BEARD & FISHER
[2013] FCCA 755
•12 July 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BEARD & FISHER | [2013] FCCA 755 |
| Catchwords: CHILD SUPPORT – Departure order – lump sum payment – application for review out of time – whether capital sum to be considered in child support assessment – earning capacity. |
| Legislation: Child Support (Assessment) Act 1989, ss.111, 112, 112(2), 116, 117(2)(ia) & (ib), 118, 123(3) Child Support (Registration and Collection) Act 1988, ss.89, 90 |
| Cases cited: Lightfoot & Hampson (1996) FLC 92-663 Archer & Archer [2013] FCCA 226 Cazet & Faulkner [2011] FMCAfam 117 Christian & Donald (2004) FamCA 1171 CSR & Harrison (1995) 20 FamLR 101 Bendeich & Bendeich (1993) FLC 92-355 Boyd & Boyd (2012) FMCAfam 439 McGuiness v Cowie (2002) FLC 98-018 Reinhold & Casey [2008] FMCAfam 772 Crawford-Hall & Lloyd [2007] FMCAfam 563 |
| Applicant: | MS BEARD |
| Respondent: | MR FISHER |
| File Number: | MLC 5637 of 2007 |
| Judgment of: | Judge Small |
| Hearing date: | 2 May 2013 |
| Date of Last Submission: | 2 May 2013 |
| Delivered at: | Melbourne |
| Delivered on: | 12 July 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Glass |
| Solicitors for the Applicant: | Victoria Legal Aid |
| The Respondent: | Appearing on his own behalf |
ORDERS
In substitution for periodic payments and pursuant to Section 123A of the Child Support (Assessment) Act 1989 the respondent pay child support to the Applicant for the child X born (omitted) 2004 by way of a lump sum payment of $42,500 within 14 days of the date of these orders. This sum is to be credited against the administrative assessments of child support.
From 1 July 2014, the lump sum payment specified in paragraph (1) of these orders is to be credited as 100% of the amount payable under the relevant administrative assessment of child support and pursuant to Section 69A of the Child Support (Registration and Collection) Act 1988, until the lump sum is exhausted.
That pursuant to Section 116(1)(b) of the Child Support (Assessment) Act 1989 there be a departure from administrative assessment in relation to the child X born (omitted) 2004 for the period 1 July 2014 to 4 February 2022.
That the respondent’s annual rate of child support referred to in paragraph (3) be fixed at $4,500 per annum for the child X.
That the annual rate of child support payable in paragraph 4 is increased from 1 July each year in accordance with variations in the Consumer Price Index for Melbourne.
In the event that the Respondent fails to comply with paragraph (1) of these orders, the Applicant have leave to apply at short notice for orders for enforcement including but not limited to orders allowing her to register a caveat over the respondent’s property and that he be restrained from travelling overseas.
That until the payment specified in paragraph (1) of these orders is made in full, the Respondent be and is hereby restrained by injunction from reducing or causing any other person to reduce the balance in (omitted) Bank account number (omitted) to below $50,000.
That all extant applications are otherwise dismissed and removed from the list of cases awaiting judicial determination.
IT IS NOTED that publication of this judgment under the pseudonym Beard & Fisher is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 5637 of 2007
| MS BEARD |
Applicant
And
| MR FISHER |
Respondent
REASONS FOR JUDGMENT
Introduction
This is a child support matter in which there are, in essence, three applications before the court.
First, there is the mother’s application for a Departure Order for the period 1 July 2014 to 5 February 2022, which is the eighteenth birthday of the parties’ daughter X born 5 February 2004 (X). I will refer to that as “the prospective application” for the sake of convenience.
Second, the mother seeks a lump sum payment of child support to be credited 100% against the father’s child support liability for X for the abovementioned period. I will refer to that as “the lump sum application”.
Those applications are brought under Division 4 of Part 7 of the Child Support (Assessment) Act 1989 (“the Act”).
The third application, which is contained in the father’s Response filed 21 September 2012, is that the Court grant him leave to revisit two Child Support Assessments covering the period 19 March 2009 to 30 June 2011 and 1 July 2011 to 30 June 2014.
The first of those Assessments was calculated in accordance with a decision of the Social Security Appeals Tribunal (“the SSAT”), made on 15 June 2010, to set the father’s child support income for the period 1 July 2009 to 30 June 2011 at $62,000 per annum (“the SSAT decision”). No appeal was lodged to this court in relation to that decision within the 28 day time limit prescribed by the legislation.
The second was a decision of the Child Support Agency, made on 16 December 2011, to set Mr Fisher’s child support income for the period 1 July 2011 to 30 June 2014 at $64,000 per annum (“the CSA decision”). Mr Fisher did not seek a review of that decision until he filed his Response in these proceedings.
Mr Fisher seeks orders that he have leave to proceed with his application in relation to the SSAT decision out of time.
Further, in the words of his Response filed 21 September 2012, he seeks “a departure order so that from 19 March 2009 until 30 June 2014 the applicant’s child support be determined strictly in accordance with Part V Child Support (Assessment) Act 1989”. I will refer to this as “the retrospective application”, again for the sake of convenience.
The parties have agreed to all three applications being heard together despite the provisions of s.123(3) of the Act which require me to determine any pending applications in relation to assessments more than eighteen months old before I can determine a lump sum application. It could be said that Mr Fisher's Response contains such a “pending application” although it is not put in those terms. For the sake of clarity and completeness and pursuant to s.112(2) of the Act, I will treat it as though he had made an application under s.111 and s.118, and an application to proceed out of time under s.112 of the Act.
In the case of Lightfoot & Hampson (1996) FLC 92-663, the Full Court said, in relation to s.123(3) (as it then was) that “the section is clear and ought to be complied with”, although “as these are civil proceedings one would ordinarily expect that the parties could waive its requirements and I think that that is so here notwithstanding that the Assessment Act has significant public policy and public interest content” (per Fogarty J at 82, 589). That is, the requirement for independent hearings could be overcome with the consent of the parties. Therefore, having the consent of the parties, I consider that I can determine the lump sum application before determining the retrospective application and will do so.
Background
Ms Beard and Mr Fisher were engaged in a de facto relationship between mid 2002 and January 2006. There is one child of that relationship, X, born (omitted) 2004 (“X”). Various Child Support Assessments in relation to Mr Fisher’s liability to pay child support for X have been made since 6 February 2006.
Mr Fisher is also liable to pay child support for two other children from his first marriage.
In 2008, Mr Fisher’s mother died, and in March 2009, he received assets in the form of cash and shares worth in excess of $850,000 by way of inheritance from his mother’s estate.
From the date of separation until the date of trial Mr Fisher paid child support for X on an intermittent and ad hoc basis and was often in arrears with those payments.
In 2011 he made a payment of $5,115 in full discharge of his then arrears just before going on a six-month holiday overseas. Ms Beard alleges, and Mr Fisher denies, that there was a Departure Prohibition Order (“DPO”) in place at that time. No independent evidence of a DPO was produced at trial.
Mr Fisher’s tax returns were intercepted in 2012 such that Ms Beard received sums of $571.30 and $984.62 in August of that year. Her uncontested evidence at trial was that no further payments have been made since August 2012. At 19 February 2013 Mr Fisher’s arrears stood at $5,123.08.
Ms Beard’s case is that Mr Fisher’s history shows that he will continue to fail to meet his child support obligations for X if left to his own devices. She says that the income and financial resources upon which his child support liability is based should be the subject of a Departure Order based on the provisions of s.117(2)(ia) and (ib) of the Act.
She says that he has the capacity to pay a lump sum from the monies left to him by his mother, and that the Court should therefore make an order for a lump sum payment to cover Mr Fisher’s child support liability until X’s eighteenth birthday.
Mr Fisher says that the inheritance left to him by his mother is his personal property, and he should be able to spend it as he sees fit. His evidence is that he has been living off the income derived from those monies and investments, and off some of the capital from his inheritance, since March 2009, and that he has no other income or sum upon which his child support liability ought to be calculated.
He contends that his declared investment income should be the amount upon which his child support liability is based.
The Prospective Application
Ms Beard seeks a Departure Order for the period 1 July 2014 to 5 February 2022. That application is made pursuant to the provisions of Division 4 of Part 7 of the Act.
She says that the figure upon which Mr Fisher’s child support liability ought to be based is not the $30,000 which he claims is his income from investments, but the total amount which he can be shown to have spent on a discretionary basis over the years since he received his inheritance.
Mr Fisher opposes that application and says that only the amount of the income he derives from his investments ought to be taken into account when determining his child support liability.
The Law
Before making an order for departure from an administrative assessment under s.116 of the Act, s.117(1) requires the court to be satisfied that a ground for departure exists under s.117(2); that it would be just and equitable as regards the child, the carer parent and the liable parent to make such an order; and that it would be otherwise proper to make the order.
Section 117(2) sets out the grounds upon which such an order might be made. Sub-sections (a), (aa) and (b) refer to situations where the capacity of either parent to provide support for the child might be reduced, or the special circumstances of the child might affect the assessment. None of these sub-sections is relevant here.
Sub-section (c) states as follows:
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:
(i) because of the income, earning capacity, property and financial resources of the child; or
(ia) because of the income, property or financial resources of either parent; or
(ib) because of the earning capacity of either parent; or
(ii) because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975 or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child.
The factors the applicant relies on in this case are those set out in s.117(2)(c) (ia) and (ib). That is, she says that a departure order ought to be made because an administrative assessment based on the respondent’s declared income alone would result in an unjust and inequitable determination of the level of financial support provided by Mr Fisher for X. She says he has the financial resources and earning capacity upon which to base a higher child support liability than that based upon his declared income from his investments alone.
I will deal with the issue of Mr Fisher’s income, property, and financial resources first.
Mr Fisher’s evidence is that he earns about $30,000 per annum in interest on his investments. His case is that that income is the only sum upon which his child support liability should be based.
This reveals a fundamental misunderstanding of the provisions of s.117(2)(c)(ia), which clearly states that the financial resources of a parent, as well as that parent’s income, are to be taken into account when assessing child support liability.
On his evidence, Mr Fisher retained at the time of trial some $640,000 of the inheritance received from his mother. In cross-examination he conceded that in addition to the $30,000 of interest income per year, he actually spent some $200,000 of the capital on what might be termed discretionary spending since he came into those monies. On average, that expenditure would amount to roughly $50,000 per year since he received his inheritance in March 2009.
His evidence was that he has spent the extra $50,000 per year on holidays, on home renovations and on other discretionary expenditure.
His access to funds in those years can therefore be said to have been closer to $80,000 per year than to $30,000.
The remaining capital sum of $640,000 is clearly a financial resource in his hands and constitutes a special circumstance in this case. It is therefore able to be considered when the court is deciding whether to make a departure order under s.117(2)(c)(ia). I note the recent decision of Judge Baker in Archer & Archer [2013] FCCA 226, where Her Honour upheld a decision of the SSAT to consider an inheritance of $161, 212.00 as creating a special circumstance.
Mr Fisher referred me to the case of Cazet & Faulkner [2011] FMCAfam 117 in support of his argument that he should not be ordered to draw down on his capital for the purposes of paying child support.
In that case, which was an appeal to the then Federal Magistrates Court from a decision of the SSAT, Halligan FM (as His Honour then was) found that he did not need to decide whether capital sums are to be considered as income for the purposes of paying child support. However, he did make some “observations” about that issue, and, at paragraph 35, he said:
It may be that the level of capital assets compared to actual or imputed income from them, together with any other income, is such that the calculation of a proper level of child support that ensures “that children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both of their parents” requires that the capital directly influence the quantification of the amount of child support.
This is exactly such a case. Mr Fisher might only have “income” of $30,000 per year, but since he received his inheritance he has had access to that income, plus to capital funds of some $50,000 per year which are a financial resource capable of being taken into account in an application for a departure order.
Mr Fisher says further that the fact that he expended some of those monies on home renovations meant that those monies should not be taken into account as a financial resource or as income.
He said in submissions:
I would like to talk about the fact that I should be allowed to take my inheritance and spend it on a house. It shouldn’t have to be perpetually locked up in investments to earn income to pay child support.
In support of this contention he cited the Full Court decision of Christian & Donald (2004) FamCA 1171, which held that a payer with only a modest equity in a home was not be required to draw on that equity to pay child support.
I cannot see how this decision assists Mr Fisher. Section 117(2)(c) clearly states that I must take into account the special circumstances of the case in deciding whether there are grounds to make a departure order. I have already stated that the $640,000 remaining from Mr Fisher’s inheritance constitutes a special circumstance in this case.
In the further special circumstances of this case, Mr Fisher has not bought a house which he would have to encumber to pay the child support asked of him. He has current cash and shares worth about $640,000 from which to make any ordered payments. The decision in Christian & Donald is therefore distinguished on its facts.
I therefore find that s.117(2)(c)(ia) has been satisfied in that it would be unjust and inequitable for an administrative assessment of Mr Fisher’s liability to pay child support for X to be based on his income alone. In the special circumstances of this case, Mr Fisher has significant financial resources from which to make those payments as well.
I turn now to whether the provisions of s.117(7B)(2)(c)(ib) have been satisfied.
Mr Glass for the Applicant sought to establish in cross-examination that Mr Fisher has an earning capacity which would satisfy the requirements of s.117(2)(c)(ib).
Mr Fisher’s evidence was essentially that while he had held several short-term positions of a generally unskilled nature in the years before he received his inheritance, he had not applied for work for several years because he considered that he could live off the income from his investments which are derived from his inheritance. There is no suggestion from him that he is unable to work because of any disability or health reason.
He says he is an artist, although he does not at this stage make a living wage from his art. In these circumstances, I find that Mr Fisher has some earning capacity that he currently chooses not to exercise.
However, in order to find the provisions of s.117(1)(c)(ib) have been satisfied, I would need to find that Mr Fisher is deliberately not exercising his earning capacity in order to reduce his child support liability.
Section 117(7B) of the Act states as follows:
(7B) 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 there being an 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 occupied or otherwise engaged;
(iii) the parent has changed his or her occupation, industry or work 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 that 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.
When applied to the facts of this case, this means that I may determine that Mr Fisher’s earning capacity is greater than is reflected in his income only if I am satisfied that his decision not to work is not justified on the basis that he has not demonstrated that a major purpose of that decision was to affect the administrative assessment of his child support.
I find that Mr Fisher has an earning capacity that he does not currently exercise. He has held jobs in the past, albeit of an ad hoc nature and short-lived duration, and he states that he hopes to earn some income in future from his art, which he sees as his main vocation.
Nevertheless, on the evidence before me, I do not find that he chooses not to work for the purposes of affecting his child support assessments, but rather because he sees no reason to work when he has an independent income. It may be that Mr Fisher benefits financially from the fact that not having to work may affect his child support. However, his evidence that the major reason he does not work is that he has an independent income and financial resources derived from his inheritance, together with evidence adduced that his employment history was erratic and unskilled before he received his inheritance, was persuasive.
I therefore find that Mr Fisher’s earning capacity does not satisfy the requirements of s.117(2)(c)(ib) as a ground for the making of a departure order.
For those reasons I find that, as the requirements of s.117(2)(c)(ia) have been satisfied, there are grounds for the court to make a departure order.
I must now turn my mind to the question of whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a departure order.
In considering whether it would be just and equitable to make an order, I must address the factors set out in s.117(4) That section requires me to have regard to the following matters when making that decision:
(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:
(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) 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 party 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 refusal to make, the order; and
(ii) to:
(A) the liable parent; or
(B) any other child or any other person that the liable parent has a duty to support;
by the making of, or refusal to make, the order; and
(iii) to any resident child of the parent (see subsection (10)) by the making of, or refusal to make, the order;
Having considered all of those factors I find the following:
(a)Mr Fisher, being X’s father, has a duty to maintain X under Section 3 of the Act. That duty is not of lower priority than his need to maintain himself or any other child.
(b)X’s proper needs, being the ordinary accommodation, clothing, health, material, educational and lifestyle needs of a child of nine years, plus her need for orthodontic treatment during her coming adolescence, require the support of both her parents;
(c)X, being only nine years old, has no income, earning capacity, property or financial resource that would assist in making provision for her proper needs.
(d)I have already found that Mr Fisher has an income earning capacity that he does not currently exercise. He has held positions in the past, albeit of an ad hoc nature and short-lived duration, and he states that he hopes to earn some income in future from his art. It is difficult, if not impossible, to put a figure on that earning capacity as he has sold only a few paintings and has not worked in an employee capacity for many years
(da)I have already found that Mr Fisher’s income, property and financial resources are higher than those he declares to the Child Support Agency.
(e)In addition to his obligation to maintain X, Mr Fisher has a duty to maintain himself, his current wife, and the two children of his first marriage, who are currently aged fifteen and a half and thirteen. Nevertheless, his financial circumstances are such that those duties do not significantly affect his ability to pay child support for X, especially where there is uncontroverted evidence before the court that he is in significant arrears with the payments for his other two children as well. In his Financial Statement sworn 12 April 2013, Mr Fisher states that he has property, in the form of shares and cash in a bank account, of $650,000, and he gave evidence that the sum was about $640,000 at the time of trial.
(f)Ms Beard’s evidence, contained in her Financial Statement sworn 12 March 2013, and confirmed in oral evidence, is that she supports herself, X and her older daughter Y, from her Centrelink benefits of $424 per week and the $400 per week in child support she receives from Y’s father. She has assets of $23,234, which are made up of household contents worth $15,000, a car, and small sums in two bank accounts.
(e)Were I to refuse to make a departure order, there is some evidence to say, and certainly none to refute, that X and Ms Beard will suffer hardship. She says that she is paying rent of $345 per week and is on a waiting list for public housing. Her evidence is that she is unable to meet her living expenses (and from that I infer that she means X’s living expenses as well) and that she receives food packages from the Salvation Army. She is a full-time student studying to improve her employment chances.
(f)In contrast, Mr Fisher has an income from his investments, and considerable financial resources in the form of shares and the remainder of the cash from his mother’s estate. If I were to make an order, he would not suffer any hardship at all. He would simply have fewer financial resources from which to live. In addition, were he to exhaust the capital from his inheritance, he does have some earning capacity from both his art and the possibility of other employment in the future.
It follows then, that, mindful of the primary duty of parents to maintain their children as set out in s.3 of the Act, it would be just and equitable to the child and to the carer parent for a departure order to be made in this case. However, I make the point that it is also in my opinion just and equitable to the liable parent for such an order to be made in this case. Mr Fisher’s significant wealth means that he will not suffer any injustice if he is to pay the rate of child support sought by Ms Beard of $4,500 per year,
The last issue to be considered before I decide whether I am able to make a departure order is whether it would be otherwise proper to make such an order.
Evidence supplied by Ms Beard in this case shows that a sum of $4,500 per year would be a proper amount of child support to meet X’s specific needs and that was not contested by Mr Fisher. That sum would represent a modest increase in the sum set for the previous periods by the SSAT and the CSA, and evidence has been provided that X will require some specific dental treatment in her adolescence. Therefore I find that X’s needs require an amount of $4,500 in child support per year and will fix Mr Fisher’s annual rate of child support for the relevant period at that sum.
Section 117(5) sets out what the court must have regard to when deciding whether it would be otherwise proper to make a particular order. Section 117(5) states:
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 the 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 any 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 eth child or the carer entitled to child support.
In this matter, I refer to paragraphs 58 (a) and (b) above and repeat that it is the primary duty of both the Applicant and the Respondent to support X
I note that no evidence was provided by either party in relation to the child and carer parent’s entitlement to income tested Centrelink benefits and how orders I might make might affect that entitlement.
In considering what the child’s proper needs are, s.117(6) requires me to have regard to the following matters :
(a) The manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained; and
(b) Any special needs of the child.
In this case, there is no evidence before me, either in the sworn written material or adduced at trial, to indicate any manner in which the parties intended X to be cared for, educated or trained.
On the evidence before me, the only special needs X has are for orthodontic treatment in her adolescence.
For all the reasons set out above, I will therefore make a departure order in this case for the period 1 July 2014 to 5 February 2022 pursuant to s.116(1)(b) of the Act.
The lump sum application
Ms Beard seeks an order pursuant to s.123(1)(b) of the Act for a lump sum payment of child support to be paid in lieu of periodic payments. Pursuant to the provisions of s.123A(1) she seeks that the lump sum payment be credited as to 100% towards Mr Fisher’s child support liability for X until her eighteenth birthday.
It is Ms Beard’s evidence that Mr Fisher has historically been and indeed is currently reluctant to pay the child support for which he is liable. It is for this reason that she seeks a lump sum payment that would cover the entire period to X’s eighteenth birthday, thereby relieving her of the need to pursue Mr Fisher any further for child support for X from 1 July 2014.
Mr Fisher concedes that he has significant arrears owing for X’s support, and that while he had told the court on a previous occasion that he would discharge those arrears, and states in his Affidavit sworn 2 April 2013 that he has made arrangements to pay them, his evidence at trial was that he has not done so.
Ms Beard contends, although Mr Fisher denies, that he paid the arrears he owed in 2011 only because the CSA would not allow him to leave the country until he did so. Mr Fisher denies that there was a Departure Prohibition Order in place at that time, although he concedes that there is one in place now.
He concedes that the last two payments to Ms Beard were made by way of interception of his tax returns.
Whether or not a Departure Prohibition Order was in place in 2011, I am satisfied that Mr Fisher has a consistent history of failing to make periodic payments of child support for X.
Before I can order a lump sum payment, Section 123(2) requires me to be satisfied that there is an administrative assessment currently in force, and that the applicant is a carer entitled to child support, or a liable parent. There is ample documentary and oral evidence before the court in relation to both these matters and I therefore find that the requirements of s.123(2) have been met.
Further, ss.123A(1)(b) and (c) require me to be satisfied that such an order would be just and equitable and otherwise proper; and that the amount sought equals or exceeds the amount which would have otherwise been paid by way of assessed periodic payments.
For all the reasons set out in paragraphs (57) to (67) above in relation to the making of the departure order, I am satisfied that it would be just and equitable and otherwise proper to make an order for a lump sum payment.
I am also satisfied on the evidence provided by Ms Beard and submissions made by Mr Glass, that the amount sought equals or exceeds the amount which would otherwise have been paid.
Mr Fisher referred me to several cases in support of his contention that the court ought not make orders for a lump sum payment.
He referred me to the case of CSR & Harrison (1995) 20 FamLR 101 at page 111, which he said supported his contention that the mother should have made an application through the Administration of Probate Act if she claimed that his mother’s will should have made provision for X’s support. He said that for Ms Beard to seek a lump sum from his inheritance now is an abuse of process.
CSR & Harrison is a Full Court decision in relation to enforcement proceedings sought to be taken by the Child Support Registrar. Those proceedings related to arrears owing pursuant to a Stage 1 order for child maintenance which had been registered with the Child Support Agency. The Registrar had pursued those arrears by way of proceedings in the New South Wales Local Court and judgment, including interest and costs, had been entered against the payer parent. A subsequent decision in that court had reduced the Assessment for the applicable period and the Registrar sought to raise the issue of arrears again in the Family Court of Australia.
The question before the court was whether the Family Court had jurisdiction to hear the matter when there was already a civil judgment debt in relation to the arrears. That is the context in which the issue of abuse of process was raised.
This case does not involve the Child Support Registrar, nor does the mother seek enforcement of arrears owed by the father. I cannot see anything in the judgment that would be relevant to this case and I am at a loss to see how its ratio decidendi would apply in the current circumstances.
Further, I do not see how the mother’s failure to contest the will of Mr Fisher’s mother in 2008/2009 can be seen as creating a bar to her seeking a lump sum child support payment from Mr Fisher now. It is not the will that Ms Beard seeks to dispute – it is the contention that Mr Fisher ought to be able to use his inheritance in any way he chooses, regardless of his child support obligations.
Mr Fisher further contended that “regardless of anything else that happens in this case, lump sum child support should not be paid”, and that the court ought to be “reluctant to make an order since the parties’ circumstances may change”.
In support of the first statement he referred me to the judgment of Mushin J in the matter of Bendeich & Bendeich (1993) FLC 92-355, and in support of the second, to the decision of Brown FM (as His Honour then was) in the matter of Boyd & Boyd (2012) FMCAfam 439.
In Bendeich, the applicant wife sought a lump sum payment of current and future child support so that she could keep the former matrimonial home.
What Mushin J said in that case (at 79,755) was :
Proceedings for child support or child maintenance should not seek capital sums for the purpose of capital expenditure. They are for on-going living expenses rather than the accumulation of an asset. …. However, to the extent that the present application seeks on-going expenses which might be used directly or indirectly for the payment of mortgage monies thereby enabling the custodial parent to retain a home in which to house the subject children, that is a matter to be taken into account.
There has been no suggestion in the current proceedings that Ms Beard intends to use any lump sum payment that might be ordered for the purposes of capital expenditure and I therefore find that the decision in Bendeich is distinguished on its facts.
In McGuiness v Cowie (2002) FLC 98-018, Kay J said:
40. The power in a court to make a lump sum order has two potential sources; under Pt 4 of Div 7 by virtue of the general powers contained in s.141 of the Assessment Act, or under Pt 5 of Div 7 which enables a court to make orders that are other than periodic sums.
Later in his judgment, Kay J said: (at paragraph 64).
I conclude that: The legislation provides no jurisdictional barrier to a court entertaining an application for the payment of child support by way of lump sum.
I therefore find that the court does have the power to order that Mr Fisher make a lump sum payment of child support for X.
Boyd concerned the issue of whether a Financial Agreement signed by the parties was binding upon them.
That Agreement included provision for the husband to pay school fees for the parties’ children, and the wife sought a declaration that the Agreement was binding on the parties, and an order that the husband pay her a lump sum to cover the children’s school fees from the 2010 school year to the 2017 year.
The question before the court (among others) was whether it would be just and equitable to require the husband to pay school fees for future years for which the fees were uncertain as they had not yet been set.
FM Brown (as His Honour then was) said, at paragraphs 145 to 150
145.…the payment of child support in a lump sum is generally eschewed. It being preferable that the provision of financial support for children be provided periodically in order firstly that it be utilised for a child’s immediate financial needs and secondly the amounts payable can be easily changed to reflect changes in circumstances and avoid potential anomalies arising.
146. It is also potentially unfair to penalise a parent in the event that his/her financial circumstances deteriorate markedly in future for no fault attributable to him/her, such as an illness or incapacity, which severely impacts upon earning capacity, if any lump sum payment was calculated on the basis of an ongoing ability to earn a large income.
147. In addition, it is not uncommon for the living arrangements of children to change markedly over time. Children may move to live from one parent to the other or their care may become shared, whereas in the past it was concentrated more in one parent.
148. Accordingly, by means of a process of rolling and periodic assessments, the application of the child support formula has the capacity to adapt to the changing circumstances of those who are affected by it, be they liable parent; caring parent; or financially dependent child.
149. For this fundamental reason, the legislatively mandated preference is that child support should be provided in a periodic form, following its administrative assessment by the Child Support Agency.
150. To my mind, similar considerations arise in respect of the wife’s application to capitalise Y’s future private school fees. It is uncertain whether Y will be at P. in 2017. The circumstances of the parties themselves may change dramatically over the next five years or so. These changes may render the capitalisation order sought by Ms Boyd unjust so far as Mr Boyd is concerned.
That is a very different situation than applies to this case. In this case, Ms Beard does not seek an indefinite amount of support in the form of future undetermined school fees. She seeks a definite lump sum at a set rate of child support to cover X’s support until she turns 18. There is no uncertainty as to the sum sought and there is no uncertainty about Mr Fisher’s capacity to pay that sum. Any change in his financial circumstances in the future will not affect his ability to pay a lump sum now, and the amount of the lump sum is not based on his earning capacity in any event. I do not see how the decision in Boyd can be applied to the current facts.
The amount of the lump sum sought by Ms Beard is $42,500. This is based on the current assessment continuing to 5 February 2022 at a slightly higher rate than at present, with allowance for inflation of 10% over that period. I am satisfied that the amount sought is greater than the amount that Mr Fisher would have paid by way of periodic payments over that time and am therefore satisfied that the provisions of s.123A(1)(c) have been met.
Again, in circumstances where Mr Fisher has access to resources considerably greater than the income he declares to the CSA, and where Ms Beard has had to take persistent action through the CSA and this court in order to force him to satisfy his obligations under the Act, I find that it is otherwise proper having regard to the provisions of s.117(5) of the Act for me to exercise my discretion.
I will therefore order that Mr Fisher make a lump sum payment for X’s future support in the sum of $42,500, that payment to be made within 14 days of the date of this order.
Further, I will make an order that that sum is to be credited 100% against Mr Fisher’s child support liability for X under the relevant administrative assessment for the period 1 July 2014 to 5 February 2022 at a rate of $4,500 per annum until the lump sum is exhausted.
The retrospective applications
Mr Fisher’s response filed 21 September 2012 seeks orders in the following terms:
1. There be a departure order so that from 19 March 2009 until 30 June 2014 the applicant’s child support be determined strictly in accordance with Part V Child Support Assessment Act 1989.
2. Any leave required for order 1 hereof to be made be granted.
3. The application be otherwise dismissed with costs.
Mr Fisher’s child support liability for the period 19 March 2009 to 30 June 2014 is the subject of three separate decisions:
·one made by the CSA in relation to the period prior to 30 June 2009;
·one made by the SSAT on 15 June 2010 to set Mr Fisher’s child support income for the period 1 July 2009 to 30 June 2011 at $62,000 per annum; and
·one made by the CSA on 16 December 2011 to set Mr Fisher’s child support income for the period 1 July 2011 to 30 June 2014 at $64,000 per annum.
It is actually the latter two of these decisions that Mr Fisher seeks to overturn. The assessment for the period 19 March to 30 June 2009 was not mentioned at trial and no evidence at all was presented in relation to that period. I therefore make no order in relation to it.
The orders sought in Mr Fisher's Response essentially ask that the court make departure orders in relation to both the SSAT and CSA decisions and that he be permitted to make the application in relation to the SSAT decision out of time.
The question of whether leave should be granted for the Respondent to proceed out of time in relation to the SSAT decision
As it is Mr Fisher’s application to have those decisions revisited, it is first incumbent upon him to show why the application in relation to the SSAT decision should be granted out of time, that decision having been made on 15 June 2010.
In his Affidavit sworn 20 September 2012, he states the following:
13. I understand that if I am to be successful in the aspect of these proceedings seeking an extension of time I must show three things. Firstly, I must show good reason for my delay in bringing the proceedings. Secondly, I must establish some merit in the substantive application for a decrease in my past child support. Thirdly, I must show that the applicant will not be unduly prejudiced by granting me my extension of time.
I am not sure where Mr Fisher finds these three factors. The matters the court must have regard to when deciding whether to grant leave to make an application for an order in respect of an assessment made more than 18 months previously are set out in s.112(4) of the Act, which says:
112(4) Matters to be considered. 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;
(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.
In relation to the question of delay, Mr Fisher admits that the delay is his responsibility, and states, at paragraph 15 of his Affidavit of 20 September 2012 (“the September Affidavit”):
I sought legal advice in 2010 over the issue but the costs quoted to me of litigating the matter were just completely outside my budget. It was not until now (when I have found myself in court opposed to the applicant in other proceedings) that the issue has become cost effective for me.
This statement is at best disingenuous. Mr Fisher received his inheritance of some $850,000 from his mother’s estate in March 2009 and at the time of trial, there were about $640,000 worth of assets remaining. To say that he did not seek a review of the CSA decision or appeal the SSAT decision after March 2009 because he could not afford the legal fees is simply ludicrous.
There being no other reason given for the delay, I find that Mr Fisher has not satisfied the first of the three matters I must consider in deciding whether to grant his application to proceed with his departure order application out of time.
He next sets out his case in relation to the second matter, that case being (at paragraph 17):
In that respect I note the inherent unfairness of the situation where I have been charged child support on an income way in excess of what I have been able to earn from my investments. I have always invested my inheritance prudently. My tax returns (which, along with my other relevant documents I will bring to court with me as required by the Rules) will confirm that the actual incomes I have been able to generate from my investments have not come anywhere near where the Child Support Agency and SSAT’s calculation suggest they would have.
This statement does not address the matter set out in s.112(4)(b) of the Act and I therefore find that he has not shown that there would be hardship to him if leave were not granted.
In support of his application in relation to the question whether there would be hardship to the other party if leave were granted, Mr Fisher says, at paragraph 19 of the September Affidavit:
As regards that I say that the applicant was always aware that I was unhappy with the child support situation from 2009. I also say that the state of the applicant’s financial circumstances (when measured against my financial circumstances) mean that she will suffer no appreciable prejudice should the orders I seek under s112 be made. If I am given leave and am successful in this aspect of my case, I will not seek that the applicant repay me any child support I may have overpaid her. I would be happy for any overpayment to merely stand to my credit at the Child Support Agency and reduce my ongoing child support payments.
Again, I cannot find in this paragraph any negation of the hardship it might cause Ms Beard were I to grant leave under s.112 for Mr Fisher to make this application out of time. I have set out Ms Beard’s financial circumstances at paragraph 58(f) of these reasons, and on that basis I find that granting Mr Fisher leave to seek an amended assessment out of time would cause her hardship as she would have no prospect of receiving the child support lawfully assessed by the SSAT.
At trial, Mr Fisher referred me to two decisions of this court: Reinhold & Casey [2008] FMCAfam 772; and Crawford-Hall & Lloyd [2007] FMCAfam 563 in support of his application to proceed out of time.
In Reinhold & Casey the mother made an application to proceed out of time with a departure order application. Her grounds were that during parenting proceedings, she had discovered that the father’s financial position was very different to that disclosed to the Child Support Agency. In that case, Lindsay FM (as His Honour then was) granted leave on the ground that the mother had established that she would suffer hardship if leave were not granted. That case can be distinguished from this case, as this is not a case where new evidence has come to light since the making of the original order.
Crawford-Hall & Lloyd was a case where the Applicant mother sought to amend her application for a departure order out of time. In that case, Riley FM (as Her Honour then was) said, at paragraph 2:
In general, it is proper to allow an amendment to enable all the issues in dispute between the parties to be dealt with in court at the same time. This general approach results in efficiencies for the court and the parties. There are obviously exceptions to the general rule, such as where the subject of the proposed amendment is completely separate from the existing proceeding or where the proposed amendment would prejudice the other party in a way that cannot easily be remedied.
In the present case, Mr Fisher’s application is contained in his Response to the mother’s Application, but it is not essentially part of these proceedings. Indeed, it can be said to be “completely separate from the existing proceeding” and this is conceded by Mr Fisher when he said, in relation to the delay in bringing this application:
It was not until now (when I have found myself in court opposed to the applicant in other proceedings) that the issue has become cost effective for me.
I therefore find that the facts of this case form an exception to the rule as stated by Riley FM in Crawford-Hall & Lloyd.
Having had regard to s.112, I therefore decline to exercise my discretion under s.112(1) to grant Mr Fisher leave to proceed with his application to amend any assessment that is more than 18 months old.
It follows that that decision applies to the SSAT decision and therefore the application contained in Mr Fisher's Response filed 20 September 2012 insofar as it relates to the SSAT decision is dismissed.
The CSA decision
The CSA decision made on 16 December 2011, which was to the effect that Mr Fisher’s child support income for the period 1 July 2011 to 30 June 2014 at be set at $64,000 per annum, was subject to review by the SSAT pursuant to s.89 of the Child Support (Registration and Collection) Act 1988 (Cth). Section 90 of that Act sets the time limit for applying for a review at 28 days.
Mr Fisher made no attempt to seek such a review despite being represented by lawyers at the time. Nor did he seek an extension of time under s.91. He was clearly aware of the possibility of seeking a review from the SSAT as he had done so in relation to the assessment for the previous period. He appears simply to have added this application to his Response in these proceedings as a matter of opportunity.
He now seeks a departure order from that decision in the following terms:
There be a departure order so that from 19 March 2009 until 30 June 2014 the applicant’s child support be determined strictly in accordance with Part V Child Support Assessment Act 1989
Again, the law in relation to departure orders is set out in ss.116 and 117 of the Act.
As stated previously in these reasons, before making an order for departure from an administrative assessment under Section 116 of the Act, s.117(1) requires the court to be satisfied that a ground for departure exists under sub-section (2); that it would be just and equitable as regards the child, the carer parent and the liable parent to make such an order; and that it would be otherwise proper to make the order.
While Mr Fisher’s filed material does not mention which ground he seeks to rely on in relation to this application, his Affidavit material and oral evidence and submissions at trial indicate that he seeks to rely on ss.117(2)(c)(ia) and (ib), the same grounds Ms Beard relied on in her (now successful) application for a departure order. Having examined other possible grounds under s.117(2), I can find no others which have relevance to this case.
I have already found that Mr Fisher’s income and financial resources are greater than those he has disclosed to the CSA.
In relation to the issue of his earning capacity, he merely states, at paragraph 10 of his Affidavit sworn 2 April 2013:
I note at various points in her affidavit the applicant suggests I have not ever fully exercised my capacity to work and earn money. I dispute that. However, if the respondent (sic) actually brought a case against me on such a “capacity to work” basis (something she does not appear to be doing in this case) I would be happy to defend any such case at that time.
I note that Ms Beard's Affidavit affirmed 25 June 2012 (“her initial Affidavit”) makes very clear that she is claiming that her departure order application rests on Mr Fisher’s “actual income and financial resources” (paragraph 15) . Part of the evidence in relation to his income is his earning capacity, and her initial Affidavit deposed to certain facts and assertions in relation to that matter.
However, in his affidavit of 20 September 2012, and again in his Affidavit sworn 2 April 2013 and in oral submissions, Mr Fisher stated his contention that only his income from his investments should be taken into account in assessing his child support liability.
I have canvassed the matters set out in s.117(2) as they relate to this case thoroughly in paragraphs (25) to (68) of these reasons. I found in that section of this judgment that Ms Beard had satisfied the provisions of s.117(2)(c)(ia). That is, she had shown that in the special circumstances of the case, Mr Fisher’s income, property and financial resources were greater than he had declared to the CSA.
Mr Fisher invites me to make a departure order in his favour on the same facts. In the circumstances, it would be nonsense to say that the same facts and law give rise to different conclusions.
Therefore, I find that while Mr Fisher has shown a ground for departure under s.117(2)(ia) in relation to the CSA decision, he has not shown that it would be either just and equitable, or proper for me to make that order in his favour.
In those circumstances, his application for a departure order is dismissed, and the SSAT and CSA decisions are confirmed.
I certify that the preceding one hundred and thirty-six (136) paragraphs are a true copy of the reasons for judgment of Judge Small
Date: 12 July 2013
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