Charlton and Crosby
[2008] FMCAfam 321
•9 April 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CHARLTON & CROSBY | [2008] FMCAfam 321 |
| CHILD SUPPORT – Adult child maintenance application for lump sum – whether asset preservation injunction should be issued pending determination of substantive matter – whether serious issue to be tried – balance of convenience – welfare of children concerned – whether danger of disposal of assets to defeat judgment. |
| Family Law Act 1975 (Cth), ss.66K, 66L, 66P, 68B Child Support (Assessment) Act 1989, ss.100, 116, 117, 121, 123, 140 |
| Collins & Collins (1993) FLC 92-343 Waugh & Waugh (2000) FLC 93-052 |
| Applicant: | MS CHARLTON |
| Respondent: | MR CROSBY |
| File Number: | ADC 723 of 2008 |
| Judgment of: | Brown FM |
| Hearing date: | 19 March 2008 |
| Date of Last Submission: | 19 March 2008 |
| Delivered at: | Adelaide |
| Delivered on: | 9 April 2008 |
REPRESENTATION
| Counsel for the Applicant: | Ms Horvat |
| Solicitors for the Applicant: | Robinson & Mason |
| Counsel for the Respondent: | Mr Deegan |
| Solicitors for the Respondent: | Gladys & Lewis |
UNTIL FURTHER OR OTHER ORDER
The respondent Mr Crosby be restrained and an injunction issue restraining him from disposing of or dealing with or pledging by way of contract or agreement the sum of One hundred and fifty-five thousand dollars ($155,000.00) of the monies due and payable to him by the applicant Ms Charlton pursuant to the orders of His Honour Judge Clayton in the District Court of South Australia on 29 January 2008 in action number [omitted].
The sum referred to in order 1 hereof be invested in a joint interest bearing account in the names of the parties pending the final determination of these proceedings.
The interim applications herein be otherwise dismissed.
The proceedings be fixed for final hearing for two days on 3 and 4 November 2008.
The applicant pay the hearing fee or obtain a Remission Certificate in respect thereof within 28 days of the date hereof.
The applicant file and serve all affidavit evidence she proposes to rely on at trial on or before close of Registry filing on 6 October 2008.
The respondent file and serve all affidavit evidence he proposes to rely on at trial on or before close of Registry filing on 20 October 2008.
Pursuant to section 26 of the Federal Magistrates Act 1999 the parties and their legal representatives attend a conciliation conference on 6 June 2008 at 9:15am with a Registrar of the court.
IT IS NOTED that publication of this judgment under the pseudonym Charlton & Crosby is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 723 of 2008
| MS CHARLTON |
Applicant
And
| MR CROSBY |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties to these proceedings are Ms Charlton “the applicant” and Mr Crosby “the respondent”. They are the parents of three children: [Y] born [in] 1992; [Z] born [in] 1996; and [X] born [in] 1990.
The proceedings themselves relate to Ms Charlton’s application for a lump sum payment to her of $100,000.00, being in substitution of periodic child support for [Y] and [Z] and the further payment to her of an additional lump sum of $55,000.00, being adult child maintenance for [X], who will be eighteen years of age shortly. [X] has commenced a double degree in [omitted] at [omitted] University.
The parties have never been married. They lived in a de-facto relationship between 1989 and 2004. During their relationship, they acquired a number of pieces of real property and other items of property. They ran a business, in partnership, with one another.
In March of 2005, Mr Crosby began proceedings in the District Court of South Australia, pursuant to the Domestic Partners Property Act 1996 (South Australia) seeking orders to divide the parties’ various items of property between them.
These proceedings were compromised on 29 January 2008. Pursuant to the agreement the parties reached, which was converted into a consent order made by His Honour Judge Clayton, Ms Charlton was to pay to Mr Crosby the sum of $434,000.00 on or before 31 March 2008.
In exchange for this payment, Mr Crosby was to transfer to
Ms Charlton his interest in four pieces of real estate; his interest in a motor vehicle; and his shares in a proprietary company, which I apprehend is related to the business previously operated by the parties.
The applicant commenced these proceedings on 21 February 2008. She concedes that she did not inform the respondent of the nature of her application prior to the institution of the proceedings nor attempt to negotiate some agreement with him in respect of the issues raised by it at any earlier time.
By implication, she concedes that she did not raise her application, pursuant to the Child Support (Assessment) Act 1989 (Commonwealth), in respect of [Y] and [Z] nor her application pursuant to Division 7 of Part VII of the Family Law Act 1975 (Commonwealth), in respect of [X], with the respondent or his legal advisors, during the settlement negotiations in the District Court on and prior to 29 January 2008.
Pending the final disposal of Ms Charlton’s applications in respect of child support and adult child maintenance, she seeks an injunction restraining Mr Crosby from dealing with at least $155,000.00 of the settlement moneys which he is entitled to receive pursuant to the District Court order of 29 January 2008.
The respondent opposes this application. In his view, given the substance of the agreement the parties reached on 29 January 2008, the application should be regarded as an abuse of process. Implicit in his position is his contention that he would not have agreed to the settlement, if he had known further proceedings from the applicant were imminent. As such, he feels hard done by.
Further, Mr Crosby asserts that there is no compelling evidence, from which the court could conclude that he would act to subvert or defeat any orders for either lump sum child support or lump sum adult child support, which may be made in future.
In such circumstances, it is his position that the applicant should await the court’s determination of her application before anything is done by the court in respect of the settlement monies which he is entitled to receive. It being his position that any orders for either adult child maintenance or child support should take the form of periodic payments, rather than lump sums.
It is the applicant’s position that the respondent has been financially derelict in respect of the provision of financial support for the children concerned since the parties separated and has made it clear to her and the Child Support Agency that he has no intention of cooperating with either her or the Agency in the provision of proper financial support for the three children concerned.
As such, she contends that there is a need for both adult child maintenance and child support to be paid to her in a lump sum and more pressingly, pending the determination of this issue, for an injunction to be made to prevent the respondent from dealing with the only source of funds, which will be available to satisfy such orders, namely the settlement moneys she is obliged to pay to Mr Crosby. Otherwise, she believes that there is a real risk that the respondent will dispose of funds to defeat any judgment for such lump sums, which she may subsequently obtain.
These proceedings are directed to resolve this interim issue between the parties. The hearing at the interim stage has to be brief. As I have not heard any direct spoken evidence from either of the parties nor seen them tested, in cross-examination, by the other parties’ lawyer, I cannot make findings of fact, where there is a dispute between them, as to what previously happened.
The legal principles to be applied
The court has authority to make an order for maintenance for a child over 18 years of age, if it is satisfied that such an order is necessary to enable the child concerned to complete his education [Family Law Act section 66L]. The court also has the power to make an order for payment of maintenance in a lump sum [section 66P].
However, the court is first required to consider the capacity of a parent to provide such maintenance in a periodic form prior to considering whether it should take the form of a lump sum or some other transfer of property [section 66K(5)].
The reason that it is usually preferable for child maintenance to be paid in a periodic manner is obvious. The circumstance of the child concerned may change. This is particularly so in respect of children over eighteen years of age. They may abandon their studies or elect to join the workforce and so become financially self supporting. Their personal financial circumstances may otherwise change. Accordingly, it may amount to an injustice, if the payer of the lump sum maintenance concerned is later precluded from recouping the sum paid, if the circumstances upon which its payment was initially predicated change and the sum involved has been spent.
However, circumstances where it has been found appropriate to order a lump sum payment of child maintenance include those where the payer of maintenance concerned has only made periodic payments “under severe pressure” or where an analysis of the past payment performance indicates a reluctance on the part of the payer concerned to adhere to a periodic payment regime or there is some other indicator, on the part of the payer concerned, of a tendency to avoid his or her maintenance responsibilities.[1]
[1] See Collins & Collins (1993) FLC 92-343
Part 7 of the Child Support (Assessment) Act 1989 is the legislation which confers jurisdiction on the court to make assessments of child support, in lieu of those assessments made administratively by the Child Support Agency. In particular, two divisions of Part 7 are relevant – Division 4 and Division 5.
Pursuant to Division 4, either a liable parent or a recipient of child support may apply to the court for orders departing from an administrative assessment of child support “a departure order” in certain specified circumstances. In particular, pursuant to section 116(1)(b) if firstly there are proceedings pending between the parties concerned in a court having relevant jurisdiction and secondly the court is satisfied that it is in the interests of the parties concerned to make such an order, the court is empowered to make such departure orders. The Family Court has also held that section 116 may provide an appropriate mechanism to bring an application for payment of child support in a lump sum.[2]
[2] See McGuinness & Cowie [2002] Fam CA 461
More particularly, Division 5 of the Part 7 of the Child Support (Assessment) Act 1989 provides the mechanism for the payment of child support other than by way of periodic payments.
The objects [section 121] of this Division include ensuring that:
·Children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both their parents; and
·Parents share equitably in the support of their parents.
Section 123 of the Act provides that an application may be made to the court for a payment of lump sum child support, by the carer entitled to any child support, provided there is an administrative assessment in force. Pursuant to section 123(3) the court is directed to hear any departure applications prior to dealing with any applications for lump sum payment.
In this case, the applicant has sought a departure application pursuant to section 117. It is only recently – December of 2007 – that she has pursued such an application administratively with the Child Support Agency. At the time of the filing of her present application, this aspect of the matter had not as yet been resolved. Impliedly, this is the source of some criticism of her by the respondent.
However, in McGuinness & Cowie, Kay J held that there was no procedural requirement for an applicant for a lump sum payment of child support to first apply to the Registrar of the Child Support Agency for an administrative departure order or for such an application to have been resolved. In all these circumstances, I consider that I have jurisdiction to deal with the applicant’s principal application, which is for payment of a lump sum child support pursuant to section 123 of the Act.
Section 124 of the Act provides the relevant criteria to be applied before a lump sum order is made. They are as follows:
·The court must be satisfied that such an order would be just and equitable as regards the child concerned; the child’s carer; and the liable parent concerned;
·It must also be otherwise proper for such an order to be made.
·The court is also directed to have regard to the administrative assessment in force in respect of the child concerned.
In considering matters of justice and equity, the court is directed to matters contained in section 117 of the Act, in particular the following:
·The duty of a parent to provide financially for his or her child, which has priority over all other commitments a parent has other than to support him or herself [section 3];
·The proper needs of the child concerned;
·The income, earning capacity, property and financial circumstances of the child concerned;
·The income, property and financial resources of each parent who is a party to the proceedings. This aspect is qualified by section 117(7B) of the Act;
·The manner in which the child is being educated.
Applications for lump sum payment of child support are analogous to applications for departure brought under Division 4 of Part 7 of the Act and incorporate many of the same considerations.
The intent of the Act is to provide a readily understood and accessible formula for application to the incomes of the carers and liable parents of children so that each may know what level of periodic child support is to be received and paid respectively by each. The basis of the formula is the annual income of each of the parties to the applicable determination.[3] The formula is not to be departed from unless “special circumstances” exist.
[3] See section 38 of the Act
Special circumstances warranting a lump sum payment of child support have included those where the paying parent concerned had very substantial unencumbered assets, which were not currently producing an income commensurate with their value but which could, if realised and reinvested in some other form of asset produce a much greater income; and where the employment of the paying parent concerned were seasonal, leading to great fluctuations in the level of administrative assessment.[4]
[4] See Dwyer v McGuire (1993) FLC 92-420
In Prpic and Prpic[5] the Full Court of the Family Court of Australia considered the circumstances in which it might be appropriate to make an order for lump sum child support and said:
“Capitalisation orders may well be appropriate where there are difficulties in enforcement or where it is proper to sever the financial link between the parties. However, as a general rule, given that payments of child support depend upon circumstances prevailing from time to time which circumstances cannot be predicted with any significant degree of certainty, it seems to us that the provision of child support by way of lump sum should not be considered to be a readily available alternative but one that is only exercised when there are circumstances that make it appropriate so to do.”
[5] Prpic and Prpic (1995) FLC 92-574 at 81,688
The grounds for departure provided by the Act, from an administrative assessment, include that the assessment concerned has resulted in an unjust and inequitable determination of the level of financial support to be given to the child or children concerned because of the income, property and financial resources of one of the parents concerned in the overall special circumstances of the case [section 117(2)(c)(ia)].
If a court determines that a ground for departure is made out, as with applications under section 123, it must then consider whether any proposed departure order is both just and equitable and otherwise proper. The court is required to follow a three step process.[6]
[6] See In the Marriage ofGyselman (1992) 15 FamLR 219 at page 240
In exercising its powers under Part 7 of the Act, the court has broad powers [section 140A]. Under section 141 these powers include the following:
·The order of a lump sum;
·The order of periodic amounts;
·The order of a specified transfer or settlement of property;
·The order that payment be made to a specific person or public authority;
·An order made in respect of a child until he or she attains a particular age;
·Any order which the court considers appropriate.
If the court makes an order for payment of child support in a lump sum, it is required to state whether or not such payment is to be credited against the liable parent’s applicable administrative assessments. If the court determines that the assessment is not to be so credited, special circumstances must exist to justify this decision and it must be both just and equitable and otherwise proper to do so [section 125].
Section 100 of the Child Support (Assessment) Act allows the court, in child support proceedings, to apply the provisions of the Family Law Act where appropriate. In particular, the court is directed to regard proceedings under the Child Support (Assessment) Act as if they were proceedings brought under Part VII of the Family Law Act.
Pursuant to section 68B(1) of the Family Law Act the court may grant any injunction “it considers appropriate for the welfare of the child” concerned. Pursuant to section 68B(3) an injunction granted under the section may be granted “unconditionally or on such terms and conditions as the court considers appropriate”.
The injunctive order, which the applicant seeks in this case, is commonly called a “Mareva Order”. Less opaquely, it should be described as an “asset preservation order”. The High Court, in a number of cases, has indicated the care which has to be taken by courts in granting such orders.[7] To secure such an order, it is necessary for the party seeking it to show that there is a danger that the other party will dispose of relevant assets or property in his or her possession.
[7] See Cardile LED Builders Pty Ltd (1999) 162 ALR 294
In addition, given the nexus between section 100 of the Child Support (Assessment) Act and Part VII of the Family Law Act, it also seems to be the case that there must be some connection between the injunction sought and the welfare of the children concerned, if the injunction sought is to be made.
In G & T[8] O’Reilly J summarised the principles relevant to the granting of an injunction as follows:
“The purpose of interlocutory restraining orders in a case such as this is to preserve the status quo until the trial. In order to exercise its discretion the court is required to find that there is a serious issue to be tried and that the balance of convenience supports the making of an order…
Plainly, it is also a requirement that the restraints sought be reasonably necessary in the sense that if the restraining orders sought are not made there would be a real risk of the defeat of the applicant’s claimed interest.”
[8] See G & T (2004) FLC 93-176 at 78,989
Accordingly, it is necessary for the applicant to provide evidence that the respondent intends or is likely to dispose of the moneys, which he is due to receive, in order to defeat her potential claim for lump sum adult child maintenance and child support. In my view, it is not sufficient that she mistrusts the respondent or feels anxious about the possibility of the respondent adopting such a course of conduct.
In short, the applicant is not entitled, as of right, to some form of security over the property in question.[9]
[9] See Waugh & Waugh (2000) FLC 93-052 at 87,812
In summary, before the injunction sought is made, the applicant must satisfy the following matters:
·There is a serious issue to be tried between the parties concerned;
·The balance of convenience favours the making of such an order;
·The order sought must have some nexus with the welfare of the children who are the subject of the application concerned;
·There is a real danger, as opposed to some theoretical concern, that if the injunction sought is not made, the respondent to the application will deal with the assets concerned in a manner designed to defeat any potential judgment.
·The granting of such injunctions is discretionary and the court must bear in mind that if granted, such an injunction imposes a severe restriction upon a respondent’s entitlement to deal with his or her own property. It should not be done lightly.
The applicant’s case
The applicant is fifty-four years of age and receives a modest income of $30,000.00 per annum. She asserts that following the parties’ separation, the respondent suffered from depression and was unemployed.
It is also her position that, following separation, the respondent was intent on making her personal financial position as difficult as possible, particularly in terms of being obstructive about providing details of his employment and income to the Child Support Agency.
In September of 2005, she discovered that the respondent was working at [R]. This led to her making an application for an assessment of child support. This resulted in a monthly assessment of child support of $279.67 for the three children concerned, based on a child support income for Mr Crosby of $23,949.00.
It is the applicant’s position that the respondent left his position at [R] and successfully applied for a New Start allowance. By necessary implication, she suggests that he left the job to avoid paying child support. This resulted in a reduction of his child support liability to the statutory minimum of $21.67 per month. Notwithstanding this, the respondent applied for a departure from the relevant administrative assessment. In her case, she asserts this demonstrates the length to which the respondent will go to avoid providing financial support for the children concerned.
It is the applicant’s position that the respondent has failed to file taxation returns since the parties separated. She also believes that the respondent has undisclosed sources of income. She believes he has sought other skills [in the IT industry], which could provide him with a good income. In this regard, she points to the fact that he has been able to travel on holiday in Port Douglas in North Queensland.
Since she made application for child support, she calculates that she has received payments of $456.00 from the respondent. In December of 2007, the applicant sought a departure from the applicable child support assessment. She sought departure on the basis of [X]’s special needs for orthodontic treatment; [Y]’s education needs; her high living expenses; and most importantly that the current assessment did not reflect Mr Crosby’s capacity to earn income.
Mr Crosby has responded to this application, raising issues relating to the applicant’s financial circumstances, which he asserts are not properly reflected in the relevant administrative assessment.
In addition, in his response, Mr Crosby indicated that his income was around $8,000.00 for the last financial year and he anticipated an income of $5,000.00 in the current financial year. Further he asserts he has considerable debts, particularly in respect of ongoing legal proceedings between the parties.
As previously indicated, at the time the applicant launched these proceedings in this court, neither party was aware of the outcome of these cross applications. The relevant decision was released on 3 March 2008. I will return to it in due course.
[Y] is in Year 11 at school, [Z] in Year 6. The applicant asserts it costs $559.00 per week to support these children financially. In addition, the applicant states that she is unable to provide other necessities for the children, including private health insurance and orthodontic work for [Y].
The applicant calculates it costs her $420.00 per week to support [X]. She believes he is likely to be at university for a period of around six years. She concedes that it is likely that he will obtain part-time employment for himself, at some time in the future.
Apart from these various figures, the applicant has provided no extensive calculations as to the arithmetical basis of the sums she seeks by way of lump sum. However, it seems clear that the figures concerned are calculated on the basis that it can be expected that the respondent will pay no periodic sums whatsoever in respect of the three children concerned, over the period of the next six years or so.
In support of her application for an injunction, the applicant points to the respondent’s failure to provide any extensive child support for the children concerned and asserts that it is likely that he will only be able to meet his obligations, for the children, by way of a lump sum payment. As such, she argues that the only available source of this payment is the funds, which she is required to pay him pursuant to the District Court order.
In her affidavit in support of her application, she deposes as follows:
“I am further concerned that the respondent may in the interim enter into a contract or an agreement whereby he pledges the monies due and payable to him which will result in there being no money available for my application for lump sum child support.”[10]
[10] See applicant’s affidavit filed 21 February 2008 at paragraph 36
The respondent’s case
It is the respondent’s that the parties combined worth amounted to somewhere around $1,350,000.00, at the time of the conclusion of the District Court proceedings. As such, he argues that he agreed to accept approximately 38% of the asset pool. It is his position that he agreed to accept a discounted settlement in order to reflect his responsibility to provide financial support for the three children concerned and the fact this responsibility had and was likely to remain residing with the applicant.
More importantly, it is the respondent’s position that he has always paid whatever child support has been assessed of him and has previously provided proper details of his income to the Child Support Agency. However, in the period of time since the parties separated, poor health has precluded him from pursuing full-time employment, particularly in his previous occupation [in the IT industry].
By the time Mr Crosby filed his answering affidavit material, the decision of the Senior Case Officer concerned in respect of the applicant’s departure application was to hand. The decision was provided on 3 March 2008. The Senior Case Officer determined that there should be a change in the assessment from 21 January 2008 to 31 October 2008. The Senior Case Officer set Mr Crosby’s child support income in the sum of $85,000.00.
In the decision, the Senior Case Officer sets out the assessment history of the parties. Between 20 September 2005 and 30 June 2006, the annual rate of child support was $260.00, based on a taxable income of $2,145.00 for Mr Crosby and nil for Ms Charlton.
From 1 July 2006 to 19 December 2006, the annual rate of child support was $320.00 based on the same child support incomes for each of the parties concerned. Between 20 December 2006 and 19 March 2006 the rate of child support remained $320.00 based on a taxable income of $11,407.00 for Mr Crosby and $12,648.00 for Ms Charlton.
At the time of the redetermination on 3 March 2008, the Senior Case Officer found that Mr Crosby was up to date with his child support payments. In addition, records available to the Senior Case Officer indicated that Mr Crosby was in receipt of a New Start allowance between 23 December 2005 and 1 September 2006 and from 28 November 2006 to 29 May 2007.
During the child support conference concerned, Mr Crosby told the Senior Case Officer that he had commenced full-time contracting work, in information technology, on 21 January 2008 and was being paid approximately $50.00 per hour. It was a matter of some controversy between the parties concerned, at the child support conference, as to what was Mr Crosby’s earning capacity both now and in the past.
However, the Senior Case Officer did not find that Mr Crosby had failed to work in the past despite ample opportunities to do so.[11] However, on the basis of Mr Crosby’s disclosure that he was now in paid employment, the senior case officer accepted that the child support assessment, under review, did not properly reflect Mr Crosby’s earning capacity. This was the basis for the departure.
[11] See Child Support (Assessment) Act at section 117(7B)
To the Senior Case Officer concerned, Mr Crosby indicated that his employment was only likely to last until the end of February 2008. The findings of the Senior Case Officer regarding the issues of arrears and particularly the application of Mr Crosby’s income earning capacity and his ongoing state of health are matters of great controversy between the parties. The applicant, I think, doubts that the respondent had ceased his work in February for a legitimate reason.
The applicant has provided a statement of his financial circumstances. He did so on 13 March 2008. In this document, Mr Crosby discloses an average weekly income of $1,000.00. In the document concerned, Mr Crosby indicates that he is self employed.
Mr Crosby calculates his weekly expenditure as amounting to a sum of $1,262.00 per week. This includes maintenance/child support payments of $437.00 per week, which accords with the change of assessment resulting from the decision of 3 March 2008.
In his response, filed 13 March 2008, the respondent has not sought any further departure from the decision of the Senior Case Officer made on 3 March 2008. In addition, as Ms Charlton’s application predated this decision, she has not formally sought a departure from it, although her application does seek a departure order. I have not been told whether or not the applicant regards $85,000.00 as likely to be a proper quantum of the respondent’s annual income.
Further, given that the decision of the Senior Case Officer is only recently to hand I do not know what has been Mr Crosby’s compliance with this recently inaugurated regime of child support. As previously indicated, it is usually preferable that child support be paid in periodic amounts.
The issues
At the interim stage, the following contentious issues arise between the parties.
·Mr Crosby says there is no evidence of any concerted failure to pay child support, on his part, in the past.
·In this regard, he points to the fact that the Senior Case Officer concerned accepted that he had had prolonged periods of unemployment, during which Centrelink would have required him to be actively seeking work.
·In addition, he points to the extended periods of time when he has been unwell. Mr Crosby acknowledges that past assessments of child support may have been modest but asserts they have been based on his proper income. In addition, he points to the fact that the Senior Case Officer did not find that there were any arrears of child support or he had failed to work, despite an opportunity to do so.
·Mr Crosby points to the fact that there is currently an assessment of child support in place in respect of the two younger children concerned. There is no evidence to indicate this assessment, requiring periodic payments, will not be met by him.
·Finally, the respondent points to the fact that it was only comparatively recently that Ms Charlton sought any departure from the relevant assessments of child support.
As a result of all these matters, Mr Crosby asserts that it would not be proper for the injunction in question to be granted, particularly as it would leave him with limited funds to re-house and re-establish himself, following the finalisation of property matters between him and the applicant.[12]
[12] See respondent’s affidavit at paragraph 29
From the applicant’s position the following issues arise:
·The amount of child support paid by the respondent to date has been meagre, if not practically non-existent.
·The financial needs of the children are great and have fallen exclusively on her shoulders.
·She disputes any assertion that the respondent has fully engaged his income earning capacity, either since separation or will do so in future.
·As such, she is dubious that he will comply with any future orders for periodic payment of either child support or adult child maintenance.
·In such circumstances, it is her position that the only way in which the children’s financial needs will be met is by the payment of lump sum, which can only come from the moneys she is due to advance to him.
·Given the acrimony between the parties, she asserts that there is a real risk the respondent will take steps to ensure this sum is diverted, in some way, in order to escape his financial responsibilities towards the children.
Conclusions
In my view, there is a serious issue to be tried between the parties. The forum of the District Court did not provide the appropriate jurisdiction for Ms Charlton to pursue her application for either adult child maintenance or a lump sum substitution of child support. Such applications can only be commenced in a court conferred with federal jurisdiction. This is such a court.
It is a question of evidence regarding the connection, if any, between the consent order made in the District Court and the potential quantum of either any adult child maintenance or child support and the form of its payment to which the applicant is entitled in future. Although
Mr Crosby may feel aggrieved as to the timing of the current application, no formal time limits constrain Ms Charlton from bringing her current applications. In particular, in my view, it is not necessary for the applicant to exhaust any administrative remedies she may have in the Child Support Agency regarding administrative assessments of child support.
In addition, given [X]’s age and his recent commencement of tertiary studies, now is clearly an appropriate time for an adult child maintenance application to be brought in respect of him. Mr Crosby may feel he has been taken advantage of because of the fact that the proprietorial interests of the parties, flowing from child maintenance issues and the division of de-facto relationship property, are affected by different jurisdictions, but this is not the applicant’s fault. Rather, it is as a result of jurisdictional differentiation flowing from the Australian Constitution. As such, I do not think that the application can in any way be characterised as an abuse of process.
Further, it is clearly the case, for whatever reason, the respondent has provided modest financial support for the three children concerned, in the three or four years since the parties separated. As a consequence, I am satisfied that a serious issue arises as to whether any future payments of either child support or adult child maintenance should be in a lump sum form or provided in a periodic manner.
As such, I am satisfied that the respondent’s history of child support payments has been poor. The information provided in both his cross application to the Child Support Agency and his statement of financial circumstances to the court does not lead me to be sanguine that there is likely to be any significant improvement in this state of affairs in the future. The respondent’s own representations, to the Senior Case Officer, regarding his employment, indicate that he will remain a poor payer of child support into the future, at least in a periodic manner.
The children concerned are entitled to receive proper financial support, from both their parents. In this regard, they are entitled to share, not only in their parent’s recurrent income but also in their respective proprietorial interests, financial resources and income earning capacities [see Child Support (Assessment) Act 1989 at section 121]. How the children’s financial needs are to be met in future is clearly a significant issue between the parties and one which is amenable to the jurisdiction of this court, but not the District Court.
Cases involving the earning capacity of a parent, in the child support context, are complex [Child Support (Assessment) Act 1989 section 117(7B)]. The court must be satisfied that:
·The parent concerned does not work despite ample opportunity to do so;
·Or has unusually reduced his or her own hours of work;
·Or has change his or her occupation;
·The reason for these changes is not related to an issue of health;
·The parent concerned has not demonstrated that the reasons for these changes are not motivated by a child support consideration.
In the present case, these are likely to be contentious issues.
It is true that it was open to the applicant to invoke both the jurisdiction of the Child Support Agency and the court’s jurisdiction at an earlier stage and in this regard her current application and its timing may appear either opportunistic or motivated by tactics. However, these considerations do not militate from the seriousness of the issues raised by the applicant in these proceedings.
The difficulty thrown up by this case is in assessing the balance of convenience to the parties concerned. It is only comparatively recently that there has come into existence a child support assessment, which creates a responsibility on the respondent to pay a more significant level of financial support for the children concerned than previously. Ostensibly at least, the respondent does not seek the discharge of this administrative assessment. As I have already indicated, it is usually preferable that both child support and adult child maintenance be paid in a periodic form, which is related to a parent’s capacity to pay.
The sum which the applicant seeks to injunct is a significant sum, amounting to some 35% of the respondent’s entitlements, pursuant to the District Court settlement. In addition, I accept that he has other significant and pressing liabilities. If the injunction is granted, it seems likely that the respondent will be precluded from making any large scale arrangements for his personal re-establishment, such as purchasing a home for himself. Necessarily such an injunction will be grossly inconvenient to him.
On the other hand, the applicant has acted on the assumption, as yet unproved, that the respondent will not, for the next 6 years or so, have any readily establishable form of income, which will be able to be diverted towards either child support or adult child maintenance.
As such, she seeks to confine the maximum potential amount the court is likely to award her (and [X]) once these proceedings are fully determined. Essentially, the applicant has sought the court to act to preserve the high watermark of her claim. Given the uncertainty of his capacity to pay future periodic payments and the possibility that arrangements for the children may change, the respondent asserts that this must be grossly unfair to him.
At this juncture, it is likely to be problematic, in the extreme, for the court to assess the future financial needs of [X] in particular, given his age and the uncertainty about what his future employment circumstances may be. There are less pressing circumstances so far as [Y] and [Z] are concerned.
In addition, although the applicant may be dubious about such an outcome, it is not beyond the bounds of possibility that the respondent’s health will mend (a significant area of dispute between the parties and one in respect of which no evidence has been provided to date) and he will return to his previously lucrative employment [in the IT industry]. It is for these reasons, particularly as to the court’s unlikely prognosgative abilities over the long term, that orders for lump sum payments are the exception rather than the rule and the court is directed to be cautious about making any such asset preservative injunction.
However, I have come to the view that the provisions of section 68B must be given pre-eminence in the determination of this issue. It will not be in the interests of any of the children concerned if they are precluded from receiving ongoing financial support, from one or other of their parents in future, as a result of the court’s failure to grant the injunction sought.
There is little, if any, concrete evidence that Mr Crosby would act in such a way as to frustrate his children’s proper financial support. However, up to this point, he has had few, if any, assets at his ultimate disposal, to achieve such an outcome. To this extent, I concede the applicant’s case is largely based on innuendo.
However, against these considerations is the respondent’s poor child support payment history. The primary determinative factor must be the best interests of the children concerned. In my view, it could not be in their best interests, if their future and recurrent financial needs are not able to be met because of how the respondent is potentially able to manage his financial affairs.
The fact remains that, up to this stage, the respondent has provided scant financial support for the three children concerned, in the considerable period since the parties separated. In all the circumstances of the case, I accept that the financial responsibility for providing for the children has fallen predominantly upon the applicant’s shoulders.
In my view, it is in the children’s best interests that some assessment should be made of how these needs, including [X]’s need to complete his tertiary education, are to be met from reasonable shares in the parties’ respective incomes, property, financial resources and income earning capacities. As is apparent from the parties’ history with one another to date and the sequence of this litigation thus far, these issues are likely to be highly contentious.
At present, in the short term, it seems more likely than not that the applicant will continue to bear the brunt of supporting the children concerned, as she has done since 2004. It would not be in the children’s best interests if this state of affairs continues indefinitely, particularly if the respondent has some capacity to provide financially for the children.
Accordingly, although I cannot definitely know how the respondent will deal with the monies he will receive from the applicant, his poor history of providing child support for the children is a cause for major concern. In all the circumstances of this case, I believe there is a major risk the respondent will arrange his affairs in such a way, so as to obstruct or deflect the applicant’s final application, if the injunction sought is not granted.
In my view, although there is great uncertainty about the quantum of any lump sum, if any, and the respondent’s capacity to make periodic payments of both child support and maintenance, these factors tip the balance of convenience in favour of the injunction sought being granted. Any inconvenience to the respondent can be ameliorated by allocating the earliest possible final hearing date.
Accordingly, for these reasons, I have decided to grant the injunction sought and fix the matter for final hearing. Given the issues raised, I also consider it likely to be of assistance to them if they attend a financial mediation.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding ninety-five (95) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: P Smith
Date: 9 April 2008
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