Walton and Cannon (Child support)

[2019] AATA 2536

Walton and Cannon (Child support) [2019] AATA 2536 (16 July 2019)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2019/PC016294

APPLICANT:  Mr Walton

OTHER PARTIES:  Child Support Registrar

Ms Cannon

TRIBUNAL:Senior Member R Ellis

DECISION DATE:  16 July 2019

DECISION:

The decision under review is affirmed.

CATCHWORDS

CHILD SUPPORT – non-agency payments - prescribed payments for school fees – whether the amount ought not to be credited in the circumstances of the case - 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

BACKGROUND

1. Mr Walton and Ms Cannon are the parents of [Child 1] (born January 2002) and [Child 2] (born December 2003).

2. There has been a child support assessment in place since 9 August 2007 with collection by the Department of Human Services, Child Support (the Child Support Agency) from 27 January 2016.  Mr Walton is the liable parent under the assessment.

3. From 27 October 2015 the child support assessment reflected that Mr Walton provides 28 per cent care and Ms Cannon provides 72 per cent care of [Child 1] and [Child 2].  From 6 February 2016 the child support assessment reflected that Mr Walton provides 3 per cent care and Ms Cannon provides 97 per cent care of [Child 1] and [Child 2].

4. On 12 July 2016 Mr Walton applied to the Child Support Agency for credit of the following 27 non-agency payments associated with private school fees and school uniforms (total $6,030.00):

   ·     27 November 2015 - $270.00 (school fees)

   ·     4 December 2015 - $270.00 (school fees)

   ·     11 December 2015 - $270.00 (school fees)

   ·     21 January 2016 - $515.00 (school uniforms)

   ·     4 March 2016 - $180.00 (school fees)

   ·     11 March 2016 - $180.00 (school fees)

   ·     18 March 2016 - $240.00 (school fees)

   ·     18 March 2016 - $180.00 (school fees)

   ·     11 April 2016 - $185.00 (school fees)

   ·     13 April 2016 - $240.00 (school fees)

   ·     15 April 2016 - $180.00 (school fees)

   ·     15 April 2016 - $240.00 (school fees)

   ·     22 April 2016 - $240.00 (school fees)

   ·     22 April 2016 - $180.00 (school fees)

   ·     6 May 2016 - $240.00 (school fees)

   ·     6 May 2016 - $180.00 (school fees)

   ·     13 May 2016 - $180.00 (school fees)

   ·     13 May 2016 - $240.00 (school fees)

   ·     20 May 2016 - $240.00 (school fees)

   ·     20 May 2016 - $180.00 (school fees)

   ·     10 June 2016 - $170.00 (school fees)

   ·     10 June 2016 - $240.00 (school fees)

   ·     16 June 2016 - $170.00 (school fees)

   ·     16 June 2016 - $240.00 (school fees)

   ·     23 June 2016 - $240.00 (school fees)

   ·     23 June 2016 - $170.00 (school fees)

   ·     7 July 2016 - $170.00 (school fees)

5. It is noted that in addition to these payments Mr Walton also reported a duplicate of the school fee payments made for the period 5 February 2016 to 11 March 2016 but these 10 payments were previously considered in a separate original decision made by the Child Support Agency on 5 July 2016.

6. On 18 July 2016 the Child Support Agency made the decision to refuse to credit four payments totalling $1,325.00 and to credit 23 payments totalling $4,705.00 claimed by Mr Walton as prescribed non-agency payments.

7. On 21 February 2017 Ms Cannon objected to this decision and on 5 February 2019 an extension of time was granted by the Child Support Agency.

8. On 29 March 2019 the Child Support Agency allowed the objection and made the decision to refuse to credit the payments totalling $4,705.00 as ordinary or prescribed non-agency payments (the objection decision).

9. On 9 April 2019 Mr Walton applied to the Administrative Appeals Tribunal (the Tribunal) for a review of the objection decision.

10. The Tribunal conducted a hearing into the application on 27 June 2019.  Both Mr Walton and Ms Cannon appeared before the Tribunal.  Mr Walton gave sworn evidence and Ms Cannon gave evidence on affirmation.  The Child Support Agency provided the Tribunal and the parties with a bundle of documents relevant to the review (598 pages).  Mr Walton advised the Tribunal he had not received these documents but was familiar with the evidence and wished to proceed with the hearing.  Additional documents were received from Ms Cannon prior to the hearing (B1-B90) and copies were provided 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 regulation 5D of the Child Support (Registration and Collection) Regulations 1988 (as in force at that time).

3. Section 71C of the Act provides a mechanism whereby payments made by a liable parent for items specified in regulation 5D may be taken into account in partial satisfaction of the liable parent’s child support liability. A number of specific criteria must be satisfied for this provision to apply. Even where all the criteria 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.

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

CONSIDERATION

1. Mr Walton told the Tribunal that [Child 1] attended [School 1] and [Child 2] attended [School 2].  Mr Walton said after the parents separated he started paying the full school fees and other school related items for the children.  Mr Walton said the school fee payments under consideration were made on a weekly basis by direct debit from his bank account.  He said the amounts of $270.00 and $240.00 were for [School 1] fees and the smaller amounts of $180.00 and $170.00 were for [School 2].

2. Mr Walton explained that following separation there was little communication between the parents and no agreement about the ongoing payment of any education related costs.  Mr Walton said at the time he made these payments the same scenario existed between the parents as earlier in the year.  He remained unaware of what costs Ms Cannon was supposed to meet and what costs he was supposed to meet.  Mr Walton said it was his understanding, however, that the parents were equally responsible for the school fees and while he was paying the full fees he should receive a credit for 50 per cent.

3. Mr Walton said he wanted to meet his share of the costs for educating the children but did not think it was fair he should pay without being involved in their schooling or their day-to-day activities.  Mr Walton said the school fees should not just be a liability.

4. Ms Cannon told the Tribunal that both parents agreed the children should go to private schools and both signed the enrolment forms.  She said after the parents separated it was her understanding, based on emails received from Mr Walton, that he would pay 100 per cent of the school fees for [Child 1] and [Child 2].  Ms Cannon said she was paying for other school related costs, as well as extracurricular costs, because Mr Walton offered to pay the school fees.  She said there was no agreement the school fees were in lieu of child support.

5. Ms Cannon said she did not dispute that Mr Walton had made the 27 payments in question but said she believed it was his responsibility.  Ms Cannon said she had provided written evidence to the Child Support Agency of the commitment Mr Walton made to pay the school fees for both children.  Ms Cannon added she was doing nothing to stop Mr Walton from being involved with the children or their schooling.

6. The Tribunal notes in evidence a ‘Change of Family Circumstances’ form from [School 2] dated 19 January 2016.  The form verifies the changed family circumstances of [Child 2] and indicates Mr Walton is responsible for payment of 100 per cent of the school fees.  The form is signed by both Mr Walton and Ms Cannon.  The Tribunal also notes an email from Mr Walton to his [lawyer] dated 7 April 2016 stating, “Further to the above I will continue to pay the kids school fees as well as current child care arrangements”.

7. Ms Cannon said it was on this basis she believed Mr Walton should not be able to claim the fees as non-agency payments.  Mr Walton did not dispute that he had agreed to pay 100 per cent of the fees for [Child 2] but said the email dated 7 April 2016 was essentially a draft as part of financial settlement which never took place.  He said there were a number of other subsequent emails which were all part of the negotiation around financial settlement.

8. Ms Cannon said that even though Mr Walton had agreed to pay the fees for both children, in June 2016 the parents received an email from [School 1] advising they were each liable for [Child 1]’s fees.  She then commenced paying her share of these fees from mid-2016 onwards.  Ms Cannon said there were fee statements from [School 1] in evidence to the Child Support Agency which set out the school fees she had paid for [Child 1] in 2016.  Ms Cannon said she could see from these fee statements that Mr Walton was paying what she believed was his half of the fees.

9. The Tribunal notes in evidence a letter from the Senior Finance Officer at [School 1] to Mr Walton dated 16 June 2016 in relation to the school fees for [Child 1].  This letter states:

   Thank you for your email, unfortunately both Ms Cannon and yourself have signed the admission for being jointly responsible for payment of [Child 1]’s school fee account.

   The admission form is a legal binding contract and unless and Admission Form Variation is completed to change the contract, agreed and signed by both parties, the school fees are payable under this contract.

10. The Tribunal also notes in evidence a reprinted fee statement from [School 1] dated 20 February 2019 which sets out fees paid for the 2016 school year.  This fee statement shows an opening credit balance of $2,239.00 and an amount owing as at 17 November 2016 of $1,360.00.  The statement shows seven payments of $200.00 and one payment of $1,941.00 which Ms Cannon said were her contribution to the fees for [Child 1] in 2016.

11. Mr Walton told the Tribunal he did not dispute that Ms Cannon had made these payments in 2016 but pointed out they did not equal exactly half the school fees for that year.

12. 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.  It must be the intention of both parties that the payments, or part of the payments, be credited against the payer’s child support liability.  A non-agency payment can only be credited if the amount has actually been paid.

13. It is not in contention and the Tribunal finds that the 27 payments totalling $6,030.00 were made by Mr Walton towards the school fees and uniforms for [Child 1] and [Child 2].  Of the payments for school fees, 13 were made to [School 1] for [Child 1] (total $3,210.00) and 13 were made to [School 2] for [Child 2] (total $2,305.00).  There was one payment made for school uniforms ($515.00).

14. The payments made on 27 November 2015 ($270.00), 4 December 2015 ($270.00) and 11 December 2015 ($270.00) for school fees as well as the payment made on 21 January 2016 for school uniforms ($515.00) were at a time when there was not an enforceable maintenance liability in place.  Collection by the Child Support Agency commenced on 27 January 2016.  These payments cannot, therefore, be considered as non-agency payments.

15. The Tribunal finds that at the time the remaining 23 payments totalling $4,705.00 were made, Mr Walton was the payer of an enforceable maintenance liability.

16. Mr Walton has told the Tribunal there were no agreement between the parents at the time the payments were made that the fees under consideration should be credited against the child support liability.  He said the parents were not communicating.  Ms Cannon has also stated the school fees were not intended to be in lieu of child support and it was her view Mr Walton had agreed to pay 100 per cent of the school fees for both children. 

17. The Tribunal finds that the 23 payments totalling $4,705.00 cannot, therefore, be considered as non-agency payments under section 71A.

18. 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 provided that it does not exceed 30 per cent of the amount payable and the balance of child support is paid as it becomes due and payable. Section 71C also requires that at the time payment was made, or at the time the payment is to be credited, the payer must not have at least regular care (14 per cent) of any of the children to whom the assessment applies.

19. The Tribunal is satisfied that at the time the remaining 23 payments were made, Mr Walton did not have at least regular care of [Child 1] and [Child 2].

20. The payment to be credited must also be a payment of the kind specified in regulation 5D of the Child Support (Registration and Collection) Regulations 1988. Regulation 5D states that for paragraph 71C(1)(b) of the Act, specified payments are payments of the following kinds:

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

    b)fees charged by a school or pre-school for that child;

    ba) amounts payable for uniforms and books prescribed by a school or pre-school for that child;

    c)fees for essential medical and dental services for that child;

    d)the payee's share of amounts payable for rent or a security bond for the payee's home;

    e)the payee's share of amounts payable for utilities, rates or body corporate charges for the payee's home;

    f)the payee's share of repayments on a loan that financed the payee's home;

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

21. In this case the Tribunal finds that the private school fees paid by Mr Walton are prescribed non-agency payments of the kind specified in regulation 5D.

22. Section 71D of the Act states that the Child Support Agency “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”.

23. 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.

24. 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.

25. Mr Walton agreed to meet 100 per cent of the school fees for [Child 2] as per the [School 2] ‘Change of Family Circumstances’ form signed by him and Ms Cannon.  Both parents are separately responsible for the school fees for [Child 1] at [School 1].

26. After taking into account the circumstances of this case, the Tribunal is satisfied that Mr Walton’s request to credit the remaining 23 payments totalling $4,705.00 as prescribed non-agency payments should be refused under section 71D of the Act.

DECISION

The decision under review is affirmed.