Vardy and Wilmot (Child support)

Vardy and Wilmot (Child support) [2018] AATA 82 (2 January 2018)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2017/SC011866
APPLICANT:  Mr Vardy
OTHER PARTIES:  Child Support Registrar
Mrs Wilmot

TRIBUNAL:Member W Kennedy
DECISION DATE: 2 January 2018

DECISION:

The decision under review is varied so that the amount of child support payable by Mr Vardy is increased by the following amounts:

·$33,472.75 in 2017
·$39,715.00 in 2018
·$45,771.00 in 2019
·$47,830.00 in 2020

CATCHWORDS

Child support – Departure determination – Special needs of the child not significant – Costs of education for the child – Income and financial resources of parents – Business income – Decision under review varied

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.

REASONS FOR DECISION

BACKGROUND

This decision concerns an application for a departure from the formula assessment of child support. Mr Vardy and Mrs Wilmot are the parents of [Child 1] (born September 2004) and [Child 2] (born January 2007). Although the parents separated in 2007 there has been a child support assessment in place for the children made by the Child Support Agency of the Department of Human Services (the Department) only since 3 August 2016. The assessment is based on Mr Vardy having a care percentage of 42% for both children.
For the period from 18 November 2016 to 12 September 2017 Mr Vardy was assessed to pay an annual rate of child support of $11,880.00 based on his adjusted taxable income (ATI) of $757,174.00 and Mrs Wilmot’s adjusted taxable income of $280,142.00. For the period from 13 September 2017 to 2 November 2017 Mr Vardy was assessed to pay an annual rate of child support of $13,130.00. The increase was due to [Child 1] turning thirteen.
On 26 October 2016 Mrs Wilmot applied to the Department for a departure from the formula assessment because of the special needs of one of the children and also because of the cost of educating and training the children in the manner expected by the parents. For administrative purposes these are known as Reason 2 and Reason 3 respectively. On 1 February 2017 Mr Vardy responded to Mrs Wilmot’s application and cross-applied on the basis that the assessment does not correctly reflect one or both of the parents’ earning capacity, known as Reason 8B. Mr Vardy later withdrew his cross-application.
On 28 February 2017 a delegate of the Child Support Registrar considered the departure application and decided that Reason 2 and Reason 3 had been established and that it was just and equitable and otherwise proper to change the assessment. The delegate decided to vary the assessment as follows:
·for the period from 1 January 2017 to 28 February 2017 increase the rate of child support payable by Mr Vardy by $19,926.00; and
·for the period from 1 March 2017 to 31 December 2017 increase the rate of child support payable by Mr Vardy by $41,489.00 per annum; and
·for the period from 1 January 2017 to 31 December 2017 increase the rate of child support payable by Mr Vardy by an additional $3,072.00 per annum.
On 18 March 2017 Mr Vardy lodged an objection to that decision, stating that the children have no special needs and that there was an agreement between the parents that they would equally split the cost of education.
On 22 May 2017 a Departmental objections officer partly allowed Mr Vardy’s objection, deciding that Reason 2 and Reason 3 had been established and that it was just and equitable and otherwise proper to change the assessment. The objections officer set aside the original decision and decided to vary the assessment as follows:
·for the period from 1 January 2017 to 31 December 2017 increase the rate of child support payable by Mr Vardy by $41,001.00 per annum; and
·for the period from 1 January 2018 to 31 December 2018 increase the rate of child support payable by Mr Vardy by $42,896.00 per annum; and
·for the period from 1 January 2019 to 31 December 2019 increase the rate of child support payable by Mr Vardy by $44,885.00 per annum; and
·for the period from 1 January 2020 to 31 December 2020 increase the rate of child support payable by Mr Vardy by $43,866.00 per annum; and
·for the period from 1 January 2021 to 31 December 2021 increase the rate of child support payable by Mr Vardy by $46,059.00 per annum; and
·for the period from 1 January 2022 to 31 December 2022 increase the rate of child support payable by Mr Vardy by $48,362.00 per annum.
On 7 June 2017 Mr Vardy lodged an application for a review of the decision with this Tribunal, restating his reasons for the objection lodged on 18 March 2017. The Tribunal had access to the statement and documents provided by the Department. The documents are at folios 1 to 391 of the hearing papers, and were provided to the parties in advance of the hearing. Mr Vardy provided additional documents in the form of a Statement of Financial Circumstances dated 2 July 2017. Those documents are at folios A1 to A9 of the hearing papers. Mrs Wilmot provided additional documents in the form of a Statement of Financial Circumstances and some other documents. Those documents are at folios B1 to B21 of the hearing papers. The additional documents were provided to both parents in advance of the hearing.
Following an early case appraisal conference the matter proceeded to a substantive hearing. The matter was heard and determined in [City 1] on 2 January 2018. Mr Vardy and Mrs Wilmot both attended the hearing in person and gave their oral evidence under oaths. The Child Support Registrar was not present and was not represented at the hearing.

CONSIDERATION

The legislative framework and issues for the Tribunal to determine

The rate of child support payable by a liable parent is usually based on an administrative assessment under Part 5 of the Child Support (Assessment) Act 1989 (the Act). This requires the application of a statutory formula which takes into account factors such as the number and ages of the children, the level of care provided and the income of each parent.
The liable parent or a carer may apply to the Child Support Registrar for a determination to depart from the child support administrative assessment under Part 6A of the Act. Section 98C of the Act provides that the Registrar may make a determination to depart from the formula assessment and establishes a three step process for considering applications to do so. The Registrar, and the Tribunal standing in place of the Registrar, must be satisfied:
·that one, or more than one, of the grounds for departure referred to in subsection 117(2) of the Act exists; and
·that it would be just and equitable as regards the child, the liable parent, and the carer entitled to child support; and
·that it would be otherwise proper to make a particular determination.
The grounds for departure from the administrative assessment are set out in subsection 117(2) of the Act. Each of the grounds, which for administrative purposes are referred to as reasons, require that special circumstances be established. The term ‘special circumstances’ is not defined in the Act. In Gyselman v Gyselman (1992) FLC 92-279 the Full Court of the 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.
If satisfied that a ground or grounds exist and that it would be just and equitable and otherwise proper to make a particular determination, the Tribunal must make one of the determinations prescribed in section 98S of the Act. These include varying the annual rate of child support payable or varying a parent’s ATI.

Issue one – Does a ground exist to depart from the administrative assessment?

The Tribunal’s first task is to determine whether a ground for departure from the administrative assessment can be established. In her application to the Department Mrs Wilmot asserted that there were two grounds (or reasons) for a departure from the formula assessment. The Tribunal considered each of these in turn.

Does a ground exist to depart from the administrative assessment under Reason 2?

Mrs Wilmot has sought a departure from the administrative assessment on the ground that there are extra costs because of the special needs of [Child 1]. This ground for departure is found in subparagraph 117(2)(b)(ia) of the Act:
(2) For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:
. . .
(b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
. . .
(ia) because of special needs of the child; or
The Tribunal has before it a school counsellor’s report dated 13 October 2014 (folios 58 to 66). A search of the Australian Health Practitioner Regulation Agency shows that the person compiling this report had a provisional registration as a psychologist (meaning that he can only practise under supervision), which at the time he had held for a few months, and that his registration continues to be provisional. The report is no more than a summary of some testing conducted in 2014. The recommendations are unexceptional, being what might be expected in relation to any child. For instance the counsellor recommends “individual and group support from the learning and enhancement department”. The report can be summarised as concluding that [Child 1] has a mix of strengths and weaknesses that can be addressed primarily through the school. It is not strong evidence of any special needs that [Child 1] might have.
The Tribunal also has before it a letter from a Consultant Developmental Paediatrician dated 9 June 2016 (folio 67). The quite brief letter is also unexceptional, finding that [Child 1] is making progress and recommending only that he remain on a low dose of [medication] and that he access “ongoing support via an individual learning programme at school to develop his literacy and maths skills.”
At the hearing Mrs Wilmot said that she has no doubt that [Child 1] has special needs and that he had been assessed on many occasions by many specialists. She said that he had recently been diagnosed with severe dyslexia and offered to provide further documentation if required by the Tribunal.
At the hearing Mr Vardy said that he also believes that [Child 1] has special needs but that he is wary about diagnoses as to his condition and thus the exact nature of those needs. He said that he accepted that [Child 1] required some special help but that he was not convinced that the help he was receiving was necessarily the best for him. In particular he doubted the value of a clinical psychologist engaged by Mrs Wilmot as a literacy tutor. The clinical psychologist engaged by Mrs Wilmot, [Ms A], is apparently the principal of [a psychologist’s practice] in [Suburb 1], which, according to its website, provides “[support to children with learning difficulties].”
The original decision maker decided that [Child 1]’s special needs had been established “on the basis of the documentary evidence and the evidence of both parents” (folio 264). The objections officer stated that “as the parents also agree that [Child 1] has learning needs I am satisfied to establish [Child 1] has a condition that is out of the ordinary when compared to most children his age.” (folio 10). The professional evidence relied upon by the objections officer, and apparently, although not specifically stated, by the original decision maker, is limited to the two documents described above. These documents recommend little more than an individual learning programme at school. There is no professional documentary evidence before the Tribunal that clearly concludes that [Child 1] has relevant special needs.
While the parents have apparently decided to provide [Child 1] with some specialist assistance, the documentation before the Tribunal does not establish that it is the result of any professional assessment that places [Child 1] in a different category to that of other children. The Tribunal finds that the decision of the original decision maker and the decision of the objections officer are based on the opinion of the parents rather than on any clear evidence provided by a relevant professional.
However, like the original decision makers, the Tribunal must place significant weight on the opinion of the parents conveyed in the documentation and on the oral evidence provided by the parents at the hearing. Relying mainly on the opinion of the parents and noting Mrs Wilmot’s offer to provide further documentation if required, the Tribunal finds that there is sufficient evidence to establish that [Child 1] has needs that are special or out of the ordinary.
Having found that [Child 1] has special needs the Tribunal examined whether those needs significantly affect the cost of maintaining [Child 1]. Mrs Wilmot has stated that in order to meet [Child 1]’s special needs she incurs costs totalling $4,212.00 per annum. This consists of the cost of the clinical psychologist ($2,600.00), specialist consultations ($980.00), spectacles ($200.00) and medication ($432.00). The quantum of these costs has not been disputed by Mr Vardy, however he does dispute the need for, or at least the value of, the clinical psychologist. The other expenses, in the opinion of the Tribunal and taking into account all the circumstances (including the medicare rebates), are within the range of the normal expenses incurred in caring for a child.
Taking into account that there is a dispute between the parents as to the value of the clinical psychologist and that the evidence of [Child 1]’s special needs is not particularly strong the Tribunal concludes that while [Child 1] has some special needs these can mostly be addressed by the school that he attends. Indeed, the parents chose that particular school because of its capacity to address [Child 1]’s needs. Additional and necessary costs fall within the range of expenses provided for all children through the formula assessment. Thus the agreed expenses may be met by the parents through the formula assessment and taking into account their respective percentages of care. The Tribunal finds that in all of the circumstances the costs of maintaining [Child 1] are not significantly affected by his special needs and as a result the Tribunal finds that reason 2 is not established.

Does a ground exist to depart from the administrative assessment under Reason 3?

Mrs Wilmot has sought a departure from the administrative assessment on the ground that there are extra costs involved in educating and training the children in the manner expected by the parents.
This ground for departure is set out in subparagraph 117(2)(b)(ii) of the Assessment Act:
(b) that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
. . .
(ii) because the child is being cared for, educated or trained in the manner that was expected by his or her parents;
. . .
There is no dispute between the parents that it was their expectation that the children would be privately educated. Although Mr Vardy originally wished to have the children educated at [School 1] this was only because he was under the impression that [School 1] had an association with his own school, being [a school] in [City 2]. As the schools are in fact not associated and the parents concluded that [School 2] would provide the best environment for their children, Mr Vardy and Mrs Wilmot agreed that the children would be educated at [School 2].
The evidence before the Tribunal establishes that in 2018 the tuition fees charged by [School 2] vary from $18,054.00 to $32,841.00 per annum per child.
The Tribunal finds that the children are being educated in the manner expected by the parents and that, as this involves private education, there are special circumstances that significantly affect the costs of maintaining the children. The Tribunal finds that this establishes a reason to depart from the formula assessment of child support under subparagraph 117(2)(b)(ii) of the Act and that as a result Reason 3 is established.

Issue two – Would departure from the administrative assessment be just and equitable?

Relevant law and evidence

As the Tribunal is satisfied that there are grounds to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable to depart from the assessment. In deciding whether it is just and equitable the Tribunal had regard to the following matters set out in subsection 117(4) of the Act:
(4) In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b)     the proper needs of the child; and
(c) the income, earning capacity, property and financial resources of the child; and
(d) the income, property and financial resources of each parent who is a party to the proceeding; and
(da) the earning capacity of each parent who is a party to the proceeding; and
(e) the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i)      himself or herself; or
(ii) any other child or another person that the person has a duty to maintain; and
(f) the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g)     any hardship that would be caused:
(i)      to:
(A)     the child; or
  (B)     the carer entitled to child support;
   by the making of, or the refusal to make, the order; and
(ii)      to:
(A)     the liable parent; or
(B) any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order; and
(iii) to any resident child of the parent (see subsection (10) by the making of, or the refusal to make, the order.
The Tribunal considered the evidence provided by both parents, including the documents and statement of financial circumstances form that each party provided to the Tribunal, as well as the documents provided by the Department.

Assessment of evidence, findings of fact and application of the law

Section 3 of the Assessment Act states and the Tribunal accepts that it is the duty of both parents to financially support their children and that [Child 1] and [Child 2] should receive a proper amount of financial support from their parents in accordance with their capacity to contribute.
At the hearing Mrs Wilmot asserted that she believed that court orders dated 6 October 2009 provided that Mr Vardy would meet the children’s schooling costs from 2017 onwards. The court orders state:
That provided the father meets the whole of the children’s school and tuition fees the parties do all acts and things and sign all documents necessary to have the children attend [School 1] from Year 7 and if the father is prepared to pay the fees for [Child 2], for him to commence from Year 5 rather than Year 7.
At the hearing Mr Vardy disputed that the court orders provide that he would pay the children’s school costs. He said that the purpose of the relevant part of the court orders was to establish a right exercisable by him to have the children attend [School 1].

Although awkwardly worded it is not apparent that the court orders require Mr Vardy to meet the children’s school costs in all circumstances. It is evident that the order relates to the children attending [School 1] as a condition precedent. As the parents agreed that the children would attend [School 2] the order relied on by Mrs Wilmot does not appear to have any practical impact.
At the hearing Mrs Wilmot acknowledged that on reflection she understands the interpretation placed on the court orders by Mr Vardy, but said that it had always been her understanding that the court orders meant that Mr Vardy would meet the full cost of the children’s high school education. She said that her understanding had been communicated to Mr Vardy on many occasions and that he had never suggested that her understanding was incorrect. She said that the agreement between them had been that she would forego child support and that in return he would pay the high school costs and tuition. She said that she had not sought child support in fulfilment of her part of the agreement but that now he was refusing to pay for the children’s education, which was his part of the agreement.
The evidence before the Tribunal is that the parents separated in 2007 and that a child support assessment was not applied for by Mrs Wilmot until 2016. Thus the circumstances support her oral evidence. Mrs Wilmot also provided a handwritten document that she said was the summary of a telephone conversation between herself and Mr Vardy in 2011. The note (at folio 40), which she states was made at the time of the conversation, supports her claim as to the agreement between the parties.
At the hearing Mr Vardy said that he first realised that Mrs Wilmot had misconstrued the court orders after the arrangements between them had deteriorated in 2016. Up to that time they had equally shared the costs of the children’s education. He said that there was an oral agreement between the parents that they would share the costs of educating the children equally. He acknowledged that this agreement was oral and that it is not evidenced by any written document. He relied on the pattern of behaviour of the parties up to 2017 as evidence of the oral agreement.
Mrs Wilmot acknowledged that the parents had split the education costs but said that she had only been able to do this by borrowing from her parents. She said that Mr Vardy was aware of this.
Mr Vardy has previously made two proposals in relation to school fees. In a letter from his lawyers dated 19 June 2016 (folios 186 to 190) he proposed that the parents contribute on a pro rata basis in accordance with their financial circumstances, apparently as evidenced by their incomes. He also offered to meet the full fees if Mrs Wilmot was able to demonstrate financial hardship. In a letter from his lawyers dated 19 January 2017 (folios 191 to 192) Mr Vardy proposed that he pay the full fees for both children from Year 7 and that his payment of the fees would fully discharge the expenses that he pays with respect to the children. At the hearing Mr Vardy stated that this proposal envisaged that by paying the tuition fees he would fully discharge his child support liability.
There is insufficient evidence before the Tribunal to conclude that there is any existing agreement between the parents as to how the children’s school fees will be met. While there is no dispute as to the past behaviour of the parties there is no evidence of an agreement that the parties shall continue to behave in that way or in any other particular way into the future.
At the hearing Mrs Wilmot said that the tuition fees do not account for the full cost of educating the children. She said that the children are involved in extracurricular activities and that these have a cost. Mrs Wilmot has provided some documentary evidence of various expenditures. In her original application to the Department she stated that the following expenses were incurred:
·Tennis lessons   $1,820.00 pa
·Guitar lessons  $1,920.00 pa
·Trumpet lessons for [Child 2]            $1,824.00 pa
·Uniforms/sporting equipment            $800.00 pa
·School stationery  $424.00 pa
·Swimming lessons  $80.00 each
Most children are involved in some extracurricular activities which carry some cost. The formula assessment takes this into account. However, some activities are particularly costly and the formula does not reflect the cost of very expensive activities. This is particularly relevant in relation to gifted children.
Mr Vardy has previously said that he did not agree that the children required tennis or swimming lessons, noting that they have a swimming pool at Mrs Wilmot’s home and that Mr Vardy’s home is adjacent to the beach. He said that he played tennis with both boys and is able to assist them in developing their tennis skills.
The Tribunal finds that music lessons, uniforms, sporting equipment and school stationery are in no way unusual expenses. Particularly in comparison with the income of the parents it is not apparent to the Tribunal that the children participate in any unusually costly extracurricular activities that need to be taken into account outside of the formula assessment. The extent to which the children participate in extracurricular activities is a matter for the parents and the Tribunal will not presume to determine the appropriate extent of their participation or if they require tuition in order to participate fully. Accordingly the Tribunal makes no special provision with regard to the costs related to any extracurricular activities that the parents may decide to sponsor. As with normal medical costs, these costs may be met by the parents through the formula assessment and in accordance with their respective percentages of care.
The tuition fees are a different matter. The fees are substantial and are additional to the costs included in the statutory formula. Evidence before the Tribunal shows that [School 2] tuition fees for 2017 for [Child 1] amounted to $29,232.00 and, taking into account the brother’s discount, for [Child 2] amounted to $21,975.00, a total of $51,207.00. At the hearing there was no dispute between the parties as to the quantum of the tuition fees.
In 2018 the tuition fees for the two boys will total $53,936.00. The tuition fees for 2019 and subsequent years have not been set. In recent years tuition fees at [School 2] have increased between 3.5% and 5.7% annually. In addition the tuition fees increase as the boys move into more senior grades. In order to estimate the future cost the Tribunal has applied an annual increase of 4.5% from 2019 to the 2018 tuition fees appropriate to the grade the children will be undertaking. The uplift factors of 4.5%, 9.2%, 14.1% and 19.3% produce estimates of total tuition fees of $62,105.00 in 2019, $64,898.00 in 2020, $70,509.00 in 2021 and $73,685.00 in 2022.

The children’s needs

Paragraph 117(4)(b) of the Act requires the Tribunal to consider the proper needs of the children. The Tribunal has done this in accordance with the legislation under which this determination is made. At the hearing the parties agreed that the children are both healthy and have no special needs or extraordinary costs, other than [Child 1]’s learning difficulties described by the parents. Those needs were fully considered by the Tribunal as part of its consideration as to whether a reason to depart from the administrative assessment had been established.

The children’s incomes and earning capacities

[Child 2] and [Child 1] are full-time students and neither has any independent income or earning capacity.

The income, property and financial resources and earning capacity of Mr Vardy and his necessary commitments

Mr Vardy’s financial circumstances were closely examined by the Tribunal. The Tribunal examined the Statement of Financial Circumstances (SOFC) (folios A1 to A9), which shows that his income exceeds his expenditure by some $1,700.00 per week, assuming child support of some $53,000.00 per annum. This latter figure is derived from the decision of the objections officer, which is the subject of this review. As the child support assessment under the statutory formula is some $40,000.00 less the Tribunal concludes that, consistent with the circumstances being reviewed by the Tribunal, Mr Vardy has a surplus of income over expenditure of more than $2,500.00 per week.
This does not include any benefits that Mr Vardy may derive from the fact that he operates as a sole trader with the business meeting some expenses from which he derives a benefit. In this regard the Tribunal notes the decision of the Family Court in Carey v Carey (1994) FLC 92-489 where it was observed:
The legislation however realises that, whilst the simplest method of calculating child support is to use existing taxation records, the use of taxable income as the sole basis for child support could lead to some inequities and injustices. For a start, the financial position of many members of the community is not accurately reflected in their taxable income; either they manage to evade or avoid their taxation liabilities or they can so structure their affairs so that they are capital rich and income poor.
This and other cases establish that a self-employed person is able to derive additional personal benefits through their business structures, and that they also have greater control over the structure of their finances than does a salaried employee.
A profit and loss (PL) statement (folio 145) and a balance sheet (folio 146) for the financial year ending 30 June 2015 for the business are provided in the hearing papers. Expenses shown on the PL include computer costs of $10,778.31, conference expenses of $59,605.11, motor vehicle expenses of $21,965.48, telephone costs of $4,241.19 and travel expenses of $7,042.53.
As it is not apparent that Mr Vardy’s employment as [an occupation] requires the use of a motor vehicle the Tribunal has decided to consider that the motor vehicle costs represent a resource available to Mr Vardy. This amounts to $21,965.48. The Tribunal also considers that other costs extracted above provide some personal benefit to Mr Vardy and, after careful consideration, has decided that it would be fair and appropriate to consider that they represent a resource available to Mr Vardy equal to 10% of the total expenditure. This amounts to $8,166.71. These amounts are small in comparison with Mr Vardy’s personal income but they demonstrate that Mr Vardy has resources available to him that are somewhat beyond those disclosed by his personal income.
The PL also shows salaries of $82,444.40. At the hearing Mr Vardy said that the business has two employees (aside from himself) and acknowledged that one of these is his current partner who is engaged as [an occupation]. He said that she has relevant research qualifications and that her employment dates from subsequent to them establishing a relationship. He said that on one occasion she had attended a [conference] with him, the expenses presumably being met by the business. After consideration the Tribunal finds that there is insufficient evidence before it to make a finding in relation to this particular expense.
The Tribunal found Mr Vardy to be a credible witness and it concludes that the documents provided to the Tribunal together with Mr Vardy’s oral evidence presents an accurate picture of the financial resources available to him.

The income, property and financial resources and earning capacity of Mrs Wilmot and her necessary commitments

Mrs Wilmot’s financial circumstances were closely examined by the Tribunal. The Tribunal examined the SOFC (folios B1 to B9) and the other documentation provided by Mrs Wilmot. Mrs Wilmot is employed as [an occupation]. Her SOFC shows that her expenditure exceeds her income by some $2,200.00 per week. This assumes that she has no employment income and that the child support received by her is limited to that determined under the statutory formula.
However this is an artificial situation because it is a snapshot of a particular point when she was unemployed and not receiving a salary. She was however in receipt of a redundancy payment at that time. At the hearing Mrs Wilmot was frank about her circumstances. A realistic assessment of Mrs Wilmot’s financial circumstances, taking into account her income as disclosed by her payslips, by the SOFC prepared on 28 October 2016 (folio 50) and by her oral evidence shows that her surplus of income over expenditure is about $1,000.00 per week.
At the hearing Mrs Wilmot described her employment history. Over the course of the past few years she has changed roles within one company, been made redundant and found new employment. Throughout this period, as a result of bonuses and redundancy payments she has been able to maintain a reasonably steady income. At the hearing Mrs Wilmot acknowledged that she sometimes receives bonuses. The Tribunal is satisfied that such bonuses are fully disclosed in her income tax returns and that as a result they are adequately taken into account in the formula assessment. Mrs Wilmot said that the only other benefit that she receives through her employment is a mobile phone. In relation to Mr Vardy the Tribunal has determined that the private value of the phone provided by his business is 10% of the cost shown in the PL. That amounts to $424.11 and the Tribunal considers it appropriate to make the same determination in relation to the phone provided to Mrs Wilmot.
The Tribunal found Mrs Wilmot to be a credible witness and it concludes that the documents provided to the Tribunal together with Mrs Wilmot’s oral evidence presents an accurate picture of the financial resources available to her.

The parents’ duty to support others

Neither parent has a legal duty to support any other person, other than their children.

Hardship

Both parents have incomes well above the average. While Mr Vardy’s income exceeds Mrs Wilmot’s income by a factor of about three, Mrs Wilmot’s income is nonetheless very substantial. Mrs Wilmot has expressed concern about the impact of an unfavourable determination on her disposable income, however the Tribunal finds that no determination it is able to make on the facts before it would result in hardship for either parent. Mr Vardy has quoted from Mee v Ferguson (1986) FLC 91-176 in support of the proposition that a person is not required to contribute to a child’s education simply because they have the resources to do so (folio 308). In the passage quoted by Mr Vardy the Court is referring specifically to circumstances in which the parent has not agreed to the child being educated privately. The view of the Court that is relevant to the case before the Tribunal is stated at paragraph 78 of the judgment:
Where the non-custodian has agreed to the child attending such a school that person is liable to contribute to the fees involved so long as and to the extent that he or she has a reasonable financial capacity to continue to do so.
Because of his qualifications and professional standing Mr Vardy’s income is high and reliable, while Mrs Wilmot’s income, while also high, is considerably below Mr Vardy’s and is more subject to market forces and the somewhat variable demand for her particular skills and expertise. She is however an experienced and accomplished professional and the Tribunal anticipates that she should have no difficulty generating a substantial, reliable income in the future.
The current child support assessment uses provisional income figures for both parents. These establish that Mr Vardy’s income is 72.93% of the combined income of the parents (folio 383). The Tribunal finds that due to the already high income of both parents it is not necessary to change the figures for the purposes of calculating the formula assessment. However in order to equitably share the tuition costs the Tribunal determines that it would be appropriate to add to the parent’s income the amounts detailed above. The addition of $30,132.19 to Mr Vardy’s provisional income of $770,046.00 produces a figure of $800,178.19 while the addition of $424.11 to Mrs Wilmot’s provisional income of $301,000.00 produces a figure of $301,424.11. Deducting the self-support amount of $24,154.00 for each of the parents reduces the figure for Mr Vardy to $776,024.19 and for Mrs Wilmot to $277,270.11 and produces a combined total of $1,053,294.30. The amount attributed to Mr Vardy is 73.7% of the total and the Tribunal finds that it would be appropriate for Mr Vardy to pay that percentage of the tuition fees estimated above. The Tribunal emphasises that the fees detailed above take into account the progression of the children through the grades and use an uplift factor of 4.5% per annum from 2019. This would result in an increase to the formula assessment as follows:
·$37,740.00 in 2017
·$39,715.00 in 2018
·$45,771.00 in 2019
·$47,830.00 in 2020
·$50,736.00 in 2021
·$54,306.00 in 2022
At the hearing the parties advised that in 2017 Mr Vardy and Mrs Wilmot had equally split the fees for January and February 2017 and that since then Mrs Wilmot had been responsible for the payment of the fees. She has of course received child support from Mr Vardy in accordance with the decision before the Tribunal, which had effect from 1 January 2017. This means that for January and February 2017 Mr Vardy has paid for half of the fees directly to the school and then paid for the percentage of the fees determined in accordance with the decision of the objections officer. In order to avoid unfairness to Mr Vardy the Tribunal will reduce the amount identified above against 2017 by one-half of the monthly amount of the fees for two months. As the fees for 2017 total $51,207.00 the reduction is $4,267.25 and the increase to the formula assessment is $33,472.75.
The departure from the formula assessment contemplated by the Tribunal will result in Mr Vardy’s child support liability increasing from the assessment that was in place when Mrs Wilmot applied for the departure from the assessment. At the time that Mrs Wilmot applied for the departure Mr Vardy was assessed to pay $13,130.00 per annum. As a result of the decision of the objections officer the assessment increased, over a five year period by amounts varying from $41,001.00 per annum to $48,362.00 per annum. Leaving aside the adjustment for tuition fees paid in January and February 2017, the departure envisaged by the Tribunal would increase the assessment by amounts varying from $37,740.00 per annum to $54,306.00 per annum over the same period. The total increase payable by Mr Vardy would be $267,069.00 under the decision of the objections officer and $276,098.00 under the determination contemplated by the Tribunal.
The Tribunal is satisfied that Mr Vardy has access to sufficient financial resources to meet the child support liability contemplated by the Tribunal. Taking into account Mr Vardy’s primary obligation to support his children the Tribunal finds that the decision contemplated by it will not cause hardship to Mr Vardy.
The decision contemplated by the Tribunal will result in Mrs Wilmot being responsible for tuition fees ranging from $13,468.00 per annum to $19,379.00 per annum. While acknowledging that these are substantial expenses, taking into account Mrs Wilmot’s primary obligation to support her children the Tribunal finds that the decision contemplated by it will not cause hardship to Mrs Wilmot. The Tribunal also notes that because of the decision to credit Mr Vardy for the tuition payments relating to January and February 2017, as a matter of practical reality his payments of child support will be reduced briefly. The Tribunal concludes that this will not cause Mrs Wilmot any financial hardship.

The Tribunal has decided to not make any special provision for [Child 1]’s tutoring, beyond those envisaged in the formula assessment, however the Tribunal notes that its determination is, in quantum, quite similar to the determination made by the objections officer. The child support payable by Mr Vardy under the decision contemplated by the Tribunal should reasonably ensure that the parents are both able to meet the reasonable and necessary expenses of [Child 2] and [Child 1].

Terms and period of departure

The Tribunal has decided to depart from the formula assessment by increasing Mr Vardy’s assessment to take into account the tuition fees charged and estimated to be charged by [School 2].
The child support assessment started on 3 August 2016. Mrs Wilmot applied for the change of assessment on 26 October 2016. Mrs Wilmot’s application was prompt and Mr Vardy has had access to financial resources at the current level at least since the start of the assessment. Having regard to the matters in subsection 117(4) of the Act, the Tribunal finds that it would be just and equitable for the adjusted taxable income calculated for Mr Vardy to apply from the start of the year immediately following her application, which is to say from 1 January 2017. This is the same start date used by the original decision maker and the objections officer.
At the hearing both Mr Vardy and Mrs Wilmot said that they would like the Tribunal’s determination to be of reasonable length so that they do not need to go through the change of assessment process in the immediate future. At the same time they acknowledged that as the assessment is based on estimates, the further it extends the less accurate it is likely to be. The parents also noted that they cannot be certain about [Child 1]’s future education needs and thought that it would be appropriate to continue the departure determination to the end of his Year 10. This would extend the departure determination to the end of 2020. Although the Tribunal has made estimates and calculated the outcome to the end of 2022, it concludes that it would be most appropriate to extend the departure determination only to the end of 2020. Thus the period of departure from the formula assessment will be from 1 January 2017 to 31 December 2020.

Issue three – Is it otherwise proper to depart from the administrative assessment?

The final step for the Tribunal to undertake is to determine whether it is ‘otherwise proper’ 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.
The child support law recognises that each parent has a primary duty to maintain their children. In this case neither party receives social security benefits and this will not change as a result of the Tribunal’s decision. The Tribunal is satisfied that it is otherwise proper to depart from the administrative assessment in this matter.

DECISION

The decision under review is varied so that the amount of child support payable by Mr Vardy is increased by the following amounts:

·$33,472.75 in 2017
·$39,715.00 in 2018
·$45,771.00 in 2019
·$47,830.00 in 2020

[2018] AATA 82

2 January 2018

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Appeal

Jurisdiction

Statutory Construction

Costs