B and D
[2003] FMCAfam 155
•9 May 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| B & D | [2003] FMCAfam 155 |
| CHILD SUPPORT – Departure application – Father’s earnings substantially decreased – whether brought about voluntarily – whether Father’s sharing of income with current Wife artificial. |
Child Support (Assessment) Act 1989
Savery and Savery (1990) FLC 92-131
In the Marriage of Gyselman (1992) 15 FLR 219
Hides v Hatton (1997) FLC 92-759
| Applicant: | K D B |
| Respondent: | A M D |
| File No: | (P)MLM 5084 of 2002 |
| Delivered on: | 9 May 2003 |
| Delivered at: | Melbourne |
| Hearing date: | 25 June 2002 |
| Judgment of: | Phipps FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Skerlk |
| Solicitors for the Applicant: | Stephen Farmer |
| Counsel for the Respondent: | Mr Hip |
| Solicitors for the Respondent: | Russell McLelland Brown |
ORDERS
The application pursuant to Section 117 of the Child Support (Assessment) Act 1989 for a departure from the Child Assessment for the periods 6 December 2000 to 30 June 2002 is dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
(P)MLM 5084 of 2002
| K D B |
Applicant
And
| A M D |
Respondent
REASONS FOR JUDGMENT
Proceedings
These proceedings relate to child support and whether there should be any departure from the child support assessments for the period
25 September 2000 to 30 June 2002 and continuing. The Respondent opposes such a Departure Order and seeks that the child support payments be in accordance with the assessment and formula prescribed by the Child Support Assessment Act 1989.
Application
The Applicant Wife, filed a Form 63 Application for a departure from the child support assessment in this Court on 13 May 2002.
Background
The parties were married on 1 October 1983 and separated on
8 October 1993. There are three children of the marriage who live with the Wife. The Wife has remarried and has two children by her new marriage. The Husband has also remarried and they have one child.
The Husband’s taxable income for the year ended 30 June 2000 was nearly $91,141.00. For the period 1 June 2002 to 7 August 2001 he was initially assessed to pay child support of the rate of $1,286.00 per month calculated on the basis of him having a child support income of $58,733.00 in 1998/1999.
In July 2000, the Husband lodged an application seeking variation. The decision was issued on 6 October 2000 varying the Husband’s exempt income amount. Just prior to that, on 3 October 2000, an assessment was issued providing for a payment of $2,150.92 per month for the period 1 November 2000 to 7 August 2001. Since then a number of assessments have been issued and at the time of hearing the assessments were based upon the Husband having a taxable income of $35,562.00.
On 11 December 2000 the Wife sought a review of the then current assessment which was nil. The notice of decision was delivered by the Child Support Agency Review Officer on 20 March 2001. The decision was that the Wife was not able to prove the necessary grounds for a change to the assessment and that the matter was complex and should be referred to Court.
The law
The provisions of section 117 of the Child Support (Assessment) Act empower a Court to make an Order for departure from administrative assessment in special circumstances.
Section 117(i) provides as follows:
“i)That in the special circumstances of the case one or more of the grounds for departure outlined in section 117(2) exist before a Court can make an order for departure;
ii)that under section 117(1)(b)(ii) it would be just and equitable, as regards the child, the carer entitled to the support and the liable parent; and
iii)that it would be otherwise proper to make a particular departure order.”
If these three conditions are satisfied then the Court should make the departure order sought.
In Savery and Savery (1990) FLC 92-131 Kay J said that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases.”
In the Marriage of Gyselman (1992) 15 FLR 219 at 225, the Full Court of the Family Court said as follows of the phrase “special circumstances”:
“Whilst it is not possible to find with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something that 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.”
The grounds for departure
Section 117(2) of the Act sets out the various grounds for departure. After considering these various bases for departure and whether or not in the special circumstances of the case it is appropriate for a departure order to be made, the Court must then consider section 117(4) of the Act which deals with the circumstances in which it is just and equitable to make the departure order sought.
Section 117(4) of the Act reads as follows:
“117(4) 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:
–the nature of the duty of a parent to maintain a child (as stated in section 3); and
–the proper needs of the child; and
–the income, earning capacity, property and financial resources of the child; and
–the income, earning capacity, property and financial resources of each parent who is a party to the proceedings; and
–the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
himself or herself; or
any other child or another person that the person has a duty to maintain; and
–direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
–any hardship that would be caused:
to:
the child; or
the carer entitled to child support;
by the making of, or the refusal to make, the order; and
to:
the liable parent; or
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.”
Finally, it is necessary for the Court to consider section 117(5) and determine whether or not it is proper to make the departure order.
Section 117(5) reads as follows:
“117(5) In determining whether it would be otherwise proper to make a particular order under this Division, the Court must have regard to:
–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
–the effect that the making of the order would have on:
any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.”
In Gyselman (supra) the Full Court of the Family Court said at page 240 as follows:
“As we have already indicated, the exercise under section 117 involves three steps. The first, which we have already examined, is whether one or more of the grounds in subsection 2 has been made out. The legislation then requires the Court to consider whether any proposed order is “just and equitable” and “otherwise proper”.
It is clear therefore that each of these three steps must be addressed by the Court as a separate issue, namely:
a)whether one or more of the grounds of departure in section 117 is established; if so:
b)whether it is just and equitable within the meaning of section 117(4) to make a particular order;
c)Whether it is otherwise proper within the meaning of section 117(5) to make a particular order.
Further, from a consideration of the case of Hides v Hatton (1997) FLC 92-759 it is clear that the Court must follow this three-step process in respect of each year for which a departure order is sought.
The evidence
(a) The Wife’s evidence
The Wife’s evidence was of her knowledge of the Husband’s employment circumstances and investigations she had made about his current situation. In substance, the evidence was that until
22 September 2000, the Husband had been employed by M A H, a major Australia wide company. He was employed as V S S Manager until he moved to S in April 2000.
She produced company searches which showed that A M D, the Husband’s Wife, is the Director and sole shareholder of T R S Pty Ltd. She said that the Husband is a mechanic, that she believed that his current Wife has no expertise in this area and that she believed the company structure had been set up to minimise his taxable income for child support reasons. What she put was that the Husband had an income earning ability of $92,000.00 per year; that being the amount he had earned for the year ending 30 June 2000. He had moved voluntarily, she alleged, from V, and so voluntarily given up his ability to earn that amount. Consequently, she claimed that child support should be assessed on the basis of the Husband having an income of $92,000.00.
(b) The Husband’s evidence
The Husband said that he was employed by M A H as a mechanic until 1995 and then S Manager in V from 1996. His taxable income was, 1996 – $42,951.00, 1997 – $46,991.00, 1998 – $44,685.00, 1999 – $58,733.00 and 2000 – $91,141.00.
In June 1999, he ceased in his position as S Manager. He said that for some time he felt uncomfortable in the position as he had no management background. He felt under pressure and was aware that he had made a major blunder in relation to a significant client. He had discussions with his employer and was able to continue in employment as a mechanic but without management responsibilities. He said that at that time the company had a significant backlog in outstanding installation and commissioning of plants and he was offered a position for a limited time to finalise the outstanding installations and commissions. He was employed in the position from June 1999 until April 2000. He earned significantly more than usual because of the amount of work. Through that period his average working week was 84 hours.
In April 2000 he transferred to work in N S W. The transfer was at his request. His Wife’s parents lived in C, were not in good health and she wished to move to be close to them.
He moved with his Wife to the W area and worked in S and then joined his employer's S C crew. He was made redundant in 22 September 2000. He said that it was not a voluntary redundancy.
He registered for unemployment benefits, made applications for employment and attended approximately four or five interviews over the next few weeks but nothing came about. He said that at the time, because of redundancies, a lot of mechanics were looking for employment because most employers in the industry had cut back.
He and his Wife decided to establish their own business. They took advice from an accountant and established the company owned and managed by his Wife.
A M D, who the Husband married on 15 June 1996, gave evidence. She had previously been employed as a S Manager with the W group. Consequently, she had management experience. The combined effect of the Husband and Ms D’s evidence about the operation of their business was as follows.
The business services and installs equipment. Part of the business involves the remote monitoring of equipment in supermarkets. They have installed in their home office a computer which connects to the monitoring equipment in the store by telephone line. They login as necessary and it can make adjustments using the computer in the near home office, or can see whether it is necessary for the Husband to attend the store. Both the Husband and the Wife carry out this work. The Wife is responsible for office management and keeping the accounts of the business.
There are no other employees except for occasional casual employees to assist in installation.
The profit and loss is statement for the year to 30 June 2001 was produced in evidence by Ms D. It showed the gross income of $84,688 79 cents and an operating profit, after paying wages and salaries of $12,854.46. The Husband’s tax return for the same period showed total income of $38,705 and taxable income of $35,562. His Wife’s income for the same period was $31,284 and taxable income of $30,070.00.
Application of the law to these facts
The administrative assessments which have been made have all been based upon the Husband’s taxable income. The evidence shows that his taxable income is his actual income, subject to whether any adjustment should be made for the circumstances in which his current employment exists. There is no reason to doubt the evidence about the income of T R S and how that income is distributed between the Husband and his Wife.
Whether any special circumstances exist in justifying a departure depends upon whether the assessments should have been made based upon amounts other than his taxable income.
I do not need to go beyond the first step in the process described above. In the first place, I accept the Husband’s evidence about the circumstances in which he ceased to be V S Manager of his then employer. I also accept that the amount of overtime available which enabled him to have a taxable income of $92,000.00 in the year ending 30 June 2000 was exceptional. I accept that his move to N S W, whether justifiable for other reasons or not, was not the reason for his redundancy. The Husband said that there was a change in the industry which brought about many redundancies and that it would have come about in any event. There is no evidence which contradicts that of the Husband. I can see no reason for not accepting his evidence. The Respondent had some time prior made an application in respect of contact which was unsuccessful. It had been suggested in that application that he made the move so that he could reduce his child support payments. Whether that is correct or not, there is nothing in the Husband’s evidence, and no inconsistencies arising from surrounding circumstances or documents, which suggests that he said it should not be accepted.
I find that the Husband’s reduction in income after the year ended
30 June 2000 was not brought about by voluntary steps taken by him, nor was his redundancy.
That leaves the situation with T R S. The Husband’s Wife’s evidence was that she had played a substantial part in the running of the business. She has management skills and applied them to the running of the business. In addition she did a substantial amount of the work involved in remote monitoring of equipment. In their evidence, she produced telephone accounts and logs generated by the computer to illustrate their evidence of the work she was able to do. There is no reason to doubt that she has been able to develop the skills and knowledge necessary for carrying out this part of the work of the business.
The income of the business is divided roughly half between the Husband and his Wife, with perhaps slightly more going to the Husband. I accept that whatever the reason for setting up the business, the Husband’s Wife’s expertise and effort is essential for the level of income that that business is earning. I accept that her share of income of that business is genuinely earned. That being so, there is no reason for making an adjustment to the Husband’s taxable income for child support purposes.
It follows that there are no special circumstances and the application must be dismissed.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Phipps FM
Associate:
Date: 9 May 2003
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