ADG and VO
[2007] FMCAfam 818
•10 October 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ADG & VO | [2007] FMCAfam 818 |
| FAMILY LAW – Child Maintenance – Overseas maintenance orders. |
| Child Support (Registration and Collection)(Overseas-Related Maintenance Obligations) Regulations 2000 ( Repealed ) Child Support (Assessment Amendment Regulations 2007 Child Support (Registration and Collection) Amendment Regulations 2007 Child Support (Registration and Collection) Act 1988 (Cth) Family Law Regulations 1984, s.36 Family Law Act 1975 (Cth), ss.66B, 66C, 66L, 66S Child Support (Assessment) Act 1989 (Cth) |
| Klein & Wright [2007] FMCAfam 360 Newbeld & Child Support Registrar [2007] FMCAfam 465 |
| Applicant: | ADG |
| Respondent: | VO |
| File number: | PAC 114 of 2007 |
| Judgment of: | Henderson FM |
| Hearing date: | 20 August 2007 |
| Date of last submission: | 20 August 2007 |
| Delivered at: | Parramatta |
| Delivered on: | 10 October 2007 |
REPRESENTATION
| Solicitor for the Applicant: | Mr Essy |
| Respondent: | Self Represented |
ORDERS
That child support including medical costs payable by the father to mother pursuant to the Overseas Maintenance Entry Liability, Child Support Case Number 123456789 be reduced to an amount of AUD $370 each week being AUD $1,480 each four weeks.
This order is back dated to 10 January 2007 the date upon which the father filed his application seeking to vary the overseas child maintenance liability.
I stay the operation of these orders for 42 days after publication of the judgement to allow the Child Support Agency to have this matter re-listed for further hearing or submissions.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAC114 of 2007
| ADG |
Applicant
And
| VO |
Respondent
REASONS FOR JUDGMENT
The matter of ADG and VO was heard by me on Monday 20 August 2007.
The application filed by the father sought to vary an order made in the Texas County Court at Bexar on 12 October 2006 that he pay periodic child maintenance for the children HAG born 1994 and SAG born 1992 of US $1,000.00 per month, plus full health care premiums for the children which at that time was some AUD $360.00 per month.
I gave leave to the father to amend his application filed 10 July 2007 to seek an order to vary the existing order under regulation 36(1)(b) of the Family Law Regulations which regulation deals with overseas maintenance orders.
The mother lives with the children in Texas. She appeared by way of telephone. Mr Essy appeared on behalf of the husband.
The mother’s response filed 1 February 2007 sought that the father’s application be dismissed. The mother sought leave to amend her response at the hearing. I gave her that leave. The mother asked that the Texas court order be varied such that the father pay to her the same sum he would have paid had this been a matter dealt with under the child support legislation. The mother assessed the father’s liability under the Child Support (Assessment) Act 1989 (Cth) to be to be in the vicinity of AUD $2,126.00 per month in addition to medical expenses.
The mother’s evidence of the American medical costs for the children alone was accepted at $420 per month and that payment of medical costs is an important issue in America. It is very different from Australia.
The husband’s current liability under the Texas order is AUD $1,640.00 per month. Prior to November 2006 the amount was AUD $1,296.20 per month.
It was this increase that caused the father to file his application as he asserts he is unable to pay this increased amount. He seeks I reduce the periodic maintenance in total to AUD $700.00 a month, with no payment for medical support.
When the matter came before the court on 20 February 2007 I granted the father a stay of the re-assessed amount of $1,636.82 provided he continued to pay the sum of $1,296.20 per month which sum he has paid.
The mother assesses the arrears from the stay at $2,720.00 which is agreed.
It is also agreed that the husband was $5,000 in arrears at the date of the stay order being made. Thus today there are arrears of some
AUD$7,720.00.
Both parties gave oral evidence and were examined and cross examined. The mother’s husband gave evidence by way of explanation in relation to the taxation returns filed by him and his wife under American law.
The mother agreed that the father’s income for child support purposes was $124,000 per annum and she asserted her income was $18,000 per annum.
The father’s solicitor submitted that the mother’s income was some $45,000 per annum being one half of the joint income of her and her husband of $87,155. The mother and her husband filed joint income tax returns showing a joint income over $87,000 in years 2004, 2005 and 2006.
The mother was quite firm that her income is only $18,000 per annum and is derived from her husband’s business. The mother’s husband gave evidence that American law requires a joint income tax return to be filed but that the individual income of each spouse is not merely derived by a simple equal division. I must accept that evidence as there is nothing to contradict it.
In any event even if the mother’s income was $45,000, this level of income would not affect the amount to be paid by the father under the child support assessment. It may be a relevant under s.66L of the Family Law Act which section deals with child maintenance orders simpliciter.
Jurisdictionally this matter is determined as if it was an old-fashioned child maintenance hearing under the Family Law Act for reasons that appear below.
Evidence
The evidence of the parties is as follows.
For the father I read:
a)His application and affidavit filed 10 January 2007;
b)His affidavit filed 6 August 2007;
c)The large bundle of documents that were discovered by the father to the mother;
d)The amended minute of order that I granted the father leave to file.
For the mother I read:
a)Her response and affidavit filed 1 February 2007
b)Large bundle of documents that were discovered by the her to the father;
c)Her written submissions in relation to the matter.
The following tenders were made at the hearing:
a)Three income tax returns for the mother and her husband in 2004, 2005 and 2006.
b)Three income tax returns for O Consulting Inc. for the years 2004, 2005 and 2006.
The mother’s husband is a university professor. That is his primary source of income. He also runs a consultancy business in which his wife assists him and she is paid as an employee of the business. This is the source of her income of US $18,000 per annum.
The father’s gross taxable income is AUD $124,742.
The parties gave me very little past history in this matter.
The matter was poorly prepared and not well presented to the court.
I had great difficulty in ascertaining the relevant facts I needed to find to make a decision.
Neither party sought an adjournment. To have given an adjournment would have been a great injustice to each party.
The Court had made arrangements for the mother to present her case from Texas, it had been some six months since the matter had been listed for hearing, and any adjournment would have been due to the father’s failure to produce proper evidence before the court. The father was legally represented and has the burden of proof.
Of real concern is that the Child Support Agency has not been notified of this matter and are unaware that it is before the court. In these circumstances I proceeded to hear the evidence and I will deliver a judgment. However I will stay the operation of that judgment for
42 days to give the Agency an opportunity to appear before me and reopen the matter should they deem appropriate.
Chronology
The parties were divorced on 18 June 2002 in the United States of America. They were living in Texas at that time, as were the two children.
The mother is a native of Canada; the father is an Australian Citizen.
In October 2004 the children, the mother, her husband, DO, and the father were all living in America.
In October 2004 the father lost his job in America and thus he could no longer remain in America having regard to the terms of his visa.
The Texas Law is that each three years parties are able to review a child support order. The parties’ child support order was made in 2001 at the time of the separation.
In October 2004 the parties were going the process of having the original order reviewed. This was at the very time the father asserts he lost his job and had to return to Australia.
This event caused the mother some degree of difficulty. The Texas Court issued a form of a garnishee order against the husband, he was ordered to appear in court and bring his financial records with him. He did appear in court but did not bring his financial records asserting that he did not have time to do that.
When the father came to Australia in late 2004 he registered the Texas Order under section 11 of the Child Support (Registration and Collection)(Overseas-Related Maintenance Obligations) Regulations 2000 (“Overseas Regulations”) as a registrable maintenance liability.
The Overseas Regulations were repealed by the Child Support (Assessment) Amendment Regulations 2007 and the Child Support (Registration and Collection) Amendment Regulations 2007 on 28 June 2007 and became effective law on 19 July 2007.
Thus at the time this hearing was commenced by the father the Overseas Regulations governed this matter, but by the time of the hearing those regulations had been repealed and the relevant sections relating to overseas orders is now contained in the Child Support (Registration and Collection) Act1988 (Cth)( relevant Act ).
By registering the Texas order it became a registrable maintenance liability. As such the order was entered into the overseas maintenance register held by the Child Support Registrar.
By virtue of the operation of regulation.16 of the Overseas Regulations the monies paid under the overseas order became a debt due and payable to the Commonwealth and enforceable by the Commonwealth.
This is the relevance of the Agency being notified of the proceedings. The reality is that any liability under this legislation is a Commonwealth debt and not a debt personally payable to or enforceable by the respondent who is the mother.
The legislative trail has been well set out by my brother FM Slack in two decision Klein & Wright [2007] FMCAfam 360 and Newbeld & Child Support Registrar [2007] FMCAfam 465.
His Honour sets out the legislative trail under the Overseas Regulations. I will substitute the amending legislation for the repealed legislation.
Both matters were similar to the matter before me. In each case the overseas maintenance orders had been registered under the Child Support (Registration and Collection) (Overseas-related Maintenance Obligations) Regulations 2000.
One difference was that the applications were brought by the Child Support Registrar to enforce an overseas maintenance obligation.
In this matter the father has brought the application and is seeking a variation of the overseas obligation.
His Honour FM Slack in the matter of Newbeld & Child Support Registrar stated that:
29. At common law, an order for maintenance made overseas cannot be enforced as a final order by an Australian Court. So, too, it could not be varied or discharged. However, international enforcement of maintenance orders is now governed by treaty and laws of mutual recognition.
30. Section 110(2) of the Family Law Act 1975 (as amended) (hereafter “the Act”) provides relevantly for the power to make regulations in respect of registration and enforcement of maintenance orders made in “reciprocating jurisdictions”. The Family Law Regulations 1984 (as amended) (hereafter referred to as “the Regulations”) contains such regulations as do the Child Support (Registration and Collection) (Overseas – Related Maintenance Obligations) Regulations 2000 (hereafter referred to as “the Overseas Regulations”).
31. Section 110(1) of the Act defines “maintenance order” as relevantly “An order or determination (however described) with respect to the maintenance of a party to a marriage.” It further defines “reciprocating jurisdiction” to mean “a country or part of a country outside Australia declared by the regulations to be a reciprocating jurisdiction for the purposes of this section”.
32. Section 110(2) of the Act not only provides for the making of regulations for the registration and enforcement of maintenance orders made by Courts of reciprocating jurisdictions, but goes on, in sub-paragraph (c) of that sub-section, to provide for:
“The making of orders … for the variation, discharge, suspension or revival of maintenance orders registered in accordance with regulations under this section …”
33. Regulation 25 of the Regulations provides:
“Each of the jurisdictions specified in Schedule 2 is declared to be a reciprocating jurisdiction for the purposes of s.10 of the Act (elsewhere defined to mean the Family Law Act).”
34. Schedule 2, consequent to amendments to the regulations made in May 2000, includes the United States of America.
His Honour states that the operation of the regulations and the Family Law Act means that overseas maintenance orders can be enforced in Australia as if they were Australian child maintenance obligations.
The starting point under the new legislation is s.18A of the Child Support (Registration and Collection) Act (“the relevant Act”) which is in similar terms to the repealed reg.11 of the Overseas Regulation
(1) A liability is a registrable overseas maintenance liability if it is:
(a) a liability of a parent or step‑parent of a child to pay a periodic amount for the maintenance of the child; and
(b) an overseas maintenance liability.
The father’s obligation in this matter clearly falls within that definition.
The relevant Act defines overseas maintenance liability as a liability that arises under:
(a) a maintenance order made by a judicial authority of a reciprocating jurisdiction; or
(b) a maintenance agreement registered by a judicial or administrative authority of a reciprocating jurisdiction; or
(c) a maintenance assessment issued by an administrative authority of a reciprocating jurisdiction.
The order made by the Texas Court is clearly a maintenance order made by a judicial authority of a reciprocating jurisdiction and is a registrable maintenance liability as it orders a parent to pay periodic maintenance.
The liability is clearly registrable under the relevant Act. However, the liability has not been registered under the relevant Act but under the repealed Overseas Regulations.
I am unable to ascertain in the relevant Act any deeming or saving provisions that provide for a prior registered maintenance liability under the old Overseas Regulations to be deemed as a registered maintenance liability under the new relevant Act. However from my reasoning below I do not see lack of registration under the relevant Act will affect my jurisdiction to entertain his application.
There is a difficulty with the new legislation and that relates to mother’s application to enforce arrears.
Section 30 of the relevant Act is in the same terms as reg.16 of the repealed Overseas regulation and states :
(3) If a registrable maintenance liability is registered under this Act, the payee of the liability is not entitled to, and may not enforce payment of, amounts payable under the liability other than by instituting a proceeding under section 113A to recover a debt due in relation to the liability.
As I read the relevant Act to enforce arrears the mother must now register the Texas Order under the relevant Act which is the amending Act. The Texas order was registered under the repealed Act. There are no saving or deeming provisions to cover this very situation. The mother then notifies the Registrar under section 113A that she seeks to enforce arrears. The mother has not carried out these steps and thus I cannot entertain her application to enforce arrears.
I can deal with the father’s application for variation as regulation 36 of the Family Law Regulations provides that:
When a party in Australia may apply to vary etc overseas maintenance order, agreement or liability
(1) This regulation applies to:
(a) an overseas maintenance order or agreement registered in a court before 1 July 2000; and
(b) an overseas maintenance entry liability or a registered maintenance liability.
The Texas order is a registered overseas entry maintenance liability within the meaning of the above regulation. The order was registered and entered onto the register of overseas maintenance orders maintained by the Child Support Registrar. That is clear from the letter written to both parties by the Agency on 20 November 2006 and the attached notice of liability of the father to pay child support. These documents are attached to the father’s affidavit.
Although the Texas Order has not been registered under the relevant Act it is nevertheless still a registered overseas entry maintenance liability for the purposes of regulations 36(1)(b) and 36(2) of the Family Law Act and I will so proceed.
In passing I note that regulation 24A of the Family Law Act Regulations which defines an overseas maintenance entry liability and a registered maintenance liability still refers to sub-regulations 11(1) and (2) and paragraph 11(3)(a) of the repealed regulations. There has not yet been an amendment to the Regulations under the Family Law Act to reflect the change to the operative legislation.
Regulation 36 states :
(2) Application may be made to a court having jurisdiction under the Act for an order discharging, suspending, reviving or varying an order, agreement or liability to which this regulation applies.
(3) An application may be made by:
(a) the person for whose benefit the order or agreement was made, or for whose benefit the liability was created; or
(b) the person against whom the order was made or the person who is liable to make payments because of the agreement or the liability; or
(c) the Secretary, on behalf of a person mentioned in paragraph (a) or (b).
(4) The law to be applied to determination of an application is the law in force in Australia under the Act.
The applicable law in force under the Family Law Act is s.66S and is headed Modification of child maintenance orders. There is no assessment of child support under the Child Support (Registration and Collection) Act and thus this matter is to be dealt with as if it were a child maintenance application simpliciter under s.66S. The principles set out in ss.66L and 66S apply to the hearing.
Part VII, Division 7, deals with child maintenance orders. Section 66B states:
(1) The principal object of this Division is to ensure that children receive a proper level of financial support from their parents.
(2) Particular objects of this Division include ensuring:
(a) that children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both of their parents; and
(b) that parents share equitably in the support of their children.
There is no issue taken by the father as to the needs of the children. His application is based on his assertion that he simply cannot afford the amount that has been determined he ought to pay by operation of the Texas Court order.
The relevant parts of Section 66S for this matter are:
Modification of child maintenance orders
(1) This section applies if:
(a) there is in force an order (the first order ), for the maintenance of a child (whether or not made under this Act and whether made before or after the commencement of this section):
(i) made by a court; or
(ii) registered in a court;
(1A) , the court may, subject to section 111AA, make an order:
(d) varying the order:
(i) so as to increase or decrease any amount ordered to be paid by the order; or
(ii) in any other way.
(2) In any other case, the court may, by order:
(d) subject to subsection (3), vary the order:
(i) so as to increase or decrease any amount ordered to be paid by the order; or
(ii) in any other way.
(3) The court must not vary the order so as to increase or decrease any amount ordered to be paid by the order unless it is satisfied:
(a) that, since the order was made or last varied:
(ii) the circumstances of the person liable to make payments under the order have changed so as to justify the variation; or
(iii) the circumstances of the person entitled to receive payments under the order have changed so as to justify the variation; or
(d) that material facts were withheld from the court that made the order or from a court that varied the order, or material evidence previously given before such a court was false.
(7) An order decreasing a periodic amount payable under the order, or discharging the order, may be expressed to be retrospective to such day as the court considers appropriate.
(10) For the purposes of this section, the court must have regard to the provisions of Subdivisions B, C and D (to the extent applicable).
Section 66C: Principles- Parents have primary duty to maintain the child:
(1) The parents of a child have, subject to this Division, the primary duty to maintain the child.
(2) Without limiting the generality of subsection (1), the duty of a parent to maintain a child:
(a) is not of lower priority than the duty of the parent to
(b) has priority over all commitments of the parent other than commitments necessary to enable the parent to support:
(i) himself or herself; or
(c) is not affected by:
(i) the duty of any other person to maintain the child;
Maintenance applications require a three staged approach. The first stage is to determine the reasonable and/or necessary expenses of the children. That is not really an issue.
The second and third stages are to determine the level of support each parent can pay towards the necessary support of the children having regard to their income and expenditure necessary to support themselves.
My first task is to assess the father’s income, the expenses necessary for him to support himself having regard to the principles set out in s.66C.
Of particular relevance in this matter is the high cost incurred by the father in exercising contact to his children, either here in Australia or by him attending America.
The father did not file a financial statement nor did the mother. The father gave information relevant to his income in his affidavit.
The father says he has an income of $124,000 gross per annum. The husband asserted in his affidavit and orally that his income after tax was around $80,000. However it became clear from page 221 of the discovered documents that his net income was about $85,000 per annum.
From that $85,000 per annum he pays the following:
a)Interest-only mortgage payments on a property purchased by him after arriving in Australia of $2,297 per month, or $570 per week.
b)The father asserts he contributed $50,000 of his own savings when he purchased his unit in 2005. This was at a time he had arrears of child support under the Texas Order.
c)He has strata levies of $75 per week.
d)Utility costs of approximately $50 per week.
e)He has a personal loan of $35 per week.
f)He makes payments of $125 per week on credit cards.
g)The father asserts he has a personal mobile telephone bill of $55 per week however that must clearly also be tax deduction as it is a facility he is required to have for the purposes of his employment.
h)The monthly costs of household essentials at $600 per month. In oral evidence he said it was more like $400 per month. I will allow him $150 a week for his necessary food, household supplies and expenses.
i)The costs the father asserts are incurred in his travel to and from work are $530 per month. The documents in Annexure Q to his affidavit do not in any way support such a figure. I allow him $50 per week for travel.
j)It is not necessary, although desirable for the father to have private health insurance and I disallow the figure of $130 per month.
k)It is not necessary, although desirable for the father to have life and income protection insurances and I disallow the figure of $310 per month.
I find that the father’s necessary expenses are, on a weekly basis, $1,110 per week making a total each four weeks of $4,440.
The father’s net income is $85,000 per annum. The father has a net weekly income after tax of $1,635 per week. I have allowed him weekly expenses of $1,110. This leaves a surplus of income over necessary expenditure of $535 per week.
The father has an excess income over expenditure of $535 per week, or $2,140 a month. This is a figure similar to the current maintenance liability including health care costs.
However, the expenditure I have allowed does not take into account the extremely high costs the father incurs in having the children spend even one period of a couple of weeks or so with him in Australia, or by him attending America. I accept the last occasion the children came to Australia in July he paid $7,000 for their airfares.
The father does not have a car and he hires a car for the children when in Australia. The father asserts he spends somewhere in the vicinity of $10-15,000 whether the children come to Australia or he goes to America. He said he would like to see his children on two occasions each year.
Under the Child Support formula 5% of a parent’s taxable income is apportioned towards the high cost of contact. On the father’s taxable income that would be an allowance of $6-7,000 per annum.
I accept the father’s evidence that at minimum he spends $10,000 each occasion he visits the children or they visit him. I accept that those are the costs and that the bulk of those costs are comprised in airfares. Australia is a long distance from any other country and the cost of air travel even within Australia is quite prohibitive compared to other countries such as America.
Only allowing the father $10,000 each trip and amortizing that figure over 52 weeks gives a figure of $192 per week.
If I deduct $192 from the father’s found surplus income of $535 this leaves a figure of $343. I find the father has the capacity to pay $370 each week towards the support of his children. On a four weekly basis this would be payment of $1480 each four weeks.
I find that this is the amount the father has the capacity to pay towards the support of his children, namely $370 Australian dollars each week or $1,480 Australian each four weeks.
I do not see on the evidence before me that the father has the capacity over and above that figure or any amount towards medical costs if he and the children are to have even one holiday together each year in Australia or America.
The father is a PAYE tax payer and his income is known. He has minimal tax deductions. I do not see whether the mother has an income of $18,000 or $45,000 US dollars per annum is relevant to my decision.
I have determined the father’s capacity to pay support for his children which is less than both parents agree would be a proper level of child support.
This is not a matter in which I will apply the child support formula. That would be inappropriate due to the high costs of travel.
I have dealt with the matter looking at the relevant factors under s.66S of the Family Law Act and have had regard to the principles set out in ss.66B, 66C and 66D of the Act in coming to my decision.
Therefore I make orders in accordance with those as set out at the commencement of this judgment.
I certify that the preceding ninety-one (91) paragraphs are a true copy of the reasons for judgment of Henderson FM
Associate: A. Morris
Date: 11 October 2007
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