Baden and Baden
[2018] FCCA 389
•20 February 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BADEN & BADEN | [2018] FCCA 389 |
| Catchwords: CHILD SUPPORT – Enforcement of arrears – determination of amount outstanding – whether amounts outstanding are covered by consent order – discretion to enforce not exercised. |
| Legislation: Child Support (Assessment) Act 1989 (Cth), s.79 |
| Cases cited: Mathieson & Hamilton [2006] FMCAfam 238 Wreford & Caley [2010] FamCAFC 21 |
| Applicant: | MR BADEN |
| Respondent: | MS BADEN |
| File Number: | MLC 3449 of 2008 |
| Judgment of: | Judge Baker |
| Hearing dates: | 19 July 2017, 9 November 2017, 30 November 2017 |
| Date of Last Submission: | 30 November 2017 |
| Delivered at: | Hobart |
| Delivered on: | 20 February 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Baden in Person |
| Solicitors for the Applicant: | N/A |
| Counsel for the Respondent: | Ms Paull of Counsel |
| Solicitors for the Respondent: | Sievers Lee |
ORDERS
The Initiating Application filed 5 May 2016 be dismissed.
The Response filed 21 April 2017 be dismissed.
The Respondent’s application for costs is adjourned to a date to be fixed.
IT IS NOTED that publication of this judgment under the pseudonym Baden & Baden is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 3449 of 2008
| MR BADEN |
Applicant
And
| MS BADEN |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicant father (‘the father’) filed an initiating application seeking that a consent order made 8 December 2010 be dismissed.
The consent order is for the provision of child support otherwise than in the form of periodic amounts. The order provides that the father pay one half of the school fees for [X] born 1996, [Y] born 1998, and [Z] born 2002, including tuition, uniform, book and extra-curricular activity costs, as and when they fall due by way of substituted child support under Part 7 Division 5 of the Child Support (Assessment) Act 1989 (Cth) (‘the Act’) – such payments not to be credited against any periodic child support otherwise payable.
The order also provides that the father pay one half of [X]’s counselling costs levied by Relationships Australia as and when they fall due, or in the event the wife pays such costs in the first instant, he shall pay her his one half share within 14 days of having been provided with a receipt.
The respondent mother (‘the mother’) filed a response seeking that the father’s application be dismissed; the final order made on 8 December 2010 remain in full force and effect; and the father reimburse the mother for payment of his share of the children’s expenses pursuant to the final orders made on 8 December 2010. An order for costs of $13,406 was also sought.
Background
The parties married on 1994 and separated on 5 September 2006.
On 24 February 2010, parenting orders were made that provided that the children live with the mother; [X] spend time with the father as agreed; and [Y] and [Z] spend time with him on five nights per fortnight and equal time during school holidays.
On 27 January 2015, further parenting orders were made by consent. They provided that the children live with the mother; [X] and [Y] spend time with the father in accordance with their wishes; and [Z] spend time with him each alternate Sunday.
The father received a workers compensation payment in 1999 after a serious workplace injury in 1996. He was excluded from receiving government assistance for a period of 10 years. In 2010 he started receiving a disability support pension of $14,000 per annum. The father gave evidence that he paid the mother $1,500 per annum in child support and paid one half of the children’s expenses of around $6,000 per annum.
The father’s accountant, Mr F, gave evidence that in the 2011, 2012 and 2013 financial years, the father had little or no assessable income, his only income being the disability pension. Mr F gave evidence that in the 2012 financial year, the father incorporated Business A. The father and his wife are the company directors. Mr F deposed that a 2013 company project made approximately $25,000, a 2014 company project lost approximately $93,080, and since then the company has been dormant. He gave evidence that in 2013 the father commenced employment with (employer omitted), with a gross income of $76,257 for that year. Mr F was cross-examined. He was an impressive witness and I accept his evidence.
On 1 April 2015, the periodic child support payable by the father increased to around $262 per week. The child support transactions statement for the period 1 January 2013 to 12 September 2017 indicates that he has paid $35,216.72 in child support during that period. He ceased making private school fees payments from the beginning of 2015. He deposed that the legal advice he first obtained, about the effect of the periodic order increase and the child support order, was incorrect.
Discussion
This application was listed for a one day hearing and was part heard on 19 July 2017. On resumption of the hearing on 9 November 2017, the father indicated that after receiving further legal advice, he was no longer seeking that the 2010 consent order be dismissed. Instead, he was contesting the amounts that the mother alleged he owes to her.
At the commencement of the hearing, the total amount sought by the mother from the father from 8 December 2010 amounted to one half of the following amounts:[1]
School uniforms $11,822.30
School books $16,529.83
Activities $9,881.44
Medicals $7,577.76
Counselling $2,165.00
Total $47,976.33
One half of total amounts to the sum of: $23,988.17
[1] Affidavit of Ms Baden sworn 22 August 2017, Annexure B 26.
The father conceded that he owes one half of the school fees outstanding to School 1 and he is involved in litigation with the school about this.
The father disputed that he should contribute towards the medical expenses totalling $7,577.76. It was conceded by the mother during the hearing that medical costs are not included in the 2010 order, so one half of this expense was not pursued by her.
On resumption of the hearing in November 2017, after cross-examination by the father of the mother, the father made further concessions. He agreed to an order to pay the mother the sum of $9,446.87. This sum is made up of $5,378.02, being expenses agreed between 16 December 2010 and 3 February 2017 for uniform, schoolbooks, activities and counselling; the sum of $1,821.12 for expenses with receipts; and the sum of $2,247.73 for expenses without receipts.
The expenses revised by the mother totalled $43,590.68, one half amounting to $21,795.34. As the father has agreed to pay $9,446.87, the ambit of the dispute totalled $12,348.47.
The main issue is whether the mother has proved that the amounts that she alleged are outstanding are expenses covered by the order.
Relevant Law
The mother is entitled to enforce an obligation pursuant to s.79 of the Act. Division 25B.2 of the Federal Circuit Court Rules 2001 applies to enforcement of obligations. Rule 25B.07 provides that an obligation to pay money may be enforced. This includes a provision requiring a payer to pay money under an order made under the Act; and a liability to pay arrears accrued under an order.
Rule 25B.13 provides the general enforcement powers of the Court including the making of: ‘(a) an order declaring the total amount owing under an obligation; (b) an order that the total amount owing must be paid in full or by instalments and when the amount must be paid;…’
The Court has a discretion about enforcing child support arrears. In the decision of Mathieson & Hamilton,[2] Federal Magistrate Walters FM (as he then was) summarised the principles that would be applied with respect to enforcement of arrears at [230]:
[2] [2006] FMCAfam 238.
In my opinion, it is possible to distil the following principles, considerations or factors relating to the enforcement of arrears of maintenance or child support:
(a) The “12 months rule” is extinct. It was, in any event, never more than a discretionary guideline or rule of practice, and the 12 months period was an arbitrary one.
(b) The Court has a discretion, not only as to the period in respect of which accumulated arrears of maintenance or child support will be enforced, but as to whether they should be enforced at all.
(c) The Court is not prevented from enforcing arrears of maintenance or child support simply because the time for payment of the same has long since passed, or because (in the case of child maintenance or child support) the relevant child has long since left school, commenced paid employment or otherwise ceased to require such child maintenance or child support.
(d) In considering whether to enforce arrears (and, if so, for what period), the Court's discretion is unfettered, but the following considerations (at least) might be considered to be of relevance:
(i) whether the party who was obliged to pay the maintenance or child support (“the Payer”) knew or ought to have known of his/her obligation to pay maintenance or child support;
(ii) whether the party entitled to maintenance or child support (“the Payee”) pressed or pursued – directly or indirectly – his/her rights to the same, and whether the Payee did so in a timely fashion;
(iii) whether, by words or conduct, the Payee led or permitted the Payer to form a reasonable view that the Payer’s obligation to pay maintenance or child support would not be enforced, and whether (and in what way) the Payer was thereby induced – whilst acting in good faith – to change his/her financial position;
(iv) whether, by words or conduct, the Payer led or permitted the Payee to form a reasonable view that the Payer’s obligation to pay maintenance or child support would be met, and whether (and in what way) the Payee was thereby induced – whilst acting in good faith – to change his/her financial position;
(v) whether the Payer had (other) appropriate or adequate reasons for failing or refusing to pay;
(vi) the financial circumstances of the Payer, the Payee and the children during the period of the non-payment, and at the time that the enforcement of the arrears is sought (including the Payer’s ability to pay at all relevant times);
(vii) whether the Payer has made a full and frank disclosure of his/her financial position at all relevant times; and
(viii) whether the Payee has made full and frank disclosure of his/her financial position at all relevant times.
(e) The Court should be very cautious not to encourage a Payer to metaphorically sit back and ignore his/her liability for maintenance or child support, and to continue to ignore such liability “… hoping for the best.”
This decision was considered and approved by the Full Court in Wreford & Caley [2010] FamCAFC 21.
Discussion
The mother deposed that since 2010, she has attempted to keep records of expenses she has paid in relation to the children. She compiled one list of expenses from amounts withdrawn from her bank accounts and did not provide numerous original receipts. It was conceded that she has not kept many of the original receipts. The father was provided with some of her Bank account statements for him to ascertain what withdrawals were for.
The mother deposed that she has on numerous occasions provided the father with CDs marked ‘children’s expenses’ which contained copies of all receipts. She specifically referred to 19 September 2012, when she provided him with a CD marked ‘children’s expenses 9 September 2012.’ The father disputed that he had been provided with more than one CD. During cross-examination, in contrast to her affidavit, the mother said that she has only ever mentioned one CD.
The father cross-examined the mother about the expenses claimed by her. He agreed to pay amounts when she satisfied him that these were expenses covered by the consent orders. An example of why he needed to check the original receipts was a claim in her list for $591.35. When he saw the receipt, there was a credit on it for $189, which she had not included. He therefore agreed to pay one half of the balance sum of $372.35.
In respect of Officeworks expenses, he agreed that the children need books and pens for the start of the school year. He agreed to pay some of the expenses with receipts, where he could ascertain from the receipts what the payments were for.
He agreed to pay for such items as (Uniform Store), as he was satisfied that these businesses sell school uniforms and books. He did not agree to pay (Shoe Store) accounts because he also buys [Z] runners and school shoes. He agreed to pay for some (hobby expenses), but not to the cost of hairspray, hairpins etc for (hobby expenses).
He disputed amounts he was not able to verify. He said:
The ones I can see that are genuinely for their school uniforms… I’ve highlighted, ones that I don’t have the receipts or haven’t seen the receipts for, I could go to Kmart any time. I’ve got thousands and thousands of dollars worth when I’ve had the children going to Kmart… The school has an iPad and laptop program. It’s a leasing program for each child, and the software, the books and everything else, are given out through the school…
In respect of Best and Less receipts he said:
… She has provided some Best and Less receipts and they look like genuine clothing for the children, school related items, and I have said I will pay them. But ones that I don’t have receipts for or don’t even know what it’s for, ladies blouse or – I’ve got no idea what they’re for.
He disputed a number of supermarket related expenses from Coles, Safeway and Aldi because the receipts provided were for chocolate, junk food, or hair products. He disputed expenses for purchases from jewellery stores such as (omitted); retail store expenses such as Big W, Target, Kmart, Best and Less, Aldi, Officeworks; department stores such as (omitted); and for child activities.
The father refused to pay for expenses which the mother claimed twice. For example, she claimed the sum of $799 on 18 November 2011 for school uniforms and claimed $799 on the same date with a Bank reference to withdrawal for uniforms. She claimed on 22 February 2011 the sum of $60.50 from (Uniform Store) and on 25 February $60.50 for School 1. It was agreed that these were the same expenses. The mother included $250 on 28 November 2011 for School 1 when the father had also paid $250 to the school. It was agreed that this sum would not be pursued by the mother. The mother included two claims for Officeworks of $591 on 22 January 2011. When she was asked about this, she said ‘I went through all my bank statements and added them on. And if there was any duplicates, I wouldn’t have known’. She agreed that this Officeworks claim was duplicated. Similarly, on 23 January 2011 there were two expenses from Kmart of $78; on 27 January there were two Big W expenses of $29.92; on 25 January 2011 there were two pool claims of $184. There were many other School 1 amounts that were duplicated.
In respect of claimed expenses at jewellery shops such as (omitted), the mother claimed them under the heading ‘uniforms’ and claimed that these were school associated expenses. She also claimed parking fees when [Y] had hurt her knee and said that this was ‘probably going to Hospital for physio and stuff like that.’
The father refused to pay for expenses which were the mother’s expenses. For example, he asserted that an entry on 12 June 2014 for Norton Annual Renewal, a Bank withdrawal of $99.99, was internet security for the mother’s computer, as the school has a different antivirus system.
The father refused to pay the cost of (hobby products). The mother claimed these for [Y]’s (omitted) course, because [Y] decided to make her own dress for her graduation and had to buy the materials. The mother said that the expenses referred to in her bank statements from (store) refer to purchases made for [Y] in relation to her (hobby) subject.
The father refused to pay half the cost of computer and iPad expenses. The mother gave evidence that during [X]’s first three years of school from 2009 until 2011, he was required to have his own laptop, as the school did not provide one. In 2012 an iPad system was introduced and [X] had one from 2012 until 2014. She said that she was required to pay a service and hiring fee. [Y] had her own laptop from 2011 to 2012. The mother said that she purchased a laptop for her because her subject teacher encouraged her to have her own laptop, due to the iPad not supporting the work to be done. She did not obtain an iPad until 2013 and had one until 2016. [Z] was provided with an iPad in 2015 and with a laptop in 2016 and 2017.
In respect of the numerous computer expenses that the mother claimed, the father tendered a debtor transaction statement from School 1 from 1 August 2010 until 12 October 2017. It included text book deposits, iPad fees, iPad repairs, and iPad program annual fees. Exhibit F9 indicates that the father was billed for an iPad program fee of $17.50 each for [Y] and [X], and $15 for [Z] in 2012. There were iPad repair charges for [Y] and [X] in 2013 and an iPad repair of $79.50 in December 2012. One entry demonstrated that ICT Resource Fees 50% of $147.50 was charged to the father for [Z] in 2016. The same fee of $147.50 was charged to him in 2017.
The father refused to pay for a large number of expenses relating to the children’s activities with no explanation or itemised account. He submitted that the mother put a lot of receipts under ‘Activities’, and only a percentage of those receipts were for activities. He submitted that there are ‘probably about $10,000 worth of activity receipts…and I want to know what they’re in relation to, what that spending is about.’ He noted that: ‘if you go through the entire book that’s just listed as Activities, all it is cash withdrawals or HandyBanks, or cash out from the bank to the tune of $1900?’
The following are examples of when the mother could not explain for what the expenses were incurred:
a)An entry dated 15 December 2012 labelled ‘Activities’ for $100. The mother said ‘It could have been for (hobby), it could have been anything. I’m not 100% sure.’
b)An entry dated 7 January 2013 labelled ‘Activities’ for $48. The mother did not know what this was for.
c)An entry dated 18 February 2013 labelled ‘Activities’ for $15. The mother did not know what this was for.
d)An entry dated 5 April 2013 labelled ‘Activities’ for $20. The mother did not know what this was for.
e)An entry dated 28 April 2013 labelled ‘Activities’ for $50. The mother did not know what this was for.
f)An entry dated 27 September 2013 labelled ‘Activities’ for $50. The mother did not know what this was for.
g)An entry dated 5 November 2013 labelled ‘Activities’ for $50. The mother did not know what this was for.
The mother said that her Bank account was used only for the children’s expenses, ‘a lot of the things with activities were cash, and exactly what they were for, I can’t tell you’. It was suggested to her that the cash withdrawals total $1,915. She was not able to say how much, but agreed that she did not know what the cash withdrawals were for in relation to activities.
The following are examples of items which I consider are not intended to be covered by the orders:
a)An entry dated 24 September 2012 labelled ‘Activities’ for $76.45. The mother gave evidence that there was no receipt, but said it would have been for (hobby): ‘they take…food platters and all this sort of stuff at competition time.’
b)An entry dated 2 January 2013 labelled ‘Activities’ for $30. There was no receipt and the mother said it was not a cash withdrawal, but a purchase at a Coles Express. She did not know what it was for.
c)An entry dated 16 March 2015 labelled ‘Mobile’ for $19.00.
d)A claim for $198 from Communications on 28 March 2011 for a telephone for [Y]. The mother claimed that as a school book expense.
The father argued that he also paid the children’s expenses which should be taken into account. Prior to child support payments commencing, he paid for half of extra-curricular activities, such as (sports/hobbies).
The father’s record of expenses shows payments to department stores such as Big W and Kmart; clothing stores including (stores omitted); recreational activities including (sports/hobbies). It also shows payments to Officeworks and Dymocks. Health expenses (not covered by the order) were also paid, such as to Orthodontics of $6,225 for [Y]’s braces. He made payments to School 1. For example, he paid $400 for a school uniform on 4 November 2011.[3] On 23 March 2013 he paid $115 for a school uniform.[4]
[3] Exhibit F5.
[4] Exhibit F5.
In respect of (sports) expenses, the father gave evidence that he paid $32 per week and the mother paid the same. The parties had the children each alternate week, so they each paid for (sports). He paid for (sports) for 10 weeks for two years in 2011 and 2012.[5] The mother agreed that one week she would pay the (sports) expenses and the second week the father would pay. She said that sometimes he would not turn up with the children and she would have to pay even though it was the father’s week to pay.
[5] Exhibit F8.
Conclusion
I consider that many of the claims made by the mother are not verified and many relate to expenses not intended to be covered by the order. Many of them relate to everyday living expenses for which periodic child support is paid. I am not satisfied that the expenses incurred and claimed by her are covered by the 2010 consent order.
In respect of expenses with receipts, and the expenses detailed from the mother’s bank statements which the father has disputed, an examination of them shows that there are expenses from such places as pharmacies, Big W, K Mart, Coles, (stores omitted). There are claims for haircuts, teacher’s gifts, chiropractic, homewares and Myki. It is unclear from the evidence what much of the expenditure was for.
I consider that the mother has not pursued the father in respect of half her expenditure dating back to 2010 in a timely fashion. Although she provided him with some receipts and a CD containing her claim for expenses in 2012, she only pursued the expenses after he filed his initiating application in 2016. She has not been able to produce receipts to satisfy many of her claims.
The father has also made payments for many of the expenses claimed by the mother, such as school iPad expenses, uniform expenses, and extra-curricular activities.
Having regard to all the evidence, I exercise my discretion not to enforce the expenses claimed by the mother that have not been agreed.
In respect of the mother’s application for costs, I need to hear submissions from the parties about this.
I certify that the preceding forty eight (48) paragraphs are a true copy of the reasons for judgment of Judge Baker
Date: 20 February 2018
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