Aitken and Porteus
[2009] FMCAfam 783
•31 July 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| AITKEN & PORTEUS | [2009] FMCAfam 783 |
| CHILD SUPPORT – Application for lump sum child support – relevant provisions of Child Support (Assessment) Act – lump sum ordered to operate both retrospectively and prospectively. |
| Child Support (Assessment) Act 1989, ss.116, 117, 123, 123A, 124, 125, 126 & 141 Federal Magistrates Court Rules 2001, r.24.01 |
| Lightfoot & Hampson (1996) FLC 92-663 Ivanovic (1996) FLC 92-689 Hartnett & Baker (1995) FLC 92-620 McGuinness & Cowie [2002] FamCA 461 Kettle & Baker & Green [2009] FamCAFC 113 |
| Applicant: | MS AITKEN |
| Respondent: | MR PORTEUS |
| File Number: | PAC2768 of 2007 |
| Judgment of: | Lindsay FM |
| Hearing dates: | 20, 21 & 26 May 2009 |
| Date of Last Submission: | 26 May 2009 |
| Delivered at: | Parramatta |
| Delivered on: | 31 July 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr Livingstone |
| Solicitors for the Applicant: | Rafton Family Lawyers |
| Counsel for the Respondent: | Self-represented |
ORDERS
Pursuant to s.124 of the Child Support (Assessment) Act 1989 (Cth), in respect of the period 1 May 2007 to 31 July 2012, the father do provide child support for the children [Y] born in 2002 and [X] born in 2001 to the mother other than in the form of periodic payments, namely in the form of a lump sum of FORTY EIGHT THOUSAND DOLLARS ($48,000).
The annual rate of child support payable by the father under any relevant administrative assessment for that said period is to be reduced by ONE HUNDRED PER CENT (100%).
The payment referred to in paragraph 1 be paid by the father to the mother within sixty (60) days of today’s date.
In the event that the father fails or neglects to comply with the payment of the lump sum referred to in paragraph 1, then the parties shall forthwith do all such things and sign all such documents and give all such instructions as may be necessary to list for sale and sell the property situate and known as Property C in the State of New South Wales, being the whole of the land comprised in Certificate of Title folio identifier Lot [2] in Deposited Plan [1], (“the Property”) with a real estate agent as agreed upon between the parties or, in default as to the identity of such real estate agent for a period greater than seven (7) days, with a real estate agent as nominated by the Real Estate Institute of New South Wales, at a price agreed upon between the parties or, in default as to agreement on such a selling price for a period greater than seven (7) days, at such selling price as nominated by the said real estate agent, and, upon completion of the said sale, the balance of proceeds of such sale be applied in the following priority:
(a)in payment of an amount sufficient to discharge any mortgage secured upon the Property;
(b)in payment of the fees due for the nomination of a real estate agent, the real estate agent’s commission and legal costs incurred in relation to the said sale;
(c)in payment to the mother of any sum pursuant to paragraph 1; and
(d)in payment of the balance to the father.
Pending compliance by the father with paragraph 1, the father be restrained from transferring, encumbering, assigning, mortgaging or otherwise adversely dealing with or disposing of his right, entitlement and interest in the Property.
All applications do otherwise stand dismissed.
There be liberty to apply as to consequential orders.
IT IS NOTED that publication of this judgment under the pseudonym Aitken & Porteus is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAC2768 of 2007
| MS AITKEN |
Applicant
And
| MR PORTEUS |
Respondent
REASONS FOR JUDGMENT
By way of an Amended Application filed on 11 December 2008 (“the Application”), the applicant seeks orders providing for lump sum child support in respect of the two children of the relationship.
The Application casts its net wide. The orders sought are said to be authorised in the alternative by Division 4 of Part 7 of the Child Support (Assessment) Act 1989 (“the Act”) in combination with s.141(1)(a) or by Division 5 of Part 7.
The orders sought relate to the period 1 May 2007 to 30 June 2012.
What is sought is alternatively:
a)a lump sum payment of $64,331.20; or
b)an order for payment of the sum of $64,331.20 into an account in the joint names of the parties and enabling the wife to draw down on that account to the extent of arrears that accrue upon the payment sought for that period (broadly $117.70 per child per week to 30 June 2008 and $120.70 per child per week thereafter); or
c)a departure order for either a lump sum payable in respect of the period 1 May 2007 to 30 June 2008 and at the end of each full financial year thereafter or for payment of the weekly amounts referred to in (b) above.
In addition, an order is sought that:
a)from 1 July 2012 onwards, the administrative assessments under the Act apply;
b)if a lump sum is ordered, under either (a) or (b) in para.[4] above, then one of the respondent’s properties be sold and the monies due as a lump sum paid from the proceeds thereof to the applicant;
c)injunctions restraining dealings with the properties of the respondent;
d)that any lump sum ordered be credited as to one hundred per cent of the respondent’s liability for any assessment that would issue for the period 1 May 2007 to 30 June 2012; and
e)costs.
The application is therefore expressed in somewhat convoluted form. That is unsurprising, having regard to the uncertainties which have long plagued the operation of the Act in relation to lump sum orders.
I do not propose to revisit the controversies discussed in the Full Court decisions of Lightfoot & Hampson (1996) FLC 92-663 and Ivanovic (1996) FLC 92-689 and earlier decisions of single judges and Federal Magistrates (see especially the discussion of Mullane J in Hartnett & Baker (1995) FLC 92-620, strongly supportive of the “independent power” interpretation of Division 5) as to whether Division 5, as it then existed, was the source of a power independent of Division 4 and the power to order departure from administrative assessments, or whether it could only operate in respect of assessments already modified under Division 4. The issue was most clearly expressed by positing a nil administrative assessment: no Division 5 order could provide for any payment other than a nil payment; there was nothing that could be expressed in the form of a non-periodic order. A nil assessment must first be departed from, so it was said, to enable a lump sum order to be made.
Ivanovic (supra) was really a case that involved a refusal to depart from Lightfoot & Hampson (supra). No arguments additional to those advanced by Fogarty J in Lightfoot & Hampson (supra) are advanced for the confinement of Division 5 orders to those which were truly substitutive of a departure order rather than orders made under an independent head of power.
The substance of the controversy can be found in the competing judgments of Fogarty J and Kay J in Lightfoot & Hampson (supra).
The significance of the controversy was ameliorated by the decision of Kay J in McGuinness & Cowie [2002] FamCA 461. There, His Honour found that a lump sum application under Division 5 could be the “pending proceeding” required under s.116 of the Act to allow a departure application to be brought when the administrative review and objection procedures had not been followed. So a Division 4 and Part 5 application could be brought simultaneously (as long as they were brought bona fide), as the applicant has done here.
But for that authorised use of s.116 of the Act, it must be thought that the lack of clarity associated with the substitutive/independent head of power controversy regarding Division 5 would have been resolved much sooner, as applicants, impatient of the review and objection procedures, brought their Division 5 departure applications on a stand alone basis and respondents answered with the argument that no power existed to bring such an application independently of a review application. Instead, as here, both applications could be filed together, though the legislation still required the departure application to be heard first (Fogarty J and Kay J had agreed about that).
Here, however, the applicant jettisoned the departure application as the hearing commenced, and made it plain that the only order sought was a lump sum order, though the form of the order was still sought in alternative forms.
She did so, it must be frankly acknowledged, in the shadow of the Court expressing its own clear view that Division 5 was an independent source of a power to make a lump sum order.
My reasons for doing so are to be found in the significant transformation that Division 5 has undergone since 1 July 2007. The controversy described in the competing judgments in Lightfoot & Hampson (supra) is about a very different Division 5 of the Act than now exists.
The Child Support Legislation Amendment (Reform of the Child Support Scheme - New Formula and Other Measures) Act 2006) made the following changes to Division 5. Firstly, s.123(1) was repealed and substituted by the present sub-section.
The former section provided:
Application may be made to a court having jurisdiction under this Act for an order that a liable parent provide child support for a child otherwise and in the form of periodic amounts paid to the carer entitled to child support.
It now provides as s.123(1)(a) and (b):
(1)An application may be made to a court having jurisdiction under this Act for:
(a)an order that a liable parent provide child support otherwise than in the form of periodic amounts paid to the carer entitled to child support; or
(b)an order that a liable parent provide child support in the form of a lump sum payment to be credited against the amount payable under the liability under the relevant administrative assessment.
The Act now distinguishes two different kinds of possible applications, the “old” non-periodic order application (in (a)) and a “new” (in (b)) species of application, being for a lump sum which is to be credited against the liability under the relevant administrative assessment.
The “new” application is in fact an accurate description of the nature of the power given under the old section as interpreted by Fogarty J in Lightfoot & Hampson (supra) - in other words, a power to make a lump sum order which leaves the administrative assessment intact and simply changes the form of the order, expressing the same liability in lump sum rather than periodic form.
It was just such an interpretation that Kay J had such trouble reconciling with the express power available in s.125(2) not to credit the Division 5 order against the existing administrative assessment (“special circumstances”).
Sub-s.(2) of s.123 is amended so as to make clear that the requirement of an administrative assessment being in force applied only to the “old” application. It was self-evidently unnecessary to express the requirement in respect of the “new” application.
A new s.123A has been inserted as follows:
(1)The court may make an order that a liable parent provide child support for a child to a carer entitled to child support in the form of a lump sum payment to be credited against the amount payable under the liability under the relevant administrative assessment if:
(a)the carer entitled to child support or the liable parent makes an application to a court under paragraph 123(1)(b); and
(b)the court is satisfied that it would be:
(i) just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(ii) otherwise proper;
to make an order under this section; and
(c)the amount of the lump sum payment equals or exceeds the annual rate of child support payable for the child under the administrative assessment.
(2)A lump sum payment may include a payment by way of transfer or settlement of property.
(3)An order under subsection (1);
(a)must specify the amount of the lump sum payment; and
(b)must specify that the lump sum payment is to be credited against 100%, or another specified percentage that is less than 100%, of the amount payable under the liability.
(4)In determining the application made under paragraph 123(1)(b), the court must have regard to:
(a)the administrative assessment; and
(b)any determination in force under Part 6A (departure determinations) in relation to the child, the carer entitled to child support and the liable parent; and
(c)any order in force under Division 4 of this Part (departure orders) in relation to the child, the carer entitled to child support and the liable parent; and
(d)whether the carer entitled to child support is in receipt of an income tested pension, allowance or benefit; and
(e)if the carer entitled to child support is not in receipt of such a pension, allowance or benefit - whether the circumstances of the carer are such that, taking into account the effect of the order proposed to be made by the court, the carer would be unable to support himself or herself without an income tested pension, allowance or benefit.
(5)In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make an order under subsection (1), the court must have regard to the matters mentioned in subsections 117(4), (6), (7), (7A) and (8).
(6)In having regard to the earning capacity of a parent’s earning capacity of a parent of a child under paragraph 117(4)(da), the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied as mentioned in subsection 117(7B).
(7)In determining whether it would be otherwise proper to make an order under subsection (1), the court must have regard to the matters mentioned in subsection 117(5).
(8)Subsections (4), (5), (6) and (7) do not limit the matters to which the court may have regard.
Section 124 deals exclusively with the “old” power to order non-periodic child support. As already noted, the criteria for making the order, and in particular the picking up by reference of most of the s.117 departure order criteria, are near identical to s.123A.
Section 125(1), (2) and (3) have been repealed and new provisions substituted. It applies only to s.124 and hence s.123(1)(a) applications. Section 125 provides:
(1) If the court makes an order under section 124, the court must state in the order whether the annual rate of child support payable by the liable parent under any relevant administrative assessment is to be reduced, in the manner specified under subsection (3), by the child support ordered to be provided by the liable parent.
(2) The court may state that the annual rate of child support payable by the liable parent is not to be so reduced only if it is satisfied that, in the special circumstances of the case, it would be:
(a)just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(b)otherwise proper;
that the annual rate of child support not be reduced by the child support ordered to be provided.
(3) If the court states in the order that the annual rate of child support is to be reduced by the child support ordered to be provided, the court must also state in the order either:
(a)that the annual rate of child support payable is to be reduced by a specified amount that represents an annual value of the child support to be provided; or
(b)that the annual rate of child support payable is to be reduced by 100% or another specified percentage that is less than 100%.
The provision does not relate to the “new” lump sum orders, of course, because they are not intended to reduce the child support at all.
Section 126 has been amended to include reference to both kinds of lump sum payments. Reasons must be given for each of the orders, save where the order is made by consent and the payee is not in receipt of an income-tested pension allowance or benefit.
This summary of the changes to Division 5 is not intended to be exhaustive.
There now exists a statutorily created distinction between non-periodic orders which are to be credited against the existing assessments and those which have no such limitation. The “old” power enables an order to be made in non-periodic form and a concomitant reduction to be made to the amount payable under the assessment. Special circumstances need to be found for the non-periodic payment to be in addition to that provided for in the existing assessments. Clearly the power is intended to provide for the making of a non-periodic order, independent of the state of and terms of any administrative assessment. The exercise of the power involves more than merely changing the form of the obligation - it can be changed substantively. There is no need to go through a preliminary process of departing from the order.
On the other hand, if it is intended to leave the obligation under the assessment the same, but merely to change the form of the compliance with the order, the “new” lump sum provisions can be exercised. No one could suggest that a departure order was required to exercise the powers under s.123A - no departure is contemplated. There is no basis for reading into the s.124 power any such requirement.
The Part gives a comprehensive range of powers to effect the payment of child support other than in periodic form. The fact that both the old and new applications pick up the discretion-guiding criteria of s.117 in any event (see s.123A(6) and s.124(3)), and are both expressed as involving the “just and equitable” and “otherwise proper” test of s.117, means in reality that, whether s.117 departure orders are formally required or not, the judicial exercise will be much the same as that involved in making a departure order. The important step was taken in McGuinness & Cowie (supra) even before the change in the legislation made matters explicit - the review-objection procedures can be avoided by seeking a lump sum order, whether truly substitutive (s.123A), or not (s.124). Further minimising in this case the impact of the changes to the legislation is the breadth of the application made by the applicant. The orders sought are pursuant to Division 4 or Division 5 of Part 7 or s.114(1)(a) of the Act, in the alternative.
Section 141(1)(a) of the Act provides:
(1)In exercising its powers under this Act, a court may do all or any of the following:
(a)order payment of a lump sum, whether in one amount or by instalments;
(b) …
It confers a power to make orders within jurisdiction but does not purport to identify, create or limit such jurisdiction. The jurisdiction is to be determined in accordance with the provisions of Division 5 of Part 7 of the Act. (I should here point out the obiter dicta remarks of the Full Court of the Family Court in Kettle & Baker & Green [2009] FamCAFC 113 at [114] and [115] to the effect that use of Division 4 powers with the general powers in s.141(1)(a) were sufficient to ground jurisdiction to make a lump sum order. Not only are the remarks obiter dicta but the case was one which was concerned with the state of the Act prior to the amendments discussed above.)
The father, as noted, was self-represented. He raised the s.116 point at the outset. But even if a s.117 order were required to be made before a lump sum order could be made (and I have found that the new legislation makes clear that such is not the case), the lump sum order can be taken to be the relevant pending proceedings in accordance with the decision of McGuinness & Cowie (supra).
The applicant mother, who is represented by counsel, relied upon her affidavit of 30 May 2008 and the administrative assessments filed pursuant to rule 24.01 of the Federal Magistrates Court Rules 2001, and three financial statements filed. A number of documents were tendered as part of her case. She was cross-examined by the respondent father who appeared on his own behalf.
An affidavit of a land valuer, Mr M, was introduced into evidence with the consent of the parties.
The father relied upon his affidavits of 28 May 2008 and 18 May 2009. He was cross-examined.
The father opposed all of the lump sum orders sought by the mother. He wished for the child support to be paid in accordance with whatever administrative assessments of child support had issued and would issue from time to time.
The parties commenced a relationship in 2000 and separated in October 2005. There was an earlier separation between 2002 and early 2004.
There are two children of the relationship, namely, [X], born in 2001, now eight years of age, and [Y], born in 2002, now seven years.
In October 2006, the mother instituted de-facto relationship property proceedings in the Supreme Court of New South Wales. These proceedings settled in September 2007, with the father being obliged to pay the mother the sum of $107,500 and providing that they otherwise retain the property in their respective possession or control.
The children remained in the mother’s care following separation but spent significant and substantial time with the father. On 26 April 2007, Flohm J made an order in the Family Court providing for the children to live with the mother and spend time with the father on two out of three weekends and overnight on alternate Tuesdays and for one half of school holiday periods.
During the relationship, the parties lived in a home at Property S, owned by the father. Since separation, the mother has found her own rental accommodation with the children. She is currently living in a home owned by her father.
The mother does not work. She has health problems. She suffers from a form of Lupus. She has tried to go into business on her own behalf since separation. Some employment would be available for her in her father’s business, but her health does not permit her to take it up.
Generally, she impressed as a truthful witness attempting to give an honest account of her financial circumstances.
Her evidence was not without its blemishes, however. She overstated the involvement of [Y] in taekwondo and thus the costs associated with it; she expended several thousand dollars in renovations to her father’s home, a home in which she has no interest; when she received her property settlement moneys from the father, she loaned her sister the sum of $35,000, which sum has not yet been repaid, a curious decision for a person in her parlous circumstances to make.
But there was no issue as to the significance of her health problems and the effect of them upon her ability to obtain and keep employment. Neither was there controversy about her father effectively meeting her weekly accommodation costs or about her reliance upon receiving ad hoc financial help from him and expecting to continue to do so in the absence of proper support from the father.
The mother sought a child support assessment following upon separation. Until approximately early to mid-2006 - I will deal with the events in more detail presently - the father paid the mother directly amounts of between $150 and $200 each week by way of child support.
Child support ceased in early to mid-2006, the mother says, because the father received a letter from her solicitors advising of her intention to institute the de facto property claim. Certainly the letter was sent in February of 2006 and certainly in March of 2006 the father had decided to reply to enrol full time in university in an [omitted] course.
The father is a self-employed [tradesman] and has been since 1991.
He says that his decision to go to university related to a general downturn in the industry in which he is involved.
Exhibit 2 indicates that by May 2006, the father was being forwarded by the University Admissions Centre confirmation of the date of his admission. Therefore, the enrolment must have preceded that date.
In 2006, the father bought vacant land at Property D. In that same year, he transferred that land to his daughter [Z]. She is aged 14 and is a daughter from a previous relationship and she lives fulltime with him. I will discuss that transaction hereunder.
On 20 October 2006, the applicant filed her Statement of Claim in the Supreme Court proceedings. That same week, she received advice from the Child Support Agency that her child support assessment had been reduced to $26.00 per month. That was the function of the father having become unemployed.
That assessment - that is, the minimum payable - remained extant until 2009. The details of the current administrative assessment appear in Exhibit 12. The father is liable to pay a monthly amount of $65.83, based upon a 2008 taxable income of $25,000.
The husband was at all relevant times (apart from alleged unemployment) a self-employed [tradesman] trading under the style of “[E]”.
As ultimately agitated by her, the mother’s application was for lump sum child support as follows:
a)1 May 2007 to 30 June 2009 - $26,600.20
b)30 June 2009 to 30 June 2012 - $36,161.72
Total: $62,761.92
Those sums were calculated as follows:
a)Past child support claimed
Calculation of child support including use of the 3% tables
1 May 2007 to 30 June 2009 is 113 weeks x 241.40 = $27,278.20
Less 26 per month or 6 per week for 113 weeks = $678
$27,278.20 - $678 = $26,600.20
b)Future
Calculation of future lump sum discounted by 3% tables
$1 per week at 3% tables for 3 years is $149.80
Child support claimed is $241.40 per week
$241.40 x $149.80 = $36,161.72
c)Future plus past
Add $26,600.20 + $36,161.72 = $62,761.92
I deal with the application as one made under s.123(1)(a) and therefore to be determined having regard to the provisions of s.124 and 125 of the Act. Pursuant to s.124(3) and (3A) I must also apply the provisions of s.117(4), (6), (7), (7A) and (8).
The mother receives Centrelink benefit (Family Tax and Parenting Payment) of $350 per week. The current parenting order sees the two children live with the father two out of three weekends from Friday to Monday, alternate Tuesday nights, and for one half of school holidays. That is, four nights per fortnight during school term and otherwise half time.
[X] has asthma. The costs associated with treating that are modest. She attends gymnastics and [Y] attends taekwondo. Again, the costs associated with these activities are modest.
The mother lives in accommodation provided rent-free by her father. She has expended some of her capital in improving those premises.
She owes her father money for a business enterprise she started post-separation, which was unsuccessful (the sale of [omitted] products).
She suffers from a form of Lupus. The consequences of that are set out at paragraphs 61 to 75 of a trial affidavit and were not challenged by the father.
The combination of her obligations to the children and her health make it unlikely that she will be able to secure remunerative employment in the foreseeable future. She attempted to start a business. It failed. She cannot reasonably be criticised for the attempt. I have already noted the curiosity of the loan to her sister of a significant portion of her settlement funds. But had she retained the capital, it would have been earning a relatively modest amount of interest, in any event.
She has been, manifestly, assisted by her father in meeting the expenses associated with the children and expected such informal assistance to continue. The Supreme Court de facto property proceedings resolved upon the basis that the father paid her the sum of $107,000. There was a delay in the payment of the last $25,000 of that amount, but it has all been paid to her.
The mother’s financial position is relatively straightforward. There is no suggestion of her having withheld relevant information about it. The position of the father, however, is not as straightforward.
As noted above, he has been a [tradesman] (self-employed) since 1991. He says that since 2004 there has been a downturn in his work. [Z] has lived with him since 2001. Her mother provides him with no financial or other assistance in caring for her.
He says he tailors his work to fit in with an ability to take [Z] to and from school. An inability to be on site at 7am each morning accounts, he says, for his inability to secure “permanent” employment (see paragraph 18 of his trial affidavit). By “permanent” I assume he means “as an employee.” But he has been self-employed since 1991.
He left his industry in 2006 and obtained Centrelink benefits. He enrolled in university and wants to find employment as an [omitted] at the conclusion of his course.
He returned to [trade] in December 2007 when the work for contractors in the building industry, according to him, “picked up” (see paragraph 19 of his trial affidavit).
We know about the real property he owns because an affidavit of a valuer was before the Court.
He owns a property at Property C. There are two inhabitable dwellings on the property (one is a granny flat). He bought it in 1996. It is subject to a mortgage of $680,000. It is valued at $350,000.
He owns a property at Property S. It is valued at $460,000. It was purchased (or the land at least was purchased) in 2003. It is subject to the same $680,000 mortgage as the Property C property above. It is rented out at $480.00 per week.
A residence at [B], formerly owned by the father and occupied by the parties during the relationship, was sold after the parties separated.
Then there is land at Property D, purchased for $305,000 in 2006 and subsequently transferred to [Z]. It is mortgaged to the St George Bank for $305,000. It is valued at $420,000.
So much is clear. Thereafter, matters become much less clear. I will try to summarise the other information we have about the father’s financial position and dealings and the source of such knowledge:
a)We have a draft 2008 individual tax return (Exhibit 4). The father eschewed, in his oral evidence, any clear intention to lodge this return. His evidence was that he might lodge it or he might not. In it, his main business activity is described as [trade omitted]. He made a loss of $3,200 in the 2008 year from gross earnings of $17,077 and expenses of $20,277. His gross rental income for that year was $20,417. This is the only tax return or financial statement of the father introduced into evidence, whether relating to the pre or post-separation period and even this return is a document that he refused to specifically adopt in his evidence.
b)We had his oral evidence that repayments on the vacant land at Property D (in his daughter’s name now) cost him $293.00 per week or approximately $15,000 per annum.
c)We had his oral evidence that mortgage payments on the $680,000 borrowed by security on Property C and Property S amounts to payments on a monthly basis of $3,600 or $837.00 per week (partly offset by $430.00 per week rent collected from the latter).
d)We had his oral evidence that he pays school fees of $6,400 per annum for [Z] or at a rate of $123.00 per week.
e)We had his oral evidence that he spent at least $4,000 on a four to five week trip overseas with [Z] in 2006 or 2007 during the period he was allegedly unemployed.
(I take this to be the proportion of those expenses attributable to [Z] as the costs for both of them must have been significantly more than $4,000.)
f)We had his affidavit evidence (confirmed in cross-examination), that in April 2008 Centrelink demanded he repay the sum of approximately $19,000 being moneys wrongly claimed by him as a “Parenting Pension.” We have no further details about this: firstly, whether the wrongful claims were made by him; how they were detected; what his income was for the period or periods in respect of which the wrongful claim was made; or whether the error was deliberate or accidental.
g)We had his oral evidence that the difference between his income for 2006 to 2009 and the expenses associated with (b), (c), (d) and (e) above (plus his normal living expenses) were met by drawing down upon his mortgage facilities.
h)We had Exhibit 5, which was a copy of the instrument of transfer of the Property D property to [Z] on 31 August 2006. The consideration is described in the document as “nil”. However, the father said in his oral evidence that [Z] paid the sum of $5,000 for the transfer. No indication was given of where she obtained the money to pay that sum (she was thirteen at the time) or where the money was banked by the father when he received it.
i)We had the father’s financial statement filed on 7 August 2007. It disclosed, on his oath:
i)that he was not employed;
ii)weekly income of $410.00 for rent and $315.00 for parenting pension, but no other income.
iii)$1,000 for mortgage payments to the St George Bank each week;
iv)the ownership of the Property C and Property S properties;
v)$2,000 in the bank in an identified account;
vi)ownership of a motor vehicle valued at $15,000 to $20,000;
vii)identified that he had given to his daughter in that period beginning twelve months before separation and since separation assets valued at $305,000 and;
viii)a home mortgage of $647,000.
j)We had an amended financial statement filed on 26 May 2008. It disclosed, on his oath:
i)that he was a [tradesman], self-employed;
ii)income in the form of rent of $410 per week and $300 per week from [trade] and $110 per week from Family Tax Benefit;
iii)weekly payments of $1,040 for the St George liability by way of mortgage;
iv)disclosed the same properties owned by him as in his previous financial statement;
v)disclosed the same (approximate) amount in the same bank account at St George Bank;
vi)disclosed ownership of a motor vehicle worth $20,000;
vii)represented that he had an interest in a business known as [Mr Porteus] (as to one hundred per cent thereof);
viii)disclosed ownership of [machinery] valued at $3,000;
ix)disclosed a superannuation interest of negligible value;
x)disclosed a home mortgage of $688,358 to St George Bank;
xi)disclosed a liability to Ms P of $100,000 (she was not called and no documents evidencing this liability were produced);
xii)disclosed a HECS debt of $2,000;
xiii)disclosed a Centrelink debt of $18,653;
xiv)gave the same details as the previous financial statement relating to the disposal of land to his daughter; and
xv)disclosed weekly household expenses of $503, inclusive of educational expenses for [Z].
k)We had documents tendered in evidence by the applicant from material produced upon subpoena by the St George Bank (a subpoena issued at the request of the wife). The portions tendered were the subject of oral examination of the father by the applicant’s counsel. The information from that material is summarised as follows:
i)he applied to extend his credit limit with the St George Bank in September 2005 from $519,000 to $728,000 and represented to the bank an annual income (excluding rental income) of $100,000. It is not entirely clear whether this income was said by him to be a gross income, or net of expenses (taxable) or net of tax, though an “income calculation worksheet” therein suggests it is taxable income. The father said in his oral evidence that he deliberately inflated his income in this document so as to be able to obtain the loan;
ii)cash deposits into the father’s cheque account in the period 7 to 9 November 2006 totalling $4,556;
iii)a series of debits to his cheque account in November 2006 strongly suggestive of his being overseas in that month;
iv)a credit to his cheque account on 4 April 2007 in the amount of $28,664.02, which the father said in his oral evidence was a refund by the Australian Taxation Office of GST paid to him (for what period was never specified);
v)a “transfer credit” of $240,000 made on 2 June 2006 reducing his cheque account from $231,000 overdrawn to $8,000 in credit. The father said in evidence that this was a loan facility made available by the bank, but no further details were provided. It may have been (partly) a rationalisation of the additional advances made by the bank in September of 2005 discussed above, but that is speculation on the part of the Court;
vi)a debit of $274,500 on 5 June 2006 to his cheque account, presumably to facilitate the purchase of the Property D property; and
vii)
credits totalling approximately $84,000 to his cheque account in the period 25 October 2007 to 30 November 2007 coinciding with his part-payment to the applicant of $80,000 pursuant to the settlement of the de facto proceedings which payment is debited to the account on
7 November 2007.
l)We had documents tendered in evidence by the applicant being documents produced upon subpoena by [D] Proprietary Limited, which is, the father confirmed in his oral evidence, a company with whom he had a trading account. That trading account in the period 31 December 2005 to 17 September 2008 shows regular use of that facility by him (there are forty-five transactions in those twenty-one months). The father said in his oral evidence that some of those transactions represent purchases from that company by his friends and associates authorised by him on the account. There are no transactions for the period 20 December 2006 to 18 April 2007.
m)We had documents from the material produced upon subpoena by the St George Bank for 2008 and onwards, which material was the subject of cross-examination of the father, information relating to his loan accounts with that bank. Most of the identified transactions are inter-account transactions and difficult to rely upon as signifying anything meaningful about the father’s financial position. Some deposits, for example, the $24,000 cheque deposited on 20 February 2009 are simply unexplained. The same must be said for most of the transactions identified in the post-2008 statements relating to his cheque account, i.e., they are mostly inter-account transactions, but include significant unexplained cheque deposits such as the deposit of $10,076 on 15 August 2008.
n)A document from the Child Support Agency evidencing a payment of $1,200 on 30 April 2009 (and therefore to be credited to the father’s liability whatever else we do at the conclusion of this case).
o)The relevant child support assessments filed compendiously in the one document on 10 November 2008.
It should be observed immediately that we have a very fragmented, if not obscure, picture of the father’s financial position.
The most significant omissions are the taxation returns and financial statements. We have none. The father tried to suggest, faintly, in his evidence that this was somehow the fault of his accountant, but this suggestion was never seriously developed.
The mother did not accept that the father gave up his [trade] business in 2006 or 2007. It is plain that he continued to service a significant mortgage on the Property S loan in that period and incurred further significant debt when he bought the vacant land in 2006.
He travelled overseas with [Z]; he continued to pay the school fees for [Z]; He retained his [machinery] during this period of alleged retirement from the industry. He must have understood as these proceedings have made of their way through the Court the extent to which his financial position in this key period was in dispute and yet he has failed to produce the most fundamental documents which would enable light to be shed on this issue, namely his taxation returns and financial statements. If they were not in existence, he should have done whatever was necessary to bring them into existence.
The bank account information, such as it is, was provided pursuant to subpoenas issued at the request of the applicant and not by the father.
Nothing is produced by him in the form of invoices, accounts paid, cheque stubs, BAS statements or otherwise relating to the conduct of the [trade] business for any relevant period. The father is content for the issues thrown up by the limited information we do have to remain in this inconclusive and uncertain position.
Of course, the father is unrepresented. But that is his choice. It cannot be taken to explain an almost complete failure to produce relevant documentary material relating to his business.
I have no idea what his income in the period 2006 to 2009 is other than that I can infer that it has been substantial enough to meet the following weekly expenditure:
a)$293 per week on the Property D mortgage for [Z];
b)$837 per week on the mortgage over the other properties;
c)$123 per week by way of school fees for [Z];
d)$300 per week in other household expenses (less education expenses) – see his second financial statement.
These amounts total $1,553 per week or $80,756 per annum.
The father says that these expenses are met by him drawing down on his mortgage. He produces no documents in that regard. It is not for the court to trawl through the bank records (records not produced by him or at his request in any event) to try to substantiate that assertion for him.
The evidence satisfies me on the balance of probabilities that he purported to leave his employment and take up university studies when advised of the mother’s de-facto property claim in early 2006. He went the step further of advising the Child Support Agency of his unemployed status in October 2006 which coincided with the filing and service of the Statement of Claim in relation to those proceedings.
I accept the mother’s evidence that he was extremely angry at her decision to proceed with her de-facto property claim.
He deliberately and suddenly purported to change the arrangements extant when he paid $150 to $200 per week to one where he paid the minimum amount of child support under an administrative assessment and he has maintained that position until, in the shadow of these proceedings and the trial, in particular he made representations to the Child Support Agency of having earned in 2008 the sum of $25,000. That has resulted in his current monthly liability for child support in the sum of $65 per month.
For completeness, I should note that I have the following recent assessments before me:
Issue Date Assessment Period Monthly Amount
a)24/05/08 7/07/08 to 6/10/09 $54.50
(Based on the provisional
income of $36,504 or soExhibit 11 tells me)
b)30/04/09 7/07/08 to 29/04/09 $178
(Based on a
provisional incomefor the father of
$36,504)
c)30/04/09 30/04/09 to 6/10/09 $65.83
(Based on a 2008
taxable income of$25,000)
To add to the confusion, the assessment described at (a) above details a “previous” monthly amount of $105.17, though no assessment showing such monthly amount has been produced.
I was given no information by the father to assist me in finding out how the income for the above assessments were calculated.
In any event, it was not disputed that until trial and since the 1 May 2007 (which is the beginning of the period to which the application relates) the father paid the minimum amount of $6 per week (apart from the lump sum payment of $1,600 made on 30 April 2009).
It is unacceptable for the court to be put in a position of having to determine an application for lump sum child support, from in the main, the drawing of inferences about the father’s financial position from material not produced by him. But the application has to be determined upon the basis of the evidence available. I do not think that the mother can have been reasonably expected to go to any greater lengths than she did to produce information about the father’s financial position.
It is not a matter of me simply drawing inferences about the actual state of the father’s finances during the relevant periods from his failure to produce the documents. The inference I have drawn about his minimum available income from the expenses he was meeting (see para.[84] above) of $1,553 per week is reasonably open to me. There is no material to warrant the drawing of any contrary inference.
I also infer that the father was confident enough in his own income position to incur a further debt of $305,000 voluntarily in 2006 to purchase land which made its way in to [Z]’s name (the latter transaction occurred, I find, with no consideration being paid). That was an entirely voluntary assumption of a significant debt of $293 per week. I infer that he would not have assumed such a debt without some margin of income from which to fund it. The $1,553 per week should not be regarded as his total income. It is more likely to be, given his other regular expenses something approaching in the sum of $1,900 to $2,000 per week or approximately $100,000 per annum (which would be $1,923 per week).
In 2005, we know that he represented to the bank a taxable income of $100,000 (that it was a taxable income figure that was provided seems to me to be highly likely). It remains possible that he was merely overstating his income in order to procure the loan. But the income represented is approximately the same as the income I find he had in the following year and he has produced nothing to tell me what his taxable income was for either of those years. I find it is more likely than not that what he said to the bank was an accurate estimate of his taxable income for the twelve months preceding September 2005.
The “retirement” which he seems to suggest occurred between the end of 2006 and the end of 2007 was, I find, a half-hearted ruse designed to discourage the wife from proceeding with her de facto property claim or to warn her that, if she did, she could expect little child support from him. I have been given no evidence to suggest that, apart from actual enrolment, he has participated in a tertiary course designed to qualify him as an [omitted].
On the contrary, his retention of his [machinery] throughout the period are strongly suggestive of his continuing to derive an income from [trade], as has his decision at the end of 2006 to take [Z] on a five-week overseas holiday. I infer that he would not have voluntarily assumed that significant expense unless he was expecting to be able to continue to generate an income.
Then there is the evidence that he owes Centrelink an amount of $19,000. We do not know the period to which this debt relates other than it was prior to the demand for repayment made by Centrelink in April 2008 and some time following the separation of the parties. This suggests the strong possibility that it involved the period of ostensible unemployment, on the basis that if he was representing that status to the mother, he was also representing it to others, including the social security authorities.
He says that the payments were made “in error”. From that I infer that he was not eligible upon the basis of his income to receive such payments. If he means some other kind of error, then he did not explain it to me. All of this adds significantly to the suspicion attendant as to all of his behaviour throughout this period.
The fact of his current indebtedness to Centrelink cannot be overlooked either, of course, in assessing his capacity to properly discharge his obligations to support his children.
At the end of the trial, the mother’s counsel handed me written evidence of a calculation performed on the Child Support Agency estimator facility. This was based upon an annual taxable income of $100,000 for the payer, with him having the care of a child aged thirteen to fifteen, and the payee having an annual taxable income of less than $10,000 (the inclusion of the contingency of the payee having a child under the age of twelve with whom she has spent less than one hundred and ten nights per year was also, for some reason, included in the exercise, but had no bearing on the calculation in the light of what was, in any event, the payee’s low income). Unfortunately, there was no indication in the calculation that there relevant care percentages and cost percentages applicable had been factored in. (Exhibit 12 tells us that for the mother the cost percentage is 65 per cent based upon a care percentage of 60 per cent and for the father a cost percentage of 35 per cent based upon a care percentage of 40 per cent.) If those percentages are involved in the formula, the annual amount of child support payable by the father under the calculation is $9,866 per annum or $822 per month or $189 per week.
The application made by the mother includes a period of two months prior to the most recent reforms of the calculation of the child support formula, but I have calculated these amounts as if the same formula applied to that period. This cannot have disadvantaged the father.
$100,000.00 is the best estimate I can make of the father’s taxable income for the period dealt with in the application (from 1 May 2007) and the best estimate I can make of his annual income until 30 June 2012.
Those dates are the parameters of the application made by the mother.
The evidence indicated that the mother’s health condition is likely to persist for the foreseeable future. She is unlikely, on account of her circumstances and qualifications, to earn an income such as would have any tangible bearing upon the amount of child support that would be payable by the father.
Having regard to the financial circumstances outlined in her Statement of Financial Circumstances (and I had three filed to May 2008) and her oral evidence the child support of $189 per week is less than is sought by her but a proper amount for her to receive.
The children’s needs are not especially singular and there is nothing about their health or extra curricular pursuits which sound significantly in determining their proper needs (see s.117(4)(b)).
I have considered the earning capacities of the parties (passim). In the case of the father and because of his unexplained failure to produce relevant and fundamental financial information, my findings have been based, to some extent, on the drawing of inferences, as I have sought to explain.
The father’s commitment to [Z] must be recognised. They are voluntarily assumed by him of a magnitude in excess of the assumption of responsibility that he has made for his two other children.
I note the payment of school fees and the holiday expenses and the meeting of mortgage instalments on the land, which is now in the daughter’s name, in addition to his meeting her orthodox weekly expenditure.
I find that if the amount of child support payable is not capitalised in a lump sum, it is unlikely to be paid at all. That would cause significant hardship to the two children and the mother.
I find that, in addition, the duty of the father to maintain these children was such that it is just and equitable and otherwise proper to make a lump sum order.
It would be unjust and inequitable of the court to fail to order a lump sum against the background of the facts before the court in relation to the father’s conduct in:
a)“staging” a departure from employment;
b)during such period of ostensible unemployment, purchasing land for his daughter at significant cost;
c)during his period of ostensible unemployment, travelling overseas at significant expense;
d)failing to provide to the court taxation returns or financial returns for any relevant period; and
e)failing to make any proper contribution to the support of the children until in the shadow of the trial.
The mother has sought the lump sum in amounts that do not reflect my findings as to the likely income of the father, but I do not think that it would be just and equitable or otherwise proper to make an order in excess of that which arises from an annual income of $100,000 on the application of the formula.
Similarly, she has circumscribed the period of the operation of the order sought by her until June 2012. It may be that the father’s attitude towards an assumption of a proper share of his responsibility for the support of the children would have changed by then. Perhaps that informed the mother’s thinking in this regard.
In any event, it is not appropriate for me to capitalise child support for periods not sought by her in her application. That would not be just and equitable.
How will the father find the lump sum to meet the order I make?
I cannot be certain. He might arrange with [Z] to sell the Property D land and create a capacity on his part to borrow and service a loan much smaller than that which he presently is servicing in respect of that land (that is if [Z] retains any equity arising from the sale, estimated to be $100,000). He might sell one of his other properties. He has had a significant capacity to borrow money in the recent past and an extension of his current loan liability with the St George Bank is certainly something he should pursue if so minded.
I am satisfied that it will be just and equitable as regards the children, the mother and the father and otherwise proper to make an order that the father provide child support in the form of a lump sum.
I propose to fix the sum upon the basis of the father having an annual taxable income of $100,000.
I propose to calculate the lump sum payable by him by factoring that annual income into the ordinary operation of administrative assessment of child support under the Act.
Based upon an income of $100,000 and an administrative assessment relating to two children under the age of twelve; and upon the basis of further assumption on my part that the mother will continue to earn an income which is less than that which will affect the calculation of the assessment; and upon the further basis of acknowledging the father’s continuing full-time care of a child over the age of thirteen years; and, further, on the basis of a cost percentage of 65% and a care percentage of 60% for the mother and a cost percentage of 35% and a care percentage of 40% for the father, I find that the annual rate of child support payable by the father should be fixed at $9,866 per annum or $189.73 per week.
To the extent that the mothers’ application has a retrospective operation, the amount of child support payable by the father for the period 1 May 2007 to 1 August 2009, or three years and thirteen weeks, equals a lump sum payment of $22,198.41 less the amount of $1,600 which has been paid by way of lump sum by the father and the amount of $6 per week paid by him over the period of one hundred and seventeen weeks, being $702.02 (there may be some duplication as between the lump sum and that latter amount but the father will get the benefit of that).
This means that the total lump sum payable by the father pursuant to the orders I propose to make for the retrospective period of the operation of the orders is $19,896.39.
Prospectively, and until 31 July 2012 (a month longer than that sought by the mother but for simplicity sake three years from the date of my order), I need to capitalise the annual amount having regard to the likely impact of inflation and interest rates. The mother proposed that I capitalise at the rate of 3%. The father did not speak against such a rate applying if I reached this position and I consider it an appropriate rate to fix.
The calculation, then, is as follows:
a)$9,866 divided by 365.5 days equals 26.99316 per day
b)multiplied by 7 equals 188.952 per week
c)$1 at 3% over three years equals $148.66
d)$148.66 multiplied by 188.952 equals $28,089.62
When I add the prospective part of the order to the retrospective part of the order together the total child support payable by the father is $47,986.01, which I will round off to $48,000.
Pursuant to s.125 of the Act, the annual rate of child support payable by the father under any relevant administrative assessment for both periods is to be reduced by one hundred per cent.
The father needs to be given a period of sixty days in which to make such payment. The orders sought by the mother with respect to the sale of his real property in her application ought to be made if he fails to do that and it is proper that there be an order restraining from dealing the property identified in the mother’s application until that has occurred.
The periods of time covered by my orders include a period of two months before the legislative amendment referred to in paragraph 14 came into operation but I am satisfied that for those two months it is just and equitable and otherwise proper that the same annual rate of child support apply. If it had been necessary for me to formally to make a departure order for that period (and I am not at all certain that it would have been) then, on account of the matters discussed in paragraph 29, the operation of the previously applying legislation would have led to the same result.
I certify that the preceding one hundred and thirty (130) paragraphs are a true copy of the reasons for judgment of Lindsay FM
Associate: Ms N. Julius
Date: 31 July 2009
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