of the child, regard must be had to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained, and any special needs of the child (subsection 117(6) of the Act).

3. With respect to school fees, on 8 February 2018, an officer of the Child Support Agency decided that there was mutual intent for the child [Child 1] to have a private school education and that the cost of that education at [College 1] that should be taken into account for child support purposes was $2,535.56 for 2017, which Ms Truong was liable for. The Child Support Agency officer decided that the 2018 costs for [Child 1] would be similar and for that reason increased Mr Truong’s annual child support liability by one half of those costs, being $1,267 per annum for the period 1 October 2017 to 31 December 2019.

4. Mr Truong claims that Ms Truong pays significantly less than $2,535.56 per annum in respect of [Child 1’s] education at [College 1].  In his view [Child 1’s] fees have been in the vicinity of $1,500 since 2016 and that since 2018 the fees for both [Child 1] and [Child 2] have been about $2,500 after discounts provided by the school to Ms Truong.

5. Ms Truong agrees that because she has a health care card [College 1] charges her $1,500 each for [Child 1] and [Child 2] which is a significant discount.  [College 1] has also applied a hardship discretionary deduction of $500, which means that for 2018 and 2019 school costs for both [Child 1] and [Child 2] are $2,500 per annum. However it is her view that Mr Truong should contribute half of the school fees in respect of [Child 2] as well as [Child 1], as both boys were being educated in a manner expected by the parents. Mr Truong said that it was never his intention for the children to attend private schools and he has not signed the enrolment form in respect of either child. However he also told the tribunal that he did not have an issue paying one half of the school fees after all the deductions have been taken into account.

6. The tribunal notes a text message from Mr Truong to Ms Truong dated 6 March 2013 in which he nominates that the boys should go to [College 2] and not Ms Truong’s choice of [College 1]. He also undertakes to pay the school fees. The tribunal is satisfied that it was the intention of both parents for [Child 1] and [Child 2] to attend private schools. Whilst the school they now attend is not the school nominated by Mr Truong (and in between [Child 1] was enrolled at another school, [College 3]) [College 1] is a private school in the [private] education system with a lower fee structure. The tribunal finds that the children are being educated in a manner expected by both parents and that the annual fees are paid by Ms Truong who receives a discounted rate. The tribunal finds it appropriate that Mr Truong contributes to the school fees.

7. The tribunal has established that [Child 1] has special needs; the cost of which was $1,905 from commencement to diagnosis after discounts and rebates. Ms Truong was responsible for the payment of those costs. The tribunal finds it appropriate that Mr Truong contributes to those costs.

8. The tribunal finds that, it is appropriate to calculate the costs of their children’s other needs by reference to the Costs of the Children Table.[3]

   [3] Provided for in section 155 of the Act.

9. The tribunal is satisfied that neither of the children have income, earning capacity, property and financial resources that should be taken into account for the purpose of child support.

10. At hearing neither Ms Truong nor Mr Truong contested the incomes used for each other in the administrative assessments. Nor was there a contention that either party had property, financial resources or earning capacity that should be taken into account for the purposes of child support.

11. In respect of Mr Truong, his adjusted taxable income used in the administrative assessment is as follows:

    ·1 October 2018 to 5 November 2018 – $128,015

    ·6 November 2011 to 30 June 2019 – $54,544.59 (reconciled estimate)

    ·1 July 2019 to 31 August 2019 – $128,015

    ·1 September 2019 to 30 November 2020 – $76,526 (2019 taxable)

12. In his Statement of Financial Circumstances he recorded his weekly income as $769.08 ($39,992 per annum) for working 12 hours per week.  He said he reduced his working hours in September 2018 to look after his [other child]. He listed his property as a half share of the home he lives in with his partner. The property is mortgaged. He also lists two cars valued at $66,000: a 2006 [Brand 1] and a 2019 [Brand 2]. No other property is listed. He noted a car loan of $46,000 plus several outstanding credit card debts and a [bank] personal loan.  His commitments are noted as $309 per week for his mortgage, $253.25 per week for the car loan, $117 per week for income tax, $32 per week for life insurance, $30.30 per week for health insurance and $88.78 per week minimum repayments for his credit card. The tribunal notes that his outgoings appear to be well in excess of his declared weekly income.

13. In respect of Ms Truong, her adjusted taxable income used in the administrative assessment is as follows:

    ·1 October 2018 to 31 August 2019 – $40,611 (2017/18 adjusted taxable income)

    ·1 September 2019 to 30 November 2020 – $36,445 (2018/19 adjusted taxable income).

14. In her Statement of Financial Circumstances Ms Truong listed her income from self-employment as [an occupation] as $980 per week and her income tax was $86 per week. She indicated that she has a small amount of savings and a 2012 brand car]. Ms Truong indicated that she has a home mortgage of $400 per week. Her mother who is a pensioner lives with her. Her other commitments are life insurance of $36 per week, minimum credit card payments of $25 per week and health insurance of $47 per week. Her outgoings are not significantly different to her income.

15. The tribunal proposes to make a departure determination in the following terms:

    ·For the period 4 September 2018 to 3 September 2019 Mr Truong’s annual liability is increased by $2,202.50;

    ·For the period 4 September 2019 to 31 December 2020 Mr Truong’s annual child support liability is increased by $1,250.

16. The amount of $2,202.50 includes one half of [Child 2’s] speech therapy costs, which have now ceased and one half of the private school fees Ms Truong was required to pay in respect of [Child 1] and [Child 2] of $1,250.[4]

    [4] The amount of $1,250 replaces the $1,267 that was added in respect of school fees by the departure decision made by the Child Support Agency on 8 February 2018, but only from 4 September 2018.

17. The ongoing amount of $1,250 represents one half of the school fees Ms Truong is required to pay each year in respect of the school fees for [Child 1] and [Child 2].

18. The tribunal chose not to backdate the determination prior to the date Ms Truong made her change of assessment application as the difference in the amount allocated for school fees is insignificant; Mr Truong did not have the decision reviewed at the time, and his income at that point was in the vicinity of $128,000 per annum. This means that the departure decision of the Child Support Agency on 8 February 2018 to increase the liability by $1,267 per annum stays in place until 3 September 2018.

19. The tribunal does not find that the decision will cause Mr Truong hardship; he has minimal child support arrears despite paying the higher rate set by the objections officer for the period prior to 4 September 2018.The arrears he does have come from the reconciliation of estimates on 31 October 2019 and the inclusion of his 2019 taxable income in the assessment from 20 September 2019 (that decision being made by the Child Support Agency on 13 November 2019). The tribunal’s decision is likely to reduce those arrears slightly.  His ongoing rate of child support will be in the vicinity of $110 per week. The tribunal finds the decision to be just and equitable as it shares the burden of the private school costs and [Child 2’s] special needs equally among both parents.

Issue 3 – Is it otherwise proper to make a particular departure determination?

1. The third step is to consider whether it would be otherwise proper to make a particular departure determination in accordance with sub-subparagraph 98C(1)(b)(ii)(B) of the Act. Subsection 117(5) sets out the matters that must be considered when deciding whether it would be “otherwise proper” to make a departure determination. It focuses on the balance of support carried between the parents on one hand and the taxpayer on the other. It is appropriate for the children to be primarily supported by their parents rather than by government assistance. The tribunal must consider whether the level of a benefit, in particular family tax benefit, received by the party caring for the children may be affected by the level of child support.

2. Ms Truong indicated in her Statement of Financial Circumstances that she is in receipt of family assistance payments with respect to the children.  The increase in child support payable by Mr Truong may reduce her family payments slightly, thereby putting the burden of supporting the children on the parents rather than the taxpayer. The proposed determination is otherwise proper.

DECISION

The tribunal sets aside the decision under review and makes a departure determination in the following terms:

·For the period 4 September 2018 to 3 September 2019 Mr Truong’s annual liability is increased by $2,202.50;

·For the period 4 September 2019 to 31 December 2020 Mr Truong’s annual child support liability is increased by $1,250.