Court of Appeal dismisses appeal of application for judicial review of child support assessment

Summary

The Court of Appeal dismissed P’s appeal and accepted the Commissioner of Inland Revenue (“CIR”) had acted correctly in changing P’s child support entitlement to nil.

Impact

The judgment confirms the result reached in the High Court. The judgment also offers some guidance regarding the relationship between amending an ongoing assessment at s 82(2) and cessing assessments under s 25.

Facts

P was the Receiving Carer in respect of A. The liable parent (“W”) resides in Australia. The original assessment was made on the basis P was providing 100% of the “ongoing daily care” of A.

P and W agreed that A would go to Australia to stay with W. A was residing with W from December 2017 to July 2018. The Court found the evidence allowed the CIR to conclude the visit was intended to be for at least six months (par [13] of judgment).

The CIR decided there had been a change in circumstances and that the ongoing daily care during this period had changed: that W provided 100% of the ongoing daily care and P had provided none.

P argued there had been no change to the ongoing daily care of A and that she was entitled to receive child support payments during the relevant period. P argued that because the period of time A was staying with W fell over two child support years, there was no change of circumstances in each of the two child support years affected.

The High Court had dismissed P’s judicial review ([2019] NZHC 98).

Issues

Was the CIR correct to form the opinion there had been a change in circumstances in the ongoing daily care of A in the period December 2017 to July 2018?

Decision

The Court accepted the general scheme of the Child Support Act 1991 (“CSA”) was that the money should follow the child so that the person providing the ongoing daily care received the financial support to do so: par [4]

At par [6] the Court observed:

Where there has been a request for a formula assessment, the Commissioner is required to establish the proportion of ongoing daily care that each parent and/or non-parent carer provides. The phrase “ongoing daily care” is not defined but it is evident that this is an assessment to be made by the Commissioner on the basis of all the relevant information and with the assistance of other provisions of the Act. For example, in establishing the proportions of ongoing daily care being provided by each carer, the Commissioner is required to rely on any care order or agreement in place. However a parent or carer may challenge the establishing of proportions of care on that basis if there are reasons that a care order or agreement should not be relied on. In addition, if the Commissioner is satisfied that a care order or agreement does not accurately reflect the proportion of ongoing daily care provided, she must establish the proportion of care primarily on the basis of the number of nights that the child spends with the carer. And if the number of nights spent with a carer is not regarded as a true reflection of the proportion of care actually provided then the Commissioner must establish that proportion on the basis of the amount of time the carer is responsible for the daily care of the child.

On the facts of this case the Court of Appeal noted:

[27] However, during Ms P’s submissions she conceded that, faced with the fact that A would be in Mr W’s care for a continuous six-month period, the Commissioner was entitled to conclude that a change in circumstances had occurred and to have assessed the 2018 child support year on that basis. This was a responsible concession. Although “ongoing daily care” is not defined, the ordinary meaning of that phrase conveys continuity of present circumstances into the future. Who has the ongoing daily care of a child is not a retrospective enquiry; rather, it is directed towards the current and prospective situations. Only once that assessment is made does the past becomes relevant in order to determine (by reference to the past arrangements) whether there has been a change in circumstances. [Emphasis added]

The Court continued at[28]:

… The parties [here P and W] were required by s 82(1)(a) to notify the Commissioner of the change in circumstances because it was a change that might have affected the determination of the cost care percentage. Such notification is required specifically “[f]or the purpose of enabling the Commissioner to make or amend a calculation of child support payable in respect of a child”. The scheme of the Act is clear that the Commissioner must respond to changes in circumstances when they occur and on a prospective basis i.e. assessing entitlements on the basis of ongoing care arrangements. If the response was determined by past arrangements the integrity and purpose of the scheme would be undermined. [Emphasis added]

On these facts the CIR was right to conclude the living circumstances had changed. The combined effect of ss 25(3)(b), 86, and 87 meant the CIR was entitled to alter the existing assessment and did so.

In an obiter dicta footnote the Court specifically excluded the circumstances of this case from the ambit of 82(2) stating:

[Footnote 36] …Section 82(2) goes on to specify the dates on which a change of circumstances is to be treated as having occurred where the change either increases the liability of the liable parent or decreases the liability of the receiving carer or where notice of the change was received within 28 days of the change being notified to the Commissioner. The present case does not fall within those provisions because the result in this case was that the respective liability and entitlement ceased rather than increased or decreased. Cessation of liability is specifically governed by ss 25 and 62. So although s 82 applies generally insofar as it imposes the requirement to notify of changes in circumstances, the effect of the change where liability or entitlement ceases is not affected by s 82(2). [Emphasis added]

Given the lack of a definition of the phrase “ongoing daily care” and the fact there were no earlier decisions on the phrases, the Court did not award costs to the CIR.