Wolfe and Stepney (Child support)

[2023] AATA 4283

Wolfe and Stepney (Child support) [2023] AATA 4283 (17 November 2023)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2023/MC026327

APPLICANT:  Mr Wolfe

OTHER PARTIES:  Child Support Registrar

Ms Stepney

TRIBUNAL:Senior Member D Benk

DECISION DATE:  17 November 2023

DECISION:

The Tribunal sets aside the decision under review and, in substitution, decides:

1. From the date of the departure application 2 October 2022, to 30 June 2023, the adjusted taxable income of Mr Wolfe be set at $240,000;

2. Thereafter his adjusted taxable income be set with reference to the administrative formula.

CATCHWORDS

CHILD SUPPORT – departure determination – income, property and financial resources of the liable parent - benefits derived from business - income from family trust - decision under review set aside and substituted

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. The parties are the parents of [Child 1] born [in] July 2013 who remains in the sole care of the mother. Child support is managed via Services Australia (Child Support) (the Agency).

2. Between 1 September 2022 and 30 November 2023 the father was assessed to pay an annual rate of child support of $1,521. This assessment was derived by the operation of the child support administrative formula which applied a nil income for the father and $41,215 for the mother.

3. On 2 October 2022, the mother sought a departure from the administrative formula via the change of assessment process. The departure was successful resulting in the father being assessed to pay $13,045 annually from 2 October 2022 to 31 December 2024.

4. The father objected to that decision. Following review, an objections officer set an annual rate of child support of $22,000 for the period 2 October 2022 to 31 December 2026.

5. The father now seeks independent review of that decision maintaining the Agency have over-inflated his financial means. The mother objects to any change.

6. The matter underwent the usual case management pathway with a telephone directions hearing resulting in directions being issued and satisfactory compliance by the parties. The matter then proceeded to hearing proper on 17 November 2023.

PRELIMINARY COMMENTS

1. The parties are high conflict with many concurrent legal proceedings. The evidence of both parents was self-serving and a greater reliance was placed on the documentary evidence.

CONSIDERATION

1. The parties are familiar with the process of departure. However, for the sake of completeness and background the Tribunal will summarise the law.

2. Before making an order for departure from the assessment under section 116 of the Child Support (Assessment) Act 1989 (the Act), subsection 117(1) requires the Tribunal to be satisfied that:

   ·      a ground for departure exists under subsection 117(2);

   ·      that it would be just and equitable as regards the child, the carer parent and the liable parent to make such an order;

   ·      and that it would be otherwise proper to make the order.

3. Subsection 117(2) sets out the grounds upon which such an order might be made. Relevantly, paragraph 117(2)(c) states as follows:

   That, in the special circumstances of the case,[1] application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:

   (i)     because of the income, earning capacity, property and financial resources of the child; or

   (ia)   because of the income, property or financial resources of either parent; or

   (ib)   because of the earning capacity of either parent; or

   (ii) because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975 or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child.

   [1] The phrase “special circumstances of the case” is not defined in the Act. The Full Family Court, in the case of Gyselman and Gyselman (1992) FLC 92-279 stated that:

   It is intended to emphasise that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the court will not interfere with the administrative formula result in the ordinary run of cases.

4. When submitting the change of assessment application, the mother requested the Agency primarily consider subparagraph 117(2)(c)(ia).

5. To establish this ground to depart, the Tribunal would need to establish that the administrative formula which has applied a rate of nil child support does not reflect the father’s income, property or financial resources.

Does a ground for departure exist?

Evidence

1. The following represents a summary of the evidence only as it relates to the issue in dispute. It does not purport to be a transcript.

Father’s evidence

1. When summarised, the father submitted:

   ·      That child support should be assessed with reference to his actual taxable income, that is nil;

   ·      That deposits made into his accounts by family members should not be considered financial resources and should be labelled goodwill and he is now entirely dependent on the kindness of others;

   ·      He has no income and has not earned an income as [an occupation 1] since 9 March 2021 and prior to that time he had taxable incomes exceeding $500,000;

   ·      The claims in relation to assets and property ownership made by the mother are ‘wildly exaggerated’;

   ·      That the monies deposited into his bank account by his daughter have dwindled as she herself has run out of funds. There is no loan agreement between father and daughter to repay the monies;

   ·      That the decision of the Agency is not just, equitable and otherwise proper. He is now [age] years of age, in poor health and has no prospect of returning to his [length]-year career as [an occupation 1] as he is no longer registered. He cannot engage in other forms of employment on account of his multiple psychological and physical ailments;

   ·      Income is limited to Centrelink benefits at this time and likely to continue indefinitely and consist of jobseeker benefits and carer allowance for his adult son who lives with him.

Evidence of the mother

1. When summarised the mother submitted:

   ·      The father is an expert at hiding his resources and she does not accept that his adult daughter has the capacity to deposit in excess of $200,000 per annum into his bank account;

   ·      It is accepted that he can no longer [practice occupation 1] but all assets including the [business] of which he was a part owner were transferred to his wife [named] approximately five years ago;

   ·      His bankruptcy is just a ruse to avoid child support;

   ·      His lifestyle does not match that of someone who has ‘nil’ income;

   ·      He uses other names and accounts to avoid being seen as having any independent assets or income;

   ·      She has no evidence of the above but ‘just knows’ as all the actions undertaken by the father since she announced her pregnancy were designed to avoid any liability to her or the child;

   ·      [Child 1] has many needs which are not fully funded by NDIS and these relate to the diagnoses of autism, ADHD, pathological demand avoidance, learning difficulties, anxiety and various orthopaedic issues;

   ·      The matters relating to child support and family violence are consuming and cause a lot of anxiety;

   ·      Whilst in the past she did ask for $1,000 per week in child support in cash, this was a statement made in anger and all she requests is a proper level of support.

Documentary evidence

1. Accountants for the father have confirmed that he is no longer in receipt of any income. Documents confirm that jobseeker benefits commenced on 21 March 2023. Review of the bank statements for the 12-month period between December 2021 and December 2022 show total deposits of $244,000 the majority being from [his daughter]. Bank statements from January 2023 show minimal deposits.

2. Whilst the ATO may have accepted a nil income, this does not reflect the financial resources available to the father especially in 2022. The father testified that the deposits were not reward for work but rather goodwill and loans from his daughter to meet daily expenses, such as legal fees and loans. The Tribunal queried why these expenses were not met directly by [his daughter] rather than being deposited into his account. The father could not answer this question but testified that in any event ‘the money has dried up’.

3. Deposits averaged at about $20,000 per month (net). The gross value of such funds would exceed over $270,000 taking into account the taxation rates. The father did not provide any evidence of expenses that consumed these funds and the Tribunal notes there are no loan agreements. Overall, on the basis of the evidence before it, whilst the Tribunal accepts the father is not working and has not worked since March 2021, that despite this he has had access to net financial resources exceeding $240,000 which on his own evidence he cannot repay because he has no financial means. These financial resources are significant and cannot be disregarded particularly as the Act dictates that the father has a primary duty to support the child.

4. The Tribunal concludes that the father had greater income and financial resources than the nil income reflected in the administrative formula. His resources exceeded at least $240,000 and this has a significant impact on the formula significantly increasing the liability from the previously assessed $1,521 per annum. The increase in liability is more than 10 fold and so such circumstances are ‘special’.

5. The Tribunal finds the ground for departure set out in subparagraph 117(2)(c)(ia) of the Act has been made out in respect of the father’s income, property and financial resources and so there are grounds to depart from the administrative assessment. However, such departure is not automatic.

6. At this juncture, it is appropriate to raise that the mother raised various other grounds including special needs and education costs. These will be dealt with below.

Is it just and equitable to make a departure determination?

1. As the Tribunal is satisfied that there is a ground to depart from the administrative assessment of child support, the next step is to consider whether it is just and equitable as regards the child, the liable parent and the carer entitled to child support to make a particular determination in accordance with sub-subparagraph 98C(1)(b)(ii)(A) of the Act. This in turn requires the Tribunal to consider a range of factors, set out in subsection 117(4) of the Act.

The nature of the duty of a parent to maintain a child and the income, earning capacity, property and financial resources of the child

1. The child remains in the care of the mother. The father has had no contact since late 2021. The child has no independent income and is entirely reliant upon the parents for support. The Tribunal so finds.

The proper needs of the child

1. Subsection 117(6) of the Act states that in having regard to the proper needs of the child, the Tribunal must have regard to the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained; and any special needs of the child.

2. The child currently attends public school. The mother is concerned that the school is not able to meet his needs especially as he gets older and would prefer private education. The father disagrees. There is no expectation or joint agreement that the child be educated privately and the evidence revealed that there are no school fees apart from public school fees, which are already factored into the administrative formula.

3. The mother also submitted that the child has large expenses associated with the management of multiple health conditions although admits that an NDIS package currently funds some therapies but by no means does it cover all of the expenses. There are expenses associated with specialists and medication, although there was insufficient evidence to enable the Tribunal to assess the true out-of-pocket expenses, after Medicare rebates and NDIS assistance.

The income, property and financial resources of the father

1. This has largely been dealt with above within the confines of the information to hand. The mother maintains that she believes the father has ongoing access to funds but these are being funnelled through other bank accounts. The proceeds of sale of his multiple properties and [his business] remain unaccounted for. She asked the Tribunal to undertake a forensic audit of all of the father’s property holdings and expenses. This was understood and acknowledged, but the Tribunal has dealt with this above to the best of its ability and within its jurisdiction, perhaps not in the detail requested by the mother, but with caution and globally.

2. As indicated above, the bank statements show deposits exceeding $240,000 between December 2021 and December 2022. The deposits stopped after the mother commenced her change of assessment application. Whether this was a coincidence or deliberate is unknown however, what is clear is that the father did have access to financial resources conservatively valued at this amount. Some decision makers may elect to gross up such a figure, as these deposits represent the net amount, however the Tribunal has elected not to do so. It does find that the father had access to at least $240,000 in the 2022/2023 financial year. This is a conservative figure.

The income, property and financial resources of the mother

1. The Tribunal finds that the administrative assessment correctly reflects the mother’s income. She is a PAYG employee.

The earning capacity of the father

1. On the basis of the evidence before it, the Tribunal finds the father has changed his occupation, industry or working pattern as he no longer holds a [professional] registration that enables him to [work] as [an occupation 1]. However, the Tribunal finds that this was not a move deliberately motivated to avoid child support but rather the result of conduct that he self-reported. The medical evidence generally supports that the father has no real residual earning capacity and so the Tribunal finds it is not open to make an earning capacity determination in respect of his circumstances.

The earning capacity of the mother

1. On the basis of the evidence before it, the Tribunal finds the mother is working and has not reduced her weekly hours of work or otherwise changed her occupation, industry or working pattern in the main. The Tribunal finds that it is not open to make an earning capacity determination in respect of her circumstances. The mother did forecast that as the child’s needs become more profound it is likely she will have to alter her working pattern but at this time, she cannot afford to do so.

The necessary commitments of the father

1. The father testified that he is now in receipt of welfare and this is his primary source of funds. His vehicle has been sold. He has no assets and has held no assets since his bankruptcy many years ago. He maintained he is supported by his children and the goodwill of others. It was confirmed that the bulk of medical expenses are met by the public purse although there are some out-of-pocket expenses on a monthly basis. The Tribunal notes that he is the beneficiary of a self-managed superannuation fund which does have a balance sufficient to discharge any child support debt.

2. There is a large tax debt ($98,000) which remains unpaid to date. No payment arrangement has been negotiated. Whilst his daughter has funded his lifestyle and expenses, such support does not extend to child support or the ATO. The father discussed high legal fees due to unrelenting litigation both civil and criminal commenced by the mother. There was no evidence of such fees although the Tribunal does not doubt their existence given the extensive legal communications found in the papers (which are unrelated to this dispute but rather pertain to conduct, paternity and protection orders amongst other matters).

3. The father confirmed he has no other children that require financial support. He does live with his adult son, but he is financially independent.

The necessary commitments of the mother

1. The mother testified she has no significant expenses relating to her welfare that impact her ability to support the child.

2. The Tribunal accepts the record of income and expenditure in the Statement of Financial Circumstances which was entirely consistent with her evidence.

3. The Tribunal has had regard to/considered the commitments of each parent that are necessary to enable the parent to support himself or herself or any other child or another person they have a duty to maintain and could not find that any self-support commitments take priority over any child support liability and further each parent’s budget is sufficient to cater for such needs.

The direct and indirect costs incurred by the father in providing care for the child

1. As there is no contact, there are no costs.

Hardship

1. Paragraph 117(4)(g) of the Act requires the Tribunal to consider any hardship that would be caused to the children or the parties by the making of, or refusal to make, a departure determination.

2. There was a general claim for hardship made by the father, which overall the Tribunal finds could not be sustained given its analysis of the financial material before it. This is because, in the 2022/2023 financial year the father had access to consistent large deposits allegedly from his daughter to assist with living costs. These exceeded $240,000 and funded vehicles and various discretionary expenses. The father maintains that the money is gone and the support is now non-existent but it beggars belief that he did not quarantine a portion of such funds to meet child support liabilities, being fully aware of his need to support his child and his knowledge of Agency intervention.

3. No specific financial hardship was claimed by the mother. She reinforced that their child deserves to have the support of both parents and that it should not be forgotten that she has the lion’s share of the responsibility for him as he is predominantly in her care.

What is the proposed departure determination in this case?

1. There is no outcome that will satisfy both parents. This is not the goal/purpose of the review process but is said as an acknowledgement.

2. There are a number of ways that the assessment can be made. One common view is to apply adjusted taxable incomes, but in circumstances where there have been periods of self-employment or other financial resources, this can never be done with the greatest degree of accuracy.

3. Another option allowed by the Act is to set an annual rate of child support. The Tribunal considered this to be an option but then such an avenue prevents changes to the various elements in the formula as they occur from easily being applied.

4. Once a special circumstance is established under subsection 117(2), the formula no longer governs the outcome. Rather, consideration must be given to the actual income and financial resources of the parties and the actual costs of the child in order to determine the amount of child support that should be paid.[2]

   [2] Carlson & Acuff & Anor (SSAT Appeal) [2010] FMCAfam 677

5. The Tribunal opted to set an adjusted taxable income as this will allow the Agency to adjust any level of support if and when the father’s situation changes.

6. Overall, for the reasons given above, the Tribunal finds that it is just and equitable to depart from the administrative assessment as follows:

   ·      From the date of the departure application, 2 October 2022 to 30 June 2023, the adjusted taxable income of Mr Wolfe be set at $240,000 and thereafter his adjusted taxable income be set with reference to the administrative formula.

1. As indicated, this figure represents the financial resources that are evident in the financial records. It is conservative. It results in an overall child support liability of approximately $20,000 to $22,000 for the 2022/2023 financial year where there is evidence that the father had such resources. The figure is in line with the Child Support Calculator generally relating to the range of income assessed by the Tribunal and considering the care level. The Tribunal appreciates the father’s claims that the goodwill of his daughter has now dried up, however, it cannot ignore that he failed to quarantine monies for his son despite knowing of his obligation toward him. It also appreciates the claim that these monies are not income and should not be reflected as such. They haven’t. These are financial resources available to him that can cater for the needs of the child during their period of receipt. The bank statements do show a dwindling balance, and it is appropriate that child support be assessed with reference to the administrative formula at the commencement of the new financial year. Should the mother obtain any tangible evidence of further resources, she can always approach the Agency for further departure.

2. The last issue to be considered is whether it is otherwise proper to depart from the administrative assessment. When doing so, subsection 117(5) sets out what the Tribunal must have regard to when deciding whether it would be otherwise proper to make a particular order. Subsection 117(5) states:

   In determining whether it would be otherwise proper to make a particular order under this Division, the court must have regard to:

   (a)    the nature of the duty of the 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 any 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.

3. Family tax benefit will now be adjusted to take this assessment into account. Overall, the Tribunal therefore finds that it is “otherwise proper” to depart from the administrative assessment.

Conclusion

1. Section 4 of the Act sets out the objectives of the Act. These objectives include:

   ·      Parents of a child have a primary duty to maintain that child;

   ·      That duty has a priority over all commitments of the parent other than commitments necessary for self-support;

   ·      The level of financial support to be provided by parents to their children should be determined in accordance with the legislatively fixed standards; and

   ·      The level of financial support is to be determined according to the capacity to provide financial support and noting that parents with a like capacity to provide financial support should provide like amounts.

2. The Tribunal could not identify on the basis of the evidence before it any hardship to either parent or child arising from this decision.

3. The Tribunal has found that there is a ground for departure in this case, and it would be just and equitable and otherwise proper to make a departure determination in accordance with its findings above.

DECISION

The Tribunal sets aside the decision under review and, in substitution, decides:

• From the date of the departure application 2 October 2022, to 30 June 2023, the adjusted taxable income of Mr Wolfe be set at $240,000;

• Thereafter his adjusted taxable income be set with reference to the administrative formula.