G and G
[2002] FMCAfam 322
•27 September 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| G & G | [2002] FMCAfam 322 |
| FAMILY LAW – Child support – departure application. Child Support (Assessment) Act 1989, ss.98X, 117 Carey and Carey (1994) FLC 92-489 |
| Appellant: | M T G |
| Respondent: | S G |
| File No: | PAM458 of 2002 |
| Delivered on: | 27 September 2002 |
| Delivered at: | Parramatta |
| Hearing Date: | 17 September 2002 |
| Judgment of: | Scarlett FM |
REPRESENTATION
| Solicitors for the Appellant: | In person |
| Solicitors for the Respondent: | Dignan and Harahan Solicitors |
ORDERS
That there be a departure from administrative assessment of child support with effect from 29 January 2001.
That the Applicant’s liability for child support for the period
29 January 2001 to 1 July 2001 be assessed on the basis of a child support income amount of $39,662.00.That the Applicant’s liability for child support for the period 2 July 2001 to 4 November 2001 be assessed on the basis of a child support income amount of $26,000.00.
That the Applicant’s liability for child support for the period
5 November 2001 to 7 January 2002 be assessed on the basis of a child support income amount of $44,000.00.That the Applicant’s liability for child support for the period 8 January 2002 to 30 June 2002 be assessed on the basis of a child support income amount of $36,000.00.
That the Applicant’s liability for child support for the period 1 July 2002 to 31 October 2003 be assessed on the basis of a child support income amount of $31,798.00.
That the Applicant and the Respondent do all such things and execute all such documents and instruments necessary to authorise the payment to the Child Support Registrar of the sum of $6,000.00 together with all interest accrued thereon held in trust on behalf of the parties for payment out to the Respondent by way of arrears of child support within 14 days of receiving from the Registrar an assessment of arrears of child support calculated pursuant to these Orders.
Liberty to apply in respect of Order 7 on 48 hours notice.
All exhibits are to be returned after the expiration of one month from the date of these Orders.
All documents produced on subpoena with the exception of exhibits may be returned forthwith.
All other outstanding applications except as to costs are dismissed and removed from the Pending Cases List.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAM 458 of 2002
| M T G |
Appellant
And
| S G |
Respondent
REASONS FOR JUDGMENT
This is a departure application relating to a Child Support Assessment dated 25th January 2002. The application was returnable before this Court on 11th June 2002, and was adjourned until Tuesday 17th September 2002 for hearing. The Orders sought by the Applicant are:
a)That leave be granted to hear the application out of time (no issue was taken by the Respondent on this point);
b)That the notice of assessment dated 25th January 2002 be stayed pending the final hearing (a stay was never sought in any interlocutory proceedings);
c)That the arrears for the period 17 February 2000 to 1 April 2001 be recalculated on a child support income amount of $29,674.00;
d)That the arrears for the period 1 April 2001 to 2 July 2001 be reduced to $45.00 and that all late payment penalties be discharged;
e)That the arrears for the period 2 July 2001 to 7 September 2001 be recalculated on a child support income amount of $26,000.00;
f)That the arrears for the period 7 September 2001 to 5 November 2001 be reduced to $45.00 and that all late payment penalties be discharged;
g)That the arrears for the period 5 November 2001 to 26 November 2001 be recalculated on a child support income amount of $44,000.00;
h)That the arrears for the period 26 November 2001 to 8 January 2002 be reduced to $55.00 and that all late payment penalties be discharged;
i)That the arrears for the period 8 January 2002 to 15 March 2002 be recalculated on a child support income amount of $36,000.00;
j)That the arrears for the period 16 March 2002 to the present be recalculated on a child support income of nil; and
k)That all future child support assessments be based on the applicant’s actual gross income minus any car expenses.
The grounds of the application are those set out in s.117(2)(a), (b) and (c) in respect of the arrears up 1 April 2001, and those set out under s.117(2)(a) and (c) in respect of the later arrears.
The Appellant has complied with the requirement that he should object under section 98X of the Act and the Registrar has disallowed the objection.
Background
The proceedings concern child support for the children of the parties’ marriage, whose dates of birth range from 8th April 1991 to 21st May 1998. Their ages range from 11 years down to 4 years. They all reside with the Respondent mother.
The parties were married on 16th September 1989 and were finally separated on 2nd February 2000. The decree nisi dissolving their marriage became absolute on 26th April 2002. Property proceedings between the parties were decided in the Family Court of Australia in December 2001. As a result of those proceedings, there is a sum of $6,000.00 being held in trust by the parties’ solicitors awaiting the finalisation of Child Support proceedings.
At the time of the parties’ separation, they were residing in Queensland. The Respondent and the children moved to Sydney, but the Applicant remained living in Queensland, where he was employed.
On 26th April 2000, the Child Support Agency issued an assessment for the period from 7th February 2000 to 6th May 2001. The assessment was for an annual rate of $4,341.00, being a monthly amount of $361.75. This assessment was based on a child support income amount for the Applicant of $23,251.00.
The Respondent applied for an increase of child support on 22nd May 2000. The application was based on the Applicant’s income at the time. The Respondent claimed that the assessment was unfair as it was based on the Applicant’s 1999 taxable income, which was significantly lower than the income he was earning at the time. The Applicant indicated that the salary component of his employment was $40,932.00 per year, and that he received a car allowance of $18,000.00.
In a Notice of Decision dated 7th August 2000, Senior Case Officer W found that:
“The current assessment is clearly unfair to Ms G as it is based on a level of income significantly lower than the amount currently being earned by Mr G. Accordingly, special circumstances are established.”[i]
The Applicant raised the fact that the cost of his exercising contact required him to pay airfares of $580.00 return to fly from B to Sydney, and that if he drove it would cost him $300.00. The Senior Case Officer took into account the additional costs that the Applicant incurred in exercising contact with the children.[ii]
The Senior Case Officer made a decision to vary the Applicant’s child support income amount to $45,000.00 from 22nd May 2000 (the date of the Respondent’s application) to 30th September 2002. It would follow that the child support income amount for the period 7th February to 21st May 2000 remained at the original figure of $23,251.00.
The Respondent says, in paragraph 7 of her affidavit sworn on 30th July 2002, that the Applicant lodged an objection to this decision on 30th August 2000. The objection was disallowed by Notice of Decision dated 1 November 2000.
The Applicant then applied to change the assessment on the grounds that it cost more than 5% of his child support income amount to have contact with the children, and that he had necessary expenses in supporting himself that affected his ability to support the children. The Respondent made a cross application, seeking to increase the assessment.
In a Notice of Decision dated 29th January 2001, Senior Case Officer L. T refused both applications. The costs of contact claimed by the Applicant amounted to a total of $1,856.00. The Senior Case Officer dealt with the matter in this way:
“I am required to consider whether contact costs are high and the test for determining whether they are high is whether or not they exceed 5% of the relevant child support income amount.
Firstly to succeed under this reason the contact costs must exceed 5% of Mr G’s actual income. In the previous decision this was determined to be $58,000 comprising $40,000.00 per annum from salary and bonuses and $18,000.00 per annum car allowance.
Therefore 5% of this income amounts to $2,900 per annum”.[iii]
As the Senior Case Officer found that the costs of contact only amounted to $1,856.00, which does not exceed $2,900, it was found that the contact costs had not exceeded the mandatory minimum threshold and, therefore, could not be considered. It would appear that the Senior Case Officer applied the wrong test, although this was later taken into account.
The Applicant also submitted that his necessary expenses for his own support significantly reduced his capacity to support the children. The Senior Case Officer found that this ground had not been established, either.
The Applicant objected to this decision, and this objection was partially allowed. The matter was considered by the Regional Registrar, and, in a Notice of Decision on objection dated 16th May 2001, the Applicant’s child support income was reduced from $45,000.00 to $40,000.00. This decision was based on a reconsideration of the Applicant’s work-related expenses.
The Regional Registrar also reconsidered the Applicant’s costs of exercising contact, which had been calculated at $1856.00. The Regional Registrar calculated the mandatory threshold (correctly, in my view) at $2,000.00, being 5% of the Applicant’s new child support income. The costs of contact still did not exceed that figure.
The objection was partially allowed.
On 25th May 2001, the Applicant applied for a decrease in the annual rate of child support. The Applicant said that his income had decreased because he had resigned from his position at B Toyota as from 30th March 2001. He was unemployed until 2nd July 2001. His new employment paid him at the rate of $26,000.00 per annum plus commission plus a car allowance of between $60.00 and $70.00 per week.
The Senior Case Officer refused to change the administrative assessment of child support, finding that there was “clear evidence” that the Applicant left his employment primarily in an attempt to avoid his child support obligations. The Senior Case Officer was satisfied that the Applicant should be assessed on his previous earning capacity. She rejected his argument that he needed to take three months off work because he was suffering from psoriasis due to stress. He had received four weeks holiday pay when he left work.
The Applicant lodged an objection to the decision of the Senior Case Officer. In his objection, the Applicant denied that he had left his position at B Toyota because of the level of child support that he was required to pay. He claimed that his health was a contributing factor:
“I say that I have suffered from arthritic psoriasis for some time. This is exacerbated by stressful conditions. The psoriasis occurs between the joints and connective tissues and effectively means that I am unable to use my hands and arms in the normal way.
Following the break down of my marriage and the move of my children to Sydney, this disease became extremely active and I found it difficult to function on a day to day basis.”[iv]
He referred to proceedings which were then ongoing in the Family Court at Parramatta which were listed for three days’ hearing in December 2001. These proceedings concerned the question of residence of the children. The thrust of the Applicant’s case was that he did not leave his previous employment in order to avoid paying child support, but “for reasons directly related to the breakdown of my marriage and the welfare of my children.”[v]
The Applicant’s objection was dealt with in a Notice of Decision on Objection dated 25th January 2002. His objection was disallowed. The reasons given by the Regional Registrar were:
“Mr G has not succeeded in demonstrating either that there is a substantial error in the facts found by the senior case officer or that a fundamental flaw exists.
The Courts have found that it is not acceptable for a parent to resign voluntarily from a relatively well paid job or to accept a lower paid job. The Courts have made decisions where the child support payable is based on the actual capacity to earn an income. This is because the legislation expects a liable parent to earn as much as they can in order to assist their children.”[vi]
The Applicant’s child support income remained set at $40,000.00. An assessment issued on 25th January 2002, showing that the child support income applied from 7th May 2001 to 6th August 2002.
Issues
The issues in this matter are whether:
a)the assessments should be amended to take into account the Applicant’s costs of exercising contact whilst he was still residing in B and the children were living in Sydney;
b)whether the Applicant’s child support liability should be assessed on the basis of his earning capacity or his actual income; and
c)if the Applicant’s child support liability should be assessed on the basis of his earning capacity, what is his earning capacity for the relevant periods.
Evidence
The Applicant gave evidence on his own behalf. He provided an affidavit to which he had annexed a number of documents, including copies of accounts for medical treatment on 8th and 22nd February 2002 from Dr David Spencer, a specialist in rheumatic diseases. Dr Spencer’s rooms are at the Specialist Medical Centre in H Road, W, New South Wales. In his affidavit, the Applicant referred to obtaining medical treatment from Dr S M, a general medical practitioner practising at G G, in Queensland, and a Dr B, a general medical practitioner of M, New South Wales.
There were no affidavits from any of these medical practitioners.
The Applicant was cross-examined by Mr Clarke, for the Respondent. He denied being paid a wage by a business called R A A, even though he had a business card showing him to be their National Sales Manager. He admitted doing some work for the business “as a favour”, although he said that his fuel and accommodation expenses had been reimbursed by the business. It emerged that the business is part-owned by his brother J G.
The Applicant denied that he told Senior Case Officer W of the Child Support Agency that he had left his work with B Toyota because of his opposition to paying child support. He maintained that he left that employment because of his health and because he wished to move to Sydney to be nearer his children.
The Applicant explained that he was not legally represented because of his impecunious financial state. He told the Court that he had become bankrupt. He was given the opportunity to keep his case open so that he may attempt to obtain from his former solicitors documents that may assist him in the presentation of his case. After the luncheon adjournment he informed the Court that he had been unsuccessful in this endeavour.
The Respondent gave evidence by affidavit and was cross-examined by the Applicant. The Respondent also relied on an affidavit by a C P C, a Licensed Private Inquiry Agent.
Mr C deposed in his affidavit that he had telephoned the number on the business card describing the Applicant as the National Sales Manager for R A A and the Applicant had answered the telephone.
Mr C recounted a conversation with the Applicant where the Applicant said “I am the Sales Manager”. He described how he contacted the boss of the business, Mr A A, who said to him “M G has been employed as a sales representative for this business for the past 12 months.”
Mr C was cross-examined about these conversations and maintained the truth of his account. He was asked about the absence of a record of the calls on the telephone account and said that he had made the calls from a silent number.
The Respondent tendered certain documents into evidence. Exhibit 1 is a copy of the Applicant’s Income Tax Return for the year ending 30th June 2002. This document shows a taxable income of $31,798.00 and a refund of income tax due of $1506.63. That amount has been applied to the child support arrears, as the result of a notice issued pursuant to the provisions of s. 72A of the Child Support (Registration and Collection) Act 1988, which allows the Registrar to collect child support related debts from a third person.
The Respondent also tendered a letter dated 16th September 2002 from the Regional Registrar of the Child Support Agency. This letter, which has been marked as Exhibit 2, shows that the amount of $11,510.44 is currently owing in Child Support.
Conclusions
It is a major part of the Applicant’s case that his health has affected his earning capacity. In his affidavit sworn 2nd May 2002, he says:
“In relation to my employment, I do not feel that I can cope with the high demands of a sales position in a company. Accordingly, I would like to commence doing some consultancy work for approximately 20 hours per week.”[vii]
In his Departure Application, the Applicant relies on the provisions of s.117(2)(c) of the Child Support (Assessment) Act, which provide the ground for departure:
“that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable level of child support to be provided by the liable parent for the child:
(i) because of the income, earning capacity, property and financial resources of either parent or the child.”
The Applicant has not provided any admissible evidence from any medical practitioner as to his health. He has described his symptoms, and it is not difficult to accept that he has suffered stress as a result of the breakup of his marriage, the ongoing litigation in the Family Court and his financial reverses, but he has not produced any evidence that would enable the Court to make any findings about his health at present or in the future. The High Court of Australia has commented about the inference that may be drawn by the failure of a party to bring before the Court “some circumstance, document, or witness, when either the party himself or his opponent claims that the facts would thereby be elucidated” (Jones v Dunkel, (1959) 101 CLR 298 at 320).
The first period which the Appellant wishes the Court to consider is described as “17 February 2000 to 1 April 2001”, although it is clear that there has been a typographical error, and the correct starting date should be 7 February 2000. The Applicant seeks that the arrears for that period should be recalculated on a child support income amount of $29,674.00. It is clear from the decision of Senior Case Officer W made on 7th August 2000 that the Applicant’s child support income for the period 7th February to 21st May 2000 remained unchanged, at $23,251.00, a lesser figure than the amount sought. Clearly, that part of the application must fail.
The Senior Case Officer found that the Applicant’s child support income amount from 22nd May 2000 to 30th September 2002 should be set at $45,000.00. The Applicant’s objection was disallowed.
The Applicant has not brought any evidence to show that the decision by Senior Case Officer W on 7th August 2000 or the subsequent Notice of Decision on Objection of 1st November 2000 (no copy of which was put into evidence) was in any way flawed.
The Notice of Decision by Senior Case Officer T dated 29th January 2001 dealt with both the Applicant’s claim that it cost the him more than 5% of his child support income amount to exercise contact as well as his claim about his necessary expenses. Both of those claims were refused.
As I mentioned in paragraph 15 above, the Senior Case Officer appears to have applied the wrong test in assessing whether or not the Applicant’s costs of exercising contact exceeded 5% of his income. The Senior Case Officer stated that “the contact costs must exceed 5% of Mr G’s actual income”. The test provided by s.117(3) refers to the parent’s child support income. In this case, the Senior Case Officer used the Applicant’s actual income of $58,000.00 rather than his child support income of $45,000.00, although the Applicant’s claim would still not have succeeded if the correct income had been used. The Senior Case Officer found that the contact costs must exceed 5% of $58,000.00, being $2,900.00, but the contact costs claimed by the Applicant only amounted to $1,856.00. Even if the correct income had been used, the contact costs would have had to exceed $2,250.00 (5% of $45,000.00).
When the Applicant objected to this decision, the Regional Registrar partially allowed the objection by reducing the child support income to $40,000.00, as a result of re-assessing the Applicant’s work-related expenses. This change took place from 7th May 2001, and was to last until 6th August 2002.
Unfortunately, the Regional Registrar appears to have made an error in dealing with the question of the Applicant’s costs of contact. Whilst the correct test was applied, and the correct threshold of $2,000.00 (5% of $40,000.00) was applied, the Regional Registrar appears to have used the costs provided in the earlier application, saying “The figures which you provided in your objection letter did not exceed this threshold".[viii] The fact is that the Applicant, in his letter of objection dated 21st February 2001, had provided figures showing the cost of contact to amount to $2,337.60 per annum, which clearly exceeds the threshold of $2,000.00.
I am of the view, therefore, that the Applicant’s child support income for the period should be set at $39,662.00, to take into account the costs of contact that exceeded the threshold figure of $2,000.00, and that this should date from 29th January 2001. The Regional Registrar, when partially allowing the objection, should have, in my opinion, made the assessment retrospective to the date of the Notice of Decision that was the subject of the objection.
The next matter to be considered is the decision by Senior Case Officer W on 6th August 2001, refusing to change the administrative assessment. The Senior Case Officer was satisfied that the Applicant only left his employment at B Toyota on 30th March 2001 because he objected to the level of child support he had to pay. Accordingly, even though there was evidence that the Applicant had obtained employment in Sydney at a salary of $26,000.00 plus commission and car allowance, Senior Case Officer W found that the Applicant should still be assessed on the basis of his previous earning capacity of $40,000.00.
The question of assessing a person who voluntarily leaves work on the basis of their earning capacity has been considered by the Family Court in Carey and Carey (1994) FLC 92-489 and by the Full Court of the Family Court in DJM and JLM (1998) FLC 92-816. It is simply not correct to make the bald assertion that appears on page 2 of the Notice of Decision on Objection dated 25th January 2002 that “the legislation expects a liable parent to earn as much as they can in order to assist their children”. The Full Court has made it clear that whether it is 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”[ix].
In this case, I take into account the fact that the Applicant left his employment in B because he had left B itself. His children now reside in Sydney and he has chosen to return to Sydney, where he resides with his parents. He stated that he wished to be nearer to his children. I am satisfied that his actions were reasonable in the circumstances. He did obtain employment in Sydney after three months (four weeks of which was covered by his holiday pay from B Toyota). The fact that his employment in Sydney, again in the motor trade, was at a lesser salary does not automatically lead to the inference that he is trying to avoid paying child support. I consider that the Applicant’s contention that his child support income for the period 2nd July to 7th September 2001 should be set at his actual salary of $26,000.00 has merit. I am similarly of the view that his child support income for the periods when he was in employment, as set out in his affidavit, should be set at his then salary rate. His periods between employment should be set at his previous income, as that would be an indication of his earning capacity. I am not prepared to reduce the amount of arrears for those periods to the nominal amounts set out in the departure application.
The Applicant says that he is currently unemployed, and denies that he is in paid employment with R A A, notwithstanding the evidence that he has some real connection with that firm. If he is being paid a wage or salary, the subpoenaed material did not produce any evidence of that fact. At the same time, the Applicant’s claim that he is only capable of working for 20 hours per week is not backed up by any medical or any other evidence at all. It is nothing more than a bald assertion.
The Respondent has produced a copy of the Applicant’s most recent income tax return, signed on 20th August 2002. I take this to be reliable evidence that the Applicant has a capacity to earn income in the amount set out in his income tax return, namely $31,798.00 per annum.
There remains the question of the sum of $6,000.00 held in trust against the arrears of child support, pursuant to the orders of Coleman J in the Family Court. It is my understanding that the Regional Child Support Registrar issued a Notice pursuant to Section 72A of the Child Support (Registration and Collection) Act to the Applicant’s former solicitors, Coleman & Greig, requiring them to forward that amount to the Registrar to be set off against the Applicant’s arrears of child support. I further understand that this amount has not been forwarded to the Registrar, as the order of the Family Court was that this amount should be held in trust until the finalisation of these proceedings.
These proceedings are now finalised (subject to any appeal that may be lodged), and it is clear that the orders I propose to make will require the arrears to be re-calculated by the Child Support Agency. Nevertheless, I would expect that the arrears will still exceed the amount held in trust. I propose to make an order that the amount be paid to the Child Support Registrar for payment out to the Respondent within 14 days of the issue of a re-assessment of the arrears as a result of these proceedings. I will allow liberty to apply in respect of that order.
I am satisfied that there are special circumstances for departure from administrative assessment of child support for the reasons set out above. I am also satisfied that it would be just and equitable as regards the children, the Applicant and the Respondent, and it would be otherwise proper to make the following Orders.
I certify that the preceding fifty-five (55) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Associate: A. Coutman
Date: 1 October 2002
[i] Notice of decision 7 August 2000, page 3
[ii] at page 4 of the decision.
[iii] Notice of Decision 29 January 2001, page 2
[iv] Applicant’s affidavit, Annexure “P”
[v] ibid.
[vi] Notice of Decision on objection dated 25 January 2002, page 2.
[vii] Applicant’s affidavit, paragraph 50.
[viii] Notice of Decision on Objection dated 16 May 2001, page 2
[ix] DJM v JLM (1998) FLC 92-816.
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