Tyrwhitt and Vough (Child support)

[2022] AATA 4111

Tyrwhitt and Vough (Child support) [2022] AATA 4111 (19 October 2022)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2022/PC024361

APPLICANT:  Mr Tyrwhitt

OTHER PARTIES:  Child Support Registrar

Ms Vough

(previously Ms Tyrwhitt)

TRIBUNAL:Member F Staden

DECISION DATE:  19 October 2022

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – departure determination – special needs of the child – a ground for departure established – 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 Tyrwhitt and Ms Vough are the separated parents of [Child 1], born 2004, and [Child 2], born 2006 (the children). There has been a child support assessment for this case from 10 July 2008 and the parents are recorded as equally sharing the care of the children since at least 2013. The child support assessment for [Child 1] ended on 9 March 2022.

2. When care of a child is shared, each parent is assessed as having a child support liability to the other, with the lower rate being subtracted from the higher and the parent with the amount remaining is the parent with a child support liability.

3. Mr Tyrwhitt is the parent liable to pay child support. Ms Vough opted for collection of child support by Services Australia – Child Support (Child Support) from 19 January 2015.

4. There have been previous change of assessment decisions in this case. The most recent was a 22 January 2021 Child Support primary decision maker decision that increased Mr Tyrwhitt’ annual child support liability for the period 1 January 2021 to 31 December 2021 by $1,768 which was half the annual private school fees costs of the children. Neither party objected to this decision.

5. At the time of the change of assessment application under review here, the relevant assessments were:

   ·     For the period 1 January 2022 to 9 March 2022, Mr Tyrwhitt’ annual rate of child support liability was $11,266, based on Mr Tyrwhitt’ 2020/21 adjusted taxable income of $119,748 and Ms Vough’s 2020/21 adjusted taxable income of $24,182.

   ·     For the period 10 March 2022 to 30 November 2022, Mr Tyrwhitt’ annual rate of child support liability was $8,889 based on Mr Tyrwhitt’ 2020/21 adjusted taxable income of $119,748 and Ms Vough’s 2020/21 adjusted taxable income of $24,182.

6. On 3 February 2022, Mr Tyrwhitt applied for a change of assessment on the basis that the costs of maintaining [Child 2] were significantly affected by the costs associated with meeting his special needs, specifically orthodontic costs (Reason 2).

7. On 8 March 2022, Ms Vough responded to Mr Tyrwhitt’ change of assessment application and also lodged a cross application on the grounds of the extra costs involved in caring for, educating, training a child in the way both parents intended, specifically school fees (Reason 3).

8. On 22 April 2022, a Child Support primary decision maker found Reason 2 in Mr Tyrwhitt’ change of assessment application established and Reason 3 in Ms Vough’s cross application not established and made the following decision:

   ·     For the period 1 May 2022 to 30 April 2023, Mr Tyrwhitt’ annual rate of child support is reduced by $1,500.

9. Mr Tyrwhitt lodged an objection to the 22 April 2022 decision on 5 May 2022.

10. On 4 July 2022, an objections officer disallowed Mr Tyrwhitt’ objection.

11. On 1 August 2022, Mr Tyrwhitt applied to the Social Services and Child Support Division of the Administrative Appeals Tribunal (the tribunal) for review of the objections officer’s decision.

12. A hearing was held on 19 October 2022. Mr Tyrwhitt and Ms Vough gave sworn evidence by telephone. The tribunal had before it papers from Child Support (324 pages), Mr Tyrwhitt (pages A1 to A13) and Ms Vough (pages B1 to B10). Copies of these documents were provided to all parties.

13. Relevant aspects of the evidence are referred to in the consideration below.

ISSUES

1. The rate of child support payable by a liable parent is usually based on an administrative assessment under the Child Support (Assessment) Act 1989 (the Assessment Act). The formula used to calculate the rate takes into account factors such as the number of children, the levels of care provided and the income of each parent.

2. Under section 98B of the Assessment Act, a liable parent or carer receiving child support can apply to the Child Support Registrar for a determination to depart from the administrative assessment. This is known as a change of assessment.

3. Under section 98C of the Assessment Act, the Child Support Registrar, here the tribunal, may change the assessment if the case meets the following three criteria:

   · There is a ground to depart from the assessment (subsection 117(2) of the Assessment Act lists those grounds). Only one ground has to be established for the tribunal to proceed to consider the next criterion (Marsh & Eccles [2008] FMCAfam 1417);

   ·     It is “just and equitable” to make particular changes to the assessment; and

   ·     It is “otherwise proper” to make those changes to the assessment.

CONSIDERATION

Issue 1: Is there a ground to depart from the administrative assessment?

1. Subparagraph 117(2)(b)(ia) of the Assessment Act provides a ground for departure exists where, in the special circumstances of the case, the costs of maintaining the child are significantly affected because of the special needs of the child. Special needs may result in costs which are essential or desirable for a child’s welfare but are outside the ordinary costs of a child that can be met from the administrative assessment (Lightfoot and Hampson (1996) FLC 92-663).

2. The term “special circumstances” is not defined in the Assessment Act. In Gyselman and Gyselman [1991] FamCA 93, the Full Family Court indicated that for there to be special circumstances, the facts of the case must establish something which is special or out of the ordinary.

3. The Child Support Guide is a policy manual which assists Child Support officers to apply child support law consistently. Although not bound to apply these guidelines, the tribunal will usually do so unless there are cogent reasons to do otherwise (see Re Drake and Minister for Ethnic Affairs (No 2) (1979) 2 ALD 634). In relation to orthodontic treatment the Child Support Guide states:

   The costs of orthodontic treatment that is considered to be essential or desirable for a child’s welfare may be significant enough to affect the costs of maintaining the child.

4. The parents agree that [Child 2] needed orthodontic treatment. As not all children need orthodontic treatment, the tribunal was satisfied that those who do need orthodontic treatment meet the requirement of having a special need which differentiates them from most children.

5. Receipts provided by Mr Tyrwhitt show that [Child 2] first consulted Dr [A] about his orthodontic treatment on 20 September 2021 at a cost of $52. He had cephalometry scans done on 22 September 2021, at an out-of-pocket cost of $49, and underwent diagnostic procedures on 4 October 2021, at a cost of $414. On 1 November 2021, [Child 2]’s teeth removal by [Dr A] cost $660, with the anaesthetist costing an additional $896. Mr Tyrwhitt paid each of these amounts on the day treatment took place. On 17 November 2021, [Child 2]’s braces treatment began at a total cost of $7,100. On that day Mr Tyrwhitt paid $1,175 and on 15 December 2021 he paid the remaining $5,925.

6. The total cost of [Child 2]’s orthodontic treatment was therefore $9,171 ($52 + $49 + $414 + $660 + $896 + $7,100), all of which was paid by Mr Tyrwhitt. The tribunal found that $9,171 was a significant amount as it constituted around a half of the $17,777 costs of a child of [Child 2]’s age, based on the combined child support income of Mr Tyrwhitt and Ms Vough as used in the assessment at the time of the original decision here (2.4.2 Formula tables & values in the Child Support Guide).

7. Overall, the tribunal found that the cost of [Child 2]’s orthodontic treatment was such that the cost of his care was significantly higher than those of a child without this special need and that this is a special circumstance in this case. The tribunal further found that the cost of maintaining [Child 2] was significantly increased by his orthodontic treatment and so a ground for departure was established.

Issue 2: Is it just and equitable to depart from the administrative assessment?

1. To decide whether it is just and equitable to depart from the administrative assessment, the tribunal must consider the matters required by subsection 117(4) of the Assessment Act, plus any other matters raised in the change of assessment application.

Duty of a parent to maintain a child/commitments necessary for self-support or the support of anyone else the parent has a duty to maintain

1. Section 3 of the Assessment Act makes it clear that the parents of a child have the primary duty to maintain the child, and that this duty has priority over all commitments of the parents other than commitments necessary for self-support or the support of another person the parent has a duty to maintain.

2. Mr Tyrwhitt and Ms Vough each have the primary duty to financially support [Child 2]. Neither identified anyone whom they have a legal duty to maintain other than Mr Tyrwhitt’ daughter who is taken into account by the assessment.

3. Neither Mr Tyrwhitt nor Ms Vough identified any personal health-related costs or any other unusual self-support expenses they wished to have considered by the tribunal.

The proper needs of the child

1. In determining the proper needs of a child, it is necessary to consider any special needs of the child and the manner in which the parents intended the child to be cared for, educated or trained.

2. Both parents agreed that [Child 2] has no special needs other than his need for orthodontic treatment discussed above.

3. From at least 4 September 2018 to 31 December 2021, Mr Tyrwhitt’ child support liability was increased to take account of his half share of the private school fees for the children. [Child 1] finished school at the end of 2021. [Child 2] left school at the end of Term 1 2022 to commence an apprenticeship. [Child 2]’s school fees for Term 1 2022 were approximately $562.50. Ms Vough said she had accepted advice from Child Support that this was too small an amount to warrant a change to the assessment.

Income, earning capacity, property and financial resources of the children

1. In April 2022, [Child 2] commenced an apprenticeship for which he earns a variable amount each week. Both parents stated that they were unaware of the exact amount of [Child 2]’s earnings. The impact of [Child 2]’s income on the child support assessment is the subject of a separate change of assessment application made by Mr Tyrwhitt on 5 May 2022. The tribunal did not consider those earnings here because at the time the orthodontic payments were made and for at least three months after, [Child 2] had no income, property or financial resources which could be used for his self-support.

Income, property and financial resources and earning capacity of Mr Tyrwhitt

1. Mr Tyrwhitt works full-time as a [manager] and his earning capacity is not in question. His 2021/22 adjusted taxable income was $132,344 and his 15 August 2022 Statement of Financial Circumstances (SoFC) indicates that his 2022/23 adjusted taxable income is likely to be similar.

2. Mr Tyrwhitt listed his assets as a 50% share of the family home plus two motor vehicles valued at $54,000 and $119,000 and his liabilities as 50% of a $440,000 mortgage, a credit card debt of approximately $33,000 and a car loan of $148,000. He explained that he is attempting to sell the more expensive car he owns which will reduce the amount of his car loan.

3. Mr Tyrwhitt’s SoFC showed his average weekly household expenses to be $3,760. This amount was higher than usual because he is currently paying both rent on the property in which he is living and the mortgage on the property into which he will soon be moving. The amount is also higher because of his weekly car repayment of $500.

4. Ms Vough questioned whether Mr Tyrwhitt’s adjusted taxable income accurately reflected the income and financial resources available to him, querying his financial involvement with a restaurant and two cafés. Mr Tyrwhitt said that the restaurant and two cafés were businesses operated by his current partner through a company of which she is the director. Ms Vough observed that Mr Tyrwhitt had recently purchased cars for both the children at a cost of $28,000 each. Mr Tyrwhitt responded that the cars were gifts from his current partner, whose average weekly earnings he listed in his SoFC as $1,154 a week. Mr Tyrwhitt agreed that he had in recent times set up a trust and an associated company as he had intended to buy a business but this had not eventuated. He stated that he had not benefited from the trust.

5. Mr Tyrwhitt’s combined household and personal expenditure in his SoFC are more than the combined income of himself and his partner. However, it appears that once Mr Tyrwhitt is living in his own home and has sold his most expensive car, his expenses may be more in line with that combined income.

Income, property and financial resources and earning capacity of Ms Vough

1. Ms Vough works from home for around four days a week as a self-employed [occupation]. The amount she works depends on the customers she gets. The tribunal found nothing to indicate that Ms Vough is not exercising her earning capacity.

2. Ms Vough’s 2020/21 adjusted taxable income was $24,182 and that of 2021/22 is deemed to be $24,883. In addition to her earnings from her [business], Ms Vough receives carer allowance in relation to the care she provides for her age pensioner mother who lives with her.

3. Ms Vough’s assets consist of 50% of her family home, $6,500 in the bank and a car valued at $6,000. Her liabilities are 50% of a $259,000 mortgage plus a $1,000 credit card debt.

4. Ms Vough’s average weekly personal expenditure is $315, which includes $52 for health insurance which covers [Child 1] and [Child 2]. Her average weekly household expenses are $738 which Mr Tyrwhitt queried as being exceptionally low. Ms Vough agreed that her petrol costs are now much higher and also explained that the information she had provided did not include the contribution to household costs made by her mother.

5. Mr Tyrwhitt queried Ms Vough’s income and financial resources referring to past items of expenditure by her which he believes to be unaffordable if her circumstances are such as she had provided in her SoFC. Ms Vough responded that Mr Tyrwhitt had both incorrectly identified some costs as being met by her and had inflated the amount of costs she has previously met. She noted that that her mother assisted her in meeting one-off costs.

Direct and indirect costs of providing care for the child incurred by the parent entitled to child support

1. Both Mr Tyrwhitt and Ms Vough identified the cost of transporting [Child 2] as the only significant cost associated with caring for him. Since [Child 2] transitioned from school to work/TAFE in April 2022 and so travelled to different locations, that cost has increased for Ms Vough and decreased for Mr Tyrwhitt.

What determination should be made taking into account the above factors?

1. The proposed departure determination is that:

   ·     For the period 1 May 2022 to 30 April 2023 the annual rate of child support payable by Mr Tyrwhitt is reduced by $1,500.

2. The start date of 1 May 2022 is consistent with that used in earlier decisions in this matter and is the beginning of the month following that in which the original decision was made. Its use avoids an overpayment being generated for Ms Vough.

3. The end date of 30 April 2023, again the date used in earlier decisions in this matter, allows for the reduction in Mr Tyrwhitt’ child support liability to be spread over a year and so to minimise disruption to the amount of child support received by Ms Vough.

4. The tribunal accepts that there is a case for reducing Mr Tyrwhitt’ child support liability in order to take into account his significant expenditure of $9,171 on [Child 2]’s orthodontic treatment. In determining that the amount of that reduction should be $1,500, the tribunal noted the following:

   ·     In September 2021, [Child 2] had been on the waiting list for orthodontic treatment with the Oral Health Centre of Western Australia (Oral Health) for a number of years. Oral Health is a dental teaching and learning facility which is part of the West Australian public dental system and offers reduced rate services to eligible patients, as Ms Vough then was. [Child 1] previously had braces fitted through this service at a cost of approximately $2,700. The parents dispute whether there was a previous $5,500 private dental bill in relation to [Child 1].

   ·     The parents agreed that they do not speak directly to each other at all. They exchange information about [Child 2]’s care through [Child 2].

   ·     Mr Tyrwhitt’ evidence was that [Child 2] asked him if he could organise his orthodontic treatment privately as he wanted it done as soon as possible and did not know what was happening with Oral Health. Mr Tyrwhitt said that he agreed as he understood [Child 2]’s concerns. [Child 2]’s private orthodontic treatment by Dr [A] began in September 2021. Mr Tyrwhitt had paid the full cost of $9,171 by mid-December 2021. He did not seek agreement from Ms Vough for the treatment and was unaware of what was happening with Oral Health.

   ·     Ms Vough’s evidence was that she was aware that [Child 2] was having private orthodontic treatment from September 2021 but believed that Mr Tyrwhitt would be bearing the full cost because that was what [Child 2] had told her. This was why she expressed no objection to the treatment taking place.

   ·     On 29 November 2021, Oral Health informed Ms Vough that an appointment could be organised for [Child 2] in the next 90 days.

   ·     Mr Tyrwhitt lodged his change of assessment application in relation to [Child 2]’s dental costs on 3 February 2022. The tribunal asked Mr Tyrwhitt why he delayed asking Ms Vough to pay half of [Child 2]’s orthodontic costs until then. He said that he did so because he knew she would not be happy about being asked to pay half the costs.

   ·     Mr Tyrwhitt did not dispute Ms Vough’s income, although he did question her outgoings. Ms Vough raised questions about both Mr Tyrwhitt’ income and expenditure, including his access to income and financial resources through his current partner’s business. Mr Tyrwhitt stated that he had no such access.

5. The tribunal had some concerns about requiring Ms Vough to make any contribution to [Child 2]’s orthodontic costs, given she was unaware that she could be required to contribute and there was a cheaper source for the treatment available. However, the tribunal noted that both parents are well aware of the objections process and Ms Vough did not object to the original decision in this case. Additionally, Ms Vough expressed a willingness to pay half of the likely $3,000 cost of [Child 2]’s orthodontic treatment through Oral Health.

6. On balance, the tribunal found that the fairest way to determine an appropriate division of the parents’ contributions to [Child 2]’s orthodontic costs was to consider those contributions relative to the income of the parents. [Child 2]’s orthodontic treatment took place in 2021/22. The parents’ total income for that year was $157,727, with Mr Tyrwhitt’s 2020/21 adjusted taxable income being $132,344 or 84% of the total, and Ms Vough’s 2020/21 provisional income being $24,883 or 16% of the total. Applying those proportions to the $9,171 cost of [Child 2]’s orthodontic treatment results in Mr Tyrwhitt being responsible for $7,704, 84% of the total, and Ms Vough being responsible for $1,467, 16% of the total.

1. As there is little difference between Ms Vough making a contribution of $1,467 and the $1,500 determined by the original decision maker and the objections officer, the tribunal found no need to vary the amount and therefore reduced Mr Tyrwhitt’s child support liability by $1,500 over the period 1 May 2022 to 30 April 2023.

Any hardship resulting from the departure determination

1. Ms Vough expressed the view that she did not object to paying half of the likely $3,000 costs of [Child 2]’s orthodontic treatment had it been done through Oral Health; that is, $1,500. The tribunal was satisfied that this reduction spread over one year was not such as to cause Ms Vough financial hardship

Issue 3: Is it otherwise proper to depart from the administrative assessment?

1. The tribunal considered the impact of its proposed determination on the balance of support provided by the parents on one hand and the taxpayer on the other. It is necessary to decide whether this is a proper outcome given that parents have the primary responsibility to support their children.

2. Neither parent has or will receive family tax benefit nor any other government payment related to [Child 2] in the proposed period of change to the assessment. The proposed determination therefore has no impact on the level of government support received by either parent. The tribunal therefore found that the proposed determination is otherwise proper.

DECISION

The decision under review is affirmed.