Aspen & Selby
[2007] FamCA 872
•22 August 2007
FAMILY COURT OF AUSTRALIA
| ASPEN & SELBY | [2007] FamCA 872 |
| FAMILY LAW - APPLICATION FOR LEAVE TO APPEAL - Whether leave to appeal should be granted - Whether Federal Magistrate had committed error of principle. FAMILY LAW - DEPARTURE APPLICATION - Whether appropriate to depart from administrative assessment on basis that special circumstances established under s 117(2)(a)(iii) and or s 117(2)(c)(ia) and s 117(2)(c)(ib) of the Child Support (Assessment) Act 1989 (Cth) - Whether Federal Magistrate failed to give adequate reasons for rejecting departure grounds - Whether Federal Magistrate in error in factual findings- Whether error vitiated discretion - Whether Federal Magistrate failed to consider special circumstances - Whether Federal Magistrate in error in determining level of child support not unjust and inequitable having regard to each party's income, property and financial resources – Error of law established - Appeal allowed. FAMILY LAW - APPLICATION FOR LEAVE TO CROSS APPEAL COSTS ORDER - Whether Federal Magistrate committed error of principle in determining costs application– Whether wife denied natural justice - Whether Federal Magistrate incorrectly took wife's conduct into account when determining costs - Leave to cross-appeal granted. FAMILY LAW - COSTS OF APPLICATION - Each party to receive certificates under Federal Proceedings (Costs) Act1981 (Cth) for appeal and re-hearing. |
| Child Support (Assessment) Act 1989 (Cth) ss 4, 102A(1), 102A(2), 102A(5), 117(1), 117(2), 117(4), 117(5), 117(7A), 117(7B) Family Law Amendment (Shared Parental Responsibility) Act 2006 (Cth) Family Law Act 1975 (Cth) s 79 Superannuation Industry (Supervision) Act 1993 (Cth), s 65 Superannuation Industry (Supervision) Regulations 1994, reg 13.13 Federal Proceedings (Costs) Act 1981 (Cth), ss 6, 8 and 9 |
| Gyselman and Gyselman (1992) FLC 92-279 C & D [2004] FamCA 1171 |
| APPELLANT: | Aspen |
| CROSS APPELLANT: | Selby |
| RESPONDENT: | Selby |
| CROSS RESPONDENT: | Aspen |
| FILE NUMBER: | SYM | 2718 | of | 2005 |
| APPEAL NUMBER: | EA | 38 | of | 2007 |
| DATE DELIVERED: | 22 August 2007 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Boland J |
| HEARING DATE: | 18 July 2007 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 22 February 2007 |
| LOWER COURT MNC: | [2007] FMCAfam 144 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT/CROSS RESPONDENT: | Mr Millar |
| SOLICITOR FOR THE APPELLANT/CROSS RESPONDENT: | L J Rickard, Solicitor |
| COUNSEL FOR THE RESPONDENT/CROSS APPELLANT: | Ms Bridger |
| SOLICITOR FOR THE RESPONDENT/ CROSS APPELLANT: | Jo-Anna F S Moy, Solicitor |
Orders
The husband’s application for leave to appeal is granted.
The husband’s appeal is allowed.
The wife’s application for leave to cross-appeal is granted.
The wife’s cross-appeal is allowed.
The husband’s application for departure filed 2 December 2005 and the wife’s response filed 1 February 2006 be listed for re-hearing as soon as possible before a Federal Magistrate other than Federal Magistrate Housego.
The Court grants to the appellant husband a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by him in relation to the appeal.
The Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by her in relation to the cross-appeal.
The Court grants to each of the parties a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each of the parties in respect of the costs incurred by them in relation to the new trial ordered.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Boland delivered this day will for all publication and reporting purposes be referred to as Aspen and Selby.
| IN THE APPEAL DIVISION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 38 of 2007
File Number: SYM 2718 of 2005
| Aspen |
Appellant/Cross Respondent
And
| Selby |
Respondent/Cross Appellant
REASONS FOR JUDGMENT
The husband by application filed on 22 March 2007 seeks leave to appeal against orders made by Federal Magistrate Housego on 22 February 2007. Federal Magistrate Housego had dismissed the husband’s departure application under s 117 of the Child Support (Assessment) Act 1989 (Cth)(“the CSA Act”), and made no order for costs.
The wife resists the application for leave to appeal filed by the husband, and also seeks leave to cross-appeal Order 2 (the costs order) made by her Honour. The wife’s application for leave to cross-appeal was not filed in the time provided by the rules, but an extension of time in which to file such application was subject of a consent order made by Finn J on 6 July 2007.
I heard these applications for leave as a single Judge of the Appeal Division pursuant to the provisions of s 102A(2) of the CSA Act.
Section 102A(1) of the CSA Act provides that, with the leave of the Family Court, an appeal lies to that Court from a decree of the Federal Magistrates Court exercising original jurisdiction under the CSA Act. Under s 102A(5), the Court may, in determining the outcome of an appeal, affirm, reverse or vary the decree or decision the subject of the appeal and may make such decree or decision as, in the opinion of the Court, ought to have been made in the first instance, or if it considers appropriate, order a re-hearing, on such terms and conditions as it considers appropriate.
The husband proposes if leave is granted to rely on four grounds of appeal which are set out in a document “Amended draft Notice of Appeal” filed 29 June 2007. The grounds may be summarised as follows:
· Lack of adequate reasons
· Failure to make findings of fact essential to the determination of the application
· Error of law in respect of the grounds for departure from administrative assessment
· Making findings of fact contrary to the evidence.
The wife’s challenge, if leave is granted, is directed to an asserted error of law by the learned Federal Magistrate in taking conduct, not related to the proceedings, into account in refusing to make a costs order in the wife’s favour, and denial of natural justice in not permitting the wife to make submissions in respect of her asserted entitlement to costs.
The husband’s counsel submits that if the husband’s challenge in respect of asserted lack of adequate reasons is successful, it will regrettably be necessary for the matter to be remitted for re-hearing. I agree with that submission.
Background
The background relevant to the parties is found in her Honour’s reasons for judgment and the Federal Magistrates Court’s record and is not the subject of controversy.
The husband was born in December 1949 and the wife was born in August 1953.
The parties commenced cohabitation in October 1977 and were married in November 1979. They separated in July 2003.
The parties were divorced in May 2005.
There are four children of the marriage namely J P born in May 1988, S B born in April 1990, A K born in December 1992 and R M born in April 1977. At the date of the hearing all of the children were living with the wife in the former matrimonial home on the upper North Shore (“the matrimonial home”).
The husband is the sole director and shareholder of a company, E P Pty Ltd (“the company”). The husband is the sole employee of the company. The husband is a contributor to the E P Superannuation Fund (“the superannuation fund”), a self managed fund. The superannuation fund is the owner of commercial premises also on the upper North Shore (“the commercial premises”). The husband conducts a consultancy business through the company. The company pays a commercial rent to the superannuation fund for occupation of the commercial premises.
At the date of the hearing, the husband rented a room at premises leased by his uncle. The husband said he slept at the commercial premises approximately three nights a week.
The wife is primarily engaged in home duties and the care of the children. She is in receipt of a Parenting Payment and Family Allowance. In addition, the wife earns a small amount by way of income from babysitting and ironing.
From July 2003 the husband was assessed by the Child Support Agency to pay child support.
On 17 January 2005 the wife applied for a change of assessment to increase the child support paid by the husband.
On 22 March 2005 a Notice of Decision of a Senior Case Officer, Ms J, was published. Pursuant to Ms J’s decision the husband’s child support income was determined as follows:
1.That for the period 17 January 2005 to 16 April 2006 Mr [Aspen’s] child support income amount is increased to $93 570.
2.That for the period 17 April 2006 to 16 July 2007 Mr [Aspen’s] child support income amount is increased to $97 313.
3.That for the period 17 July 2007 to 31 October 2008 Mr [Aspen’s] child support income amount is increased to $101 206. (page 2 of Annexure A to wife’s affidavit filed 6 June 2006)
Both parties sought an administrative review of Ms J’s decision, and on 13 July 2005 Ms C, Objections Officer, published her reasons. Ms C reconsidered the original decision after receiving objections and decided not to change the original decision. The husband’s child support liability for the period from 17 January 2005 to 19 February 2006 was assessed at an annual rate of $27,411.00, or a monthly amount of $2,284.25, for all four children.
J P attained the age of 18 years in May 2006 but was completing Year 12 in that year.
Following defended property and parenting proceedings Mullane J made orders in the parenting proceedings on 19 July 2005. The parenting orders provided that the four children should live with the wife and for the husband to have contact (as it was referred to before the introduction of the Family Law Amendment (Shared Parental Responsibility) Act 2006 (Cth)) with the three older children as agreed to by those children, and for defined contact with the parties’ youngest child, R M.
The property orders made under s 79 of the Family Law Act 1975 (Cth) (“the Act”) provided the husband pay to the wife the sum of $43,344.00, and that he transfer to her his interest in the matrimonial home. The husband retained oriental art and artefacts which were subsequently sold by him to the superannuation fund, and a splitting order was made in respect of the wife’s superannuation entitlement in the superannuation fund, such that the husband received 100 per cent of the wife’s entitlement in that fund. In addition, the wife was required to transfer a motor vehicle to the husband.
On 2 December 2005 the husband filed the departure application, the subject of proceedings before Federal Magistrate Housego.
At the commencement of the hearing the husband’s counsel sought different orders in terms of a Minute of Order, which Minute became Exhibit 1. The husband sought a departure from the administrative assessment, and that he pay a monthly sum of child support from 17 January 2005 to 30 June 2006 of $653.08 per month, and from 1 July 2006 to 30 June 2007 an annual sum of $10,640.35 ($886.69 per month).
The wife filed a response on 1 February 2006 in which she sought orders for the dismissal of the husband’s departure application, and that he pay her costs of and incidental to the application.
Reasons for Judgment of the Federal Magistrate
Having noted the making of child support assessments by the Child Support Registrar, objections by the parties to the assessments, and the determination the subject of the departure application, her Honour set out brief historical details concerning the parties.
In paragraph 7 of her reasons for judgment, her Honour referred firstly to the provisions of s 117 of the CSA Act and then referred to “the three step approach to be adopted [by her]” as identified by the Full Court in Gyselman and Gyselman (1992) FLC 92-279.
Thereafter her Honour set out the grounds for departure relied on by the husband in a Minute of Order provided by his counsel at the commencement of the hearing. In paragraph 12 of her reasons her Honour said:
It is incumbent upon the applicant for relief to establish that the grounds for departure set out in s.117(2) are made out. The burden on the husband is therefore, to establish firstly that he did not have adequate income to support himself, and secondly, that there is an imbalance, an unjust and inequitable determination of financial support being provided by the liable parent, vis-à-vis the carer parent.
Her Honour noted the husband’s assertion that “…the child support assessment erred in the determination of his income” (paragraph 13), and recorded the income on which the assessment had issued in the quantum of $93,570.00.
Her Honour then said:
The husband's complaint in relation to that is that there is no basis for that figure being arrived at. The salary appears to have been assessed by reference to the figure payable to a notional working proprietor of the husband's business for the purpose of valuing that business on a maintainable earnings basis. The figure that has been represented in that assessment was $120,000. There is no evidence that suggests that $120,000 is the income received by the husband. (paragraph 15)
Her Honour then recorded “the husband’s own evidence” as to his income was that it was $40,857.00 and his net income was $31,815.00. The Federal Magistrate then discussed the business activities undertaken by the husband through the company, and the distribution of income received by the company, including payments to the husband, the superannuation fund and for company expenses including rent for the commercial premises.
Her Honour then discussed the husband’s expenditure as set out in his Financial Statement, which she noted on an annual basis amounted to $23,660.00, and concluded “[h]ence his minimum expenses as set out in his financial statement appear to consume at least two-thirds of his net income.” (paragraph 21)
Her Honour thereafter recorded the wife’s assertions about expenditure of the husband notwithstanding his assertion of “a very limited income”. The Federal Magistrate noted those assertions to include the purchase of a luxury motor vehicle, discharge of the loan in relation to “that property” (it is not clear whether her Honour was referring to the matrimonial home or the commercial premises but more likely the latter), and the discharge of the mortgage over “the property.” Having recorded the husband’s assertion that he was unable to obtain accommodation to live independently and slept from time to time at the commercial premises, her Honour said:
The difficulty, in the context of the husband’s application, is that on examination of the husband's expenditure it is clear that the financial benefits that he derives well exceed that limited income sum. (paragraph 24)
Thereafter, her Honour recorded, by way of example, that the company was able to pay rent in the financial year ended 2003 of $28,600.00 for occupation of the commercial premises owned by the superannuation fund.
Her Honour then said:
Rent varies with no explanation given by the husband. In the year ended 30 June 2004 it reduced to $8,250 and increased again in the year 30 June 2005 to a rental of $16,000. (paragraph 26)
Her Honour noted:
There is no evidence to suggest that decisions as to the amount of rent paid are other than at the election of the husband. The husband could arrange for the business to occupy the premises free of rent, in which case in the year in question of 30 June 2005 an additional $16,000 would be available to him, or alternatively, the premises could be rented to some other person or entity for a commercial return, which moneys could then be additional income available to the husband. (paragraph 28)
Her Honour then turned her discussion to her examination of the company records and said, “…a number of expenses paid for the husband on his behalf by the company are items of a personal nature.” (paragraph 29)
The Federal Magistrate then referred, by way of example, to an account run by the company with a North Shore coffee shop. Her Honour said:
…[t]hat was referred to by the husband in his evidence as corporate catering, but in fact it transpired that much of the product purchased on that account was the equivalent of food and comestibles for the husband alone. As such, that constitutes a payment by the company for food and other expenses of the husband, which is not otherwise properly reflected in the financial position put by the husband to this Court. (paragraph 30)
Her Honour noted, at paragraph 31, that the husband had the benefit of “…a gym membership, provision of some equipment, telephone accounts, motor vehicle expenses and the like...” provided to him by the company.
Thereafter she examined other items of the husband’s expenditure including his expenditure on golf, and noted he had been able to spend time overseas in Vietnam, Cambodia and Singapore in 2006, which trip had been partly professional and partly personal.
In paragraph 35 of her reasons, Her Honour said:
I am asked to find for the husband that his financial position, because of the downturn in income in the company is so constrained that he is unable to provide for his own self-support and cannot meet his assessments for child support.
At paragraph 36 of her reasons for judgment, the Federal Magistrate said:
In determining this application I have to take that into account evidence of his continuing to expend moneys on such luxuries as golf club membership, overseas holiday at least in part, and also the fact that he is able to elect through the company structures to enjoy the financial benefits of reducing his taxable income in his hand by the payment of his expenses through the company and also the payment by the company of moneys into his superannuation fund.
Her Honour made a finding that the superannuation fund did provide “resources” for the husband, and cited as the basis for this finding the evidence that the husband had funded the payment to the wife pursuant to the property orders by selling the artworks in his possession to the superannuation fund to obtain monies which he was then able to provide to the wife.
Having recorded the husband’s assertions that his income was reduced from that enjoyed during the parties’ cohabitation by reason of a downturn in client base and that he was no longer in the position to maintain professional indemnity insurance, her Honour said, “[t]o be accepted by this Court such assertions ought be supported by actual evidence.” (paragraph 39)
The Federal Magistrate then made findings about the husband’s evidence, noting she found that his answers to be “vague and unconvincing” and said:
…I formed the view from his evidence that he was not assisting in presenting a clear and detailed picture of his true financial position. Rather, he glossed over detail so as, in my view, to paint a picture, however unconvincing, of lack of sufficient income to meet self-support let alone child support. (paragraph 40)
However, her Honour accepted the husband’s submission that she could not add-back expenses met on behalf of the husband into the hands of the company and then seek to retrospectively determine what the husband’s income might be because of the complexities of tax consequences and the like. Her Honour recorded the obligation on the husband to provide the Court with evidence to satisfy the Federal Magistrate of his actual financial circumstances. Her Honour concluded:
…He was unable to explain where moneys expended by him derived, and nor was he able to discharge the basic requirements to satisfy me that the fortunes of his company are down-turned in the manner outlined by him, both in his affidavit and also in the submissions of his counsel. (paragraph 44)
Her Honour then said:
While I cannot identify the income of the husband, I find that, on the evidence before me, the husband has a capacity to meet his expenses necessary to support himself both from his income or that of the company and from his financial resources. He demonstrably has the capacity to meet additional expenses for and on his behalf, including some luxury expenditure. Accordingly I find in these circumstances that the first ground for departure relied upon by the husband is not made out. (paragraph 45)
Turning to the second ground of departure relied on by the husband, namely s 117(2)(c), her Honour summarised that provision as follows:
…That is, whether there is an unjust and inequitable determination of the level of financial support to be provided by the husband because of the income property and financial resources of the parties, and also because of the earning capacity of the other party. (paragraph 46)
Her Honour recorded that the property held by each of the parties was “…largely equivalent to the property which was received by each of them as a result of property orders made by Mullane J in 2003 …” (paragraph 47). Her Honour noted “…[n]o actual value of any relevant assets was before me is that [sic] including as to change in value since Mullane J’s orders.” (paragraph 49)
Her Honour concluded the second ground for departure was not made out and said:
The property orders themselves carried a requirement that the orders then be just and equitable, and the orders stand without any appeal and continue to represent [sic] lay out the relative financial positions of each of the parties. (paragraph 51)
Thereafter, Her Honour discussed the wife’s income and earning capacity, and concluded that “…neither aspect of the second ground for departure has been made out.” (paragraph 54), and dismissed the husband’s application for departure.
Her Honour then turned to the question of costs and noted the wife had sought an order for costs in her favour. Her Honour said the financial circumstances of the parties did not suggest to her there should be a departure from “the usual rule that each party bear their own costs”. Her Honour then said:
58.Secondly, what is apparent both through the conduct of this litigation and the documents that have been tendered before me is that much of the difficulty in relation to the child support issue has its roots at least partly in the relationship between the parties, and the manner in which they have continued to carry the issues between them forward from the time of final resolution of their property proceedings.
59In particular I note a continuing attitude of bitterness in relation to the children, and the husband's involvement with them.
60.It is of concern to me that the mother has elected to conduct herself as she has with consequent the privation that the children are experiencing, for the sake of retaining the former matrimonial home. While her decision to retain that property is understandable from some points of view, this is a decision that is clearly placing the children under a level of financial constraint which is understandable and likely to be contrary to their best interests. The mother’s decision to retain the home, expend monies on its upkeep and forgo use of this resource to provide an income which would [sic], together with child support payable by the father, is not a decision I condone.
61.Accordingly, I am not satisfied that the conduct of either of the parties in relation to the overall dispute between them does not [sic] warrant making a costs order in this particular case.
The grounds relied on in the departure application, and relevant provisions of the CSA Act
Before commencing my discussion of the four grounds of appeal on which the husband seeks to rely if leave is granted, it is appropriate to set out the two provisions of s 117(2) of the CSA Act on which the husband sought to rely for departure from the administrative assessment made by Ms J on 22 March 2005 and confirmed by Ms C on 13 July 2005. It is useful at this point to set out the relevant provisions of s 117 of the CSA Act, including s 117(1) (2) (4) (5) (7A) and (7B):
Section 117(1) [Court may make departure order]
Where:
(a) application is made to a court having jurisdiction under this Act for an order under this Division in relation to a child in the special circumstances of the case; and
(b) the court is satisfied:
(i) that one or more of the grounds for departure mentioned in subsection (2) exists or exist; and
(ii) that 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;
to make a particular order under this Division;
the court may make the order.
Section 117(2) [Grounds for departure order]
For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:
(a) that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of:
…
(iii) commitments of the parent necessary to enable the parent to support:
(A) himself or herself; or …
…
(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 would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
…
(ia) because of the income, property and financial resources of either parent; or
(ib) because of the earning capacity of either parent; or
…
Section 117(4) [Matters to consider for the purposes of subparagraph (1)(b)(ii)]
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 a particular order under this Division, the court must have regard to:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b) the proper needs of the child; and
(c) the income, earning capacity, property and financial resources of the child; and
(d) the income, property and financial resources of each parent who is a party to the proceeding; and
(da) the earning capacity of each parent who is a party to the proceeding; and
(e) the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i) himself or herself; or
(ii) any other child or another person that the person has a duty to maintain; and
(f) the direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g) any hardship that would be caused:
(i) to:
(A) the child; or
(B) the carer entitled to child support;
by the making of, or the refusal to make, the order; and
(ii) to:
(A) the liable parent; or
(B) any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order.
Section 117(5) [Determination whether otherwise proper to make order]
In determining whether it would be otherwise proper to make a particular order under this Division, the court must have regard to:
(a) the nature of the duty of a parent to maintain a child (as stated in section 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
(b) the effect that the making of the order would have on:
(i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
(ii) the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.
Section 117(7A) [Matters to consider for purposes of paragraph (4)(d)]
In having regard to the income, property and financial resources of a parent of the child, the court must:
(a) have regard to the capacity of the parent to derive income, including any assets of, under the control of, or held for the benefit of, the parent that do not produce, but are capable of producing, income; and
(b) disregard:
(i) the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child, or who has such a duty but is not a party to the proceeding, unless, in the special circumstances of the case, the court considers that it is appropriate to have regard to them; and
(ii) any entitlement of the child or the carer entitled to child support to an income tested pension, allowance or benefit.
Section 117(7B) [Matters to consider for purposes of paragraph (4)(da)]
In having regard to the earning capacity of a parent of the child, 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 that:
(a) one or more of the following applies:
(i) the parent does not work despite ample opportunity to do so;
(ii) the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full‑time work for the occupation or industry in which the parent is employed or otherwise engaged;
(iii) the parent has changed his or her occupation, industry or working pattern; and
(b) the parent's decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:
(i) the parent's caring responsibilities; or
(ii) the parent's state of health; and
(c) the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.
At the commencement of the hearing before the Federal Magistrate, the husband’s counsel tendered a Minute of Orders sought. It was in the following terms:
1.That the administrative assessment provisions of the Child Support (Assessment) Act 1989 be departed from in the special circumstances of the case.
2.That the child support payable by the husband for the children of the marriage for the period 17 January 2005 to 30 June 2006 be determined to be $653.08 per month.
3.That the child support payable by the husband for the children of the marriage for the period 1 July 2006 to 30 June 2007 be determined to be $10,640.35.
Proposed grounds of appeal
The proposed draft grounds of appeal relied on by the husband are as follows:
1.That her Honour failed to give adequate reasons for making order 1.
2.That her Honour erred in law in failing to make findings of fact which were essential to the determiniation [sic] of the application including finding as to the husband’s income.
3.That her Honour misdirected herself with regard to the matters required to be established in order for husband to make out one or both grounds of departure.
4.That her Honour erred in making findings of fact which were contrary to the evidence.
In my consideration of whether or not it is appropriate to grant leave, I propose to examine the merits of each of the husband’s proposed grounds of appeal.
In determining this appeal I note the Federal Magistrate faced a difficult task. The proceedings unfortunately were conducted over three days when, as the transcript reveals, her Honour had other matters in her list. This necessitated the filing of written submissions after the close of the evidence depriving her Honour the opportunity of useful exchange with counsel during oral final submissions. The husband’s material was sparse and his Financial Statement out of date. I am cognisant that her Honour, who had the benefit of seeing the husband in the witness box, found the husband to be an unsatisfactory witness.
Challenges to the Federal Magistrate’s treatment of the first departure ground
The parties’ submissions
The gravamen of the husband’s complaint in respect of the first departure ground is his assertion that her Honour failed to address the question of whether the husband had established “special circumstances”.
Further it is submitted that her Honour failed to give reasons for her conclusion that financial benefits derived by the husband from the company “well exceed that limited income sum” (the husband’s net taxable income). Complaint is made about her Honour’s discussion of, but asserted lack of findings about, the rent paid to the superannuation fund for the commercial premises, for food and comestibles, gym membership and provision of holiday expenses and equipment. It is asserted that whilst her Honour refers in a general way to these matters, she failed to analyse the evidence of husband on these topics, and make necessary findings to underpin her conclusion that the first ground relied upon for departure was not established. It is submitted that there is no foundation for her Honour’s finding that the husband could meet expenses from his financial resources – it being asserted his only financial resource was his superannuation interest.
Counsel is also submitted that the learned Federal Magistrate failed to make the necessary findings about the income, property and financial resources of both parties necessary to properly evaluate the husband’s proposed second departure ground.
Counsel for the wife submitted in her written submissions, and again orally, that although “her Honour did not state explicitly that she did not find special circumstances to exist, it is implicit in the judgment that she was satisfied there were no special circumstances.” (Wife’s submissions p 2 paragraph 4)
Counsel for the wife submitted the inability of her Honour to make specific findings about the husband’s financial position was caused by the husband, who carried the onus of establishing the departure grounds, failing to put “clear evidence before the Court of his true financial position, an onus her Honour found he had not discharged.” (Wife’s submissions p 3 paragraph 5.3)
In addressing the challenge in respect of the husband’s second ground, the wife’s counsel submitted, in paragraphs 47 to 48, her Honour “sets out simpliciter what property each party had at the time of the hearing…..It is implicit in the judgment that her Honour concluded there were no special circumstances that would render the level of child support payable by the husband unjust and inequitable because if [sic] property and financial resources”. (Wife’s submissions p 3-4 paragraph 5.6)
Relevant law – adequacy of reasons
The requirement to give adequate reasons is not in doubt. In Bennett v Bennett (1991) FLC 92-191 the Full Court considered that the test as to the adequacy of reasons propounded by Gray J in the passage appearing hereunder was a useful one and one which applies to discretionary judgments. The Court observed at 78,266:
“In Sun Alliance Insurance Ltd v Massoud (1989) VR 8, the Full Court of the Supreme Court of Victoria, consisting of Fullagar, Gray and Tadgell JJ, followed the principles established by the New South Wales Court of Appeal. Gray J, who delivered the principal judgment, said, at 18:
“The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if:
(a)the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b)justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.”
The decision of the New South Wales Court of Appeal in Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 386 is also relevant. There Mahoney JA considered the function to be served by the giving of reasons. His Honour said the function included the fact that reasons may be necessary to enable a party to exercise his or her right of appeal, and that the requirement should be seen as an incident of the judicial process. Further, his Honour noted limits to the function:
Nor is it necessary for a judge who is exercising a discretionary judgment to detail each factor which he has found to be relevant or irrelevant, or to itemize, for example, in the assessment of damages for tort, each of the factual matters to which he has had regard … Nor is a judge required to make an explicit finding on each disputed piece of evidence. It will be sufficient, if the inference as to what is found is appropriately clear.
He concluded:
But, subject to matters such as these, the basis of the decision of a trial judge or of an intermediate court of appeal should be made apparent. This does not mean that the reasons given need be elaborate: an elaborate argument may not require an elaborate answer. Reasons need be given only so far as is necessary to indicate to the parties why the decision was made and to allow them to exercise such rights as may be available to them in respect of it.
Discussion
There is a degree of overlap in issues raised by the husband in respect of ground 1 and ground 3 in which it is asserted that the learned Federal Magistrate “misdirected herself with regard to the matters required to be established in order for husband to make out one or both grounds for departure”. In his oral submissions the husband’s counsel submitted that her Honour had:
(a)fallen into error in her summation of the statutory requirements under s 117 in paragraph 12 of her reasons; and
(b)had mistakenly applied the “just and equitable” test relevant to property proceedings under s 79 as the relevant test under s 117(2)
I will discuss this latter submission again when dealing with the “just and equitable” (the second) ground.
I propose to first examine the principles to be applied in determining an application under s 117(1). The structured discretion to be exercised under the CSA Act is succinctly set out in Gyselman v Gyselman (1992) FLC 92-279; 15 Fam LR 219 (see also Hides v Hatton (1997) FLC 92-759; 21 Fam LR 855). In Gyselman the Full Court (Nicholson CJ Fogarty and Nygh JJ) said at 79,064:
4.Section 117 is the critical provision.
The structure of that section is that s 117(1)(b) identifies concisely the matters about which the Court must be satisfied and those components are then expanded in sub-sections (2) to (9). Section 117(1)(b) identifies a clear three-step process:
1. Whether one or more grounds of departure in s 117(2) is established.
If so:
2. Whether it is “just and equitable” within the meaning of s 117(4) to make a particular order.
3. Whether it is “otherwise proper” within the meaning of s 117(5) to make a particular order.
It is clear from the careful way in which s 117 has been structured that the Court must address each of those three separate issues.
Later in their reasons, referring to s 117(2) the Full Court said:
Section 117(2) sets out the grounds for departure from administrative assessment. Each of those grounds is prefaced by the words, “in the special circumstances of the case”. Whilst it is not possible to define with precision the meaning of that term, as a generality it is intended to emphasize 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), Kay J, adopting the view in Philippe and Philippe (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.
In the written submissions provided to the Federal Magistrate the husband’s counsel referred to a passage in: In the Marriage ofS.A. and L.A. Johnson (1998-1999) 24 Fam LR 130 to support first the principle that the assessment the subject of the review is the assessment as varied by the review officer’s determination, and (at 146) that, although a departure application is not an appeal against a reviewing officer’s determination, it is not appropriate to treat the review officer’s reasons as irrelevant. Of relevance in Johnson (supra) is the statement at paragraph 85, by Nicholson CJ and Moore J that “the fact that it [the determination] is obviously flawed may give substance to a proposition that there are special circumstances requiring a departure order to be made under s 117.”
As I have already noted, the husband’s counsel criticised the Federal Magistrate’s lack of reasons asserting:
·a failure to analyse the husband’s income and expenditure;
·a failure to make findings about the husband’s income and expenditure;
·a failure to consider the basis on which the review determined the husband’s income, and whether that review was flawed;
·erroneously finding that the husband was able to meet expenses from “financial resources”;
·a failure to consider whether the husband’s capacity to meet his own expenses was significantly reduced by reason of his commitment to pay child support.
·a failing to consider at all whether the husband had or had not established “special circumstances.”
Counsel for the wife asserted that the husband, who carried the evidentiary onus, had failed to put sufficient evidence before the Court to establish that his capacity to provide financial support for the children was significantly reduced because of his commitments to support himself.
As I have ready noted the learned Federal Magistrate referred to the review which resulted in a figure of $93,570.00 being the husband’s child support income figure, and that a figure of $120,000.00 did not appear to have been determined on the company earnings, but was a figure used by a valuer for the purposes of valuing the business. She also recorded the husband’s assertion in his Financial Statement that his net income was $31,815.00 and having regard to his expenses, his “minimum expenses ….appear to consume at least two-thirds of his income.” (paragraph 21)
The husband’s Financial Statement filed 2 December 2005 disclosed total income and benefits of $1,129.00 per week (this sum included superannuation and provision of a motor vehicle paid by the company). He disclosed total personal expenditure, after payment of child support of $163.00 per week (rather than $571.00 per week asserted to be the assessed amount), of $822.00 per week. The husband also disclosed he had a debit loan account with the company of $53,502.00.
The husband updated his income and expenditure in his affidavit affirmed 16 June 2006. In that affidavit the husband said:
4.My income for the financial year 2005/2006 will be reduced compared to previous years with a net income of $24,000 (or a gross income of approximately $29,000 less income tax of approximately $4870 and Medicare levy of approximately $435), plus statutory superannuation of $3000 and use of a company car…
5.The personal expenses as disclosed in my Form 13 dated 29 November 2005 is [sic] the same as my current expenses. I have incurred increased personal debt of approximately $17,560.00 in the form of a loan from the Company as a result of borrowing from the Company to pay my legal expenses during the financial year 2005/2006. In addition I have a personal credit card debt of approximately $1,850.00.
Her Honour does not in her reasons set out what the husband’s commitment for child support is following the decision on objection and re-consideration of that objection. Annexure C to the wife’s affidavit filed 6 June 2006 is a copy of the relevant Assessment and Child Support Register Entry for the period from 17 January 2005 to 19 February 2006 which discloses the husband’s child support liability at $27,411.00 per year or approximately $527.00 per week.
Her Honour appears to have accepted that the husband had annual expenditure of $23,660.00 or $455.00 per week. This is the sum claimed in the written submissions filed on behalf of the husband. However the husband’s Financial Statement reveals expenditure of $659.00 per week or $34,268.00 excluding child support. It is unclear to me on what evidence the sum of $455.00 for the husband’s weekly expenditure is derived particularly as the husband’s evidence in his affidavit affirmed 16 June 2006 was that his expenses remained identical to those in his Financial Statement.
It appears the Federal Magistrate relied on the husband’s income as claimed in his Financial Statement. That information was subject of amendment by the husband in his oral evidence and his affidavit affirmed 16 June 2006. The husband’s evidence about his income was also referred to extensively in the written submissions provided by his counsel (paragraph 41) The decrease in the husband’s income referred to in his affidavit was not referred to by her Honour.
Whilst her Honour found the husband received benefits from the company her Honour did not analyse with any particularity those benefits. The financial statements of the company (Exhibit 2) for the year ended 30 June 2005 disclosed that the company provided staff amenities costing $2,174.00 in the year ended 30 June 2005, superannuation of $4,000.00 on behalf of the husband to the superannuation fund, $939.00 for subscriptions and memberships, and motor vehicle expenses of $23,544.00 (including depreciation of $11,532.00). Other than superannuation and the benefit of motor vehicle expenses the husband did not provide any evidence of other benefits received from the company in his Financial Statement. He did depose to receiving additional funds to pay legal expenses which were debited to his loan account. Exhibit 2 disclosed the company had a total revenue of $171,976.00 derived essentially from professional fees, but the statements disclosed expenditure on consultant’s fees of $41,909.00.
As I have already noted, her Honour concluded that “on examination of the husband’s expenditure it is clear that the financial benefits he derives well exceed that limited income.” Whilst her Honour did not set out her specific findings about the amenities provided by the company for the husband’s food, gym membership, motor vehicle expenses etc by reference to Exhibit 2, many of those details were not provided by the husband who bore the onus of proof. Further, her Honour, who had the opportunity of observing the husband in the witness box, made adverse credit findings about the husband.
I accept however that the Federal Magistrate was in error in finding the husband had “financial resources” other than the company, to provide for his income and expenditure. Her Honour failed to specify the financial resources to which she was referring. The evidence disclosed the husband’s only other “financial resource” (other than benefits received from the company), as his superannuation fund. Whilst he obtained money to make the payment to the wife pursuant to Mullane J’s orders, he did so by selling his asset (the art works) to the fund. It appears, having regard to s 65 of the Superannuation Industry (Supervision) Act 1993 (Cth) he had no entitlement to borrow from the fund if the fund was a regulated superannuation fund. Further, it would appear that Regulation 13.13 of the Superannuation Industry (Supervision) Regulations 1994 would preclude the husband charging his interest in the fund. I accept this error is likely to have vitiated her Honour’s discretion in assessing the husband’s capacity to pay child support, having regard to his commitments (see De Winter v De Winter (1979) 23 ALR 211; (1979) FLC 90-605; (1979) 4 FamLR 583).
Both parties conceded before me that her Honour’s reference to rent paid by the company in 2003 was irrelevant to the issues in dispute. Further, her Honour appears to have overlooked the husband’s evidence in respect of pre-paid rent and the manner of determining the rent. The transcript reveals:
Just have a look at the document in front of you. The company paid rent to the super fund of $16,000, didn’t it? You will find that in the profit and loss statement, the second last entry?---Yes, yes.
The previous year it paid $8250?---Well, that may not be right, because some of the rent was sometimes prepaid. Six months rent prepaid the previous financial year.
So you think that the sum of $8250 for the year ended 30 June 2004 may not be correct. Is that correct?---I am pretty sure it is incorrect, because the commercial rent has always been paid on the unit. My accountant sometimes advises me to prepay the rent.
Can you explain, then, why this statement that you have signed off on may have incorrect information in it?---No, it doesn’t have incorrect information. It is for that financial year. (Transcript 01/03/07, p 52, lines 27-42)
The husband’s evidence of pre-payment of rent in 2004 appears to be corroborated by the financial statements which disclose a rent of $28,600.00 for the financial year ending 30 June 2004.
It appears to me that her Honour did not take into account the husband’s evidence of the change in his income as disclosed in his Financial Statement, and the income disclosed in his affidavit. Further, her Honour appears to have been misled by the expenditure claimed in the husband’s written submissions ($455.00 per week) as distinct from that set out in his Financial Statement and confirmed in his affidavit.
Whilst the company’s financial statements corroborated the husband’s evidence of rent paid by the company to the superannuation fund, the husband did not provide evidence to support the quantum of rent paid by the company to the superannuation fund. The rent paid may have been entirely appropriate, but there was no objective evidence before her Honour which she could properly consider and on which she could make findings. That payment would have reduced the earnings of the company and provided cash funds to the superannuation fund of which the husband will be the beneficiary on his retirement.
Absent the errors in the Federal Magistrate’s judgment about husband’s income, expenditure and financial resources which I have identified above, I am satisfied that her Honour’s inability to make specific findings about the quantum of the benefits received by the husband from the company, at least during 2006, was open to her, particularly in light of her adverse credit findings about the husband.
I turn then to consider whether, even if the Federal Magistrate’s findings about the husband’s income were open to her, the failure to give reasons as to why the husband had not established “special circumstances” or to assess whether his capacity to provide child support at the level assessed ($27,411.00 per annum) because of his commitments to support himself, constituted appealable error.
The Federal Magistrate did refer in paragraphs 13 and 14 of her reasons to the determination and review of that determination. However, her Honour did not analyse whether the determination that the husband’s child support income should be $93,570.00 was flawed, thus potentially constituting a “special circumstance”. Her Honour’s attention was drawn to this issue by detailed written submissions of the husband’s counsel provided after the hearing of the evidence. (submissions paragraphs 12-19)
Ms J noted in her Notice of Decision that she had been supplied with a forensic accountant’s report which “assessed Mr [A]’s ‘salary’ for 2003 as $120,000”. Ms J further noted:
I have the information available to me from the forensic accountant, but note that this is based on previous years’ figures. Mr [A]’s taxation records for 2004 indicate a considerable downturn in gross business income in comparison to the figures used by the accountant. On the other hand, there is no obvious reason why Mr [A]’s income should have decreased and I have no explanation for this.
Having considered both parents’ financial circumstances and the children’s proper needs, I am satisfied that Mr [A]’s child support income amount should be increased to $93 570. I note that this figure is based on his individual and business taxation records for 2004 and includes additional benefits that he is likely to have… (page 6 of 7)
In her Notice of Objection on Decision reasons, Ms C noted:
In Mr [A]’s objection he states the accountant’s report tendered by Dr [S] used a theoretical salary of $120 000 to see if his business had any good will. The accountant found there was none… (page 4)
Ms J also assessed the husband’s financial circumstances having regard to the fact the wife asserted he paid off a loan obtained to purchase the business premises in 1998 in a ten month period. Ms C noted the husband disputed this assertion and claimed the loan was paid off over a three year period.
Whilst the documents which were before Ms J and Ms C were not before her Honour, in light of the husband’s counsel’s submissions, and particularly as Ms J’s acknowledgement that the salary attributed to the husband was not his actual salary, some examination of that material was warranted.
As I have previously noted, the gravamen of the husband’s submissions was directed to the absence of any discussion by her Honour of whether or not the husband had established “special circumstances”. I have already referred to judicial consideration of the phrase “special circumstances”. That phrase has been held to mean “facts peculiar to the case which set it apart from other cases” (see Savery and Savery (1990) FLC 92-131 at 77,897) and “something special or out of the ordinary (see Gyselsman) but may be established by flawed determination of child support income.
In Ross v McDermott (1998) FLC 93-003, (1998) 23 Fam LR 613 the Full Court considered whether diminution of income was “per se sufficient to amount to special circumstances.” In that case the trial Judge had made orders reducing the amount of child support payable under a child support agreement where the husband’s uncontroverted evidence was that his business, and hence his income, had suffered a decline.
The Full Court said at paragraphs 30-32:
30.The view which we have formed is that it would be inappropriate and a misreading of the requirements of s117(2)(c)(i) for special circumstances of the type defined there, to be established merely upon proof of a change in the “income, earning capacity, property and financial resources” of that party. It is, we think, implicit in par (c)(i) read overall that that circumstance has to be compared with that person’s commitments in order to arrive at a view that there would be an “unjust and inequitable determination of a level of financial support”.
31.We recognise that this may in a sense be duplicating one of the requirements of s 117(4)(e), but nevertheless we consider that this is the required approach at the first step when one is considering s 117(2)(c).
32.In this case it is clear that his Honour did not, at least in his judgment, refer in any way to this comparison of reduced income and necessary commitments. We think he was obliged to analyse that issue. It would have been a difficult exercise in this case because, although there would still have been a sufficient margin between the husband’s reduced income and his other commitments to continue to pay the original agreed amount, it would have left a very small margin for other discretionary expenditure including, as appears to be the case here, expenditure for the child on contact. It appears to us that that was a step which needed to be taken in order to determine whether there were special circumstances of the required type. The comparison then between the husband’s situation and that of the wife and child would be taken up under s 117(4) and the interests of the community under s 117(5).
I accept the thrust of the submissions of the husband’s counsel that the Federal Magistrate failed to give any reason why she found that the husband had not established “special circumstances”. Whilst the wife’s counsel asserted such a finding may have been implied by reason of her Honour’s finding that the husband was able to met his expenses including the assessed child support, I consider there are problems with such a submission:
·The Federal Magistrate did not anywhere in her reasons identify and discuss the quantum of child support payable by the husband as a result of the review and objection process.
·Her Honour appears to have been misled by the husband’s submissions (as distinct from the evidence) about his expenses.
·Her Honour’s did not identify any “financial resource” available to the husband, other than the company, but made findings that the husband had access to financial resources, which finding was contrary to the evidence.
·Her Honour did not discuss whether the adjusted child support income fixed by the review process was flawed.
·Her Honour did not consider whether the husband’s capacity to provide child support was significantly reduced because of his need to provide for his own commitments to enable him to support himself by assessing those commitments.
Overall, I am satisfied that the husband’s challenge based on lack of adequate reasons is established. I am also satisfied that the structured exercise of discretion required by the CSA Act was not followed by her Honour, and that she fell into appealable error in failing to evaluate both the child support payable, in light of the husband’s income and expenses, and to determine whether or not there were special circumstances which meant that his capacity to pay child support was reduced having regard to his necessary commitments.
Challenge to the Federal Magistrate’s treatment of the second departure ground
The husband’s submissions
The thrust of the husband’s challenge to her Honour’s reasons is succinctly captured in his counsel’s written submissions including the following:
…It is submitted that her Honour correctly stated the relevant matters in paragraph 46 with respect to the second ground. However, in the following paragraphs it becomes clear that her Honour sees the relevant matter as being whether there has been an equitable distribution of property and resources between the parties, rather than whether the application of the administrative assessment provisions of the Act would result in an unjust and inequitable determination of the level of child support to be provided by the husband by reason of the income, property and financial resources of the parents or because of the earning capacity of the wife. (paragraph 15)
…In considering whether this ground was made out her Honour gave no attention to the level of child support required to be paid as a result of the assessment made by the review officer and consequently did not consider the level of that child support against the background of the income, property and resources of both parties. (paragraph 16)
The objects of the CSA Act
Section 4 of the CSA Act set out the objects of the Act. It is in the following terms:
Section 4 [Objects of Act]
(1) The principal object of this Act is to ensure that children receive a proper level of financial support from their parents.
(2) Particular objects of this Act include ensuring:
(a) that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and, in particular, that parents with a like capacity to provide financial support for their children should provide like amounts of financial support; and
(b) that the level of financial support to be provided by parents for their children should be determined in accordance with the legislatively fixed standards; and
(c) that persons who provide ongoing daily care for children should be able to have the level of financial support to be provided for the children readily determined without the need to resort to court proceedings; and
(d) that children share in changes in the standard of living of both their parents, whether or not they are living with both or either of them; and
(e) that Australia is in a position to give effect to its obligations under international agreements or arrangements relating to maintenance obligations arising from family relationship, parentage or marriage.
(3) It is the intention of the Parliament that this Act should be construed, to the greatest extent consistent with the attainment of its objects:
(a) to permit parents to make private arrangements for the financial support of their children; and
(b) to limit interferences with the privacy of persons.
Discussion
Section 117(2)(c) requires a judicial officer to consider in the special circumstances of the case whether the imposition on a liable parent of assessed child support would result in “an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child”. In assessing whether the result would be unjust and inequitable the Court is required to examine the circumstances set out in sub-sections (i),(ia), (ib), (ii), (iii) and (iv) as are relevant. The preferred approach to arrive at orders for the division of property under s 79 of the Act which are “just and equitable” involves different criterion, although s 79(4)(g) does require consideration of child support which has been provided or is to be provided in the future.
I accept that her Honour may appear to be in error in her statement at paragraph 49 that “[n]o actual value of any relevant assets was before me is [sic] that including as to change in value since Mullane J’s orders” if by that statement, her Honour meant the parties had not filed any valuation evidence. They had, however, each attributed values to their assets in the Financial Statements which were not challenged.
The gravamen of the husband’s challenge is to her Honour’s reasons in paragraphs 50 to 53. For ease of understanding I repeat those paragraphs:
50.My assessment of the evidence before me, there is no ground made out here of any inequity due to the manner in which the resources of the parties had been distributed between themselves.
51.The property orders themselves carried a requirement that the orders then be just and equitable, and the orders stand without any appeal and continue to represent lay out [sic] the relative financial positions of each of the parties.
52.There is, accordingly, I find, no basis to make out the ground that there is an unjust and inequitable determination of the level of financial support as a result of the income, property and financial resources in the hands of either parent.
53.The remaining aspect of this ground for departure relied upon by the husband is the relative earning capacity of the parents. In relation to that, the husband asserts that the wife ought be earning an income. True it is that the wife is seemingly well qualified, she having obtained a PhD in her area of professional endeavour. But the evidence before me is that she does not work and has not worked for some time, and there was no evidence adduced to suggest that there was either opportunity for gainful employment available to the wife, or that there was any particular dilatoriness on her part in taking up any such available opportunities.
I accept that her Honour has fallen into appealable error by applying the test of the justice and equity of the orders made by Mullane J under s 79, rather than examining each party’s respective income, property and financial resources and then assessing and determining whether in the special circumstances the level of child support required to be paid by the husband was unjust and inequitable. Her Honour appears to have discussed one aspect which was relevant to s 117(2)(c)(i) in paragraph 60 of her reasons when dealing with costs.
I am satisfied that the husband has established proposed ground 3.
Conclusions
The husband’s application having disclosed error of principle by the Federal Magistrate, it is appropriate that leave be granted to him to appeal (see Hendy & Deputy Child Support Registrar & Webb (2001) 27 Fam LR 641; C & D [2004] FamCA 1171)
The wife’s application for leave to appeal
In light of the concession made by the husband’s counsel which was to the effect the wife was denied natural justice in being denied the opportunity to make submissions on costs, the wife’s application for leave to appeal requires little discussion.
The husband’s counsel conceded the wife sought in paragraph 44 of her written submissions an opportunity to make submissions on costs after delivery of her Honour’s reasons for judgment. Unfortunately, her Honour appears to have overlooked that submission.
That error of principle having been established, it is unnecessary for me to consider the other challenges raised by the wife in respect of her Honour’s determination on costs.
Cost of the applications
At the conclusion of the hearing I sought submissions from the parties about costs. The husband’s counsel submitted in the event the application and appeal succeeded the wife should pay the husband’s costs of the appeal. In the alternate he submitted that if I found error of law by the Federal Magistrate then it would be appropriate for a grant of certificates under the Federal Proceedings (Costs) Act 1981(Cth) for the applications, appeal, cross-appeal and the re-hearing.
Counsel for the wife submitted in the event the application and appeal was successful that each party should pay their own costs of and incidental to the appeal. In respect of the wife’s application to cross-appeal, her counsel submitted she should receive a costs certificate for both the cross-appeal and the re-hearing.
I have found error of law by the Federal Magistrate in respect of the application for leave to appeal, and to cross-appeal. In the circumstances of this case it appears to me appropriate to grant certificates both in respect of the husband’s and wife’s applications, and for the re-hearing.
I certify that the preceding one hundred and eleven (111) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Boland.
Associate:
Date:
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