G and D - [2004] FMCAfam 213

FEDERAL MAGISTRATES COURT OF AUSTRALIA

G & D

[2004] FMCAfam 213

CHILD SUPPORT – Father’s departure application – eligible carer mother reduces working hours to undertake a university degree – whether she should be assessed on the basis of the income she had forgone.

Applicant:

SANDRA HELEN G

Respondent:

MICHAEL ANTHONY D

File No:

CAM991 of 2003

Delivered on:

7 May 2004

Delivered at:

Canberra

Hearing date:

6 January 2004

Judgment of:

Brewster FM

REPRESENTATION

Counsel for the Applicant:

Self Represented

Counsel for the Respondent:

Mr Brzostowski

Solicitors for the Respondent:

Chris Crowley & Associates

ORDERS

That the departure order made by the Child Support Agency on
19 January 2003 and confirmed on 20 June 2003 be set aside.
That the mother’s child support income be assessed on the basis of Subdivision D of Division 2 of Part 5 of the Child Support (Assessment) Act.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
CANBERRA

CAM991 of 2003

D G

Applicant

And

S D

Respondent

REASONS FOR JUDGMENT

Introduction

This matter concerns a dispute between the parties as to child support. The essential issue is whether the child support income of the mother, who is the eligible carer, should be assessed on the basis of the income she actually earned since 30 October 2002 or on the basis of the income which she is capable of earning. The issue arises because the mother decided to undertake studies for a law degree. To enable her to do this she reduced her hours of employment. The result of this was that her income fell below the disregarded income amount.
The mother is employed in the Commonwealth Public Service having joined that Service in 1986. In the late 1980s she obtained a Bachelor of Arts degree. After a number of unsuccessful applications she was accepted into a law course in 2000. In March 2001 she commenced full time study and, as I understand it, confined her employment to university vacations. Up until that time she had been working part time in the Public Service and had an income of $48,000 per annum. She worked part time because she had the care of the child L who was the subject of the child support assessment. L was born on 21 November 1993 and is aged 10.
On 30 October 2002 the father applied to the Child Support Agency for a change in the assessment. In essence his claim was based on the contention that the mother should be assessed on the basis of income she was capable of earning rather than her actual income. As I understand it his contention to the Child Support Agency was that her income should be assessed on the basis of income she could earn if she worked full time in her Public Service job plus her income from two rental properties.
On 19 January 2003 Senior Case Officer Wootten determined that the mother's child support income should be assessed at $62,000 per annum for the period 30 October 2002 to 30 October 2004. Whilst the basis of fixing this figure is not entirely clear it appears to be an aggregation of the $48,000 the mother was earning prior to commencing her studies plus $14,000 rental income from two properties owned by her which she had rented out. This decision was later confirmed by another officer of the Agency Ms Sheargold.
In one respect it appears to me that the decisions of Senior Case Officer Wootten and Ms Sheargold were flawed. The mother owns a house in Fisher and a unit in Campbell. The Campbell unit has always been an investment property and rented out. Up until she commenced her law studies however she and L lived in the Fisher property. She moved from Fisher to live with her parents after she commenced her studies because with her reduced income she was unable to support herself and needed the additional rental income from that property. It seems to me to be plainly unjust that the mother should have her child support income assessed at $48,000 plus her rental income from Fisher when she only receives that rental because she is not actually earning $48,000.
In the light of the ultimate decision I reach in this case however I do not need to take account of any rental income. As is apparent from the orders at the commencement of this judgment I am ordering that the mother's child support income be her actual income. If her actual Public Service income is aggregated with her rental income it is below the disregarded income amount. Her rental income therefore becomes irrelevant.

Discussion

It is, in my opinion, not unreasonable for the mother to choose to work part time. She has done so for some years. Given that she is the sole carer of a 10 year old child I believe it would be inappropriate to assess her on the basis of having a capacity to earn a full time income.
The issue of her law studies is more difficult. In essence the father's case is that the mother already has a degree and it is not reasonable that his child support should be increased by reason of her decision to reduce her income in order to obtain a second degree.
It has long been accepted that in fixing a parent's child support income that parent's actual income can be ignored and an amount fixed based on the parent's capacity to earn income. There are a number of cases decided in the Family Court which address this issue. Many of them are referred to in the Full Court decisions of Scott v Scott (1994) FLC 92-457 and DJM v JLM (1998) FLC 92-816.
Some cases are easily decided. If a parent for no objectively good reason gave up employment or gave up full time employment for part time employment or if a parent gave up employment to embark on a university course which has no potential to increase that parent's income then I would invariably assess that parent's child support income on the basis of earning capacity rather than actual earnings.
The position becomes more complex where a parent gives up a higher paid position for a lower paid position but where the lower paid position has the potential ultimately to attract a remuneration greater than the job which was given up. Difficult decisions also arise where the parent gives up full time employment to embark on a university course or other course of training where those studies have the potential to increase that parent's income. This is such a case.
All of the reported cases of which I am aware in this area deal with a payer parent who reduces his income. In the present case however it is the payee parent who has taken this step and I will discuss the implications of this later in this judgment. My approach in relation to payer parents is set out in the case of S v S (2004) FLC 93-158 where I said as follows:
The test to be applied in such cases is, I believe, as follows. First one should look at the payer parent's long term earning potential and the benefits that may ultimately be obtained by that parent (and also by the payee parent and the child in the form of substantial maintenance payments) if that potential is realised. An assessment must then be made as to whether or not, in all circumstances, it is reasonable that the child or the payee parent suffer short term deprivation by reason of the prospects of these longer term benefits being obtained. The wishes and interests of the payer parent should not be ignored but must be considered in the light of that parent's responsibility to maintain his or her child.
As I have indicated the present case is the obverse in that it is the payee parent who has reduced her income. Observations about hardship to the child are not apposite in this case. The hardship, if that is the correct term, will be suffered by the father in that he will be liable to pay a higher rate of child support than he would if the mother's child support income amount were assessed on the basis of her earning capacity.
In the light of this I reformulate the test to cover a case such as the present in the following terms. First one should look at the payee parent's long term earning potential arising from the obtaining of additional qualifications and the benefits that might ultimately be obtained by
a)that parent in the form of increased income;
b)the payer parent in that the payee parent's child support income will be increased; and
c)the child who will have the benefit of living in a more prosperous household
if that potential is realised.
An assessment must then be made as to whether or not in all the circumstances it is reasonable that the payer parent suffer short term financial disadvantage by reason of the prospects of these long term benefits being obtained. The wishes and the interests of the payee parent should not be ignored but must be considered in the light of that parent's responsibility to share with the payer parent the cost of maintaining the child in proportion to the respective income earning capacities of both parents.
The mother gave evidence that she was to complete her course in early 2004. Whilst I found the evidence rather confusing it appears that with a law degree she could transfer to the Legal Section of her department and would be able to earn a greater income as a result. The amount of the increase would be dependent on whether she worked full or part time but if she decided to work full time it would be in the order of $9,000 per annum.
In my opinion the benefits that may be obtained by the mother undertaking a law course justify having her child support income for the period October 2002 to the beginning of this year being assessed on the basis of her actual earnings rather than on the basis of her earning capacity. Accordingly I propose to set aside the determinations of Senior Case Officer Wootten and Ms Sheargold. The result of this will be that the mother will be assessed on her actual income. It is to be noted from early 2004 this will be income from either part time or full time employment in the Public Service.
Whilst it does not fall for determination in this case it might be helpful to the parties if I were to indicate my views in relation to a matter which was agitated at the hearing. The mother gave evidence that she was contemplating undertaking the Legal Workshop course with a view to becoming admitted as a legal practitioner. She was contemplating resigning from the Public Service at the completion of this course with a view to obtaining employment as a solicitor in private practice. Were she to do so and were an application to be made by the father for a departure order I would regard it as appropriate to make such an order unless there was cogent evidence that within a reasonable time frame she would be earning an income sufficient to satisfy the test I have set out in paragraphs 14 and 15. Counsel for the father invited me, in effect, to take judicial notice of the fact that as an employed solicitor in private practice her starting salary would be significantly less than that which she could earn as a lawyer in the Public Service and that it would be some time, if at all, before she could earn an income greater than that paid to Public Service lawyers. Whilst I suspect this is right I am not prepared to take judicial notice as invited and in any event it is unnecessary to do so. In any future litigation the onus would be on the mother to demonstrate that counsel’s contention is inaccurate.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Brewster FM

Associate:

Date: