Cantrell & Jennings - [2009] FMCAfam 229

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CANTRELL & JENNINGS

[2009] FMCAfam 229

CHILD SUPPORT – Application for departure – leave to make orders sought with respect to assessment more than eighteen months prior to the filing of the application – whether leave should be granted – factors considered – leave not granted – Applicant’s duty to make full and frank disclosure of financial circumstances.

Family Law Act 1975
Child Support (Assessment) Act 1989 ss.112, 114, 117, 118
Family Law Act 1975 s.44

Bryant & Bryant [1996] FLC 92-690
Gilmore & Gilmore [1995] FLC 92-591
Whitford & Whitford (1979) FLC 90-612

Applicant:

MR CANTRELL

Respondent:

MS JENNINGS

File Number:

HBC 864 of 2008

Judgment of:

Baker FM

Hearing date:

16 February 2009

Date of Last Submission:

16 February 2009

Delivered at:

Hobart

Delivered on:

23 March 2009

REPRESENTATION

Counsel for the Applicant:

Mr Foster

Counsel for the Respondent:

Mr Trezise

ORDERS

That the application filed 21 August 2008 be dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Cantrell & Jennings is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
HOBART

HBC 864 of 2008

MR CANTRELL

Applicant

And

MS JENNINGS

Respondent

REASONS FOR JUDGMENT

Orders were made in the Family Court of Australia at Hobart on

1 September 1997, which required the applicant to pay $35.00 per week by way of child support for each of the children of the marriage namely [X] born in 1993 and [Y] born in 1994. Order 3 provided that the terms of Order 1 be suspended during any period that the husband is in receipt of a means tested Social Security benefit or entitlement, including any qualifying or waiting period as required by the Department of Social Security.
On 11 March 2003 the orders made on 1 September 1997 were varied by Roberts FM, increasing the amount of child support payable for each of the children from $35.00 per week to $65.00 per week with effect from 1 July 2002. Order 3 was discharged, so that the husband would be required to apply to the court if he were to receive a Social Security benefit. At the time the order was made, the applicant intended to sell his truck and Roberts FM found that he had an earning capacity of $45,000 per annum, whether he sold his truck or not.
On 15 August 2003 Roberts FM ordered a lump sum payment for child support of the two children in the sum of $3,380.00 per child being a total of $6,760.00, for one year’s child support to be paid within

21 days and that payment be credited towards the applicant’s liability to pay child support in accordance with the orders of 11 March 2003 and 1 September 1997. At the time the lump sum order was made, the applicant had sold his truck. The opinion of Roberts FM as to the applicant’s earning capacity of $45,000 per annum had not changed.
This is an application by the applicant filed on 21 August 2008 seeking a departure order:
“1. That paragraph 1 of the interim orders made in the Family Court of Australia at Hobart on 1^st September 1997 be discharged with effect from 31 March 2003 and that the child support payable for [X], born in 1993, and [Y], born in 1994, be as follows:
For the period 31^st March 2003 to 30 June 2003 – Nil
For the period 1^st July 2003 to 30^th June 2004 – Nil
For the period 1^st July 2004 to 30^th June 2005 – Nil
For the period 1^st July 2005 to 30^th June 2006 – Nil
For the period 1^st July 2006 to 30^th June 2007 – Nil
For the period 1^st July 2007 to 31^st January 2008 – Nil
The applicant relied on his affidavit and financial statement filed

21 August 2008
and he gave oral evidence. The applicant was cross-examined. The applicant did not seek to cross-examine the mother, who relied on a financial statement filed 4 December 2008.
The applicant’s application was filed on 21 August 2008. Eighteen months prior to that date is 21 February 2007. For the period, 31 March 2003 to 21 February 2007, the applicant therefore requires leave of the court to seek a departure order. After 21 February 2007 no leave is required.
At the commencement of the hearing it was agreed by both parties that I should hear the leave application under section 112 of the Child Support (Assessment) Act 1989 at the same time as hearing the application for an order under section 118 of that same Act.

The Evidence

During the evidence-in-chief, the applicant indicated that his financial situation had changed and that he is a casual employee of [I] and works 38 hours per week. He did not produce any pay slips. His liability for child support, in accordance with a statement from the Child Support Agency dated 16 January 2009, is $44,066.06. This is made up of $33,075.20 in child support arrears and $11,126.19 in penalties[1]. The applicant has been paying the ordered child support of $65.00 per child per week since he commenced work at [I] in January 2008. From

12 July 2004
to 26 May 2006 the applicant paid $10.00 per fortnight in child support and from 24 August 2006 to 21 January 2008 he paid $12.28 per fortnight.[2]
[1] Exhibit “A1”
[2] Exhibit “R2”
The applicant borrowed $20,770.00 in December 2008 to renovate his kitchen. He has purchased new appliances, new tiles, plaster, electrical goods and two roof beams. His legal costs in respect of these proceedings are $4,000.00.
The applicant’s financial statement indicated that he earns a weekly income of approximately $910.00 or $47,320 per annum. His home has an estimated value of $350,000.00, and his Land Cruiser is worth $6,000. He has household contents, workshop tools and a trailer worth $4,500. He has superannuation worth $41,000.00. He has a loan to his father of $10,000 and his mortgage is $130,000.00, which increased as a result of his loan made in December 2008. The equity he has in his home is approximately $200,000.00.
In the applicant’s affidavit, he said that in March 2003 he sold the truck that he used in his courier business because back problems meant that he was not able to lift large packages. He received $60,000.00 which he said, during cross examination, was “dwindled away”. He had intended to acquire motorised digging equipment to start a new business, however the defence of the mother’s application for lump sum child support in 2003 cost him approximately $24,000.00 in legal costs and he was not able to lease the equipment. As a result, after March 2003, he said that he remained unemployed and on 6 February 2004 he began to receive Centrelink payments until January 2008, when he commenced work at [I] as a maintenance worker.
The applicant was cross-examined about his financial circumstances. No bank statements were produced for the period 31 March 2003 to

1 September 2006
. His MyState bank account statements from

8 February 2008
until 31 October 2008 and from December 2008 to

16 February 2009
were tendered by the respondent[3]. The applicant’s Commonwealth Bank statements from 1 September 2006 to 26 June 2007 were also tendered by the respondent.[4]
[3] exhibit “R1”
[4] exhibit “R2”
From the loan of $20,770.00, which the applicant borrowed in 2008, he spent $6,697.00 at Clive Peters to purchase his whitegoods. He has made various withdrawals including $2,000.00 to pay a plasterer and electrician. He withdrew $2,000.00 on 16 February 2009 to pay his solicitor. The balance of the account as of 16 February 2009 was $8,232.42. He said that there were some cheques to be cleared which would reduce the balance to $460.00 on the day of the hearing. He could not explain where $2,710.00 had been paid but said that it was in “holding”. The accounts indicated regular cash withdrawals at various hotels which the applicant said was used for alcohol and expenses.
The applicant’s Commonwealth Bank statements from 1 September 2006 to 31 October 2007 confirm the receipt by the applicant of Centrelink payments during this period. The statements indicate that the applicant received income from Coca-Cola during a 3 week period.
During the period from 1 September 2006 to 31 October 2007, the applicant said, during cross examination, that he had three or possibly four jobs. He worked for [B] on occasions and was paid cash. He worked for [G] and was paid $100.00 per day in cash. He said he used his cash to pay his rates. He worked for [D] and every now and then with a [tradesman]. He was paid cash for these jobs, so there is no evidence of the amount of his actual income.
The applicant also received $180.00 per week from a boarder. He said he did not receive the board every week and he used it for expenses such as electricity and food. The applicant said that the boarder lived with him for two months in 2006 and from October 2007 until April 2008. The applicant was paid in cash and there is no evidence of how much he received.
In respect of the applicant’s employment from which he received cash, he stated that he gave Centrelink a full and complete record of his income and board received. He did not produce any of these details to the court. He did not produce any evidence from Centrelink of what benefits he received. He did not produce income tax returns. His evidence was that he had not submitted a tax return for the past four years. He did not produce cheque stubs, although he said “he would have them somewhere”.
During a six week period from 24 March 2007 to 6 May 2007 the applicant did not make any withdrawals from his Commonwealth Bank account. The applicant admitted that he probably did work during this period. When he was asked whether he had sufficient funds not to make withdrawals during that period he answered “yes”. When he was subsequently asked whether he was able to live from funds outside the accounts, he gave a different answer and said he had sold his metal lathe.
The applicant has the onus of proof. He has a duty to make full disclosure of his financial affairs[5]. I am not satisfied that the applicant has made full and frank disclosure. The applicant did not include in his affidavit any evidence of the work he obtained and the cash he received, nor did he include details of the income he received from his boarder. His responses in cross-examination were unconvincing. For example, when he was asked about the amount of his savings as at 16 February 2009 he could not explain how he had spent $2,710.00 and his answer was that the bank had told him that the cheque was in “holding”. When he was asked about having a boarder, he stated that the agreed rate of board was $180.00 per week. Then he said that he did not receive that sum every week, as he and the boarder shared expenses. I refer to paragraph 18.
[5] order 25A.08 Federal Magistrates Court Rules 2001
The court cannot determine what the amount of the applicant’s income was during the requisite periods. It can be inferred that he must have had income, other than his Centrelink benefits.

Whether leave should be granted pursuant to section 112

Section 112 of the Child Support (Assessment) Act 1989 provides that the Court may grant leave for a departure application to be made for a date more than 18 months prior to the application. Pursuant to sub-section (4) the matters to be considered by the court when deciding whether to grant leave under sub-section (1) are as follows:
“ (a) any responsibility, and reason, for the delay in:
(i) making an application under section 98B or 116; or
(ii) making a determination under section 98S;
as the case requires; and
(b) the hardship to the applicant (other than the Registrar) if leave is not granted; and
(c) the hardship to the other party or parties (other than the Registrar) if leave is granted”
Sub-section (5) of section 112 enables the court to have regard to any other relevant matter.

Reason for the delay

In paragraph 6 of the applicant’s affidavit he stated:
“After I became unemployed I did not make an application to vary the current child support orders. The last litigation between the respondent and myself cost me about $24,000.00 in legal fees. I was depressed and I could not afford a lawyer to make a further application which I thought would be defended. I sought advice from Legal Aid but they would not assist me. I did not expect the Child Support Agency would seek to enforce child support arrears against me which had accrued during periods when I was unemployed.”
During cross-examination the applicant said he went to the Legal Aid Commission, but because he had a house the Commission would not fund him. He said that he went to the Legal Aid Commission in August 2008 and once in about 2004 or 2005. He also had three to four meetings with the Child Support Agency and was told that if he had gone to see the Agency within the first 12 months the Agency might have helped him.
It was submitted by Counsel for the applicant that the hardship to the applicant if leave is not granted, is that the sum of over $40,000.00 is a large sum of money for a person with uncertain employment. It was submitted that the provision of past child support will not address the needs of the children and nothing that is ordered now can change the past.
In my view the applicant has not satisfactorily explained his delay in not taking action. The only effort he made was to see the Legal Aid Commission once in about 2004 or 2005 and again in 2008 and to have several meetings with the Child Support Agency.
It was submitted on behalf of the respondent that there is no evidence or a dearth of evidence from the applicant explaining the reason for the delay and he did not provide any evidence of the hardship he may suffer if leave is not granted.
In Whitford & Whitford[6] the Full Court interpreted the meaning of hardship in section 44(4) of the Family Law Act 1975. The Full Court pointed out that under section 44(4) the court is not required to consider any respective hardship. The Full Court said:
“in cases where ‘any hardship’ of one party and ‘any hardship’ of the party is to be taken into consideration, or where the question is whether greater hardship will be caused by the making of an order or the refusal to make an order, it is appropriate to equate hardship to ‘any appreciable detriment financial, personal or otherwise’”.
[6] (1979) FLC 90-612 at 78 - 145
Section 112(4) requires the respective hardships of the parties to be weighed up. In my view it is appropriate to follow the Full Court’s interpretation in Whitford & Whitford to equate hardship to “any appreciable detriment financial, personal or otherwise”.
Order 3 of the orders made on 1 September 1997 was discharged in March 2003, which meant that the applicant was required to apply to the Court, if he commenced receiving a Social Security benefit. I am not satisfied of the explanation of the applicant that he could not afford to apply to the Court. The applicant had received $60,000.00 for the sale of his truck in or about 2003, which he said had “dwindled away”. The applicant could have used some of this money to fund an application. His explanation that he did not expect the Child Support Agency to enforce the child support arrears in my view is not a satisfactory explanation as to why he took no action.
The respondent has an income of $290.70 per week or $15,116.00 per annum and receives a family benefit payment. The mother is a joint registered proprietor with her husband of her home at Property L and the equity she has in the home is worth $125,000.00. She has a car worth $7,000, household contents worth $15,000.00 and superannuation of $5,000. Her share of the mortgage secured by the home is $40,000.00. She has a credit card debt of $11,000.00.
The children’s expenses set out by the respondent amount to $681.00 per week. She has been required to pay for their expenses, with minimal contribution from the applicant, since about July 2004 until he recommenced employment in January 2008.
The respondent has been supporting the two children with only minimal assistance from the applicant over a three and a half year period.
There is no evidence that the applicant will suffer hardship. He has equity in his house of $200,000.00. He could afford to increase his housing loan to build a new kitchen in late 2008. He is in receipt of income from his employment.
In balancing the hardship of the parties, I find that there will be greater hardship to the respondent if leave is granted than to the applicant if it is not granted.
Having regard to all the factors referred to in section 112(4), and having regard to my finding that the respondent has not made full and frank disclosure, I am of the view that leave should not be granted to the applicant.

Departure order application

In respect of the applicant’s departure order application, he is relying on section 117(2)(c)(ia) of the Child Support (Assessment) Act 1989. His case is that, because he was in receipt of unemployment benefits, he had little income and could not afford to make the payments of child support. The Court is required to consider whether the level of $65.00 per week per child for child support is unjust and inequitable within the meaning of the legislation, having regard to any change in the applicant’s circumstances including the needs of the applicant to maintain himself.
Section 117 sets out the matters of which the court must be satisfied before making a departure order. The Full Court in Gilmore & Gilmore[7] considered the principles applicable to a variation or discharge of a previous departure order made under the Child Support (Assessment) Act 1989. The Full Court held that the court must apply the three stage process which is required under s.117 of the Act. The court must satisfy itself:
[7] [1995] FLC 92-591
“(i)    Whether one or more of the grounds for departure in s.117(2) is established,
(ii)     Whether it is ‘just and equitable’ within the meaning of s.117(4) to make a particular order; and
(iii)   Whether it is otherwise ‘proper’ within the meaning of s.117(5) to make a particular order.”
In Bryant & Bryant[8] the Full Court stated:
“it must however be recognised that once an order has been made departing from an administrative assessment, before there can be a variation of (or ‘departure’ from) that existing order, it must be established to the Court’s satisfaction, that since the making of the existing order circumstances have arisen as a result of which the financial capacity of either party is now significantly reduced (s 117(2)(a)), or the costs of maintaining the child have been affected (s 117(2)(b)) or the existing order now results in an unjust and inequitable determination of child support (s 117 (2)(c))”.
[8] [1996] FLC 92-690
When dealing with proceedings under this legislation the court must have regard to the objects:
“     (1)     The parents of a child have the primary duty to maintain the child.
(2)     Without limiting subsection (1), the duty of a parent to maintain a child:
(a)     is not of lower priority that the duty of the parent to maintain any other child or another person; and
(b)     has priority over all commitments of the parent other than commitments necessary to enable the parent to support:
(i) himself or herself; and
(ii) any other child or another person that the parent has a duty to maintain; and
(c) is not affected by:
(i) the duty of any other person to maintain the child; or
(ii) any entitlement of the child or another person to an income tested pension, allowance or benefit.”
Section 114 provides:
“Additional particular objects of this Division include ensuring:
(a) that children have their proper needs met from reasonable and adequate share in income, earning capacity, property and financial resources of both of their parents; and
(b) that parents share equitable in the support of their children.”

For the period 21 February 2007 to 30 June 2007

From about July 2004 to January 2008 the respondent has supported the children with minimal financial assistance from the applicant. There is no evidence of the expenses of the children for this period however the Lee “Costs of Children Table” for the May 2008 quarter is that an 11-13 year child old costs $375.36 per week. The respondent’s evidence is that the two children’s current expenses amount to $681.00 per week. I infer that their weekly expenses would have been similar during this period. This amounts to a total cost of $35,412.00 per annum of which the applicant’s share is $6,760.00.

The applicant’s Commonwealth Bank statements during this period indicate that he received $398.62 per fortnight in Centrelink benefits. This increased to $401.29 per fortnight on 2 April 2007 and to $402.02 on 10 April 2007. During this period the applicant received a payment of $500.00 on 13 February 2007. From 24 March 2007 to 6 May 2007 no withdrawals were made from this account. The applicant admitted that he probably did work during this period. During the period from 21 February 2007 to 30 June 2007 the applicant received cash from various jobs.
I repeat my finding in paragraph 19.
I am not satisfied that the applicant has made out a ground of departure. I am not satisfied that the level of child support of $65.00 per week per child was unjust and inequitable having regard to the applicant’s circumstances. The applicant’s commitments included mortgage, rates and insurance. There was no evidence that the applicant had difficulty meeting these commitments.
Because the applicant has not established a ground for departure I am not required to consider section 117(4) or (5).

For the period 1 July 2007 to 31 January 2008

On 15 October 2007, the applicant’s Centrelink payments increased to $407.52 per fortnight. The applicant received a payment of $1200.00 on 18 October 2007, which he said was for his work with Coca-Cola. The applicant produced no bank statements from 31 October 2007 to 31 January 2008.
During this period the applicant received cash from his boarder and income from various jobs.
I refer to my finding in paragraph 19.
I am not satisfied that the applicant has made out a ground of departure. I am not satisfied that the level of $65.00 per week per child was unjust or inequitable having regard to the applicant’s circumstances. The applicant’s commitments included mortgage, rates and insurance. There was no evidence that the applicant had difficulty meeting these commitments.
Because the applicant has not established a ground for departure I am not required to consider section 117(4) or (5).
Counsel for the applicant has asked the court to make an order to enable child support to be assessed according to the child support formula. Counsel for the applicant submitted that there could be further disputes between the parties resulting in further legal costs. This was opposed by the respondent, as she would prefer to have certainty in the amount she receives. I was informed by Counsel for the respondent, who provided me with a child support estimate result, that the assessment pursuant to the formula is substantially the same as the current order.
I am of the view that, to provide certainty to the respondent of the amount of child support she receives, the order should not be made.
In respect of the penalties incurred by the applicant no submissions were made by either party. The Child Support Agency is not a party to these proceedings and the Court does not have power to order the Child Support Agency to waive the penalties which are monies due and payable to the Commonwealth. Nevertheless, I recommend to the Registrar of the Child Support Agency that the penalties be waived, because the applicant will be paying the arrears of child support together with his child support obligation of $130.00 per week.

I certify that the preceding fifty four (54) paragraphs are a true copy of the reasons for judgment of Baker FM

Associate: Sita Buick

Date: 23 March 2009