Berge and Berge
[2013] FMCAfam 38
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BERGE & BERGE | [2013] FMCAfam 38 |
| CHILD SUPPORT – Departure Application – where Social Security Appeals Tribunal declined to make a decision because the issues were too complex – whether ground for departure established – whether just and equitable to make an order under Division 4 of Part 7 of the Child Support (Assessment) Act 1989 (Cth) – whether it is otherwise proper to make an order under Division 4 of Part 7 of the Child Support (Assessment) Act 1989 (Cth). PRACTICE AND PROCEDURE – Application to re-open case – where applicant obtained fresh evidence. |
| Child Support (Assessment) Act 1989, ss.3, 98E, 114, 116, 117, 118 Family Law Act 1975, ss.75(2), 79A |
| Berge & Berge & Ors [2009] FamCA 968 Christian & Donald [2004] FamCA 1171; (2008) FLC 93-367 Gyselman & Gyselman (1991) 15 Fam LR 219; FLC 92-279 Jones v Dunkel (1959) 101 CLR 298 |
| Applicant: | MS BERGE |
| Respondent: | MR BERGE |
| File Number: | SYM 7148 of 2005 |
| Judgment of: | Scarlett FM |
| Hearing dates: | 24 March, 3 June 2010, 21 June 2011 |
| Date of Last Submission: | 21 June 2011 |
| Delivered at: | Sydney |
| Delivered on: | 29 January 2013 |
REPRESENTATION
| Solicitors for the Applicant: | Hamish Cumming Family Lawyers |
| Solicitors for the Respondent: | In person |
ORDERS
The Respondent’s child support income for the period 1 January 2009 to 31 December 2009 is set at $100,000.00 (one hundred thousand dollars).
The Respondent’s child support income for the period 1 January 2010 to 31 December 2010 is set at $100,000.00 (one hundred thousand dollars).
Written submissions in support of any application for costs are to be filed and served within 21 days and written submissions in opposition to any such application are to be filed and served within 28 days.
IT IS NOTED that publication of this judgment under the pseudonym Berge & Berge is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYM 7148 of 2005
| MS BERGE |
Applicant
And
| MR BERGE |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application for departure from assessment of child support made by the wife. The husband is currently assessed to pay $nil by way of child support for the parties’ daughter. It is her application, which was commenced by a Notice of Appeal filed on 19 August 2009, that the husband’s child support income should be deemed to be 2.5 times the EAWE (the annual equivalent of all employees’ average total weekly earnings).
The husband opposes the Application. By his Response, filed on 7 December 2009, he seeks an order that the child support payable by him be “as assessed by the Child Support Agency”.
Background
The parties commenced living together in August 1996 and were married [in] 1999.
There is one child of the marriage, [X], who lives with the wife. [X] was born [in] 2000.
The parties separated on either 24[1] or 26[2] March 2004 and were divorced on 17 November 2005.
[1] According to their Application for Divorce filed on 25 October 2005
[2] Affidavit of Ms Berge 16.3.2010 at paragraph [6]
In June 2004 the wife applied to the Child Support Agency for an administrative assessment of child support. The matter was registered for collection by the Agency on 8 June 2004.
There were several changes of assessment between 7 October 2004 and 22 June 2007.
On 15 August 2008 the husband applied for a change of assessment. On 14 October 2008 a Senior Case Officer made a decision on that application:
a)increasing the husband’s adjusted taxable income to $75,000.00 for the period 1 January 2009 to 31 December 2010;
b)increasing the wife’s adjusted taxable income to $86,000.00 for the same period;
c)increasing the annual rate of child support payable by the husband for the period 1 January 2009 to 31 December 2009 by $1,000.00; and
d)increasing the annual rate of child support payable by the husband for the period 1 January 2010 to 31 December 2010 by $1,050.00.
The husband objected to this decision but his objection was dismissed on 4 March 2009.
On 6 April 2009 the husband applied to the Social Security Appeals Tribunal for a review of that decision. In a Decision made on 7 July and despatched on 20 July 2009, the Tribunal refused to make a decision on the basis that the matter was too complex.
The Tribunal’s decision was:
On 7 July 2009, the Tribunal decided to set aside the decision under review and substitute a decision, pursuant to section 98E of the Child Support (Assessment) Act 1989 that the issues raised by the application are too complex to be dealt with under Part 6A of the Assessment Act and the Tribunal refuses to make a determination to change the assessment. It recommends that application be made to a court having jurisdiction under the Assessment Act for an order under Division 4 of Part 7 of that Act. This means that the departure decision made on 14 October 2008 is of no effect.
The wife filed a Notice of Appeal against that decision on 19 August 2009, returnable on 27 October 2009.
On 16 September 2009 the husband’s child support assessment was set at $nil.
Whilst parenting issues between the parties had been resolved by orders made on 4 May 2007, the parties’ property issues were the subject of a degree of contested litigation. A property application was heard by Fowler J in the Family Court on 29 June 2009. Judgement was handed down on 9 October 2009.
The parties to the proceedings in the Family Court were the wife as Applicant and the husband, the husband’s father and the mother’s mother as Respondents. The Court ordered that the wife would retain those assets that she had and receive a payment of $120,990.00, which effected a division of the assets in the proportion of 55% to the wife and 45% to the husband. The husband and his father were to charge the whole of their right, title and interest in and to a property at [C] in favour of the wife to secure the payment of the order.
The husband lodged an Appeal against that decision on 6 November 2009. The Appeal had not been decided at the time the hearing of this matter commenced.
On 27 October 2009, when the wife’s Appeal was returnable before
Sexton FM, her Honour noted that the proceeding was “the mother’s application for departure from administrative assessment of child support” and listed the application for final hearing for one day on 24 March 2010.
The application was not heard to finality on 24 March 2010 but was adjourned part-heard to 3 June 2010, when further evidence was taken. The parties were to provide written submissions to the Court by 26 July.
The husband’s Appeal against the decision of Fowler J was heard by the Full Court of the Family Court on 7 December 2010.
On 4 April 2011 the wife applied to re-open her case. The husband opposed the application.
The Full Court delivered its decision on the husband’s Appeal on 6 April 2011.
On 21 June 2011 the wife was granted leave to re-open her case.
Evidence
The wife relied on the following:
a)her Application (Notice of Appeal) filed on 19 August 2009;
b)her affidavit of 16 March 2010; and
c)her Financial Statement filed 16 March 2010.
The wife deposed that in May 1998 the husband and his father purchased two adjoining lots of land at Property C, [C] for $250,000.00. They purchased the land as tenants in common, the husband as to 20% and the husband’s father as to 80%. She deposed:
The husband now claims that his father is 100% the beneficial owner of [C]. This claim was the subject of Family Court proceedings.[3]
[3] Affidavit of Ms Berge 16.3.2010 at [23]
The wife annexed a copy of the Judgment to her affidavit.
In his decision[4], Fowler J found that the [C] property was acquired by the husband and his father for the purpose of a joint venture between them. His Honour found the value of the property in its unsubdivided form to be $950,000.00. After taking into account the mortgages on the property which secured various loans, some of which related to the personal borrowings of the husband or his father, Fowler J estimated the net value of the husband’s share at $296,300.00.[5]
[4] Berge & Berge & Ors [2009] FamCA 968
[5] Berge & Berge & Ors [2009] FamCA 968 at [78]-[83]
In her affidavit, the wife claimed that the husband has financial resources available to him in addition to a significant earning capacity based on his professional qualifications, including an [omitted]. She seeks orders for the maximum amount of child support to be payable by the husband until the child [X] turns 18 to avoid any ongoing child support disputes.
It is the wife’s case that the husband and his fiancée, who is his employer, have so manipulated the figures relating to his income and resources to give a misleading picture of the husband’s capacity to pay child support.
At paragraph [104] of her affidavit, the wife provides a list of the Child Support Assessments made between 2004 and the date of the hearing:
2004 $9,259 pa $771.50 monthly
2005 $8,859 pa $738.25 monthly
2006 $7,333 pa $611.08 monthly
2007 $6,606 pa $550.50 monthly
2008 $6.072 pa $506.00 monthly (incl $1000, half the school fees)
2008-2 $3,257 pa $271.42 monthly (incl $1000, half the school fees)
2009 $1,122 pa $93.50 monthly (incl $1000, half the school fees)
2009-2 $4,417 pa $368.08 monthly (incl $1000, half the school fees)
2009-3 $32 pa $2.67 monthly
2010 $4,490 pa $374.17 monthly (incl $1000, half the school fees)
2010-2 $32 pa $2.67 monthly
2010-3 NIL NIL[6]
[6] Affidavit of Ms Berge 16.3.2010 at [104]
The wife claims that the husband has commanded a considerably high income in the past and has capacity to provide financial support for his only child. The company [P] Pty Ltd, which the wife describes as the husband’s “purported employer” is the husband’s own [omitted] company, incorporated by his “fiancée”[7], Ms R, with him as employee, which company incorporates out of their residence in [F].
[7] The husband objected to the use of the word “fiancée” to describe Ms R but agreed to the use of the word “partner”.
This house, the wife deposes, is a 5 bedroom home purchased in
Ms R’s name in around April 2008 for $625,000.00.
The husband’s current employment, the wife claims, allows him the opportunity to manipulate his earnings and nominate a token salary of $50,000.00 per annum.
The wife sets out in her affidavit a list of the husband’s taxable income taken from his tax returns, from 1999 to 2009. The highest income was in 1999, $212,905.00, whilst the income for 2009 was $32,907.00.
The wife’s own taxable income for 2009 was $81,000. However, she deposed that at the time of affirming her affidavit, she was on paid leave from her employment as she was due to give birth to her second child later that month.
The wife deposed that the father of her second child is Mr T, with whom she anticipated that she would commence to reside later that year. She was currently living in a house at [B] owned by her mother.
The child [X] lives with the wife. [X] attends a Catholic Primary School. Her school fees are approximately $2,000.00 per annum. The husband does not contribute to the child’s educational expenses, which she meets.
There is a sum of money in a trust account for [X]. The wife is the sole signatory to that account. The funds are held on fixed term deposit. The wife made a withdrawal of $5,000.00 from that account in 2009 to pay for musical instruments and a bedroom suite for [X]. She estimated that the balance in the account was approximately $34,000.00. She states that she intended to use those funds to help pay for the child’s tertiary education.
The wife gave oral evidence and was cross-examined by the husband. She was asked a number of questions about her relationship with Mr T, including what financial arrangements would ensue. The wife answered that she believed Mr T would support his child but had no obligation to support the husband’s child. She did not know what salary Mr T earned in his work as an [omitted], nor did he know what she earned.
The wife was also asked about the financial arrangements with her mother in regard to living in the house owned by her mother at [B]. She said she was paying her mother $300.00 per week by way of rent. The husband told the Court that the wife’s occupation of the mother’s house at a low rent could be an indication “that her mother is a financial resource for her, which has previously been undisclosed”.[8]
[8] Transcript 24.3.2010 page 76
The husband cross-examined the wife about the sum of money held in trust for [X]. The wife said that she had stated to the Court in the property proceedings in the Family Court that the funds were to be all for [X]’s tertiary education and she did not want the husband to be a co-signatory to that account. In 2009 she bought a violin for the child. She said that in November 2009 she withdrew the sum of $5,000.00 from the account to cover the cost of the violin and other purchases for the child.
The wife went on to say that she was more than prepared, because the husband had not paid child support for years, to top up the amount at the conclusion of the next term deposit maturity with $5,000.00.[9]
[9] Transcript page 80
The wife’s oral evidence was not completed on 24 March so the proceedings were adjourned part-heard to 3 June 2010.
The wife was cross-examined further on the contents of her Financial Statement and other matters.
The husband relied on the following:
a)his Response filed on 7 December 2009;
b)his affidavit affirmed on 7 December 2009;
c)his affidavit affirmed on 23 March 2010; and
d)his Financial Statement filed on 7 December 2009.
In his affidavit of 7 December 2009 the husband started that he had made offers to the wife:
…to make payments well beyond the CSA assessments. The total sum of the latest offer is $3,952.[10]
[10] Affidavit of Mr Berge 7.12.2009 at paragraph [3]
He went on to claim that:
If the CSA assessed my income today at what I am hoping it will become next year, between $50-60,000, then the child support payable would be around $1,536 (Appendix A).[11]
[11] Ibid at [6]
He annexed a calculation of child support that he had prepared.
The husband’s evidence is that he completed training as a [omitted] in 2006 and was employed as [omitted] by [P] between March 2007 and March 2009. He earned a salary of $50,000.00 per annum. He stated that [P] is wholly owned by Ms R.
After his contract with [P] expired in March 2009 he remained employed in the same role on an equivalent pay by hour basis, at $25.00 per hour plus superannuation.
The husband claimed in his affidavit that the [omitted] industry changed drastically with the global financial crisis, the principal changes being:
a)[omitted]; and
b)[omitted].[12]
[12] Affidavit of Mr Berge 7.12.2009 at [62]
The husband described the wife’s financial position in his affidavit of 7 December 2009 in this way:
[Ms Berge] is financially very comfortable. This year (2009) she has to the best of my knowledge:
a. Gone skiing in Japan
b. Attended a wedding in Scotland, including holidaying in Dubai
c. Had a family holiday and attended graduation from her [omitted] in Melbourne
d. Put tens of thousands in additional payments into her superannuation (beyond what is declared in her financial statement).[13]
[13] Ibid at [134]
In his later affidavit affirmed 23 March 2010, the husband claimed that the wife “secretly purchased a house for $745,000 in [B] in her mother’s name”.[14]
[14] Affidavit of Mr Berge 23.3.2010 at paragraph [2]
The husband moved in with his partner Ms R, who was pregnant at the time of the affidavit.
The husband claims to have spent an “an extraordinary amount of time” in defending the three court cases brought against him by the wife, to the extent that he cannot afford a solicitor.[15]
[15] Ibid at [18]
The husband further states that he has no financial resources:
My parents are pensioners. The Berge family trust (trustee [L] Pty Ltd) ceased trading and is deregistered.[16]
[16] Ibid at [35]
The husband claims that the wife has a “huge” disposable income.
The husband also deposed that he applied for and received a grant of Legal Aid. However, the solicitor who was nominated by Legal Aid NSW decided not to act for him because he had no funds to pay a barrister. He asked the Applicant’s solicitor to agree to an adjournment but this request was refused.[17]
[17] Affidavit of Mr Berge 23.3.2010 at [[84]-[89]
He did not ask the Court for an adjournment.
The husband gave oral evidence and was cross-examined by
Mr Cumming, solicitor, on behalf of the wife.
The husband said that he was presently seeing [X] every second weekend and half the school holidays, as well as some extra days.
As to the payment of child support, the husband said the last time he paid any money to his ex-wife for the support of his daughter was:
At the end of last year, second half of last year some time.[18]
[18] Transcript 3.6.2010 page 27
The husband was asked about the offer in his affidavit of 7 December 2009 to pay an annual amount of child support of $3952.00, which he agreed amounted to $76.00 per week. However, he did no pay any of that amount because the wife rejected the offer. He also said that he had considered but rejected paying some moneys to his ex-wife for food or clothing for [X], for the reason that the wife had refused to accept any offers that had made and was not going to stop the court proceedings.
Mr Cumming asked the husband about the company [P]. The husband said that [omitted]. He explained that Ms R, when she set up her company, was trying to find a name for it. She asked him the [omitted] she decided to use that as the company’s name.
When Ms R set up the company, which she did in 2006, she herself was not a [omitted] until the husband commenced working in March 2007. She, he said, is the boss of the company.
The husband said that he was not making any contributions towards the child’s school fees because there was no joint input as to which school she attended. He said that he probably would contribute towards school fees if his daughter went to a school to which he agreed.[19]
[19] Transcript 3.6.2010 page 62
The husband said in evidence that he believed that he should pay by way of child support whatever amount was calculated according to the formula used by the Child Support Agency at the time, taking into account the parents’ income and capacity to pay. He agreed that his current assessment was nil.
Mr Cumming asked the husband about his qualifications. He said that he had the degree [omitted]. He was not qualified to give financial planning advice. He had started a Master’s degree, an MBA, by correspondence out of a university in [omitted] in about 2002. He studies until about 2004 but never completed the course.
There were no other witnesses.
The Application was stood out of the list, pending decision. The Court made directions for filing and serving written submissions by 26 July 2010.
Application to Reopen the Applicant’s Case
On 18 March 2011 the solicitor for the Applicant wife sought leave to relist the Application for the purpose of the wife applying to reopen her case.
The Application came back to Court on 4 April 2011. There was an appearance on behalf of the wife but the husband did not attend. The Application was adjourned to 21 April and then to 5 May 2011, on which date the husband appeared and told the Court that the application to reopen the wife’s case was opposed.
The Court heard argument from the parties on 21 June 2011.
The wife relied on her affidavit of 6 April 2011. The husband relied on his affidavit of 21 June 2011.
The wife’s evidence in her affidavit was that the husband had conducted the proceedings on the basis that he had no interests in the property in a property at Property C [C], notwithstanding the fact that the title to the property was registered in the names of his father and himself as tenants in common, as to 80% to the father and 20% to himself. This claim was also notwithstanding the finding by Fowler J in the Family Court proceedings that the property was acquired by the husband and his father for the purposes of a joint venture between them.
The husband had claimed that his interest was held in trust for his parents.
The wife’s affidavit also referred to the finding by Fowler J that the value of the property in its unsubdivided form was $950,000.00. The wife annexed to her affidavit copies of correspondence from Hudson Watts Solicitors to her solicitors, advising that [H] Council had approved a plan of subdivision of the property at Property C [C].
The affidavit also annexed a copy of a letter dated 14 October 2010 from the [H] Council to Barrie Green & Associates advising that the date of approval was 13 October 2010 but the endorsed date of original consent was 13 July 2004.
The wife deposed that she had filed an Application to the Family Court under s.79A of the Family Law Act 1975.
The wife also annexed to her affidavit a copy of an email dated 31 March 2011 from the husband to her solicitor. In that email the husband states, inter alia:
thank you for the pile of documents you have sent me whilst I have been away the last couple of months.[20]
[20] Affidavit of Ms Berge 6.4.2011 Annexure “L”
The wife’s solicitor, Mr Cumming, submitted that the affidavit showed that the husband’s interest in the land may be a great deal more than what was put to the Court at the hearing. He husband’s asset position, he submitted, was a relevant consideration.
The husband relied on his affidavit of 21 June 2011, filed that day.
In his affidavit, the husband made a number of critical comments about the wife, who, he believes, no longer works for [omitted]. As a result, the wife is now free to seek higher paid work in the private sector.
The husband said of the proposed sale of the property at [C]:
The property is my parents’ home; they have made all mortgage and other payments on it since 1999…I have no expectation of receiving any money from it.
Irrespective, IF the property became subdivided, and IF the property was sold, and IF any money went to me, it would be taxable income. This would change my income for the purposes of the child support formula and the child support would adjust accordingly – as per my submissions.[21]
[21] Affidavit of Mr Berge 21.6.2011 at paragraphs [15]-[16]
The husband expressed the view that the application to reopen the wife’s case was “purely to harass, and to stall the proceedings further”.[22]
[22] Ibid at [21]
The husband claimed that the Full Court was aware that the subdivision was going ahead.
The husband submitted that this application should not be confused with the wife’s s.79A Application to the Family Court. He said that her application related to the s.79A Application and not to the matter before this Court. He complained of having been dragged through the courts for seven years straight.
The husband further submitted that the wife’s application to reopen was merely a “fishing expedition” for her s.79A Application. These proceedings were vexatious and intended to harass him and waste his time. Further, the application was an abuse of the court process and he would be seeking an order for costs.
After considering the evidence and the submissions, I granted the application for leave to reopen the case.
An edited summary of the reasons for that decision appears below:
It should be made quite clear that this Court will not entertain dual applications and will not deal with matters that are properly before the Family Court. What there is in this Court, however, is a relatively simple application relating to a particular asset, namely, a piece of land which appears to be held in the name of the respondent and his father.
The thrust of the applicant’s submission is that the respondent did not put before this Court during the proceedings the fact that there was an ongoing subdivision of the land which would, once finalised, add to the assets available to the respondent. That, of course, would be a matter for evidence.
The respondent says two things. One, that he had made it clear that there was this subdivision in train, and he further says that the subdivision is pending as it was in June 2009, and therefore it would follow that the position is no more advanced than it was in June 2009.
The difference I see is this. It is the applicant’s case that she was made aware of the current situation by a letter dated 5 January 2011 from a Hudson Watts solicitor to her solicitor relating to the sale of a property in Property C, [C]. The letter goes on to say:
The plan of subdivision has been prepared and approved by the [H] Council
and a copy of the plan with the draft section 88B instrument was enclosed.
What is also before the Court is a copy of a contract for the sale of the land referring to a lot being Lot [omitted] in an unregistered plan being part of Lot [omitted] in Deposited Plan [omitted], and…the sale price for this appears to be $420,000. On that evidence on its face, the subdivision appears to have proceeded significantly. Indeed, had it not proceeded significantly, it would seem to follow that there would be no contract for the sale of the land…
So the situation has advanced, and in my view, on that issue - but I would stress on that issue alone – it would appear to me that the applicant has an arguable case to reopen the proceedings.
I am of the belief that in respect of this particular issue there is a justification to reopen the proceedings. It is not my intention that the proceedings should recommence ab initio.
The application has been brought in respect of a specific asset and state of affairs relating to the subdivision of the [C] property. It should not extend to wider issues, and it should not and will not be allowed to form part of some tactical process towards a 79A application in the other Court. There is a slight concern that at the moment there are now proceedings in both this Court and the Family Court, but in view of the history of this matter, it seems to be unavoidable.
Orders for departure from Administrative Assessment of Child Support
A person entitled to child support may apply to a court under the provisions of s.116(1) of the Child Support (Assessment) Act 1989 for a departure order in certain circumstances, one of which is:
(ab) the SSAT has, under section 98E or 98R, refused to make a determination under Part 6A in respect of the administrative assessment;…
Under s.117(1) of the Act, the court may make a departure order if it is satisfied that:
(i) that one or more of the grounds for departure mentioned in subsection (2) exists or exist: and
(ii) that it would be:
(A) just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(B) otherwise proper;
to make a particular order under this Division.
The types of orders that may be made are listed in s.118(1). They include:
(c) an order varying a parent’s child support income;
Submissions
Both parties filed written submissions.
In his written submission, the husband sought orders:
That the Wife’s income for Child Support assessment purposes is adjusted up from her taxable income, reflecting the Wife’s very strong financial circumstances and capacity to earn.
That the Husband’s income for Child Support assessment is adjusted downwards from his taxable income, reflecting his precarious financial situation, and the 75(2) financial settlement adjustment for child support.
That 50% of the Husband’s $35,000 in funds transferred by the Wife at the time of separation into a so called ‘trust account’ for their daughter [X] are returned to him.
That the Mother pays the Father’s costs.
The husband criticises the wife for what he claims to be her non-disclosure of and refusal to produce relevant documents. He submits that she is “clearly hiding funds, income and financial resources”.
The husband also accuses the wife of bringing her Application not for reasons of child support but to create as much difficulty as possible for him. He claims that the action is vexatious and motivated by revenge.
The husband denies that he has any interest in a joint venture with his father or that he has any interest in the company [P]. He denies that the wife is suffering hardship.
He goes on to submit that any departure needs to take account of the current weakness in his financial position. He claims he is “technically bankrupt”.
The husband relied on the decision of Christian & Donald[23] in support of his submission that the Family Court had made a s.75(2) adjustment in favour of the wife to recognise that he would be unable to pay substantial child support. He submitted that he had already paid child support once by means of the transfer of property in the property settlement.
[23] [2004] FamCA 1171; (2008) FLC 93-367
The husband takes issue with the wife’s holding a sum of money in trust for the child [X]’s tertiary education. He complained that the wife had taken amounts totalling exactly $5,000.00 to buy musical instruments and bedroom furniture for the child.
The husband submits that the Court should deal with the money in trust either by:
a)An order that the wife transfer 50% of the balance of the account plus 50% of $5,000.00 to the husband; or
b)Transferring $5,000.00 to the wife, deeming half of the balance to be lump sum child support, and holding the other half on trust for the child in an account to which both parents are signatories.
The husband submits that if his finances and those of his partner are intertwined, so are those of the wife and Mr T. The submission is that both Mr T and the wife’s mother should be regarded as financial resources for the wife.
The husband denies that he is hiding his income and channelling it through his girlfriend’s income, saying that her income and that of her business are actually lower than his.
He goes on to claim that he not only has to maintain her as a dependent but her father as well. He is also maintaining and paying for his child by Ms R, [Y].
The husband submits that the wife has an under-utilised earning capacity. He estimates that, based on her qualifications and experience, she would obtain a much salary if she went to work in the private sector.
The husband criticises the wife for:
a)her failure to disclose her full financial situation; and
b)lying to the Court.
The husband states that he seeks costs:
a)for the time wasted in these proceedings by the wife’s refusal to negotiate a settlement;
b)deceiving the Court and filing false financial statements; and
c)refusing to provide the information she was required to do.
The husband concedes that he did not incur solicitors’ costs but says that he has been forced to spend a huge amount of time responding to the wife’s Application. This, he claims, is a direct reduction in his income, as he had to take unpaid leave from his work. He estimates that he has wasted well over 110 hours at $30.00 per hour, amounting to a total of $3,300.00. He also claims to have incurred disbursements for subpoenas, transcripts, stationery and printing.
The wife made a written submission through her solicitor.
The wife seeks an order varying the husband’s child support income under s.118(1)(c). Her view is that his child support should be set at the maximum amount allowed by the formula. She submits that the Court would find that:
a)there are special circumstances;
b)a ground for departure exists;
c)it is just and equitable; and
d)otherwise proper
to make an order.
The wife relies on the matters set out in s.117(1)(b)(ii) and s.117(4)(a), (b), (d), (da), (f) and (g).
The wife submits that, although the husband claims that his present income is approximately $50,000.00 per annum and that this is a reasonable income to be used in applying the child support assessment, due to the husband’s earning capacity and other factors this is not a reasonable income.
It is submitted that the husband has a far greater earning capacity then the income he presently declares, based on his past high earnings and his employment history. The wife draws the Court’s attention to the finding by Fowler J in the property proceedings that husband was involved in a joint venture developing property with his father.
The wife submits that the Court will be sceptical about the husband’s role in the company known as [P], which the husband says is owned by his partner, Ms R. The husband obtained accreditation as a [omitted] in the second half of 2006. The word “[P]” means [omitted]. The husband is [omitted] but his partner is not.
The husband gave evidence that the company was set up to do [omitted]. It is the husband who has the experience and accreditation in this area, not his partner. It was the husband’s evidence that when the company was set up in 2006, the husband’s partner did not have a [omitted] or someone working in the industry working with the company. The husband gave evidence that the company did not start to operate until he was employed.
The thrust of the wife’s submission is that it is unreasonable that someone of the husband’s qualifications, industry experience and capacity to remain on a low income for more than a short period of time. She submits that the husband has constructed his financial affairs to remain on a low income for the past six years so as to minimise the amount of child support payable.
The wife submits that the husband has an earning capacity which he chooses not to exercise by claiming that he is employed in his partner’s business. He structures his finances in such a way as to show a low child support income.
Further:
For someone with Mr Berge’s business experience and financial qualifications, it is submitted the Court would not accept that he has no properties, no funds, no shares, no motor vehicles, no insurance (excepting income protection), no financial resources and has large liabilities.[24]
[24] Wife’s Submissions page 11
The wife submits that the husband has no intention of paying a reasonable amount of child support. He has not made any offer to pay child support directly to her but to make payments to a health fund and for [omitted] lessons for the child. Whilst he agreed in cross-examination that both parents should contribute to all the costs involved in bringing a child up “on a general basis”[25], the husband does not contribute significantly towards the cost of bringing the child up. His attitude is summarised by his statement at page 25 of the Transcript:
“…I believe the appropriate amount to pay is per the Child Support Agency, so to pay any more or any less than that, I think, would be inappropriate…”
[25] Transcript 3.6.2010 page 63
Orders Sought by the Wife
The wife’s solicitor submits that the orders the wife seeks under s.118(1)(c) should be made based upon the facts that:
(i) There are grounds for a departure pursuant to Section 117(2)(c)(ia) and (ib) in that the father has an earning (capacity) far in excess of that declared, has an interest in a joint venture with his father, has an interest in [P] or a significant resource in that company;
(ii) that it will be just and equitable and other wise proper for the Orders sought by the wife to be made and otherwise proper in that:
(a) Both parties have a duty to maintain the child. The wife is fulfilling this duty and it is submitted that the husband is not and his attitude in this matter quite clearly shows that he does not have an intention of doing so in the future;
(b) That the proper needs of the child are not being met by the father;
(c) That the income earning capacity, property and financial resources of the father is (sic) that he does have a capacity to contribute;
(d) That the father has a far greater earning capacity than that which is disclosed;
(e) That the father’s commitments to support himself are in no way extraordinary and should not be a factor in allowing a minimal amount of child support to be paid. The majority of the indebtedness of the husband relates to his joint venture with his father and those liabilities should be offset against this interest in the property at [C];
(iii) Should the court find the notional income for the husband to be the maximum child support income amount, the formula will still allow for the husband’s duty to maintain the child he is to have[26] with his present de facto and will take into account the wife’s income.[27]
[26] The husband now has another child
[27] Wife’s Submissions pages 13-15
The wife’s submission is that both she and the child suffer hardship in that she has to meet all the costs of the child, although this is with the support of her mother and her present partner. They do not have any obligation to support the child, notwithstanding the husband’s view. Whilst the wife is lucky to have the support to provide adequately for the child, this does not relieve the husband from the obligation to make some payments.
Orders Sought by the Husband
The husband seeks these Orders:
That the Wife’s income for Child Support assessment purposes is adjusted up from her taxable income, reflecting the Wife’s very strong financial circumstances and her capacity to earn.
That the Husband’s income for Child Support assessment is adjusted downwards from his taxable income, reflecting his precarious financial situation, and the 75(2) financial adjustment for child support.
That 50% of the Husband’ $35,000 in funds transferred by the Wife at the time of separation into a so called ‘trust account’ for their daughter [X] are returned to him.
That the Mother pays the Father’s costs.
The question of the funds held by the wife in the trust account was dealt with by Fowler J in the property proceedings in 2009. His Honour declined to make any order in respect of those funds, declaring at [153]:
It was agreed during the course of the hearing that the wife held on trust money for the child’s tertiary education. There is no indication she will not apply the funds properly for that purpose, and I accept that she will.[28]
[28] [2009] FamCA 968
There is evidence that the wife used an amount of $5,000.00 from that account to purchase musical instruments and bedroom furniture for the child, which does not come within the terms of the child’s tertiary education. However, the wife acknowledged that she would repay that sum. The evidence certainly is that the funds were used for the child’s benefit and were not spent otherwise.
I do not propose to make any order in respect of that account. In any event, it is an issue that should more properly be argued in any further property proceedings if indeed the wife brings an action under s.79A of the Act. It is not a subject for a child support declaration.
Conclusions
This is an Application for departure from administrative assessment of child support in circumstances where the Social Security Appeals Tribunal made a finding under s.98E of the Child Support (Assessment) Act 1989 that the issues raised by the application to it were too complex to be dealt with under Part 6A of the Assessment Act. Accordingly, the Tribunal refused to make a determination to change the assessment and recommended that an application be made to a court having jurisdiction under the Act for an order under Division 4 of Part 7 of the Act.
Having heard the evidence of the parties and observed their demeanour in the witness box, it is fair to say that I did not form a favourable view of the husband’s evidence. He appeared to give evidence in an arrogant way and some of his answers to questions in cross-examination were flippant. I am not of the view that the husband was a reliable witness and I formed a negative view of his credibility.
An examination of the husband’s position in respect of paying child support for his daughter allows the inference to be drawn that he does not intend to pay anything but the smallest amount, and that on his own terms and conditions.
The husband refers to the Child Support Agency’s formula in glowing terms in his submission:
The Child Support Agency formula has been evolved and tried over several decades, includes the recent major overhaul.[29]
[29] Husband’s Submission page 6, paragraph 3.1
He stated in his oral evidence:
“…I believe the appropriate amount to pay is per the Child Support Agency, so to pay any more or less than that, I think, would be inappropriate…”[30]
[30] Transcript 3.6.2010 page 25
The husband currently has a nil assessment from the Agency. He cannot pay any less than that.
I am satisfied that a ground for departure exists and that it would be both just and equitable and otherwise proper to make an order under Division 4 of Part 7. As set out in Gyselman & Gyselman[31], the Court must apply a three-stage test:
a)Whether one or more grounds for departure in s.117(2) are established; if so:
b)Whether it would be “just and equitable” to make a particular order; and
c)Whether it would be “otherwise proper” to make a particular order.[32]
[31] (1991) 15 Fam LR 219; (1992) 92-279
[32] (1991) 15 Fam LR 219 at 224; (1992) FLC 92-279 at 79,064
I am satisfied that a ground for departure exists because of the earning capacity, the property and the financial resources of the husband are such that, in the special circumstances of the case, application in relation to the child of the provisions of the Assessment 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, the husband (see s.117((2)(c)(ia),(ib).
The husband has constantly downplayed the value of his interest in the land at [C], in which he claims to have no beneficial interest., He claims that it is no more than his parents’ home and he holds his interest in trust for them.
However, the Family Court has found that the husband was a joint venturer in the venture of subdividing and developing the property at [C].[33] The Court also considered and rejected the husband’s claim that he had no beneficial interest in the land:
Letters sent by the husband do not at any time indicate other than a beneficial ownership of the property. Indeed the husband seeks taxation advice in relation to the taxation imposts on various re-arrangements of the title to the property and in particular a proposal that the husband become the owner of one of the lots.[34]
[33] Berge & Berge & Ors [2009] FamCA 968 per Fowler J at [96]-[103], [117]-[119]
[34] [2009] FamCA 968 at [120]
It will not avail the husband to argue that he has no beneficial interests in the land at [C]. That question has already been decided in the earlier property proceedings.
What now transpires is that the proposed subdivision was much further advanced than was thought to be the case when the property proceeding was underway. The value of the husband’s interest in the land would therefore appear to be significantly greater than was thought to be the case in the property hearing.
I am also of the view that the husband’s evidence about [P] and his involvement in the company should not be accepted. That his fiancée should chose to set up a [omitted] entity with a [omitted] name when she did not have the qualifications to be a [omitted] and could not operate the company without a [omitted] is incredible, unless it is accepted that she had a [omitted]-born [occupation omitted] all ready to be employed.
I am satisfied that the company [P] Pty Ltd was set up as a vehicle for the husband to run as a [omitted]. There is evidence that the husband is intelligent and well-qualified and from that I find that he has a considerable earning capacity.
The husband’s earning capacity is such that I do not believe that he was only able to earn an income of $50,000.00 per annum as a [omitted]. The husband’s income seems to have been manipulated, either by his fiancée or himself to keep his income artificially low.
As was submitted by the wife’s solicitor, it was always open to the husband to call his fiancée to support his account of the business of [P] Pty Ltd and his role in it, but he chose not to do so and did not give any explanation for this omission. Thus, the rule in Jones v Dunkel[35], to the effect that her evidence would not have assisted the husband.[36]
[35] (1959) 101 CLR 298
[36] Per Kitto J at 308
I find that a ground for departure from administrative assessment of child support has been established.
Having found that a ground for departure exists, the Court must be satisfied that it would be just and equitable as regards the child, the wife and the husband to make a particular order under Division 4 (see s.117(1)(b)(i)). In determining whether it would be just and equitable to make such an order, the Court must consider the matters set out s.117(4)(a) to (g) of the Act.
Each of [X]’s parents has a duty to maintain her. Her needs appear to be no greater or less than those of any other girl aged twelve years. There is no evidence that [X] has any income, earning capacity, property or financial resources, other than a beneficial interest in the sum of money held in trust for her tertiary education to which I have previously referred. It is not the case that her mother’s new partner should be regarded as a financial resource any more than her maternal grandmother should be so regarded. They have no duty to maintain the child.
The wife’s income and her earning capacity have been the subject of evidence. Initially, the mother’s earning capacity will be reduced whilst she is home caring for her new child. If, as it now appears, she no longer works for [omitted], she may well, once she returns to the work force, have a greater earning capacity in private enterprise, as the husband submits. That, however, is highly speculative and the Court has no evidence to make such a finding.
I have already found that the husband appears to have a greater income, greater earning capacity and more in the way of financial resources than he has put to the Court.
Both the husband and the wife have a responsibility to support themselves and the child [X]. Each party now has another child. They have each re-partnered, and it is fair to find that they each have an obligation towards their new partner. However, it is not the case that the husband has any responsibility to support his fiancée’s father, who he claims is a pensioner.
I am satisfied that, in all the circumstances, there would be a hardship to the child and to the wife if an order was not made. I am not satisfied, because of the view that I have formed about the husband’s income and earning capacity, that there would be any appreciable hardship to him or to his new daughter if an order were to be made.
Section 3 of the Assessment Act provides that the parents of a child have the primary duty to maintain the child, and this duty is not of lower priority than the duty of the parent to maintain any other child or another person, inter alia. In this case, the wife is bearing most of the burden of maintaining [X]. The husband is paying very little, except for relatively minor expenses such as [omitted] lessons.
Section 114 sets out the additional particular objects of Division 4:
Additional particular objects of this Division include ensuring:
(a) 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; and
(b) that parents share equitably in the support of their children.
I have considered all of these matters. I am not satisfied that the child [X]’s needs are being met from a reasonable and adequate share of the income, earning capacity, and financial resources of her father. I am not satisfied that the husband is meting an equitable share in the support of his daughter.
Accordingly, I am satisfied that it is just and equitable to make an order under Division 4 of Part 7 of the Act.
It is not sufficient, however, to find that it is just and equitable to make an order unless the Court is also satisfied that it would be otherwise proper to do so (s.117(1)(b)(ii)(B)).
In determining whether it would be otherwise proper, the Court must have regard to the matters set out in s.117(5) of the Act:
(a) the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and
(b) the effect that the making of the order would have on:
(i) any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
(ii) the rate of any income tested pension, allowance or benefit payable to the carer entitled to child support.
I have considered those matters. I have considered the duty of [X]’s parents to maintain her at paragraph [147] above. It is not the duty of her maternal grandmother or her mother’s new partner, Mr T.
No evidence has been led about the entitlement of the child or the wife to an income tested pension, allowance or benefit, let alone of the rate of any such pension, allowance or benefit.
In all the circumstances, I am satisfied that it would be otherwise proper to make an order under Division 4 of Part 7 of the Act.
What is sought by the wife is an order s.118(1)(c) varying the husband’s child support income. In particular, it is submitted that the husband’s child support income should be set at the maximum amount of child support allowed under the formula.
I am not satisfied that such an order is appropriate, even allowing for the findings that have been made about the husband’s earning capacity and financial resources. Taking a somewhat more conservative view, I am satisfied that the husband appears to have acted in such a way that his child support income stated to be $50,000.00 would be, at the very least, half of what it should be. It is hard to accept that someone in the husband’s position, with his qualifications and experience, would have a child support income of less than $100,000.00 and I propose to order accordingly.
The Social Security Appeals Tribunal decision made on 7 July 2009 and despatched on 20 July 2009 dealt with a decision made by a senior case officer on 14 October 2008 that, insofar as the husband was concerned
·
For the period 1 January 2009 to 31 December 2009
Mr Berge’s assessment is increased by $1,000; and
· For the period 1 January 2010 to 31 December 2010 Mr Berge’s assessment is increased by $1,050.
Consequently, the decision of the Court will cover those two periods.
The husband has sought an order for costs, notwithstanding the fact that he is not, and has not been, legally represented in these proceedings. The wife’s submissions are silent on this point. If either party seeks to pursue an application for costs, he or she may do so by way of written submission, to be filed and served on the other party within 21 days. A further 7 days will be allowed for any written submission in reply.
I certify that the preceding one hundred and sixty-two (162) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Date: 29 January 2013
0
3
0