Wolford and Fendi (Child support)

Wolford and Fendi (Child support) [2018] AATA 2406 (23 May 2018)

DIVISION:Social Services & Child Support Division
REVIEW NUMBER:  2017/PC012785
APPLICANT:  Ms Wolford
OTHER PARTIES:  Child Support Registrar
Mr Fendi

TRIBUNAL:Member S Brakespeare
DECISION DATE: 23 May 2018
DECISION:

The decision under review is affirmed.

CATCHWORDS
Child support - Departure determination - Income and financial resources of parents - Whether the parent had undeclared source of income - A ground for departure not established - Refusal to make a departure determination - 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

This review is about whether there should be a departure from the administrative assessment of child support.
Ms Wolford is the parent liable to pay child support to Mr Fendi for their children [Child 1] and [Child 2], who are both aged 15.
On 14 June 2017 Mr Fendi applied for a change to the assessment (a departure application) citing a number of grounds for departure. Ms Wolford made a cross application, citing Mr Fendi’s income, earning capacity, property and financial resources as a ground for departure.
The administrative assessments relevant to the departure application are as follows:
·       For the period 9 June 2017 to 31 October 2017 Ms Wolford is liable to pay child support of $10,670 per annum. This assessment is based on her 2015/16 adjusted taxable income of $72,622 and Mr Fendi’s adjusted taxable income for that year of $0.
·       For the period 1 November 2017 to 30 June 2018 Ms Wolford is assessed to pay child support of $11,294 per annum. The assessment is based on Ms Wolford’s income election (estimate) of $75,931 per annum and a provisional 2016/17 adjusted taxable income for Mr Fendi of $0.
·       These assessments also took into account that Ms Wolford had 17% care of [Child 1] and 14% care of [Child 2] and that Mr Fendi had 83% care of [Child 1] and 86% care of [Child 2].[1]
[1] [Ms A] indicated that those percentages of care were contested. However, the tribunal notes that the percentage of care determinations are separate to the decision that is before the tribunal. Ms Wolford will need to pursue review of those determinations with the Child Support Agency.
On 2 August 2017 an officer of the Department of Human Services, Child Support (the Child Support Agency) made a departure determination in the following terms (the original decision):
· for the period 14 June 2017 to 13 June 2019 Mr Fendi’s adjusted taxable income is set at $69,144.
Mr Fendi objected to the original decision. On 10 October 2017 an objections officer set aside the original decision and refused to make a departure determination (the objection decision).
Ms Wolford lodged an application for review of the objection decision with the tribunal on 27 October 2017.
A hearing was held on 23 May 2018. Ms Wolford attended and gave sworn evidence to the tribunal. She was represented by [Ms A], who gave evidence on affirmation to the tribunal. Mr Fendi attended and gave evidence on affirmation to the tribunal. The Child Support Agency provided the tribunal and the parties with a bundle of documents in accordance with section 37 of the Administrative Appeals Tribunal Act 1975. The tribunal also received documents from Ms Wolford (folios A1 to A9) and Mr Fendi (folios B1 to B101). The documents were exchanged with the parties prior to hearing.
Relevant aspects of the evidence and material before the tribunal will be referred to in the tribunal’s consideration of the issues which it has to decide.

ISSUES

The statutory provisions relevant to these reviews are contained in the Child Support (Assessment) Act 1989 (the Act).
The rate of child support payable by the liable parent is usually based on an administrative assessment under Part 5 of the Act.
Under Part 6A of the Act the liable parent or the carer of the child or children may apply to the Child Support Registrar for a determination to depart from the administrative assessment (section 98B).
Section 98C provides that the Registrar may make a determination to depart from the administrative assessment and it establishes a three step process such that the issues for determination by this tribunal are:
·       whether a ground is established to depart from the administrative assessment of child support; and
·       if so, whether it is just and equitable to make a particular departure determination; and
·       if so, whether it is otherwise proper to make a particular departure determination.
The grounds for departure from an administrative assessment of child support are set out in subsection 117(2) of the Act.
Each ground is prefaced by the words “in the special circumstances of the case”. The meaning of this expression is not defined in the Act, but the Family Court in Gyselman and Gyselman [1991] FamCA 93 has held:
as a generality 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 formula in the ordinary run of cases.
Likewise, in Phillippe and Phillippe (1978) FLC 90-433 the Court held that “special circumstances” are “facts peculiar to the particular case which set it apart from other cases”.
If the tribunal is satisfied that a ground exists and that it would be just and equitable and otherwise proper to make a particular determination, the tribunal may make one of the determinations prescribed in section 98S of the Act.
The range of determinations which can be made includes variations to: the annual rate of child support payable; or to the adjusted taxable incomes of the parents and/or carer; or to other components of the statutory formula used to calculate child support.

CONSIDERATION

Issue 1 – Is there a ground for departure?

One of the grounds for departure Mr Fendi relied upon in his initial application was in respect of the costs of private school fees for the children. The objections officer noted that the issue of the private school costs was before the Family Court. Mr Fendi agreed that that was the case and did not further pursue the matter at hearing.
A ground for departure exists where, in the special circumstances of the case, application in relation to the child of the provisions of the Act relating to the 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 because of the income, property and financial resources of either parent (subparagraph 117(2)(c)(ia) of the Act).
[Ms A] contends that Mr Fendi’s income and expenditure indicate that he has a significant undeclared source of income. She stated that prior to separation Mr Fendi had run his own business which involved [the production and sale of particular goods], at markets. Ms Wolford had been the bookkeeper for this enterprise prior to separation and was aware that it generated a significant cash income, which she recorded correctly for taxation purposes. [Ms A] said that despite Mr Fendi’s statement that the business ceased to exist Ms Wolford had obtained video evidence indicating that Mr Fendi had recently attended [a particular market] and was observed [producing goods] and undertaking related activities. [Ms A] said that the video evidence was gathered by a private investigator whom Ms Wolford had contracted to gather evidence in relation to Mr Fendi’s income for the specific purpose of the child support review. Ms Wolford had paid the private investigator $1,700.[2]
[2] [Ms A] requested that the video evidence be played at the hearing. The tribunal refused the request as Mr Fendi agreed that he had attended the [market] and therefore that evidence was not contested.
[Ms A] told the tribunal that Ms Wolford had the financial statements for the business for 2015 and they showed a gross income of $31,835 and expenses of $19,884.86.
Mr Fendi told the tribunal that he ceased running his business in late 2016 as it was running at a loss. He deregistered the business in 2017. The income from the business was from two sources: consulting and presentation work on [the production of goods], and the production and sale of [goods] at [markets].
Mr Fendi said that he is currently involved with a number of organisations on a volunteer basis including [a particular organisation] and [a separate organisation]. His attendance at the [market] and other similar markets is on a purely voluntary basis. He said he spends about 10 to 15 hours a week doing voluntary work. Mr Fendi told the tribunal that he has had a long history of volunteering for community organisations; he was a volunteer at [a particular school] whilst the children were there, despite being employed at the time as a full-time [Occupation 1].
Mr Fendi told the tribunal that his main source of funds since he was forced to leave the family home in 2015 has been a loan from his mother, who is a pensioner. His mother used the equity in her home to draw down the amount of $120,000 which she gave to Mr Fendi. He used those funds to pay for his self-support needs, the mortgage repayments for the property in which he resided after separation (and which is subject to property settlement), private school fees for the children and legal fees.
The agreement was for him to repay his mother $1,000 per month until property settlement occurred, at which time he would pay the remaining amount. Whilst he repaid $1,000 per month for a few months he can no longer afford to do so. The Family Court matters have now concluded and the judgment is expected to be delivered in late June 2018.
Mr Fendi told the tribunal that his current sources of income are newstart allowance (granted under the assets test hardship provisions), family tax benefit and the child support payments from Ms Wolford. He is struggling to meet the needs of himself and the children on those funds. He is unable to meet the mortgage payments on the property he is residing in, and is unable to repay his mother the $1,000 a month he agreed to pay.
The tribunal is satisfied that Mr Fendi’s current income is confined to his newstart allowance and family tax benefit. The tribunal does not accept the assertion of [Ms A] and Ms Wolford, that Mr Fendi has a significant income from another source. The tribunal accepts that he wound up his business. In respect of that business the tribunal notes the figures Ms Wolford provided (for the financial year prior to separation) indicate a net income of about $10,000. It is not a significant source of income.
Documents provided to the Child Support Agency confirm that Mr Fendi borrowed significant funds from his mother, which in turn were borrowed against the equity in her home. The tribunal accepts that those funds constitute a loan which must be repaid. Therefore the tribunal does not find them to be a financial resource of Mr Fendi’s for the purpose of child support.
With respect to Mr Fendi’s property the tribunal notes that the assets of the parties are currently subject to proceedings of the Family Court. The tribunal is therefore of the view that it is not appropriate to pre-empt the Court and attribute Mr Fendi (or Ms Wolford) with assets that they hold, separately or jointly, for the purpose of determining whether there is a ground to depart from the administrative assessment of child support.
Ms Wolford’s main source of income comes from Disability Income Protection payments which she estimates will be in the vicinity of $75,931 for the current financial year. [Ms A] advised the tribunal that Ms Wolford’s 2016/17 income was higher ($95,344) because she drew down $65,000 from her superannuation to pay outstanding legal fees and to repay $10,000 she owed to [Ms A]. [Ms A] said that due to Ms Wolford’s disability she needs to be represented in Court and her legal fees totalled $210,000. Ms Wolford also withdrew $80,000 against the equity of one of her properties to pay legal fees.
The tribunal notes that the superannuation fund and property form part of the asset pool which is subject to current proceedings of the Family Court. So as not to pre-empt the Court the tribunal will not therefore consider Ms Wolford’s withdrawals of superannuation or equity for the purpose of determining whether there is a ground to depart from the administrative assessment of child support.
The tribunal does not find that there is a ground for departure under subparagraph 117(2)(c)(ia) of the Act.
A ground for departure exists where, in the special circumstances of the case, application in relation to the child of the provisions of the 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 because of the earning capacity of either parent (subparagraph 117(2)(c)(ib) of the Act).
In relation to earning capacity, subsection 117(7B) of the Act requires the tribunal to consider three matters in determining that the parent’s earning capacity is greater than is reflected in his or her income used in the administrative assessment:
·       whether the parent is:
(i)not working despite ample opportunity to do so (subparagraph 117(7B)(a)(i)); and/or
(ii)has reduced their weekly hours of work to below full-time work (subparagraph 117(7B)(a)(ii)); and/or
(iii)has changed their occupation, industry or working pattern (subparagraph 117(7B)(a)(iii)); and
·       if the parent’s decision about his or her work arrangements is not justified by either his or her caring responsibilities (subparagraph 117(7B)(b)(i)) or his or her state of health (subparagraph 117(7B)(b)(ii)); and
·       if the parent has not demonstrated that it was not a major purpose of their decision not to work despite ample opportunity to do so or to stop working, reduce their hours of work or change their occupation, industry or working pattern to affect the administrative assessment of child support (paragraph 117(7B)(c)).
All three of the above criteria must be met before a departure determination can be made to take into account whether a parent’s earning capacity is more than the income used in the administrative assessment.
[Ms A] contended that the information that Mr Fendi submitted to the tribunal regarding his job search efforts are limited to his skills as an [Occupation 1]. In her opinion he had a much broader capacity to work and therefore was not exercising his earning capacity.
Mr Fendi said that he last worked as an [Occupation 1] in 2012 for a [particular company]. He gave up that position to care for the children and Ms Wolford. His current job search efforts are hampered by the fact that he cannot undertake jobs that would require him to work away from home because of his caring responsibilities for the children. He said that as a condition of his newstart allowance he is required to apply for at least 20 jobs a month and also be engaged with an employment services provider. He is actively engaged with the Salvation Army in job search activities and it is likely that he will be participating in the Work for the Dole program shortly to increase his employability.
The tribunal does not find that Mr Fendi satisfies any of the conditions in paragraph 117(7B)(a). This means that there is not a ground for departure under subparagraph 117(2)(c)(ib) of the Act.
A ground for departure exists where, in the special circumstances of the case, the costs of maintaining a child are significantly affected because of the special needs of the child (subparagraph 117(2)(b)(ia) of the Act). The term “special needs” is not defined in the legislation and the tribunal requires some evidence that the needs of the child relate to a condition or disability that is out of the ordinary.
Mr Fendi told the tribunal that [Child 1] has special needs in that she requires regular sessions with a psychologist for mental health issues. She has 10 sessions per year which are partially funded; however, he makes a co-payment of $75 per session. He said if she has extra sessions the full cost is $200 per session but these have only occurred occasionally.
The tribunal is not satisfied that [Child 1]’s treatment for a mental health condition significantly affects the costs of maintaining her.
The tribunal does not find that there is a ground for departure under subparagraph 117(2)(b)(ia) of the Act.
The tribunal has not found that a ground for departure exists. It therefore refuses to make a departure determination.

DECISION

The decision under review is affirmed.

[2018] AATA 2406

23 May 2018

Key Legal Topics

Areas of Law

Family Law

Administrative Law

Legal Concepts

Judicial Review

Statutory Construction