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Nowell and Tansey (Child support) [2019] AATA 433 (11 January 2019)

Last Updated: 20 March 2019

Nowell and Tansey (Child support) [2019] AATA 433 (11 January 2019)

DIVISION: Social Services & Child Support Division

REVIEW NUMBER: 2018/MC014271

APPLICANT: Ms Nowell

OTHER PARTIES: Child Support Registrar

Mr Tansey

TRIBUNAL: Member P Noonan

DECISION DATE: 11 January 2019

DECISION:

The decision under review is varied so that:

CATCHWORDS

CHILD SUPPORT - departure determination – income, property and financial resources of the liable parent – compensation for medical incapacity – special needs of the child – orthodontic expenses – 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 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. The Child Support (Assessment) Act 1989 (the Act) provides for an administrative assessment of the child support payable. It uses a formula, which contains variables such as the parents’ adjusted taxable incomes (ATI) and their percentages of care of the children. The Act also provides for a departure from the administrative assessment in certain circumstances.
  2. Ms Nowell and Mr Tansey are the parents of the children [Child 1] (born 2006), [Child 2] (born 2008) and [Child 3] (born 2011).
  3. A child support case was registered with the Department of Human Services (the Department) on 26 June 2014 and was registered for collection of child support by the Department since 2 September 2015. According to the Department’s records the care of all three children is recorded by the Department as being 292 nights per year to Ms Nowell and 73 nights per year to Mr Tansey.
  4. On 22 December 2016 Ms Nowell applied for a departure from the administrative assessment of child support payable. At the time of her application the administrative assessment was that:
  5. On 24 February 2017 a Department officer, acting as a delegate of the Child Support Registrar, found that a ground for departure was established and changed the assessment as follows:
  6. Mr Tansey subsequently lodged an objection. The Administrative Appeals Tribunal (the Tribunal) allowed an extension of time for the lodgement of an objection by Mr Tansey on 20 March 2018. On 17 May 2018 his objection was allowed in part as follows:
  7. An appeal was subsequently lodged by Ms Nowell with the Tribunal for an independent review on 6 June 2018.
  8. A hearing for the matter was held on 28 November 2018. The Child Support Registrar did not attend the hearing. Ms Nowell gave evidence on affirmation. Mr Tansey also gave evidence on affirmation. The Tribunal adjourned to enable further evidence to be supplied and exchanged. The Tribunal noted Ms Nowell’s expressed concerns in respect to transactions within Mr Tansey’s bank accounts and missing financial documentation. After consideration of all further evidence the Tribunal determined it was appropriate to proceed with its decision on the basis of the evidence before it. Copies of all further documents have been exchanged.
  9. In making its decision the Tribunal considered the verbal evidence of all parties and the various documents supplied by the Department and the parties (both prior to and after the hearing), copies of which have been exchanged.
  10. Pursuant to paragraph 98C(1)(b) of the Act, a decision to depart from the administrative assessment may be made if the following requirements are met:

(i) that one, or more than one, of the grounds for departure referred to in subsection 117(2) exists; and

(ii) that it would be:

(A) just and equitable as regards the child, the liable parent, and the carer entitled to child support; and

(B) otherwise proper.

CONSIDERATION

A ground for departure

  1. Mr Tansey gave evidence that he received a payout from the Australian Army due to medical reasons. He will require two [medical procedures] in the future. He also requires ongoing [treatment]. The treatments are paid for by the Department of Veterans Affairs (DVA). He separated with Ms Nowell prior to his discharge. He worked briefly for a while after discharge at a company called [Company 1]. He then had no income and was supported by his new partner, who was running a [business]. He told the Department he was without income. When he started getting incapacity payments from the DVA he started paying child support again. He tried to run a business but this failed. His income now consists of a part pension from Comsuper and his incapacity payments which is roughly net $2,200 per fortnight. He is also working some shifts at a [shop] and he has informed the Department of this income.
  2. Ms Nowell submitted that Mr Tansey must be earning cash in hand or have other income sources as he was supporting multiple children. She also noted that she is highly frustrated with the Department as she did query the original departure decision as she did not want to end up having to pay money back and had not expected such a large child support payment decision to her. Now, after the objection decision, she has been left with a hole in her finances as the original decision has basically been reversed. Mr Tansey also expressed a sentiment that he is primarily appealing against the Department.
  3. Mr Tansey denied cash in hand income. Mr Tansey’s 2016-17 taxable income was $59,291. Mr Tansey’s 2017-18 taxable income was $70,749, as confirmed in evidence submitted after the hearing. He submitted that he has been experiencing financial hardship after his business [failed] and as a result of poor spending decisions. He has avoided bankruptcy; however he is in arrears on his car finance and owes money to his accountant. He is no longer a part of his partner’s [retail] shop. He lost most of his compensation money on his failed business venture. The [retail] shop started at the end of 2017. Mr Tansey noted that he contributed to this by fitting out the shop and stocking it with his personal [items]. He started obtaining these [items] on the wholesale market after the property settlement with Ms Nowell. These are [various items]. He estimated he has contributed around $15,000 to $20,000 to the [retail] business.
  4. The original departure decision incorporated Mr Tansey’s lump sum payment of $87,256.72 in regard to his successful claim for permanent impairment under the Military Rehabilitation and Compensation Act (2004). The DVA confirmed in a letter dated 15 March 2016 that the payment was to compensate for the medical impairment and lifestyle effects of Mr Tansey’s condition and that it did not include an income component. The Tribunal considered that this capital sum was paid, in effect, to enable Mr Tansey to meet his necessary costs of self-support being costs arising as a result of his acquired medical condition. In such circumstances it would be inappropriate to denude the capital sum over an extended period of time to meet his child support obligations. Further the Tribunal considered that the level of capital in question, when compared to Mr Tansey’s recent taxable incomes, is not such that not incorporating it would result in an improper level of child support payable by Mr Tansey relative to his overall access to financial resources.
  5. The Tribunal has examined the evidence before it in regard to Mr Tansey’s overall access to financial resources, including a consideration of his bank account statements, and considered his taxable income to be an appropriate basis for determining that access. There was no evidence of expenditure by Mr Tansey that would indicate a significantly higher level of income reflective of cash in hand income or access to some other source of finance.

Ms Nowell’s income and access to financial resources

  1. Ms Nowell’s 2017-18 taxable income was $42,321. She is employed on a part time basis and noted she currently earns around $780 per week with some dividend income also received. Mr Tansey made no particular submission in respect of Ms Nowell’s overall access to financial resources. Overall there was no information before the Tribunal to suggest that her overall access to financial resources was not appropriately reflected by her most recent taxable income.

Conclusion

  1. Under the applicable administrative assessment, the annual rate of child support payable by Mr Tansey, at the time of Ms Nowell’s departure application, was $1,947 per annum. Mr Tansey’s overall access to financial resources has been found to be reflective of an income of his taxable income which at that time was $59,291. The annual amount of child support payable using this figure and Ms Nowell’s taxable income is $6,867 per annum or $132 per week. Such a difference in the child support payable meant that application of the applicable assessment would result in an unjust and inequitable determination of the level of financial support to be provided by Mr Tansey in support of the children. As a result a ground for departure in subparagraph 117(2)(c)(ia) of the Act does exist.

Would departure from the administrative assessment be just and equitable?

Mr Tansey

  1. Mr Tansey disclosed very little in assets with any value. His vehicle is under finance, costing him $350 per week and he also has some outstanding credit card debts. He also disclosed significant tax liabilities which he estimated at $200,000. In regard to household expenditure he listed $860 per week in expenses primarily in respect to rent, food and utilities. The Tribunal accepted Mr Tansey’s listings as reasonable and noted he has limited spare financial capacity. The Tribunal considered the analysis of Mr Tansey’s overall access to financial resources, as set out earlier in these reasons, to be appropriate in determining his capacity to pay child support during the period under consideration.

Ms Nowell

  1. Ms Nowell disclosed that she owns a house worth around $400,000 with an outstanding mortgage of around $117,186. She has around $7,000 in the bank and owns a vehicle worth around $14,000. She also owes around $2,600 in [dental] work in respect to [Child 2]. In regard to expenditure she listed private health cover of $56 per week and household expenditure of $1,175 per week. Major expenses are the mortgage payments of $200 per week, food of $250 per week and utility and vehicle expenses. It is clear that any child support payable to her would assist her in maintaining the children.

The children

  1. In determining the proper needs of the child, it is necessary to 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 (subsection 117(6) of the Act). In Eades & Cadell (SSAT Appeal) [2009] FMCAfam 275 at [22], Slack FM stated as follows:

In considering the proper needs of the child [s 117(4)(b)], the SSAT:

  1. would ordinarily consider the evidence of the parties about the needs of the children to assess the reasonableness and quantum of those needs;
  2. may have regard to publish guidelines as to the needs of the children (see Hallinan & Witynski at 94.323).
  1. may also have regard to the costs of children used in the assessment of child support under the existing formula arrangements (although it is not sufficient or appropriate to rely upon the formula to perform that task, Lindenmayer J in Dwyer & McGuire (1993) FLC92-420 (and see also Gyselman (supra) at 79.078).
  1. Ms Nowell informed the Tribunal that she is currently paying for [Child 2’s] recent [dental] treatment under a payment plan. She supplied a receipt that indicated she is paying $200 per month from 1 April 2018 to 1 July 2019, with a total cost of $3,200. No other special needs costs were raised. The Tribunal considered that this cost should be incorporated into the departure determination so that Mr Tansey contributes 50% of these costs. There were no other special needs costs raised that the Tribunal considered were such that the amount of child support payable resulted in an inequitable amount of child support payable.

Otherwise proper

  1. Ms Nowell receives family tax benefit in respect of the children. As such an increase in child support payable to her may reduce this cost to the community. The Tribunal was satisfied that changing the amount of child support payable would not have any adverse effect upon the community. Such a result would be otherwise proper.

Conclusion

  1. It is open to the Tribunal to vary the rate of child support payable or vary some of the variables that are used in the administrative assessment formula. The Tribunal noted that Mr Tansey submitted that he has been placed in a difficult financial position by the original decision of the Department. He noted that the Department had intercepted his taxation return for payment of outstanding child support. The Tribunal agreed with the objections officer’s reasoning in respect to seeking to ameliorate the effect of this overpayment to Ms Nowell by first increasing and then reducing Mr Tansey’s future child support payments. The Tribunal noted that Mr Tansey’s taxable income has increased in 2017-18 which will increase child support payments to Ms Nowell.
  2. The principal object of the Act is to ensure that children receive a proper level of financial support from their parents. Further, I note the statements contained in sections 3 and 4 of the Act to the following effect:
  3. Mr Tansey submitted that he can afford the current departure assessment but no more. He considered Ms Nowell would struggle. Ms Nowell considered that Mr Tansey’s expenditure on personal items demonstrated a capacity to pay more child support. She cited the purchase of dirt bikes. Mr Tansey noted that this purchase was undertaken through the cashing in of superannuation.
  4. In respect of appropriate dates for a departure determination, the Tribunal agreed with the objections officer’s date range. The Tribunal will however make the following variation. From 1 April 2018 to 30 March 2019 the annual rate of child support payable by Mr Tansey is varied such that the amount payable is reduced by $3,103. The Tribunal calculated that this reduction, which is less than that decided by the objections officer, results in Mr Tansey now making a 50% contribution to the special needs [dental] costs of the child. From 1 April 2019 to 30 March 2020 the annual rate of child support payable by Mr Tansey is varied such that the amount payable is reduced by $4,703. With regard to the care records outlined earlier in these reasons, taking into account the various adjustments to account for overpayments the ongoing amount of child support payable by Mr Tansey to Ms Nowell is around $5,867 per annum in the period from 1 April 2018 to 30 March 2019 or $112 per week and $4,267 per annum or $82 per week from then until the cessation of the departure determination. The Tribunal notes this increased amount, when compared to the objections officer’s decision, is attributable to Mr Tansey’s increased 2017-18 taxable income.
  5. The Tribunal did not consider Mr Tansey will be placed in undue hardship by this decision and considered that he has access to sufficient financial resources to meet the child support requirements set by this departure decision. The decision also effectively adjusts the effects of the original decision upon him while seeking to reduce hardship to Ms Nowell caused by the overpayment to her as a result of that decision. She will be paid child support that is commensurate with the Tribunal’s analysis of the parents’ current overall access to financial resources.
  6. Overall, the Tribunal considered both parents will be provided with certainty in planning their respective finances to adequately support the child by the implementation of this departure determination, and that it is a just and equitable outcome in regard to the respective situations of each parent.

DECISION

The decision under review is varied so that:


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