Tutton and Tutton (Child support)

[2021] AATA 464

Tutton and Tutton (Child support) [2021] AATA 464 (21 January 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2020/PC020257

APPLICANT:  Mr Tutton

OTHER PARTIES:  Child Support Registrar

Ms Tutton

TRIBUNAL:Senior Member R Ellis

DECISION DATE:  21 January 2021

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – non-agency payment – prescribed payment for school fees – payments not credited – agreement to share education costs – decision under review affirmed

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

1. Mr Tutton and Ms Tutton are the parents of [Child 1] (born October 2006) and [Child 2] (born May 2009).  There has been a child support assessment in place since 22 February 2017 with collection by the Child Support Agency since 22 April 2020.  Mr Tutton is currently the parent liable to pay child support under the assessment.

2. From 30 August 2019 the child support assessment reflected that [Child 1] and [Child 2] were in the 100 per cent care of Ms Tutton.

3. On 8 July 2020 Mr Tutton applied to the Child Support Agency for credit of payments made on 9 January 2020, 1 March 2020, 1 April 2020, 1 July 2020 and 8 July 2020 totalling $1,409.86 as non-agency payments.  The payment made on 9 January 2020 was for school books and the other four payments were for school fees.

4. On 8 July 2020 the Child Support Agency made the decision to credit $195.20 paid on 1 July 2020 for school fees and $780.80 paid on 8 July 2020 for school fees as prescribed non-agency payments.

5. On 10 July 2020 Ms Tutton objected to this decision and on 30 October 2020 the Child Support Agency allowed the objection and made the decision to refuse the payments made by Mr Tutton on 1 July 2020 and 8 July 2020 as prescribed non-agency payments (the objection decision).

6. On 17 November 2020 Mr Tutton applied to the Administrative Appeals Tribunal (the Tribunal) for a review of the objection decision.

7. The Tribunal conducted a hearing into the application on 21 January 2021.  Mr Tutton and Ms Tutton gave evidence on affirmation by conference telephone.  The Child Support Agency provided the Tribunal and the parties with papers relevant to the review (60 pages).

8. The Tribunal also received additional evidence from Mr Tutton (A1–A3) prior to the hearing and copies were distributed to the parties.

ISSUES

1. The statutory provisions relevant to this review are contained in the Child Support (Registration and Collection) Act 1988 (the Act).

2. When a child support liability is registered under the Act for collection, the amount payable is a debt due to the Commonwealth and must be paid to the Child Support Agency not the payee.  In some circumstances the Child Support Agency may credit payments made directly to a payee or to a third party against a child support liability that is registered for collection (sections 71, 71A or 71C of the Act).  The Child Support Agency refers to the credits under sections 71 and 71A as ‘non-agency payments’.  Credits under section 71C are known as ‘prescribed non-agency payments’ as this section applies to payments of the kind specified in section 19 of the Child Support (Registration and Collection) Regulations 2018 (the Regulations).

3. Section 71C of the Act provides a mechanism whereby payments made by a liable parent to the payee or to another person for items specified in section 19 of the Regulations may be taken into account in partial satisfaction of the liable parent’s child support liability.  A number of specific criteria must be met for this provision to apply.

4. The issue which arises in this case is whether or not any of the five payments made by Mr Tutton can be credited against his child support liability.

CONSIDERATION

1. Mr Tutton told the Tribunal that [Child 1] attended [School] and commenced in 2019.  He said [Child 2] was due to start at the school in 2021.  Mr Tutton said the five payments under consideration were for his share of education costs for [Child 1].

2. Mr Tutton explained that both parents wanted the children to attend [School] and after separation they had agreed to share equally in the costs associated with schooling.  Mr Tutton said as part of the agreement on schooling costs he was to have care of the children for at least seven nights a month.  He said the agreement was set out in a document from his lawyer to the law firm acting for Ms Tutton.

3. The Tribunal notes in evidence provided by Mr Tutton a letter from [Law firm 1] dated 5 December 2018.  The letter is addressed to [Law firm 2].  Of relevance, the letter states that Mr Tutton:

   a)    has care of the children for between 7 to 10 nights per month;

   b)    pays the sum of $900.00 per fortnight to your client as follows:

   i.$546.00 per fortnight for child support, which is at a high sum than the assessed amount; and

   ii.$354.00 per fortnight for the mortgage, which is currently interest only.

   c)     shares equally with your client in the children’s educational costs, being school fees, uniforms, equipment and excursions/camps.

4. Mr Tutton said it was his understanding he would only share in the costs of educating the children while he continued to have care in accordance with this agreement.  He said Ms Tutton had applied for a change of care and he no longer had care of the children.  He also pointed out that Ms Tutton had applied to the Child Support Agency for collection.  Mr Tutton said he was seeking to have the education costs considered as non-agency payments because he believed the agreement between the parents was no longer valid.

5. Ms Tutton told the Tribunal it was definitely not her understanding there was a link between care and payment of any education costs for the children.  Ms Tutton said Mr Tutton had agreed to pay his equal share of the education costs in addition to child support.

6. Ms Tutton said initially Mr Tutton had transferred his share of the education costs to her but he now paid the school direct.  Ms Tutton said she did not dispute that Mr Tutton had made the five payments under consideration and they were for his share of the education costs for [Chlid 1].  Ms Tutton said despite the change of care, Mr Tutton had continued to pay his half of these costs.  She said the parents had both signed the enrolment forms for [Child 1] and [Child 2] to attend [School] and were jointly liable for the costs.

7. Mr Tutton agreed the parents were jointly liable for the education costs for [Child 1] and [Child 2].  He said he had continued to pay his equal share of the education costs for [Child 1] despite no longer having care of the children because he was advised these costs would be considered as non-agency payments.

8. It is not in contention and the parents agree that Mr Tutton made payments on 9 January 2020, 1 March 2020, 1 April 2020, 1 July 2020 and 8 July 2020 towards school books and school fees.

9. Section 71A of the Act provides for payments made by the payer of an enforceable maintenance liability to a third party to be credited against the amount payable under the child support liability. The amount paid by the payer to the third party must partially or completely satisfy a debt owed by the payee, the payer or both the payer and the payee (paragraph 71A(1)(a)).  It must be the intention of both parties that the amount paid, or part of the amount paid, be credited against the payer’s enforceable child support liability in relation to the child support enforcement period (paragraph 71A(1)(c)).

10. The payments made by Mr Tutton on 9 January 2020, 1 March 2020 and 1 April 2020 were made at a time when there was not an enforceable maintenance liability in place.  Collection by the Child Support Agency commenced on 22 April 2020.  The Tribunal finds these payments cannot, therefore, be considered as non-agency payments under section 71A of the Act.

11. Ms Tutton has told the Tribunal the payments made on 1 July 2020 and 8 July 2020 were for school fees and were in addition to child support.  Mr Tutton does not dispute this.  Mr Tutton told the Tribunal there was no agreement with Ms Tutton that any payments made for school fees were to be intended as payments in lieu of child support.  As these payments were not intended to satisfy an amount payable under the liability they cannot be considered as non-agency payments under section 71A.

12. Where such payments cannot be credited under section 71A, they may be credited under section 71C even if there is no mutual intention between the parents. Section 71C was introduced to give payers more choice regarding the form in which child support is paid. It provides, subject to section 71D, for an amount to be credited against a payer’s child support liability regardless of the intention of the parents at the time the payment was made.  Under subsection 71C(1) of the Act the Child Support Agency must credit an amount when all the conditions set out in paragraphs 71C(1)(a) to 71C(1)(d) are met. 

13. The payment to be credited must be a payment of the kind specified in section 19 of the Regulations.  This section states that for the purposes of paragraph 71C(1)(b) of the Act, specified payments are payments of the following kinds in relation to an enforceable maintenance liability:

    (a)  child care costs for the child who is the subject of the enforceable maintenance liability;

    (b)  fees charged by a school or preschool for that child;

    (c)  amounts payable for uniforms and books required by a school or preschool for that child;

    (d)  fees for essential medical and dental services for that child;

    (e)  the payee’s share of amounts payable for rent or a security bond for the payee’s home;

    (f)  the payee’s share of amounts payable for utilities, rates or body corporate charges for the payee’s home;

    (g)  the payee’s share of repayments on a loan that financed the payee’s home;

    (h)  costs to the payee of obtaining and running a motor vehicle, including repairs and standing costs.

14. The Tribunal has established the payments made by Mr Tutton on 9 January 2020, 1 March 2020 and 1 April 2020 were made at a time when there was not an enforceable maintenance liability in place and cannot, therefore, be considered as prescribed non-agency payments under section 71C of the Act.

15. The Tribunal finds, however, that the payment made of $195.20 on 1 July 2020 and the payment made of $780.80 on 8 July 2020 are payments of the kind specified in the Regulations.

16. The condition in subsection 71C(1)(a) of the Act is that the payer of an enforceable maintenance liability in relation to a payment period or initial period has made one or more payments to the payee, or to another person.  The Tribunal is satisfied this is the case.

17. The condition in paragraph 71C(1)(ba) is that at the time the payment is made, the payer does not have at least regular care of any of the children to whom the relevant administrative assessment relates. It is also a condition that the payer does not have at least regular care of any of the children at the time at which the Registrar applies section 71C (paragraph 71C(1)(d)).  The Tribunal is satisfied that at the time the two payments were made Mr Tutton had less than 14 per cent care, or regular care, of the children.

18. Where the conditions in subsection 71C(1) are met, the Registrar must credit any amount that has not already been credited against the amount payable under the payer's liability for the period, up to a maximum of 30 per cent of the amount payable for that period.

19. In this case the Tribunal finds the payments made by Mr Tutton of $195.20 on 1 July 2020 and of $780.80 on 8 July 2020 meet all the conditions set out under the Act and must, therefore, be credited under section 71C.

20. Even where all the criteria under section 71C are met, there is still a discretion in section 71D of the Act to refuse to credit amounts that would otherwise be able to be credited against the liability.  Section 71D of the Act states that the Registrar “may refuse to credit an amount under section 71, 71A or 71C if satisfied that, in the circumstances of the particular case, the amount ought not to be credited”.  The title of section 71D is "Registrar may refuse to credit amounts in special circumstances".

21. Chapter 5.3.1 of the Child Support Guide contains a non-exhaustive list of circumstances in which the discretion to refuse to credit an amount may be exercised.  These include:

    ·     the payer is claiming credit under section 71C for an expense which they have undertaken to pay in addition to their liability as specified in an agreement between the parents (this does not have to be a child support agreement);

    ·     the payer is claiming credit under section 71C for expenses for the child for which they are separately responsible.

22. Although not bound by policy as set out in the Child Support Guide, the Federal Court has held that a tribunal should take into account relevant government policy which is not inconsistent with the provisions or objects of the legislation.

23. Mr Tutton argues that under the terms of an agreement reached between the parents he was responsible for half the school fees and other school-related costs only on the basis he had care of seven to 10 nights a month.  Ms Tutton has told the Tribunal this was not her understanding.  Based on the evidence available it is not clear there is a direct link between the payment of school fees and the care Mr Tutton has of the children.  Nonetheless Mr Tutton and Ms Tutton are separately responsible for the fees for [Child 1] to attend [School].

24. After taking into account the circumstances of this case, the Tribunal is satisfied that the payments made for school fees by Mr Tutton of $195.20 on 1 July 2020 and of $780.80 on 8 July 2020 should be refused as prescribed non-agency payments under section 71D of the Act.

DECISION

The decision under review is affirmed.