Do and KG - [2004] FMCAfam 21

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DO & KG

[2004] FMCAfam 21

FAMILY LAW – Child support – departure application – career change – income earning capacity – application for departure in future years refused as relevant circumstances likely to change.

Child Support (Assessment) Act 1989

Gyselman (1992) FLC 92-279
DJM v JLM (1998) FLC 92-816

Applicant:

Respondent:

File No:

BRM4812 of 2002

Delivered on:

15 January 2004

Delivered at:

Parramatta

Hearing date:

10 November 2003

Judgment of:

Ryan FM

REPRESENTATION

Applicant:

In person

Solicitor Advocate for the Respondent:

Mr I. Bullock

Solicitors for the Respondent:

Ian Bullock Partners

ORDERS

That the father pay child support for the child M born 8 June 1999 for the period 24 March 2000 until 30 June 2000 calculated on the applicant father having a taxable income of $65,728 and the respondent, KG, having a child support income amount of nil from
24 March 2000 til 21 May 2000 and $40,000 from 22 May 2000 until 30 June 2000.
That the father pay child support for the child M born 8 June 1999 for the period 1 October 2003 – 4 June 2005 at an annual rate of $6840.
That the Registrar of the Child Support Agency give effect to the departures from administrative assessment in orders (1) and (2) above.
That otherwise than as provided in these orders the applicant father's application for a departure of the administrative assessments of child support for the period subsequent to 24 September 1999 until 1 October 2003 are dismissed.
That the respondent mother's application for departure from 5 June 2005 until 31 December 2010 is dismissed.
The party who issued any subpoena shall uplift that subpoenaed material and return it to the owner within seven (7) days.
All exhibits tendered in these proceedings are to be returned at the expiration of one calender month unless an appeal is lodged.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PARRAMATTA

BRM4812 of 2002

Applicant

And

Respondent

REASONS FOR JUDGMENT

The Application

This is an application for a departure order from an administrative assessment of child support. DO (“the applicant”) filed his application in the State Magistrates Court in Brisbane. Those proceedings were transferred to the Family Court of Australia and then to the Federal Magistrates Court of Australia. On the respondent’s application, the proceedings were transferred from the Federal Magistrates Court of Australia in Brisbane to the Federal Magistrates Court of Australian in Parramatta.
In essence, the applicant proposes that the relevant administrative assessments for the periods 24 September 1999 (the date upon which his child support liability commenced) – 21 May 2000, 22 May 2000 – 30 June 2001, 1 July 2001 – 30 June 2002, 1 July 2002 – 30 September 2003 be departed from. Both parties agree that the review and rejection procedures contained in Parts 6A and 6B of the Child Support (Assessment) Act 1989 (“the Act”) have been completed. In relation to the early periods Senior Case Officer W delivered an initial decision on 20 July 2000, which decision was amended on 25 October 2000. Senior Case Officer N issued a Notice of Decision on 5 June 2001, which decision deals with the later period 17 April 2001 – 31 December 2002.
KG (“the respondent”) proposed orders[1] that the applicant’s Form 63 application be dismissed. Also that child support for the period 1 October 2003 – 4 June 2005 be paid at the rate of $570 per month and from 5 June 2005 – 31 December 2010 at the rate of $800 per month. From 19 October 2003 the assessment is based on the applicant’s taxable income of $21,786 and only G is taken into account. Hence the child support percentage increases to 13.5%. Nonetheless the rate of child support drops to $45.50 monthly, which amount the applicant concedes is too low, but said he could not afford to pay it. In relation to the child support ordered the respondent asks that it increase on 1 October annually in accordance with upward movements in the consumer price index for Sydney or the child support inflation factor, whichever is the greater.
[1] Exhibit A

Introduction

The applicant is a builder and the respondent a solicitor. They have one child, M. The parties disagree about the length of their cohabitation but agree that final separation took place prior to M’s birth.
Some time prior to the start of their relationship, the applicant left Queensland and took work as a building project manager in Sydney. At that time the applicant owned, and still does, a home in Queensland. He rented his property until he returned to live there in June 2000 after being made redundant. He now runs his own building company. The applicant continues to support both of his daughters, one of whom has now turned 18 and is in her first year of university.
Prior to M’s birth, the respondent was employed on a full time basis at a large Sydney legal practice. After his birth she returned to work three days a week. It is not clear to me precisely when, but the respondent changed employers and presently works as a specialist superannuation solicitor with a superannuation company. During 2002 the respondent purchased a home near Sydney. Her home unit which she owned prior to M’s birth, was sold in April 2003. While she is at work M attends paid day care.

Background facts

DO was born on 6 June 1961. He has two children by his former wife, J born 19 October 1985 and G born 4 June 1987.
These parties commenced cohabitation in August 1994 and separated in January 1999 during which time they lived in Sydney. They have one child, M born 8 June 1999. M lives with the respondent and has always done so.
Previously, the parties have been involved in proceedings in the Family Court of Australia at Sydney concerning parenting issues. Apparently not without difficulty, the applicant obtained orders for regular contact, which appear to reflect that the child was born after the parties separated and that the applicant returned to live in Queensland and was thus unable to have regular short periods of face to face contact. The program of contact is graduated and the applicant will shortly be exercising overnight contact.
After M’s birth the respondent wrote to the applicant and requested that he pay her $3,000 child birth expenses, baby start up costs of $1,500 and provide continuing financial support. The applicant agreed and later that month paid her $3,000. The parties disagree about whether this payment should be treated as child support. In September 1999 the respondent applied to the Child Support Agency for the administrative assessment of child support. On 5 October 1999 the applicant was assessed to pay $236.40 per month on the basis that his taxable income was $36,000.
In March 2000 the respondent applied to change the October 1999 child support assessment on grounds that the applicant’s actual salary was $86,000 plus rental income. The applicant responded by challenging paternity. Although parentage testing has not taken place the issue of paternity has not been pursued further. Senior Case Officer W conducted the conference concerning these applications for reassessment in June 2000. On 20 July 20000 SCO W issued a notice of decision. The effect of this decision was to increase the applicant’s child support liability, achieved by assessing his income capacity at $80,000 for the period to 30 June 2001, $83,200 for the period to

30 June 2002; and $86,538 for the period to 30 September 2003. On 25 October 2000 SCO W issued an amended notice was because he had erroneously taken into account social support income received by the respondent. Her child support income was reduced to nil for the period 24 March 2000 – 21 May 2000.
On 23 March 2000 the applicant was made redundant. He received $19,800 gross redundancy payout.
In September 2000 the applicant lodged an objection to the change of assessment issued by SCO W which objection was disallowed by Registrar T in October 2000.
In March 2001 the applicant lodged an application to change child support in response to which the respondent cross-applied on the ground that her childcare costs exceed 5 per cent of her income.
On 5 June 2001 Senior Case Officer N refused the applicant’s application and allowed the respondent’s application increasing the disregarded income amount to $37,059 for the period 17 April 2001 – 30 June 2001 and for the period 1 July 2001 – 31 December 2002 the disregarded income was set at $36,899. This had the effect of increasing the monthly child support payable by the applicant to $603.92 and $624.50 respectively. In August 2001 the applicant lodged an objection to this decision which objection was disallowed by Registrar T in August 2001.

The hearing

The gravamen of the applicant’s case is that his actual earnings do not accord with his assessed earning capacity and that the assessments have resulted in an unjust outcome. He emphasised that he continues to support his daughters and says there should be reasonable comparability between his children. He does not accept the respondent’s contention about the high child care costs she incurs for M and says that older children are routinely more expensive than younger children. The applicant appeared on his own behalf and clearly found the task difficult. He had brought boxes of papers but when called upon to produce obviously potentially relevant material was not able to do so. Whilst he had done his best to prepare for the hearing he was often unable to help with provision of precise information necessary in cases such as this. While the court can take a broad-brush approach it must have a proper basis for findings made. In a number of instances the applicant relied heavily on the hope that the court would draw sweeping inferences without proper foundation. Asked to outline precisely the orders sought in relation to each period the applicant prevaricated. Working backwards he pointed out that he has paid $19,310 child support (an amount disputed by the respondent) and that he presently has $14,737.04 arrears. The arrears comprise $12,824.62 child support and $1,912.42 late payment penalties. However it is formulated the applicant wants to achieve an outcome that results is no arrears and appeared to agree that $570 per month future child support was reasonable and achievable in the short term.
By comparison the respondent’s preparation was thorough and precise. As a salaried employee it is often easier to maintain complete financial records. In making her application for future child support that addresses the applicant’s liability until 2010 the respondent emphasised that she is weary of disputes concerning child support. She submits that because the applicant will probably always be self employed his capacity to intermingle his personal and business affairs is likely to give him the opportunity to initially achieve artificially low assessments that will be increased upwards on application. Rather than face a relentless cycle of application to change assessments and then for court ordered departure she prefers to settle the issue as far as possible into the future.

Relevant Law

The obligation to pay child support is created by the provisions of the Child Support (Assessment) Act 1989. Section 3 contains the obligation that parents maintain their children. The objects of the Act are found in section 4. Each of the objects needs to be borne in mind when deciding an application under the Act. Section 4(3) of the Act recognises the desirability of parents reaching agreement for the financial support of their children. Sections 114 and 121 identify that the further objects of Divisions 4 and 5 of Part VII include:
a)that the children have their proper meeds met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both of their parents and
b)that parents share equitably in the support of the children.
The Full Court of the Family Court in Gyselman (1992) FLC 92-279 set out a three step process that courts must follow in determining an application for a departure order under s.117. The first step whether one or more of the grounds in s.117 is established. If so, the next step is whether it is just and equitable within the meaning of s.117(4) to make a particular order. The final consideration is whether it is otherwise proper within the meaning of s.117(5) to make a particular order.
An issue in this matter is whether the court might properly base its decision on earning capacity rather than actual income. It is clear from DJM v JLM (1998) FLC 92-816 that a court can take into account earning capacity in situations other than those in which a person has deliberately weakened his or her economic position in an attempt to avoid their responsibility to pay child support. What distinguishes these cases from cases in which the court does focus on the actual and reduced income in calculating the level of child support seems to turn on whether the person acted reasonably in all the circumstances in taking the step that led to the reduced income.[2] What is reasonable must be determined not only in light of the particular facts but also in the light of the particular area of law involved. In child support cases an important part of the context for determining what is reasonable is the explicit statement of the objects of the Act in section 4 in which there is reference to the parents, “capacity to provide financial support”. Thus a different answer to the “what is reasonable” question, may be given in spouse maintenance compared to child support proceedings. Partly, this is because child support legislation prioritises the obligations of parents to support their children.
[2] See, for example, discussion in DJM v JLM (supra.).

Special circumstances of the case – has the applicant shown a ground for departure?

From 24 September 1999 to 23 March 2000 and on to 30 November 2000 the applicant was initially assessed to pay child support at an annual rate of $2,837.00 ($108.82 a fortnight). This was based upon his 1998/99 taxable income of $36,854 less the exempt income amount of $10,219.00. Taking into account his two daughters the applicant was assessed at 10.65% of his adjusted income amount. SCO W’s decision changed the assessment commencing 24 March 2000.
Between January 1999 and March 2000 the applicant was employed as a construction manager working on a Hotel in Sydney. His base salary was $62,264 (less than his total salary package). I am satisfied that he also received rent of $120 per week from tenanting the Queensland property. At that time by private agreement, including private school fees, he was paying $11,112 annually towards his daughter’s expenses. When pressed the applicant conceded that he had been easily able to afford child support at the applicable rate during the period and submitted that he had in fact paid more than he was required to. The assessment took into account his obligation to support his daughters and no submissions were made or evidence called that suggested that any of the other grounds for departure might apply to this period. The respondent was not employed and her only asset of significance was her home unit in which she and M resided. In the circumstances the applicant has not demonstrated a ground for departure for the period up until 23 March 2000.
For the period 24 March 2000 to 21 May 2000 and 22 May 2000 to 30 June 2001, based on SCO W’s determination the applicant's child support income was increased to $80,000. This was based on earning capacity rather than actual income. For the first period the respondent’s income was nil and in the second period her child support income increased to $40,000. This is immediately after the applicant was made redundant. I accept his evidence that he actively pursued well paid contract/project work and that the only position offered to him was accepted. Between March 2000 and June 2000 he secured a project management job to rectify the external facade of an existing apartment building. The works were valued at $117,065, which included his management fee of $10,400. This equated to $742 per week over the 14 weeks contract. Upon finishing this work the applicant returned to Brisbane.
The SCO accepted the respondent’s evidence that her enquires revealed that there was still plenty of project work available in Sydney for people with the applicant’s qualifications and experience. He concluded “He has not since tried to obtain employment in the field which produces the most income for him, that of contract management”. Hence his decision is based upon earning capacity and not actual earnings. The figure of $80,000 is based upon the approximate value of his past salary packages with a reduction to reflect the costs of contact. The other complicating factor is that the applicant received $19,800 redundancy payment. The treatment of redundancy payments can be controversial. In this case I consider that the proper way to treat this payment is to apply it to the applicant’s income for one year, that is $380 weekly. The sum is quite modest and he had worked with his former employers for slightly longer than one year. In fact the applicant used a significant part of this money to take a holiday in the Northern Territory with his daughters, the respondent and M. The balance was used for living expenses. Thus I am persuaded that for the period 24 March 2000 the applicants actual weekly income comprised $742, plus $380 and $120 rent giving a total figure of $1,264 gross. At $80,000 per annum the applicant’s weekly income would be $1,538.46, it was nothing like it.
I accept the applicant’s evidence that in the period immediately after he was made redundant that he tried to obtain better paid work and that he could not. He took the only work he could secure. In those circumstances the assessment assumes an income that did not reflect his earning capacity during that period. Had he continued looking for work in the same field better paid work might have come his way, however while he planned his future it was reasonable and appropriate that he take what work he could obtain. Doing so did not limit his opportunities for better paid work in the future, rather it kept him in the industry and meant that he did not need to live off savings or exhaust his redundancy immediately. Thus I am satisfied that pursuant to s.117(2)(c)(i) for the period 24 March 2000 until 30 June 2000 the applicant has established a ground for departure.
Immediately after the apartment contract came to an end the applicant decided to return to Brisbane. He wanted to spend more time with his daughters and appears to have been very disappointed at the difficulty he perceived establishing his relationship with M and resuming a relationship with the respondent. In short his hope was that he would be meaningfully involved with M and when that seemed unlikely he went back to Queensland. Upon his return he contacted his previous employer hoping that they would employ him in project management. They did not have work for him. In the months that followed he travelled to the Northern Territory and made virtually no attempt to find work. He was dispirited and somewhat at a crossroads in his life. The applicant then made further enquiries in his industry looking for project work. However he had decided that rather than remain forever an employee the time was right to establish his own building firm. His decision was motivated by the confluence of a number of factors, project/construction work was not easy to find, he had obvious building skills that he could use and in the long term he believed he would earn more while enjoying a superior lifestyle running his own business. Ultimately he believes he and his children would have a more secure financial future if he took this step.

Having made the decision to work as a sole trader in residential construction the applicant stopped looking for project management work. His income reflects hard work in the start up phase of a competitive field. Attached to his affidavit is a long list of jobs for which he submitted tenders, setting out that considerable work is done for no reward. His gross income for 2000/2001 was $10,255. Because of the nature of his work calculating his income involves more than simply adding together the total value of successful contracts as these include building and contractor expenses. The applicant’s income is the amount after these expenses have been paid out. Unfortunately he did not have schedules that revealed the difference, although he did have current BAS returns which shed some light on his current situation.
I am satisfied that the applicant’s decision to leave project management was influenced far more strongly by his desire to work on his own account than by difficulties securing employment as a project manager in either Sydney or Brisbane. He is a licensed builder with many years building and projects management experience. In 1984 the applicant completed tertiary training in building management. Attached to the respondent’s affidavit is a large volume of material that includes twenty-one positions for construction industry contracts administrators in Brisbane advertised on 29 September 2003 on my.career.com and seek.com. Annexure D comprises the 2003 Hays Salary and Recruitment Survey, Construction Industry Commentary for 2002. The report states “The result was [in the preceding 12 months] a construction market that outstripped other industries in its performance and provided much needed respite to a struggling business economy elsewhere. And also “As always project management disciplines remain the most lucrative, however with the ebb and flow of work within the industry they can become exposed to downturns in the market. Uncertain as the market is, it is important that candidates seek employers who have a long track record in the market but also a spread of risk in the work they undertake.”
This information is similar to that provided orally by the respondent to SCO W. It suggests that from the time the applicant returned to Brisbane the construction industry was still strong and that in all probability the applicant could have secured well paid project management work had he wanted to and probably still could. It may have required him to be selective about who he worked for but with reasonable diligence I am satisfied that the applicant could have continued in his field. The respondent submitted in effect that if the court made this finding that the applicant’s departure application must fail because he could not establish a ground for departure. However I consider that the court must look at the entire circumstances, which means considering whether the applicant’s decision was reasonable and also whether the imputed earning capacity should be moderated in some way. A parent is not required to remain forever stuck on a work treadmill they find increasingly debilitating until any children have turned 18 years. However when deciding to leave a well paid career child support considerations cannot be ignored or treated lightly. This style of decision requires careful consideration of how children’s entitlement for financial support will be met. Reasonableness would usually involve considerable forward planning, including establishing savings that would enable child support obligations to be met. Perhaps a short-term drop in child support and general standard of living for the liable parent may be reasonable. If the decision appears likely to be financially rewarding in the long term all concerned will benefit from it. Timing can also be relevant to reasonableness. Here the respondent had overwhelming responsibility for a baby and needed to incur substantial childcare costs in order to resume part time work. She needed proper and reliable child support for M during his pre-school years probably more acutely than at any other time. Otherwise she would carry an unjust and inequitable level of M’s financial support. Timing a career change without establishing a fund by which child support would continue at a proper level in the circumstances of this case was unreasonable and showed an inadequate regard for his obligation to provide a proper level of child support.
Overall I am satisfied that the decision of the SCO to assess the applicant’s liability for child support based upon his earning capacity as a project manager rather than on his actual income as a builder for this and subsequent periods was correct.
The distribution construction graphs[3] indicate that total salary packages for project/construction managers in Queensland are in the $80-100,000 range, averaging $87,279 per annum. In those circumstances and having regard to the applicant’s evidence about his prior total salary packages I am satisfied that the assessment’s predicated upon the applicant’s earning capacity at the level determined are appropriate. His decision to travel and apply a significant share of his redundancy towards the trip rather than establish a fund for future child support was unreasonable. Although I was unsure how he could do so the applicant was able to draw upon his superannuation and may have been able to extend his draw down in order to provide child support. Of course he could have remained in contract/project work until timing was more reasonable.
[3] Annexure I respondent’s affidavit
During this period the respondent returned to work, earning $45,369 for the 2000/2001 tax year. Her only other income was by way of child support. Just as the applicant, did she lived in her own home. She did not have significant cash reserves that she could draw upon and overall needed an equitable share of child support in order to provide for M.
On 5 June 2001 SCO N changed the assessment again because of the respondent’s high costs of day care. This was achieved by increasing the respondent’s disregarded income amount from $31,699 for the period 17 April 2001 to 30 June 2001 to $37,059. This figure reflects the amount she needed to earn ($5,360) in order to pay excess day care costs of $2,680. For the period 1 July 2001 until 31 December 2002 her disregarded income increased to $36,899 for the same reason. Although he had previously challenged the amount and extent to which the respondent used day care, in this hearing the applicant appeared to have abandoned his earlier discontent.
At no time has the child had any income, earning capacity, property or financial resources.
In the circumstances the application has not established a basis for departure pursuant to s.117(2)(c)(i) for the subsequent periods.
The applicant contends in the alternative that his obligation to support his daughters [s.117(2)(a)(i)] and high costs of contact [s.117(2)(b)(i)] entitle him to the relief sought. If his actual income rather than his earning capacity were used he would be correct. However evaluation of these grounds must proceed on the basis of the applicant’s earning capacity outlined above. Prior to deciding to change careers the applicant supported his daughters to the extent already outlined in these reasons, approximately $220 each week. Of this $115 related to school fees, which fees have continued to be paid. School fees fell this year because J finished school. She lives at home with her mother and is now attending university full time. From 30 June 2000 the applicant’s earning capacity is reasonably comparable to his actual income earned before he was made redundant. He conceded quite frankly that prior to his redundancy his support for his daughters was made without hardship. The relevant assessments all take into account that the applicant provides for his daughters, hence the lower percentage rate for M. This leads me to conclude that based on his earning capacity the applicant is able to provide proper child support for his daughters and that the assessment adequately recognises this. This ground therefor is not made out.
In terms of the high costs of contact the applicant is entitled to exercise contact monthly in Sydney. On a child support income of $80,000 the applicant’s contact costs would have to exceed $4,000 annually before they would affect his assessment [s.117)(3)]. On occasion he brings one or both daughters with him as he is keen that they come to know their brother. The costs that I take into account are those associated with his costs of taking contact, that is his airfares, accommodation and actual costs to and from the airport. All contact involves expenses for the parent taking it. For example providing lunch, activities and travel during contact. Not every expense associated with contact can be factored into a “high costs” submission. The applicant flies down when he can but from time to time has not had the money to do so. When he does the applicant estimated that these costs amounted to $329 per visit. This was calculated by $250 airfares, Taxi from H $24, fuel to and from H at $30 and youth hostel $25. Given the method whereby the applicant included fuel at the tax rate and depreciation on his car the SCO determined that he would allow $30 fuel for the trip to and from Brisbane airport. This is the correct approach. Even so, using the applicant’s figures, contact costs were $3,948 for the twelve-month period, post 27 March 2001. They were similar for the preceding period.
The respondent contends that the applicant uses his trips to Sydney for various purposes (mainly court attendances) and the costs of the trips should be apportioned accordingly. I accept the applicant’s evidence that the principal purpose of his trips to Sydney is contact with M and that the entire costs of air travel and taxis to and from the airport when used and any accommodation costs are attributable to contact. That he was able to persuade those responsible for court listings to accommodate his schedule does not detract from the fact that the contact costs would have been incurred. All that has happened is that the applicant has been able to avoid additional expense associated with earlier proceedings.
The overall effect of these findings is that the applicant has not established that he incurred sufficiently high costs of contact to establish special circumstances in any period up to the hearing.
For these reasons the applicant has not established a ground for departure for the periods subsequent to 30 June 2000.

Is it just and equitable to make a departure order for the period

24 March 2000 until 30 June 2000?

I have already made findings about the parties and M’s income, earning capacity, property and financial resources at this time. In addition the applicant had superannuation worth about $144,000 from which he was able to draw down about $40,000 provided he paid tax on it. I do not have precise figures that reveal the necessary commitments each of the parties had at this time, for themselves or their children. I infer that the applicant was living in rented premises, the respondent and M in her unit and that the respondent had child care expenses. I have treated the applicant’s redundancy as a payment applied over a longer period and not as a lump sum to be used all at once. Given the uncertainty that usually follows redundancy drawing down on it assuming a well paid position is around the corner would be fool hardy indeed. It should not be treated differently in this part of the exercise. Thus although the redundancy gave the applicant a fund from which to pay child support at the assessed amount, demanding that he do so may not be either just or equitable.
I accept that the respondent needed every cent she could have from the applicant towards child support. The applicant is not required to take his superannuation and pay the penalties associated with doing so. Child support is primarily an income-based formula and expecting a party to draw on assets intended to provide for retirement is a step that should not be taken unless clearly warranted. The circumstances warrant acknowledgment that the applicant was made redundant and had a period of reduced income. Using capital in this instance would not be appropriate.
Both parties claim hardship, the applicant if it is refused and the respondent if relief is given. The respondent’s claim is because a greater share of meeting M’s costs will fall onto her. During this period I am satisfied that the court should focus on the parties actual income and that it would be unjust and inconsistent to expect the applicant to use his redundancy to provide child support based at a higher income than he could achieve.

Is it otherwise proper to make a departure order for the period

24 March 2000 until 30 June 2000?

Ordering a departure for this period will have only limited effect on the parties and child. The applicant has substantial child support arrears and a reassessment will reduce these to only a small degree. The reduction will still have the applicant making a proper contribution, proportionate to his circumstances during the period. Having regard to the whole of his financial circumstances during this period it is proper that the applicant’s child support should be reduced.
Ordering accordingly may retrospectively increase the respondent’s entitlement to family allowance or other income-tested benefit. Any entitlement would be modest indeed.

The respondent’s prospective departure application commencing

1 October 2003

These relate to two periods, namely 1 October 2003 – 4 June 2005 in relation to which the respondent seeks $570 per month and the second period from 5 June 2005 – 31 December 2010 at the rate of $800 per month. The applicable law is as summarised earlier in these reasons.
The parties agree that an assessment of $45.50 per month must change, as it is plainly inconsistent with the Act. Just as the respondent is worn out by constant disagreements about child support, so is the applicant. He is very disappointed about the respondent’s approach to his relationship with M and feels she does not give him adequate recognition for his desire and capacity as a parent. He left me with the strong sense that if the respondent were more reasonable as a parent much of their dispute concerning child support might not have eventuated. He emphasised that for many years he has reliably supported his daughters to a greater extent than the Act required and would willingly do so with M. Somewhat in vain he has tried to force the respondent to involve him as a parent. It was clear to me for example that the respondent was making schooling decisions for M without any regard for the applicant’s opinions, or indeed knowledge. He heard for the first time during cross-examination her plans for M and his education. It is not at all surprising that the applicant has been unreliable in the past with child support, both parties using in effect what influence they could in the situation to force the other to their will.
During these proceedings the applicant emphasised his commitment to M, which I do not doubt. Partly this is reflected in his acknowledgment that the amount sought by the respondent for the first period was reasonable and that if he could afford to he would pay it, perhaps more. Overall the applicant was optimistic about the time ahead financially. He is getting more work and with his partner has established a growing reputation for Japanese style building and design. From his point of view his career change looks as though it will bear fruit in the reasonably foreseeable future. Decisions however must be based on evidence, usually more persuasive than aspirations and belief.
In 2001/2002 the respondent's taxable income was $73,778. This included a performance bonus of $5400. For 2002/2003 her taxable income was $71,636. This included a performance bonus of $17,400 and a retrenchment payment of $13,934. I accept that having overwhelming responsibility for M’s care as well as working is onerous for the respondent. Daycare opens at 8 am and the respondent collects M between 5.30 pm and 6 pm. During M's remaining time at preschool and in his first years of school, the respondent wishes to work part time so that she can participate in M’s education and also that school and daycare are not too demanding for him. I accept the evidence in her affidavit that M benefits from her regular input and that it is reasonable that the respondent moderates her working hours so that he is not required to be in full time daycare or full time before and after school and holiday care. Working and excluding retrenchment payments, the applicant earned the amounts identified above. Presently, doing contract work, she is earning $1381 per week, including annual and sick leave. Thus the respondent, although working part time, is able to produce an income of about $72,000 annually. Although M may be eligible to start school in 2004, the respondent indicated that it was unlikely that he would do so and I am satisfied that he will not start school until 2005.
The assessment that issued on 19 October 2003 is based upon the respondent having a child support income amount of $47,000.70 from which is deducted $36,213 giving child support income of $10,857. As already indicated, her taxable income from 2001/2002 was considerably greater than the provisional taxable income upon which the assessment is based.
So is the applicant's income. His actual income is difficult to discern. For the year ended 30 June 2003 the applicant's total business income was $187,495 less expenses of $149,088. This produced a taxable income of $38,407. The applicant pays J to perform bookwork an amount equivalent to the child support paid and which consequently he is able to claim as a legitimate deduction. Unfortunately, he did not have a profit and loss statement for the 2002/2003 tax year and while the BAS statements corroborated expenses attributed to materials and supplies ($129,792) I could not see where J's costs, for example, were taken into account. However my decision will not rely on the applicant's actual income. For the reasons already outlined, I am persuaded that I should focus more substantially on his earning capacity. The applicant's decision to change careers at a time when the respondent could reasonably be expected to work only part time was unreasonable without pre-planning provision for proper child support. Although it is possibly generous to the applicant, I am satisfied for the reasons already given that he has an earning capacity until 4 June 2005 of $83,000 per annum.
Thus the assessment issued 16 January 2003 that operates until

30 April 2004 clearly bears no reasonable resemblance to the parties’ income and earning capacity. In those circumstances I am satisfied that a ground for departure in the special circumstances of the case has been made out in relation to the period covered by the assessment and until M turns five.

Is it just and equitable to make a departure order?

M does not have any income, earning capacity, property or financial resources.
The applicant works part time as a solicitor and whether on her current contract or with different employers, is likely to earn an income of about $72,000 per annum during this first period. She has the property identified in her financial statement, which has a net value of approximately $327,473. She has superannuation worth $87,200. Her principal asset is her home near Sydney. It is worth approximately $600,000 subject to a mortgage of $143,000. This year she expects to repay her father $38,000 that he advanced previously and which he has requested that she repay. Thus her mortgage will increase to about $186,000 and the periodic payments rise accordingly. The respondent sold her unit in April 2003 and used the money to reduce the mortgage raised when she bought her home near Sydney. The respondent now has a total weekly income of $1446 from her employment and the child support presently at $70 per week. Of her average weekly expenses identified in her financial statement at $1091, $529 is attributable to M. Of this, she claims $60 legal fees, which costs I do not take into account as a necessary expense for M. Thus, excluding this cost, M’s average weekly expenses are $469 plus one third of the mortgage, rates and home insurance. At one third these costs recognise that the mortgage includes capital reduction and eventually a capital asset that the respondent will keep. This gives a total expense for M of $624 weekly. The balance of the respondent's expenses are identified in her financial statement and reveal that she needs to expend virtually all of her income on her and M's necessary commitments.

I have already made findings about the applicant’s income and earning capacity. His financial statement filed 13 August 2003 reveals that his average weekly income is $738. This is consistent with his 2002/2003 taxable income. This does not reflect, therefore, the applicant's evidence that 2003/2004 was returning a greater profit from the business than achieved during 2002/2003. Examining the applicant's average weekly expenses at annexure C to his financial statement he claims child support payments at $162 and at answer 55 identifies education expenses of $138. Three thousand dollars of these funds are paid directly from the business to J. As I have already earlier indicated in these reasons, I was unable to locate in any of the source documents provided by the applicant where this payment was reflected as a business expense. My inability to locate it, even with the applicant's help, confirms my sense of discomfort that the applicant's financial disclosure is both inaccurate and incomplete. In his financial statement he makes no reference to expenditure for holidays. However, at Easter 2003 he travelled to Japan. The trip was taken using frequent flyer points but expenses were incurred that are neither reflected in the financial statement nor the deductions included in the applicant's taxation return. The overall effect of this is that I am satisfied that the applicant has greater income than revealed in his financial statement and that some of his expenses identified as personal expenses are legitimate business expenses and therefore not necessary commitments within the meaning of the Act.
The respondent challenged the legitimacy of the expenses claimed by the applicant supporting his daughters. J is over 18 and there is no enforceable obligation requiring the applicant to pay child support or adult maintenance for either daughter. The case law distinguishes between moral and legal obligations when determining whether a commitment is a necessary commitment. The respondent's approach is that unless the applicant is obliged by order or registered child support agreement to pay child support or adult maintenance, then the court must disregard the expense. I consider this too narrow an interpretation of legal obligation. The fact that a payment is made voluntarily does not necessarily mean that it should be characterised as merely a moral obligation.
The applicant and his former wife have agreed for many years the financial commitment the applicant would make in order to meet his obligation established by virtue of the Child Support (Assessment) Act to make a proper contribution for their daughters' support. In relation to J now that she had left school and turned 18 years of age, the applicant does not have a continuing obligation to support her. However, on the evidence available there is little doubt that if J or her mother sought it, it is highly probably that a court would order the applicant to pay adult child maintenance in at least the sum paid currently. I do not accept that a court that it can only treat payments to an adult child as a necessary expense if made pursuant to an order. The issue, however, is not pivotal in this case. That is because the applicant uses the business as a vehicle to support J primarily by income that she earns in her own right. Thus from the $15,600 claimed as education and child support expenses annually, I deduct the $3000 paid by the business to J. School expenses include payment of J’s university fees. These are quite modest and could be deferred using the HECS scheme. However because the applicant is able and willing to pay her university fees and I am satisfied there is no tension with the amounts payable for other children I need not determine priority. On a weekly basis this means that education and child support payments amount to $242, not the $300 claimed. The balance of the expenses claimed appears to be legitimate and necessary commitments. Therefore the applicant's fixed and average weekly expenses total $674. On his financial statement his excess of income over expenses is therefore $64 per week.
The applicant's home at Queensland is worth at least $300,000, he has a work Econovan with a nominal value of $500, $5000 in savings and a 2000 Holden Commodore worth $17,500. Otherwise he has tools and personal effects worth about $7000. The applicant does not have liabilities. His superannuation is currently valued at $179,000.
Both parties submit that they would suffer hardship if an order were made (the applicant and his daughters) or refused (the respondent). Refusing to make the order will cause some hardship to the respondent. She may need to resume full time employment sooner than she considers desirable from M's perspective. I do not accept that making the orders sought would cause the applicant hardship. The impact would be to reduce his capacity to accrue savings. Otherwise any effect would be minimal and I am not satisfied that the impact is properly described as hardship.
The respondent receives a family assistance payment of $57 per week but otherwise neither party nor M receives any payment of the type identified in s.117(5)(b)(i) or (ii).
I am satisfied that is just and equitable to make a departure order in the sum sought.

Is it otherwise proper to make a departure order for the period commencing 1 October 2003?

Both parties have an obligation to maintain M. The respondent makes a greater contribution to his necessary expenses than the applicant does. The orders sought by her would make the gap between the costs met by the parties for their son narrower. I am satisfied that it is proper that the gap is narrowed and that the order sought by the applicant until the end of 2005 in the sum sought should be ordered. There are no relevant s.117(5)(b) considerations. It is proper to order the departure as sought.

The respondent’s prospective departure application commencing

5 June 2005

Because both parties are weary of disputes concerning child support the respondent contends that the court should set the level of child support for many years hence. During submissions it would have been apparent that I was concerned that in the particular circumstances of this case the court would have difficulty determining the applicant's income or earning capacity with sufficient precision that it could properly apply s.117(2). By June 2005 school I am satisfied that the court should assess the applicant's income rather than focus on his earning capacity. Five and a half years will have passed since he changed careers and in this case it will no longer reasonable to determine the applicant’s liability using his earning capacity as a project manager. During the period it is likely that the respondent will resume full time work and her income even should decide not to do so may be significantly greater. As he gets older M's needs may not be as restrictive upon her working capacity as they are at present.
It is probable that the applicant's income will be materially different to his current income and it is feasible that he will no longer support either daughter. M's costs may well fall. It does not appear that the parties have discussed and agreed that he should have private school education. Costs of contact will almost certainly be higher. All of these uncertainties contribute to my comfortable satisfaction that in this case the court should not make orders concerning child support after 4 June 2005. In simple terms I cannot make the findings I would need to make in order to determine whether or not a ground for departure exists after 5 June 2005.
The orders I make therefore are those identified to at the start of the reasons for judgment.

I certify that the preceding sixty-five (65) paragraphs are a true copy of the reasons for judgment of Ryan FM

Associate:

Date: 15 January 2004