F and F (No.2)
[2005] FMCAfam 41
•14 February 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| F & F (No.2) | [2005] FMCAfam 41 |
| CHILD SUPPORT – Application for departure – children concerned in shared care arrangement – husband engaged in full time employment – wife engaged in tertiary studies and part-time work – application of formula results in nil assessment for wife – whether wife fully utilising her income earning capacity – hardship to husband – whether just and equitable to make departure order. Child Support (Assessment) Act 1989, ss.3, 4, 114, 116, 117 Savery and Savery (1990) FLC 92-131 |
| Applicant: | D R F |
| Respondent: | V M F |
| File No: | DNM 500 of 2004 |
| Delivered on: | 14 February 2005 |
| Delivered at: | Alice Springs |
| Hearing date: | 7 February 2005 |
| Judgment of: | Brown FM |
REPRESENTATION
| Counsel for the Applicant: | Ms H |
| Solicitors for the Applicant: | S & A |
| Counsel for the Respondent: | Ms O |
| Solicitors for the Respondent: | N T L A C |
ORDERS
That orders one and two of the orders made on 16 December 2004 be discharged.
That pursuant to section 117 of the Child Support (Assessment) Act 1989 there be a departure from the administrative assessment of child support.
For the period from 1 November 2004 to 31 December 2005 the father’s child support income be fixed at an annual rate of $70,000.00 and the mother’s child support income be fixed an annual rate of $32,000.00 for the same period.
That the application be otherwise dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DARWIN |
DNM 500 of 2005
| D R F |
Applicant
And
| V M F |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to child support and whether there should be any departure from the child support assessment procedure in respect of three children, namely J D F, who was born on 24 February 1997;
J T F, who was born on 18 March 1999; and D J F, who was born on
1 November 2001.
The applicant in the proceedings is D R F, who is the children’s father. The respondent in the proceedings is V M F, who is the children’s mother. For obvious reasons of convenience, I will refer to Mr F as “the father” in these reasons for judgement and to Ms F as “the mother”.
The father commenced these proceedings on 1 November 2004. He seeks the following orders:
1.
That pursuant to section 117 of the Child Support (Assessment) Act 1989, there be a departure from administrative assessment of child support for J D F born
24 February 1997, J T F born 18 March 1999 and D J F born 28 April 2001 payable by the father to the mother as follows:
a) the annual rate of child support be set at $7,500.00 from 17 July 2003 and be adjusted each 17 July thereafter in accordance with any change in the Consumer Price Index for the preceding calendar year; and
b) the annual rate of child support be apportioned equally between the children; and
c) that the father pay for private health insurance and all costs associated with their education in a public school.
The mother responded to the father’s application on 29 November 2004. She seeks the following orders:
1. That the Annual Rate of Child Support payable by the father be based on the child support income of the father as assessed by the Child Support Agency from time to time.
2. That the application by the father be otherwise dismissed.
The father is engaged in full time work. He is the manager of a community-based newspaper owned by N N Ltd. He receives a salary which consists of income and fringe benefits comprised of payment of his home telephone and electricity bill, use of a fully serviced motor vehicle and two return airfares between D and B each year. The value of this salary package is $70,266.04 in cash per annum with the value of the fringe benefits being $15,952.04. At the present time this is the basis on which his child support income is calculated. Currently he has been assessed to pay child support amounting to $295.87 per week for the three children concerned.
The parties have agreed that responsibility for the care of the children concerned is to be shared equally between them. On 1 August 2003 the following order was made by the Family Court at D:
That the children J D F born 24 February 1997, J T F born
18 March 1999 and D J F born 28 April 2001 live with each of the parties on an equal basis.
In practice this has meant that the children live with each of their parents on an alternating weekly basis during school term times and for half of each school holidays. Neither party has any proceedings on foot to change this shared care arrangement. These proceedings are concerned with the financial implications of this care arrangement and their connection to the provisions of the Child Support (Assessment) Act 1989.
Since the parties separated the mother has not been fully engaged in the paid workforce. Her main sources of income have been social security payments and child support, although she has had some part-time work as a hairdresser. For at least part of the time, she has been pursuing tertiary studies. As a result, her income has been markedly less than the father’s has been. This has resulted in her being assessed as having to pay no child support.
The Child Support (Assessment) Act 1989 “hereinafter referred to as ‘the Act’” governs the provision of financial support for the three children concerned by their parents. The Act provides a formula, which is to be applied to the income of each of the parents concerned to arrive at a monthly sum, which is to be utilised by them for the financial support of the children. The aim of the Act is to provide a simple means by which separated parents can easily ascertain their respective liability to provide financial support for their children and so avoid disputes about the appropriate level of financial support.
In this case, pursuant to the Act, nominally two assessments of child support have been made, based on the taxable income of each of the parties, from which an amount of legislatively sanctioned exempt income has been subtracted. The father’s assessment results in payment of child support by him of $15,385.00 per annum. In the mother’s case it results in an assessment of child support of nil. Because the children are in shared care these two sums are of set against each other. The rationale for this off setting being that the financial burden of supporting the children should be shared in proportion to the time the children spend with each of the parties and their respective capacity to provide financial support for them.
If the parties child support incomes had been even, the two assessments would have cancelled each other out and neither party would have had to pay child support to the other. However, in the present case, there is a marked discrepancy between the incomes of the parties concerned. Accordingly the father receives no reduction in his liability for child support because the children are in shared care. Ironically he pays the same amount of child support as he would if the children concerned lived predominantly with the mother and had irregular contact with him. He believes this is fundamentally unfair.
It is the father’s position that he is unable to bear the current level of child support assessment as well as adequately financially support himself and provide for the three children concerned in the periods when they are living with him. He asserts that the mother is not fully utilising her capacity to earn an income and so contribute to the full extent of her ability to the financial support of the children. He believes this is unfair. For these reasons he seeks a departure from the current child support assessment and effectively that his liability for child support be capped indefinitely at $7,800.00 per annum other than for annual CPI increases. This equates to a base sum of $150.00 per week. He also proposes that he provide private health insurance and some educational expenses for the children in addition to this sum.
The father’s application is governed by the provisions of Division 4 of part 7 of the Act and in particular by section 117. Section 117 provides the sole grounds on which an application for departure can be based. The father relies on two such grounds. Firstly that his capacity to provide financial support for the children is significantly reduced because of his necessary commitments to support himself financially.[1] Secondly that the current assessment does not properly reflect the income earning capacity of the mother.[2]
[1] See section 117(2)(a)(iii)(A) of the Act. In this regard counsel for the father did not specifically point to his necessary commitments to support J, J and D financially in the periods when the children are residing with him and the provisions of section 117(2)(a)(iii)(B) as being grounds for departure. However on the pro forma application provided by Schedule 2 of Part 1 of the Federal Magistrate Court Rules which the father filed to commence these proceedings his solicitor has crossed the box which provides this ground.
[2] See section 117(2)(c)(i) of the Act.
In the aftermath of their separation, the parties were able to agree as to the appropriate arrangements for the division of their matrimonial property, arrangements for the care of J, J and D and the provision of child support. That is no longer the case. Sadly, at the moment, the parties have an uneasy relationship with each other. This seems to have resulted from a growing realisation as to the financial consequences for them both of the shared care arrangement not only in respect of the child support regime but also in regards to social security entitlements and other government offered financial benefits available to the parents of children. The parties have been in dispute as to how these are to be divided between them given their different levels of personal income but their equally shared responsibility for the care of the children. In this atmosphere hostility has deepened between them.
In July of 2003 the parties discussed the financial implications of their separation and ostensibly reached agreement as to how financial responsibility for the children was to be divided between them. The father agreed to pay the mother the sum of $150.00 per week in this regard and continue to pay the cost of the children’s health insurance and some other educational expenses. The parties attempted to reduce this agreement to writing and a child support agreement was executed to this effect in August of 2003. However this agreement was never ratified by the Child Support Agency. Subsequently in the light of other dispute between the parties, the mother applied for a formal assessment of child support in April of 2004.
At the core of the dispute between the parties are their currently differing views as to how financial responsibility for the children is to be divided between them given the great discrepancy in their personal income but equal responsibility for providing care for the children. Prior to their separation the parties mutually agreed that the father would be the primary breadwinner for the family and the mother would stay in the home and provide a larger component of the children’s day to day care. Essentially, it is the father’s position that, in the radically altered fiscal geography that now prevails between the parties, in the aftermath of their separation, the parties can no longer afford the luxury of such an arrangement. It is his case that his income has essentially remained the same but, as a result of the current child support assessment, he is now supporting two households. He believes this is fundamentally unfair to him and now the mother must take up a greater share of the financial burden. He believes the agreement the parties reached in August of 2003 represents a more appropriate means of balancing the discrepancy in the parties’ income but the equality of their responsibility to care for the children.
Needless to say the mother does not accept the father’s position. It is her case that her decisions regarding paid employment have been motivated by her concerns for the children and the quality of the care they receive. She points to the fact that the father could make considerable savings by utilising her services to care for the children between the end of school and the time he finishes work, in the weeks the children are in the his care, rather than utilising professional child minding services.
It is her case that it is contrary to public policy for a court such as this one to interfere with the strict application of the child support formula to the parties’ respective incomes, which are readily ascertainable. In that sense, by implication, she argues that this is not a case, which can be described as exceptional or out of the ordinary. She points to the fact that there will inevitably be a wide discrepancy between the income she receives and the income the father receives and as a result it is only appropriate that he provide more financial support for the children than she, despite the fact that they are in shared care.
Both parties’ positions have much to recommend them. It is difficult to strike a balance between them, which is likely to be acceptable to both the father and the mother, neither of whom can be described as being in a strong financial position. The case raises issues that are likely to be of interest to many separated parents, who are attempting to strike a balance between work and family commitments.
The Evidence
The father relied on the following affidavits of evidence:
i)two affidavits of himself filed on 1 November 2004 and 24 January 2005;
ii)a statement of his financial circumstances filed on 1 November 2004;
iii)an affidavit of his mother O F filed 31 January 2005;
iv)an affidavit of his father R T filed 4 February 2005.
The mother relied on the following affidavits of evidence
i)
two affidavits of herself filed on 29 November 2004 and
1 February 2005;
ii)a statement of her financial circumstances filed on 29 November 2004.
Of these witnesses only the parties themselves were required for cross-examination. Both parties were represented by counsel. I found both the father and mother to be honest and pleasant people. It is not necessary to make any findings regarding their respective credit. The difference between their recollection of the salient events is minor and in my view attributable to their differing perspectives as to what is important in this case.
The father was born on 5 January 1974. He has been employed by
N N Ltd for approximately fourteen years. The mother was born on
26 December 1974. Both parties enjoy good health. They began to live together in February of 1994 and married in D on 3 March 1996. They separated on 5 July 2003, although it is the mother’s position that she considered reconciliation after this date. The marriage between the parties has not yet been dissolved.
The mother is a qualified hairdresser. She commenced her apprenticeship in 1994 and completed it prior to the birth of J. She resigned from a full-time hairdressing position shortly prior to his birth in February of 1997. Thereafter she has largely been engaged in part-time work punctuated by breaks caused by the birth of J and then D. She estimates that she worked up to two days per week for about fourteen months after J was born. She has also done hairdressing on Saturdays. More recently, during 2002/2003 she worked as a part-time waitress at the P V R. She worked four nights a week between 6.00 pm and 11.00 pm. The father works standard office hours. Obviously the mother took this work to augment the family’s income. She was able to leave the children in the care of the father whilst she did it. She stopped this work approximately six months prior to the parties’ separation. As a casual waitress the mother is able to earn $17.50 gross per hour and a similar amount as a hairdresser. A Saturday morning’s hairdressing is likely to gross her between $60 and $65.00.
There is no argument between the parties that, during their marriage, they mutually decided that the father would be the major financial provider for the family and the mother would remain in the family home and provide for the majority of the children’s day to day needs. The mother wished to be at home with the children. The father did not demur from this wish. However to ease the financial pressures on the family the mother worked on a limited basis when she was able to. Neither party is to be criticised for these decisions, which reflects the day to day reality for many parents with young children.
The father has been promoted during his time with N N Ltd. He is now a manager. As a result he has inherited the employment contract of another person. Accordingly some aspects of his salary package are not as a result of his own negotiations or choice but rather have been handed on to him. For example although he receives two annual airflights to B each year, the father himself has no personal connection with B.
As previously indicated, the salary package consists of a component of cash and a component of fringe benefits. It is the father’s case that this arrangement suits his employer more than it suits him. However, he has no choice as to what the package is to be. At present, he receives $1,351.27 gross per week or $70,266.04 per annum by way of cash salary. The fringe benefits component consists of provision to him of a motor vehicle; payment of his home telephone (but not internet connection); payment of his home electricity bill; and the two return economy class air tickets to B. The father does not receive any cash payments for these benefits, which are not redeemable. However, obviously, the benefits have a value both to the father himself and for taxation purposes.
In respect of his home telephone and electricity bill, it seems that
N N Ltd reserves a discretion to reject the account submitted to it by the father, if they deem it unreasonably excessive. This rarely happens. The father submits the necessary account to his superior and it is paid. N N Ltd keeps a record of the payments it makes for taxation purposes. N N Ltd also hands on its liability to pay fringe benefits tax in respect of the payments it makes for the father to the father himself.
I have not been provided with a copy of the father’s most recent tax return or indeed any of his tax returns nor a copy of his contract of employment. The evidence in this regard has been provided by the father himself and his statement of financial circumstances. The evidence was not challenged by counsel for the mother.
Accordingly the father deposes that the gross value attributed to the use of the motor vehicle provided to him by his employer is $5,331.32 per annum, which he asserts increases his taxable income by this amount.[3] He deposed that he pays tax of $2,745.63 on this sum. He is permitted to use the car outside of business hours but not during personal holidays other than when his office is closed over Christmas.
[3] See father’s affidavit of evidence of 24 January 2005 at paragraph 24
In respect of his home telephone, the father asserts that the gross value attributed to the provision of this service by his employer is $1,209.27 per annum, which again increases his taxable income by this amount. He deposed that he pays tax of $622.78 on this sum. The position in respect of his domestic electricity bill is to increase his taxable income by $3,217.21 of which $1,656.87 is said to be the taxation component.[4]
[4] See father’s affidavit (supra) at paragraph 27
The father is employed in the management of a l c b n. The margins in running such n are apparently thin. It was his evidence that his employer requires him to travel interstate to attend seminars and other meetings in respect of the n. Usually the travel is necessary to see if contracts for advertising in the n can be obtained. However he is not reimbursed for the money he spends on such travel. It is apparently thought to be part and parcel of the employment conditions in c n that managers voluntarily pay for such travel in the hope that they will improve the revenue for the n. The rationale apparently being that they have a vested interest in meeting or exceeding their budgets.
Accordingly, it is the father’s evidence that usually he utilises his two air tickets for business purposes. Nonetheless the value of these tickets increases his taxable income to $6,256.38 of which the taxation component payable by the father is $3,222.04.[5] The father can apparently claim some deductions from his taxable income in respect of the cost of this business travel.
[5] see father’s affidavit (supra) at paragraph 26
As a result of these matters, it is the father’s position that he pays a total of $8,247.32 per annum tax on the various fringe benefits which his employer provides to him and his taxable income, on which his child support liability is calculated, is increased by $16,014.18 to $86,280.22. In his statement of financial circumstances the father calculates that he pays what is described as personal income tax of $561.63 per week or $29,204.76 per annum or in real terms 41.56% of his actual gross cash income. This includes the various sums attributable to the fringe benefits he receives. The father believes that the inclusion of the fringe benefits amount in his child support income is artificial. He deposes as follows:
“My assessment is being calculated on my income plus the fringe benefits I receive from my employer. However, these fringe benefits are not paid in cash and about half the amount is attributable to the taxation component. My taxable income is not a true reflection of the actual income I receive.”[6]
[6] see father’s affidavit(supra) at paragraph 23
By implication, it is the father’s position that it is unfair to make him pay child support in cash on the basis of an artificially inflated salary, which is not actually paid to him in cash. In essence he cannot convert the fringe benefits into cash to pay the child support which has been assessed on it.
The parties separated on 5 July 2003. They appear, certainly the father, to have wished to complete the division of their matrimonial property and other financial responsibilities as soon as possible. At least ostensibly they remained on good terms. At separation the parties jointly owned their former matrimonial home at 10 C C, R. It was valued at approximately $180,000.00 and was subject to a mortgage of $140,000.00. The father wished to retain the property. The parties also owned a motor vehicle.
On 1 August 2003, concurrently with the making of the orders regarding arrangements for the joint care of the three children concerned, the Family Court at D made consent orders dealing with arrangements for the division of the parties’ matrimonial property. The father was to retain the C C property and the motor vehicle and pay the mother the sum of $16,700.00. Items of household furniture and effects were divided between them, with the father retaining items of furniture and the mother retaining white goods, beds, cutlery, crockery and kitchen items, and electronic entertainment items. Unless specifically indicated, the orders provided that each party was to retain items of property currently in his or her possession.
The mother is now somewhat critical of these orders, which she now believes were unfair. She points to the fact that there was a marked discrepancy in the father’s favour in respect of superannuation entitlements. Although she indicated to the court at the time the orders were made that she had obtained legal advice in regards to them, this was not the case. In any event, it is not the role of this court to commence any examination of the appropriateness or otherwise of the orders, which neither party currently wishes to challenge.
Analysis of the orders, which were made on this occasion, does not provide a full picture of the parties’ financial position. It seems that prior to their separation, the parties were engaged in an unsuccessful business venture, which had left them with a joint debt of $7,500.00. The father paid this debt in full by selling the former family car in October of 2003, which recouped him approximately $4,000.00 and applying other monies he had. However in consideration of the mother’s half responsibility for the debt, the parties agreed that the mother would not pursue the father for child support for a period of three months following their separation.
After the parties separated, the mother moved into a rented unit in G. She sold a litter of puppies the parties had to pay the necessary security deposit. Due to the division of their matrimonial chattels, both parties had to re-equip themselves. In November of 2003 the father borrowed $9,000.00 from his father to buy beds and white goods to replace the beds and white goods, which the mother had retained. This debt was to be repaid by November of 2004 but has not as yet been repaid.
In July of 2003 the parties also had discussion with one another as to the provision of financial support for the children in the shared care arrangement. The father asserts that they did some calculations as to the amount they had expended on the children’s care in the period prior to their separation, primarily from examining shopping receipts. As a result of these calculations, it is his position that it was agreed between them that he would pay the mother the sum of $150.00 per week child support, being a sum that properly reflected these calculations as to the true cost of the children’s maintenance. It was also agreed that he would continue to provide private health insurance for the children and pay the children’s incidental out of pocket educational expenses. The father calculated these expenses as amounting to $2,763.12 per annum. The mother no-longer accepts the validity of this calculation.
On or around 17 July 2003 the parties attempted to ratify this purported agreement in a Child Support Agreement. There was no formal child support assessment in place at the time. The agreement states that it is to commence on 14 August 2003. In late August of that year the father attempted to register the agreement with the Child Support Agency via the P Centrelink Office. The agreement has never formally been accepted by the Agency and its efficacy is currently doubtful.
At some time around July of last year the father discovered that the agreement had not been accepted. He was told that the Agency had no knowledge of the agreement and believed it had not yet received it. The father rectified this situation and provided the Agency with another copy. In August of 2004 the father was informed by the Agency that the agreement would not be accepted in any event.
It seems that the Agency was concerned that the parties had ticked a box on the pro-forma agreement form, which indicated that the child support to be received by the mother was to be reduced by $2,763.12 per year, being the amount of the education and health insurance expenses, which was at odds with what the parties had actually agreed. The father has challenged this decision and sought an explanation as to why the agreement went astray between July of 2003 and July of 2004. It is his position that it was a simple error that the wrong box had been ticked and the agreement should be regarded as otherwise valid. These matters are still outstanding from his point of view.
In any event, in my view, the child support agreement has been largely overtaken by other events. Although the agreement states that it was to commence in August of 2003, the parties had independently agreed otherwise because of the business debt. On 29 October 2003, the father paid the mother the sum of $500.00, which was followed by a further sum of $550.00 on 1 December 2003; $500.00 on 5 January 2004; and $600.00 on each of 3 February, 2 March, 2 April and 4 May 2004. The mother complains that these payments did not reflect the apparent agreement.
Initially, the father was content to leave the children with the mother in the weeks when they were in his care between the end of school and the time he finished work. It seems that the youngest child spent the entire day with the mother. Accordingly it is her view that at this time the parties did not have a true shared care arrangement. Although it does seem that this arrangement suited both of the parties. Other tension began to emerge between the parties after this time. These tensions related to financial matters.
Around the beginning of 2004, the father saw an article in a l n that indicated that the mother was joining a hairdressing salon in C. The father was of the view that the mother should devote herself to full-time employment at this salon. However she applied for social security payments. At the time she was advised by Centrelink staff that it was a pre-condition to her receipt of social security payments that she apply to the Child Support Agency for an assessment of child support. Obviously this measure is designed to protect the public purse.
In April of 2004 the father learnt that of this assessment of child support. He was assessed to pay child support an annual rate of $11,475.00 ($220.67 per week) based on a child support income of $66,831.00. The assessment was apparently for the period from
17 July 2003 until 15 October 2004. I have not been provided with a copy of this assessment, which is referred to in the father’s subsequent departure application to the Agency. In any event it is the father’s position that his liability was backdated only to 11 February 2004.
In May of 2004 the mother also advised the father of her intention to attend C D U in the second semester of 2004 to begin a certificate of business course. This necessitated the mother advising the father that she would have to place D in day care whilst she attended classes. The father took umbrage at these decisions and apparently retaliated by deciding that he would place all three children in day care in the week when they were in his care. This decision upset the mother. She had wanted to spend as much time as possible with the children and believed this was in their best interests. Correspondence passed between the mother’s solicitor and the father.
It seems clear that the father felt it was inappropriate that the mother commence a course of tertiary study particularly when, from his perspective, she had the opportunity of full-time work at the salon at C. Whether his subsequent decision to place the children in day care when they were with him was an attempt to force the mother’s hand in this regard is unclear to me.
On the 3 June 2004 the father applied to review the administrative assessment of child support that had been made. He based his application on the basis of the level of his own expenditure for self-support and on the fact that the assessment did not take into account the mother’s income, earning capacity, property and financial resources of the mother.
The application was determined by Senior Case Officer Short, who refused the application to change the administrative assessment in a decision issued on 16 July 2004. The Senior Case Officer determined that there were no special circumstances arising “out of those of Mr F’s commitments which are strictly necessary in self support and which reduce his ability to contribute to child support”. The Senior Case Officer was also satisfied that the mother was not deliberately failing to fully utilise her earning capacity in an attempt to change her child support entitlement. However the Senior Case Officer indicated that:
“If however, Ms F continues to work part time for an extended period then, in answer to a fresh application considered at a future time, a Senior Case Officer may come to a different view…
I point out that I did find that Mr F had a salary package exceeding $80,000.00. In some circumstances I may have made a decision to increase Mr F’s liability. If Mr F were assessed on his package of $80,260.00 then his annual rate of child support would approximate $14,697.00. In the current circumstances however I find that Mr F would find difficulty in meeting any increased payments and at this time I decline to make a decision increasing his liability.”
The father object to this decision on 16 August 2004. His objection was disallowed on 25 August 2004. Accordingly at this stage the father’s only option, if he remained aggrieved in respect of the assessment of child support was to apply to this court or the Family Court.
On 29 September 2004 a fresh assessment of child support issued for the period from 24 September 2004 until 23 December 2005. As the three children concerned are in shared care, the relevant child support formula has been applied to each of the parties’ income. At this time the father’s child support income was assessed as being $83,977.00 based on his 2003/04 taxation return.[7] The mother’s child support income, also based on her 2003/04 taxation return, was assessed as being $15,977.00. From each of these respective sums must be deducted the exempted income amount of $19,871.00, which is based on the social security allowances applicable to the parties. As is apparent, the mother’s income is exceeded by the exempted income amount, giving an adjusted income amount for her of nil. In the father’s case the adjusted income amount is $64,106.00. In each case the applicable child support percentage of 24% relevant to the care of three children is applied to each of the parties’ income and the result set off against each other. This result in the mother’s assessment of nil being nominally off set against the father assessment of $15,385.00 per annum or $295.87 per week. The father has not sought any internal reviews in respect of this particular assessment.
[7] Obviously this includes a sum attributable to his fringe benefits.
It is the father’s position that he has experienced great difficulty in meeting the subsequent assessment of child support. As a result he has been forced to live in straightened financial circumstances and borrow money from his mother to pay the necessary child support. Mrs O F deposes to having lent the father the sum of $652.91 in October and November of 2004 in order to assist the father meet his liability for child support.
The father commenced these proceeding on 1 November 2004. At that time he also sought a stay in respect of the collection of child support pursuant to section 140 of the Act. This application was successful and collection of child support, other than in the amount of $150.00 per week, was stayed.[8]
[8] See F & F [2004] FMCAfam 751
In July of 2003 the parties had jointly attended at the Centrelink Office in P where the father signed a form in which he waived his entitlement to receive any of the family tax benefit in respect of the three children concerned, notwithstanding they were in shared care. Later, in July of 2004, whilst discord brewed between the parties, it seems clear that the father resiled from this agreement and sought his share of the family tax benefit. As a result the mother has subsequently been deemed to have received an overpayment of $ 3,757.87 and the father has been reimbursed this sum. This has created still more tension between the parties. The parties have also been in dispute regarding the division of the so-called “baby bonus” between them.
The father’s financial position
It is necessary to outline the father’s financial position in some detail. However at the outset, it should be pointed out that it is his position that his necessary and unavoidable weekly expenses, including the child support as currently assessed, exceed his net weekly cash income. Accordingly it is his position that it is currently impossible for him to pay the required amount of child support.
The father deposes that he receives a gross salary in cash of $1,351.27 per week and the family tax benefit of $60.97 per week making a total of $1,412.24. The actual sums he estimates he is personally liable to pay from this sum are as follows:
| Tax | $561.63 |
| Superannuation contributions | $ 10.00 |
| Rates | $ 32.63 |
| Mortgage repayments | $296.50 |
| Health insurance | $ 26.81[9] |
| House and contents insurance | $ 16.93 |
| Food | $135.00[10] |
| Household Supplies | $ 27.00 |
| House Repairs | $ 3l.80 |
| Gas | $ 2.00 |
| Clothing and Shoes | $ 29.00 |
| Children’s Activities | $ 13.00 |
| Child Minding | $ 72.66[11] |
| Medical & Dental Expenses | $ 4.00 |
| Entertainment | $ 10.00 |
| Education Expenses | $ 13.00 |
| Chemist and Pharmaceutical Expenses | $ 14.00 |
| Gardening | $ 7.50 |
| Cleaning | $ 9.00 |
| Repairs | $ 6.00 |
| Dry cleaning | $ 10.00 |
| Books and Magazines | $ 6.00 |
| Gifts | $ 10.00 |
| Hairdressing and Toiletries | $ 17.00 |
| On-line Career Development Expenses | $ 73.25[12] |
| Total | $1,434.71 |
[9] Includes health insurance for both himself and the three children concerned
[10] $67.50 of this sum is said to be attributable to the children. Accordingly in the weeks when the children are with the mother this sum is likely to be considerably reduced. The same observation can be made in respect of several of the items which follow in this schedule. I appreciate however that all these estimates of weekly expenditure have an artificial quality about them and cannot be determined with complete accuracy.
[11] This amount is particularly contentious so far as the mother is concerned given her willingness and availability to mind the children in the weeks during which they are residing with the father whilst he is at work.
[12] This is another controversial expense. The father’s evidence was that he is required by his employer to undergo professional development and sub-editing training at his own expense. No formal evidence was provided by the father in respect of this not inconsiderable expense in the general scheme of things. He is however entitled to claim this expense as a deduction against his taxable income.
The sums the father has included in his statement of financial circumstances which he has attributed as being the expenses paid by his employer, namely electricity, telephone, motor vehicle expenses and airfares have not been included in the above table. The rationale is that these expenses are not provided to him in cash. However the tax he pays on those benefits is paid in cash. Accordingly the tax has been included as a recurrent expense. I appreciate however that the provision to him of a motor vehicle and the payment of his domestic electricity and telephone accounts constitute a considerable benefit to the father, which he would otherwise have to replicate from the income he receives.
I suspect that many of the expenses listed above have been inflated by the father. In particular food and other household expenses are likely to be much reduced in the weeks when he is living alone and the children are with their mother. However, on any view, notwithstanding the fringe benefits the father receives from his employer, his financial circumstances can only be described as tight.
I accept that the father does not live an extravagant or unusual life style. He has an interest of approximately $35,000.00 in the house he is purchasing and an accrued amount of superannuation to the value of about $58,500.00. He has savings of $3,000.00, which is attributable to the back payment of the family tax benefit. He values the contents of his home at $4,500.00. He has no other major items of property. In my view these are not extraordinary items of property to have acquired after a working career of fourteen years.
The father deposes as to the current level of his financial privations. He cannot afford to replenish his domestic gas bottle. His property needs to be treated for termites. He is unable to afford this service. He is unable to pay the rates on his property as they fall due and as a result has entered into a scheme with the relevant municipality to pay them off over time. He is in debt to his parents, in the amounts already described. He also has debts for legal fees of approximately $5,000.00 and has recently entered a credit arrangement to pay additional legal fees.
On the basis of my findings in respect of the father’s financial circumstances, I accept that it is extremely difficult for him to extract an additional amount of $295.87 from his recurrent income, particularly so long as the shared parenting arrangement continues.
The mother’s financial position
It is the mother’s position that she is also in a poor financial position.
I accept that this is so. There is no dispute that in the previous child support year her income was less than $16,000.00. It is also her position that the father received more of the parties’ marital property on separation. This may be so but it is not my role to perform any readjustment in that regard. In any event, it is incontrovertible that the end of the marriage between the parties has left her with few assets of any large value. She has purchased a motor vehicle for herself worth approximately $14,000.00. She has a modest amount of superannuation to the value of $7,000.00. She values her household contents at $5,000.00. As a result of the reallocating of the family tax benefit she currently has a debt of almost $3,500.00 to Centrelink.
Since the parties separated the mother has supported herself and the children when they have been in her care by means of a social security benefits, child support received from the father and some limited part-time work. It is the mother’s position that it is likely to be in the best interests of the children that they spend as much time as possible in the care of a parent, whilst they are still of tender years. It would be her preference to confine herself to part-time work until the time at least when D starts school, which is likely to be the start of 2006. She wishes to avoid using day care, baby sitters and the like for the children as much as possible. It is her position that the father shares these views, certainly that this was his view whilst the parties were married.
The mother commenced a certificate of business course at C D U in July of 2004. She has no plans at present to complete this course. Initially she commenced the course to augment her hairdressing skills. She had some interest in attempting to secure a position in administration. She has put these plans on hold. She has recently commenced work as a part-time hairdresser working up to 25 hours per week at a gross rate of $17.72 per hour. This equates to $443.00 per week or $23,036.00 per annum. She does not wish to extend her hours until the start of 2006.
She remains available to care for the children most afternoons of the week and believes the father’s use of daycare is unnecessary. She also believes that the father has inflated the out of pocket expenses[13] he paid for the children in the past child support year. Initially the father asserted that this sum was $1,369.00 for 2004 but later he conceded that $730.00 was a more likely figure. The mother also pointed to the fact that she too has purchased some items of school uniform and contributed to some other of the school expenses. Given the care arrangement for the children I accept that this is undoubtedly the case. I also accept the mother’s criticism that it cannot be said that all of the monies expended by the father on private health insurance - $1,394.12 per annum is attributable to the children as it contains a component for his own insurance.
[13] Such things as school uniforms and shoes, school fees and excursions, swimming lessons and lunch boxes and school bags
The mother is now working more than she was in 2004. However there will be a delay in her increased income being reflected in the applicable child support assessment. The mother has skills as a hairdresser and waitress. It is her evidence, which the father is not in a position to controvert, that these types of work are covered by awards. It is the mother’s evidence that a full time permanent hairdresser can expect to receive a wage of $15.00 per hour. The father deposed that the full time award wage for a hairdresser is $602.90 per week and for wait and bar staff $529.80 per week. It is the father’s position that these sums increase substantially when overtime and weekend rates are factored in. However on the basis of the evidence before me, I do not believe, putting aside the mother’s present wish to be as closely involved in the care of the children on a day to day basis as possible, that she has a current capacity to earn an income exceeding the sum of $600.00 per week.
The mother’s major expenses each week are her rent of $200.00; car running expenses, including insurance and registration of $108.37; food of $120.00; incidental expenses related to the children such as clothing, minding and the like of $95.00; and her own personal health insurance of $13.00. In the pro forma list of weekly expenses in her statement of financial circumstances she has put nil against very many items which the father has recorded as being recurrent items of expenditure for him. I accept that the mother runs a tight financial household where there is little room for error. Certainly I reject the contention that the mother has an under-utilised financial capacity which she is using to provide luxury items for herself and the children.
The law applicable to departure applications
These proceedings are governed by the Child Support (Assessment) Act. Pursuant to section 3 of the 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 objects of the Act are described in section 4(2) as being intended to ensure:
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 legislatively fixed standards; 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;
The Commonwealth Parliament has seen fit to allow parties to negotiate outside of the confines of the Child Support (Assessment) Act and also to enable the Courts, in special circumstances, to depart from the administrative assessment of child support.
The provisions relating to departure are contained within Division 4 of Part VII of the Act. There are additional particular objects of this division outlined in section 114 which include ensuring:
(a)that children have their proper needs 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 their children.
Accordingly, in considering any departure application, the court must bear in mind the overall financial positions of both of the parents concerned, not merely their, respective taxable incomes and secondly the relevant provisions emphasise that the court must inform itself by reference to principles of justice and equity, in determining any such application.
The provisions of section 117 of the Child Support (Assessment) Act empower a Court to make an order for departure from administrative assessment 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.
If the three conditions as set out in section 117(1) of the 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 and Savery[14] 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[15], 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.”[16]
[14] (1990) FLC 92-131
[15] (1992) 15 FLR 219
[16] supra at page 225
Accordingly, the intent of the Act is that a readily understood and accessible formula should be applied to the incomes of separated parents so that the child support payable by each of them may be easily calculated in an administrative manner. The basis of the formula is each of the parent’s taxable income from each relevant year[17]. The formula is not to be departed from unless “special circumstances” exist.
[17] See section 38 of the Act
In basic terms, the formula works as follows:
·First, the taxable income of the non-custodial parent is taken into account.
·Second, an amount is deducted from that income for the living expense of the non-custodial parent and any natural or adopted children living with that parent.
·Third, if the custodial parent’s taxable income exceeds average weekly earnings, plus a fixed allowance for child care costs, the excess reduces the non-custodial parent’s income.
·Finally, a percentage of the non-custodial parent’s remaining income is paid as support for the child or children involved.
·The Act provides for a range of modifications to the formula in cases where the care of children is split or shared by the child’s biological parents.
·An appeal lies to a Court, such as this one, where one of the parties considers that the application of the applicable formula provided by the Act has been incorrectly applied or interpreted.
Section 117(2) of the Act sets out the various grounds for departure. It is not necessary to outline each of the various grounds available other than to say that in the present case, the father relies on the following grounds:
i)That in the special circumstances of the case, the administrative assessment has resulted in an unjust and inequitable determination because of the income, earning capacity, property and financial resources available to the father – section 117(2)(c)(i).
ii)That in the special circumstances of the case, the capacity of the father to provide financial support for the children is significantly reduced because of commitments necessary to support himself and presumably the three children concerned when they are in his care – section 117(2)(a)(iii)(A)(B).
After considering these various basis for departure and whether or not in the special circumstances of the case it is appropriate for a departure order to be made, the Court must then consider section 117(4) of the Act, which deals with the circumstances in which it is just and equitable to make the departure order sought.
Section 117(4) of the Act reads as follows:
In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
(a)the nature of the duty of a parent to maintain a child (as stated in section 3); and
(b)the proper needs of the child; and
(c)the income, earning capacity, property and financial resources of the child; and
(d)the income, earning capacity, property and financial resources of each parent who is a party to the proceedings; and
(e)the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
(i)himself or herself; or
(ii)any other child or another person that the person has a duty to maintain; and
(f)direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
(g)any hardship that would be caused:
(i)to:
1. the child; or
2. the carer entitled to child support;
by the making of, or the refusal to make, the order; and
(ii)to:
1. the liable parent; or
2. any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order.
Finally it is necessary for the Court to consider section 117(5) and determine whether or not it is proper to make the departure order. Section 117(5) reads as follows:
In determining whether it would be otherwise proper to make a particular order under this Division, the court must have regard to:
(a)the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and
(b)the effect that the making of the order would have on:
(i)any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
(ii)the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.
In Gyselman[18] the Full Court of the Family Court said at page 240 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’.”
[18] In theMarriage ofGyselman (1992) 15 FLR 219
It is clear therefore that each of these three steps must be addressed by the court as a separate issue, namely:
i)Whether one or more of the grounds of departure in section 117 is established, if so:
ii)Whether it is just and equitable within the meaning of section 117(4) to make a particular order; and
iii)Whether it is otherwise proper within the meaning of section 117(5) to make a particular order.
At the core of the dispute between the parties is the father’s assertion that an excessive amount of the financial burden for supporting the parties’ three children in the shared care arrangement is falling on his shoulders because the mother is under-utilising her capacity to earn income. In this regard section 117(7) is relevant. It reads as follows:
In having regard to the income, earning capacity, property and financial resources of the child or a parent of the child, the court must:
(a)have regard to the capacity of the child or parent to earn or derive income, including any assets of , under the control of, or held for the benefit of, the child or parent that do not produce, but are capable of producing, income; and
(b)disregard:
(i)the income, earning capacity, property and financial resources of any person who does not have a duty to maintain the child, or who has such a duty but is not a party to the proceeding, unless, in the special circumstances of the case, the court considers that it is appropriate to have regard to them; and
(ii)any entitlement of the child or the carer entitled to child support to an income tested pension, allowance or benefit.
The import of section 117(7) is to direct the court to be mindful of parents who own assets, which are under utilised so far as their capacity to earn income is concerned – situations where a parent is “asset rich” but “income poor” and so avoiding their proper obligations to contribute to the support of their children. The same considerations apply to parents, who choose not to utilise their full earning capacity and so do not provide financial support for their children to their maximum ability. These considerations apply to parents, who have skills or intellectual abilities to follow pursuits which would guarantee them a certain level of remuneration but choose not to follow those pursuits, either because they find them uncongenial or for some other more cynical reason.
In these circumstances, the court is empowered to substitute its own consideration of what is an appropriate level of income for the parent concerned by notionally considering the income available to that parent if he or she pursued some particular form of occupation available to him or her or configured his or her assets in a different way. The aim of the legislation being to prevent parents choosing not to work or allowing them to use their assets in such a way so as to avoid their child support obligations.
As has already been indicated, one of the major objects of the child support system is to place the primary obligation for the financial support of children on the parents of those children. Accordingly, the court is directed to disregard the income, earning capacity, property and financial resources of any person who does not have a duty to provide financial support for such a child. However, if special circumstances exist, the court can have regard to the financial circumstances of such a third person. Clearly, the section is designed to cover situations where a parent has disposed of assets in a not at arms length transaction, in order to avoid his or her obligations to pay child support.
In this case, the father seeks a departure order beyond the year of assessment. He also seeks orders in respect of an administrative assessment, which has not as yet been subject to the internal reviews available to him in the Child Support Agency. It is clear that the court is empowered to make such a departure order. In Dwyer v McGuire[19] Lindenmayer J said as follows:
“In any event, I believe that the structure of the act is such that once a valid application for departure has been made, it throws open for consideration by the court the question of departure from the administrative assessment provisions of the act not only in respect of any current or past child support years but also in respect of any future years.”[20]
[19] (1993) FLC 92-420 at 80,316
[20] Approved by the Full Court of the Family Court in Hendy & The Deputy Child Support Registrar and Webb [2001] FamCA 632
Discussion
Special circumstances and the grounds specifically nominated by the father(a)
It is I think generally recognised that more and more separated parents, in this day and age, are wishing to share equally in the provision of day to day care for their children, as the parties in this case have done. Such a decision is not one to be taken lightly, as it must necessarily have all sorts of implications for the parents concerned. Obviously many of those implications will be financial ones but it also may be necessary for the parents concerned to review other previously made arrangements for the care of the children concerned.
It is clear to me that the decision the parties made in July of 2003 to share the care of J, J and D is one that has had particularly severe financial ramifications for them both. It is not appropriate for me to look behind the reasons the parties had at the time for seeking the orders which were ultimately made by the Family Court on 1 August 2003. As those orders have been made, it is to be assumed that they encapsulate the best possible care arrangements for the children concerned, from the perspective of both the father and the mother.
In the past the parties in this case elected to share responsibility for the care of the children in what can be described as a conventional manner. The father was the major breadwinner and the mother provided the majority of primary care. The shared care arrangement, which has been in place since towards the end of 2003 and throughout the whole of 2004, has resulted in the father assuming more of the responsibility for the primary care of the children in the weeks when they are residing with him. In my view, the evidence in this case does not indicate that there has been a commensurate shift to the mother in respect of the provision of financial support for the children to balance out this shift in primary care. In my view the evidence indicates that this financial burden has fallen unduly on the shoulders of the father.
I am satisfied that the current arrangement has resulted in an enormous financial burden being placed on the father’s shoulders. I am satisfied that he is not feigning his current financial difficulties nor can it be said that he the author of those difficulties through his own negligence or fault or that he has engineered those difficulties for some ulterior purpose. His difficulties are due in no small part to the particular way in which he is remunerated. A significant proportion of his salary is provided in benefits rather than in cash. However he is effectively assessed to pay both tax and child support in cash. In those circumstances, it seems to me to be unfair to assess his child support income on the basis of these fringe benefits.
The mother is to be praised for wishing to devote herself as much as possible to the care of the children and avoid the necessity of placing them in childcare. However, her remaining solely at home and maintaining the role of primary carer in both the weeks she has the care of the children and the weeks she does not, seems to me to be a luxury the parties can no longer afford. The orders of 1 August 2003 were consent orders. Ostensibly the mother was a willing participant in them and, as I say, they are taken to reflect the best interests of the children concerned.
I do not think that it can be said that the father is under some obligation to utilise the mother to care for the children in the weeks when the children are with him to reduce his care expenses for them. The orders place no such obligation on him and one should not be inferred. The father is not in a position to intervene in how the mother chooses to care for the children in the weeks when they are with her. In my view a residence order in favour of a particular parent implies with it authority to make the necessary decisions necessary to implement such a residence order. In this regard, order 2 of the orders of 1 August 2003 empowers each of the parties to have responsibility “for making decisions concerning the day to day care, welfare and development of the said children when the children are living with them.” In my view this responsibility encompasses authority to make decisions concerning after school care.
In all these circumstances it seems to me that the mother, in the now radically altered parenting geography which prevailed in the aftermath of the parties’ separation, was under some duty to consider how the financial support of the children was to be maintained in the future. With the shift of some of the primary care of the children to the father, some of the responsibility for their financial support shifted to her. In those circumstances it was no longer open to her not to utilise to the full her income earning capacity as a hairdresser.
The child support legislation emphasises and prioritises the obligation of parents to support their children financially and measures the level of that support according to a parent’s capacity to provide that support. In this case, I am satisfied that the mother has a capacity to earn up to $32,000.00 per annum as a hairdresser employed on a full-time basis. The central question in this case is whether in all the circumstances it is appropriate to, in effect, compel the mother to utilise that capacity, when it would be her preference to remain in the home for significant periods of time to be available to care for the children.
The Full Court of the Family Court discussed this difficult issue in DJM vJLM [21] and said as follows:
“It is open to a court to give weight to the ability of a party to earn income especially where the opportunity clearly exists to utilise that ability. Whether it is or is not appropriate to require a party to work particular hours or work in a particular occupation is a question peculiarly within the province of a trial judge and needs to be measured on a case by case basis. …
A judge might accept that it is unreasonable to expect a parent to continue to work 80 hours per week whilst having obligations to care for one child, and whilst that parent is still earning more than sufficient for his or her own needs and the needs of that parent’s children. Alternatively, a judge might conclude, based on a proven work history, that such a work pattern is entirely reasonable in the circumstances. Ultimately the matter reverts to the exercise of discretion by the trial judge based on the individual circumstances of the case then being tried.”
[21] DJM v JLM (1998) FLC 92-816 at page 85, 272
Relationship breakdown is invariably traumatic for all concerned. It is not uncommon for the parties concerned to make all sorts of reappraisals of their goals and objects in life. Certainly the parties in this case radically reappraised how J, J and D were to be cared for in future. This reappraisal had financial implications for both the father and the mother. In this case it has been the preference of the mother to remain largely in the home to be available to care for the parties young children. Notwithstanding the change in care arrangements for the children, the father has felt compelled to remain in the full time workforce. I doubt that either the mother or an appropriate court would have approved any decision by him to cease his work altogether or take up less well remunerated employment. Clearly that would have been viewed as unreasonable. The court must consider the decision of the mother not to utilise her hairdressing skills to their full extent against the background of the child support legislation and the heavy onus in that legislation placed on parents to support their children financially.
I concede that in the particular circumstances of this case, there are likely to be many views as to what is reasonable conduct.
I am satisfied that the concurrent maintenance of both the current child support regime and the shared care regime is untenable. There is no proposal to alter the shared parenting regime. Accordingly there must be some alteration to the child support regime. Although shared parenting regimes can no longer be described as novel, I am satisfied that special circumstances are made out, on the basis of both grounds specified by the father, for a departure order to be made.
Just and equitable – section 117(4)(b)
The father has a much larger income earning capacity than the mother and therefore, whilst the shared care regime continues, must be expected to contribute significantly more to the financial support of the children than she, regardless of the equality in their provision of actual care. I am well aware that, given the average level of income in Australia at present, many would regard Mr F as being comfortably off and Ms F, who is largely in receipt of social security as being in straightened financial circumstances. In my view, neither party can be described as being well off, under the present circumstances. I am satisfied that the father has not engineered his financial circumstances for any malign reason. I am satisfied that he is currently struggling to stay afloat financially. Equally clear is the fact that the mother has only limited financial resources. She does however have a currently under-utilised ability to earn income.
Ordinarily the application of the child support formula to the respective incomes of the parties, where there is such a wide discrepancy in financial resources, would result in a situation where income is distributed fairly between the two such differently financially equipped household in an equitable manner. I am not satisfied that this is the case in this particular matter. That is because the reality of the parties’ situation is that the shared care arrangement cannot be properly supported, as it presently stands, without either a significant deterioration in both parties’ standard of living or an injection of regular income from some other source. As the parties jointly made the decision to inaugurate the shared care arrangement, it is may view that the must each bear some responsibility to confront these difficult issues. As the formula is presently applied it is my view that this responsibility is being disproportionately borne by the father, notwithstanding his markedly superior financial resources.
Accordingly I have reached the conclusion that it is currently just and equitable to depart from the strict application of the child support formula in this case to some limited degree. The departure will reflect the mother’s capacity to earn income and what I view as being the anomaly created by the fact that a significant proportion of the father’ remuneration is provided to him in fringe benefits.
The exercise under section 117(4) of the Act requires the court to balance the hardship between the parties and the child or children concerned in the making or not making of a departure order. As the Full Court pointed out in Gyselman[22], it is almost inevitable that any departure order will result in hardship both ways. At present both parties are suffering some degree of financial hardship. This situation flows from the parties’ decision to embark upon the shared care arrangement. It is likely that this situation will prevail for some time to come, regardless of what orders are made. I am however satisfied that the justice of this case requires some shifting of the hardship from the father to the mother.
[22] See Gyselman (supra) at 79,079
As I indicated in the judgement delivered in connection with the father’s application for a stay order, I am satisfied that he has not attempted to abrogate his financial responsibilities towards the children concerned. It has consistently been his position that he has the financial capacity to pay only $150.00 child support per week together with the continued payment of the children’s health insurance and some of the incidental costs of their education, such as uniforms, swimming lessons, excursions and the like. It is somewhat misleading to suggest that the children receive all of the benefit of the payment of private health insurance as a component of this insurance relates to the father himself. The other category of payments amounts to about $730.00 per annum and the mother also pays a proportion of these expenses.
In these circumstances I do not believe that it is either possible or appropriate for me to take these payments into account in the formal departure process. It must remain a matter for the father whether he wishes to continue to pay them and, if so, whether he, in association with the mother, wishes to request that the Child Support Agency take them into account as non agency payments pursuant to section 71, 71B and 71C of the Child Support (Registration and Collection) Act.
It would also be regrettable, if as a result of any orders made by this court, that the mother is regarded to have had an over-payment of child support. Such an occurrence would only lead to an increase in rancour between the parties, as was the case with the family tax benefit reallocation and perhaps some unforeseen financial hardship in the short term for both the mother and the children.
In my view it is appropriate to fix the father’s child support income at $70,000.00 for the period of the current child support year to take into account the issues previously discussed arising from the payment of some of his remuneration in fringe benefits. In order to take into account the mother’s under utilised income earning capacity it is appropriate to fix the mother’s child support income at $32,000.00 for the same period. When the relevant exempt income is subtracted from both these sum and the applicable child support percentage of 24% is applied it results in a sum of child support of $12,030.96 to be paid by the father and a sum of $2,910.96 to be paid by the mother each year. When these sums are offset against each other the result reached is $9,120.00 or $175.38 per week. I consider this an appropriate result and consider that the father has the capacity to pay this sum.
In reaching this decision I have no wish to devalue the contributions made by the mother on behalf of the children in the period since the parties separated. I can understand why she would wish to remain as available as possible for the children, particularly whilst they are still of tender years.
(c) Otherwise proper – section 117(5)
This provision is directed at protecting the public purse and again emphasises the duties of parents to support their children financially.
I am satisfied that the orders I propose are otherwise proper within the meaning of the section.
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 one hundred and nine (109) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: C White
Date: 14 February 2005
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