CHARLTON & CROSBY
[2010] FMCAfam 207
•5 March 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CHARLTON & CROSBY | [2010] FMCAfam 207 |
| CHILD SUPPORT – Application for departure from administrative assessment of child support in respect of children born 1990, 1992 & 1996 – parties have never been married – parties separated in 2004 – payee seeks departure from 10 June 2006 to [date omitted] 2014 – proceedings commenced shortly after resolution of parties’ de-facto property proceedings – these proceedings resulted in payer receiving a substantial cash payment – payee seeks lump sum payment of child support for remainder of children’s minority from de-facto property proceeds – capacity to earn – capacity to pay – what is just and equitable. FAMILY LAW – Adult child maintenance – capacity of university student to self support – what is necessary and proper – whether monies should be paid in lump sum. |
| Child Support (Assessment) Act 1989, ss.3; 4; 38; 99E; 111, 114; 116; 117; 118; 121; 122; 123; 123A; 124; 125; 140A; 141 Family Law Act 1975, ss.4; 66B; 66C; 66G; 66H; 66J; 66K; 66L; 66P |
| Charlton & Crosby [2008] FMCAfam 321 Port of Melbourne Authority & Anshun Pty Ltd (1981) 147CLR 589 Bruce Doyle: Complications and Intricacies of Child Support Post 2008 Reforms Sixth Annual Family Law Summit Brisbane June 2009. In the Best Interests of Children – Reforming the Child Support Scheme – Report of the Ministerial Taskforce on Child Support - published 14 June 2005 |
| Applicant: | MS CHARLTON |
| Respondent: | MR CROSBY |
| File Number: | ADC 723 of 2008 |
| Judgment of: | Brown FM |
| Hearing dates: | 18 & 19 June & 28 August 2009 |
| Date of Last Submission: | 28 August 2009 |
| Delivered at: | Adelaide |
| Delivered on: | 5 March 2010 |
REPRESENTATION
| Counsel for the Applicant: | Ms Horvat |
| Solicitors for the Applicant: | Robinson & Mason |
| Counsel for the Respondent: | Mr Childs |
| Solicitors for the Respondent: | Gladys & Lewis |
ORDERS
Pursuant to section 117(1) of the Child Support (Assessment) Act 1989 there be an order departing from the administrative assessment of child support payable by the father to the mother for the children [X] born [in] 1990; [Y] born [in] 1992 and [Z] born [in] 1996 so that child support is fixed at a weekly amount of $184.50 for the period from 21 January 2008 to [date omitted] 2008.
Pursuant to section 117(1) of the Child Support (Assessment) Act 1989 there be an order departing from the administrative assessment of child support payable by the father to the mother for the children [Y] born [in] 1992 and [Z] born [in] 1996 so that child support is fixed at a weekly amount of $167.00 for the period from [date omitted] 2008 to [date omitted] 2010.
Pursuant to section 117(1) of the Child Support (Assessment) Act 1989 there be an order departing from the administrative assessment of child support payable by the father to the mother for the child [Z] born [in] 1996 so that child support is fixed at a weekly amount of $132.00 for the period from [date omitted] 2010 to [date omitted] 2014.
In lieu of the periodic amounts of child support ordered to be paid pursuant to orders (1) to (3) hereof, the father pay the mother a lump sum of child support pursuant to the provisions of section 123 of the Child Support (Assessment) Act1989 in the amount of $46,300.00.
In the event neither party files a notice of appeal, in respect of orders (1) to (4) hereof, the lump sum referred to in order (4) hereof be paid to the mother after the expiration of 28 days from the date of these orders from the moneys currently standing in the parties’ joint names pursuant to order (2) of the orders made on 9 August 2008.
The father pay the sum of $3,000.00 per annum by way of adult child maintenance for the adult child [X] born [in] 1990 for each year whilst the aforesaid adult child remains engaged in a course of under graduate tertiary education to obtain the degree of [omitted] commencing with the academic year in 2010 and each subsequent year thereafter.
Pursuant to the provisions of section 66P of the Family Law Act1975 the said adult child maintenance be paid in a lump sum of $12,000.00.
In the event neither party files a notice of appeal in respect of orders (7) to (10) hereof, the lump sum of $12,000.00 be paid to the mother after the expiration of 28 days from the date of these orders from the moneys currently standing in the parties’ joint names pursuant to order (2) of the orders made on 9 August 2008.
The sum of $3,000.00 be released to the adult child after 28 days of the date of these orders with the remainder to be invested by the mother in an interest bearing account in the adult child’s name and be released to him in annual instalments of $3,000.00 plus one third of the accrued interest on the 1st of March of each successive year provided that the adult child gives to the father proof in writing that he remains enrolled in his course of full-time study for the under graduate degree of [omitted].
In the event that the adult child ceases the aforementioned course of study or becomes engaged in full-time employment he shall advise the father of such occurrence upon which event any moneys held on his behalf pursuant to these orders are to be refunded to the father but the adult child will be entitled to defer his course of study for a period of one academic year without consequences so far as order (7) hereof is concerned provided he gives the father written evidence of such deferral.
In the absence of any notice of appeal being filed by either of the parties the balance of the monies held in the parties’ joint names pursuant to the order made on 9 August 2008 is to be refunded to the father.
All applications be otherwise dismissed.
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
This case concerns whether it is appropriate that the father in these proceedings, Mr Crosby be ordered to pay the mother, Ms Charlton, a sum of money from his share of the proceeds of de-facto property proceedings between the two, in order to satisfy past and future assessments of child support and any other order for adult child maintenance payable, for their three children and, if so, what should be the quantum of that sum.
This is not the first judgment, which I have written in respect of the matter. At an earlier stage, I was called upon to decide whether it was appropriate for Mr Crosby to be restrained from dealing with a portion of the de-facto property settlement in question, amounting to $155,000.00. I determined that it was appropriate for such an injunction to be made. The earlier reasons for judgment outline some of the background to the matter.[1]
[1] See Charlton & Crosby [2008] FMCA fam 321
Regrettably, the expedited hearing of the substantive aspect of the parties’ competing applications has been delayed, largely because of the illness and death of Mr Crosby’s father. These current reasons for judgment deal with the determination of the substantive issue between the parties.
Ms Charlton and Mr Crosby are the parents of [X] born [in] 1990; [Y] born [in] 1992; and [Z] born [in] 1996. The parties have never been married to one another. The relationship between them was significant, not only because it produced three children, but also because during it the parties acquired substantial assets and operated a business together.
The relationship between them lasted around fourteen and a half years, beginning in November of 1989 and ending, in acrimonious circumstances, in March of 2004. The acrimony remains. The parties have been engaged in litigation, with one another, almost unceasingly, in the period since their separation.
This litigation has taken place in the Family Court, the District Court of South Australia and more recently in this court. Although it is trite to point it out, the extent of this litigation demonstrates the unfairness of separated partners being compelled to bring proceedings in different venues in respect of arrangements for the care of their children and the division of their property.
In addition, such an artificial dichotomy does not encourage or facilitate the parties to such proceedings to reach either a holistic or comprehensive resolution of the various issues in dispute between them, which take into account all possible applicable legal principles.
This is the essence of Mr Crosby’s case. He feels hard done by that, after the resolution of the children’s issues in the Family Court and the resolution of the property proceedings in the District Court,
Ms Charlton has commenced this third set of proceedings, in the Federal Magistrates Court, regarding future financial support for the three children concerned.
He asserts that he understood that the District Court proceedings were intended, certainly so far as he was concerned, to finalise the division of the parties’ capital assets between them. It is Mr Crosby’s case that Ms Charlton received a greater proportion of them as a consequence of [X], [Y] and [Z] living with her.
On 22 January 2007, Dawe J, in the Family Court at Adelaide, ordered that [X], [Y] and [Z] should live with the mother, who would be responsible for their day to day care, welfare and development. Limited orders were made for the father to be able to communicate with the children by telephone and email.
These orders came about following the children being independently represented and a number of psychological assessments of them being prepared. Essentially, it is clear that each of the children is alienated from the father and has no wish to have any intimate form of relationship with him.
The children’s proceedings were on foot from December 2004 onwards. During this period, the three children spent little time with their father. They lived with their mother in [W]. Accordingly, the rift between the children and their father is longstanding. At the time of these current proceedings, they have had no meaningful interaction with him for many years.
The proceedings in the District Court of South Australia began in 2005. They were brought pursuant to the Domestic Partners Property Act 1996 (SA). The pre-amble to the Act described it as “an Act to facilitate the resolution of property disputes arising on the termination of domestic partnerships …” There is no doubt that Ms Charlton and Mr Crosby were domestic partners for the purposes of the Act.
Pursuant to section 10 of the Act, the District Court is empowered to make any orders, it considers necessary, to divide property between domestic partners in a way which is just and equitable.
Section 11 of the Act delineates the matters, which the District Court must consider. The court must consider the financial and non-financial contributions made directly or indirectly by such domestic partners to the acquisition, conservation or improvement of their property or their financial resources. In addition, it must consider the home making and parenting contributions made by each such domestic partner.
The parties’ competing applications, pursuant to the Domestic Partners Property Act, were fixed for trial, in the District Court on 29 January 2008. On this date, the parties were able to negotiate a settlement of the matter.
I have been provided with a copy of the order that was made by Judge Clayton on this date, which provided for a settlement of the parties’ property on 31 March 2008. The order does not provide any rationale as to how the settlement was reached or ascribe value to the items of property contained within the orders.
What is clear is that Mr Crosby was to receive the sum of $434,000.00 from Ms Charlton. Concurrently with this payment, Mr Crosby was to transfer his interest in four pieces of real property to Ms Charlton.
In addition, Mr Crosby was to transfer to Ms Charlton his interest in a Toyota Tarago motor vehicle and his shares in a company [E] Pty Ltd. This company related to a business operated by the parties during the course of their relationship. In addition, Mr Crosby transferred all his interests in a partnership, Charlton Crosby & Associates, again which related to the business operated by the parties during their relationship.
The four pieces of real property retained by Ms Charlton consisted of the following: Property 1, Property 2, Property 3 and Property 4.
Property 2 is the parties’ former family home. Associated with the property is a piece of vacant land at Property 3. This latter property has been integrated into the former family home and is part of the backyard.
I have not been provided with any expert evidence in respect of the value of Properties 2 and 3. In her financial statement, Ms Charlton calculates the value of the combined properties to be $565,000.00.
Property 1 is a house, which has been rented out to tenants. Mr Crosby has provided a valuation report ascribing a value of $270,000.00 to the value.[2] Ms Charlton does not disagree with this valuation.
[2] See exhibit PG2 to the father’s affidavit filed 13 March 2008
Property 4 is also a rental property. Again, Mr Crosby has provided a professional valuation of the property, which ascribes a value of $650,000.00 to the property. Again, Ms Charlton does not disagree with this valuation.
During the course of the parties’ relationship, the two rental properties were negatively geared. That is the various outgoings in respect of the properties, including mortgages, were configured in such a way that the properties ran at a loss, after the rent received from them was calculated.
Prior to 31 March 2008, all these properties were jointly owned by the parties. In round terms, I accept that they were worth in the vicinity of $1,485,000.00. I have been provided with no evidence regarding the value of [E] Pty Ltd; the business of Charlton Crosby & Associates; or the Toyota Tarrago motor vehicle.
In her sworn evidence, Ms Charlton asserted that the mortgages and associated line of credit secured against the four properties concerned amounted to some $616,000.00. It is her evidence, which I accept, that she borrowed the sum of $815,000.00 to consolidate her various debts at the time of settlement; pay her considerable legal costs; and pay the settlement sum of $434,000.00 due to Mr Crosby.[3]
[3] See exhibit A letter from Kelly & Co to Ms Charlton dated 24 April 2008, which confirms the level of borrowing
Ms Charlton’s evidence is that the settlement, from her perspective, was a pragmatic one. She was worn out by years of litigation with
Mr Crosby and had no stomach for a vitriolic trial with him. In these circumstances, although there were considerable draw backs in her retention of the properties in question, particularly in respect of the retention of the level of debt relating to them, she was prepared to agree to such a settlement for the sake of certainty and to bring the litigation to an end.
It is Ms Charlton’s evidence that, if and when she sells any of the properties in question, she will be liable to a considerable level of capital gains tax. In addition, she has deposed that, due to the recent financial downturn, it is not a good time to sell real property in the Adelaide area. Accordingly, at present, she is content to retain the properties, although the recurrent mortgage payment of around $5,000.00 per month represents a considerable burden to her.
Mr Crosby’s position in respect of the property settlement is set out in his affidavit material.[4] It is his position that, since the parties separated, he has been significantly unwell for lengthy periods of time. He asserts that he has been suffering from depression.
[4] See father’s affidavit filed 13 March 2008 at paragraphs 10-24
Mr Crosby calculates the parties’ net asset base, at the time of the property settlement, as being around $1,350,000.00. It is position that the parties’ various contributions, as assessed pursuant to the provisions of the Domestic Partners Property Act, are to be considered equal. He concedes that, in the period following separation,
Ms Charlton’s parenting contributions were greater than his own.
However, he remains aggrieved that, following separation, the mother continued to live in the former family home and received the rental moneys from the other properties concerned. In all these circumstances, he asserts that the starting point of any division of the parties’ property was 50/50 percent, which he calculates to be $675,000.00 for each party.
Mr Crosby concedes that, as the parties’ three children had lived with their mother since separation, the court would almost certainly have allowed Ms Charlton to receive a greater percentage of the asset pool available, however he believes this loading would be offset by the court giving consideration to his level of illness, which he asserts reduced his ability to gain employment in the period in question.
Mr Crosby asserts that the items of property, which he has received in the settlement – cash in the sum of $434,000.00 together with his accrued superannuation entitlements of $75,000.00 – amounts to approximately 38 percent of the parties’ asset pool.
In the father’s contention that the differential between what he has received and the mother has received is significant. It is his view that the amount concerned is more than Ms Charlton “could have expected to receive in contributions towards the maintenance of the children, had I [Mr Crosby] been gainfully employed.”[5]
[5] See father’s affidavit filed 13 March 2008 at paragraph 26
Essentially, it is Mr Crosby’s position that the only rational and equitable explanation, as to why Ms Charlton received a larger proportion of the parties’ assets, is that the differential represented both past and future financial contributions from him for the support of the three children concerned. In his view, the significance of this contribution is heightened by the fact that he was not in paid employment for most of the period following separation.
Mr Crosby’s position would appear to be that he entered into the settlement negotiations with Ms Charlton in good faith and reached what he considered to be fair compromise, so far as both parties were concerned. In entering the compromise, he was motivated by considerations of what the settlement meant for him in raw dollar terms. He was not anticipating that he would be met by further proceedings that would possibly erode the base result, which he had negotiated for himself.
In his view, the only rational explanation for the timing of the current round of proceedings, by Ms Charlton, is her desire to gouge the best possible result for herself from the de facto property proceedings. In this regard he feels outmanoeuvred and even tricked by Ms Charlton.
In this regard, it seems unlikely that Mr Crosby would have agreed to the settlement of 29 January 2008, if he had known that Ms Charlton was intending to bring these current proceedings, seeking the payment to her of a significant sum of money. As a result, no doubt, he feels hard done by.
Ms Charlton commenced the current round of proceedings on 21 February 2008, around three weeks after the District Court proceedings were compromised. She amended her application on 16 June 2009.
Ms Charlton’s application is as follows:
·There be a departure from the administrative assessment of child support in respect of all three children for the period 10 June 2006 to [date omitted] 2008 and the sum of child support payable be fixed at $45,450.00;
·There be a departure from the administrative assessment of child support in respect of [Y] and [Z] for the period [date omitted] 2008 until [date omitted] 2010 and the sum of child support payable be fixed at $33,392.00;
·
There be a departure from the administrative assessment of child support in respect of [Z] for the period [date omitted] 2010 until
[date omitted] 2014 and the sum of child support payable be fixed at $42,084.00;
·That the various sums outlined above be commuted to a lump sum of $100,000.00 reflecting the financial advantage to be derived from capitalisation by way of payment in a lump sum;
·That the father pay adult child maintenance in respect of [X] by way of a lump sum payment of $55,000.00.
Ms Charlton’s case is based on her assertion that it is appropriate that Mr Crosby’s child support income, for the various periods in question, be fixed at $85,000.00 per annum. During each of these periods, her income has been significantly less than this sum and she anticipates in future, she will earn around $50,000.00 per annum.
It is Ms Charlton’s position that Mr Crosby is a highly skilled IT professional, with [financial industry] qualifications. She asserts that he has chosen not to utilise his income earning capacity in the period since the parties separated, largely because he is ill disposed to pay child support.
It is further her case that Mr Crosby is likely to remain recalcitrant, so far as the payment of child support is concerned and these circumstances dictate that the child support be paid in a lump sum from the moneys currently quarantined from the District Court settlement. She proposes a discount of around twenty percent on the child support, as she proposes it being assessed, in recognition of the fact that it will be paid in a lump sum.
The significance of [dates omitted] is that each is the date preceding the eighteenth birthday of [X], [Y] and [Z] respectively.
[X] has now reached his majority. Currently he is in the second year of a double degree in [omitted]. The course will take six years to complete, if [X] continues his studies on a full-time basis.
It is Ms Charlton’s position that [X] is currently entirely financially dependent upon her and will require ongoing financial support in order to complete his undergraduate education. In these circumstances, she contends that it is only proper that Mr Crosby contribute towards the cost of [X]’s financial support.
Again, it is her position that the only feasible way Mr Crosby can be compelled to provide this support is through the provision of a lump sum payment from him. Ms Charlton calculates [X]’s weekly expenses at around $420.00 per week at present. She asserts that it proper that Mr Crosby contribute at least 42% of this sum or $176.28 per week. This is the basis of her calculation that a lump sum of adult child maintenance for [X] in the sum of $55,000.00 is an appropriate one.
Mr Crosby’s position is set out in his amended response filed on 15 June 2009. Essentially, he seeks the dismissal of the mother’s application and the discharge of the injunction preventing his access to the sum of $155,000.00, from his portion of the District Court settlement. It is his case that Ms Charlton’s case is unmeritorious for the following reasons.
He disputes any assertion that he has not utilised his income earning capacity in the period since the parties separated. Rather, he contends that he has been actively seeking work, in the period in question, other than at times when he has been incapacitated by illness, particularly depression.
In all these circumstances, Mr Crosby asserts that a more reliable level of child support income to be attributed to him for the period from
10 June 2006 to date is around $12,000.00 per annum. In this regard, he would seek the departure from a Child Support Agency senior case officer decision, which set his child support income at $85,000.00 for the period from 21 January 2008 to 19 March 2008.
Accordingly, it is Mr Crosby’s position that he has fulfilled his child support obligations towards the three children in the period, since the parties separated, given that his income in the period concerned has been modest. This is particularly so given that Ms Charlton received a larger proportion of the parties’ assets, on the compromise of the District Court proceedings, which in part was due to the fact that she had contributed more to the financial support of the children following separation.
It is Mr Crosby’s evidence that he is gradually getting himself on his feet financially, following the traumatic circumstances surrounding the end of the parties’ relationship with one another and the bitter court proceedings which followed. He has returned to gainful employment [in the IT industry]. In these circumstances, he asserts that it is fair and appropriate that the applicable child support formula should be applied to his ongoing level of income, so his level of child support for [Y] and [Z] can be calculated on a recurrent basis according to the applicable formula.
Essentially, it is Mr Crosby’s position that it may potentially result in an injustice to him if child support is calculated in a lump sum for the remainder of [Y] and [Z]’s minority, particularly if, from his perception, an inflated level of income is attributed to him as the basis for its calculation.
Mr Crosby is also concerned that Ms Charlton has inflated [X]’s level of expenditure. In addition he believes that Ms Charlton’s position has given no regard to the fact that [X] has some capacity to provide for his own financial support. In this regard he points to the fact that [X] was awarded a scholarship in the past and has indicated a willingness to undertake some tutoring in future.
In addition, although it may not be [X]’s preference, it would appear to be Mr Crosby’s position that necessarily [X] has the capacity to seek some form of part-time employment, particularly in university vacations, as many other university students do.
Ms Charlton’s view is that [X]’s course is a demanding one and although he himself is an above average student, he is currently applying himself to his studies too such a degree that it would not be appropriate for him to be required to seek out such part-time employment.
Although [X] is a well motivated student, it is not beyond the bounds of possibility that he may either cease his studies entirely or defer them, perhaps for one or two or perhaps more years. As a consequence, he may elect to join the paid work force and provide for his own support.
In these circumstances, Mr Crosby argues that the provision by him of a lump sum of child support, in the magnitude proposed by
Ms Charlton, has the potential to be unfair to him, as once provided it will not be easily recouped, if [X]’s circumstances do markedly change over the course of the next four years.
In answer to these criticisms, Ms Charlton has indicated her willingness to act as a trustee for any lump sum of maintenance provided for [X], ensuring that the award will be allocated so that it will last the period of his studies and can be reimbursed to Mr Crosby in what she sees as the unlikely possibility that [X] does not complete his degree as scheduled by 2013.
In addition the issue of adult child maintenance raises complex philosophical questions, given that there is little if any paternal affection between [X] and his father and the two no-longer converse or interact together and are unlikely to in the foreseeable future. In these circumstances, is it “proper” [6] for Mr Crosby to be compelled to provide financial support to his disaffected adult son?
[6] See Family Law Act at section 66G
At present, Mr Crosby is essentially self-employed. He is nominally employed by a company [S] Pty Ltd, of which he is the only shareholder and director. Ms Charlton is dubious about Mr Crosby’s bona fides so far as his self-professed commitment to resume and maintain paid employment is concerned. She fears that the company may be a structure designed to conceal Mr Crosby’s true level of remuneration from both her and the Child Support Agency and defeat the proper application of the formula to Mr Crosby’s circumstances.
In addition, she believes that Mr Crosby’s likely attitude to future assessments of child support can be gleaned from his past response to the provision of financial support for the three children concerned, which has been poor. As such it is her position that the only means by which it is likely Mr Crosby will ever shoulder his portion of the burden of financially supporting [Y] and [Z], for the remainder of their infancy, is through the provision of a one off sum.
A major portion of Mr Crosby’s case rests on the premise that proper considerations of justice and equity should dictate that he retain a significant proportion of the capital, which the parties acquired during their relationship, particularly whilst he is “getting himself back on his feet financially”. Mr Crosby puts his position this way:
“…in the event [the court] grants the orders sought by the applicant I would be left with $284,000.00 from which would be deducted my legal expenses of approximately $90,000.00 and other debts of $75,000.00 leaving with a final amount of just $119,000.00 to buy a house and start my life again.”[7]
[7] See father’s affidavit filed 13 March 2008 at paragraph 29
Significant controversy exists between the parties regarding the on-going viability of their respective financial situations. Mr Crosby asserts that Ms Charlton is significantly better placed than him because she has retained the parties’ various investment properties. More importantly he contends that she is sole proprietor of her own successful IT business – [K], which is operated by a company [M] Pty Ltd of which Ms Charlton is a director and shareholder.
Similarly, Ms Charlton doubts claims made by Mr Crosby that his income earning has been affected by significant illness or that he has ever been remiss in his past efforts to seek paid employment. From her perspective, the father’s IT qualifications and experience in that industry remain viable and he has the capacity to earn a comfortable income in this field.
In addition she points to the fact that the father is currently undertaking tertiary studies in [omitted] and has a tertiary qualification in [the finance industry] as being indicative of his overall employability.
These proceedings are intended to resolve the various issues raised by the parties about future financial support to be provided for [X], [Y] and [Z] and what form it should take.
The Applicable Child Support Assessments
Ms Charlton first applied for an administrative assessment of child support in September of 2005. This resulted in Mr Crosby being assessed to pay a monthly amount of $279.67 in respect of all three children. The assessment was based on a child support income for
Mr Crosby of $23,949.00, which was apparently his provisional taxable income for the 2004/2005 financial year.[8] The assessment was to be in force for the period from 20 September 2005 to 19 December 2006.
[8] See Exhibit A to the mother’s affidavit filed 21 February 2008
At the time of this assessment, Mr Crosby was employed at the [R] of South Australia. I have not been advised as to the form of his employment. It would appear to be the case that he had not been employed, certainly as a PAYG taxpayer, in the period following the parties’ separation. It is Mr Crosby’s position that he was suffering from depression following the parties’ separation.
Mr Crosby left the employ of the [R] in October of 2005. Ms Charlton is suspicious about this. It is her case that it is a reasonable inference to draw that Mr Crosby stopped working at the [R] to avoid child support. Mr Crosby has provided a letter from the General Manager of the [R] indicating that his employment was terminated “during the agreed probationary period”, the inference being that the termination was beyond Mr Crosby’s control.[9]
[9] See Exhibit B to the father’s affidavit filed 15 June 2009
In any event, the termination of his employment led Mr Crosby to seek a re-assessment of the applicable child support assessment. Accordingly, on 26 April 2006, a fresh assessment issued for the period from 20 September 2005 to 19 December 2006. This assessment resulted in Mr Crosby being assessed to pay a monthly amount of child support for the three children in question of $21.67. This is the minimum amount and is based on the fact the Mr Crosby was in receipt of social security payments.
Mr Crosby was aggrieved by this assessment and sought a departure from it on a number of the statutorily provided grounds, which included the following: it cost more than 5% of his child support income to have contact with the children concerned; the assessment did not take into account property and financial resources of the children; the mother and children had already received the benefit of financial support from him; the mother had access to income, property and financial resources, which had not been taken into account in the making of the assessment.
In his application, Mr Crosby complained that Ms Charlton had retained control of the parties’ income earning assets following separation, whilst he had been put to considerable expense in re-housing himself and pursuing legal avenues to spend time with the children. He also alleged that the children had access to funds from a trust, which had been set up by one of their maternal relatives for their benefit. He reiterated that he had been ill for long periods since the parties separated and provided medical certificates to this effect.
Mr Crosby’s application for a departure from the administrative assessment was determined by Senior Case Officer M on 31 May 2006, who decided that there should be no change to the applicable assessment. Essentially the Senior Case Officer pointed out that as
Mr Crosby had been assessed to pay the legal minimum amount of child support of $260.00 per annum, she was powerless to reduce the amount further.
Nonetheless Mr Crosby objected to Senior Case Officer M’s decision. His objection was disallowed on 19 July 2006. The objections officer concerned said as follows:
“It may be useful to note that a SCO does not have the authority to reduce the rate of child support below the minimum rate which, from 1 July 2006, is $320 per annum.”[10]
[10] See Exhibit E to mother’s affidavit filed 21 February 2008
Through the submission of her counsel, Ms Horvat, the mother contends that the father’s futile attempt to reduce the already negligible amount of child support payable by him to nil is evidence of his determination not to provide her with any financial support for the children, if it can possibly be avoided.
In these circumstances, she argues that the court can have no confidence that Mr Crosby will voluntarily comply with any future periodic assessments of child support and, as such, any reasonable level of compliance with future assessments by him must come about through compulsion.
For the period from 20 December 2006 to 20 January 2008 the annual rate of child support was fixed at the rate of $320.00 based on an income of $11,407.00 for Mr Crosby and one of $12,648.00 for
Ms Charlton. These were apparently the incomes reported for the parties by the Australian Taxation Office for the 2005/2006 financial year.
Ms Charlton sought a departure from this administrative assessment on 10 December 2007. In support of her application, she pointed to the fact that [X] had special needs so far as orthodontic treatment was concerned; [Y] too had special educational needs, as she had recently been enrolled at in the International Baccalaureate program at [omitted] High School; that her own necessary expenses significantly reduced her capacity to provide financial support for the children; and, most importantly that the applicable assessment was not properly reflective of Mr Crosby’s earning capacity.
At this stage, it was Ms Charlton’s contention that Mr Crosby had the capacity to undertake a managerial role in the information technology industry and earn an annual salary of between $75,000.00 and $130,000.00. The catalyst for Ms Charlton’s application seems to have been, at least in part, some disclosures Mr Crosby made during an application made by him to the Port Adelaide Magistrate Court to have a domestic violence restraining order against him, in favour of the mother, discharged.
In addition, it was Ms Charlton’s understanding that Mr Crosby had recently undertaken some honorary offices, of a financial nature, for a number of public organisations, which in her contention, flew in the face of Mr Crosby’s position that he suffered some level of incapacity for work.
Ms Charlton was also concerned that Mr Crosby had disclosed to the Magistrates’ Court that he was studying [omitted], on a full time basis, through [university omitted]. Given that Mr Crosby already had tertiary qualifications and experience in the IT industry, Ms Charlton thought it unreasonable for Mr Crosby to pursue these studies rather than pursue some form of gainful employment.
The original domestic violence order, by which Mr Crosby was restrained from coming in to contact with Ms Charlton, was made on 2 February 2005, with Mr Crosby’s consent. Mr Crosby applied to discharge the order in April of 2007.
It was his evidence to the presiding magistrate concerned that he was actively seeking employment at the time but had been largely unsuccessful in his endeavours, in part because the domestic violence order precluding him from obtaining a police clearance, which was an essential prerequisite for many of the positions which he sought.
In his response to Ms Charlton’s application for a departure from the administrative assessment of child support, Mr Crosby categorised [X]’s orthodontic needs as largely cosmetic; he also asserted that [Y]’s attendance at [omitted] High School did not constitute any special educational need on her part.
More importantly, Mr Crosby argued that he provided considerable non-cash financial benefits to Ms Charlton and the children, as she retained control of the most of the parties’ jointly owned assets, which produced income. It was his position that since April of 2005, he had been searching for work, both in Adelaide and interstate.
Mr Crosby submitted that all his income had been properly declared to the Australian Taxation Office. It was his position that he was in a parlous financial position and reliant on loans from family and money borrowed on credit cards to survive, as he was not entitled to full unemployment benefits. He opposed that there be any change to the applicable administrative assessment of child support.
Ms Charlton’s application and Mr Crosby’s cross application were dealt with by Senior Case Officer P on 3 March 2008. The result was that the Senior Case Officer found that Mr Crosby was not fully utilising his earning capacity and, as such, there should be a departure from the administrative assessment of child support. Accordingly, from 21 January 2008 to 31 October 2008, Mr Crosby’s child support income was fixed in the sum of $85,000.00.
The most important factor, which led to this reassessment, was a concession made by Mr Crosby to the Senior Case Officer concerned, during the conference held on 4 February 2008, which appears in the relevant notice of decision as follows:
“Mr Crosby says that he is studying part-time as an external student and at conference, he said that he had full-time contracting work in Information Technology through a recruitment company. He said that he commenced work on 21 January 2008 and was being paid approximately $50 per hour. Ms Charlton believes that Mr Crosby would be earning more than $50 per hour but I do not have details of his employer and therefore am not able to confirm his precise income figure.
Mr Crosby said at conference that he had an agreement to work until the end of February and he did not know whether his employment would extend beyond that time. I have not been able to obtain further details from him and in the absence of any evidence to show that his employment has ceased, I am satisfied that his income is higher than is reflected in the assessment.”[11]
[11] See Notice of Decision of Senior Case Officer P dated 3 March 2008 being Exhibit PGC 4 to the father’s affidavit filed 13 March 2008.
Senior Case Officer P did however have access to Mr Crosby’s social security records. These showed that Mr Crosby was in receipt of Newstart Allowance from 23 December 2005 to 1 September 2006 and from 28 November 2006 to 29 May 2007. The Senior Case Officer also found that the aspect of the parties’ business, in which Mr Crosby was involved prior to their separation, was not profitable. In this regard the decision reads as follow:
“…taking into account the extended periods he [Mr Crosby] was on social security payments and the fact that he was self-employed in an unprofitable business prior to their separation, I do not find that he was failing to work despite ample opportunity to do so. Furthermore, as Mr Crosby was not working full-time at separation, I do not find that the requirements of the first criterion are satisfied. Therefore, I do not find that he had a greater earning capacity than was reflected in the assessment. However, as he commenced full-time employment on 21 January 2008, I am satisfied that he has demonstrated he has the capacity to work and that his income is higher than is reflected in the assessment.”
Both Mr Crosby and Ms Charlton objected to this assessment. In her objection, Ms Charlton apparently asserted that she believed that, given Mr Crosby’s skills in management and information technology, he may have been earning income from undeclared sources. The objections officer concerned felt unable to revolve this issue in the Change of Assessment process. Mr Crosby objected to the Senior Case Officer’s decision to set his child support income at $85,000.00.
The Objections Officer determined as follows:
“Information from the ATO shows that Mr Crosby’s taxable income as declared in his income tax returns has consistently been below $20,000 and , similarly to Ms Charlton’s income tax return, consists of director’s fees and a loss from the Charlton Crosby and Associates partnership.
However since January 21 2008 Mr Crosby has been contracting his services through his company at a contractor fee of $53.66 per hour excluding GST. As a contractor Mr Crosby would have certain business expenses that he would be entitled to claim against the income received. In addition, as a contractor Mr Crosby would not be paid for annual leave, sick leave or public holidays which would affect the total remuneration received.
Mr Crosby has confirmed that he is continuing to contract his services and was requested to provide information relating to the actual income and expenses in relation to his contract. At the date of this decision this information had not been provided.
However, I am satisfied that Mr Crosby is currently earning income at a rate above the income of $12,114 used in the assessment and to this extent the assessment is rendered unfair.”[12]
[12] See Details of Objection Decision dated 11 August 2008 being Exhibit B to the mother’s affidavit filed 30 October 2008.
The Objections Officer also considered the question of Mr Crosby’s income earning capacity, both in the context prior to and after the parties’ separation. The Objections Officer had access to the income tax returns for the parties’ company [E] Pty Ltd. This company had declared a loss, for taxation purposes, for each of the financial years between 2002 and 2005. In this context the Objections Officer determined that:
“It is extremely difficult to tell what hours Mr Crosby was working prior to the separation, however what is clear is that both he and Ms Charlton were running a loss business. In addition I am satisfied that Mr Crosby is currently working full time and earning more income than he was earning at the date of separation so I consider the first criterion for earning capacity [a parent does not work despite ample opportunity to do so] is unable to be established.”
Accordingly the Objections Officer concerned disallowed each of the party’s objections to the decision of Senior Case Officer P, which set Mr Crosby’s child support income at $85,000.00 for the period from
21 January to 31 October 2008. During this period, Ms Charlton’s child support income was $12,648 for the period from 21 January to
19 March; and $23,259 for the period from 20 March to 31 October. These figures were based on Ms Charlton’s reported income to the Australian Taxation Office.
This resulted in a child support assessment whereby Mr Crosby was assessed to pay a monthly amount of child support of $1,893.75. This amount reduced to $1,566.50 following [X]’s eighteenth birthday on [date omitted] 2008 and to $1,400.17 on 1 July 2008 when the formulaic calculation of child support was altered due to legislative amendment.
On 1 November 2008, the assessment reverted to the statutorily based minimum amount on the basis that Mr Crosby’s income was deemed to be $12,114.00, in the absence of a taxation return for the year ending 30 June 2007. Accordingly, for the period from 1 November 2008 to 19 June 2009, the monthly amount of child support payable was $28.25.
For the period from 20 June 2009 to [date omitted] 2009, the assessed monthly amount of child support increased to $713.67.[13] This was on the basis that Mr Crosby’s child support income was $51,435.00 and Ms Charlton’s was $23,887.00. Mr Crosby’s child support income is the same figure as appears on his Notice of Taxation Assessment for the financial year ending 30 June 2008.[14]
[13] See Exhibit O.
[14] See Exhibit M.
I have been provided with some of the documents which relate to
Mr Crosby’s financial affairs for the year in question. In particular, I have been provided with his own personal income tax return[15] and the taxation return for [S] Pty Ltd,[16] the company which nominally employs Mr Crosby but of which he is the sole director and shareholder. The former attributes an income of $25,685.00 for
Mr Crosby. The latter records receipt of $51,148.00 but claims expenses of $51,555.00 resulting in the company recording a modest loss.
[15] See Exhibit C to the father’s affidavit filed 15 June 2009.
[16] See Exhibit G.
Assessments of child support have issued until 19 September 2010. These are based on a child support income of $51,435.00 for
Mr Crosby and one of $19,637.00 for Ms Charlton. The monthly amount payable is initially $781.67 reducing to $618.50 following [Y]’s eighteenth birthday.[17]
[17] See Exhibit O.
Mr Crosby objected to these assessments on 27 May 2009.
Ms Charlton did not take part in the review process. The main thrust of Mr Crosby’s objection was that a proper consideration of
Ms Charlton’s financial position, when compared to his, rendered the current assessment unfair.
In particular, he pointed to the fact that Ms Charlton had received four real properties in the parties’ property settlement, which were subject to a combined mortgage of around $800,000.00. He queries how she was able to maintain such a level of borrowing given her modest declared level of income.
The review process was conducted by Senior Case Officer T, who handed down her decision on 27 July 2009.[18] Senior Case Officer T had access to Ms Charlton’s income tax returns for the years ending
30 June 2006; 30 June 2007; and 30 June 2008; which showed she had received a wage from her company ([M] Pty. Ltd.) of $27,500; $30,000; and $30,000; respectively.
[18] See Exhibit O.
Information disclosed to Ms T indicated that an annual amount of around $72,000 was required by Ms Charlton to service the various mortgage payments on the properties owned by her for the period from November 2008 to February 2009. Ms T accepted that rent received from two of the properties would be off-set against this sum however notwithstanding this fact she was of the view that it was more likely than not Ms Charlton had access to financial resources, which were not properly represented in the current assessment.
Mr Crosby sought to challenge the finding made by Senior Case Officer P regarding his taxable income for the financial year ending
30 June 2008 based on the information contained in the returns submitted by him for the year in question. However Senior Case Officer T was unwilling to act on this return alone without access to more specific documentation.
In her Notice of Decision Ms T wrote as follows:
“While I have found Reason 8 established with respect to
Ms Charlton’s financial resources, I am unable to make a determination about a change of assessment. This is because I must be satisfied of the quantum of both parents’ incomes in order to make a change to the assessment. I also consider the issue of the pending court proceedings adds a level of complexity to the case.”
For these reasons she reached the conclusion that the matter was too complex for determination by the Child Support Agency. Accordingly, she refused Mr Crosby’s application pursuant to section 98E of the Child Support (Assessment) Act 1989.
The Legal Principles Applicable
a)Court Ordered Departures from Administrative Assessments
The law related to court ordered departures from administrative assessments of child support is set out in the Child Support (Assessment) Act 1989 [the Assessment Act], in particular in Division 4 of Part V11 of the Act.
Pursuant to section 3 of the Assessment Act, the parents of children have the primary duty to maintain their children. This duty has priority over all other commitments a parent may have, other than the necessary commitments to enable the parent to support him or herself, or any other child that that parent may have a duty to maintain.
The overall objects of the Assessment Act are set out in section 4(2) and include the following:
a)that the level of financial support to be provided by parents for their children is determined according to their capacity to provide financial support and, in particular, that parents with a like capacity to provide financial support for their children should provide like amounts of financial support; and
b)that the level of financial support to be provided by parents for their children should be determined in accordance with the costs of children; and
c)that persons who provide ongoing daily care for children should be able to have the level of financial support to be provided for the children readily determined without the need to resort to court proceedings; and
d)that children share in changes in the standard of living of both their parents, whether or not they are living with both or either of them.
Pursuant to the provisions of Part VII of Division 4, in special circumstances, a parent may apply to the court to depart from an administrative assessment of child support. This particular division has some additional objects pertaining to it which are set out in section 114 as follows:
a)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
b)that parents share equitably in the support of their children.
As can be seen from these various objectives stipulated by the Legislature, one of the intentions of the child support scheme is that it should be standardised in the sense that its application is readily predictable to those affected by it and not dependent upon the application of any individualised judicial discretion, unless special circumstances can be demonstrated to exist in the case concerned. The practical underpinning of this objective is the statutorily based child support formula, which is to be administratively applied to the financial circumstances of the parents concerned.
The law relating to child support has recently been significantly amended by a number of pieces of interrelated legislation, one of which is the Child Support Legislation Amendment (Reform of the Child Support Scheme – New Formula and Other Measures) Act 2006 which, in part, changed the formulaic basis for the administrative calculation of child support.
The intent of the various new applicable formulae was said to be that they would be more reflective of the actual needs of children affected by the child support system, as they would be based on actual empirical research, as well as the capacity of their parents to pay such child support. The amendments concerned were also said to be fairer, as they provided more recognition of the various possible graduations in the division of parenting time between the parties to a child support assessment.
In his second reading speech regarding the new legislative regime, Mr Brough, the relevant minister at the time, said as follows:
“The new formula, on the other hand, will explicitly be based on the costs of children, as drawn from Australian research showing the real cost of children for the level of their parents’ income and the children’s ages. An ‘income shares’ approach will be used so both parents will have the same amount deducted as self-support, both parents income will be taken into account in establishing the costs of the children, and the resulting costs will be apportioned between the parents according to their share of the combined income.”[19]
These aspirations are recognised in section 4(2)(b) of the Assessment Act.
[19] See Hansard (House of Representatives) for Thursday, 14 September 2006 at page 1
The basis of the application of the formula remains the respective taxable income of each parent concerned. Doyle[20] has described the eight step application of the basic child formula as follows:
·Step 1 – Work out each parent’s taxable income for the last relevant year of income. This includes adjustments for other income components including net rental property losses and reportable fringe benefits. Deduct from this sum each parent’s self support amount, which is currently $18,808;
·Step 2 – Work out combined child support income by adding each parent’s child support income;
·Step 3 – Work out each parent’s income percentage for the child. This is each parent’s adjusted taxable income less the self support amount and less allowances for other relevant dependent children. It is regarded as the base level of income available to be contributed towards the support of the children concerned in the applicable assessment;
·Step 4 – Work out each parent’s percentage care for the children concerned. This relates to the number of nights each year a child is the care of each of his or her parents and represents the direct costs a parent is taken to have contributed to any child concerned. In this particular case as neither [Y] nor [Z] currently spend any time at all with their father, his percentage level of care is 0% and Ms Charlton’s is 100%;
·Step 5 – Work out each parent’s cost percentage care for the children concerned. This relates to a stepped level of care for any child affected by the assessment concerned. It does not relate to the specific number of nights the children spend with each parent. A fixed percentage of 24% applies between 14 and 35% of nights. From 35% the cost percentage increases by 2% for every 1% of nights until it reaches 65% of nights. Again because he currently spends no time with either [Y] and [Z], Mr Crosby’s cost percentage is 0%;
·Step 6 – Work out each parent’s child support percentage for the children concerned. This represents the percentage share of the costs that each parent is required to meet based on their share of combined income after deducting care provided directly to the children concerned;
·Step 7 – Work out the costs of the children concerned by reference to the statutory tables contained in section 55G of the Act. These figures are up-dated annually by reference to the Male All Income Average Weekly Earnings Trend published by the Australian Bureau of Statistics [MTAWE]. The cost of children is referenced to the ages of the children concerned and the income bracket into which their parents’ combined child support income falls.[21]
·Step 8 – Work out the child support payable. This is done by multiplying the parent’s child support percentage by the statutorily based costs of the child.
[20] Bruce Doyle: Complications and Intricacies of Child Support Post 2008 Reforms Sixth Annual Family Law Summit Brisbane June 2009.
[21] The current Child Support Assessment ascribes a cost for both [Y] and [Z] of $4,949.00 each based on a combined child support income of $37,706 [see Exhibit O].
Given the circumstances of the parties concerned, particularly the absence of other child support assessments pertaining to them and neither of them having other children dependent upon them, the basic formula applies in this case.
It is the clear intention of the legislature that, given the specificity and comprehensiveness of the formula, a court such as this one should depart from its administratively assessed application only in special or exceptional circumstances. Obviously, given the centrality of each parent’s taxable income to the application of the formula, it (the formula) will work most transparently and effectively if those incomes are readily identifiable and able to be calculated.
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.[22] The formula is not to be departed from unless “special circumstances” exist.
[22] See section 38 of the Act
Section 116 of the Assessment Act sets out the circumstances in which either a carer of a child or a liable parent may apply to the court for departure from an administrative assessment. The circumstances include the following:
·The Registrar of the Agency has declined to make a determination pursuant to section 98E of the Assessment Act;
·A liable parent or a carer has an application pending in the court and the court is satisfied that it would be in the interests of all concerned that a departure order be made.
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.[23]
[23] See McGuinness & Cowie [2002] Fam CA 461
The provisions of section 117 of the Child Support (Assessment) Act 1989 empower a court to make an order for departure from an administrative assessment of child support in special circumstances. Section 117(1) provides as follows:
Where:
(a)application is made to a court having jurisdiction under this Act for an order under this Division in relation to a child in the special circumstances of the case; and
(b)the court is satisfied:
(i)that one or more of the grounds for departure mentioned in subsection (2) exists or exist; and
(ii)that it would be:
1. just and equitable as regards the child, the carer entitled to child support and the liable parent; and
2. otherwise proper;
to make a particular order under this Division;
the court may make the order.
Accordingly, the section provides three specific pre-conditions for the making of a departure order. They are as follows:
“(i)an applicant must establish one or more of the grounds for departure as specified in section 117(2);
(ii)thereafter the court must be satisfied that it is just and equitable to make a departure order. In so doing, the court must consider the matters set out in section 117(4);
(iii)the court must then be satisfied that it is otherwise proper to make a departure order and in so doing must consider the matters set out in section 117(5).”
If the three conditions as set out in section 117(1) of the Assessment Act are satisfied then the court may make the departure order sought. The proviso to any departure application is that special circumstances should exist.
In Savery & Savery[24] His Honour Justice Kay held that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases”. In the Marriage of Gyselman[25], the Full Court of the Family Court said as follows of the phrase “special circumstances”:
“Whilst it is not possible to find with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something that is special or out of the ordinary. That is, the intention of the legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases.”[26]
[24] Savery & Savery (1990) FLC 92-131
[25] In the Marriage ofGyselman (1992) 15 Fam LR 219
[26] (supra) at page 225
In Gyselman[27] the Full Court of the Family Court as follows:
“As we have already indicated, the exercise under section 117 involves three steps. The first, which we have already examined, is whether one or more of the grounds in subsection 2 has been made out. The legislation then requires the court to consider whether any proposed order is ‘just and equitable’ and ‘otherwise proper’.”
[27] In theMarriage ofGyselman (supra) at 240
In this particular case each of the parties concerned seeks a departure order, although for different periods of time. Both would seem to rely on the provisions of section 117(2)(c) of the Assessment Act which reads as follows:
(c)that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to the administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child:
(i)because of the income, earning capacity, property and financial resources of the child; or
(ia)because of the income, property and financial resources of either parent; or
(ib) because of the earning capacity of either parent; or
(ii) because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975 or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child;
Mr Crosby points to what he asserts are special circumstances in this case arising from the recent settlement in the District Court, which resulted in Ms Charlton receiving more of the parties’ capital assets than him. It is also his position that Ms Charlton’s financial position, particularly the fact that she continues to operate her own business and control the negatively geared rental properties, are matters not properly reflected in the various administrative assessments in question.
In addition, so far as the assessments, which are predicated on the basis that his child support income is $85,000.00, it is Mr Crosby’s case that this assumption is incorrect and has resulted in assessments which are unjust and inequitable, so far as he is concerned.
Ms Charlton’s case rests primarily on section 117(2)(c)(ib), which deals with earning capacity. It is her case that Mr Crosby has either concealed a stream of income from her or the Child Support Agency or is not properly utilising his capacity to earn a comfortable income in the IT industry, given his level of qualifications and amount of prior managerial experience.
Cases regarding a parent’s capacity to earn are complex. The Ministerial Taskforce on Child Support,[28] the recommendations of which formed the basis of the currently applicable legislation, distinguished between two categories of earning cases – “capacity to earn” cases and “capacity to pay” cases.
[28] In the Best Interests of Children – Reforming the Child Support Scheme – Report of the Ministerial Taskforce on Child Support - published 14 June 2005
In the former case, it is accepted that the parent concerned’s income is as stated by him or her in the child support assessment process but that parent has the capacity or ability to earn a higher income. As a consequence, in order to meet both the financial needs of any child concerned and satisfy considerations of overall fairness, it may be appropriate to levy child support on a nominated higher income than that currently being actually earned by the parent in question.
In the latter case, the issue in question is usually whether the parent concerned’s child support income actually reflects what that parent earns. In this category of case arguments often arise, regarding income minimisation schemes, such as salary sacrifice or the channelling of income through trusts or companies.
The legislative provisions regarding “capacity to earn” cases have been significantly modified as a result of the report of the Ministerial Taskforce on Child Support. The Taskforce recommended that a parent’s income should only be increased on the basis that that parent had a higher capacity to earn income if three criteria were satisfied:
·The parent was unwilling to work despite having ample opportunity to do so or had reduced his or her level of normal full-time work below that which was normal in the industry in which he or she was employed;
·The decision of that parent to work less hours was not based on caring responsibilities or the state of health of that parent;
·On the balance of probabilities, a major purpose for the parent’s decision, in respect of his or her employment, was to affect the level of child support assessed.
The legislature has adopted these recommendations. Section 117(4) of the Child Support (Assessment) Act has been amended and subsections (7A) and (7B) have been inserted. The aim of the new legislation is to distinguish between parents who change their income earning patterns for legitimate reasons and those who do so to escape or reduce their child support liabilities.
The relevant sections of the explanatory memorandum indicate as follows:
“The new method of assessment is intended to be flexible enough to allow parents whose earning capacity has been assessed for child support purposes to make decisions about their work and life, for example, choosing to pursue a different career or reducing work hours due to caring responsibilities, in the same way as parents in intact families. However, it is also important to take account of whether a parent, either payer or payee, whose earning capacity is assessed for child support purposes, makes changes to his or her work, where a major purpose of those changes was to affect the assessment of his or her liability. Therefore, the Schedule introduces provisions that allow a court to make an order that a parent has a greater capacity to earn than he or she is presently exercising if the parent has not demonstrated that affecting his or her assessment for child support was not a major purpose of that decision. That is, the court may make an order that a parent has a capacity to earn greater than he or she is presently exercising if the parent cannot show that he or she had an appropriate reason for his or her decision about work changes.”[29]
[29] See explanatory memorandum – Reform of the Child Support Scheme (Initial Measures) Bill 2006 at page 8
In determining whether it is just and equitable to depart from an administrative assessment of child support, the court is required to have regard to the income, property and financial resources of each parent [section 117(4)(d)] and the earning capacity of each parent, who is a party to the proceedings [section 117(4)(da)].
Pursuant to sub-section 7(A) the court is required to have regard to the capacity of parents to derive income, including any assets, under the control of or held for the benefit of a parent that do not produce but are capable of producing income for that parent.
Sub-section 7(B) provides the relevant criteria, to which the court must have regard in determining whether parent’s earning capacity is greater than that which is reflected in his or her income for the purposes of the child support assessment scheme. The section is crucial in “capacity to earn” cases and reads as follows:
“(7B) In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:
(a) one or more of the following applies:
(i) the parent does not work despite ample opportunity to do so;
(ii) the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full‑time work for the occupation or industry in which the parent is employed or otherwise engaged;
(iii) the parent has changed his or her occupation, industry or working pattern; and
(b)the parent’s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:
(i) the parent’s caring responsibilities; or
(ii) the parent’s state of health; and
(c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.”
Riethmuller FM has considered the new implications of the new provisions in the context of earning capacity cases.[30] He proposes a four step process as follows:
·Step 1 – Does a person have a greater earning capacity?
·Step 2 – Does the earning capacity fall within section 117(7B)(a)?
·Step 3 – Are the lower earnings justified?
·Step 4 – Has the payer proved that avoidance is not a major purpose?
[30] How to decide earning capacity cases and more … : A review of the 2006 amendments to the child support scheme – paper delivered by Riethmuller FM on 16 July 2008
b) Departures involving payment of child in a lump sum
Division 5 of Part VII of the Assessment Act provides mechanisms for the payment of child support in a form other than by way of periodic amounts.
The intent of the Assessment Act, reflected in its basic structure, is that it should provide a mechanism for calculating the amount of financial support to be provided for dependant children on a regular and periodic basis, rather than in some other form, such as a one-of payment or by way of transfer of property.
The rational for such methodology being that the financial circumstances of parents are liable to change over time and children are entitled to benefit from any improvement in their parent’s finances, particularly improvements to those circumstances [Assessment Act, section 4(2)(b)].
It is also potentially unfair to penalise a parent in the event that his/her financial circumstances deteriorate markedly in future for no fault attributable to him/her, such as an illness or incapacity, which severely impacts upon earning capacity, if any lump sum payment was calculated on the basis of an ongoing ability to earn a large income.
In addition, it is not uncommon for the living arrangements of children to change markedly over time. Children may move to live from one parent to the other or their care may become shared, whereas in the past it was concentrated more in one parent.
Accordingly, by means of a process of rolling and periodic assessments, the application of the child support formula has the capacity to adapt to the changing circumstances of those who are affected by it, be they liable parent; caring parent; or financially dependant child.
For this fundamental reason, the legislatively mandated preference is that child support should be provided in a periodic form, following its administrative assessment by the Child Support Agency.
A further benefit of such an approach is that it will avoid anomalies in the calculation of child support between families, which have similar financial circumstances. The rationale being that families whose parents earn similar income and care for their children in comparable ways will have child support calculated in the same manner.
For obvious reasons, the provision of child support in a lump sum has the potential to create such anomalies. In addition, the longer the period of time to which a lump sum payment of child support is calculated to relate to, the greater is the potential for unfairness to one of the affected parties concerned by reason of some significant change of circumstances.
In Bendeich & Bendeich[31] Mushin J said that:
“The rationale underlying the general approach of the court was that the longer a lump sum order operates, the greater the chance of change in circumstances necessitating a variation of that order, thereby making the order unjust. Those changed circumstances might be in relation to the liable parent, custodial parent or the children. Incomes may increase or decrease and children may change their living arrangements from one parent to another.”
[31] Bendeich & Bendeich (1993) FLC 92-355
Section 122 of the Assessment Act is the starting point in respect of potential lump sums of child support. It provides as follows:
“This division Cases in relation to which Division applies
This Division applies where a carer entitled to child support wants a liable parent to provide, or a liable parent wants to provide, child support for a child otherwise than in the form of periodic amounts paid to the carer entitled to child support.”
Division 5, in common with division 4 of the Assessment Act, which deals with general departures, is subject to two specific objects [section 121] namely:
·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 children.
Clearly, the preference is that child support should be provided in a periodic manner, so that the day to day financial needs of children can be satisfied regularly, as they arise, from their parent’s respective available income, again as that income fluctuates from time to time.
Section 122 recognises that, in some circumstances, it may be appropriate to substitute the payment of child support in some other manner than in a periodic form, either by a lump sump payment or in some other way such as the payment of school fees.
It is also theoretically open to a liable parent to make application to provide for the provision of financial support to a dependant child in some other way, including by the transfer of property. Such a situation may apply to a parent who is “income poor, but asset rich”.
In my view, Division 5 is a remedial division providing alternative mechanisms for the provision of period child support, which should be applied only if the circumstances of the case concerned are such that a periodic assessment will not satisfy the overall objectives of the Assessment Act, particularly that the provision of child support should depend upon the overall capacity of the parents concerned to provide financial support; children should share in changes in the standards of living of both their parents; and the scheme of assessing child support should be transparent, in that the parties concerned should not be compelled to embark upon court proceedings to have it ascertained [Assessment Act section 4].
Section 123 provides two prerequisites for an application for a payment of a lump sum of child support. Firstly, there must be an administrative assessment of child support in force. Secondly, any departure application must have been determined prior [section 123(2)].
Section 124 of the Assessment Act is the specific machinery provision dealing with lump sum child support payments. Before making such an order, the court must be satisfied as follows:
·It is just and equitable so far as the child is concerned; the liable parent concerned; and the carer concerned; to make such an order;
·It is otherwise proper to make such an order [see section 124(1)(b)].
In determining such applications, the court must have regard to:
·Any administrative assessment of child support in force;
·Any departure order [see section 124(2)].
In determining whether it would be just and equitable to make a lump sum order, the court is directed to have regard to the matters contained in section 117 of the Assessment Act, including 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, including the manner in which the parents concerned expect the child to be educated;
·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, particularly the capacity of any parent concerned to derive an income. This aspect is specifically qualified by section 117(7B) of the Act.
Accordingly, applications for lump sum payment of child support are dependant upon the same considerations which apply to departure applications. In particular, in the circumstances of the current case, the criteria relevant to income earning cases are germane.
Division 8 of Part VII of the Assessment Act provides the court with powers to utilise in exercising its jurisdiction under the Act. These powers are described as “broad”, by the heading to the division itself [section 140A].
They include the following:
·Order payment of a lump sum, whether in one amount or by instalments;
·Order payment of a weekly, monthly, yearly or otherwise of periodic amounts;
·Order that a specified transfer of property be made;
·Order payment of a secured amount. [section 141]
Much jurisprudential controversy exists as to the nature of the power conferred on the court by Part VII division 5 of the Assessment Act. The question being whether the division empowers the court independently to make an order for lump sum payment, irrespective of the provisions of division 4 dealing with departures generally or whether the division limits the power to the substitution of a lump sum payment in lieu of assessed periodic payments.
It is generally considered that the correct approach to the division is that set out by Fogarty J (with whom Purvis J) agreed, provided in Lightfoot & Hampson.[32] I accept that I am bound by this decision.[33] Fogarty J considered that “Division 5 of Part VII … is, subject only to the qualifications referred to later, concerned with changes in the form of the assessment or departure order and not with the quantum of the liability.”[34]
[32] See Lightfoot & Hampson (1996) FLC 92-663
[33] See Gingham & Gingham [2007] FMCAfam 254 at paragraph 31 per Wilson FM
[34] Supra at 82, 849
Accordingly, in the case before me, I must first deal with
Ms Charlton’s application for departure from administrative assessment, which she brings pursuant to Division 4 and fix at least some notional regime for periodic payment of child support for the children concerned before I can move to the provisions of Division 5 and substitute a lump sum payment for such periodic regime.
Applying the applicable legal principles to the evidence
a) Should there be a departure from the applicable administrative assessments for the period from 10 June 2006 until 20 January 2008
The former date, listed in the heading above, is taken from
Ms Charlton’s amended application filed 16 June 2009. The second date is the date on which the various assessments, made by administrative departure commenced, which fixed Mr Crosby’s child support income at $85,000.00. It is also a period which can be roughly described as being prior to the de-facto property orders.
I appreciate that there is some artificiality arising from this approach. In the period in question, there were a number of assessments. However, the net result of those assessments is that Mr Crosby was assessed to pay very little child support.
I also appreciate that I am ordinarily required to follow the three stage process, described in Gyselman, for each support year in respect of which a departure order is sought.[90] In the context of the factual situation arising in this case, such an approach seems to be inherently cumbersome.
[90] See In the Marriage of Hides & Hatton (1997) FLC 92-759
There is a further difficulty arising in this case, to which neither of the parties has eluded. It concerns whether Ms Charlton requires the court’s leave to proceed with some portions of her application.
Ms Charlton commenced her proceedings on 21 February 2008. Pursuant to section 111(1) of the Assessment Act, a party to a child support assessment may only apply for a departure order, pursuant to section 118, in respect of “a day in a child support, being a day that is more than eighteen months, and less than seven years, earlier than the day on which the application under this section is made” with the leave of the court.
On my calculations, the period of eighteen months prior to
Ms Charlton’s application is completed on 20 August 2006, which overlaps with a portion of the relevant assessment period. As
Ms Charlton has not sought leave to apply with this period, no such leave has been granted.
Again, in the overall context of this case, I do not think that this is a material issue. Essentially, for the reasons which will follow, I do not think that Ms Charlton has demonstrated that sufficiently special circumstances exist to justify a departure from the assessments in question for the whole of the period specified above. Nor, do I think it would be just and equitable for there to be such a departure. Accordingly, the period for which leave is required is brief and in any event the absence of leave does not effect the overall outcome.
As I have indicated, in my view, one of the intents of the child support scheme is that it should respond flexibly and responsibly to the financial circumstances of the parties concerned, as they change from time to time.
This flexibility is required because the income of the parents can change, as their role in the workforce changes. Parents are promoted; they are made redundant; or their hours of work are reduced, in times of economic recession. These exigencies require the application of the formula to change.
Essentially, this flexibility and responsiveness is required because child support is intended to provide financial maintenance for children in the here and now. As such, the system is not generally supportive of it being subject to a high degree of retrospectivity.
I think it is clearly the case that the catalyst for Ms Charlton’s application was the fact that she knew Mr Crosby had recently come into funds, as a result of the settlement of the de-facto property proceedings between the parties. Her application was not as a result of any other change in Mr Crosby’s circumstances, such that she had discovered that he had had access to another stream of income in the past or had been working surreptitiously, although she has had her suspicions of this.
In my view, I must be careful not to unduly bowdlerise the application of the child support formula, which is designed to apply essentially to the income of the parties concerned to any applicable assessment, particularly as that income changes from time to time.
I do not think it is in keeping with the ethos of the system to allow a departure in the circumstances of this case, where it is said that the existence of the special circumstances required rest essentially on the fact that Mr Crosby received a significant flow of capital, which can only be regarded as being independent of his income, during the period in question and must be regarded as unrelated to any question of his capacity to earn in that period.
Ms Charlton has her suspicions that Mr Crosby was disinclined to work in the period following the parties separation. I share those suspicions. It is also her case that it is probable that Mr Crosby was working clandestinely during the period in question.
To deal with the second issue first. In my view, there is insufficient evidence to establish that Mr Crosby was working secretly.
Ms Charlton cannot point to any evidence, which supports her contention. In particular, she cannot demonstrate that Mr Crosby maintained a lifestyle, which could not have been supported by his professed income.
Although the medical evidence, relating to Mr Crosby’s alleged incapacity to work, is scant, other evidence provided to the various review officers concerned indicate that Mr Crosby was unemployed for significant periods following the parties separation. Accordingly, I do not think that this case can be characterised as a “capacity to pay” for the period in question.
Accordingly, if Ms Charlton is to be successful, she must demonstrate that Mr Crosby had a capacity to earn a higher income in the period involved. Accordingly, this engages the considerations contained in section 117(7B) of the Assessment Act.
The difficulty arising in the case is that it is impossible for me to ascertain what was Mr Crosby’s level of income in the period prior to the parties’ separation. During this period, he was self employed in the parties’ business. The business appears to have been a successful one, but following separation Mr Crosby was not able to transplant himself into a similar business, without the cooperation of Ms Charlton, which was not forthcoming.
In these circumstances, Ms Charlton’s case rests on the assumption that Mr Crosby should have been able to obtain employment, and some sort of IT consultant, in private industry because of his previous experience and qualifications.
In this case, I do not think that Ms Charlton can establish that
Mr Crosby declined to work in this field notwithstanding that he had “ample opportunity to do so” [section 117(7B)(a)(i)].
I accept that Mr Crosby has qualifications and experience in IT but, as I have indicated earlier, my impression of him was not that he was some kind of dynamo in this field, either before or after the parties’ separation.
To a large degree, it was not Mr Crosby’s decision to change his previous mode of employment, particularly his pattern of work. This occurred because of the parties’ separation and the fact that
Ms Charlton remained in control of the parties’ business. Accordingly, in my view, self employment for Mr Crosby posed significant logistical problems, in the period post the parties’ separation.
Ample is defined as meaning “plentiful, abundant, extensive, enough or more than enough”[91]. In the overall evidential context of this case, I do not think that Mr Crosby had ample opportunities to work in the period in question. In my view, the evidence indicates that Mr Crosby struggled to find employment.
[91] See The Australian Oxford Dictionary
I agree that it is also clear that Mr Crosby was not well motivated to provide financial support to Ms Charlton. However, I do not think that she can demonstrate that the manner in which Mr Crosby led his life, in the period post the parties’ separation, was solely to avoid his financial obligations towards the children, although this motivation played a part in the manner in which he conducted his affairs. Mr Crosby’s situation was more complicated than that.
Accordingly, I do not think that Ms Charlton has satisfied each of the three steps, as set out in Gyselman, each of which is an essential prerequisite for departure. However, even if I am incorrect in my analysis, I also think it would not be just and equitable, for there to be such a departure because of the terms and conditions of the settlement of the parties’ de-facto property proceedings. For those reasons, I do not believe that there should be a departure from the various administrative assessments in place for the period in question.
b) Should there be a departure from the applicable administrative assessments for the period from 20 January 2008 onwards
Both parties seek a departure for this period but for different reasons. Mr Crosby objects in respect of the period when his child support income was assessed as being $85,000.00. The ground he relies on is that this level of income does not properly reflect his financial circumstances.
Ms Charlton is happy to accept a level of remuneration for Mr Crosby of $85,000.00 per annum, as the proper basis for the calculation of his child support liability. As such, she seeks to depart from later assessments, made in respect of periods after 31 October 2008, which have set Mr Crosby’s child support income at lesser amounts.
Since the early part of 2008, I am satisfied that the evidence indicates that Mr Crosby has been in more or less regular employment, notwithstanding his previous travails. In this regard, I am satisfied that the commencement of his relationship with [C] marks a turning point in his professional career.
The more difficult aspect of the case is in the court fixing some level of income to which it would be fair to attach a child support assessment. In my view, the difficulty largely arises because of the obduracy of
Mr Crosby and his efforts to make his financial situation as opaque as possible. As previously indicated, there are likely to be perils for any payer of child support, who embarks upon such a course of conduct.
The basis of the child support assessment of 3 March 2008 was
Mr Crosby’s own disclosures, apparently against self interest, to the senior case officer concerned. In my assessment, the evidence regarding Mr Crosby’s financial circumstances, in the period since, do not bear out a continuation of an annual income, for Mr Crosby, of around $85,000.00 per annum. In my view it would be both imprudent and potential unfair to Mr Crosby if such a figure was adopted, as the basis for any departure from administrative assessment.
But clearly Mr Crosby has been working, through the agency of his corporate alter ego [S] Pty Ltd, since early January 2008 and continues to do so, albeit with some breaks from time to time, as contracts end and fresh ones materialise.
As such, it is both fair and proper that some level of income be attributed to Mr Crosby, for the periods in question and on going. Because otherwise, if the court were to rely on Mr Crosby’s self disclosure in this regard, it is likely to lead to an inaccurate or improper level of income being used as the basis of child support assessments.
As previously indicated, I am satisfied that Mr Crosby is well aware of the potential benefits available to him arising from his self employment. One of these benefits is that it is difficult for an outside agency to calculate accurately his level of receipts from such employment and make some appropriate allowance of the level of legitimate expense related to the earning of monies received by him.
Mr Crosby’s evidence about his employment by [S] Pty Ltd was unsatisfactory. As such I do not believe that I am able to make any concluded finding of fact as to the actual sums earned by the company (and so Mr Crosby) in the period since January of 2008.
It is also my finding that although Mr Crosby cannot realistically be described or regarded as some kind of IT “wizard”, he does have both tertiary qualifications and experience in the field. In addition, as his own evidence indicates, a number of agencies are willing to engage his services in his area of expertise.
Essentially I find that Mr Crosby is employable but is likely to attempt to both underplay his level of employability and conceal, if he can, what is his actual level of remuneration. The underpinning of this finding is that I am satisfied that, because of his animosity to
Ms Charlton, he is determined to avoid paying her any child support, if he can.
Accordingly this case has aspects of both capacity to pay cases, in the sense that it is unclear what level of income is channelled through [S] Pty Ltd, and capacity to earn cases in the sense that Mr Crosby has a capacity to earn a level of income, which will not necessarily be reflected in any income tax returns which he files.
I find that Mr Crosby is not likely to be proactive in attempting to find work for himself, say as a PAYG taxpayer, if it means that any income received by him is likely to be readily amenable to a child support assessment. As such, it is likely to remain his preference to be in self employment through the use of an agency such as his company [S] Pty Ltd. It suiting Mr Crosby to be able to obfuscate about his actual level of income wherever possible.
I have not been provided with any independent and so objective evidence of what are the likely employment prospects of a person in his early fifties, in a time of some economic turbulence, in the
IT industry. This state of affairs makes it difficult for me to grapple with the provisions of section 117(7B) of the Assessment Act. However, given the onus residing with a person seeking to depart from a child support assessment to be frank about his or her financial circumstances, I regard the onus as being on Mr Crosby to provide this evidence.
As such, in the overall context of this case, I am prepared to find that Mr Crosby does not work to his full potential, despite having ample opportunity to do so. I reach this conclusion because Mr Crosby has not chosen to call any specific evidence to refute Ms Charlton’s assertions in this respect and he himself has previously conceded an ability to earn around $50.00 per hour or up to $1000.00 per week.
I accept that Mr Crosby has had some health issues in the past, although these difficulties have not been fleshed out by him with any degree of precision by the provision of up to date or comprehensive medical material. He has not provided any evidence to refute the proposition that he is not currently capable of working a full time week of between 35 and 40 hours per week. In addition I have not been provided with any evidence to suggest that this is not the norm in the IT industry.
In these circumstances, Mr Crosby is not in a position to assert that he is disqualified from full time work, either because of his own health or his responsibility to care for another person. In addition, I have no difficulty in reaching the conclusion that one of the major motivations, in respect of how Mr Crosby has chosen to arrange his working and financial affairs, since January of 2008, is to avoid or reduce his level of liability for child support.
Accordingly, I have reached the conclusion that it has been established that the assessments of child support, from 29 January 2008 onwards do not properly reflect the financial circumstances of Mr Crosby, in the sense that they are not based upon either his actual level of income or his capacity to earn an income.
In addition, I have no difficulty in reaching the conclusion that special circumstance exist which justify a departure from those administrative assessments of child support. This is most certainly a case which “falls outside of the ordinary run of cases”.
In my view it is appropriate that a level of child support income of $50,000.00 per annum be attributed to Mr Crosby for the period from 29 January 2008 onwards. I appreciate this must necessarily be something of an imprecise exercise. I reach this sum by attributing an income of around $1,000.00 per week to him, which is based on allowing him to work a minimum of twenty hours per week, at an hourly rate of $50.00.
I acknowledge that this is likely to be viewed as a conservative approach from Ms Charlton’s perspective, particularly given the recent gross income figures for [S] Pty Ltd, which Mr Crosby has provided, albeit that those figures have been hedged with all manner of qualifications and provisos by him. However, in my view, it is likely to be both prudent and equitable to take such a conservative approach.
Having considered the matters in section 117(4) of the Assessment Act, particularly the duty incumbent on Mr Crosby to maintain the children concerned and his overall earning capacity, I am also satisfied that it would be just and equitable to depart from the currently applicable administrative assessments of child support. As I have already pointed out, since the parties separated, the responsibility for providing financially for [X], [Y] and [Z] has fallen exclusively on Ms Charlton. This is unfair.
I also have no difficulty in reaching the conclusion that it is otherwise proper for the court to intervene and recalibrate the level of financial support which Mr Crosby is liable to provide for the children. This leads to the next relevant consideration. For how long should the court determine that there should be such a departure from the application of the strict formula to the parties’ circumstances, given that the longer the period involved the greater is the potential for anomalies to arise, particularly if there is any radical change in the financial circumstances of either Mr Crosby or Ms Charlton?
The child support period commencing 21 January 2008 can be broken into three components, depending on the ages of the children concerned. The first component ends on [date omitted] 2008, with [X]’s majority; the second ends on [date omitted] 2010 with [Y]’s majority; and the third ends on [date omitted] 2014, when [Z] attains his eighteenth birthday.
Clearly the scope for injustice being occasioned to Mr Crosby between now and April 2010 is so slight that it should be disregarded. In addition, I have come to the conclusion that, in all the circumstances of this case, particularly Mr Crosby’s likely ongoing resistance to paying child support, it is appropriate that any departure should encompass the remaining years in which Mr Crosby will be liable to pay child support for [Z]. I regard it as inherently improbable that [Z] will become financially self-supporting prior to him becoming eighteen years of age or that he will go and live with his father.
Bearing in mind the applicable child support considerations, particularly that Mr Crosby has provided and will provide no level of care to any of the children concerned in the relevant period and acting on the blunt attribution of a child support income of around $50,000.00 to Mr Crosby and one of around $40,000.00 to Ms Charlton, I propose the following departures from the applicable and future administrative assessments of child support:
| Period of Calculation | Number of Children | Annual Amount of Child Support | Weekly Amount of Child Support | Number of Weeks in Period | Total Amount of Child Support |
| 21 January 2008 to [date omitted] 2008 | three | $9,594.00 | $184.50 | 22 | $4,059.00 |
| [date omitted] to [date omitted] 2010 | two | $8,684.00 | $167.00 | 98 | $16,366.00 |
| [date omitted] 2010 to [date omitted] 2014 | one | $6,860.00 | $132.00 | 243 | $32,076.00 |
These calculations are necessarily somewhat “rule of thumb”. This must be the case given the imprecision surrounding both parties’ actual level of income, which makes the exact application of the child support formula, the steps of which are set out at paragraph 116 (supra), impossible to achieve, in their case.
However, as previously indicated, one of the objects of the current child support regime is that the level of financial support, to be provided by parents for their children, should be determined by reference to the actual costs of caring for such children. These costs are determined objectively through independent survey commissioned by government at regular intervals [see Assessment Act at section 4(2)(b)].
Accordingly, the Child Support Agency regularly publishes tables of the costs of children for each year. These costs are tabulated by reference to the combined income of parents.
In 2008, the cost of supporting three children, were the parents concerned had a combined income of around $82,000.00 was $21,355.00. In 2009, the cost of supporting two children, whose parents combined income fell into the same band was $18,903.00. In 2010, the figure for one child was $15,605.00.
Obviously, these sums are to be distributed between both parents, according to the level of their respective incomes and the amount of care provided for the children concerned. In this case, I utilise these figures to ensure that my calculations remain in line with the overall ethos of the applicable legislation. I am satisfied that they do.
This approach results in a total amount of child support payable, in respect of the period in which I have determined there should be a departure, of $52,501.00. I determine that this is a fair and proper determination of child support, given the overall circumstances of this case as I have found them.
c) Should the departure take the form of a lump sum payment?
For the reasons already provided, I have reached the regrettable conclusion that Mr Crosby is a person who in the past has neglected and refused to meet his obligations to pay child support and is likely to do so in future. I would go so far as to say that he is likely to do everything within his power to avoid paying child support. Given his preferred mode of employment, he has much scope to arrange his affairs to this end.
In my view, having reviewed a number of the applicable cases, the poor attitude of Mr Crosby to paying child support is by far the most significant factor which militates in favour of the various departure orders taking the form of a lump sum payment, rather than being paid periodically. I have no confidence that Mr Crosby will ever adhere to a voluntary regime of periodic payments.
I also consider it unlikely that there will be any major change, in the parties’ circumstances, between now and the end of 2014, when [Z] will turn eighteen years of age. On balance, it seems more likely than not that Ms Charlton will continue with her mode of employment, which will provide her with a moderate level of income but she will be liable for the multitude of expenses which will arise from educating and supporting [Z] in a middle income family, which places great emphasis on children attaining their full potential at school.
It also seems more likely than not that Mr Crosby, a person in his early fifties with expertise and qualifications in IT, will continue to work as a consultant in this field. As such, I would expect his prospects to be likely to improve rather than deteriorate, if he is prepared to devote himself to his business. Certainly, I have not been provided with any compelling evidence to suggest his health is likely to decline markedly in the medium term.
I appreciate that four years is a lengthy period of time and, as such, it is generally imprudent for one to attempt to prognosticate for such a period. However, too a large extent, Mr Crosby’s recalcitrant attitude towards the paying of child support has brought this situation on his own head. His behaviour and attitude has left the court with no realistic alternatives but to apply the somewhat blunt instruments of lump sum departures to his circumstances.
In the overall circumstances of this case, I do not consider that there is an unacceptable risk that a lump sum departure, for a period in excess of four years, will lead to an unjust or anomalous situation arising because of a change in the financial positions of either of the parties.
To the contrary, I have reached the conclusion that the provision of child support in a lump sum to Ms Charlton is the only available means by which Mr Crosby is likely to ever share equitably in the financial support of the children concerned.
The overarching objective of lump sum departure payments is to provide the court with a mechanism to ensure that children have their proper needs met from their parents’ income, earning capacity, property and financial resources and that parents share equitably in providing support for their children [Assessment Act: section 121].
Up to this stage, the parties have not shared equitably in providing for [X], [Y] or [Z]. The responsibility has resided solely in Ms Charlton. Mr Crosby has both an income earning capacity and property to satisfy a lump sum payment. I am satisfied it is both just and equitable and otherwise proper to make such an order.
For that reason, I propose making orders that will see the departures from the current and future assessments of child support, as I have determined them, taking the form of a lump sum, which will be paid from the monies currently injuncted.
In her application Ms Charlton sought a departure in a sum of $120,926.00. She proposed discounting this sum to $100,000.00 to reflect the benefits of capitalisation. I have calculated a lesser sum, admittedly in respect of a shorter period than was sought by
Ms Charlton.
A significant component of this sum represents overdue payments. As such, it is not in my view appropriate to discount this sum. Nor do I propose to discount the sum representing future payments, given the overall circumstances of this case.
The order however needs to take into account the amounts of child support paid by Mr Crosby, largely as a result of garnishment, in the period since January 2008. I calculate this sum at around $6,273.29.[92]
[92] See annexure D to Mr Crosby’s affidavit filed 15 June 2009
In those circumstances, I propose a lump sum departure order in the sum of $46,300.00. It is not appropriate that I make any provision for late payment penalties. In addition, it is not appropriate that this sum be set off against future child support assessments.
d) Adult child maintenance
[X] has only recently turned 18. He went straight from secondary school to university. Accordingly, the nexus of dependency between him and certainly his mother has not been broken. [X] continues to live at home with her and his brother and sister and continues to remain significantly dependant on his mother for financial support.
Both Mr Crosby and Ms Charlton have been educated to a tertiary level. In the case of Ms Charlton, she has qualifications in physics. In this regard, [X] is following in her footsteps. No doubt it is a matter of considerable pride to her that [X] has done so well to date in his demanding scientifically based course.
[X] has been estranged from his father for the past few years. As such, Mr Crosby had no input into the decision regarding [X]’s choice of course. In addition, he was not personally consulted about the prospective financial implications of [X] pursuing the course chosen by him.
[X] has now successfully completed the first year of his course and, as far as I know, is on track to complete the second year of it. To date, he has received no financial assistance whatsoever from his father. In all these circumstances, it seems to be an irresistible conclusion that [X] would have attended university regardless of what his father thought about the matter and whether or not he provided financial support to him.
Accordingly, in the strict sense of the word’s meaning, it has not been “necessary” for Mr Crosby to provide financial support for [X] to attend university. However, in Tuck, the Full Court directed that a broad interpretation of the word be utilised in the application of section 66L(2), which is to be derived from an analysis of the overall circumstances of the case concerned.
[X] is the product of a middle class family, which places significant emphasis on the desirability of tertiary qualifications. In Mr Crosby’s case, this is evident by the fact that he himself is currently studying [omitted], on a part-time basis and has other tertiary qualifications, as does Ms Charlton herself.
In these circumstances, it seems a reasonable inference for me to draw that, if the parties had remained in a relationship together, they would have been highly supportive of [X] attending university and would have done all things necessary to ensure that he passed successfully from secondary school to an appropriate institution of higher learning.
I think, the normal expectation of such families is that the parents concerned will provide some level of financial support, if it is reasonably available to them, to assist their children to pass successfully from school to university, particularly if the child concerned has not had an intervening “gap year” or has not otherwise had occasion to support him or herself financially. This is the case with [X].
Accordingly, I find that it was necessary, in a generic sense, for [X]’s parents to provide him with some level of financial support to enable him to undertake his tertiary education. The more difficult aspect of the case is what that level of maintenance should be, and what form it should take, in the overall context of what is proper and the other provisions of Division 7.
Ms Charlton assesses [X]’s financial needs as being met by a sum of around $300.00 per week or $15,600.00 per annum. It is clear that
Ms Charlton’s expectation is that [X] will devote himself to his studies on a full-time basis.
I accept that [X]’s course is demanding and it is often very difficult for secondary school students to adapt to the less structured but more rigorous environment of university. But [X] himself seems to be a talented and well focussed student, who is coping well with his course. As such, it does not seem either unreasonable or improper that the court should have regard to his capacity to contribute to his own financial support.
The academic year is around nine months in length. It is a common phenomenon that students use the long vacation to secure employment for themselves. In addition, it is a common thing for students to seek part-time employment, often on weekends, during the academic year. Indeed, many in society think such experiences are beneficial to the students concerned.
In this day and age of close to full employment, it seems reasonable to me that young adults, who are attending tertiary institutions, should make some effort to assist in their financial support. Indeed, this would appear to be the norm, so far as students in Australia are concerned. The Financial Review recently reported as follows:
“The early years of productive life are dominated by education, casual work and extended periods of leisure. More young people are going on to higher post-graduate courses but they’re not rushing the education years. The extended period of learning, combined with the tendency to take gap years before and during the university years is raising the average age of students. Of the 1 million students attending university, only a quarter are aged 18 or 19, almost 40 per cent are aged 20 to 24 and almost 40 per cent are 25-plus.
But young people are getting experience in the workforce, even if they are studying. Of those aged 15 to 24 years who are studying, full-time, half of them are in the workforce.”[93]
[93] See Australian Financial Review February 6-7, 2010 at page 25 Retirement Road Less Travelled by Deidre Macken
[X] is a bright and intelligent young person, who in the past, whilst at school, has had some part-time employment. He himself recognises that he has some capacity to be a tutor. I have no doubt that he has other attributes and abilities, which would make him an attractive part-time employee in many other fields.
It would seem to me to be not unreasonable for me to regard [X] as having the capacity to provide around about half of his own financial needs. However, regardless of whether or not [X] does obtain employment for himself or whatever orders are made in this case, [X] will continue to go to university. Ms Charlton will countenance no other outcome and will continue to make significant financial circumstances so this can occur.
In my view, this is a relevant consideration in determining how the burden of providing for [X] is to be divided between each of his parents. Ms Charlton has the motivation of interacting with [X] daily and seeing him develop as both an individual and a student. Although it is not usually part of the “job description” of a parent, she may also receive the thanks and gratitude of [X], from time to time.
Mr Crosby will have none of these things. It seems likely that [X] is irremediably estranged from his father. This is not a case where there is a chilly or distant relationship between father and son, rather there is no relationship whatsoever.
As such, Mr Crosby is unlikely to receive any thanks, from [X], for any maintenance provided. In addition, he will be unable bask vicariously in [X]’s academic achievements. He will not be asked to provide advice and guidance regarding any academic decisions, which [X] will have to make.
To my mind, these are relevant considerations to what is the proper award of adult child maintenance in the case. [X] has ability and intelligence. These attributes will enable him to obtain qualifications, which will see him occupy in the position in the upper echelons of society and presumably being well paid as a result. Given the lack of relationship between Mr Crosby and [X], this outcome will have only theoretical interest for Mr Crosby. He is unlikely to have any direct experience in the successors of his son.
In Gamble & Gamble[94] Fogarty J said as follows;
“Ordinarily, but subject to the ultimate control of the court, the custodian may determine the mode of education of a child but by doing so the custodian cannot impose the financial liability of that on the father. But the provision of education is an aspect of maintenance and what provision a father is required to make in that regard depends upon the particular circumstances of the individual case”.
[94] Gamble & Gamble (1987) FLC90-452 at 77,304
For reasons already provided, I find that the parties have basically similar incomes and earning potential. But given [X]’s longstanding estrangement from his father, I do not believe that it would be necessarily proper that he and Ms Charlton contribute in strictly equal measures to [X]’s on-going financial support.
However, I must also be careful not to overlook the objects of the child maintenance provisions, contained in section 66B. In particular the parents are to share equitably in the support of their children, from “reasonable and adequate shares in the income, earning capacity, property and financial resources of both of their parents”.
In Gamble, Fogarty J drew a distinction between circumstances where the provision of maintenance was “necessary” as distinct from being “desirable” or “the socially proper thing to do”. In this case, given his background, the expectation of the parties (and of [X] himself) is that he would proceed to some form of tertiary education. The fact that he has chosen to do a double degree, extending over six years of study, seems irrelevant to this expectation.
In all the circumstances of this case, I consider it proper if Mr Crosby contributes around twenty percent of [X]’s anticipated recurrent expenses. This will amount to a sum of around $3,000.00 per annum. Having closely analysed Mr Crosby’s financial situation, particularly his income earning capacity and the fact that he has liquid assets as a result of the de-facto property proceedings between the parties, I assess that he has the capacity to meet such an order.
Given the animosity between the parties and the fact that Mr Crosby is only likely to provide maintenance for [X] under duress, it seems appropriate to me that this maintenance be provided by way of a lump sum amount.
I propose making an order for the payment of $12,000.00 for the provision of adult child maintenance for [X], which will provide for his last four years of study. I will provide for the sum to be invested in an interest bearing account, and released to [X] on a pro-rata basis at the beginning of each year during which he is engaged in study. This will cove the possibility of him seeking to take a “gap year” at some time in the future.
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 four hundred and seventy-four (474) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: P Smith
Date: 5 March 2010