GCL and GRP
[2004] FMCAfam 673
•25 November 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| GCL & GRP | [2004] FMCAfam 673 |
| CHILD SUPPORT – Application for departure orders – husband agrees to pay private school fees – where husband fails to make full and frank disclosure of his financial position – where husband stubbornly refuses to accept the inadequacy of his contribution to child’s financial support – apportionment between the parties of the overall costs of maintaining the child in accordance with the parties’ respective financial positions. |
Child Support (Assessment) Act 1989
Child Support (Registration and Collection) Act 1988
Family Law Act 1975
Luton v Lessels (2001) FLC 98-015
Gyselman (1992) FLC 92-279
Hides v. Hatton (1997) FLC 92-759
Ross and McDermott (1998) 23 Fam.L.R. 613
Chang v Su (2002) FLC 93-117
Mezzacappa (1987) FLC 91-853
Black & Kellner (1992) FLC 92-287
Weir (1993) FLC 92-338
Oriolo v Oriolo (1985) FLC 91-653
Briese (1986) FLC 91-715
Giunti (1986) FLC 91-759
Kannis (2002) FamCA 1150 (reported in (2003) FLC 93-135)
Hardman (2003) FamCA 1057 (unreported)
Rayson (2003) FamCA 1384 (unreported)
DJM & JLM (1998) FLC 92-816
Scott (1994) FLC 92-457
Scott v Stauder (unreported judgment delivered 20 November 1996)
| Applicant: | GCL |
| Respondent: | GRP |
| File No: | MLM 5286 of 2003 |
| Delivered on: | 25 November 2004 |
| Delivered at: | Melbourne |
| Hearing date: | 4 May 2004 |
| Judgment of: | Walters FM |
REPRESENTATION
| Counsel for the Applicant: | Ms Vohra |
| Solicitors for the Applicant: | Lander & Rogers |
| Counsel for the Respondent: | Mr Mawson |
| Solicitors for the Respondent: | CE Family Lawyers |
ORDERS
(1)Pursuant to s.117 of the Assessment Act, there be a departure from the administrative assessment of child support payable by the husband to the wife for the child W as follows:
(a)For the period from 1 April 2003 to 12 April 2008 (being the date upon which W turns 18) the annual rate of periodic child support be set at $14,040.00 (being $1,170.00 per calendar month).
(b)The annual rate of periodic child support payable by the husband to the wife will increase from 1 April each year (commencing 1 April 2004), in accordance with variations in the consumer price index for Melbourne.
(2)Pursuant to s.124 of the Assessment Act, the husband provide additional child support to the wife for the child W by way of payment of all the following school fees and expenses for W while she continues to attend Mentone Girls Grammar (or such other school as the parties shall agree upon from time to time), such payment to commence with the 2003 school year:
(a)payment of all school fees for W as invoiced by Mentone Girls Grammar, or such other school as may be agreed upon between the parties from time to time;
(b)stationery, book and uniform expenses;
(c)excursions and camp expenses (compulsory and non-compulsory);
(d)hire and purchase of sporting and musical equipment;
(e)computer and software expenses as may be required by the school; and
(f)incidental expenses as invoiced by the school from time to time, inclusive of building levies and contributions.
(3)The child support ordered to be provided by the husband in (2) above is not to be credited against the husband’s liability for periodic child support as provided for in paragraph (1) above, and is to be paid by the husband in addition to the said periodic child support.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLM 5286 OF 2003
| GCL |
Applicant
And
| GRP |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to child support for the parties’ daughter, W, who is fourteen years old.
The wife was born in February 1963, and the husband in January 1949. They married in November 1988 and separated in or about May 1992. W is the only child of the marriage. She was born on 12 April 1990.
W has resided with the wife since her parents separated.
The wife has remarried. Her husband is Mr K. He is a “managing consultant”, and the wife is employed as an account manager through a company associated with him. According to the wife, she “provides sales services on a commission basis to copier and printer sales”.
The husband is a businessman. He is a director of a number of companies, including Automotive Burg Design Australia Pty Ltd (“ABD”). ABD is involved in the development and importation of accessory equipment for motor vehicles.
Background
After the parties separated in 1992, the husband commenced paying child support for W at the rate of $60.00 per week. Apart from a relatively brief period during 1999, he continued to pay child support at the rate of $60.00 per week.
In 2000, the wife sought a formal assessment of child support from the Child Support Agency (“CSA”). The CSA assessed the husband’s liability to pay child support on the basis of his taxable income which, in that year, was approximately $26,500.00. Child support was assessed at the rate of $241.00 per month.
The wife sought a review of this assessment and, as a result, the CSA increased the husband’s liability to $16,375.00 per annum. The decision was made on 15 November 2000, and was based on a determination that the husband’s child support income amount should be treated as being the maximum (“cap”) amount, or approximately $103,000.00 per annum. The wife’s income was treated as being in the order of $35,000.00 per annum.
In March 2001, the husband applied to vary the amount of child support that had been fixed pursuant to the decision in November 2000. Senior Case Officer Kirmos decided (in a decision dated 19 April 2001) that the husband’s application to change the child support assessment should be refused – because the matters that had been raised were too complex. Senior Case Officer Kirmos referred the case to a court of appropriate jurisdiction pursuant to the provisions of s.98E of the Child Support (Assessment) Act 1989 (“the Assessment Act”).
The husband did not pay child support at the higher rate. As a result, arrears began to accumulate.
After the handing down of Senior Case Officer Kirmos’ decision, the husband put a proposal to the wife. He suggested that, if the wife would agree to forego the arrears of child support (which were then in the vicinity of $12,000.00 or $13,000.00), then he would “pay the wife’s share of the deposit on the purchase of a property in which W and the wife could reside”. The wife was to have a one half share in the property, and the other half was to be held by the husband on trust for W. It was a condition of the proposal, however, that the husband would revert to paying child support at the previous level of $60.00 per week.
The wife said, and I accept, that she felt helpless and intimidated by the husband’s demands. She did not seek or receive legal advice at the time, because she was concerned about the likely cost of such advice. She agreed to the proposal.
The husband then arranged for his solicitors to prepare a formal agreement. The agreement is annexure CLG3 to the affidavit of the wife sworn 14 April 2003 (“the Agreement”).
As envisaged in the Agreement, a property was purchased at Unit 4/19 Oak Avenue, Mentone (“the Mentone property”). The purchase price of the Mentone property was $269,500.00. The husband paid the whole of the deposit on the Mentone property (amounting to $26,950.00), together with one half of the balance of the purchase price. The wife paid the other half of the balance of the purchase price (being one half of $242,550.00).
The Mentone property was registered in the joint names of the husband and the wife. The Agreement records that “the half share of the purchase price paid by the husband” was to be held on trust for W. It also records that the mortgage payments in respect of the property were to be paid equally by the husband and the wife “via separate mortgages”. The wife was to be responsible for all outgoings in relation to the Mentone property.
Both parties borrowed moneys in order to fund their respective shares of the purchase price.
It was an integral part of the Agreement that the husband would continue to pay child support at the rate of $60.00 per week, and that the arrears then in existence would be waived by the wife.
As was required by the Agreement, the wife instructed the CSA not to pursue payment of periodic child support from the husband and to treat the arrears as having been discharged.
In 2002, the wife transferred her interest in the Mentone property to the husband. The husband agreed to pay $160,000.00 to the wife to acquire her interest (at, it would appear, market value). According to the wife, she only received approximately $2,500.00 after paying out the mortgage encumbering her share of the Mentone property. The wife’s borrowing for the purpose of completing the purchase of the Mentone property had been something in the order of $125,000.00, but she had borrowed additional funds for her own purposes.
After the husband acquired the wife’s interest in the Mentone property, the wife approached the CSA for a review of the then existing arrangements. As a result of her approach, the husband was assessed to pay child support at the rate of $1,255.00 per annum. Once again, the wife sought a review, and on 15 May 2003 the husband was assessed to pay $21,320.00 per annum.
The husband objected to the assessed figure. The wife also objected to it — and sought a determination to the effect that the husband be responsible for the payment of school fees and incidental expenses for W, and that he pay child support at the maximum rate.
The CSA eventually disallowed both of the parties’ objections, and confirmed the husband’s liability to pay child support at the rate of $21,320.00 per annum. The date of the CSA’s decision on the parties’ objections was 25 July 2003.
On 3 July 2003, and whilst the competing objections were pending before the CSA, the husband wrote to the wife’s solicitors. Contained within the husband’s letter was the following:
I wish to make it clear to you that until such time as I am provided with a DNA test that proves that W is in fact my daughter, I will not accept any further payments to (the wife).
For your information, before and during our relationship and marriage, (the wife) had taken numerous sexual partners, illegal drug taking and even prostituted herself for financial gain.
There are also a multitude of other issues that I can prove if so required.
Not surprisingly, the wife found the husband’s allegations (and his implied denial of paternity) extremely hurtful and distressing. She was firmly of the view that the DNA test was unnecessary and inappropriate.
In a subsequent letter to the wife’s solicitors (dated 11 July 2003), the husband wrote:
Insofar as the DNA testing — if (the wife) is prepared to ‘let it go’ on the basis that I look after W insofar as her schooling and leave it at that then no DNA testing will be required.
On 14 August 2003, the wife filed a form 63 application seeking the following orders:
1.That there be a departure order for the husband’s assessment to pay periodic and non-periodic child support for W as follows:
(a)That the husband pay by way of periodic support for W the sum of $1,451 per calendar month such sum to be indexed annually on 1 July in accordance with the child support inflation factor and to be paid in advance on the 1st of each month by way of direct credit to a bank account nominated by the wife and thereafter in accordance with the appropriate support payable for one child at the capped level for the maximum level of child support income, such sum to be fixed annually on the 1st day of July each year.
(b)That the husband pay by way of non-periodic child support the following:
(i)payment of all school fees for the child as invoiced by Mentone Girls Grammar, or such other school as may be agreed upon between the parties;
(ii)stationery, book and uniform expenses;
(iii)excursions and camp expenses (compulsory and non-compulsory);
(iv)hire and purchase of sporting and musical equipment;
(v)computer and software expenses as may be required by the school; and
(vi)incidental expenses as invoiced by the school from time to time, inclusive of building levies and contributions.
Procedural orders were made on 28 October 2003, and the matter was dealt with at trial on 3 and 4 May 2004.
W attends Mentone Girls Grammar
W attends Mentone Girls Grammar (“MGG”).
Both parties agreed that W should attend MGG. Her enrolment in the school was ratified in 2002 (and a deposit paid). Both parties attended an interview with the principal.
W commenced at MGG at the beginning of 2003.
The husband accepted responsibility for W’s school fees, together with all associated costs of her attendance at MGG.
Issues for Determination
It is not in dispute that W is to continue her education at MGG, and that the husband will continue to be responsible for all school fees and other expenses associated with her attendance at the school.
The only question for determination by this court is the amount of periodic child support that the husband should pay over and above his contribution to W’s school fees and associated expenses.
A Number of Key Issues are Not in Dispute
During the course of the trial, it was agreed that a reasonable allowance for the costs of W’s education at MGG is approximately $17,000.00 per annum — which equates to $327.00 per week.
It was also agreed that a fair allowance for the costs incurred by the wife in maintaining W (and which represent W’s proper needs whilst she is with the wife) is $423.00 per week.
Further, it was agreed that:
a)a fair allowance for the costs incurred by the husband in maintaining W whilst she is with him is $30.00 per week;
b)a reasonable allowance for dental/orthodontic expenses for W is $12.00 per week; and
c)the wife will accept responsibility for W’s dental/orthodontic expenses from time to time.
In summary, the parties agreed that a fair allowance for the total, overall costs incurred by both parties in maintaining W (and which represent her proper needs on an average weekly basis) is as follows:
Living expenses whilst with the wife
$ 423.00 per week
Living expenses whilst with the husband
30.00 per week
School fees and associated expenses
327.00 per week
Dental/orthodontic expenses
12.00 per week
Total
$ 792.00 per week
The only issue for determination, therefore, was the quantum of periodic child support payable by the husband over and above the amount of $357.00 per week that he is presently paying (being $327.00 per week for school fees and associated expenses and $30.00 per week for general living expenses).
The husband argued (eventually) that the quantum of “additional” periodic child support that he should be contributing is $170.00 per week. The wife argued that it should be $270.00 per week.
The Law
The Commonwealth’s legislative scheme for assessment and enforcement of child support liabilities is contained in the Child Support (Assessment) Act 1989 (“the Assessment Act”) and the Child Support (Registration and Collection) Act1988. Certain aspects of this scheme were considered by the High Court in Luton v Lessels (2001) FLC 98-015. In that case, Gaudron and Hayne JJ said (at page 95,659):
The Assessment Act records that the “parents of a child have the primary duty to maintain the child”. This duty is said, by the Assessment Act, (a) to be not of lower priority than the duty of the parent to maintain any other child or another person: (b) to have priority over all commitments of the parent other than commitments necessary to enable the parent to support himself or herself and any other child or another person the parent has a duty to maintain: (c) to be not affected by the duty of any other person to maintain the child or any entitlement the child or another person may have to an income tested pension, allowance or benefit. …The principal object of the Assessment Act is said to be “to ensure that children receive a proper level of financial support from their parents”.
Part 5 of the Assessment Act (ss 35-79) provides for the administrative assessment of child support. “Child support” is defined as “financial support under [the Assessment] Act, including financial support under [the] Act by way of lump sum payment or by way of transfer or settlement of property”. An administrative assessment of child support requires the application of one or more of several statutory formulae that is, or are, apposite in the particular circumstances. Section 79 of the Assessment Act provides that “an amount of child support due and payable by a liable parent to a carer entitled to child support is a debt due and payable by the liable parent to the carer”…
Where there has been an administrative assessment, both the liable parent and the carer may lodge with the Registrar an objection against the assessment. A person aggrieved by a decision on the objection may, pursuant to section 110 of the Assessment Act, appeal to a court having jurisdiction under that Act.
In the same case, Gleeson CJ said (at page 95,653):
The objects of the Assessment Act are set out in section 4. The principal object is to ensure that children receive a proper level of financial support from their parents. To that end, the Act provides for a level of support to be determined in accordance with legislatively fixed standards, and permits carers of children to have the level readily determined without the need to resort to court proceedings.
…It may be observed that, although the legislation is enacted in furtherance of a clearly defined public policy, it creates a distinctly personal liability. The natural and moral obligation of the parent to support a child becomes, by force of the legislation, a legal obligation reflected in a debt, calculated in accordance with the Assessment Act, owing by a parent to a carer of the child.
Gaudron and Hayne JJ continued (at page 95,663):
Part 7 of the Assessment Act (ss 99–146) deals with the jurisdiction of courts under the Act. In particular, provision is made for applications to a court for a declaration about the applicability of the administrative assessment provisions. Provision is made for what are called “appeals” against incorrect administrative assessments and for orders for departure from administrative assessment. (The reference to “appeal”, although similarly used in other contexts, may mislead. The proceeding which is so described is the first application of judicial power; it is an exercise of original, not appellate jurisdiction.) An order by a court for departure from an administrative assessment may be made on the grounds on which the registrar may make a departure determination…
The process involved in the consideration of an application for departure from the administrative assessment of child support was explained by the Full Court in Gyselman (1992) FLC 92-279 at 79,064-5, under the heading “Division 4 — Orders for Departure from Administrative Assessment in Special Circumstances”. The Full Court said (inter alia):
Section 117 is the critical provision.
The structure of that section is that s.117(1)(b) identifies concisely the matters about which the Court must be satisfied and those components are then expanded in subsections (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.
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.
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...
…Each of those grounds (in s.117(2)) 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 emphasise 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. (It has been held) 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.
In Hides v. Hatton (1997) FLC 92-759, the Full Court said this (at 84,352):
..it was also made clear in Gyselman that when the Court is considering whether it is just and equitable within the meaning of s.117(4) to make a particular order, the Court is required to undertake the task of considering the matters set out in paragraphs (a) to (g) of that sub-section, and in this regard the Full Court said as follows (at 79,078):
‘However, some of the matters listed in sub-section (4) may overlap with matters already considered under sub-section (2) and some of the paragraphs in sub-section (4) may be more significant in one case than they would be in another or of little relevance in a particular case. It is an essential part of the s.117 exercise to carry out the obligation under sub-section (4). However, that does not mean that it is necessary in each case to slavishly go through each of the paragraphs. The extent to which it is necessary to do so will depend upon the facts and conduct of the individual case and the analysis already performed under sub-section (2).’
The Full Court also made it clear in its decision in Gyselman that similar considerations apply to the Court’s determination as to whether it is ‘otherwise proper’ within the meaning of s.117(5) to make a particular order (see at 79,080), and furthermore and very relevantly for present purposes the Full Court emphasised the importance of trial Judges providing adequate reasons for judgment in order to ensure a proper exercise of the discretion under s.117 (see at 79,080).
A differently constituted Full Court in Ross and McDermott (1998) 23 Fam.L.R. 613 at 623-4 (paragraph 39) said:
In our view a practical and flexible approach should be adopted to the task of considering these s 117(4) and (5) matters, that is an approach similar to that which this court has long adopted to the ‘s 68F(2) matters’… in child-related proceedings under the Family Law Act 1975 (Cth), and to the ‘s 79(4) matters’ and ‘s 75(2) matters’ in property settlement proceedings under that Act. Accordingly, we consider it is unnecessary to make any reference to those s 117(4) and (5) matters which have no real relevance in the circumstances of the particular case. We also consider that it would be permissible to group together and consider as a whole, those relevant matters which by their nature lend themselves to such an approach in the circumstances of the particular case, and in the case of those matters which are required to be considered under more than one subsection of s 117, to examine such matters only once, although they may need to be taken into account under more than one subsection.
The Court must follow the three step process described in Gyselman in respect of each year for which a departure order is sought (see Hides v Hatton (1997) FLC 92-759).
“Special Circumstances” — Section 117(2)
It was conceded by both parties that a ground for departure within the meaning and contemplation of s.117(2) of the Assessment Act had been established. The fact of the matter is that both parties sought that the relevant assessment (and all future assessments) be departed from.
In all the circumstances, I need do no more than record that I am satisfied that at least one of the grounds for departure in s.117(2) of the Assessment Act has been established.
“Just and Equitable” — Section 117(4)
I shall deal with the various factors referred to in s.117(4) of the Assessment Act below — but before doing so, I remind myself of the nature of the duty of a parent to maintain a child (as stated in s.3 of the Assessment Act).
W’s Proper Needs
It is not in dispute that W’s proper needs total $792.00 per week, and are calculated as set out in paragraph 37 above.
W’s Financial Position
Neither party suggested that W’s income, earning capacity, property or financial resources are relevant, or that they should be considered by the Court.
The Parties’ Credibility
I paid careful attention to both parties as they gave their evidence.
The wife remained calm, the comments that she made were balanced, and she gave appropriate responses to the questions that she was asked. She also made appropriate concessions when necessary. She was open and frank. I was impressed by her as a witness, and find that she is a witness of truth.
The husband clearly bears considerable resentment towards the wife. I find that he was unable to provide an objective and unbiased account of the broad scope of the matters in issue in these proceedings.
The husband attempted to portray himself as a relatively easy going, practically minded businessman. He sought to convey the impression that he had no more than a limited understanding of various financial arrangements in which he was or had been involved. I do not accept, however, that the husband does not fully understand all aspects of his financial position and the transactions in which he has been involved. He is — to use a colloquialism — “as sharp as a tack”.
I am of the view that the husband was not candid with the Court. He remained guarded throughout his evidence, and at times his answers to questions were non-responsive. At other times, he demonstrated impatience, irritation and aggression. He was not an impressive witness.
I find that the husband is an intelligent, capable and hard working man who is prepared to explore all available avenues to increase his personal wealth. I find that he has not been open and frank regarding his financial position, and that the financial information which he presented to the Court (both orally and in his financial statement) is something less than the whole truth. I find that he is an astute and resourceful businessman, who has been less than honest in his dealings with the wife and the Court.
Many of the husband’s comments reflect unfavourably on him, and are regrettable. To the extent that the husband’s correspondence (and his evidence in court) might suggest that the wife is or was vindictive, manipulative, dishonest, obstructive of contact between W and her father, greedy, financially irresponsible, uncaring, controlling, promiscuous or immoral, I find that the wife is none of those things. I find that the husband’s criticisms of the wife were spiteful and insulting. It is to the credit of counsel for the husband that such allegations and obviously irrelevant areas of dispute were not pursued during the trial.
I shall discuss aspects of the husband’s evidence later in these Reasons. At this stage, however, I simply record that, where the evidence of the parties is in conflict, I prefer the evidence of the wife.
The Wife’s Financial Position
The wife married Mr K on 12 June 2003.
The wife is employed through a company associated with Mr K. She began selling copiers and printers in or about November 2003. She is paid a salary, and also receives a commission (although it appears that the primary commission, as it were, is received by the company that employs her).
The wife said that her income for the financial year leading up the date of the trial was approximately $40,000.00, together with commission of somewhere between $2,000.00 and $3,000.00.
The wife said that Mr K earns something in the order of $116,000.00 per year, and that they live a comfortable lifestyle.
The income that the wife receives is paid to her in a manner that is tax effective for her and for Mr K. It includes a motor vehicle and telephone allowance.
Although the employment arrangement between the wife and Mr K is flexible and relatively informal, I accept the submission of Ms Vohra (for the wife) that a fair allowance for the wife’s income is approximately $40,000.00 per annum. Indeed, Mr Mawson (for the husband) also accepted that figure in his closing address.
There can be no doubt that Mr K is in a strong financial position. Although he was subpoenaed by the husband’s legal advisers, he was not required to give evidence.
The wife and Mr K live in rented premises in Black Rock. The rent (amounting to $650.00 per week) is paid by Mr K.
The wife’s financial statement sworn 8 August 2003 reveals that her asset position is very modest. At that time, she had savings totalling approximately $1,450.00, a motor vehicle worth approximately $26,000.00 and furniture, chattels and personal effects worth approximately $20,000.00. She also had superannuation worth approximately $10,500.00.
The wife’s liabilities were equivalent to or greater than the value of her assets. She owed close to $29,000.00 in respect of her motor vehicle and approximately $11,000.00 in respect of credit card debts. She also owed approximately $6,000.00 to AGC.
Mr Mawson suggested to the wife that she had “made” approximately $35,000.00 from the sale of the Mentone property. He suggested that she made a profit from the transaction due to the fact that the Mentone property was purchased for $125,000.00 and subsequently sold for $160,000.00.
Although the wife conceded that the purchase and sale prices for the Mentone property were correct, she explained that she had liabilities at the time of the purchase and that she had to borrow additional funds (over and above the bare purchase price of the Mentone property) in order to “consolidate her debts”. She also had to purchase furniture which she required at that time.
Further, the wife pointed out that the husband owed arrears of child support amounting to approximately $12,000.00 at the time that the agreement for the acquisition of the Mentone property was entered into.
Overall, I find that the wife is largely reliant upon Mr K for her financial security. I accept that she is presently earning something in the order of $40,000.00 per annum, and I find that she is properly and effectively exercising her earning capacity. Indeed, it seems unlikely that the wife would be able to earn anything like $40,000.00 per annum if her present employment arrangements did not adhere.
The Husband’s Financial Position
The husband’s evidence included the following:
a)He has been paying approximately $60.00 per week for child support for W since she was approximately two years old.
b)He spends, on average, approximately $30.00 per week for W when she is with him.
c)He conceded that the expenses claimed by the wife in respect of her care of W are reasonable.
d)He conceded that W’s “current expenses” will increase as she gets older.
e)He conceded that he wrote to the wife in late 1999 regarding the payment of child support for W whilst she was in his care for two to three weeks over the holiday period[1]. He conceded that he told the wife that he should not have to pay child support for W during that period. When pressed by Ms Vohra to confirm that he would not adopt a similar approach in the future, the husband was evasive and inappropriately aggressive. He later conceded that he “ … might have been angry at the time (that he wrote the letter)”.
[1] The letter is annexure CLG1 to the wife’s affidavit sworn 14 April 2003.
f)He denied punishing the wife financially because she may, from time to time, say or do something that he does not like, but I do not accept his evidence in that regard. I find that the husband can be (and has been in the past) vindictive and unreasonable. I refer, in this regard, to the correspondence attached to the wife’s affidavit.
g)Although he initially said[2] that he is “… a director of one company only, Automotive Burg Design Australia Pty Ltd …”, he conceded that he is, in fact, a director of two other companies as well — being RP Pty Ltd and Active Life Products Australia Pty Ltd. When Ms Vohra put to him that he was a director of Active Life Products Australia Pty Ltd, he replied:
[2] In paragraph 2.2 of his affidavit sworn 27 October 2003.
To be honest, I’m not sure. I’m not sure if I act as a director or whether my daughter (S[3]) is the director and my accountant is the secretary. I can’t answer that. I don’t handle my financial affairs.
[3] S is the husband’s adult child from a previous relationship.
h)Even when Ms Vohra demonstrated that the husband’s statement in his affidavit to the effect that he was the director of one company only was incorrect, he was unwilling to concede the he had deposed to a statement that was inaccurate.
i)He conceded that his taxable income for the year ending 30 June 2003 was $16,077. When it was put to him that his accountant, Ms E, had deposed to the fact that “ … if it were possible to ‘strip away’ the corporate structure that is in place for (the husband) and (if) he was trading in his own right as an individual rather than a company, then I estimate that his personal income would be in the region of $100,000.00 gross”, the husband responded evasively. When asked how he could reconcile what he had said with what his accountant had said, he replied:
… because the accountant pays me what I need to live on, and the rest is put down for some sort of benefit when I’m a little older as superannuation. It’s been clearly stated what those amounts are, which amount to about $100,000.00.
j)After confirming that his taxable income was $16,000.00, and after conceding that, in the previous year, he paid school fees of approximately $16,000.00, he was asked what he lived on during that period. He replied:
I live on borrowed money out of the house that I tried to help my wife to get into, which I have to redraw against to live on. I borrow money from my parents consistently. That’s how I live.
(k)Ms Vohra referred him to a letter that he had written to the CSA in July 2003. In the letter, he had written:
Unlike (the wife), I live a very simple and conservative lifestyle. I’ve not had a holiday for over two years, and I work around 60 hours per week.
He said that this statement was true, but later conceded that he had been on a holiday to Brampton Island (with his de facto partner) shortly before writing the letter, that he made regular wine purchases (although he said that the wine was largely for his customers), that he and his partner had spent weekends away in Lorne and elsewhere, and that he spends approximately $700.00 per year on his membership of the Sandringham Yacht Club.
(l)He purchased a Mercedes motor vehicle in June 2003 for approximately $118,000.00. He said that the vehicle was purchased through ABD and that the lease payments are approximately $2,000.00 per month. He said that he discussed the purchase of the Mercedes (prior to its acquisition) with his accountant and his daughter, S. During her evidence, however, Ms E said that she had no input into the acquisition of the Mercedes. She said that she found out about the purchase after seeing the cheque listing in the financial records of ABD. She asked the husband why it was purchased and was informed that it was partly for private purposes, and partly for the purpose of advertising ABD. She had seen no evidence, however, to confirm that the car had been used for business purposes.
(m)Ms Vohra referred the husband to his financial statement, in which he deposed to the fact that his salary before tax was $96.00 per week, that his “income from investments (before tax)” from ABD was $213.00 per week and that his only other income was rent of $230.00 per week from the Mentone property (making a total of $539.00 per week). He was also referred to item 11 in his financial statement, which records that his “income from business/partnership” is nil. Again, the husband was evasive in his replies to questions from Ms Vohra, but the evidence clearly established that the husband derives significant benefits from the business in which he is involved. Payments (for himself and for his daughter, S) were made from credit cards, which were paid off as they fell due. The credit card statements include many personal expenses for the husband and S. He said that the accountant goes through the records and allocates expenses to the husband and to the business (and, perhaps, to S).
(n)He conceded that ABD had nearly $80,000.00 in a cash management account as at 23 March 2004, and that he had nearly $510,000.00 standing to his credit in a National Australia Bank account in his name at the time of the trial.
(o)He confirmed that, in paragraph 9 of his affidavit sworn 27 October 2003, he had said that ABD paid a superannuation contribution of in excess of $71,000.00 on his behalf “in the last financial year”, and that such an arrangement was part of a “salary sacrifice” arrangement. He later conceded that $83,000.00 was paid into superannuation for him in the 2002 financial year. He conceded that the current value of his superannuation entitlements is approximately $593,000.00.
(p)He was paid a dividend of $17,000.00 from AJG Investments Pty Ltd (being his late father’s investment company) at the end of the 2002 financial year.
(q)He conceded that his taxable income in the 2000 financial year was approximately $26,500.00, and that in the 2001 financial year it was approximately $24,500.00. His taxable income for the 2003 financial year was approximately $16,000.00. He said that his income has remained “pretty much the same since 2001”.
(r)He said that he has a number of employees in the business — the two most senior of whom earn approximately $60,000.00 per annum (compared to the husband’s taxable income of approximately $16,000.00 per annum).
(s)In a loan application form signed by the husband in January 2003, he stated that his assets were worth a total of approximately $2.4m. In addition, his superannuation entitlements were then worth approximately $360,000.00. His liabilities were just under $365,000.00.
(t)In Citibank and Colonial loan application forms signed by the husband in July 2001, he recorded his gross monthly income as $14,186.00. He could give no satisfactory explanation as to where that figure came from, and endeavoured to suggest that the figure was his accountant’s doing.
(u)An income of $14,000.00 per month reflects an annual income of approximately $170,000.00. Given the husband’s concession that his income has not altered since 2001, it follows that his income is still likely to be in the order of $170,000.00 per annum.
(v)At a later stage, the husband suggested that the broker through whom he had applied for the relevant loans was the person who had calculated the monthly income figure of approximately $14,000.00. Irrespective of the origin of the figure, however, the fact remains that the husband had no discomfort with representing to the respective financial institutions the fact that this figure reflected his true income.
(w)Ms Vohra drew the husband’s attention to the Agreement. The husband conceded that a term of the Agreement was that his half interest in the Mentone property was to be bought on trust for W. He then professed not to know whether he still held half of the property on trust for W. When asked whether it was his intention that one half of the property should be held on trust for W, the husband responded:
It depends on the circumstances … I think under the circumstances and being here has put me in a frame of mind that I think the whole thing is becoming unfair and that maybe dispersed between my other daughters who have responsibilities too now. So it might become a three way split.
(x)Notwithstanding the husband’s comments in the passages referred to above, it was apparent from the evidence of the husband’s accountant, Ms E[4], that the husband does, in fact, have complete control over his financial affairs — although mechanical and technical matters (as it were) are handled by Ms E pursuant to the husband’s instructions.
(y)He conceded that he had signed the financial records of the corporate entities as being a true and correct reflection of their affairs. He then said:
I don’t have hardly anything to do with the financial running of that company or any of those companies. That’s not my talent. I leave that entirely to the accountant and S. That’s why I’m very vague on a lot of this … “
Although the husband may not have been aware of the details of the manner in which his accountant dealt with the financial affairs of the corporate entities, I find that he was well aware that he was receiving a very significant financial benefit from the entities that he controlled (relevantly, from ABD). I find that the husband, and not Ms E or S, is and was at all relevant times the person ultimately in control of ABD’s affairs.
(z)When Mr Vohra put to the husband that he makes all relevant decisions regarding the running of ABD, and regarding its investment strategy, he suggested that he was not the only person so responsible and that Ms E also made relevant decisions. He then conceded that he employed Ms E (and that the relationship between them is one of employer/employee). Having regard to the whole of the evidence before the Court, including Ms E’s evidence, I find that the husband’s suggestion that Ms E might be responsible for significant decisions associated with the overall conduct of the business was disingenuous, and intentionally misleading.
(aa)He conceded that he lives with his de facto partner in a property in Hampton, and that she pays him no rent or board for her accommodation.
(bb)In spite of the above concessions and disclosures, the husband continued to deny that he had “ … access to significant income, financial resources, property and employment-related benefits.” Having regard to the totality of the evidence before the Court, I am of the view that the husband’s denial in this regard was extraordinary, and obviously untenable.
[4] Ms E swore an affidavit in the proceedings on 29 April 2004.
S Writes to the CSA
Approximately six months before the husband signed the Citibank and Colonial loan application forms referred to above, S, wrote to the CSA on ABD letterhead. The letter is dated 21 February 2001 and comprises exhibit W14. In the letter, S (who describes herself as “Office Manager”), wrote:
… You have requested that I deduct the amount of $474.60 each fortnight from “the husband’s pay”. Please be aware that your request is not possible as this amount represents more than 40% of (the husband’s net income).
If you then take into account the fact that we already deduct $120.00 per fortnight which is paid directly into (the wife’s bank account), then the total amount would then be $594.60, which represents more than 71% of (the husband’s net income).
Please also note that (the husband’s) gross income last year was $26,562.00 …
Please confirm how you have calculated the child care amount to be deducted as the amount that you have suggested has to be a mistake because there is no way that (the husband) can live on only $286.00 per fortnight.
The husband could not discount the possibility that the letter was written at his request, and asserted, notwithstanding the evidence set out above, that the letter’s contents were correct.
Ms E is the Husband’s Accountant
The husband’s accountant, Ms E swore an affidavit in the proceedings on 29 April 2004. The affidavit identifies the companies in which the husband has an interest and describes the nature of the business carried on by ABD. In my opinion, the affidavit is less than clear, but reinforces the fact that the husband receives significant benefits from ABD and the other entities. In paragraph 12 of the affidavit, Ms E said:
Although it is difficult to estimate, I believe that if it were possible to ‘strip away’ the corporate structure that is in place for (the husband) and (if) he was trading in his own right as an individual rather than a company, then I estimate that his personal income would be in the region of $100,000.00 gross.
During cross examination, Ms E confirmed that the husband’s income package is structured with a view to minimising his income tax (and superannuation surcharge) obligations.
Ms E said that her estimate of $100,000.00 per annum referred to in paragraph 12 of her affidavit comprises the husband’s entitlements by way of salary, superannuation entitlements, dividends and motor vehicle expenses. She later said that 50% of the company’s dividend is paid to S, but that “ … she only gets paid that amount because otherwise the husband would be over the limit”.
Ms E said that the husband’s loan account with ABD is in credit, and that, at the time of the trial, it owed him just over $242,000.00.
Ms E said that she had “no input into the acquisition of the Mercedes Benz motor vehicle”. Nor did she have any input into the method of purchase of the vehicle.
Ms Vohra referred Ms E to a letter written by her and dated 8 May 2001.[5] In the letter, Ms E wrote:
… (the husband) receives a salary/dividend package to a limit of $26,000.00 per annum. This is paid via drawings over the year. He drives a company car which is used for advertising the company products during working hours. A portion of his home expenses, approximately 25%, is claimed as home office i.e. light, phone, gas and rates, as he conducts business from home most mornings and sometimes at night with overseas suppliers. His mobile phone is paid fully by the business ….
(The husband) lives from his Visa card which is paid by the company and offset by his package income.
He has no other income other than that which is paid from the company. His living arrangements do not total over the allowable amount of the net salary package of $21,000.00.
[5] See exhibit W15.
I am not satisfied that Ms E was open and frank in relation to the husband’s true financial position, and find that she sought to minimise the benefits that the husband actually receives.
The Husband’s Assets and Liabilities
In his financial statement sworn 27 October 2003, the husband stated that he owns the property in which he presently resides (in Hampton), valued at $825,000.00, together with the Mentone property (valued at $330,000.00). He estimated the value of his interest in ABD at $239,000.00. He also owns a 1976 Porche motor vehicle valued at approximately $20,000.00.
The value of the husband’s superannuation entitlements in his financial statement is just under $450,000.00.
The husband’s financial statement records that the Hampton and Mentone properties “ … are used as security for credit line — Colonial”, and that the husband has a liability of approximately $313,000.00 in respect of the credit line. The fact of the matter is, however, that at the time of the trial there were no moneys owing in respect of the credit line, and the husband’s account was nearly $510,000.00 in credit. The husband’s other liabilities were relatively modest, and totalled approximately $10,000.00.
When regard is had to the totality of the husband’s evidence (only some of which I have recorded, and commented upon, above), I am not satisfied that the husband had made full and frank disclosure of his true financial position.
The Husband Has Not Made Full and Frank Disclosure
The duty to make full and frank disclosure of one’s financial position has been set out in a number of cases determined by the Full Court over the years. Those cases were recently summarised in the decision of Chang v Su (2002) FLC 93-117. For example, where the court cannot be satisfied as to the extent of a party’s property, it can be less cautious than might otherwise be the case when making relevant orders (see Mezzacappa (1987) FLC 91-853, Black & Kellner (1992) FLC 92-287 and Weir (1993) FLC 92-338). Full and frank disclosure is required as a matter of principle in proceedings between spouses or former spouses under the Family Law Act or the Child Support legislation (see, for example, Oriolo v Oriolo (1985) FLC 91-653, Briese (1986) FLC 91-715 and Giunti (1986) FLC 91-759).
That a judge (or federal magistrate) is entitled to take a “robust view” in relation to findings regarding a parties’ financial position (including a party’s capacity to meet any proposed order) — where that party has failed to make full and frank disclosure of his/her financial position — is clear from the authorities referred to above, and from the decision in Chang v Su at paragraphs 71 and 72 (at p.89,198).
In November 2002, the High Court dismissed an application by the husband in Chang v Su seeking special leave to appeal from the Full Court’s decision. In the course of argument, Callinan J observed:
It does not matter what the principle might be seen to be, a Court has to do the best it can. It does the best it can, having regard to the evidence that is adduced, and if the parties are not frank then naturally there is going to be a measure of imprecision about any findings that the Court can make.
In Kannis (2002) FamCA 1150 (reported in (2003) FLC 93-135 — but not as to this issue) — the Full Court said:[6]
(It was submitted that) the cases discussed above were authority for the proposition that where there was a finding of deliberate non-disclosure the Court could act more robustly in making findings adverse to the party who had actively misled it. We do not see that the principle should be so confined.
Whether the non-disclosure is wilful or accidental is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied that the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances, it may be appropriate to err on the side of generosity to the party who might otherwise be seem to be disadvantaged by the lack of complete candour. This is the course the trial judge adopted. It was a course clearly open to him and one that does not merit appellate interference.
[6] At paragraphs 50 and 51.
Although the cases referred to in the passages cited above deal with issues such as property settlement or costs, there can be no doubt that the obligation to make full and frank disclosure extends to child support proceedings. Indeed, it would be extraordinary if it did not.[7]
[7] See Hardman (2003) FamCA 1057; Rayson (2003) FamCA 1384.
In Hardman (2003) FamCA 1057 (unreported), Coleman J said:
The relevant issue before the learned Federal Magistrate was the financial resources of the appellant, from whatever sources those derived. As decisions of the Full Court of this Court in cases, commencing with Oriolo v Oriolo (1985) FLC 91-653 make clear, where a litigant does not make a full and frank disclosure of his or her financial position, that litigant cannot benefit or rely upon the inability of the opposing party by reason of that failure to disclose to suggest a particular capacity or the existence, identity or location and nature of particular assets or resources. A moment's reflection would reveal why that must be so. Any other course would not only encourage litigants to fail to make a full and frank disclosure, but provide a positive incentive for concealment in that regard.
In Rayson (2003) FamCA 1384 (unreported) Kay J said:
The key findings of the (Chief Federal Magistrate) which are not really challenged before me, is (sic) that it is difficult to pin the husband down as to what is his real earning capacity. This is so because there are years of operating a business without keeping accurate books of account. There is some minor evidence at least of lifestyle inconsistent with supposed inability to make payments. But at the same time I do not think it is an openly elastic exercise of saying 'well, I am not satisfied where the end is so I can be as generous as I like.' It is true that the court can be less than duly cautious where there is not full and frank disclosure (see Weir (1993) FLC 92-338). There is no finding here by the (Chief Federal Magistrate) of lack of full and frank disclosure. There is a finding of being less than cooperative or fully cooperative in the process of producing documents but it does not seem to me, given that the material that the (Chief Federal Magistrate) had and that I have, that takes the matter very far indeed.
Kay J also observed that, in his opinion, certain findings made by the Chief Federal Magistrate were not available on the evidence. Nevertheless, the learned Judge "found himself doing what (the Chief Federal Magistrate) was doing, just guessing", and summarised the process as being "not a very exact science".
Unlike the scenario in Rayson, however, I have indeed made a finding to the effect that the husband has failed to make full and frank disclosure of his financial position.
In relation to the husband’s business activities, it is also important to understand that the court must focus on his earning capacity, as much as on his annual (or asserted) income from time to time.
The concept of “earning capacity” was discussed at length in DJM & JLM (1998) FLC 92-816, where the Full Court said (at page 85,272):
Child support and child maintenance orders are governed by legislation which emphasises and prioritises the obligation of parents to support their children and seeks to ensure that the level of financial support is to be measured according to the parents’ “capacity to provide financial support”.
Property adjustment orders have far less focus and are arrived at on the basis of what is “appropriate” after weighing up many competing factors. Spousal maintenance is governed by a test of what is proper and having regard to the reasonable ability of the liable spouse to meet the needs of the other.
In our view, there can be different answers to the same question about earning capacity — depending upon which head of power is sought to be exercised.
A judge might reasonably say that a parent should be working longer hours or in more lucrative employment to meet child support obligations. A spouse is only required to support the other spouse to the extent that he or she is reasonably able to do so. This requirement does not impute the same degree of compulsion about it that the child support and child maintenance tests express …
The Full Court (at para 17.37 of DJM v JLM) indicated that it was “most attracted” by the following tests of earning capacity, as “at least the minimum tests to be applied”. The tests derive from decisions of the Californian Court of Appeal in decisions referred to on page 85,271 of DJM v JLM:
Earning capacity is composed of (1) the ability to work, including such factors as age, occupation, skills, education, health, background, work experience and qualifications; (2) the willingness to work exemplified through good faith efforts, due diligence and meaningful attempts to secure employment; and (3) an opportunity to work which means an employer who is willing to hire…
When the ability to work or the opportunity to work is lacking, earning capacity is absent … When the payor is unwilling to pay and the other two factors are present, the court may apply the earnings capacity standard to deter the shirking of one’s family obligations… A parent’s motivation for reducing available income is irrelevant when the ability and opportunity to adequately and reasonably provide for the child are present.
Once persons become parents, their desires for self-realisation, self-fulfilment, personal job satisfaction and other commendable goals must be considered in the context of their responsibilities to provide for their children’s reasonable needs. If they decide they wish to lead a simpler life, change professions or start a business, they may do so, but only when they satisfy their primary responsibly: providing for the adequate and reasonable needs of their children.
In a similar vein, the Full Court in Scott (1994) FLC 92-457 said[8]:
… Whilst … in some circumstances an unemployed parent without income may be held to have an earning capacity or financial resources sufficient to justify an order that he or she contribute to the support of his or her children, (it is not the case that) in all such circumstances, such a conclusion must or should be reached. If (there is) any principle of general application, it is only that being unemployed and without income is not of itself necessarily an answer by a parent to an application for child maintenance. The circumstances in which the parent became unemployed or without income, the reasons for it, the nature of his/her previous employment and the efforts (if any) which he or she has subsequently made to obtain employment are all relevant matters for consideration by the court in deciding whether the parent has any and what earning capacity such as to justify an order for child maintenance. Even in the absence of any current income or earning capacity, a parent may be required to pay maintenance for his/her children if he/she has property or financial resources which are or ought reasonably to be available for that purpose.
It is ultimately a question of fact in each case, whether an unemployed parent without income or financial resources has any earning capacity, and if so, the extent of it. However, we are of the view that such an unemployed parent with no particular qualifications or skills for employment could not be held, at least in times of high unemployment … to have a current earning capacity sufficient to support an order for maintenance unless he/she has recently given up, without good reason, secure remunerative employment, or unless having become involuntarily employed he/she has made no reasonable efforts to obtain employment for at least a significant period of time.
[8]At page 80,739.
Finally, in Scott v Stauder (unreported judgment delivered 20 November 1996), Kay J said that the passage from Scott referred to above —
… reads effectively that in some circumstances an under employed parent may be held to have an earning capacity or financial resources sufficient to justify an order that he or she contribute to the support of his children and that being under employed and without adequate income is not, of itself, necessarily an answer by a parent to an application for child maintenance.
Both Scott and Scott v Stauder predated the decision in DJM v JLM, and I note that Kay J was a member of the Full Court in the later case. It follows that the tests to which the Full Court was “most attracted” in DJM v JLM (see paragraph 99 above) are of more relevance, and are likely to provide a court of first instance with clearer guidance, than the discussion of the subject contained in Scott and Scott v Stauder.
The Parties’ Income/Earning Capacity
During his closing address, Mr Mawson conceded (appropriately, in the circumstances) that the husband has available income of “not less than $100,000.00 per annum”. He did not dispute that the wife’s income is in the order of $40,000.00.
Ms Vohra, on the other hand, referred to the representations made by the husband in 2001 to the effect that his income was in the order of $170,000.00 per annum. She also emphasised the husband’s evidence to the effect that his income had not changed significantly since that time. Indeed, Ms E’s evidence was that the husband’s financial position had improved since 2001.
Having regard to the whole of the evidence before me, and to my findings regarding the husband’s credibility and failure to make full and frank disclosure of his financial position — and bearing in mind that I am entitled to take a robust approach to making findings adverse to a party who has wittingly (or even unwittingly) misled the court — I find that the husband’s overall, notional income is approximately $170,000.00 per annum.
Further, I find that the husband’s income is likely to remain around this figure for the period until W turns 18. I also find that the wife’s income will remain around $40,000.00 per annum until that time.
Clearly, the husband’s asset position is vastly superior to that of the wife. Her net asset position appears to be $ nil. The husband, on the other hand, has net assets worth not less than $1 million, and probably closer to $2 million or $2.5 million.
Commitments of the Parties that are Necessary to Enable Them to Support Themselves
Mr Mawson conceded that each household enjoys a comfortable standard of living. He did not suggest that either party should be obliged to live “a fugal lifestyle”.
I do not propose to deal with this factor in any detail because, given the ages of the parties, their respective backgrounds and lifestyles, it seems to me that both parties’ living expenses (that is, their living expenses for themselves) should be fairly similar. I accept, of course, that the husband, because of his income and vastly superior asset position, may be able to afford items (such as holidays, motor vehicles and the like) that the wife cannot reasonably afford.
Other Factors Under s.117(4)
In my opinion, none of the other factors referred to in s.117(4) are of relevance in these proceedings. I record, however, that I have had regard to any potential hardship that will be caused to W, or to either of the parties, by the making of the proposed orders. Suffice it to say that I am satisfied that the orders that I propose to make in these proceedings will not cause any undue or inappropriate hardship to either of the parties.
Quantum of Child Support for W
It was not in dispute that, in the special circumstances of the case now before me, adherence to the provisions of the child support formula would result in an unjust and inequitable determination of the level of financial support to be provided by the husband for W — because of the overall respective financial positions of the parties.
Mr Mawson eventually conceded that it would be appropriate to make an adjustment with respect to the periodic amount payable by the husband by increasing it to $170.00 per week. Ms Vohra argued that it should be increased $270.00 per week.
Both parties conceded that an acceptable approach to the apportionment between the parties of the overall costs of maintaining W is to have regard to the overall financial position of each of the parties, and to make such proportionate split as the court considers appropriate.
I have already concluded that a fair allowance for the costs incurred by both parties in maintaining W (which costs represent W’s proper needs) is a total of $792.00 per week.[9] When I take into account the matters set out in s.117(4) of the Assessment Act — which factors have been discussed above — I conclude that it would be just and equitable for the husband to bear something between 80% and 90% of these costs. It would be intellectually dishonest for me to choose either of those percentages in preference to the other, and hence I conclude that it is appropriate for me to choose the mid point of the two — being 85%.
[9] See paragraph 37 above.
I have chosen the above percentage because of the fact that the husband’s earning capacity (and, probably, his available gross income) is at least four times greater than that of the wife, and because he has assets and financial resources of vastly greater value than those of the wife.
Eighty five per cent of $792.00 per week is $673.00. Given that the husband is presently responsible for the costs which he incurs whilst W is with him (totalling $30.00 per week), and W’s educational and associated expenses (totalling $327.00 per week), it is apparent that the quantum of periodic child support that the husband should pay is $316.00 per week.
The fact of the matter is, however, is that the wife did not seek that W’s overall expenses be apportioned between the parties in such a manner as would require the husband to meet more than 80% of those expenses. That being the case, and given that the order that the wife eventually sought was that the husband pay periodic child support at the rate of $270.00 per week, I am of the view that it is appropriate to make an order to that effect.
Whether Proposed Child Support Order is “Otherwise Proper”
Having regard to the provisions of s.117(5) of the Assessment Act, and to the overall financial position of both parties, I am of the view that the proposed child support order is indeed “otherwise proper”.
Child Support Order
Having regard to the Reasons set out above (and to the general observations recorded below), I propose to make orders to the following effect:
(1)Pursuant to s.117 of the Assessment Act, there be a departure from the administrative assessment of child support payable by the husband to the wife for the child W as follows:
(g)For the period from 1 April 2003 to 12 April 2008 (being the date upon which W turns 18) the annual rate of periodic child support be set at $14,040.00 (being $1,170.00 per calendar month).
(h)The annual rate of periodic child support payable by the husband to the wife will increase from 1 April each year (commencing 1 April 2004), in accordance with variations in the consumer price index for Melbourne.
(2)Pursuant to s.124 of the Assessment Act, the husband provide additional child support to the wife for the child W by way of payment of all the following school fees and expenses for W while she continues to attend Mentone Girls Grammar (or such other school as the parties shall agree upon from time to time), such payment to commence with the 2003 school year:
(i)payment of all school fees for W as invoiced by Mentone Girls Grammar, or such other school as may be agreed upon between the parties from time to time;
(j)stationery, book and uniform expenses;
(k)excursions and camp expenses (compulsory and non-compulsory);
(l)hire and purchase of sporting and musical equipment;
(m)computer and software expenses as may be required by the school; and
(n)incidental expenses as invoiced by the school from time to time, inclusive of building levies and contributions.
(3)The child support ordered to be provided by the husband in (2) above is not to be credited against the husband’s liability for periodic child support as provided for in paragraph (1) above, and is to be paid by the husband in addition to the said periodic child support.
General Observations
The parties were in agreement that the husband’s liability in respect of both periodic and non-periodic child support should be fixed by the Court until W turns 18. To the extent that it may be necessary for me to do so, however, I now record the following:
(a)For the reasons set out above, I am satisfied that it is just and equitable as regards W and the parties, and otherwise proper, to make the order proposed by the parties to the effect that the husband provide additional child support otherwise than in the form of periodic amounts paid to the wife (in other words, in the form of the payment of school fees and associated expenses).
(b)I am familiar with, and have had regard to, the provisions of sections 121 to 126 of the Assessment Act.
(c)In effect, the parties agreed upon the form of the orders that I have proposed, and the only dispute was as to the quantum of periodic child support payable by the husband.
(d)I have fixed the quantum of periodic child support for the whole of the period until W attains the age of 18 years for the following reasons:
(i)I have made findings regarding the husband’s credibility, and his failure to make full and frank disclosure of all relevant aspects of his financial position. The husband has had significant assets, and funds invested in his name (or otherwise available to him). Notwithstanding that fact, the husband has not voluntarily met his obligations (or, at least, the entirety of his obligations) in relation to child support.
(ii)There exists a relatively long history of disputes between these parties — particularly in relation to the issue of child support. The husband is, I find, a determined, intelligent and resourceful person, and any decision on the part of the court to leave future child support assessments in the hands of the CSA will lead — as night follows day — to further objections, reviews, and (ultimately) litigation.
(iii)I find that the husband is likely to continue to manipulate his financial affairs (to the extent that he is able to do so), to ensure that his assessed child support is as low as possible — or, alternatively, that it will be as difficult as possible for the wife and the CSA to enforce the payment of any relevant assessment. I refer in this regard, and by way of example only, to the letter sent to the CSA by the husband’s daughter S, and to the letter prepared by Ms E and referred to above.
Although the wife did not seek an order to the effect that child support be capitalised, I am of the view that it would have been strongly arguable that a capitalisation order should be made. For reasons best known to her, however, the wife seems to be prepared to trust the husband to meet his financial obligations under these orders on a periodic basis.
Effect of Orders
I am aware that the effect of the orders that I propose to make will be to create “instant arrears” of the periodic child support, as it were. I am satisfied, however, that the husband earned enough (or, alternatively, had practical access to funds that would have enabled him) to have paid the level of child support that I have found to be proper and just and equitable. As a consequence of his conduct in failing or refusing to pay child support at such a level, the wife has clearly incurred a financial detriment — and the husband has incurred a corresponding financial gain.
In my opinion, the husband has not been motivated to pay child support at an appropriate level. He clearly gave it a very low priority, and stubbornly refused to accept the obvious inadequacy of his contribution to W’s financial support until the trial was well under way.
I am satisfied (for the Reasons which I have expressed) that the husband has sufficient assets available to him to meet the obligations that will flow from the orders that I am about to make.
I shall now hear counsel regarding the precise terms of the orders necessary to give effect to this judgment.
I, Barbara Mendleson, certify that the preceding one hundred and twenty-five (125) paragraphs are a true copy of the reasons for judgment of Walters FM
Deputy Associate:
Date: 24 November 2004
0