Tuckey and Vince (Child support)

Tuckey and Vince (Child support) [2021] AATA 3186 (15 July 2021)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2020/PC020432
APPLICANT:  Mr Tuckey
OTHER PARTIES:  Child Support Registrar
Ms Vince

TRIBUNAL:Member Y Webb
DECISION DATE: 15 July 2021
DECISION:

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

the previous departure determination of 17 August 2019 is ended on 31 December 2019; and
for the period 1 January 2020 to 31 December 2021 Mr Tuckey’s adjusted taxable income is varied to $22,000 per annum; and
for the period 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr Tuckey is increased by $4,826 in relation to the elder child’s school tuition fees and the younger child’s special needs; and
for the period 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr Tuckey is increased by $4,968 in relation to the elder child’s school tuition fees and the younger child’s special needs.

CATCHWORDS

CHILD SUPPORT – departure determination – whether there was a ground for departure - costs of meeting special needs significantly affect the cost of maintaining the child – costs of children include private education – manner expected by 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 omitted 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

This review relates to the issue of child support regarding the two children of Mr Tuckey and Ms Vince. The children are now aged 16 and 11. Services Australia (“Child Support Agency”) records the children are in the 100% care of Ms Vince.
The child support case recommenced on 9 February 2015 and has been collectable by the Child Support Agency since that date.
On 9 January 2020, Ms Vince applied to the Child Support Agency for a change to the administrative assessment on the basis of Reasons 2 and 3. Mr Tuckey cross-applied on the basis of Reason 8A.
At the time of Ms Vince’s application for a change to the assessment a previous change of assessment decision was still in place; that was a decision of the objections officer [A] made on 17 August 2019. Objections officer [A] decided that for the period 19 January 2019 to 18 April 2020 Mr Tuckey’s adjusted taxable income would be varied to $62,148 per annum and for the period 19 April 2020 to 18 July 2021 Mr Tuckey’s adjusted taxable income would be varied to $63,640.
In relation to Ms Vince’s new application for a change to the assessment on 9 January 2020 the original decision maker decided on 12 May 2020 that Reason 2 had been established but that no other grounds had been established. However, the original decision maker decided that it would not be just and equitable to change the assessment.
Mr Tuckey objected to that decision and on 31 August 2020 an objections officer partly allowed his objection and set aside the original decision maker’s decision. The objections officer decided that Reason 3 had been established but that Reasons 2 and 8A had not been established. The objections officer determined that for the period 9 January 2020 to 31 December 2020 the annual rate of child support otherwise payable by Mr Tuckey would be increased by $5,066 per annum and that for the period 1 January 2021 to 31 December 2021 the annual rate of child support otherwise payable by Mr Tuckey would be increased by $5,319. These increases represented 34% of the school fee tuition costs for the children. This decision resulted in a rate of child support payable by Mr Tuckey of approximately $14,600 per annum increasing once objections officer’s [A]’s decision no longer applied.
On 26 October 2020 Mr Tuckey requested a review by the Administrative Appeals Tribunal (“the Tribunal”). A telephone directions hearing was conducted with both parents on 27 May 2021.
Mr Tuckey and Ms Vince attended the hearing by way of a telephone conference on 15 July 2021 and both gave evidence on affirmation.

DOCUMENTARY EVIDENCE

The Tribunal had before it a number of documents, organised into exhibits as set out in the attached Schedule. The Tribunal had regard to all of this evidence, and refers specifically to particular items in this Statement of Reasons.

ISSUES

The central issues for the Tribunal to determine in this case are:
· Whether one or more of the grounds for departure referred to in subsection 117(2) of the Child Support (Assessment) Act 1989 (the Assessment Act) exists; and if so,
·      Whether it would be:
(a)   just and equitable as regards the children, the liable parent, and the carer entitled to child support; and
(b)   otherwise proper
to make a particular determination to depart from the administrative assessment of child support.

CONSIDERATION

The child support law

The legislation relevant to this review is contained in the Assessment Act and the Child Support (Registration and Collection) Act 1988.
The rate of child support payable by the liable parent is usually based on an administrative formula assessment under Part 5 of the Assessment Act. This requires the application of a statutory formula which takes into account factors such as the number of children, the level of care provided and the income of each parent.
A parent may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Assessment Act (section 98B). Section 98C provides that the Registrar may make a determination to depart from the formula assessment and establishes a three-step process as described in paragraph 10 above.
Section 98J of the Assessment Act is applicable in this case. This provides that a person who has made an application for a change of assessment is not precluded from making a subsequent application for a change of assessment if, because of circumstances existing at the time of the subsequent application, there are grounds from departing from the administrative assessment.
As observed by the Family Court in Ignacio v Ignacio [2016] FamCA 50 at [106]:
The Assessment Act (s 98J) is not so broad as to enable parties to engage in child support assessment departure disputes whenever they feel inclined, irrespective of surrounding circumstances. Multiple departure applications are possible, but subsequent departure applications are only permitted when the circumstances at the time the subsequent application is made warrant it.
The question for the Tribunal, therefore, is whether the application is grounded by circumstances existing at the time the (subsequent) application was made. That point in time was 9 January 2020. If the ground is established by reference to the time the subsequent application was made the Tribunal will then have the usual discretion to take into account all the matters provided for in subsection 117(2) of the Assessment Act, including the discretion to apply any new determinations retrospectively up to 18 months prior to the date of the subsequent application and indefinitely into the future. Before the Tribunal can consider this, however, it must first be satisfied that a ground is established.
The grounds for departure from an administrative assessment of child support are those set out in subsection 117(2) of the Assessment Act. Each ground for a departure from the administrative formula is prefaced by the words “in the special circumstances of the case”. Therefore, when considering whether a ground exists in this case, the Tribunal must be satisfied that there are “special circumstances” in the case. If satisfied that there are “special circumstances” and 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 determinations prescribed in section 98S of the Assessment Act. Section 98S sets out a range of determinations that may be made under the departure provisions.
The phrase “special circumstances of the case” is not defined in the Assessment Act. In the case of Gyselman and Gyselman (Gyselman),[1] the Full Court of the Family Court of Australia held that:
Section 117(2) sets out the grounds for departure from administrative assessment. Each of those grounds is prefaced by the words “in the special circumstances of the case”.
Whilst it is not possible to define with precision the meaning of that term, 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 administrative formula result in the ordinary run of cases.
[1] (1992) FLC 92-279
Subsection 98C(3) of the Assessment Act provides that subsections 117(4) to (9) of the Assessment Act apply to the Registrar and therefore the Tribunal must consider those provisions when deciding whether, if a ground is established, it would be just and equitable or otherwise proper to make the departure decision.

Is a ground established in respect of circumstances existing at the time of the subsequent application?

In considering whether a ground or grounds exist which justify departing from the administrative assessment currently in place, the Tribunal considered the evidence and submissions provided by the parents at the hearing in addition to the extensive information contained within the documentation provided by the Child Support Agency as well as the documentation provided by the parents.

Reason 2

In relation to Ms Vince’s claim that the costs of maintaining the younger child were significantly affected by her special needs, the legislative test is detailed in subparagraph 117(2)(b)(ia). The test is whether:
in the special circumstances of the case, the costs of maintaining the child are significantly affected because of special needs of the child;
This reason is informally referred to as Reason 2. The child support assessment in its usual form is intended to cover the “normal” costs of raising a child. However, it does not cover costs which are out of the ordinary or “special” which may be the case where the child has a particular medical or other health need. Lightfoot and Hampson[2] established the principle that if these costs are necessary or desirable for the child’s welfare and they impact significantly on the costs of raising the child, a change to the formula assessment may be required.
[2] (1996) FLC 92-663
Ms Vince advised that she had incurred significant out of pocket costs in relation to the younger child’s special needs. She stated that the child has learning disorders and that the child’s school conveyed its concerns regarding the child’s educational progress to her in late 2018. She provided a copy of the child’s teacher’s email to her dated 6 November 2018 which stated that she was concerned about the child’s literacy progress[3]. A further email from the child’s teacher dated 21 November 2018 recommended that a learning and educational assessment be undertaken by a psychologist[4]. Ms Vince provided a copy of the psychological assessment report dated 15 October 2019[5]. This report confirmed that the child’s full scale IQ score fell in the very low range compared to other children of her age. The child’s verbal comprehension skills were below most other children her age. The psychologist stated that the child’s learning difficulties and low academic achievement may be related to her difficulty with verbal comprehension tasks and reported deficits in language. The report stated that the child is likely to require additional assistance in order to grasp new concepts[6].
[3] C1-page 163
[4] C1-page 164
[5] C1-pages 166-181
[6] C1-page 176
Ms Vince provided details of the costs associated with the psychological assessment which totalled $1,884 with total out of pocket costs of $1,772[7].
[7] B25
More recently on 6 January 2021 a speech pathology assessment report has been undertaken to assess the child’s speech and language. Ms Vince provided a copy to the Tribunal[8] . The speech pathologist acknowledged that the child underwent psychological testing in October 2019 (aged 9) and that the child had been diagnosed with a specific learning disorder with impairments in reading and written expression[9].
[8] B12-B16
[9] B12
The speech pathology assessment report stated that the child presented with a mild language disorder characterised by borderline performance in the areas of core language skills, expressive language skills and language memory. The child also presented with a mild to moderate speech sound impairment[10]. The speech pathologist recommended regular intensive support to improve her language stating that the child’s difficulties are significant and are likely to have a profound and long-lasting impact on her ability to communicate her needs and ideas, engage in a learning environment and make friendships[11].
[10] B16
[11] B16
Ms Vince provided details of the costs associated with the speech pathology assessment which totalled $225 with out of pocket costs of $161. Subsequent to the assessment the child has been attending speech pathology sessions on a regular, approximately fortnightly basis. The first four sessions incurred out of pocket costs totalling $558 ($135 X 3 plus $153 X 1)[12]. Thereafter the sessions incur out of pocket costs of $165 per session for the period 28 June 2021 to 13 December 2021; a total of $1,980 ($165 X 12)[13].
[12] B25-B26
[13] B25-B26
In addition, Ms Vince provided details of the costs of spectacles for the younger child. In the period 18 January 2018 to 23 May 2021 the out of pocket costs incurred were $877[14].
[14] B25
In addition, Ms Vince advised (via an email to Mr Tuckey on 26 October 2019) that the younger child was diagnosed by [a] specialist as having a [medical condition] and that she required surgery which had been scheduled for 2 December 2019[15]. Ms Vince provided details of the costs of the surgery. She confirmed that there were no out of pocket costs for the hospital stay but there were out of pocket costs to the surgeon of $1,433 and to the anaesthetist of $444; a total of $1,877 for the surgery[16].
[15] C1-page 283
[16] B25 and B31 and B55-B56
Ms Vince also advised that an individual learning plan for the younger child has been developed and is being implemented by the child’s school. She provided a copy of the plan for 2020[17].
[17] C1-page 281
Mr Tuckey responded that he accepts that the younger child has special needs. He believes that the child’s school has failed to meet the learning needs of the younger child. He referred to the expertise of his mother, the child’s grandmother and a former headmistress, in early learning. He suggested that his mother could tutor the child and thereby reduce the costs associated with the child’s special needs. However, he stated that this offer of assistance has been rejected by Ms Vince[18].
[18] C1-page 217
The Tribunal considered all of the evidence regarding the younger child’s special needs. It is satisfied that the child has diagnosed learning disorder with impairments in reading and written expression[19] and a significant language and speech impairment as explained in the psychology assessment and speech pathology assessment. In addition, the Tribunal is satisfied that the younger child required surgery relating to a [medical condition]. In summary, the Tribunal is satisfied that the child has special needs; these needs are out of the ordinary; there are significant costs associated with the child’s special needs and in particular the out of pocket cost associated with the child’s assessments, ongoing therapy sessions and the costs associated with the [surgery]. The Tribunal is satisfied that Ms Vince has paid (and continues – in the case of speech pathology sessions – to pay) these out of pocket costs and that they significantly affect the overall costs of maintaining the younger child.
[19] B12
In relation to the spectacles for the child, the Tribunal has found that the out of pocket costs from 18 January 2018 to 23 May 2021 were $877. The Tribunal is not persuaded that the need for spectacles is out of the ordinary as many children require spectacles. In addition, the Tribunal is not persuaded that a cost of $877 over an approximate three-year period significantly affects the cost of maintaining the younger child.
Therefore, the Tribunal finds that the out of the ordinary costs associated with the younger child’s medical and learning needs are $1,877 (for the surgery); $1,772 for the psychology assessment and report; and $2,699 in speech pathology costs for the 2021 year (which includes the assessment and speech pathology sessions from 9 March 2021 to December 2021). In all, the total costs associated with the child’s medical and learning needs in the period 23 September 2019 to 13 December 2021 are $6,348. The Tribunal finds that these costs were necessary and that they are “special” being that they are costs not usually incurred by most children. In addition, the Tribunal is satisfied that the costs of the younger child’s special needs are so significant that they affect the overall costs of maintaining the child.
The Tribunal accepts that the special needs of the younger child had not been fully diagnosed or treated when the previous change of assessment decision was made on 17 August 2019 because when Ms Vince made her application in relation to that matter in January 2019, the child’s special needs had not been diagnosed and nor had she incurred the costs associated with the child’s [surgery] which took place in December 2019.
The Tribunal is satisfied that these developments constituted a significant change of circumstances in relation to the younger child’s special needs to the extent that the changes created a special circumstance.
Hence, the Tribunal finds that Reason 2 is established.
In relation to the claim that Reasons 3 and 8A are also relevant in this case, the approach of the Federal Circuit Court of Australia in these cases has been to limit the analysis about particular grounds once it was evident that one had been established, and to thereafter focus on the “just and equitable” considerations. The Tribunal adopts that approach in its reasoning in this matter.

Would it be just and equitable to depart from the administrative assessment?

Section 3 of the Assessment Act states that parents have the primary duty to maintain their children and that this duty takes priority over all commitments of the parents other than commitments necessary to enable the parent to support themselves or any other child or another person that the parent has a legal duty to maintain. The Assessment Act contemplates not only that both parents contribute to the support of their children but that the parents’ capacity to contribute must also be taken into account.
Having found a reason for departure, the Tribunal must consider whether it is just and equitable to depart from the administrative formula assessment. The Tribunal must have regard to a range of matters set out in subsection 117(4) of the Assessment Act. This requires an assessment of the duty of the parents towards the children; the needs of the children; any income, earning capacity and financial resources of the children; the income, earning capacity and financial resources of the parents; self-support commitments; and an evaluation of hardship on the parties (and/or the children) if the Tribunal increased or decreased the amount of child support payable.
In considering these issues, the Full Family Court, in the case of Gyselman, stated that:
However, some of the matters listed in sub-section (4) may overlap with matters already considered under sub-section [117] (2) and some of the paragraphs in sub-section (4) may be more significant in one case than they would be in another or of little relevance in a particular case. It is an essential part of the s.117 exercise to carry out the obligation under sub-section (4). However, that does not mean that it is necessary in each case to slavishly go through each of the paragraphs. The extent to which it is necessary to do so will depend upon the facts and conduct of the individual case and the analysis already performed under sub-section (2).

Of particular relevance in this matter are the following aspects of subsection 117(4) of the Assessment Act:

The proper needs of the children

In determining the proper needs of the children, subsection 117(6) of the Assessment Act requires the Tribunal to have regard to the manner in which the parents expected the children to be cared for, educated or trained as well as a consideration of any special needs of the children.
The Tribunal has found that Reason 2 has been established in relation to the special needs of the younger child.
In relation to the manner in which the parents expected the children to be educated, Ms Vince is seeking a contribution from Mr Tuckey to the children’s private school costs. She asserts that she and Mr Tuckey expected that both of the children would attend private schools. Both of the children have attended [School 1] (which is a private school) for the entirety of their schooling. The older child is now (in 2021) in Year 10 and the younger child is now in Year 5.
The issue of whether the children are being educated or trained “in a manner expected” by the parents is not defined in the legislation. However, in Mee and Ferguson [1986] FamCA 3, the Full Court of the Family Court considering a similar provision in the Family Law Act 1975 said:
It refers to the manner in which the child “is being”, and which the parties to the marriage “expected” the child to be educated. That provision appears to have direct relevance to the issue of private school education, particularly its reference to the manner in which the parties “expected” the child to be educated. The word “expected” in the past tense presumably relates to some expectation of the parties at a point in time earlier than the hearing.
Ms Vince contended that, prior to separation, she and Mr Tuckey agreed to enrol the children at [School 1]. She provided the enrolment form for the elder child which the parents both signed on 21 September 2009 with the elder child commencing in February 2010 in pre-school[20]. Ms Vince told the Tribunal that Mr Tuckey verbally agreed that the younger child would also attend the [School 1]. She stated that it was expected that the younger child would enjoy the same benefits of a private education as her older sister and she did not accept Mr Tuckey’ assertions that he had different expectations in relation to the younger child. She stated that since 2012 (when the parents separated) she has paid 100% of the children’s school fees[21]. She stated that the elder child will be completing her education at [School 1] and that as part of her Year 11 and Year 12 studies she will also be completing a [diploma]. This will incur additional fees.
[20] C1-pagegs 158-159
[21] C1-page280
Ms Vince provided a school fee schedule for the years 2019 to 2021. These showed that tuition fees in 2019 were $8,475 for the elder child and $5,729 for the younger child including a sibling discount of $636 for the younger child[22]. In 2020 the school tuition fees were $8,890 for the elder child and $6,009 for the younger child including a sibling discount of $668 for the younger child[23]. In 2021 the school tuition fees were $9,246 for the elder child and $6,250 for the younger child including a sibling discount of $694 for the younger child[24].
[22] C1-pages 160-161
[23] C1-pages 377-379
[24] B19-B21
The Tribunal acknowledges that there are costs in addition to the tuition fees such as school uniforms, camps, subject levies and excursions but these items and charges are commonly required by students whether a child attends a private school or a government school and are expected to be factored into the child support administrative formula. While the Tribunal acknowledges that these additional costs are significant, it does not consider that they exceed to any marked degree the costs incurred by many families regardless of the type of education their children receive.
Mr Tuckey agreed that he signed the enrolment form for the elder child. He stated that he considered he had “no choice” as Ms Vince was determined to enrol the elder child at [School 1]. He stated that he never wanted the elder child to attend [School 1] but that he acquiesced to Ms Vince’s insistence. He said that he had been very dissatisfied with the quality of education at [School 1].
He stated that there was no negotiation in relation to the younger child’s school enrolment and he never signed – and was never asked to sign – an enrolment form for her to attend [School 1] (or any other private school). He stated that Ms Vince solely made the decision to send the younger child to [School 1]. Mr Tuckey stated that he did not want either of the children to attend [School 1][25]. In relation to the younger child he stated that the assessment reports show that [School 1] is not meeting her needs[26].
[25] C1-page 209
[26] C1-page 217
Mr Tuckey stated that as part of the (consent) court orders he and Ms Vince had agreed that if Ms Vince wanted the children to attend [School 1] she would pay for it. A copy of the orders of the Federal Circuit Court of Australia were included within the C1 papers. These orders were dated 26 July 2017 and include under the heading of “Notations” several provisions including:
The wife acknowledges and agrees that she will not seek to alter the administrative assessment of child support payable by the husband to the wife due to her payment of the children’s school fees.[27]
[27] C1-page 188
Mr Tuckey contended that this clause was mutually agreed by the parents during the course of the court proceedings; it was clearly understood that he would not be paying any costs for the children’s private schooling and this agreement was counterbalanced by a clause that he would not seek to alter the administrative assessment of child support payable by him to Ms Vince due to his payment of transportation costs to spend time with the children.
It is well-established law that the notations to court orders are not enforceable by the courts. In PAJ & GMJ[28] the court stated:
Notations are not orders made by the court but a statement of the then wishes and intentions of the parties and an aid to the court, if required, to properly interpret the orders pronounced.
[28] [2003] FamCA 751
The value of notations is that they indicate the intentions of the parents at the time. Ms Vince told the Tribunal that the court proceedings in 2017 (in relation to property and parenting matters) had been protracted and that she agreed to the provision – not to seek to alter the child support payable due to the cost of the children’s school fees – to finalise the settlement and bring the court action to an end.
Ms Vince stated that her circumstances have changed and she is now seeking a contribution from Mr Tuckey to the children’s school fees. In particular she contends that the cost of the school fees has increased and the diagnosis, support and treatment of the younger child’s learning disorder has resulted and will continue to involve significant additional costs. She stated that she is experiencing financial stress in meeting the children’s needs. The Tribunal accepts Ms Vince’s statements that the special needs of the younger child have resulted in significant additional costs all of which have been paid for by Ms Vince and that this has affected her capacity to afford the school fees.
The Tribunal does not accept, however, that the school fees have increased to such an extent that it could be said that the increase in school fees constitutes a change of circumstances for Ms Vince. The fee increases have been modest and it is usual for some increase each year in school tuition fees.
In Newman & Caldwell [2009] FMCAfam 496, the Federal Magistrates Court of Australia stated:
The provisions of the Child Support (Assessment) Act 1989 do not provide for the Tribunal to determine what is a reasonable standard of education for the children…but require the Tribunal to first determine what the parties intended and secondly, determine the extent to which each of them can contribute to the relevant expenses.
In relation, therefore, to the parents’ intentions regarding private schooling the Tribunal is satisfied that Ms Vince intended that both children would be privately educated. They have both attended [School 1] since pre-school and they are now in Year 10 and Year 5. Since separation Ms Vince has paid for all of the costs associated with the children’s private schooling.
In relation to Mr Tuckey’s intention, the Tribunal is satisfied that he intended that the elder child attend a private school. He co-signed the enrolment form and the elder child was attending the private school prior to the parents separating. The Tribunal is not persuaded, however, that Mr Tuckey intended that the younger child would be privately educated. The Tribunal accepts that he was not consulted about the younger child’s enrolment at the private school and he did not sign any enrolment documents. He has never paid any of the school fees associated with the younger child’s schooling. While Ms Vince argued that the Tribunal should assume the necessary intention there was no actual evidence that Mr Tuckey intended that the younger child would be privately educated. Hence, the Tribunal finds that while there was a mutual expectation that the elder child would be educated at a private school there was insufficient evidence to support a conclusion that both parents mutually agreed that the younger child should be educated at a private school.
Both parents confirmed that there were no other issues which they wished to raise in relation to the proper needs of the children. They agreed that the children had no special needs (other than the ones already found for the younger child) and that they incurred the usual and typical expenses for children of their age.

The income, earning capacity, property and financial resources of the children

Both parents agreed that the children have no income, property or significant financial resources of their own. Ms Vince stated that the children do have some shares with the elder child having shares to the value of approximately $4,000 and the younger child to the value of approximately $2,500. However, the Tribunal finds that these amounts are not significant and that the children are wholly dependent on their parents for financial support.

Mr Tuckey’s income, property, financial resources, expenses and earning capacity

Mr Tuckey is the sole shareholder and sole director of his company [Company 1] (“the company”). The company was registered and has been trading since January 2019. (Mr Tuckey advised that prior to that date and from November 2018 he was operating as a sole trader but he was advised by his accountant that a company structure would be preferable and he acted on that advice.)
Mr Tuckey provided the financial statements for the company for the 2018/2019 financial year and also the 2019/2020 financial year. These show that the company made a significant loss in both of these years: in the 2018/2019 year the loss was $109,971.72 and in the 2019/2020 the loss was $170,386.35[29]. In 2018/2019 (an incomplete year as the company was not trading for all of that year) the gross profit was $116,373.46 and the expenses totalled $226,345.18. In the 2019/2020 year the gross profit from trading was $277,203.04 and the expenses totalled $337,617.67. The balance sheet of the company shows that in the 2019/2020 financial year the company had a number of significant loans totalling $205,674.47 including a loan of $43,015.59 from Mr Tuckey (which he explained was with moneys which he in turn borrowed) and a loan of $83,076.65 from related parties (his wife and adult children).
[29] C1-pages 67-93 and A72-A98
Mr Tuckey also provided a copy of the company tax return for the 2019/2020 financial year which reflected the financial statements[30].
[30] A11-A32
Mr Tuckey also provided a draft personal income tax return for the 2018/2019 financial year. This showed an income of $28,855 and total deductions of $19,348 with a taxable income of $9,507[31]. However, for part of the 2018/2019 financial year Mr Tuckey was operating as a sole trader and therefore the draft income tax return includes his business expenses for that period. From January 2019 he has not been an employee. The 2018/2019 personal income tax return has not been lodged as yet and the 2019/2020 personal income tax return has not been prepared on the basis, according to Mr Tuckey, that he has not earned any income in the 2019/2020 financial year.
[31] A63-A70
Mr Tuckey declared in his Statement of Financial Circumstances that his income is approximately $400 per week (which annualises to $20,800 per annum) at the most[32]. He confirmed that he makes drawings from the company but he is not an employee of the company. He stated that the company is in severe financial hardship as his [vehicle] has suffered ongoing mechanical problems which have had a devastating impact on the company’s finances. He told the Tribunal that he was aware that financially things would be tough for the first year of trading because of the high set-up costs and the associated loans. He said that at first the company was going quite well, despite the high establishment costs. He stated that by the end of March 2020 the company was trading quite well. However, the motor in the [vehicle] blew up at that time and he had to order a new motor. He was unable to work for a month. Because he couldn’t work he lost some customers. He stated that a replacement motor was installed and he had only travelled 500 km out of Perth when it blew up again. When he bought the replacement motor he received no warranty and although he went to the Office of Consumer Affairs and Fair Trading he was unable to obtain any refund. Mr Tuckey stated, and the Tribunal accepts, that each rebuild cost him [amount] at least and not including the loss he suffered due to work time lost. His wife and adult sons have helped him out financially with making repayments on his loans and with living expenses. Mr Tuckey stated that the [vehicle] motor was repaired for the second time. He commenced [working] again and in September 2020[an incident happened]. It cost $12,000 to repair and although he had insurance the insurer would only pay $3,000 because they said that the [vehicle] was 20 years old. He again had the [vehicle] repaired. He had a bad debt when one customer did not pay his bill of $26,000.
[32] A2-A3
Just recently the motor which was rebuilt failed again. Mr Tuckey advised that it is not possible to obtain insurance to cover motor breakdown. In addition, he has no income protection insurance because it is too expensive and he cannot afford it. He has not been at work for a month. He is waiting on parts being available to repair the [vehicle]. He is unable to borrow any finance now due to his lack of income. He is expecting that the [vehicle] will be fixed next week. In the meantime he has not had any work since June 2021. He has lost a number of customers due to the breakdown and, once his [vehicle] is repaired he will need to seek work. He has already talked to a number of companies about opportunities for work. In addition to losing customers due to the breakdowns he has also lost some customers who have closed their businesses due to the COVID-19 pandemic.
The Tribunal found it difficult to calculate Mr Tuckey’s income because he was not paid a wage or a director’s fee and according to the financial statements, there was no profit generated by the company.
The Tribunal examined the numerous bank statements within the papers and identified the withdrawal transactions described as “to Mr Tuckey” or “to [a named person] and Mr Tuckey”. At the hearing Mr Tuckey agreed that these were drawings from the company. In July 2019 Mr Tuckey withdrew approximately $4,612; in August 2019 approximately $5,272; in September 2019 approximately $3,850; in October 2019 approximately $7,333; in November 2019 approximately $4,428; and in December 2019 approximately $5,700[33]. This calculates to an average of $5,1999 per month and if annualised results in annual drawings totalling approximately $67,589.
[33] C1-pages 236-267
In 2020, however, the drawings are far below those in the second half of 2019. In January 2020 the drawings were $2,500 in January 2020; $1,800 in February 2020; $2,800 in March 2020; $1,150 in April 2020; $1,200 in May 2020; and $600 in June 2020[34]. This is an average of $1,675 per month and if annualised results in annual drawings totalling $21,775 (which approximately correlates to the current income declared by Mr Tuckey in his Statement of Financial Circumstances).
[34] C1-pages 315-353
The bank statements for February 2021 show withdrawals totalling $900 and in March 2021 and April 2021 there are no drawings by Mr Tuckey[35].
[35] A39-A50
In 2020 Mr Tuckey advised that he claimed jobkeeper payments and these are evident in the bank statements ($3,000 in May and June 2020)[36]. Mr Tuckey stated at the hearing that the final jobkeeper payment he received was in October 2020 and the Tribunal accepts his statements regarding these payments. In addition Mr Tuckey advised that he withdrew $20,000 of his superannuation under the COVID-19 superannuation withdrawal rules.
[36] C1-pages 323 and 329
The bank transactions show that Mr Tuckey’s income seriously decreased from the beginning of 2020. Even taking into account the difficulties of determining an income from bank transactions, the Tribunal is not persuaded that Mr Tuckey’s income has exceeded $22,000 a year since the beginning of 2020. Prior to that, in 2019 the bank statements tend to indicate that Mr Tuckey’s income was around $67,000 per year.
In relation to expenses and liabilities Mr Tuckey advised that he has been contributing $800 per month towards the mortgage of the home owned by his partner.
The company’s bank statements show that there were only occasional transactions of a personal nature (such as a purchase from [a shop]’s on 15 April 2020). There were multiple transactions of food purchases throughout the bank statements which Mr Tuckey claims as company expenses because he is on the road and away from home for days at a time as [an occupation].
Mr Tuckey also advised that he has other significant debts. He has a loan [and] the repayments are $390 per month. Mr Tuckey provided the bank statements for that loan account[37]and the Tribunal accepts that the statements are accurate.
[37] C1-pages 485-488
He also had loans until recently from [Bank 1] and [Bank 2]. He advised that he could not afford the repayments and he recently sold two [items] and paid out the loans from those two banks.
Mr Tuckey also advised that he has very significant credit card debts. Mr Tuckey told the Tribunal, and it accepts that he has two credit card debts totalling more than $42,000 to [Bank 3]; and credit card debts of $11,932 and another of $5,400 to [Bank 4][38]. At the hearing Mr Tuckey also advised that he has a further credit card debt to [Bank 5]. As all of these credit cards are at or over their limit, all of his credit card accounts have been closed and are in the hands of debt collectors. The Tribunal accepts that is the case.
[38] C1-pages 448-483
In addition Mr Tuckey told the Tribunal that in recent times he had borrowed approximately $100,000 (in total) from his wife and adult children. He is not currently repaying those loans because he does not have any money. Mr Tuckey claimed expenses of approximately $484 per week in his Statement of Financial Circumstances with the main expenses being food of $150 per week and “rent” of $160 per week. However, the Tribunal is satisfied that the “rent” is taking the form of a contribution to the mortgage payments on the home owned by his wife. Mr Tuckey advised that he is paying 60% of the mortgage payments being $800 per month. While Mr Tuckey may feel some obligation to make these payments they should not take precedence over his obligation to support his two children.

In relation to Mr Tuckey’s earning capacity, Ms Vince contended that Mr Tuckey had a well-paying position as an employee which he gave up to become self-employed. Ms Vince stated that he has had failed businesses in the past and that by becoming self-employed he has disregarded his obligation to financially support his children. Mr Tuckey stated that he has been self-employed for most of his working life and that he has chosen to be self-employed because of the flexibility and satisfaction which he derives from self-employment. He attributed the failure of his company to the unexpected and “catastrophic” mechanical failures he has suffered with his [vehicle]. He is hoping that once his [vehicle] is repaired again that his financial situation will improve. While the Tribunal is satisfied that Mr Tuckey has changed his working pattern the Tribunal has insufficient evidence to indicate that the changes to his work were motivated by the effect of Mr Tuckey’s self-employment on the child support assessment. The Tribunal accepts that Mr Tuckey genuinely believed that the company would be far more successful than has turned out to be the case. The Tribunal accepts that Mr Tuckey could not have foreseen the multiple breakdowns with his [vehicle].

Ms Vince’s income, property, financial resources, expenses and earning capacity

Ms Vince provided an updated Statement of Financial Circumstances[39]. She works full-time as [an occupation] for [Employer 1] and she declared her weekly income from employment to be $2,089. Ms Vince provided payslips which confirmed that her full-time annual salary is $113,500[40]. Ms Vince’s income, as assessed by the Australian Taxation Office was $108,230 in the 2019/2020 financial year and the Tribunal so finds. She receives rent from a rental property of $190 per week (gross). However, the net amount she advised would be considerably less than this. Ms Vince advised that currently she owns 50% of three properties: one is the family home in which she resides; one is a rental property; and the other property has been sold but the sale has not yet been settled. This latter property, Ms Vince advised, sold for $995,000 and after paying out the mortgage and all associated fees (which she estimated would total approximately $380,000) her 50% share of the profits will be approximately $307,500. In relation to the rental property Ms Vince estimated her share to have a value of approximately $136,000 and her 50% share of the family home to be valued at approximately $555,000. The Tribunal accepts all of Ms Vince’s statements about her properties.
[39] B39-B47
[40] B37-B38
Her general expenses are unremarkable. She holds private health insurance, pays income tax on her earnings and owes approximately $2,000 on her credit card. Her household expenses are quite high with council rates and levies of $182 per week (her 50% share) and mortgage payments of $693 per week (her 50% share). Ms Vince also advised that she pays $63 per week for gas/electricity (her 50% share). She advised that these expenses will reduce once the property recently sold settles. She advised of agents’ fees of $1,378 but it is unlikely that this would be a weekly expense. The Tribunal accepts that Ms Vince has the usual household expenses, some of which she shares with her partner, and that she has been solely responsible for education costs which were not included in her household expenses but which she advised (and the Tribunal accepts) are approximately $427 per week.
In relation to her earning capacity Ms Vince has been working in the same occupation for more than six years and is working full-time. The Tribunal has no hesitation in finding that she is exercising her full earning capacity.

Necessary commitments to support themselves or others

The Tribunal notes that the Family Court of Australia has been prescriptive about the types of expenses that can be considered “necessary” expenses and that there are only a few expenses that can be considered to take priority over a parent’s primary duty to support their children. This includes expenses such as a reasonable amount for payment of rent or mortgage, food, utilities, and some loans. In Mee and Ferguson[41] the Full Court of the Family Court stated at paragraph 128:
Some of the items obviously have to be taken into account before maintenance is arrived at; for example, the cost of reasonable transport, food and clothing, and other like expenses are necessary to the continued reasonable existence of a parent, and, barring legislative direction to the contrary, it would not accord with the understanding in this jurisdiction to suggest that those items should be put out of consideration before child maintenance is determined. On the other hand there is no doubt that one of the primary responsibilities of a parent is the continued support of children to the extent to which the parent continues to be able to do so and that may in appropriate circumstance mean making financial sacrifices or cutting one's cloth to meet that commitment during the years when it applies.
[41] [1986] FamCA3.
Mr Tuckey referred to the need for surgery on [body parts]; injuries which he advised were work-related but he stated surgery would require a recovery period of five to nine months which he cannot afford. However, Mr Tuckey confirmed that he had not made firm plans for the surgery at this time. Ms Vince did not raise any issues in relation to self-support. The Tribunal does not consider that at this time there are issues of self-support which it needs to consider.

Any hardship to either parent or the children by the making of, or refusal to make, an order

Mr Tuckey told the Tribunal that he was already in hardship. He had no funds to pay child support. He owns no property and all he owns is his [vehicle]. He is in a desperate situation financially.
Ms Vince stated that she is solely supporting the children financially. She has not received any child support since August 2019. She is not living in luxury. She is fortunate that her mother helps out a little with the school fees. Her plan going forward is that the house they are currently living in will be demolished and a new house built on the land; however, they will need to pay rent while the home is built.

Proposed determination

The Tribunal has carefully considered the evidence provided and the statements and submissions of both parents.
The Tribunal accepts that Mr Tuckey’s company is operating at a loss and that its viability is currently precarious. The Tribunal is satisfied that Mr Tuckey is deriving very little income at all from his self-employment. He has very significant debts. He has been adversely affected by multiple breakdowns with his [vehicle] and that has seriously affected his livelihood. He confirmed that currently his income at best is around $22,000 per year.
Mr Tuckey advised that the company was initially trading well. He stated that as at March 2020 “things were looking good”. The Tribunal has found that in the preceding period from July 2019 to December 2019 Mr Tuckey’s average income per month was approximately $5,1999 which annualises to approximately $67,000 per year. It is difficult to know why, therefore, in that period (from August 2019 to December 2019) Mr Tuckey was not paying any child support. The Tribunal considers it would be just and equitable to end the previous departure decision of 17 August 2019 on 31 December 2019. It considers that it is fair that in the period 19 January 2019 to 31 December 2019 Mr Tuckey’s income is varied to $62,148 as decided by DM [A]. This is a little below the annualised amount of $67,000 which the Tribunal has calculated as being his annualised income at that time but the Tribunal accepts that determining Mr Tuckey’s actual income is imprecise given that it has been calculated on his drawings.
Thereafter the Tribunal proposes to vary Mr Tuckey’s income to $22,000 per annum for the period 1 January 2020 to 31 December 2021. The start of this period correlates approximately with the time that Ms Vince made her application for a change to the assessment. The Tribunal considers it most unfortunate that Mr Tuckey’s financial circumstances have deteriorated so significantly but the Tribunal accepts that is the case and that Mr Tuckey does not, at this time, have an income greater than $22,000 and that he is unlikely to significantly improve his financial position during 2021.
Notwithstanding the poor financial state of the company Mr Tuckey has, for a good portion of the period since January 2020, been contributing approximately 60% of the mortgage payments on his wife’s property. He confirmed that this was approximately $800 per month. However, it is his wife’s property, not his own and his obligation to his children must take precedence over other financial arrangements. The Tribunal is satisfied that it would be just and equitable for Mr Tuckey to contribute to the special needs cost of the younger child and to the tuition fees of the elder child. Realistically, Mr Tuckey does not have the capacity to share these costs with Ms Vince on a 50/50 basis even though, had his income been higher that is what the Tribunal would have decided.
In all of the circumstances the Tribunal is satisfied that it would be just and equitable if the rate of child support payable by Mr Tuckey was increased by 40% of the private school tuition costs for the elder child and 40% of the special needs costs of the younger child. The Tribunal proposes to increase the child support payable by Mr Tuckey in the period 1 January 2020 to 31 December 2020 by $3,556 (that is, 40% of the tuition fee costs for the elder child of $8,890) plus 40% of the younger child’s special needs costs of $6,348 and spread over two years = $1,270. This will mean that Mr Tuckey’s child support liability will be increased by a total of $4,826 for the period 1 January 2020 to 31 December 2020.
In relation to the period 1 January 2021 to 31 December 2021 Mr Tuckey’s rate of child support payable will be increased by $3,698 ( that is, 40% of the tuition fee costs for the elder child of $9,246) and by $1,270 in relation to the younger child’s special needs. This means that Mr Tuckey’s child support liability will be increased by a total of $4,968 for the period 1 January 2021 to 31 December 2021.
While the Tribunal holds some concerns that Mr Tuckey has significant arrears and his limited capacity to pay those arrears in the foreseeable future, it is also mindful that Ms Vince has been solely supporting the children financially since August 2019 without any assistance from Mr Tuckey, which is unfair and inequitable.
In summary, the Tribunal’s determination will mean that DM [A]’s decision of 17 August 2019 will end on 31 December 2019. From 1 January 2020 to 31 December 2021 Mr Tuckey’s adjusted taxable income will be varied to $22,000. This will result in the minimum rate of child support being payable of approximately $445 per year. However, from 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr Tuckey is increased by $4,826 in relation to the elder child’s tuition fees and the younger child’s special needs. From 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr Tuckey is increased by $4,968 in relation to the elder child’s tuition fees and the younger child’s special needs. This will mean that Mr Tuckey’s liability for the two-year period is approximately $5,300 per year.
The Tribunal does not propose to extend the change to the assessment for a longer period because it is mindful that any improvements in Mr Tuckey’s financial position should be reflected in the child support assessment as soon as possible.
The Tribunal considers this proposed determination is fair, just and equitable and that it balances the needs and financial capacities of both parents.

Is it otherwise proper to depart from the administrative assessment?

100.The final step for the Tribunal to undertake is to determine whether it is “otherwise proper” to make the particular determination to depart from the administrative assessment. Subsection 117(5) of the Assessment Act requires the Tribunal to take into consideration the following matters:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and
(b) the effect that the making of the order would have on:
(i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
(ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.

101.The Tribunal must consider whether the proposed departure is “proper” within the context of the public interest and welfare expenditure by the community (see Gyselman). It is a prime objective of the child support legislation that parents should be obliged to support their own children to the extent of their real capacity, and that that obligation should not be unnecessarily left to the public welfare system when the parents themselves have the capacity to maintain their children.
102.Paragraph 117(5)(b) of the Assessment Act directs the Tribunal to have regard to the effect that the making of the order would have upon the rate of entitlement to any income-tested pension, allowance or benefit.
103.Ms Vince does not receive family tax benefit for the children. This means that there will be no change in the extent to which the community supports the children. In the circumstances of this case, that is a proper outcome.
104.The Tribunal is satisfied that the proposed determination is “otherwise proper” and that the determination should be made.

DECISION

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

the previous departure determination of 17 August 2019 is ended on 31 December 2019; and
for the period 1 January 2020 to 31 December 2021 Mr Tuckey’s adjusted taxable income is varied to $22,000 per annum; and
for the period 1 January 2020 to 31 December 2020 the annual rate of child support payable by Mr Tuckey is increased by $4,826 in relation to the elder child’s school tuition fees and the younger child’s special needs; and
for the period 1 January 2021 to 31 December 2021 the annual rate of child support payable by Mr Tuckey is increased by $4,968 in relation to the elder child’s school tuition fees and the younger child’s special needs.

SCHEDULE

List of Exhibits

Services Australia – Child Support Agency marked as C exhibits:
· CSA’s large bundle of 524 pages marked as exhibit – C1
· CSA’s smaller bundle pages 525-548 marked as exhibit – C2
Mr Tuckey has provided the following documents marked as A exhibits:
·     A1-A10                Statement of Financial Circumstances
·     A11-A34               Company tax return 2020 year
·     A35-A37               Business activity statements
·     A38-A61               Bank statements – [Bank 1]
·     A62   Cover email
·     A63-A71               Individual income tax return 2019
·     A72-A98               [Company 1] – Financial Report 2020
Ms Vince has provided the following documents marked as B exhibits:
·     B1-B10                Statement of Financial Circumstances
·     B11   Cover sheet
·     B12-B18               Speech pathology assessment report
·     B19-B22              School fee schedule 2021
·     B23-B24              Speech pathology appointments
·     B25 -B26              Schedule of special needs costs
·     B27-B36               Details of special needs costs
·     B37-B38               Ms Vince’s payslips
·     B39-B47               Updated Statement of Financial Circumstances
·     B48-B66               Details of special needs costs

[2021] AATA 3186

15 July 2021

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Costs

Judicial Review

Statutory Construction