Bauer & Becker
[2009] FMCAfam 480
•22 May 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BAUER & BECKER | [2009] FMCAfam 480 |
| CHILD SUPPORT – Payer seeks court’s leave to review administrative assessments of child support more than eighteen months old – payer has accumulated significant level of arrears – concurrently with leave application father seeks stay in collection of child support – matters to be considered in exercising discretion – reason for delay – whether prima facie case to establish departure from administrative assessment – balance of hardship – costs. |
| Family Law Act 1975, ss.117 Child Support (Assessment) Act; ss.4, 98B, 98S, 100, 111, 112, 116, 118 Child Support (Registration & Collection) Act 1988; ss.111B, 111C |
| In the Best Interests of Children – Reforming the Child Support Scheme: Report of the Ministerial Taskforce on Child Support Whitford & Whitford (1979) FLC 90-612 Cantrell & Jennings [2009] FMCAfam 229 Browne v Green 29 Fam LR 428 |
| Applicant: | MR BAUER |
| Respondent: | MS BECKER |
| File Number: | ADC 3866 of 2008 |
| Judgment of: | Brown FM |
| Hearing date: | 12 May 2009 |
| Date of Last Submission: | 12 May 2009 |
| Delivered at: | Adelaide |
| Delivered on: | 22 May 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr Eid |
| Solicitors for the Applicant: | Armour & Allen |
| Counsel for the Respondent: | Mr Hemsley |
| Solicitors for the Respondent: | Graeme Hemsley |
ORDERS
The amended application filed on 16 February 2009 is dismissed.
The father pay the mother’s costs fixed in the sum of $1,000.00 pursuant to the Federal Magistrates’ Court Rules.
IT IS NOTED that publication of this judgment under the pseudonym Bauer & Becker is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 3866 of 2008
| MR BAUER |
Applicant
And
| MS BECKER |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to child support. Mr Bauer “the father” and Ms Becker “the mother” are the parents of [X] born in 2001 and [Y] born in 2003.
The parties began to live together in 1996 and finally separated in June of 2003. Since that time, the two children have lived predominantly with the mother, an arrangement which has been ratified by formal orders of the Family Court of Australia at Adelaide.
In September of 2003 or thereabouts, the mother applied for an administrative assessment of child support to be paid to her, by the father, for [X] and [Y]. The Child Support Agency “the Agency” was later tasked by the mother with collecting the resulting child support, on her behalf, from the father.
Between 1 September 2003 to 17 March 2009, the father was assessed to pay the mother $31,795.86 by way of child support for the two children. A sum of $5,000.00, by way of child support, has been collected by the Agency from Mr Bauer and been forwarded on to
Ms Becker.
Due to his arrears of child support, the father has been levied the sum of $9,419.21 by way of late payment penalties by the Agency. As a result, as at 17 March 2009, the father owed $41,308.11 in child support arrears and penalties.
The father commenced these proceedings on 4 November 2008. By way of his amended application filed on 16 February 2009, he seeks an order staying the Agency from collecting child support from him or in some way taking steps to enforce the payment of child support owed by him.
In addition, the father seeks the leave of the court to amend six administrative assessments of child support pertaining to him, which date from June 2003 onwards. Because the majority of these assessments are more than eighteen months old, the father requires the leave of the court to have these assessments reviewed, particularly whether there should be any court ordered departure from their operation.
These proceedings deal with the father’s application for this leave. If the leave is granted, the court will have to consider whether or not to restrain the Agency from collecting child support from Mr Bauer, pending the outcome of his application for departure.
The mother responded to this application on 16 February 2009. It is her case that the father has failed to establish any proper basis on which the court should exercise its discretion to grant leave to allow him to proceed with his application for departure from the relevant child support assessments. On this basis she seeks the dismissal of the father’s application and that he should pay her costs.
These proceedings are directed to resolving the issue of leave to proceed and, if required, the resulting stay application. Necessarily, the hearing of the parties’ competing applications in respect of the issue was brief as the hearing proceeded on the basis of affidavit evidence alone and the submissions of counsel for each of the parties.
The legal principles applicable
The law relating to the calculation and collection of child support in Australia is complex. It has been subject to recent comprehensive amendment, particularly as a result of the Child Support Legislation (Reform of the Child Support Scheme – New formula and Other Measures) Act 2006.
The rationale for much of the legislative amendment to the child support regime flowed from the recommendations of a Ministerial Taskforce chaired by Professor Parkinson, which published a report to government in May 2005.[1]
[1] See: In the Best Interests of Children – Reforming the Child Support Scheme: Report of the Ministerial Taskforce on Child Support – published May 2005
In simple terms, an administrative assessment of child support can be amended or departed from in two ways. Firstly, the Registrar of the Agency can make such a determination pursuant to section 98S of the Child Support (Assessment) Act 1989 “the Assessment Act”. Secondly, the court may make such a decision pursuant to section 118 of the Assessment Act.
These powers both engage the provisions of section 111(1) of the Assessment Act, which deals with the process in respect of child support periods which have been in place for more than eighteen months. Section 111(1) reads as follows:
“ (1) A liable parent, or a carer entitled to child support, (the applicant) may apply to a court having jurisdiction under this Act for leave for:
(a) the Registrar to make a determination under section 98S; or
(b) the court to make an order under section 118;
in respect of a day in a child support period, being a day that is more than 18 months, and less than 7 years, earlier than the day on which the application under this section is made.”
Pursuant to section 112(1) of the Assessment Act, the court is granted a discretion in respect of applications made to it arising from the operation of section 111. This section reads as follows:
“(1) If an application is made to a court under section 111, the court may grant leave for:
(a) the Registrar to make a determination under section 98S; or
(b) the court to make an order under section 118.”
Section 112(4) sets out the matters which the court must have regard in exercising its discretion under subsection (1). It reads as follows:
“(4) In considering whether to grant leave under subsection (1), the court must have regard to:
(a) any responsibility, and reason, for the delay in:
(i) making an application under section 98B or 116; or
(ii) making a determination under section 98S;
as the case requires; and
(b) the hardship to the applicant (other than the Registrar) if leave is not granted; and
(c) the hardship to the other party or parties (other than the Registrar) if leave is granted.”
Sections 98B and 116 respectively are the machinery provisions relating to the departure process within the Agency itself and in the court, after any applicant for a departure from an administrative assessment of child support has exhausted his or her review rights within the Agency and the Social Security Appeals Tribunal (S.S.A.T).
Pursuant to section 112(5) of the Assessment Act, the court may have regard to any relevant matter in its determination whether or not to grant the necessary leave. However, pursuant to section 112(8), the granting of leave, of itself, does not imply that the Registrar of the Agency is required to make a determination under section 98S or that the court is required to make a departure order under section 118.
The relevant administrative assessments, in this case, span the period from 6 June 2003 to 30 June 2007. Accordingly, Mr Bauer requires the court’s leave to proceed with any application to depart from administrative assessments of child support, which relate to periods prior to 3 June 2007, as his original application was filed on 4 November 2008.
In summary, pursuant to section 112 of the Child Support (Assessment) Act 1989; the court has a discretion to grant such leave and then proceed with any dependant application pursuant to section 118. The matters which are to inform this discretion are set out in subsections (4) & (5) of section 112. The court must have regard to the responsibility and reasons for the delay; any hardship which may be occasioned to the applicant and any other party; and any other matters, which the court considers relevant.
The legislative provisions, which relate to the amendment of any administrative assessment of child support that is more than eighteen months old were inaugurated following the recommendations of the Ministerial Taskforce on Child Support, chaired by Professor Parkinson. The Taskforce was concerned to limit retrospective applications in respect of child support and the government accepted its recommendations in this regard.
The Taskforce reported as follows:
“An application for change of assessment may currently be made for a virtually unlimited time. This is highly undesirable, as it may open periods to re-examination which have long past, to the detriment of the other parent who finds past child support obligations being retrospectively reviewed. Particularly where a parent wishes to avoid complying with large outstanding child support debts, a belated application to reduce the assessment may be available, undermining the CSA’s ability to enforce debt. In practice, most decisions are not retrospective. However, the currently open discretion to make an application to vary past periods should generally be limited to the immediately preceding child support period.
However, there may be some exceptional circumstances where a parent has a legitimate reason for delaying their application for a change to a past assessment. One such reason is because information has only recently come to light about a payer’s hidden income. In such cases, a process should exist to enable this general limit on retrospective applications to be eased. A court is in the best position to consider the past ‘rights’ of the parties, and determine whether making an exception is appropriate. For this reason the Taskforce proposes that an application should be made to a court (in practice this would be the Federal Magistrates Court), to grant leave to apply out of time. This would be similar to the existing process under s.44 of the Family Law Act 1975 in relation to property and spousal maintenance applications.
Where such application has been made to a court, and the court is inclined to grant it, the court may have before it much of the necessary information and evidence from the parents to consider making a departure order. It may be inefficient to require the parents to return to the CSA to seek administrative determination of the application. In such cases, the court should have a discretion on application by a parent to proceed to determine the substantive departure application itself.”[2]
[2] ibid at page 195
Pursuant to section 3 of the Assessment Act, the parents of children have the primary duty to maintain their children. This duty has priority over all other commitments a parent may have, other than necessary commitments, which enable that parent to support him or herself, or any other child that that parent has a legal duty to maintain.
The objects of the Assessment Act are described in section 4(2) as being intended to ensure:
“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;”
The intent of the Act is that a formula should be applied to the incomes of separated parents, so that the child support payable by each of them, in respect of their children, may be calculated and collected administratively.
Complexities sometimes arise in the process of administrative assessment of child support, when it is asserted by one of the parents concerned that the other is not properly utilising his or her income, earning capacity, property or financial resources to provide financial support for any child concerned.
Cases regarding a parent’s capacity to earn are complex. The Ministerial Taskforce on Child Support, the recommendations of which formed the basis of the currently applicable legislation, distinguished between two categories of earning cases – “capacity to earn” cases and “capacity to pay” cases.
In the former case, it is accepted that the parent concerned’s income is as stated by him or her in the child support assessment process but that parent has the capacity or ability to earn a higher income. As a consequence, in order to meet both the financial needs of any child concerned and satisfy considerations of overall fairness, it may be appropriate to levy child support on a nominated higher income than that currently being actually earned by the parent in question.
In the latter category of case, the issue in question is invariably whether the parent concerned’s child support income actually reflects what that parent earns. In this category of case, arguments often arise regarding income minimisation schemes, such as salary sacrifice or the channelling of income through trusts or companies.
This particular case concerns issues to do with Mr Bauer’s capacity to earn income. It is Ms Becker’s position, subsequently vindicated by a number of review decisions within the Agency itself, that Mr Bauer has chosen not to exercise his capacity and abilities to earn an income for himself in order to avoid his child support obligations. This has resulted in the Agency deeming him to have a higher income than he has actually received.
It is these decisions, which date from 2004 onwards, which Mr Bauer seeks to review through the departure process. However, he must first obtain the court’s leave to do so. The rationale being that the payers of child support should not have an open ended ability to review past assessments of child support.
It is clear from the terms of section 111C(3) of the Child Support (Registration & Collection) Act that the court has a broad discretion in respect of granting a stay in the collection of child support. The court is directed to make whatever stay order it considers appropriate, after taking into account the interests of any person who may be affected by such an order. The section reads as follows:
“Pending the hearing and final determination of the proceeding, the court may make such orders as the court considers appropriate staying or otherwise affecting the operation or implementation of the Assessment Act and this Act if the court considers that it is desirable to do so, taking into account the interests of persons who may be affected by the outcome of the proceedings.”
In addition, pursuant to section 111B of the Child Support (Registration & Collection) Act 1988 the court has a wide range of general powers. These include an order for the payment of a weekly, monthly, yearly or other periodic amount of child support and the power to make any orders, which it considers appropriate.[3]
[3] See Child Support (Registration & Collection) Act 1988 at section 111B(1)(b) and (l)
Again, section 111B was inserted as a result of the Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006. Its operation commenced on 1 January 2007. The relevant explanatory memorandum indicates that the purpose of the legislation was to simplify the relationship between the courts and the new child support scheme.
Documents relied upon
The father relies on the following documents:
i)An affidavit of himself filed 20 March 2009; and
ii)A statement of his financial circumstances filed 20 March 2009.
The mother relies on the following documents:
i)An affidavit of herself filed 16 February 2009;
ii)A further affidavit of herself filed 27 April 2009; and
iii)A statement of her financial circumstances filed 27 April 2009.
Background
I am unsure whether I have been provided with a copy of every relevant notice of decision, which has been made by a Senior Case Officer of the Agency, pursuant to Part 6A of the Assessment Act, in respect of the parties herein.
However, it seems to be the case that, on 14 February 2005, Senior Case Officer W fixed the father’s child support income at an amount of $45,000.00 for the period from 1 March 2005 to 30 September 2006, on the basis of his earning capacity.
Thereafter, on 25 September 2006, Senior Case Officer S fixed the father’s child support income at $50,000.00 for the period from 1 October 2006 to 31 December 2007, again to reflect his earning capacity.
Finally, for the period 1 January 2008 to 31 March 2009, Senior Case Officer W fixed the father’s child support income at the amount of $41,288.00, which sum the Senior Case Officer found Mr Bauer had a capacity to earn.
Accordingly, it is self-apparent that the most significant controversy between the parties has been the father’s capacity to earn income. This has been the subject of departure applications pursuant to Part 6A of the Assessment Act, which have been determined adversely to
Mr Bauer by various Senior Case Officers, who have provided written reasons for their determinations.
However, it is the case that Mr Bauer has chosen not to seek any court ordered departure from these various decisions pursuant to sections 116 and 118 of the Assessment Act. Rather, it would appear to be his position that he has allowed arrears of child support to build up pursuant to these various decisions and has paid only a modest sum in respect of these assessments.
The father was employed as an IT contractor by the Department of Education and Children’s Services. He earned the sum of $69,000.00 in the year 2002.[4] It is the mother’s position that the father has previously had a capacity to earn a like income through his abilities as an IT contractor.
[4] See father’s affidavit filed 20 March 2009 at paragraph 11
Between separation and late 2004, the father earned a modest amount of income. His taxable income, as assessed by the Australian Taxation Office, for the year ending 30 June 2004 was $19,089.00.[5] This was the background to both parties seeking to depart from the resulting child support assessment. Senior Case Officer W handed down her decision on 14 February 2005.
[5] ibid at paragraph 26
The Senior Case Officer found that the father’s taxable incomes, prior to separation, were $69,602.00 in the 2002 year; $54,008.00 in the 2001 year; and $70,274.00 in the 2000 year.
As previously indicated, Senior Case Officer W fixed the father’s child support income at the rate of $45,000.00 from 1 March 2005 onwards. She said as follows:
“In making a decision in this case I am required to have regard to the fact that Mr Bauer is qualified in the computing industry and prior to resigning from his employment was earning an income of some $69,000 per year. I am satisfied based upon the legislation as interpreted by the Family Court that Mr Bauer is deemed to have the capacity to continue to earn that income despite his claims that he should not be assessed to pay child support on an income that he is not earning.
In the circumstances I am satisfied that Reason 8 is established as Mr Bauer is deemed to have the capacity to earn a significantly higher income than that used in the current assessment. I am satisfied that Mr Bauer’s higher earning capacity constitutes special circumstances within the meaning of the Act.”[6]
[6] See Annexure AB14 to the father’s affidavit filed 20 March 2009
I reiterate that Mr Bauer did not seek any further review of this decision, within the court’s system. It is clear that he made little, if any, attempt to pay any money to the Agency flowing from the decision. Certainly, he did not, ostensibly, at least, make any attempt to obtain some form of employment which would have provided him with a level of remuneration in the vicinity of $45,000.00 per annum.
Mr Bauer was dissatisfied with the decision of Senior Case Officer W. As a result he lodged an objection with the Agency. His objection was disallowed on 28 April 2005. At this stage he was advised that he had no further avenues of appeal within the Child Support Agency. He was also informed, at this juncture, that he had a right to apply to a court with family law jurisdiction for a departure from the applicable assessment.[7]
[7] ibid at Annexure AB16
Since the parties separated, Mr Bauer has remarried. His current wife is Mrs B. It is Mr Bauer’s position that from early 2005 onwards, he has worked casually in a [hospitality business], which is owned by
Mrs B.
Mr Bauer asserts that he was the primary carer of Mrs B’s three children. He is not the father of these children. As a result, Mr Bauer submits his capacity to earn an income was limited. In the financial year ending 30 June 2005, his income tax return notice, issued by the Australian Taxation Office, attributes a taxable income to Mr Bauer of $4,854.00. This was the background to Ms Becker making an application to change the assessment of child support. This seems to have lead to the decision, referred to above, of Senior Case Officer S.
For reasons which are unclear to me, the father has not provided me with a copy of this decision. However, once again, it would appear that Mr Bauer lodged an objection to the decision, which was subsequently disallowed.
For the financial years ending 30 June 2006 and 30 June 2007, the Australian Taxation Office issued assessments for Mr Bauer indicating that his income was $6,780.00 and $9,833.00 respectively. Again, it is the position that Ms Becker took exception to these figures being the basis of any child support assessment, particularly because it was her position that Mr Bauer was not fully utilising his capacity to earn income. This was the background to Senior Case Officer W’s most recent decision.
The Senior Case Officer found as follows:
“…I am satisfied that he [Mr Bauer] is working on a full time basis but he is not being paid for the hours that he works. I believe that Mr Bauer has arranged his financial affairs in such a manner so as to minimise his child support liability. There is a long history of dispute regarding the care arrangements of the children and Mr Bauer has demonstrated previously that he is extremely unhappy about the child support scheme and the rates of child support he has been assessed to pay.
Mr Bauer agrees that he works more hours than he is paid for. He has ensured that he has no assets in his name and has advised that he has no intention of improving his financial position at this time.
I note from Stinson’s “What Jobs Pay 2006-2007”, that a fulltime [occupation omitted] would earn approximately $41,825 per annum.
I am satisfied from the information available to me that if Mr Bauer was paid appropriately for the work that he does, he could earn at least $41,285 per annum. As such, I believe that he has the capacity to pay child support with respect to this child support income amount.”[8]
[8] ibid at Annexure AB36
Again, it seems to be the position that this decision was subject to an objection, which was ultimately unsuccessful. In submissions made on his behalf to the court, Mr Bauer complains of having been harassed by officers of the Child Support Agency. He has consistently claimed that his income is as assessed by the Australian Taxation Office and he has obligations to parent his step-children, which prevent him seeking employment.
On 28 February 2008, in his objection to Senior Case Officer W’s decision, Mr Bauer indicated that he was contemplating commencing proceedings in the Family Court regarding this matter. However, it would appear to be the case that he did not pursue this option.
In the meantime, the Agency itself has engaged its own mechanisms to secure payment of the ever increasing arrears of child support. This has included the issue of a notice to [hospitality business] instructing it to pay $0.65 in every dollar earned by Mr Bauer to it; and a notice to the Public Officer of that business requiring him to disclose information regarding Mr Bauer.
The mother’s position is that, since 2005, there have been several administrative departures, which have fixed the father’s child support income at a higher level than the earnings which he has disclosed to the Tax Office. It remains her position that the father has the capacity to obtain employment in the field of information technology or as a manager in a café.
In all these circumstances, she asserts that it was open for the various case officers concerned to find that Mr Bauer could have sought some form of employment, which would have enabled him to satisfy his child support obligations and make some reasonable level of financial contribution towards the support of [X] and [Y].
It is her position that, over a considerable period of time, Mr Bauer has made it clear to her that he has no intention of voluntarily paying her any child support. Rather, she believes that he has obfuscated and obstructed the process of administrative assessment of child support for his own ends, which is demonstrated by the significant level of arrears accumulated since 2003.
It is Ms Becker’s position that Mr Bauer has not seen [X] and [Y] for some time. It is her case that she believes that the father suffers some level of mental instability. She also asserts that previous Family Court proceedings between her and the father have left her emotionally and financially depleted.
In particular, Ms Becker asserts that she has utilised $25,000.00 of legal aid funding to engage in proceedings initiated by Mr Bauer, as well as utilising a further sum of $22,000.00, which she borrowed from her mother and which she is obligated to repay.
In all these circumstances, it is Ms Becker’s submission to the court that to grant leave to Mr Bauer to review the applicable administrative decisions would constitute a grave hardship to her, particularly in the sense that it would re-engage the parties in further vitriolic litigation, which would serve no useful purpose but create considerable expense for her.
Conclusions
I now turn to the matters which I must consider in exercising the discretion available to me pursuant to section 112 of the Assessment Act.
a) Reasons for the delay
The child support process in this case was engaged in 2003, shortly after the parties separated. Since that time both parties have been consistently aggrieved at the form various of the determinations have taken.
From the mother’s perspective, the father has always had a capacity to earn an income significantly higher than that which was recorded on his various tax returns. From the husband’s perspective, his income has always been as declared and there have been valid reasons why his income has not been higher.
The mother has been consistently successful in her representations to the delegates of the Agency, who have upheld her objections to the administrative based system being applied strictly to the father’s declared income. The oldest decision in this regard is that of Senior Case Officer W made in February 2005, now over five years ago.
Similar decisions have been made in the period since. As a result, arrears of child support have mounted steadily over the ensuing years to a point where a significant sum remains outstanding. Although formally advised at the end of administrative options for reviewing the applicable determinations, Mr Bauer has declined to institute proceedings in the court. As such, Ms Becker remains entitled to the level of child support calculated by reference to the various determinations, which have nothing of a provisional nature about them.
I do not think that it can be said that Mr Bauer was unaware of the ever growing arrears and the attitude of both the mother and the Agency to them. Both wished his compliance with the applicable determinations. In addition, the subject matter of the dispute between the parties was well known to each of them – it concerned whether it was reasonable for Mr Bauer to effectively withdraw from the paid workforce to such an extent that he received only a modest level of taxable income.
At best it is difficult to reach any other conclusion than that Mr Bauer has been content to bury his head in the sand and hope that the child support process will go away. At worst, it might be said that he has set himself up in opposition to the process solely to frustrate Ms Becker.
At any event, in the past, it does not seem to be the case that Mr Bauer has been shy in bringing proceedings against Ms Becker. In addition, he has constantly vented his frustration with the Child Support Agency about the various decisions which have been made.
Accordingly, in this case, I cannot see that there are any new facts or circumstances, which have recently come to the attention of Mr Bauer, which justify the judicial re-examination of the relevant determinations. The essential circumstances in issue between the parties have remained the same since at least 2005.
Certainly, there seems to me to be nothing exceptional in this case, which provides a legitimate reason for the delay on Mr Bauer’s part. If the Agency can be criticised for anything, it is for its delay in bringing enforcement proceedings and allowing the arrears to grow. However, Mr Bauer was also fully aware that the arrears were growing and he chose to do nothing formally about them.
The only logical explanation for the institution of the current proceedings, which Mr Bauer tacitly accepts, is the fact that the Agency has now sought to collect the debt owed to it on behalf of
Ms Becker. I do not think it is either a legitimate or acceptable explanation for the delay in him bringing the necessary application.
I agree with the view of the child support taskforce, outlined above, that it is “highly undesirable” for a parent to be able to retrospectively review obligations arising out of past child support determinations solely because he or she wishes to avoid the payment of substantial amounts of child support arrears.
The object of section 111 of the Assessment Act is to prevent the re-examination of past assessments of child support for unlimited periods of time. If there was such a facility, it would undermine the integrity of the overall system.
In the past, Mr Bauer has taken part in the review and objection process within the Agency. He has not been denied the opportunity to put his case. In these circumstances, it is my view that there must be something exceptional to justify the court’s revisiting of decisions which were made some time ago. The fact that Mr Bauer is currently being challenged to pay the arrears outstanding is not such an exceptional circumstance.
The reason for the delay in this matter is solely attributable to
Mr Bauer and the manner in which he has chosen to respond to his obligation to provide financial support for [X] and [Y]. To use an old saw of equity, it cannot be said that he comes to court to seek the exercise of a discretion in his favour with “clean hands”.
b) Does Mr Bauer have a reasonable prima facie case
I have no doubt that Mr Bauer is highly aggrieved by the various determinations, which have been made between the parties and which have resulted in him being deemed to have a higher income than that which he actually received because it was found that he was under utilising his income earning capacity. However, the strength of his grievance does not necessarily translate into the fact that he has a reasonable prima facie case.
As the law currently stands, pursuant to section 117 of the Assessment Act, the court would be required to follow a four step process, if the matter proceeds further to departure. Firstly, the court would have to determine whether Mr Bauer does have a greater earning capacity. Secondly, ascertain whether his earning capacity falls within section 117(7B)(a). Thirdly, determine whether Mr Bauer’s lower earnings are justifiable and fourthly and finally decide whether he had provided proof that avoidance of his child support obligations was not a major purpose of his conduct for the period in question.
It seems to be the case that Mr Bauer has not been fully engaged in the paid workforce since the parties separated, although in the past he has been fairly well paid. He does not assert that he has suffered any significant disability or illness in the years in question.
In addition, it would appear to me that Mr Bauer is a person in the prime of life. As such, it does not seem to me, putting his case at its highest, that Mr Bauer is able to delineate any significant impediments to him seeking full-time employment. Certainly, until fairly recently, Australia has been a country where levels of unemployment have been low and economic circumstances good.
In the period since 2004, Mr Bauer has earned very little. In my view, Mr Bauer does not present any reasonably arguable ground as to why he has not sought paid employment for himself. Certainly his decision to work, for no payment, in the café business operated by his current wife does not appear to be a reasonable one, when the objects of the Assessment Act are considered. As such it seems difficult for him to assert that section 117(7B) does not apply to his situation.
In addition Mr Bauer’s perception that he needed to provide care for his current wife’s children is not an obligation which should be allowed to have precedence over his legal obligation to provide an equitable level of financial support for [X] and [Y].
In all these circumstances, it does not seem to me that Mr Bauer has established a reasonable prima facie case regarding his wish to depart from the longstanding administrative assessments of child support. To the contrary, it seems to me that it is likely that he will labour under a significant difficulty in establishing that his level of earnings is both reasonable and one which has not been calculated to avoid his child support responsibilities.
c) Hardship
In Whitford & Whitford[9] the Full Court, in a different context, considered that, where a court was legislatively required to consider potential hardship being occasioned to one party by it not making a particular order and the hardship to be occasioned to the other party if the order in question was made, the exercise involved the balance of “any appreciable detriment financial, personal or otherwise” between the parties concerned. In Cantrell & Jennings[10] Baker FM considered that the same exercise applied to the application of section 112(4) of the Child Support (Assessment) Act. I respectfully agree.
[9] Whitford & Whitford (1979) FLC 90-612 at 78,145
[10] Cantrell & Jennings [2009] FMCAfam 229
In my estimation, Mr Bauer’s response to his obligation to provide financial support for [X] and [Y] has been to date poor. The only potential hardship, which will fall upon Mr Bauer’s shoulders, if his application for leave is not granted is that he will be deprived of the opportunity to litigate issues between him and Ms Becker and he may also be compelled to provide some level of financial support to the children concerned, which he has been disinclined to provide up until this stage.
From Ms Becker’s point of view, the hardship will be that she will be forced to engage in further emotionally and financially gruelling litigation with Mr Bauer, which she feels cannot be justified by any proper considerations of equity or justice. I agree with her assessment in this regard, particularly given my assessment of the strength of
Mr Bauer’s claim for substantive relief.
Accordingly, I have come to the view that the father’s application for leave to proceed pursuant to the provisions of section 111 of the Child Support (Assessment) Act should be refused. I reach this view primarily because the explanation for the delay is not a compelling one and, in the absence of Mr Bauer being able to provide a prima facie basis for his case, it would cause a significant degree of hardship to Ms Becker.
As a consequence of this decision I need not consider the application for a stay in collection of child support pursuant to the provision of section 111C of the Collection Act.
Costs
The mother seeks an order that the father pay her costs in these proceedings. She has not indicated a specific sum, which she seeks to be reimbursed. The hearing of the matter took around two hours. The mother was represented by her solicitor. She prepared two affidavits and a statement of her financial circumstances.
Pursuant to section 100 of the Child Support (Assessment) Act, the question of costs in child support proceedings is governed by the provisions of the Family Law Act 1975. Section 117 of the Family Law Act provides as follows:
“Costs
(1)Subject to sub-section (2) and sections 117AA and 118, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A)In considering what order (if any) should be made under sub-section (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has, in accordance with section 117C or otherwise, made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.”
Section 117(1) abolishes, for the purposes of Family Law Act proceedings, the general rule that in civil proceedings costs follow the event. Section 117(2) then provides the court with a general discretion to make costs orders if it is of the opinion that there are circumstances that justify it in so doing. Section 117(2A) sets out the matters that the court shall have regard to.[11]
[11] See Browne v Green 29 Fam LR 428 at 432
I accept that Mr Bauer is not in a strong financial position, However, to a very large extent, this seems to be a situation of his own making. In addition, he has been content over several years to leave responsibility for the financial support of [X] and [Y] with Ms Becker, who is a modest income earner. He has allowed arrears of child support to grow to an extent where it is difficult to see that they will ever be paid.
Ms Becker has deposed that her average weekly income is a sum of $561.00 per week, which is totally composed of government benefits. She has assets of $6,600.00 and liabilities of $22,000.00.
In all the circumstances of this case, I consider it proper and just that Mr Bauer make some contribution towards Ms Becker’s costs.
Schedule 2 of the Federal Magistrates Court Rules provides a schedule of costs payable which relate to specified court events. The amount allowed for opposing an application up to the completion of the first court day is a sum of $1,875.00 plus a court hearing fee.
Mr Bauer has been unsuccessful in his application seeking leave. In large part, he has been unsuccessful because he has been content to ignore the child support determination over many years. He followed this court at his peril. In these circumstances, I believe it would be just to make an order that he pay $1,000.00 of Ms Becker’s costs. In fixing this sum, I take into account Mr Bauer’s financial circumstances.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding ninety-seven (97) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: P Smith
Date: 22 May 2009
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