Aspen and Selby - [2009] FMCAfam 1483

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ASPEN & SELBY

[2009] FMCAfam 1483

CHILD SUPPORT – Child Support departure application.

Child Support (Assessment) Act 1989 (Cth), ss.115, 117, 118
Family Law Act 1975 (Cth), s.75(2)
Evidence Act 1995 (Cth), s.91

Johnson & Johnson (1997) FLC 92-764
Gyselman v Gyselman (1992) FLC 92-279
Hallinan v Witynski (1999) FLC 98-099

Applicant:

MR ASPEN

Respondent:

MS SELBY

File Number:

SYM 2718 of 2005

Judgment of:

Lindsay FM

Hearing date:

29 April 2009

Date of Last Submission:

29 April 2009

Delivered at:

Parramatta

Delivered on:

29 April 2009

REPRESENTATION

Applicant in person.

Counsel for the Respondent:

Ms Bridger

ORDERS

That any administrative assessment of child support for the period 1 July 2005 to 30 June 2006 be departed from to the extent that it shall be calculated upon the basis of a child support income amount of the husband in the amount of $66,301;
The application for departure from administrative assessments of child support is otherwise refused.

IT IS NOTED that publication of this judgment under the pseudonym Aspen & Selby is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PARRAMATTA

SYM 2718 of 2005

MR ASPEN

Applicant

And

MS SELBY

Respondent

REASONS FOR JUDGMENT

Before me this week has been an application by the husband pursuant to section 117 of the Child Support (Assessment) Act1989 (Cth). This matter, in some respects, is such a difficult and wide-ranging matter that, in some ways, it is difficult to know where to start. Perhaps the best place to start is to indicate that this is the hearing of an application that was originally determined by Federal Magistrate Housego on

15 August 2006. Before Her Honour on that occasion was essentially the same application that is before me. It was an application to depart from administrative assessments that related to periods between 2005 and 2007. Her Honour dismissed the application. It was the subject of an appeal.
The appeal was determined by Boland J and it was allowed, and since that determination, which was made on 22 February 2007, the matter has made its way through the list in this Court. On the first morning of the hearing of the application I had to deal with the question of precisely what it was that was before me, or to which periods the application related, and that was not a straightforward issue because I had two applications by the husband. I had the original application which was filed on 2 December 2005 and which sought a departure order but did not specify at all the child support periods to which it related. That, no doubt, is one of the reasons why an opportunity was given for an amended application to be filed. It was filed on 3 March of last year and it dealt with a number of periods with some particularity, but it dealt with periods that went beyond the period that had been dealt with in the application which was remitted to the Court, and I was satisfied from the explanations that were given on the first morning that it was not the case of the leave having been given for the application to be amended in that way to enlarge the child support period so significantly. It was an application that was filed and then, as to the adequacy or propriety of the amendments, they were matters that could be examined at the hearing that has just taken place.
Because what has happened is since the matter was before Her Honour, Federal Magistrate Housego, is that there has been a whole raft of amendments made to the Child Support legislation which mean, subject to one matter I will come to in a moment, that the opportunity to agitate these matters in legal proceedings such as these has been significantly reduced. The remedy for someone who is dissatisfied with a Review Officer's determination after the objection procedure has taken place, is to go to the Social Securities Appeal Tribunal and there is only an appeal to this Court from that body on a point of law. So the way in which these matters are dealt with has been changed quite radically.
The one exception to that, of course, is there is still an opportunity under s.115, when the Court is hearing some other application, to attach the enlarged application to it and I took Mr Aspen, even though he did not articulate it in this way, in the amended form of his application to really be inviting the Court to make that s.115 order. I was not prepared to do it for reasons I gave on that morning. I am not trying to enlarge on those reasons now but I thought, given the amount of money and the amount of time and effort that had already been expended on this child support issue, it was important to do what we could to limit the number of judicial hearings and to maximise the opportunities for the parties to benefit from the more informal, more administrative remedies that are now, and have been since

1 January 2007 extant, and it was for that reason that I thought it appropriate to limit the application to what was before Federal Magistrate Housego and what was before Boland J. The orders being sought by the husband in those proceedings was articulated in a Minute of Order that was tendered during the course of the proceedings before Federal Magistrate Housego. That Minute has, itself, been tendered in proceedings before Federal Magistrate Halligan in these proceedings and I want these reasons to indicate my cognisance of those two different occasions for the tender of the document. But it is plain that that was the application before the Court and I thought it appropriate, for the reasons I gave on the first morning of the application, that it be limited to the orders sought in that minute. In other words, be limited to what was agitated in the proceedings which were the subject of the remittal. They are the proceedings we embarked upon.
It does not mean the husband is without remedy in respect of the period from 1 July 2007 to the present or that he is deprived of any remedy in the future. It means that he has got a different remedy. He has got a slight problem or a problem that relates to a very limited period in respect of applying for a departure for assessments that are more than 18 months old, but I would be very surprised indeed if, in circumstances where, in the context of a remitted proceeding following an appeal, he thought he was able to agitate for those extended periods, that the leave would not be granted particularly when the leave will only relate to a period that is just over 18 months. So he has got his remedies. I did not think it appropriate. In these proceedings that have involved such a tragic waste or expenditure of money and effort and anxiety to expand them.
The Minute of Order that is relied upon has itself got complications. We will not worry about the problem with paragraph.1. I have already dealt with that. A departure order with respect to specific administrative assessments, and paragraph 1 does not indicate which administrative assessments they are and, in fact, it is only by virtue of the tender of the relevant administrative assessments by the wife through her Counsel that I actually got those assessments before me, but we will not let that distract us, but paragraph 2 is calculated for a period of about

18 months, from January 2005 to June 2006 on a monthly amount which annualises at $7836.96. Obviously the figure for the 18 months would be that times 1.5 but the figure for paragraph 3, it is annualised rather than a monthly figure. It was never explained to me why that was different, and that is a figure of $10,640.35.
The husband was unable, during his submissions, to tell me how those figures were arrived at, and it was not a matter of my being unnecessarily scrupulous about that. My curiosity arose from the fact that his taxable income for 2005/2006 was in fact higher than it was for 2006/2007 and I thought his taxable income might be some guide to the relative magnitude of the child support that was sought but, in the end, and I do not want to go into this in too much detail, it was excruciating enough, I suppose, for all of us concerned for the matter to be discussed, never mind to be rehashed in these reasons, but it was not possible for the husband to tell me how it was that those figures were calculated, and he focused instead upon indicating to me the calculation of a child support income based upon material in his affidavit of 1 August 2008 which, in turn, was based upon material that was available from the financial statements which were annexed to another affidavit and particularly an affidavit filed on the 6th, it looks like, of February 2008.
So at the end of the case I was able to follow what it was he said should be his taxable income for the relevant periods and I was able to follow how that figure was calculated and I will come to my assessment of his position in a moment.
I should note at this stage that I have been at a considerable advantage to both Federal Magistrate Housego and to Justice Boland because I have the benefit of financial statements for the company and the taxation returns for the husband for both the 2006 and 2007 financial years. It is apparent from the Reasons in those cases that the Court was doing its best to try to identify the husband's financial position in the middle of a financial year which was not the subject of any detailed financial statements, so my task has been considerably simplified in that way.
Before I turn to the husband's application and how it is adjudicated, I should touch upon another significant aspect of this matter. The property and parenting order proceedings between the parties were the subject of the judgment of the Honourable Justice Mullane of 20 July 2005. The effect of those orders was the same position that had maintained since the parties separated which was that the children were in the care of the wife. She got an order for residence and there was an order for what was essentially contact as agreed and the parenting order proceedings were characterised by an adjudication of the difficulties that were associated in the relationship between the father and the children for various reasons, not relevant to this determination. But there was also a determination of the property dispute and, ultimately, His Honour determined the matter on the basis of an adjusted asset pool of about just under $1,500,000 dollars. That appears at paragraph 297 of the judgment.
His Honour made an assessment of contributions–based entitlements of the parties and, having done that, that had the result of there having to be a financial adjustment in terms of a payment by the wife to the husband of a figure in excess of $100,000. I just cannot identify the figure at the moment. But that was then the subject of a s.75(2) (Family Law Act 1975 (Cth)) adjustment which extinguished the wife's liability to pay a cash amount, being $193,878. It appears in paragraph 312. That was the payment due by the wife to the husband under the contributions based entitlement calculation. But when the s.75(2) adjustment was carried out, and that is set out at the beginning of paragraph 329, there was a further 10 per cent adjustment in the wife's favour and that had the effect of requiring the retention of assets by each of the parties by a small cash adjustment having to be paid by the husband to the wife, and the cash adjustment was a sum of just over $43,000.
The calculation of that sum is not articulated in the Reasons. In other words, there is not the same process followed through as there was in relation to contributions based entitlements as to how the figure is reached out, but it is implicit in the judgment that that further 10 per cent adjustment in the wife's favour results in those figures.
The net effect of it was that the husband retained the superannuation of the parties. There was a splitting order in his favour from the wife's entitlement and she retained the former matrimonial home at [P] which had a value for the purposes of the judgment of $970,000. The husband retained his company; his furniture; oriental art and artefacts; his own superannuation (which was about $209,000) and the benefit of the wife's superannuation, which was approximately $100,000. The wife retained the home and she was entitled to a small cash payment from the husband.
I should say something about the use to which I put His Honour's judgment. It is clear that I would only understand, coming into this matter after three judicial determinations, I would only understand the issues in dispute before me by having some detailed knowledge or detailed information as to what has transpired before and, for that reason, I thought the tender of the decision of Justice Mullane was appropriate and, similarly, I have had regard to the decision of Justice Boland and to Federal Magistrate Housego. But in evaluating the material in those judgments, I bear in mind the provisions of s.91 of the Evidence Act 1995 (Cth) which provides that evidence of the decision or a finding of fact in an Australian or overseas proceeding is not admissible to prove the existence of a fact that was an issue in that proceeding. So I will not be utilising the judgment to resolve any factual dispute that were extant, or that had to be resolved in the proceedings before me but, plainly, everything the parties have done and are doing following the judgment of Justice Mullane is, to some extent, a function of that judgment and it was clearly appropriate that I understood what His Honour had ordered and the reasons His Honour advanced for doing so.
The wife has remained in the home. Two of the children are now adult children, although during the period of time to which this application relates, only one of the four children dropped out of the child support liability. The wife, during the period of time to which this application relates, was not working. Her qualifications were the subject of evidence before me. She has extensive academic qualifications in relation to [healthcare education]. She has been, many years ago now, a [healthcare worker] herself, but the principal qualification was in relation to [healthcare education. She was not working at the time of His Honour's judgment and she had not worked, since about 1994 and 1995, not worked in that profession. This was uncontroverted evidence before me. She had some small amount of work arising from some work she took into the house, but she is not earning anything other than a negligible amount of money by way of employment and, on the evidence, had no real intention to do so. But that is a position that is maintained well before the parties separated.
In addition to that, she is in occupation of a home which is now worth just over $1,000,000 on the evidence before me, and it was an agreed fact arising from the valuer's report it was just over $1,000,000. She continues to live in that home with the children. As I say, two of the children are adult children and are in employment. She does not receive any or take anything by way of board or rent or anything of that nature from them. She gave an explanation for that which was not entirely satisfactory. The impression left was that she proposes to remain indefinitely within the home and with an attitude of resignation, as to the adult children and non-adult children continuing to live with her there at their will for as long as they liked on the basis that she would not be charging them any board. The impression given was of a determination simply to remain in occupation of the home, whether or not it was a home that was suitable or expedient for her to occupy.
These matters are touched upon in paragraph 323 of His Honour's judgment. Even at the time of the trial in 2005 His Honour was contemplating the possibility or the option the wife had of selling the home and of purchasing what he described as adequate but less expensive and unencumbered accommodation. If His Honour had an expectation of that happening in the period following his judgment, well it was the wrong impression that he took from the evidence. It is not something she gives any indication of considering seriously at the present time. I am touching upon these issues in a general way and I am not descending into more particularised discussion of them because the fact of the matter is, at the end of the evidence in this case, I just was not left with any mechanism being promoted by the husband for dealing with that issue or those issues. I should identify the issue as the wife's retention of a capital asset in the form of the home which is an asset that is retained in circumstances where one would have thought there was every reason to argue that someone in her financial position, especially in light of the evidence that was given as to the disrepair into which the home has fallen would have given consideration, at the very least, to a decision to sell that home and to purchase something smaller and of lesser value. I recognise immediately the reasons she promotes, or are front and centre in terms of her retaining the occupation of the property, is that it is close to the school of two of the children, but I think I heard enough evidence to suggest to me that travel to that school at [suburb omitted] was something that could be accessed by public transport from other northern Sydney suburban areas where smaller homes, perhaps even home units more suitable to the wife's needs, could be purchased that would free up capital.
It would give her an opportunity to escape her straitened circumstances. It would give her an opportunity to pay for courses of further education which might expedite her re-entry into the workforce. It would change the whole context in which she lives her life, but I just do not get the impression that any consideration of that has been given. Instead, what has happened in the case of the wife, is that she has fastened on to these child support proceedings in the face of the husband's intransigence and uncooperativeness. I think, is a fair way of characterising his attitude to payment of child support. She has fastened on to resisting his applications to vary the child support in circumstances where, plainly, that has been a considerable expense to herself.
All in all it is a disturbing presentation and one that, had the husband's application been properly formulated or properly thought through, was capable of having a significant bearing upon the outcome of these proceedings, and it is still capable, if he ever gets around to properly thinking it through and formulating it, it is still capable, I cannot put it any higher than that, it is still possible that it will have a significant effect upon what a review officer does in respect of the period 2007 to now in future child support assessments.
I have expressed my discomfiture about the wife's circumstances in the context of section 117, but for that to sound in any meaningful way in terms of orders that I was going to make in these proceedings, it would have had to have been the subject of far more detailed evidence. It was not clear, for example, whether the husband was suggesting she should move to a smaller home and free up a portion of the capital or whether she should use all of the capital and rent for a period of time. They were two possibilities that come to mind. I do not know which one was being pursued. He was content on cross-examining the wife's witness on this topic, the valuer. He was content to try to elicit evidence from the valuer but called no evidence himself as to the availability of alternative accommodation within the sorts of areas that he raised in cross-examination. There was a paucity - there was no evidence, frankly, other than the evidence I elicited from the forensic accountant that was called by the wife – Mr B – there was no evidence as to what sort of interest she would earn upon those sums for these relevant periods. Most significantly, assuming that I had been able somehow to extract from the evidence some sort of meaningful material in that regard, I then did not have any inputting of that evidence into the child support formula for the relevant periods.

That whole area of evidence could only materially affect the outcome of these proceedings if the husband were to contend, when I turn to the orders I can make under section 118 of the Child Support (Assessment) Act 1989 (Cth), that I should be factoring in a notional income of the wife. At the moment, in relation to these assessments, her income has no bearing on it. It does not reach a level at which it ceases to be disregarded. So there needed to be some calculation of income foregone in that regard and then it needed to be built into the formula to tell me how it impacted upon the assessments and that just was not done, and it is not for me to do that.
The husband is self represented. That is his choice and just as it is the choice of the wife to be represented and to have incurred expenses that might be thought to be out of all proportion to the subject matter of the dispute. That, in itself, is in some respects a curious decision, but these are the decisions that litigants make and they are bound by them. He is bound by his decision to remain self represented. This is within the ambits of what the Full Court of the Family Court has said on a number of occasions, starting with the case of Johnson v Johnson (1997) FLC 92-764 as far back as 1997, I am here to ensure that justice is done to the husband, that he is not disadvantaged on account of his self represented status, but I am not here to manufacture his case for him and I frankly think he understands that. And so I mention that as an issue that is sitting out there, and related to it is this issue of the wife not utilising her ability to earn an income. They are issues that are fairly and squarely sitting out there as potential issues in future child support review determinations and, in particular, they engage the provisions of ss.117(2C) and 117(7B) of the Child Support (Assessment) Act1989 (Cth). But in terms of their impact upon their proceedings, (subject to a matter I will come to in a moment), because of the absence of those exercises that I have mentioned, having being undertaken by the husband, they simply have no bearing on the outcome of this application which, in a practical sense, is confined to matters relating to his income, property and financial resources and the way that they impact upon the assessments.
Having digressed to identify those issues which may be relevant in future proceedings, I should indicate that the administrative assessment with which I am dealing in these proceedings is a decision of a review officer made on 22 March 2005. I have the assessments before me now but the relevant assessments are those that are contained in paragraphs 1 and 2 of her decision. For the period January 2005 to April 2006 she determined that the husband's child support income amount would be $93,570. For the period 17 April 2006 to 16 July 2007 she determined it would be $97,313. Those two orders then are the only relevant orders having regard to that Minute of Order to which I have referred earlier, having regard to the way the Minute of Order set out the bounds of this application.
I should note also at this point that my decision not to permit the husband to enlarge the proceedings beyond the terms that were sought in the Minute of Order. This has had a benefit to the husband in that if we had enlarged the proceedings in the way set forth in his amended application, then he would have been bound by the decisions he had made as to the way in which he presented his case. That is a position that was consistent with what the wife asked me to do, in any event, to limit the proceedings to that period of time and, in my view, quite properly asked me to do that. Particularly as to this issue about the wife's retention of the home and her not earning an income, he would have been without the opportunity to agitate those matters if he chooses to agitate them, if he chooses to think them through and articulate them properly in respect of future proceedings before the Child Support Review Office.
Now, I should say something at this point about the nature of the Court's jurisdiction under s.117 of the Child Support (Assessment) Act 1989 (Cth) . The first step in the process is for the identification of a ground for departure, and that is set out in ss.117(1) and 117(2). These sections of the Act are the subject of a longstanding authority, the decision of the Full Court of the Family Court in Gyselman v Gyselman (1992) FLC 92-279 at 79,065, and it is worth setting out what the Full Court had to say at that point about s.117(2):
Each of those grounds is prefaced by the words in the “special circumstances” of the case. Whilst it is not possible to define this with precision the meaning of that term as a generality it is intended to emphasise, that the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases. In Savery's case (p. 77,897), Kaye J adopting the view in Phillippe & Phillippe (1978) FLC 90-433 at p. 77,202 in a different context said that “special circumstances” were facts peculiar to the particular case which set it apart from other cases. The approach to the interpretation and application of the particular grounds in s.117(2) must be guided by that qualification
My determination as to whether a specific ground for departure exists must have regard to the specific matters listed in ss.117(4) and 117(5) of the Child Support (Assessment) Act 1989 (Cth).
Now, the grounds are set out in subsection.(2), having regard to what I have just had to say about that aspect of the case that was essayed, were never formulated by the husband to a stage where the Court could give it serious consideration. The grounds relied upon in s.117(2) must be taken to be that set forth in 2(a)(iii)(a) that is:
Commitments of the parent necessarily to enable the parent to support himself and:
…
(c) that in the special circumstances of the case application in relation to the child of the provisions of this Act relating to administrative assessment of child support resulting in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
…
(i)(a) because of the income, property and financial resources of either parent and;
(i)(b) because of the earning capacity of either parent or,
(ii) because of any payments and any transfer or settlement of property made or to be made, whether under this Act, the Family Law Act (1975) or otherwise by the liable parent to the child to the care entitled to child support or to any other person for the benefit of the child.
And the specific matters in subsection (4) that I think remain of relevance to the determination of the application are those set forth in subsection (g). Subsection (4) says that:
In determining whether it be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this division, the Court must have regard to -
and then it says in (g):
any hardship that would be caused to, (a) the child or, (b) the carer entitled to child support, either making or the refusal to make the order.
Subsection (1), of course, is a three stage process:
a)There is the identification of a ground.
b)There is then the just and equitable requirement; and
c)There is the otherwise proper requirement and subsection (5) sets out the sorts of matters that must be identified in determining whether it is otherwise proper to make a particular order.
The particular part of subsection (5) that I think has relevance to the facts of this case is:
(a) the nature of the duty of a parent to maintain the child as stated in s.3 and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child and then; (b) the effect that the making of the order would have on…
It goes on to mention the income tested benefits. But in fact it is subsection 5(a) that I think is the relevant part of subsection (5).
I should mention at this point that section 3 of the Child Support (Assessment) Act1989 (Cth) says:
Subsection (1) The parents of a child have the primary duty to maintain the child.
Subsection (2) Without limiting subsection (1) the duty of a parent to maintain a child
(a) is not a lower priority than the duty of the parent to maintain any other child or anther person and,
(b) has priority over all commitments of the parent other than commitments necessary to enable the parent to support
(1), himself or herself and,
(2) any other child or another person that the parent has a duty to maintain and,
(c) is not affected by
(1), the duty of any other person to maintain the child or,
(2) any entitlement of the child or another person to an income tested pension benefit or allowance.
In Hallinan v Witynski (1999) FLC 98-099 at 95,322 the Full Court of the Family Court of Australia said in relation to the duty of a parent to maintain the child:
Although that statement of a parent's duty contains no statement about the relativity about the duties of each parent, it is a clear statement of legislative intent that both parents of any child are under a primary duty to maintain the child. In looking at the relativity of the parents' duties, we think it is legitimate to look both at the “objects of the Act” as defined in s.4 and the additional particular objects of division.4 (which contain s.117) as set out in s.114. The latter section states those particular objects to include ensuring:
(a) that children have their proper needs met from reasonable and adequate shares and income, earning capacity, property and financial resources of both of their parents and,
(b) that parents share equitably in the support of their children.
Now, the Court responds to the evidence in the submissions that are made before it in a particular case. I have already indicated the difficulties the husband had in identifying how the Minute of Order, or the basis upon which the Minute of Order had been formulated. However, at the end of the case we reached a position where the husband was promoting the following child support income amounts for the relevant years. In respect of the 2005/2006 financial year, the sum of $49,745, and in respect of the 2006/2007 financial year, the figure of $49,120. He was able ultimately to take me to the way in which he had formulated that by reference to a table that was set out at page four of his Affidavit filed on 1 August 2008. He has added his gross salary as set out in the financial statements of the company; the fringe benefits value of his motor vehicle; his superannuation contributions less a compulsory element of them, and then he purported to add the dividend that had been declared to deal with the circumstance of him having a loan account with the company.
I do not want to linger too long on the questions relating to the financial structure of the husband's business, but he has been employed as an [occupation omitted] for some time now. He has been conducting business under the aegis of a company known as [E] Pty Limited. He is an employee of that company. There are consultants engaged from time to time, but he is the only employee and he is the only director and shareholder. The company operates its business from premises,

I think in the northern suburbs of Sydney, which are owned by the trustee of his superannuation fund. Again, relevantly, he is the only relevant officer of that entity, that is, the superannuation fund and the only relevant shareholder and officer of the company. I have indicated that I have the benefit, which the previous judicial officers determining this matter didn't have, of settled financial statements for each of the relevant financial years. The way the case has been conducted is that both of the parties in different ways have sought to use the financial statements of the company as the basis of the determination of the real position rather than the ostensible position with respect to the husband's income. I should also add, if the Court has those benefits as compared to Justice Boland and Federal Magistrate Housego, it is in a much more advantageous position than the review officer was. The review officer was dealing with the matter at an earlier phase of the proceedings and the review officer did not have the benefit of the involvement of the husband in the hearing before her.
I do not propose to go to the determination of the review officer in any detail. I have read it. Relevant portions of it have been drawn to my attention, particularly by the wife's Counsel and it was quite proper that that was done, but I am not sitting as a Court of Appeal from the review officer. I am not either conducting an appeal on a rehearing basis or a strict sense appeal or even, as it were, an appeal de novo. This is an entirely different application that is before me. But it is plain that the review officer was labouring under a paucity of information in relation to the husband's financial circumstances and, as I have indicated, the hearing before me proceeded with considerable focus upon the financial statements of [occupation omitted] for the relevant financial years.
It seems to me that having regard to the objects of that part of the Child Support (Assessment) Act1989 (Cth), and of the whole child support scheme itself, what we should be looking at is getting into a position where the husband's liability for child support is calculated upon the basis of the practical reality of his financial position. It is for that reason that I think there is utility, and the cases recognise this, in exploring what that reality is irrespective of the modes in which a payer may conduct his or own business. So in this case it is a matter of stripping away the corporate entity and, for that matter, the superannuation trust, given that they are the alter egos of the husband in any event. Stripping away those parts of the function of those entities which distort rather than clarify his financial position, to enable a clear picture of the reality of the benefits he receives from the conduct of the business to be obtained. I do not propose to go through the profit and loss statement item by item, but for the 2006 financial year the company derived fees of just over $135,000. In the 2007 financial year it derived fees of just over $190,000.
Of course I have had the benefit of the report of Mr B, which is attached to his affidavit of 15 February 2008. Mr B was cross‑examined by the husband and his analysis of the husband's benefits from operating the business are set out in paragraph 5.3 of his report. In summary, in the 2006 and 2007 financial years, he adds back to the salary the husband derived from the business, the net profit of the business, one year $9,677 and in the second year, $11,595. In my view, that is manifestly appropriately for him to do so. The husband resisted that calculation, that add back, if I may use that expression, on the basis that it is a figure that is only calculable at the end of the particular financial year, and that is plainly the case. But the way in which he presented his own case was upon the basis of the financial statements of the company being the starting point for the identification of the income he derives from the conduct of the business. All of the expenses and all of the income of the company is calculated in that sense at the conclusion of the financial year. The net profit is no different. Because the husband is the sole owner of the business, the net profit could just as easily be reflected in the salary component and, for that reason, it seems to me to be entirely appropriate to add those figures.
The position of motor vehicle expenses was somewhat more complicated. The total deductions for the motor vehicle were just over $13,000 in one year and $12,000 in the next. However, in terms of the calculation of the company's taxable income, the fringe benefits tax benefit to the husband is reimbursed to the company and hence reduces the deductibility of that expense. The personal component is added back to the income of the company for the calculation of its tax and quite the opposite happens when we are calculating the tax of the husband. Mr B, I think, appropriately added back the total benefit of the motor vehicle expenses, but then deducted the contribution of the husband. He went on in the notes to his calculation to recognise that there would be, in that remaining deduction of the company which becomes an add back, an amount relating to the motor vehicle that was purely, if I may use that expression, derived on account of the earning of an income by the company. It is not possible to calculate that with any precision, and for reasons which I will come to in a moment, I propose to leave the calculation in the way that it has been done by

Mr B.
A more significant add back is the rent that is paid to the [P] Trust, that is, the trustee of the superannuation fund. The husband has structured his financial arrangements so that the place from which the company conducts business is owned by the superannuation fund and charges a rent to the company. He is the sole beneficiary of the superannuation trust. True it is that the superannuation trust is obliged by the rules under which it operates to derive an appropriate income from the resources it holds and there can be no exception taken to the practice of the unit trust in charging a rent to the company or in the company paying that rent. From the perspective of both of those entities it is a perfectly prudent and appropriate course for them to take. However, as Mr B was at some pains to point out during the course of his cross-examination by the husband, this entire situation is something that operates at the will of the husband. It is designed in the first instance to add income from year to year to his superannuation fund and, on the other hand, it is calculated to minimise the taxation which the company pays from the income it derives. Looked at in isolation, they are perfectly appropriate charges and payments in each case, but the reality is that if the husband chose not to structure his business in such a way, he would have the benefit of that income. In 2006 he could have added to his salary the sum of $20,000 and in 2007 he could have added the sum of $45,000. It should be pointed out that the position of the wife is that she is simply not in a position to make any of those sorts of assessments because she has no income after payment of all of her legitimate expenses to devote to the acquisition of any superannuation resource. So I think it is only fair, it is only equitable that in calculating the benefits to the husband of his conduct of business through these mechanisms, that we add back to his income the amount that has for tax and superannuation purposes been expressed as a payment of rent.
Other deductions, as is always the case in cases of this nature, become more difficult to determine. For example, Mr B did not make any add back in relation to depreciation which, in one year, was just over $8,000 and in one year, just over $6,000. The appropriateness of adding back depreciation will vary from case to case depending upon the nature of the business and the nature of the capital that is depreciating and some proper allowance has to be made for the replacement of capital that is used to conduct business. I rather suspect that if we had the depreciation schedules before us, or if Mr B had the opportunity of looking at them, then there would have been some other add backs arising from it. However, if he has not seen fit to add them on and if he has not seen fit to call for the depreciation schedules before formulating his opinion, I do not think it is appropriate for me to add them back.

In 2007 there is this other complication relating to a one-off payment that is made in terms of building improvements. It is an amount of $11,427. The first problem is that the deduction in that year is for building and improvements but it is under the heading of "Repairs and Maintenance." The husband said that an element of it was repair and maintenance but he did not produce the material that would enable us to know what proportion was additions and what proportion was maintenance, and I know from the evidence that the particular improvement was one that was made to add a bathroom facility to the premises. The husband lives at the premises. He says he lives there because he is unable to pay market rental for alternative accommodation which, given that he lives alone, would presumably be one or two bedroom accommodation. It is difficult to see in his financial circumstances being so straitened that he cannot pay such a rental, and I do not accept that there is an inevitability about him living at his work premises. Nevertheless, that is a decision he has made. It is a difficult issue to determine as to whether that should be added back for that particular financial year given that the reality is that he lives in the premises. On balance, I am not satisfied that in respect of the 2007 year that item should be added back.
There are a whole series of other deductions which are contained in this financial statement which could be the subject of more detailed analysis. The wife's Counsel mentioned some in her submission such as the body corporate fees and the rates and taxes. Again, I can see arguments going each way as to those. There are others like heat, light and power which, because he lives in the premises, a portion of them should be allocated towards the add back exercise, but in respect of the 2007 financial year, as I say, I do not think the building improvements add backs should be allowed. Even if I deduct that from Mr B's calculations, I am still left with an income of $99,480 and that is without going to those other matters about which the adjudication is finely balanced. I am relieved of the obligation for doing that because, in any event, the wife is not seeking to promote a figure that is greater than that that was the subject of the review officer's determination for that particular financial year, and that, in respect of the 2007 financial year, was a figure of $97,313.
It was for the husband to identify the way in which he was promoting his various applications. Again, because of his self represented status, it was often difficult to identify the rationale for approaches he took, and there was a paucity of evidence. For example, how the review officer's determination, which forms the assessment that is the subject of this 117 application, was itself formulated. I think the only rational response to the circumstances in which I am left by the way the husband has conducted his application, is for me to deal with the matter upon the basis of it being an application for departure for those two financial years, being for the financial year ended 30 June 2006 and financial year ended 30 June 2007. That is consistent with the way each of the parties approached the presentation of the case. Because, on my calculation, the husband's real income derived from his business activity was in the 2007 financial year in excess of that which appears to have been delineated by the Child Support Review Office, I propose to refuse the application as it relates to that period.
Again, with respect to 2006 and consistent with the way Mr B has conducted his analysis of the situation there, I propose to add back the net profit, the motor vehicle expenses, less the contribution of the husband by fringe benefit tax, the rent paid by the [P] Trust for that year and the superannuation. I should note that the 2007 figure included superannuation of $12,315. Whether the superannuation is paid as part of a compulsory levy on the company in respect of its single employee, the husband, or whether it is paid in excess of that amount, does not seem to matter to me if we bear in mind the purpose of the exercise. What matters is the benefit that is derived by the husband from the conduct of the business. If he were conducting his business other than as an employee, but as a sole trader the issue would not arise. I do not see why the superannuation add back to this exercise should be reduced by the compulsory amount for that reason. There were no relevant building improvements for the 2006 financial year.
On balance, I do not consider in the circumstances that it would be fair or an accurate reflection of the husband's financial circumstances to add back the body corporate fees, the heat, light and power, which is negligible, in any event, or the rates and taxes fees for the 2006 financial year. That would leave me in a position then of adopting

Mr B's calculation for the 2006 financial year leaving him with a child support income amount of $66,301. And insofar as the husband's application relates to that aspect, that is, those sections of s.117 identified which relate to his income property and financial resources, I would allow the application for that year accordingly.
There is one aspect of the matter which goes beyond the analysis of the income derived by the husband from the company and it is a matter that arises under s.117(2)(c)(ii). It is an opportunity to depart from an assessment where I am satisfied that in the special circumstances of the case, I should do so because of any payments and any transfer or settlement of property made or to be made, whether under this Act, the Family Law Act 1975 (Cth), or otherwise by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child. I read that last line of that section as identifying three recipients of the payment by the liable parent, three separate recipients, all of which need to be given separate consideration under the section. That is:
a)A payment by the liable parent to the child. It is not relevant here;
b)A payment by the liable parent to the carer entitled to child support. That is relevant here; or
c)A payment by the liable parent to any other person for the benefit of the child. That is not relevant here.
I do not think that the construction urged upon me by Ms Bridger could be characterised as for the benefit of the child as it was to qualify all that preceded by the last three words, in other words, that the only payments that could be the subject of such an application were payments, whoever they were made to.
This matter really does raise quite difficult considerations. Justice Boland found that Federal Magistrate Housego had fallen into error in her consideration of this section and the appeal which she determined and Justice Boland considered that Federal Magistrate Housego had dealt with the matter by reference to the property order that was made by Justice Mullane having to be in terms of s.79(2) of the Family Law Act1975 (Cth), an order that was just and equitable. I leave to one side whether in fact that was what Federal Magistrate Housego did say, but I bear in mind that it is important that the section simply not be side-lined. If that were the case, given the mandate under s.79(2) for an order to be just and equitable, it would effectively remove from consideration under this subsection any payment made under an order under s.79 of the Family Law Act 1975 (Cth). The order has to be, and can only be made if it is just and equitable, ergo, in considering whether it is unjust and inequitable in terms of subsection (c) that the matter is already determined.
I think, as Her Honour Justice Boland indicated, what the section really behoves us to do is to have a look at the level of financial support that is being provided by the liable parent and to have a look at it in terms of the other findings I have made. That is for the 2006 and 2007 financial year child support income amounts of $66,301 in 2006 and $93,570 in 2007. Then, against the background of the transfer of property or payments made under the Family Law Act order, consider whether that operates unjustly and inequitably towards the husband, it having to be accepted that the property order itself was just and equitable. Nevertheless, the operation of any payments made or transfers made under that order might be seen to be unjust and inequitable having regard to the amount of financial support to be paid by the liable parent.
The relevant transfers and payments here are, of course, the transfer of his interest in the former matrimonial home at [P] to the wife and the payment to her of a sum which, I think, was just under or just over the amount of $43,000. This is a matter that I have given anxious consideration, but it is a matter that, again, it would be unsurprising if once this issue was properly thought through by the husband and the subject of some articulation, which was absent from the conduct of these proceedings. It would not be surprising if that issue turned out to be one that engaged the attention of a review officer when looking at the period 2007 to 2009 and any future administrative assessments of child support. But my difficulty is that it is not a submission that has been the subject of any development or articulation by the husband.

I do not know the way in which he says that the transfer of his interest in the property or that payment made to the wife. They were payments that were made and the transfers that were made reasonably soon after the orders were made by Justice Mullane in July of 2005. It has not been identified the way in which that would impact upon the level of his financial support. Is it the case that the payment was made to the wife, that is, the $43,000 was made to the wife from income derived in the 2006 or 2007 financial year? If that were the case it might have some bearing upon whether the child support income amounts I am providing would operate unjustly and inequitably. I do not know whether that is the case. That is the difficulty. It was never identified.
Is it the case that the transfer of his interest in the property to the wife pursuant to that order operates unjustly and inequitably because of the level of his financial support? And is it proposed via that mechanism to engage these issues of whether the transfer of the property is bound up with this issue of matters that would otherwise be the subject of analysis under Section 7(b) of the Act? It is not at all clear to me how the transfer of the property itself, which is what my attention has been directed to in subsection (2) necessarily picks up this issue as to whether in 2006 and 2007 that property was being properly used. In other words, whether or not it was reasonable in the circumstances for the wife to sit on her capital and not liquidate a part or a portion of it. If that is what it means, if this issue of the transfer of the property engages this topic, again it is not clear as to how that would impact upon the wife's financial circumstances and, hence, the level of child support that is payable by the husband.
So, once again, I am left in the position of having this sense of discomfiture that there is an issue that is capable of having some bearing upon the determination of this application which simply has not been explored or articulated properly by the husband to enable me to take it into account. At the end of the evidence I am not able to find that the child support income amount which I propose to fix would be unjust and inequitable for the 2006 and 2007 financial years because of either the payment of $43,000 made by the husband in that period or the transfer of property made by him to the wife. I should say I have limited myself in terms of the house property to the question of the transfer. The section does behove me to look more generally at the settlement of property. We would be looking at the other terms of the order but, really, the major aspect of the property settlement order that Justice Mullane made was the transfer of the husband's interest to the wife. And I am unable, because of the paucity of evidence and the lack of articulation of any submission on the topic, to find that a ground for departure in the special circumstances of the case is made out on account of that factor.

I certify that the preceding fifty two (52) paragraphs are a true copy of the reasons for judgment of Lindsay FM.

Associate: Deanne Bush

Date: 18 March 2010