Zall and Scarvo (Child support)

[2018] AATA 4347

Zall and Scarvo (Child support) [2018] AATA 4347 (11 October 2018)

DIVISION:Social Services & Child Support Division

REVIEW NUMBER:  2018/MC014803

APPLICANT:  Ms Zall

OTHER PARTIES:  Child Support Registrar

Mr Scarvo

TRIBUNAL:Member J Longo

DECISION DATE:  11 October 2018

DECISION:

The decision under review is affirmed.

CATCHWORDS
CHILD SUPPORT – non-agency payments to third parties – no intention that payments be in lieu of child support – prescribed payments – discretion not to credit in particular circumstances – 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. This application for review is about whether payments made by Mr Scarvo should be credited as payment towards his child support liability.

2. Mr Scarvo and Ms Zall are the parents of [Child 1] and [Child 2]. A child support case was registered with the Department of Human Services – Child Support (the Department) on 6 August 2014. Mr Scarvo is the parent liable to pay child support to Ms Zall.

3. Mr Scarvo made a number of payments totalling $3,129.11 for which he then applied to child support for these payments to be credited towards his child support liability.

4. On 19 February 2015 the Department decided to credit the amount of $3,129.11 as prescribed non-agency payments. On 23 May 2018 Ms Zall objected to the Department’s decision. On 10 August 2018 a Departmental objections officer disallowed Ms Zall’s objection. 

5. On 15 August 2018 Ms Zall applied to this tribunal for a review of the objection decision. On 11 October 2018 the tribunal conducted a hearing. Mr Scarvo and Ms Zall attended and spoke to the tribunal and gave sworn evidence. The tribunal received documents (numbered 1 to 185) provided by the Department. Copies of these documents were provided to both parties by the Department prior to the hearing.

CONSIDERATION

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

2. Section 71A of the Act states that if a payer makes a payment to a third party in satisfaction of a liability and it is intended by both to be in complete or partial satisfaction of the payer’s child support liability, the amount can be credited against the payer’s liability as a non-agency payment.

3. The Department information provided to the tribunal show that [Child 2] and [Child 1] were in Ms Zall’s care at the time of Mr Scarvo’s application for the non-agency payments.

4. It is not in dispute, and the tribunal finds accordingly, that Mr Scarvo and Ms Zall never discussed the payment by Mr Scarvo of the non-agency payments totalling $3,129.11 towards the mortgage for the [Suburb 1] property. The details of these payments are as follows:

   29 October 2014            $227.98

   12 November 2014       $227.98

   18 November 2014       $606.30

   26 November 2014       $227.98

   12 December 2014      $153.32

   18 December 2014      $586.75

   12 January 2015            $492.50

   19 January 2015             $606.30

   Total  $3,129.11

5. Ms Zall stated that she was unaware of the existence of these loans and that they were entered into fraudulently. Mr Scarvo stated that they did agree in 2014 that he would make the payments towards the mortgage and that they would be in lieu of child support but Ms Zall changed her mind. The tribunal accepts that it was never the mutual intention of the parties that the payment made by Mr Scarvo towards the mortgage would be credited against his child support liability. It is clear that both Mr Scarvo and Ms Zall never agreed that the payments were in lieu of child support. Accordingly, the tribunal does not accept that the payments were intended by both Ms Zall and Mr Scarvo to be credited against Mr Scarvo’s child support liability.

6. Section 71C of the Act also allows for some non-agency payments to be credited and it is not necessary for there to be mutual intention between the parties. At the time of these payments, the payments had to meet the criteria as specified in the regulations under Regulation 5D. The regulation prescribes the payments made in relation to a home in which the payee lives and for which the payee is jointly or solely responsible as being able to be credited as a “prescribed non-agency payment”. Ms Zall does not dispute that she signed documents for the mortgages over the [Suburb 1] property and that her and the children were residing in the property at the time the payments were made. Payments of this type can be considered under section 71C of the Act regardless of the intentions of the parties. Thus, the payments by Mr Scarvo totalling $3,129.11 towards the [Suburb 1] property in which Ms Zall was residing and for which Ms Zall was jointly responsible for according to the mortgage documents can be considered under section 71C of the Act.

7. In addition to the payments being prescribed under the regulations, the payer must have less than regular care of the children for the payment to meet the requirements under section 71C of the Act. In this case, Mr Scarvo had less than regular care of [Child 2] and [Child 1] in accordance with Department information, therefore paragraph 71C(1)(ba) of the Act is met. This means the amount can be credited as a non-agency payment.

8. However, section 71D of the Act gives a discretion to refuse to credit an amount under section 71C in the circumstances of the particular case. This provision gives the tribunal an unfettered discretion to refuse to credit the payments. The tribunal could not locate any particular case law indicating the types of considerations in deciding whether to exercise the discretion under this section. The Agency policy guide provides little guidance other than to provide a list of examples which are of no relevance to this case.

9. Ms Zall stated that the payments ought not to be credited against the child support liability because in her view these loans were fraudulently obtained and that she should never have been liable for these loans. Ms Zall states that while she did sign the loan documents at the time, she did not understand what she was signing and that she would be liable for these loans over the [Suburb 1] and [Suburb 2] properties. Ms Zall further stated that she believed that the funds provided by her via the sale of property overseas should have meant that there was no requirement for the loans. Ms Zall thought she was on the title for these properties however this was not the case.

10. Mr Scarvo stated that Ms Zall was aware of the loans both for the [Suburb 1] property and the [Suburb 2] property. Furthermore, Mr Scarvo stated that Ms Zall received the entirety of the residual from the sale of the [Suburb 1] property, around $62,000, through the family law proceedings. The residual of the [Suburb 2] property, around $20,000, was paid towards Ms Zall’s legal fees. Ms Zall acknowledged receipt of the residual from the [Suburb 1] property but did not accept that any money from the [Suburb 2] property was paid to her lawyers.

11. In determining whether the discretion under section 71D of Act should be exercised, the tribunal noted that Mr Scarvo’s payments towards the mortgage were made in 2014 and 2015. The tribunal also considered the outcome of the division of the marital pool of assets and that Ms Zall resided at the property during the period. Ms Zall stated that the [Bank 1] stated that they would not pursue her for the outstanding loan repayments and that she was not liable for the loans. The letter from [Bank 1] does also state they would not pursue her for recovery of the owing. However, the [Bank 1] letter further states that they will not remove Ms Zall’s name from the system until the debts are repaid. The [Bank 1] further states that they will recover the loans by way of obtaining possession of the property if the amounts remain outstanding. There is no evidence which indicates Ms Zall was not liable for the loan, only that [Bank 1] would not, in the short-term, enforce recovery at the time of the correspondence. The tribunal further notes that this letter was written in September 2016.

12. The tribunal is mindful that the legislative scheme intentionally provides for payments to third parties to be credited as child support unless the particular circumstances warrant another outcome. In the particular circumstances of this case, considering the factors set out above and the history of the matter, the tribunal has decided not to exercise its discretion under section 71D. In the circumstances, considering that Ms Zall lived at the [Suburb 1] property and was at the time of the payments jointly liable for the mortgage, the tribunal has determined that the payments ought to be credited as prescribed non-agency payments.

DECISION

The decision under review is affirmed.