Ditton and Ditton
[2003] FMCAfam 552
•18 December 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DITTON & DITTON | [2003] FMCAfam 552 |
| CHILD SUPPORT – Where applicant seeks departure from administrative assessments under s.117 Child Support (Assessment) Act – where the increase is to be backdated – where liable parent’s tax returns do not accurately reflect income earned – where applicant seeks orders far into the future – where applicant seeks lump sum payment under s.124 of the Act. |
Child Support (Assessment) Act 1989 (Cth), ss.114, 117, 121, 124
Gyselman & Gyselman (1992) FLC 92-279
G & G [2002] FMCAfam 249
Kelly, In the Marriage of (1996) FLC 92-680
Wild & Ballard, In the marriage of(1997) FLC 92-771
S v C (1997) FLC 92-750
Bendetch v Bendetch [1993] FLC 92-355
Prpic v Prpic [1995] FLC 92-574
| Applicant: | SHARON DITTON |
| Respondent: | KEVIN DITTON |
| File No: | PAM 1621 of 2003 |
| Delivered on: | 18 December 2003 |
| Delivered at: | Parramatta |
| Hearing dates: | 14 August 2003, 8 December 2003 |
| Judgment of: | Raphael FM |
REPRESENTATION
| Counsel for the Applicant: | Mr P Campton |
| Solicitors for the Applicant: | Meehans Solicitors |
| Counsel for the Respondent: | Ms A Cotter-Moroz |
| Solicitors for the Respondent: | DH Dwyer Forbes & Yeo |
ORDERS
The existing child support assessments in respect of the children Abbie born 4 April 1998, Brooke born 20 May 1990, Courtney born 6 June 1993 and Tayla born 7 March 1997 be departed from.
For the period 1 January 2000 to 31 December 2004 the child support payable by the father for the said children be fixed at the rate of $80.00 per week for each child ($16,640.00 per annum).
Any arrears owed by the father arising out of these orders are to be calculated by the Child Support Assessment Agency, notified to the parties and paid by the father by five equal monthly instalments. The first instalment is to commence two months from the date of the letter from the Child Support Assessment Agency to the father notifying him of the amount of the arrears.
The father be restrained until full payment of the arrears has been made from dealing in any manner with the property known as 309 Ellis Lane Camden in the State of NSW. This order shall not prevent the father from any such dealing which will irrevocably charge any proceeds with payment of the said arrears forthwith upon receipt.
The liable father to pay the applicant mother’s costs of the proceedings to be calculated in accordance with Schedule 1 of the Federal Magistrates Courts Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAM 1621 of 2003
| SHARON DITTON |
Applicant
And
| KEVIN DITTON |
Respondent
REASONS FOR JUDGMENT
This application is brought by the mother pursuant to the Child Support (Assessment) Act 1989 (“the Act”). It was filed on 16 April 2003 and seeks departure from administrative assessments in relation to four children: A born 4 April 1988, B born 20 May 1990, C born 6 June 1993 and T born 7 March 1997.
The application seeks departure in respect of the following support years:
5 January 1999 – 30 June 1999
1 July 1999 – 30 June 2000
1 July 2000 - 30 June 2001
1 July 2001 – 30 June 2002
1 July 2002 – 30 June 2003
1 July 2003 – 30 June 2004
1 July 2004 – 30 June 2005
1 July 2005 – 30 June 2006
1 July 2006 – 30 June 2007.
The total required by way of adjustment was $249,286.11 which the applicant sought as a lump sum.
In what was described as a “cascading series of claims” this sum of $249,286.11 was required under claim D to be paid into an interest earning deposit account by way of security with consequential orders. Under claim C an order was requested that subsequent to the 1 July 2007 an administrative assessment of child support be made in accordance with the provisions of the Child Support (Assessment) Act. In this prayer the applicant sought the sale of a property known as
309 Ellis Lane Camden currently occupied by the father in the event that the lump sum was not paid or the security provided.
The applicant stated that the grounds under which the application was made was that the administrative assessments of child support sought to be departed from did not take into account:
(1) (a) The cost of maintaining the children and the needs of the children
(b) the income, earning capacity, property and financial resources of the husband
The grounds of the application for a capitalised order were:
(2) (a) Difficulties that have been encountered in the enforcement of child support liabilities to date and the same difficulties are anticipated in the future. The husband is likely to manipulate his affairs so as to reduce any administrative assessment of child support and will otherwise engage in any conduct available to him to avoid paying a proper quantum of child support
(b) It is proper having regard to the husband’s conduct to sever the financial link between the parties
(c) Husband as the liable parent is “asset rich and income poor”
(3) In all the circumstances it is just and equitable and otherwise proper to make such lump sum orders and/or in the alternative, orders for security.
(4)For the wife has borrowed funds up to the date of this application in order to meet the proper needs of the children on a periodic basis. These monies are required to be repaid. It is inequitable to require the wife as one of the parents of the children to assume almost all of the entire responsibility for their periodic support.
History
The parents were married at Cobbitty on 1 June 1985. They separated during September 1998. The wife and the children vacated the matrimonial home at Ellis Lane Camden during December 1998 and a degree nisi of dissolution of the marriage was ordered at Sydney on
1 August 2002.
Orders were made as to residence, contact and property settlement in the Family Court of Australia on 24 December 1998. In short the wife received approximately $285,000 and the husband retained the former matrimonial home. The husband was at the time of the break up of the relationship the proprietor in partnership with his wife of a plumbing business in the Camden area. The wife’s father was also a plumber and she has worked part time for her father as a bookkeeper and general office assistant since the termination of the relationship. She earns approximately $50.00 per week.
The father claimed that his income which prior to the breakdown was shared with his wife through the partnership arrangements dropped dramatically thereafter. Whereas his taxable income in the year 1995-1996 was $41,313.00, in 1996-1997 it was only $17,768.00, in 1997-1998 it was $26,888.00, in 1998-1999 it was $16,935.00, in 1999-2000 it was $13,851.00 and in 2000-2001 it was $14,370.00. No further tax returns have been submitted.
The child support agency using the tax returns as a base for their assessments made a number of assessments of small amounts. In the wife’s affidavit at [27] she calculates that as at April 2003 the father had paid $6,113.89 or an average of $7.00 per week per child since the first assessment of child support was issued.
The mother sought a departure from the child support assessment and made application to the agency. The agency gave its decision on the
14 March 2003 as follows:
“That the annual rate of child support be increased to $9,600.00 from the period 1 January 2003 to 30 September 2005.”
The Senior Case Officer stated:
“I have not introduced a significant retrospective component in this decision, in consideration of the size of the increase made as a consequence of my findings.”
The mother was not happy with this decision. She wanted a retrospective element going back to 1999. The father was not happy. He believed that the assessment should have been based upon his taxable income and that he could not afford a monthly payment of $800.00. The Child Support Assessment office wrote to the mother on 16 April 2003 noting that the maintenance arrears owed by the father was $4,105.12.
The relevant law
The obligation to pay child support is created by the provisions of the Act. Section 3 contains the obligation that parties maintain their children. Sections 114 and 121 identify that the further objects of division 4 and 5 of the Act include:
(a)that children have their proper needs met from reasonable and accurate shares in the income, earning capacity, property and financial resources of both of their parents;
and
(b)that parents share equitably in the support of their children.
When considering an application for departure pursuant to s.117 of the Act the court must engage in the three-step process described in Gyselman & Gyselman (1992) FLC 92-279. Those steps are as follows:
(a)The requirement by the court to be satisfied that in the special circumstances of the case one of the grounds for departure in s.117 has been established.
(b)In determining whether to make an order under this division the court is required to consider whether it will be just and equitable as regards to the child, the carer entitled to child support and the liable parent to make a particular order (see s.177(4)).
(c)In determining to make an order, whether it would be otherwise proper to make a particular order under this division (see s.117(5)).
In determining whether it would be otherwise proper to make a particular order the court must have regard to the fact that it is the primary duty of the parents to maintain their child and the effect that the making of an order would have upon any entitlement of the child or carer to an income tested pension, allowance or benefit.
In considering whether it is just and equitable to make an order the court must have regard to:
(a)the nature and duty of the parent to maintain a child;
(b)the proper needs of the child;
(c)the income, earning capacity, property and financial resources of each child and the parents;
(d)the commitments of each parent necessary to support themselves and any other person to whom they have a duty; and
(e)any hardship that would be caused to the child, the carer or the liable parent by the making or refusal to make the order.
In this case the wife relies upon the provisions of s.117(2)(c)(i), namely that in the special circumstances of the case the application of the existing administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the husband because of his income, earning capacity, property and financial resources.
The proper needs of the children
The information concerning the expenditure on the children was contained in the mother’s Form 17 statement. It was not seriously challenged. The mother did indicate both to the court and to the Child Support Agency that child B required orthodontic expenditure with the total costs of approximately $4000.00 and the Child Support Agency took this matter into account.
The mother’s financial position
The mother lives in an unencumbered property for which she paid approximately $265,000.00. The evidence indicated it is now worth in excess of $500,000.00. She is paid approximately $50.00 per week by her father for work in his business and in the early years after separation borrowed approximately $21,000.00 from her parents. She claims this has to be repaid. Her parents have otherwise been generous to her. They have provided her with a $20,000.00 motor vehicle and other benefits. The children are all beyond the age where they require a parent at home full time. I am satisfied from the evidence concerning the work previously undertaken by the wife in the partnership business and for her father that she does have an earning capacity in excess of that which she is currently receiving.
The father’s financial position
The father claims that the fall off in his business following the breakdown of his relationship with the mother came about for two reasons. Firstly he became depressed and uncommunicative. These are not attributes likely to increase the earning capacity of a plumber. Secondly he says that his father in law was a power in the plumbing business in the Camden area and he received a lot of work from contacts of his father in law. When the marriage broke down the work dropped off.
The father has a mortgage of approximately $250,000.00 on his property which is worth approximately $750,000.00; so there is an equity in it of approximately $500,000.00.
Some years ago the father took out an income protection policy. He continued to make payments thereunder until on the 13 February 2003 he made a claim. The underwriters have been paying the claim which provides the father with an income of $5,139.00 per month, a total of $61,200.00 per year. The father’s doctors provide regular reports to the insurance company. There was no evidence that the payments are likely to cease in the very near future.
Evidence of the parties
The mother and her father confirmed the existence of a debt of approximately $21,000.00 and the necessity for parental assistance in order to meet the mother’s regular expenditure for herself and the children. The father sought to establish that the mother had taken $15,000.00 from the matrimonial resources and paid them to her father. I am satisfied from the production of the various bank statements that the payment to Mr Wilson was a repayment of a loan previously explained and vouched. The mother sought to establish that the children’s needs have been fixed and unchanged since 1999. She claimed that she had not gone to work for her father in 2003. She conceded that in the divorce application she indicated that her earnings and the child support payments of $80.00 per month were sufficient
The father’s evidence was more controversial. In cross-examination he was forced to accept that his form 17 indicates expenditure of $1200.00 a week since 1999 but in the tax year 1999-2000 he only had a taxable income of $13,000.00. In 2000-2001 he spent $1,200 per week on a taxable income of $18,662.00 and loans of $1,500.00. In 2001-2002 he spent $1,200.00 a week with a taxable income of $14,593.00 with loans and savings of some $11,000.00. The father had difficulty in responding to a number of questions about his financial situation. These questions elicited the response “I have no idea”. He tended to refer difficult questions to his accountant who had not put on any evidence.
The applicant was questioned at some length about a source of income from the sale of antiques which was allegedly evidenced by an article in a local newspaper. The father denied that he had a business selling antiques. He agreed that he collected “collectables” and that he put them on show for a local event which was why he was interviewed.
I do not think the evidence extended to establishing that this was a regular business, although the father may have made some money at this particular sale. The father gave his evidence in an unfortunately glib manner. He relied on documents which he did not produce to the court, such as his diary.
The father stated that the mother got $35,000.00 over the cost of the house she bought and that that money should have been used for the benefit of the children. He confirmed that he had recently had his property valued in the sum of approximately $730,000.00. He had also made enquires concerning taking out a loan of $25,000.00. He claimed that he was currently unable to work.
A friend of the father’s Ms Debbie Archer gave evidence. Although she gave evidence over the telephone I felt that she was an impressive witness. She confirmed that she had paid some expenses for the father at the time they were living together in a trial relationship. She paid some legal expenses for the father and confirmed that the father did tell her that a few months ago he proposed to leave Sydney and relocate to the Gold Coast area where he felt he would have more opportunity to work in the plumbing business.
I am not satisfied that the father’s tax returns accurately reflect either his actual earnings for the years in question or his earning capacity. He spent much more than he apparently earned and was unable to explain his expenditure. The father made payments for his income protection policy and had not advised the insurance company that his income had deteriorated so that the figure insured was no longer accurate. The father is receiving insurance benefits at the rate of $61,668.00 per annum. He has not returned any of this money to the insurance company. The amount being received from the insurance company is very similar to the father’s expenditure of $1,200 per week. I think in all the circumstances it is an appropriate figure to take for his income since 1999.
Reasoning
This case commenced before me on 14 August 2003. At the end of that hearing when it proved necessary to adjourn until 8 December 2003 I made an order that pending the outcome, the respondent pay child support based upon the child support income amount of $61,668.00 per annum. The father indicated that he had been paying at this rate and his counsel conceded that whatever else occurred an adjustment should be made so that the child support income be assessed in that amount from 13 February 2003. This is a current payment of $323.00 per week, or approximately $80.00 per child. The mother accepted that this was the appropriate figure upon which departure should be sought. The amount assessed by the child support officer was $184.61 per week or $800.00 per month whereas the current payment is $1,400.00 per month.
I am satisfied that there are special circumstances in this case that will allow me to apply s.117(2)(c)(i) of the Act. It seems to me quite clear that the father has not been entirely open with the CSA in relation to his income and the decision of the CSA as to the current child support payment and its decision relating to dealing with arrears should be capable of review.
The more difficult questions in this case are the date upon which any departure should commence and the date upon which the departure should cease. When that has been decided I will have to consider the question of lump sum payment.
Counsel for the respondent father argued that I should not go back too far in relation to any departure because it would be unfair upon his client. He suggested that his client’s affairs had been arranged taking into account the assessments for child support that had already been made. Those assessments of child support were minimal. When the registrar made his order increasing the payments he did not make any significant backdating but even then arrears were created. I am not satisfied that those arrears have been cleared. I think that what has occurred since 1999 is that the wife has taken a disproportionate responsibility for the upkeep of the children. She has been lucky to receive grandparental assistance but that is not a substitute for a liable parent’s contribution. Whilst I accept that the wife has a greater earning capacity than $50.00 per week, I do not think that that would alter the requirement of the father to make his appropriate contribution. I do not believe he has done this.
There are not many examples of cases involving increases in amounts payable under administrative assessments which are then backdated. However in G & G [2002] FMCAfam 249 Chief Federal Magistrate Bryant found that it was appropriate in those circumstances for departure to date back 2 years, taking into account the fact that the father in that case had been in employment during the period, and had been less than frank about his financial situation particularly in relation to a substantial payout that he had received. With respect to the enforcement of arrears generally, the Courts are mindful as to whether the liable parent is likely to have the means to meet the arrears and of the need for liable parents to be able to arrange their affairs on the basis of known obligations. See Kelly, In the Marriage of (1996) FLC 92-680; Wild & Ballard, In the marriage of(1997) FLC 92-771; S v C (1997) FLC 92-750.
I would order that there be a departure from the terms of the Child Support assessments in respect of the liable father from 1 January 2000 so that child support for the four children be based upon a child support income of $62,000.00 per annum since that date.
The mother seeks orders far into the future. I am not prepared to accede to this request. The scheme of the Child Support Act is that payments are to be made based upon current income and both parties are entitled to the benefit of that assumption. I would be prepared to make an order which extends until the 31 December 2004. This will give the father the opportunity to submit his tax return for the year ended 30 June 2003 and to have further indication of his earning capacity in light of his current indisposition. No doubt the Child Support Assessment officer will take a more realistic view of the relationship between the father’s expenditure and his taxable income as referred to in these reasons.
The next question relates to the orders for lump sum payment requested by the Mother. The question of lump sum payments pursuant to s.124 of the Act was considered by the family court in a number of cases included Bendetch v Bendetch [1993] FLC 92-355 and Prpic v Prpic [1995] FLC 92-574 where the court found that child support was generally to be paid out of regular income and that there must be unusual circumstances before a court would order a lump sum. The evidence which has been produced in this case does not indicate that the father is a particularly unreliable payer. He says that he has been paying regularly out of his insurance company payments. He has the earning capacity to meet the payments at the rate identified either from the insurance company or from his own exertions. Whilst the relationship between the parties is not good it might well improve if regular payments of an appropriate amount are made and proper arrangements can be made for access to the children, in respect of which the father is currently petitioning the Family Court. The father has a substantial asset in his house. It was the matrimonial home.
I believe that the father should be given an opportunity to see if he can raise money on the security of the house to pay out the arrears because I think they should be settled within a reasonably short period of time.
I am minded to make an order which protected the Mother’s position in this regard but would not be disposed to making any lump sum order for the future.
Before I came to the conclusions reached above I came to the view that it was just and equitable to make the departure order which I propose.
I am satisfied that the father can pay the amount ordered and the arrears out of his available assets and income and that the orders which I propose do justice between the parties so as to ensure that the objects of the Act are attained.
I was also satisfied that the order I propose to make was otherwise proper under s.117(5). I am satisfied that the sum ordered is affordable by the father and will have the effect of alleviating as far as possible the public responsibility.
Costs
Both parties were represented I these proceedings. It is clear from my reasons that I am satisfied that the father did not make full and frank disclosure of his available income to the Child Support Assessment Officer and that the wife was justified in commencing these proceedings for departure. She has succeeded. She should be entitled to her costs to be awarded pursuant to Part 21 Rule 21.02(2)(b) and calculated pursuant to Schedule 1 of the Federal Magistrates Court Rules.
I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date:
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