Verey and Artell (Child support)

[2021] AATA 1763

Verey and Artell (Child support) [2021] AATA 1763 (22 April 2021)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2021/SC020799

APPLICANT:  Mr Verey

OTHER PARTIES:  Child Support Registrar

Ms Artell

TRIBUNAL:Member J Leonard

DECISION DATE:  22 April 2021

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – opt-in arrears – whether payments to third parties should be credited towards unpaid amounts – payments should not be credited – 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 Verey and Ms Artell are the parents of [Child 1] (born 2013) and [Child 2] (born 2016).

2. There has been a child support assessment in place since 8 May 2020 and Mr Verey is the liable parent.  On 3 August 2020 Ms Artell applied to Services Australia (Child Support) to collect the child support liability and collect outstanding payments for the period 8 May 2020 to 2 August 2020.

3. On 25 August 2020 Child Support decided to credit an amount of $3,2015 representing 50% of school fees paid by Mr Verey.

4. On 3 September 2020 Child Support decided to credit 100% of utility payments made by Mr Verey amounting to $973.46.

5. On 16 September 2020 Ms Artell objected to the decisions made on 25 August 2020 and 3 September 2020. On 19 January 2021 Child Support allowed the objection

6. On 15 February 2021 Mr Verey applied to the Administrative Appeals Tribunal (the Tribunal) for a review of the objection decision.

7. The matter was considered on 22 April 2021.  Both Mr Verey and Miss Artell gave evidence on affirmation by conference telephone.  Child Support provided the Tribunal and the parties with a bundle of documents relevant to the review. Prior to the hearing Ms Artell provided documents that were numbered B1–B4.  Mr Verey’s response is numbered A1–A16 and was discussed at the hearing.

ISSUES

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

2. The issue which must be decided in this case is the amount of child support arrears, if any, Mr Verey is liable to pay.

CONSIDERATION

1. A payee can initially elect not to have a liability which arises from a child support assessment enforceable by Child Support under subsection 24A(2) of the Act.  In other words, the child support is collected privately.

2. Section 25 of the Act states that if a payee who made an election under subsection 24A(2) applies at a later time to have the liability enforced by Child Support then the application must be accepted. The Tribunal finds that Miss Artell applied for the liability to become enforceable on 3 August 2020.

3. If an application is made under section 25 of the Act, the payee may also apply for any unpaid amounts to be treated as arrears amounts and collected by Child Support (subsection 28A(3)).  If the specified period does not exceed three months, Child Support must grant the payee’s application (subsection 28A(4)) provided the child support liability remains unpaid.

4. The Tribunal finds that Miss Artell applied to Child Support for arrears from 8 May 2020 to be collected.  Her application for unpaid amounts must, therefore, be granted.  The specified arrears period extends from 8 May 2020 to 2 August 2020.

5. Mr Verey was residing under the same roof as Ms Artell until 12 June 2020. On 20 August 2020 Child Support decided on objection that Ms Artell and Mr Verey had equal shared care of the children from 17 September 2018 to 11 June 2020.The assessment of child support for the period 8 May 2020 to 11 June 2020 was $49.88912 per day,  increasing to $99.77823 per day from 12 June 2020 when Ms Artell was assessed as having 100% care of both children.

6. The Tribunal calculated Mr Verey’s child support liability was $6,759.58 in the collection period.[1]

   [1] In the five-week period 8.5.20 to 11.6.20 the assessed liability was $49.88912 per day. In the seven-week three-day period from 12.6.20 to 2.8.20 the assessed liability was $99.77823 per day.

What is the quantum of the unpaid amount?

1. In calculating the unpaid amount, subsection 28A(7) of the Act specifies that the unpaid amount does not include a reference to any amount that would have been credited against the liability under section 71C of the Act if the liability had been an enforceable maintenance liability at all relevant times. A note at the end of subsection 71C(1) states that the subsection is subject to section 71D which provides discretion to refuse to credit the amount.

2. If relevant, the Tribunal will also exclude payments of the type covered by sections 71 and 71A of the Act. These sections require an intention by both Ms Artell and Mr Verey that the payments be in satisfaction of the child support liability.

3. During the period 8 May 2020 to 2 August 2020 Mr Verey paid $900 into Ms Artell’s bank account on 29 June 2020, 10 July 2020 and 24 July 2020; $2,700 in total. These payments were viewed by Ms Artell as partial satisfaction of Mr Verey’s child support liability and the Tribunal finds they should reduce the quantum of the unpaid amount having regard to sections 71 and 71D of the Act.

4. Mr Verey made a payment of $6,410 representing after school care for Term 2, 2020 and school fees for Term 3, 2020 for [Child 1]. In addition, he paid bills for gas and water associated with the home in which Ms Artell was living with the children. He paid  [a] gas bill on 16 June 2020 amounting to $495.53 and paid $452.92 for a Sydney Water bill on 25 June 2020. He submitted these payments should be treated as child support.

5. At hearing, Ms Artell stated she did not intend that any payments made by Mr Verey to third parties would be in satisfaction of his child support liability. Mr Verey confirmed that no such agreement was reached. The Tribunal finds that no payments made to a third party that would otherwise be covered by section 71A of the Act can be taken into account in reducing the quantum of the unpaid amount. 

6. The Tribunal then turned to section 71C of the Act which states payments made by a liable parent for certain specified items[2] may be taken into account in partial satisfaction of the liable parent’s child support liability. They are commonly referred to as prescribed non-agency payments. Joint intention or agreement is not required. A number of specific criteria have to be satisfied for this provision to apply. Section 71C relevantly provides:

   [2] Child Support (Registration and Collection) Regulations 2018 (the Regulations).

   71C Other payments of up to 30% of child support liability

   (1) If:

   (a) 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 of the liability, or to another person; and

   (b) the payment is a payment of the kind specified in the regulations; and

   (ba) 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; and

   (c) the sum of those payments exceeds the sum of all such payments previously credited under this section against the amount payable under the liability for all past periods; and

   (d) the payer does not, at the time at which the Registrar applies this section, have at least regular care of any of the children to whom the relevant administrative assessment relates;

   then the Registrar must, despite section 30, credit the excess amount mentioned in paragraph (c) against the amount payable under the payer's liability for the period, up to a maximum of 30% of the amount payable.

   Note: Subsection (1) is subject to section 71D.

   (2) …

   (3) Subject to subsection (4), the Registrar must not credit an amount under this section in relation to a period for which the payer has not paid to the Commonwealth an amount equal to the difference between:

   (a) the amount payable by the payer to the Commonwealth under the enforceable maintenance liability in relation to that period; and

   (b) the amount that is to be credited under subsection (1), or that would be so credited but for this subsection, in relation to that period.

7. Payments made prior to 12 June 2020 would not meet the legislative provisions;  paragraph 71C(1)(ba) of the Act.

8. The payee’s share of amounts payable for utilities and fees charged for a school are specified payments in the Regulations and so paragraph 71C(1)(b) of the Act is satisfied.

9. Mr Verey submitted that he paid an amount of $20,000 to [Child 1]’s school account on 23 April 2020 for payment of fees in respect on 2020. On 8 July 2020 an amount of $6,410 was drawn from the school’s trust account for tuition fees and after school care. He submitted 50% of this should be credited as it would be covered by section 71C of the Act.

10. Ms Artell submitted that the school fees were prepaid on 23 April 2020 at which time she had not lodged an application for child support. In effect she submitted that paragraph 71C(1)(a) of the Act was not satisfied as there was no enforceable maintenance liability in place in at the time the fees were prepaid. She submitted that if the school did not accept prepayment of fees it wouldn’t have accepted the deposit.

11. Mr Verey stated that he did not prepay the school fees on 23 April 2020; it was a “mere deposit of funds” into the school account. He submitted it is only possible to prepay the school fees with the agreement of the school. The payment of school fees occurred on 8 July 2020 when the school debited the account. In August 2020 Mr Verey approached the school and asked for the credit in the account to be returned to his bank account. He submitted that if he had prepaid the school fess he would not have been able to obtain the refund of $8,264.50 which occurred on 28 August 2020.

12. The Tribunal is of the view that the payment of $20,000 to the school bank account is in satisfaction of a liability that arises from [Child 1] attending school in 2020. It was for all intents and purposes, a prepayment of school fees for 2020. The fact that Mr Verey was able to obtain a refund in August 2020 of credits not yet applied against the liability is of no consequence. When the payment was made by Mr Verey on 23 April 2020 it was not during an enforceable maintenance period and so paragraph 71C(1)(a) is not satisfied in respect of the school fees.

13. As noted above, Mr Verey was assessed as having equal shared care of the children while he was living in the family home until 12 June 2020.

14. The [gas] bill relates to a period 1 March 2020 to 29 May 2020. The Sydney Water bill relates to usage charges incurred in the period 10 March 2020 to 4 June 2020 and fixed charges for the period 1 April 2020 to 30 June 2020. At the time the payments were made, Mr Verey was assessed as having less than regular care of the children.

15. Ms Artell submitted that the payments should not reduce Mr Verey’s unpaid amount as he was living in the house until 12 June 2020. He was therefore responsible for contributing towards the gas and water usage charges for which he is now seeking relief. The fixed charges cover a short period of just over two weeks when Mr Verey was no longer living at the house, but Mr Verey has the financial capacity to bear the cost. Additionally, he did not pay  70% of the assessed liability in the specified period and so a credit should not apply.

16. Mr Verey stated he made up the outstanding child support payments quickly and he thinks it is only fair that he should be credited with some benefit from paying 100% of the household bills.

17. When Mr Verey notified Child Support that he sought to have the utility bills credited, no such payments had been previously credited and so the payments exceed the sum of all previously credited non-agency payments. Paragraph 71C(1)(c) of the Act is satisfied.

18. An amount must not be credited under section 71C unless the payer has paid the remainder of the amount payable under the liability for the period (subsection 71C(3) of the Act). Section 71C only permits crediting 30% of the liability if the payer has paid the balance of 70% of their child support liability. Subsection 71C(4) provides discretion to credit where the amount referred to in subsection 71C(3) is not paid by the due date but is paid subsequently.

19. Any decision to credit a payment under section 71C is subject to section 71D of the Act which provides:.

    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.

20. Ms Artell stated Mr Verey is in a financially superior position to her. The Tribunal notes that the child support assessment was based on Mr Verey’s 2018/19 adjusted taxable income of $538,667 and Ms Artell’s provisional income of $0. Orders were made on 23 July 2020 which provided in part that outgoings including water rates and utilities were to be paid from a jointly held [bank] account and that such payments shall not be credited against any assessment of periodic child support.

21. Mr Verey submitted that he applied for credit of the payments after extensive consultation with  Child Support. He did not try to avoid his child support obligations. He believes that it is fair that the payments should reduce his child support arrears.

22. The Tribunal is of the view that to allow the payments made by Mr Verey prior to 23 July 2020 to be offset against the unpaid amount of child support would be inconsistent with the intention of the orders. Any amount pertaining to the payment of utility bills that would otherwise qualify as a prescribed non-agency payment when calculating the unpaid amount should not be credited due to the circumstances of the case.

DECISION

The decision under review is affirmed.