Gallagher and Brooks (No.2)
[2007] FMCAfam 1107
•20 December 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| GALLAGHER & BROOKS (No.2) | [2007] FMCAfam 1107 |
| CHILD SUPPORT – Departure application – capacity to pay. |
| Child Support (Assessment) Act 1989, s.117 Gyselman & Gyselman (1992) FLC 92-279 |
| Applicant: | MR GALLAGHER |
| Respondent: | MS BROOKS |
| File Number: | SYM 474 of 2006 |
| Judgment of: | Altobelli FM |
| Hearing date: | 4 October 2007 |
| Date of Last Submission: | 1 November 2007 |
| Delivered at: | Wollongong |
| Delivered on: | 20 December 2007 |
REPRESENTATION
| Applicant: | Self Represented |
| Respondent: | Self Represented |
ORDERS
The Application for Departure filed 16 January 2007 is dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT WOLLONGONG |
SYM 474 of 2006
| MR GALLAGHER |
Applicant
And
| MS BROOKS |
Respondent
REASONS FOR JUDGMENT
By way of an Application for Departure Order filed 16 January 2007 Mr Gallagher seeks a departure from an administrative assessment of child support requiring him to pay child support for his fifteen year old son R, to R’s mother Ms Brooks. I will refer to Mr Gallagher as the applicant, and to Ms Brooks as the respondent.
The grounds for the departure application as set out in the application as follows:
a)That in the special circumstances of the case, the capacity of each parent to provide financial support for the child is significantly reduced because of:
i)The duty of the parent to maintain any other child or another person; or
ii)Special needs of any other child or another person; or
iii)Commitments of the parent necessary to enable the parent to provide support:
(a)Himself or herself; or
(b)Any other child or another person that the parent that has a duty to maintain; or
iv)High costs involved in enabling a parent to have contact with
b)That, in the special circumstances of the case, application in relation to the child of provisions of this Act in relation to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial 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 Orders sought by the applicant are as follows:
That the rate of child support payable by the liable parent be varied to $200 per month for the duration of the child support assessment.
That child support payments are to cease upon the said child of the assessment gaining employment or upon turning eighteen years of age to whichever occurs first.
Both parties represented themselves in these proceedings. The respondent sought that the application be dismissed. An application for a stay of assessment has been dismissed.
Background
The applicant and respondent married in October 1989, and separated in October 1995. R is their only Child. There are two sets of concurrent proceedings. The first was the applicant’s Contravention Application also filed on 16 January 2007. I heard that case on 20 July 2007 and made Orders and provided reasons on 11 September 2007. The Orders I made in those proceedings were:
1. The Orders for R to spend time with the Father are hereby suspended.
2. R is to spend time with his Father as agreed between the Mother, Father and R.
3. The Mother is to use her best endeavours to encourage R to spend time with his Father.
4. Insofar as the contravention application relates to orders for R to spend time with his Father, such contraventions have not been established without reasonable excuse.
5. Insofar as the contravention application relates to failure to consult, such contravention has been established without reasonable excuse.
6. The parents are to continue to attend the Parenting After Separation course as previously ordered.
The other proceedings relate to an application to vary the existing parenting orders. They are still on foot. The parents are attending a Parenting After Separation course.
For all practical purposes the relationship between R and his father has broken down. In my reasons for judgment in the Contravention Application I set out the reasons for this. This means that for present purposes R has been in the sole care of the Respondent since March 2006. I suspended the Orders that would otherwise have required R to spend time with the Applicant because they were futile, and to have done otherwise would have merely precipitated a further contravention application.
Issues
Despite the very broad ambit of the applicant’s claim as set out in his application I was able to ascertain from his evidence, and from discussions with him in Court, that the real basis of his departure application was that:
a)His capacity to provide financial support for R is significantly reduced because of his duty to maintain his wife, Mrs G, and their two children, B and E.
b)The assessment of child support resulted in an unjust and inequitable determination of the level of financial support to be provided for the child because of his income, earning capacity, property and financial resources, as compared to that of the respondent.
The applicant was made aware on several occasions of the need for him to establish special circumstances.
The evidence
In support of the departure application the applicant relied on the following documents:
i)His affidavit filed 16 January 2007;
ii)His financial statement file 16 January 2007;
iii)His affidavit filed 12 March 2007;
iv)His “amended” financial statement filed 10 July 2007;
v)His further affidavit filed 27 September 2007;
vi)Significant quantities of correspondence and documentation relating to his financial matters and dealings with the child support agency.
In support of her application seeking dismissal of the application the respondent relied on the following documents:
i)Her affidavit filed 21 March 2003;
ii)Significant quantities of correspondence and documents relating to her financial affairs.
Both the applicant and respondent gave evidence orally and were cross examined by the other. Mrs G was not required for cross examination. In order to accommodate the parties and also fit in with the very busy circuit in Wollongong, the matter was primarily conducted in the afternoons.
The applicable law
The power to depart from administrative assessment to contained in s.117 of the Child Support (Assessment) Act 1989:
117Matters as to which court must be satisfied before making order
Court may make departure order
(1)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:
(A)just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(B)otherwise proper;
to make a particular order under this Division;
the court may make the order.
Grounds for departure order
(2)For the purposes of subparagraph (1)(b)(i), the grounds for departure are as follows:
(a)that, in the special circumstances of the case, the capacity of either parent to provide financial support for the child is significantly reduced because of:
(i)the duty of the parent to maintain any other child or another person; or
(ii)special needs of any other child or another person that the parent has a duty to maintain; or
(iii)commitments of the parent necessary to enable the parent to support:
(A)himself or herself; or
(B)any other child or another person that the parent has a duty to maintain; or
(iv)high costs involved in enabling a parent to spend time with, or communicate with, any other child or another person that the parent has a duty to maintain;
(b)that, in the special circumstances of the case, the costs of maintaining the child are significantly affected:
(i)because of high costs involved in enabling a parent to spend time with, or communicate with, the child; or
(ia)because of special needs of the child; or
(ib)because of high child care costs in relation to the child; or
(ii)because the child is being cared for, educated or trained in the manner that was expected by his or her parents;
(c)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 determination of the level of financial support to be provided by the liable parent for the child:
(i)because of the income, earning capacity, property and financial resources of the child; or
(ia)because of the income, property and financial resources of either parent; or
(ib)because of the earning capacity of either parent; or
(ii)because of any payments, and any transfer or settlement of property, made or to be made (whether under this Act, the Family Law Act 1975 or otherwise) by the liable parent to the child, to the carer entitled to child support or to any other person for the benefit of the child; or
(iii)because an amount (the additional amount) of a liable parent’s child support income amount was earned, derived or received by the liable parent for the benefit of a resident child or resident children of the liable parent; or
(iv)because an amount (the additional amount) of an entitled carer’s child support income amount was earned, derived or received by the entitled carer for the benefit of a resident child or resident children of the entitled carer.
Note:Section 117A sets out provisions relating to income earned for the benefit of resident children.
High costs involved in enabling parent to spend time or communicate with a child
(3)A parent’s costs involved in enabling the parent to spend time with, or communicate with, a child can only be high for the purposes of subparagraph (2)(a)(iv) or (2)(b)(i) if, during a child support period, they total more than 5% of the amount worked out by:
(a)dividing the parent’s child support income amount for the period by 365; and
(b)multiplying the quotient by the number of days in the period.
High child care costs
(3A)The ground for departure mentioned in subparagraph (2)(b)(ib) is taken not to exist unless:
(a)the costs are incurred by the carer entitled to child support; and
(b)the child is younger than 12 at the start of the child support period; and
(c)the liable parent is not an eligible carer of any eligible child of whom both the liable parent and the entitled carer are the parents.
(3B)Child care costs can only be high for the purposes of subparagraph (2)(b)(ib) if, during a child support period, they total more than 5% of the amount worked out by:
(a)dividing the carer’s child support income amount for the period by 365; and
(b)multiplying the quotient by the number of days in the period.
Matters to consider for purposes of subparagraph (1)(b)(ii)
(4)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, property and financial resources of each parent who is a party to the proceeding; and
(da)the earning capacity of each parent who is a party to the proceeding; 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)the 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:
(A)the child; or
(B)the carer entitled to child support;
by the making of, or the refusal to make, the order; and
(ii)to:
(A)the liable parent; or
(B)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.
(5)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.
Proper needs of the child
(6)In having regard to the proper needs of the child, the court must have regard to:
(a)the manner in which the child is being, and in which the parents expected the child to be, cared for, educated or trained; and
(b)any special needs of the child.
Income, earning capacity, property and financial resources
(7)In having regard to the income, earning capacity, property and financial resources of the child, the court must:
(a)have regard to the capacity of the child to earn or derive income, including any assets of, under the control of, or held for the benefit of, the child 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.
(7A)In having regard to the income, property and financial resources of a parent of the child, the court must:
(a)have regard to the capacity of the parent to derive income, including any assets of, under the control of, or held for the benefit of, the 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.
(7B)In having regard to the earning capacity of a parent of the child, the court may determine that the parent’s earning capacity is greater than is reflected in his or her income for the purposes of this Act only if the court is satisfied that:
(a)one or more of the following applies:
(i)the parent does not work despite ample opportunity to do so;
(ii)the parent has reduced the number of hours per week of his or her employment or other work below the normal number of hours per week that constitutes full‑time work for the occupation or industry in which the parent is employed or otherwise engaged;
(iii)the parent has changed his or her occupation, industry or working pattern; and
(b)the parent’s decision not to work, to reduce the number of hours, or to change his or her occupation, industry or working pattern, is not justified on the basis of:
(i)the parent’s caring responsibilities; or
(ii)the parent’s state of health; and
(c)the parent has not demonstrated that it was not a major purpose of that decision to affect the administrative assessment of child support in relation to the child.
Direct and indirect costs in providing care
(8)In having regard to the direct and indirect costs incurred by the carer entitled to child support in providing care for the child, the court must have regard to the income and earning capacity foregone by the carer entitled to child support in providing that care.
Subsections not to limit consideration of other matters
(9) Subsections (4) to (8) (inclusive) do not limit other matters to which the court may have regard.
The Full court of the Family Court in Gyselman & Gyselman (1992) FLC 92-279 described the three step process to be followed at paragraphs 34-35 of that judgment:
34. The structure of that section is that 117(1)(b) identifies concisely the matters about which the Court must be satisfied and those components are then expanded in sub-sections (2) to (9). Section 117(1)(b) identifies a clear
three step process:
1. Whether one or more grounds of departure in s 117(2) is
established.
If so:
2. Whether it is "just and equitable" within the meaning
of s 117(4) to make a particular order.
3. Whether it is "otherwise proper" within the meaning of
s 117(5) to make a particular order.
35. It is clear from the careful way in which s 117 has been structured that the Court must address each of those three separate issues.
It is apparent that each of the grounds in s.117 requires there to be a “special circumstance”. The Full Court described what they might be at paragraphs 39 and 40 of that judgment:
39. Section 117(2) sets out the grounds for departure from administrative assessment. Each of those grounds is prefaced by the words, "in the special circumstances of the case". Whilst it is not possible to define with precision the meaning of that term, as a generality it is intended to emphasize that the facts of the case must establish something which 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. In Savery's case (p 77-897), Kay J., adopting the view in Philippe (1978) FLC 90-433 at p 77202 in a different context, said that "special circumstances" were "facts peculiar to the particular case which set it apart from other cases". The approach to the interpretation and application of the particular grounds in s 117(2) must be guided by that qualification. 40. Section 117(2) sets out three separate categories of grounds of departure, each with a number of sub-categories and with the potential for overlap.[1]
[1] Gyselman and Gyselman (1992) FLC 92-279 at 39 and 40.
The “special circumstances” that are said by the applicant to arise on the facts of this case are as follows:
i)s.117(2)(a)(iii)- that the applicant’s capacity to pay is significantly reduced because of his commitments to support himself or any other child or another person that the parent has a duty to maintain; and
ii)s.117(c)(i)- that the level of assessment is unjust and unequitable having regard to the income earning capacity, property or financial resources of one or both parents; and
iii)s.117(2)(a)- that the capacity to pay is significantly reduced because of the applicant’s duty to maintain his new wife and children.
Findings
The applicant works with TAFE NSW and alleges that he earns $1526 per week. In his Financial Statement filed 10 July 2007 he claims total expenses or $1810 per week, the largest single item of which is $531 per week to IMB pursuant to a mortgage. Child support expenditure is $128 per week. The applicant and his wife jointly own the property at K which is estimated to have a value of $470,000 but is subject to a mortgage of $336,000. The applicant’s Financial Statement filed on 16 January 2007 also disclosed a liability of $336,000 as a home mortgage. The most recent IMB statements produced by the applicant’s is dated 30 April 2007. It demonstrates that the IMB debt comprises two accounts as follows:
a)Mortgage loan account 200446794 with a balance on 30 April 2007 of $74,516, and with monthly repayments of $519.56
b)Professional equity account 200446795 with a balance at 30 April 2007 of $260,871. On this account there is no monthly repayment as such but the monthly interest charge for April 2007 was $1578.
Thus the total debt balance as at 30 April 2007 was roughly as asserted on both financial statements and the monthly repayment was $2097, again as asserted on the financial statements.
What is not disclosed in either financial statement, however, is the receipt by either the applicant or by Mrs G of Family Tax Benefit A & B. In April 2007 these payments amounted to approximately $450 and they seem to average approximately $180 per fortnight. In a case such as this, where the applicant relies on his duty to maintain his wife and children, it was incumbent on him to disclose benefits received attributable to his family in his two financial statements.
The applicant’s income seems to fluctuate. His first financial statement discloses a weekly income of $1526 in July 2007, but in January 2007 it was $1472. Pay slips and the tax assessments produced confirm that the applicants pay does fluctuate. His payslips indicate a base salary of $79,637, but his 2006 tax return discloses salary from TAFE of $84,756. His sworn financial statement projects a salary of approximately $79,000 from TAFE this year, but his pay slips for 17 May 2007 shows a gross salary of $76,672. The same pay slip shows gross fortnightly pay of $3052. By adding three pays of $3052=$9154 gross to $76,672, it reveals a more likely annual salary at 30 June 2007 of approximately $87,826 or a gross income of $1688.96 per week.
I therefore find that the applicant’s weekly gross income is $1689 per week, and that with an additional money coming into the family house hold from Family Tax Benefit of $90 per week, and $19 per week for hosting a weekly radio show, the household income available to the applicant is $1798 per week.
The applicant claims total expenditure of $1810 per week, or $13 more than I find his household derives in income. He claims $404 as taxation paid. His 2006 tax return indicates that he received a refund of $1744. and he was able to claim work related expenses totalling $2,348, which thus suggests his tax burden will be relieved slightly. His expenses include child minding expenses of $65 per week, but in a case where he asserts that his wife and children are totally dependent on him, and that dependency should be taken into account as regards to his child support liability for R, such a deduction is not reasonable under the circumstances. A claim for child-care cannot take priority over the obligation to pay child support in a case like this.
The respondent earns $43,000 per annum and gave evidence that her husband, Mr B, earns $49,000 per annum. They owe $230,000 to the ANZ Bank on their home. R is their only dependent. Their combined income of approximately $92,000 gives them a household income of $1769, slightly less than the household income available to the applicant.
The respondent was unable to provide accurate evidence about the cost of providing for R. In this regard I adopt the Lee table updated as at August 2006 that shows a weekly cost of maintaining a 15 year old is about $348 per week. The applicant pays $128 per week in child support, or approximately 37% of the cost of maintaining R. The assessment is, according to the applicant, $135 per week, or 39% of the cost of maintaining R.
Discussion
Do the facts of this case establish special circumstances? In my opinion they clearly do not, on whatever ground the applicant may wish to advance. The applicant is only paying approximately 37% of the cost of maintaining his son. He has the capacity to do so. He has a legal and moral responsibility to do so. His other legal and moral obligations are not greater than his obligation to financially support his son. The fact that his relationship with his son has broken down is regrettable, but that does not change his legal and moral duty to support him. The evidence indicates that he is able to manage financially with his commitments albeit with some difficulty from time to time. The applicant’s household is neither a destitute one nor a prosperous one. Indeed, it is probably typical of many Australian households where one of the parents is supporting dependents from previous relationships as well as from current relationships. Indeed, the assessment for child support already reflects the fact that he has two dependent children. There is nothing special or out of the ordinary in this case.
The determination of what should have been a relatively simple case was clouded by a number of relatively simple issues that I find to be irrelevant. The applicant was clearly aggrieved by a series of decisions made by the Child Support Agency to accept the respondent’s assertions that she has sole care of R. The applicant was aggrieved by this because the sole care arrangement was contrary to the order for R to spend time with the applicant. But the Agency clearly had available to it information that R did not want to see his father, and it formed the view that the mother had a reasonable excuse for not complying with the Order. It was quite right to reassess the respondent as having sole care. My decision in the Contravention Application indicates the correctness of their action: The applicant seems to have wanted me to review that decision of the Agency, even though it was not within my power to do so. In any event, on the facts of this case, I would not have changed the decision of the Agency. The fact is that R has been in the sole care of his mother since March 2006.
Another irrelevant distraction was the evidence about whether the applicant and Mrs G are, in fact, cohabiting as a married couple, or separated but living under the same roof. It makes no difference to my decision. These changes may have an impact on the administrative assessment of child support, but they do not go to the issue of departure application. Changes in the applicant’s family circumstances need to be dealt with administratively. In any event I record my doubts as to whether Mr Gallagher and Mrs G are in fact separated at this time. The evidence is not consistent with this. Mrs G was a loud, aggressive and active participant in these proceedings until I made an Order excluding her from the Court during the hearing. Her interruption of the proceedings and disrespect for the Court became quite intolerable. Security had to be called into the court several times. This level of involvement in the proceedings is not consistent with a disinterested non-cohabiting spouse.
I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate: Lisa Molloy
Date: 20 December 2007
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