Walls and Thals (Child support)

[2019] AATA 4344

Walls and Thals (Child support) [2019] AATA 4344 (2 September 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/AC016805

APPLICANT:  Mr Walls

OTHER PARTIES:  Child Support Registrar

Ms Thals

TRIBUNAL:Member M Kennedy

DECISION DATE:  2 September 2019

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT - opt-in arrears - whether there were unpaid amounts - application for collection of unpaid amounts should be accepted - decision under review affirmed

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

1. Mr Walls and Ms Thals are the parents of [Child 1] and [Child 2], in respect of whom a child support assessment is in place.

2. Prior to 12 March 2019, Mr Walls’s child support liability under the assessment was collected through private arrangements.  On 12 March 2019, Ms Thals applied to the Registrar of Child Support to collect child support on her behalf.

3. The Registrar subsequently granted the application.  The Registrar also granted an application to collect arrears of child support for the previous three months.

4. The Registrar calculated that an amount of $1766.82 was outstanding in respect of the period 12 December 2018 to 11 March 2019.

5. Mr Walls objected to that decision.  Mr Walls argued that there was an overpayment of child support during the period the liability was subject to private collection arrangements.  Mr Walls said there had been an agreement arising out of that overpayment that he would cease making child support payments until the overpayment had been recovered. 

6. Ms Thals confirmed that an agreement had been reached arising out of the overpayment, but her position was that the overpayment had been addressed before 12 December 2018, and the amount in respect of 12 December 2018 to 11 March 2019 remained outstanding.

7. On objection, the objections officer compared the evidence of payments made by Mr Walls against adjustments to the assessment arising out of reconciliation of estimates made by Ms Thals and receipt of taxation information.  The objections officer identified the total amount of child support payable by Mr Walls between1 September 2016 and December 2017 (in light of subsequent adjustments to the assessment), against the amount Mr Walls had actually paid.  The objections officer identified a smaller overpayment after adjustments to the rate were taken into account, but identified that this overpayment would have been fully addressed by 12 December 2018 as a result of Mr Walls’s non-payment of any child support. 

8. On 14 June 2019 the objections officer affirmed the Registrar’s decision that an amount of $1766.82 was outstanding in respect of the period 12 December 2018 to 11 March 2019.

9. Mr Walls applied to the Tribunal for review on 24 June 2019.

CONSIDERATION

1. As mentioned above, Ms Thals requested the Registrar to commence collecting child support on her behalf on 12 March 2019. At law, this is referred to as the registration of a registerable maintenance liability. 

2. The Child Support (Registration and Collection) Act 1988 (the Act) makes provision for a registerable maintenance liability to be registered (and thus enforceable by the Registrar) at section 25 of the Act, relevantly, upon application by the payee.

3. The payee may also request that amounts due under the registerable maintenance liability in relation to periods prior to registration also be collected.  Where the period requested is for the three months or less before the registration of the registerable maintenance liability, the Registrar must accept the application: subsection 28A(4) of the Act.

4. The issue for resolution in this review is whether the amounts due under the previous ‘registerable maintenance liability’) (ie the assessment before it was collected by the Registrar) are affected by an agreement reached between the parents some time earlier.

5. In the course of the hearing before me, it has emerged that the parents are in disagreement about the terms of that agreement.

6. More specifically, Mr Walls contends that the agreement was for an excess amount of child support he believed he had paid to be recovered by him through not making child support payments of $213.67 per month, regardless of future adjustments to the ongoing child support liability.

7. Ms Thals’ does not agree that the agreement reached with Mr Walls encompassed an agreement that ongoing entitlement to child support in excess of $213.67 per month was to be foregone.

The circumstances behind the agreement

1. It is useful to briefly summarise the circumstances that gave rise to Mr Walls’s perception that he had substantially overpaid child support in and around December 2017 and his subsequent approach to Ms Thals aimed at addressing that issue. 

2. It must be acknowledged that at that time Mr Walls had cogent reasons to be aggrieved by an apparent over-assessment of child support arising out of an inaccurate estimate made by Ms Thals.  Having made that observation, I also accept that Ms Thals had not intended to provide an inaccurate estimate of her income when she made the estimate, but was subsequently the beneficiary of a distribution from a family trust that she may not have been expecting.

3. Ms Thals had put in place an estimate with effect from 1 September 2017 to the effect that her annualised income was $7821 (see T13).  That estimate was to affect the assessment from 1 September 2017 to 30 June 2018.

4. Subsequently, Ms Thals’ 2016/2017 taxable income became available, and was $86,841.  Notification was given to Mr Walls that the new taxable income information would apply to the assessment from 1 July 2018, and would replace a provisional amount drawn from Ms Thals’ earlier taxation returns.

5. As pointed out in correspondence from the Registrar to Mr Walls of 20 August 2019 (A1 to A4) however, Ms Thals’ estimate applying from 1 September 2017 to 30 June 2018 would not be reconciled against her 2016/2017 taxable income, but rather against information about her income contemporaneous to the period the estimate applied.  In this regard, the correspondence also confirms that this process was undertaken on 22 November 2018, when the estimate was reconciled against actual income for the period the estimate applied of $42,569.39.

6. Mr Walls appears to have incorrectly recalculated his liability for child support by comparing the estimate against Ms Thals’ 2016/2017 taxable income.  I have sympathy for Mr Walls in this regard as the different approaches provided for in the child support law for identifying the income component of the formula in the ordinary case, as against the making and reconciling of income estimates are notoriously complex. 

7. In short however, Mr Walls was correct to identify that he had overpaid child support as a result of Ms Thals’ estimate, but the extent of the overpayment was less than he had calculated, and arose in a different period.  I note the correspondence of 20 August 2019 identifies the overpayment as a result of the estimate reconciliation as $1,610.39, whereas Mr Walls had earlier believed the overpayment to be $6,789.28.  In this regard, I note the content of Mr Walls’ text message to Ms Thals at T130.  With respect, I can identify that Mr Walls was in error in his assertion that he had overpaid child support since September 2016 (the estimate did not affect the assessment until September 2017).  I also note that Ms Thals’ taxable income in 2016/2017 is $86,841 is not relevant to the reconciliation of an estimate that applies from 1 September 2017.

8. Although I have made these observations, the correctness or otherwise of the Registrar’s decisions about the estimate and the reconciliation of the estimate over that period are not before me, and my observations are not to be construed as a review of those decisions.

The terms of the agreement

1. The evidence regarding the terms of the agreement primarily consists of exchanges in text messages on 22 December 2017, handwritten notes of telephone conversations made by Mr Walls, and the oral evidence of the parties at the hearing.

2. Mr Walls sent a detailed text message at 5.54pm on 22 December 2017 outlining the issue as he saw it and proposing 3 alternative approaches to resolving the matter.  The relevant proposal was expressed as:

   …

   1)     I continue non-payment until such time as the over payment amount is all caught up at the current rate of $213.67 per month and we are fair and square.  We will then start payments again based on a recalculated amount at that time and it will be paid through the Child Support Agency.

   …

3. The relevant response from Ms Thals was sent at 6.25pm and was expressed as:

   Hi Mr Walls, sorry yes if possible I would request that we cease any more payments until that amount is all caught up.  Thanks for the understanding.

1. The handwritten notes of telephone conversations at T88 provide one further relevant insight.  The notes record that Mr Walls had said “you do realise how long that will be?” [referring to the arrangement being discussed], Ms Thals had said “no”.  Mr Walls had answered “Its 31 months”.

2. On the critical issue of whether or not the ongoing rate of child support as assessed from time to time would continue to be relevant in identifying when things were ‘fair and square’ or ‘caught up’, the correspondence or records of conversation do not directly assist.

3. After carefully considering the evidence of both parties, I have decided that I do not accept that there was an agreement between the parents that the ongoing rate of child support as assessed from time to time was to cease to be relevant, or in other words, that Ms Thals had agreed to forego any entitlement to child support in excess of $213.67 per month until the amount identified had been recovered.

4. First, I consider that such an agreement does not flow form the circumstances giving rise to this dispute.  There is no cogent reason why a parent would agree to forego the assessed rate of child support above a certain amount even if they were willing to address an overpayment in the way Ms Thals intended to address it.

5. Second, an agreement as significant as foregoing assessed child support in excess of a nominated amount, if it had been reached, ought to be expressly mentioned. The case in support of such an agreement being reached can be seen only by a fairly strained inference of the discussion and exchange in messages between Mr Walls and Ms Thals.

6. Third, and as mentioned above, the entire conversation and arrangement is premised on an incorrect understanding about the size and nature of the overpayment in any event.

7. Therefore, I do not accept that there was an agreement that had the effect that Mr Walls was in credit in his child support liability as at 12 December 2018.  Specifically, I note the final table in the correspondence of 20 August 2019 at A4 which compares the assessed rate of child support from September 2016 until March 2019 against the private payments made (which are not in dispute).  The table concludes, correctly in my view, that as at 12 March 2019, Mr Walls had unpaid child support liability under the assessments of $6,307.42.

8. The credit Mr Walls otherwise had as a result of the overpayment of child support previously had been exhausted by 12 December 2018.

9. It follows therefore, that I accept that the amount of $1766.82 was outstanding in respect of the period 12 December 2018 to 11 March 2019 when the Registrar accepted Ms Thals’ application to collect child support.

10. As mentioned above, where a receiving parent requests arrears to be collected in relation to a period of no more than three months before the day the application to collect is made, The Registrar must grant the application.  The Tribunal is equally bound by subsection 28A(4) of the Act .

DECISION

The decision under review is affirmed.