Grey and Grey
[2012] FamCA 389
FAMILY COURT OF AUSTRALIA
| GREY & GREY | [2012] FamCA 389 |
| FAMILY LAW - CHILD SUPPORT – Child support departure application – Jurisdiction established under s 116(1)(b) Child Support Assessment Act 1989 (Cth) – Where the father has moved to South Africa – Where move to South Africa by father does not constitute a terminating event under s 12 of the Child Support Assessment Act 1989 (Cth) – Where two of the children attended private school before the parties separated – Where father continued to pay school fees after parties separated – Grounds for departure established for two children – Where mother does not presently have income, property or financial resource to support the children – Where mother has full responsibility for the children – Where the mother does not have the capacity for paid employment – Where father did not provide full and frank disclosure of his financial circumstances – Where inference available that the father has sufficient income and assets to pay private school fees and child support as sought by the mother – Grounds for departure for third child established – Where in the present circumstances of the case it is just and equitable for a Departure Order to be made – Departure Order made. |
| Child Support Assessment Act 1989 (Cth) Child Support (Registration & Collection) Act 1988 (Cth) |
| Black and Kellner (1992) FLC 92-287 DJM v JLM (1998) FLC 92-816 Dwyer v McGuire (1993) FLC 92-420 Gyselman (1992) FLC 92-279 Lightfoot & Hampson (1996) FLC 92-663 Mee & Ferguson (1986) FLC 91-716 Wylde & Ballard (1997) FLC 92-771 Weir and Weir (1993) FLC 92-338 |
| APPLICANT: | Ms Grey |
| RESPONDENT: | Mr Grey |
| FILE NUMBER: | SYC | 1837 | of | 2010 |
| DATE DELIVERED: | 28 May 2012 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Ryan J |
| HEARING DATE: | 1 December 2011 |
REPRESENTATION
| ADVOCATE FOR THE APPLICANT: | Ms Grey in person |
| SOLICITOR FOR THE RESPONDENT: | No appearance for or on behalf of the respondent |
Orders
That pursuant to section 117 of the Child Support Assessment Act 1989 there be a departure from the administrative assessment of child support payable by Mr Grey to Ms Grey for the children, K born … May 2000, D born … May 2003 and Y born … February 2006 as follows:
(a)for the period commencing 22 March 2011 until 28 June 2011, in addition to the periodic payments payable pursuant to any administrative assessment of child support, school fees levied by M School in relation to the two elder children;
(b)for the period commencing 28 June 2011 to the date of these orders, $1,623.25 per month being $405.82 per month per child and the school fees levied by M School in relation to the two elder children;
(c)from the date of these orders until 31 December 2014 in the amount of $1,570.66 per month per child and in the event that during this period either or both of the elder children ceases to attend M School the monthly amount payable by the father shall be reduced by $1,192.50 or double that amount if both children are withdrawn.
(d)That the amount payable by the father pursuant to these orders are to be credited to 100 per cent of the annual rate of child support payable by him under all and any administrative assessments.
In relation to the commencement date for the departure order in relation to the children’s school fees, that order is stayed for six weeks during which the father has liberty to apply.
The mother shall serve on the father a copy of these orders and the Court’s reasons for decision within 10 days.
The mother shall file an affidavit of compliance with Order 2 above.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Grey & Grey has been approved by the Chief Justice pursuant to s 121(9)(g) of the Act.
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 1837 of 2010
| Ms Grey |
Applicant
And
| Mr Grey |
Respondent
REASONS FOR JUDGMENT
This is an application by Ms Grey (“the mother”) under the Child Support Assessment Act 1989 (Cth) (“CSAA”) that there be a departure from the administrative assessment of child support payable by her former husband, Mr Grey (“the father”).
The parties have three children all of whom live with the mother in Australia. Without notice to her or the children, on 8 December 2010, the father left Australia for South Africa where he has lived ever since. There is no evidence that he subsequently returned to Australia and I infer he has not.
The mother’s child support application is but one of a number of applications commenced by her in this Court. While the father participated in the early stages of the parties’ competing property settlement, spousal maintenance, parenting, child support and associated applications, he ceased an active role during 2011. That said, he filed a Notice of Address for Service, namely his father’s residential address in Perth, WA and, on occasions, personally corresponded with the Court by email. Copies of all orders, including those which listed this child support application for hearing and allied trial directions, have been sent to the Perth address. In addition, the mother complied with directions that she send copies of her documents to the Perth address and, in relation to this hearing, a duplicate copy to the father’s email address being the same email address that he uses to communicate with the Court.
I am satisfied that the father is aware that the mother’s child support departure application was listed for hearing and, that if he failed to comply with directions, the hearing would proceed in his absence. So that it is clear, in relation to various applications for interim property settlement, child support and spousal maintenance applications, in 2010, the father filed affidavits and financial statements. Nothing was filed by him for this hearing.
Although this hearing proceeded undefended, it was not without difficulty. Without in any way intending to be critical of the mother, she provided the Court with an ocean of material but did not turn her mind to issues in relation to jurisdiction or the legislative framework for her application. Basic questions such as whether an administrative assessment had been issued were not answered and it was necessary, for example, to require that she contact the Child Support Agency in order to establish such matters.
The father’s departure for South Africa invited consideration about whether her application was correctly pressed or whether she should have engaged the Court’s child maintenance powers. Once it was clear that there was an administrative assessment it was established that neither she nor the father had engaged the objection/review process required by the Act. For reasons which will be explained later, the father’s departure for South Africa is not a child support terminating event and the issue of financial support for the children is a child support and not child maintenance matter. In addition, in the special circumstances of the case, the departure application should be determined notwithstanding the mother’s failure to object to and review the administrative assessment.
Background Facts
Throughout these reasons statements of fact are findings of fact determined upon the balance of probabilities (s 140 Evidence Act 1995 (Cth)).
The father was born in South Africa in 1971.
The mother was born in South Africa in 1976.
Separately, the parties migrated to Australia where, in 1996, they commenced cohabitation.
They were married in August 1997. It would appear, that by then, both were Australian citizens.
The parties have three children, each of whom is covered by the administrative assessment and subject to this application. They are K born in May 2000, D born in May 2003 and Y born in February 2006.
Prior to separation the parties conducted a wholesale goods business, G Pty Ltd. The father was its sole director and CEO. G Pty Ltd was originally owned by the father’s father and operated in Perth. It would appear that, in effect, the parties took over the day to day operation of the business and about two years after they married established the business in Sydney. The father’s father continued to operate an arm of the business in Perth. According to the mother, the father was responsible for the supply of goods and, I infer, those aspects of the business not overseen by her. She was particularly involved in accounts management, bookkeeping, courier and customer service.
The parties separated on 10 August 2009. At separation the mother and children remained in the family home at Suburb B while the father moved into nearby rented accommodation.
On 9 September 2009, the father terminated the mother’s employment.
From separation the father paid significant expenses in relation to the family home and towards the mother’s and children’s expenses. Eventually, these petered out with it being alleged by him that the parties and children could not expect to maintain the same high standard of living enjoyed prior to separation.
The mother commenced proceedings in this Court on 25 March 2010.
On 17 April 2010 the Child Support Agency accepted the mother’s application for an administrative assessment of child support and issued its first assessment. The first assessment covered the period 29 March 2010 to 28 June 2011 and required that the father pay $1,623.25 per month for the three children.
Orders were made by a Judicial Registrar on 2 June 2010 as follows:
1.That the husband file and serve a further affidavit in these proceedings not later than 25 June 2010 and a certificate is given pursuant to s 128 of the Evidence Act 1995 in relation to the content of such affidavit, such affidavit to be filed with Judicial Registrar Johnston’s Associate in the first instance and the Certificate shall be attached thereto.
2.That these proceedings are adjourned to the Judicial Registrar’s Duty List call-over at 9:30 am on 14 July 2010.
2. That orders are made in accordance with the Minute of Order filed in Court today and signed by Judicial Registrar Johnston and placed with the Court papers as set out hereunder:-
1.That without prejudice and without admission the husband shall do all things (including making such payments) as are necessary to secure the children’s continued attendance at [M School] until at least 31 July 2010.
2.That the wife shall not cause or permit [M School] to become aware of the terms or effect of this Order.
3.Noted that the husband intends to seek to borrow such funds as may be required to comply with Order 1 herein.
3.That until 6:00 pm on 14 July 2010 the husband will pay all mortgage repayments and insurance premiums as and when they fall due in respect of the former matrimonial home [address deleted].
4.That until 6:00 pm on 14 July 2010 pursuant to s 77 of the Family Law Act 1975 the husband will pay direct to the wife by way of urgent spousal maintenance the sum of $700 per week first payment on 3 June 2010.
5.That otherwise the wife’s interim applications be adjourned to the Judicial Registrar's Duty List call-over at 9:30 am on 14 July 2010.
Without notice to the mother, at 8.30 am on 8 December 2010, the father completed an Instrument of Appointment of Voluntary Administrators which placed G Pty Ltd into administration. That same day, he appeared in a Local Court where he pleaded guilty to a fraud related charge which concerned him having forged the mother’s signature on a finance application for a Porsche. Because a conviction for a dishonesty offence would disqualify him from managing a corporation, he applied for a bond. In support of the bond it was submitted on his behalf that the father was concerned that if he could no longer manage G Pty Ltd, at least 28 people (“up to about $1 million worth salaries”) would lose their jobs and he would no longer be able to pay child support. No mention was made to his having placed G Pty Ltd in voluntary administration a few hours earlier or that he and his now wife would later that day leave Australia for South Africa.
It is now clear that shortly afterwards the father established in South Africa a business which imported bedding. G Pty Ltd administrators attempted to seize at least one container of bedding in South Africa. Although it was ultimately decided by the administrators that the process would be too difficult and expensive, this lends support to the mother’s evidence that the father used G Pty Ltd funds to establish himself and a business in South Africa. More will be said about this later. Indeed, it is reasonably likely that the father’s use of G Pty Ltd funds for this and purposes unrelated to the company is the explanation for his application to a Judicial Registrar for a s 128 Evidence Act 1995 (Cth) certificate issue as a pre-cursor to him providing financial disclosure.
There is no doubt that the father left behind financial chaos for the administrators and the mother. In this regard, large sums of money are claimed by banks and other unrelated third parties against G Pty Ltd and the parties. It is noteworthy that, although the family home is registered in the mother’s sole name, it provided collateral security (along with other real estate) for funds advanced to G Pty Ltd and the parties. Those and other loans are in default.
On 22 March 2011 the mother filed an application in a case seeking child support orders. In his response, the father did not oppose (or concede) the mother’s application. In that application, the mother sought $2,337.00 per month plus private school fees. This application was consolidated with her further amended initiating application filed on 2 August 2011. She amended her application again on 8 November 2011 to seek the $4,712.00 per month under consideration. The difference between these applications is that the latter amount includes private school fees. Essentially, the amount sought from the father is identical, albeit the mechanism for payment differs.
On 20 June 2011 the Child Support Agency issued a s 116(2) of the Child Support (Registration & Collection) Act 1988 (Cth) certification which identified that the father was in arrears in the amount of $21,031.00.
The applicable law
The obligation to pay child support is created by the provisions of the CSAA. Section 3 contains the obligation that parents maintain their children. The objects of the Act are found in s 4. Each of the objects needs to be borne in mind when deciding an application under the Act. Section 4(3) of the Act recognises the desirability of parents reaching agreement for the financial support of their children. Sections 114 and 121 identify that the further objects of Divisions 4 and 5 of Part 7 include:
a)that the children have their proper needs met from reasonable and adequate shares in the income, earnings capacity, property and financial resources of both of their parents and
b)that parents share equitably in the support of the children.
The Full Court of the Family Court in Gyselman (1992) FLC 92-279 set out a three step process that courts must follow in determining an application for a departure order under s 117. The first is whether one or more of the grounds in s 117 is established. If so, the next step is whether it is just and equitable within the meaning of s 117(4) to make a particular order. The final consideration is whether it is otherwise proper within the meaning of s 117(5) to make a particular order.
So that it is clear, once a valid application for departure has been made the question of departure from the administration assessment provisions of the Act in respect of any future years may be considered. (Dwyer v McGuire (1993) FLC 92-420).
Having raised the issue of jurisdiction, the mother relied on s 116(1)(b) of the Act to establish the Court’s jurisdiction for consideration of her child support application. At no time has the father opposed the Court taking jurisdiction as sought by her. There are outstanding property settlement proceedings which, along with the child support proceedings, require consideration of the parties’ financial circumstances. Although the proceedings will not be determined simultaneously (because the mother and her father in law are still in negotiation with Citibank about satisfaction of advances secured against properties owned by them), it was clearly not in the interests of either party to delay consideration of the child support issue until the Citibank matter is finalised. At this point there is agreement in principle with Citibank that the mother will pay approximately $1 million in exchange for Citibank forgiving against her a claim for a much larger amount. In reliance on these matters the mother met the necessary s 116(1)(b) CSAA elements and, in the exercise of the Court’s discretion, it is appropriate to determine these proceedings.
It is useful to here address the effect on the mother’s application and the administrative assessment of child support of the father taking up residence in South Africa. There is no doubt that the first administrative assessment was properly made under s 23 CSAA. However, at first blush, it would appear the effect of s 12(3) CSAA means that his becoming resident in South Africa constituted a terminating event. Section 12(4A)(b), however, qualifies s 12(3)(b). Section 12(4A) provides:
(4A) Subject to subsection (4B):
(a) if an international maintenance arrangement applies in respect of a child--a circumstance set out in paragraph (1)(f) is not a child support terminating event in relation to the child; and
(b) if an international maintenance arrangement applies in respect of a person who is a liable parent in respect of a child--a circumstance set out in paragraph (3)(b) is not a child support terminating event in relation to the person.
Sub-section 4B applies to situations where both the carer and liable parent are no longer residents of Australia and has no application to the situation under consideration.
South Africa is listed in Schedule 2 of the Child Support (Registration & Collection) Act as a reciprocating jurisdiction. This means that, pursuant to s 12(4A)(b) CSAA the father ceasing to be a resident of Australia and moving to South Africa is not a child support terminating event.
The mother’s application is thus competent.
Special circumstances of the case – has the applicant shown a ground for departure?
The mother did not identify the grounds for departure relied upon by her. However, as the issue was explored, it became clear that had she known about it she would have relied upon s 117(2)(b)(ii) CSAA (because the children are being cared for, educated or trained in a manner that was expected by their parents), s 117(2)(c)(i)(a) CSAA (because of the income, property and financial resource of either parent) and s 117(2)(c)(i)(b) CSAA (because of the earning capacity of either parent).
Turning then to s 117(2)(b)(ii) CSAA. This relates to the elder children’s education and training; in short, these children continue to attend M School which is a private fee paying school. In Lightfoot & Hampson (1996) FLC 92-663 and Wylde & Ballard (1997) FLC 92-771 the principles established in Mee & Ferguson (1986) FLC 91-716 are identified as relevant to a departure application that concerns costs associated with attendance at private fee paying schools. In essence, the principles that emerge are as follows:
a)Where the non-custodian has agreed to the child attending a private school, that person is liable to contribute to the fees involved so long as and to the extent that he or she has a reasonable financial capacity to do so.
b)Where the non-custodian has not agreed to the child attending such a school, he or she is not liable to contribute to those expenses unless there are reasons relating to the child’s welfare which dictate attendance at that school, rather than a non-private school. In such a case the non-custodian is required to contribute to the extent that he or she has a reasonable financial capacity to do so.
c)The mere fact that a non-custodian can afford the fees or is a wealthy person is not in itself a reason for imposing that liability.
The two elder children commenced school at M School before the parties separated. In relation to the father, it is appropriate to infer that it was his expectation that the children would continue their education at M School. There is no doubt that this was and remains the mother’s expectation. M School is a religious school and enables the children to be educated in their faith which they share with their school peers. K and D are settled at M School where they have a large circle of friends. D struggles with schoolwork and at M School he attends additional classes which cater for his needs.
After the parties separated, for a period, the father paid the children’s school fees. This reinforces my comfortable satisfaction that at least until that time, the children attended M School with his agreement and in accordance with his expectation of their future attendance. His failure to continue to pay the children’s school fees is consistent with his failure to pay spousal maintenance and the parties’ direct and indirect creditors. So that it is clear, I do not infer that the father’s failure to pay the children’s school fees is indicative of dissatisfaction by him with the children’s continued attendance at that school. However, even if the father no longer agreed to the elder children’s attendance at M School it is in their best interests that, at least until the mother’s circumstances are settled, and they know where they will live and have greater security than they do at present, that they continue to attend that school.
After the father stopped paying the children’s school fees, M School granted the mother a 70 per cent subsidy for 2011 and an 80 per cent subsidy for 2012. The effect of this is that for the 2010 school year $26,746.72 is outstanding, for 2011 the $33,630.98 fees were reduced to $9,990.00 and for 2012, the children’s $35,311.50 school fees have been reduced by $28,249.20 to $7,062.30 or $3,531.15 per child. The effect of the subsidy is that the school is, in effect, meeting the major component of the children’s tuition. A subsidy is not a scholarship and it would be wrong to proceed on the basis that for the children to continue to attend M School the school must continue to subsidise their fees. Payment of school fees is the parties’ and not the school’s responsibility. So that it is clear, the subsidy is relevant to the assessment of quantum for the years in which a subsidy is granted, but does not form the basis for quantifying the children’s future school fees.
Although different fees are probably levied in relation to each child, the evidence does not differentiate the amount payable for K compared to D. However, on the basis that $35,311.50 is the amount payable for both children, it is appropriate to proceed upon the basis that for each child the fees are in the vicinity of $17,600.00 per annum.
Y started school in 2011. M School refused the mother’s application to enrol him and he attends H Public School. Y is settled at H Public School and it is not the mother’s intention or, it would seem, either party’s expectation that he attends M School. It follows, that this ground of departure is established in relation to K and D, but not in relation to Y.
Thus, in relation to Y, the mother’s alternate grounds for departure require consideration. Turning firstly to her income, property and financial resources. The mother’s financial circumstances are set out in a Financial Statement filed on 10 November 2011. Essentially, this reveals that her sole source of income is $625.00 per week single parent’s pension which, in an application of this type, must be disregarded. She is the sole registered proprietor of the parties’ home at Suburb B, which she says is worth $2.5 million. In addition, she has an equal share (with the father) in Mr & Ms Grey Investments Pty Ltd which is the ultimate holding company for the parties’ investments and G Pty Ltd. As has already been mentioned, G Pty Ltd is in administration. Citibank has taken possession of associated commercial premises at Suburb A which will be sold and is unlikely to produce a return to the parties. The mother has $2,200.00 cash at bank and household contents which she says are worth $5,000.00. In a balance sheet filed by the father he asserts that the mother has expensive jewellery which she failed to disclose. Evidence was not adduced by him to substantiate this assertion.
The mother (as well as her former parents-in-law) guaranteed advances to G Pty Ltd initially made by NAB which were then assigned to Citibank. An agreement has been reached with Citibank, relevantly, whereby the mother and her former parents-in-law will each pay $1 million, the effect of which is that Citibank will apply that amount towards reduction of the total amount due under various loan facilities, discharge its mortgage secured over the Suburb B property (“Suburb B”) and release them from all liabilities under the loan facilities. Any shortfall will be deducted from the net proceeds of sale from the Suburb A property (“Suburb A”) and, in the event that the Suburb A sale proceeds are insufficient to discharge the loan facilities, Citibank retains its rights against the father, G Pty Ltd (in liquidation) and Mr & Ms Grey Investments Pty Ltd.
The mother’s brothers have agreed to advance her the funds required to make her payment to Citibank. The effect of this is that upon payment, Suburb V will be unencumbered subject to any security the mother’s brothers may require. Although registered in her name, Suburb B forms part of the property available for distribution in the pending property settlement proceedings. It may be that the mother will ultimately be in the position to sell Suburb B, discharge the debt to her brothers and have a capital sum from which she can acquire property and/or use towards her and the children’s expenses. Until that point is reached, she does not have income, property or financial resources which she can use to support herself or the children. Nor does she have the earning capacity to produce income. In this regard, she has full responsibility for three young children. Sadly, the father has stepped out of the children’s lives and no attempt is made by him to fulfil his parental responsibilities. Even if he had not left behind a business in administration and the consequential financial chaos which embroils the mother, her childcare responsibilities are such that until the property settlement proceedings are finalised, she has moved house and finalised her dealings with Citibank, she does not have the capacity for paid employment.
The father did not participate in this hearing nor present evidence for the Court’s consideration. There is no doubt that he did not comply with his obligation to give full and frank disclosure of his financial circumstances and relevant facts. Nonetheless, in difficult circumstances, the mother went to a great degree of effort to assist the Court to determine what these might be. It only needs to be recalled that some years prior to separation the father embarked on a course of action to hide assets from the mother (perhaps also others) and acquired undisclosed assets overseas to appreciate how difficult this has been, particularly now that he is resident in South Africa. In these circumstances it is well established that the Court need not be overly cautious in its determination about what the father’s financial position might be and the overall outcome of the proceedings (Weir and Weir (1993) FLC 92-338 and Black and Kellner (1992) FLC 92-287).
A search produced by the Companies and Intellectual Properties Commission of South Africa shows that on 6 January 2011 the father registered a company named “[Bedding Company]” in South Africa. He is the company’s sole director and, it would appear likely, its sole shareholder. The company has its registered office in South Africa which is different to the father’s residential address recorded in the company report. The point being that he has acquired residential and commercial premises (whether leased or owned has not been established). An internet search revealed that “[Bedding Company]” describes itself as “South Africa’s newest [bedding] retailer”. The company has numerous stores in relation to which it says “our stores are owned and run by us, in-house. They do not pay expensive franchise fees, commissions or use middle men”. The implication being that the father is the beneficial owner of a not insignificant number of stores in South Africa, which I infer is likely to provide significant income.
It would seem likely that in order to establish himself in South Africa (as well as hide assets from the mother) he invested in property overseas, in relation to which the proceeds of sale of one at least, has been received by him but not disclosed to her, or, it would seem, brought to Australia. In this regard, in August 2007, the father sold a residential unit in a building known as “[Building 1]” located in Singapore. Documents evidencing the transaction emanate from Singapore and it is appropriate to infer that the transaction was completed in Singapore dollars. The father paid a deposit in the amount of $689,810.00 with the balance of $843,101.00 payable upon completion of the development. Before the development was completed the father sold his interest for $2,280,370.00. Of this, the balance due to the developer was to be paid directly and the amount of $1,437,268.40 ultimately paid to the father. The mother was unaware that the father had acquired this property and it was only after he left Australia and she again had access to financial records at G Pty Ltd, that this was discovered by her. The father has not explained to the mother or to the Court his use of the sale proceeds.
It is tolerably clear that in May 2007 that the father, perhaps in addition to others, purchased a unit in a building known as “[Building 2]” in Singapore. Documents located by the mother show that a 20 per cent deposit in the amount of $441,900.00 was paid to acquire the interest in the Building 2 unit. Further payments were made as the development reached various stages of completion. In 2009 the father purchased another unit in Singapore, known as “[Building 3]”, at … . Although the unit was acquired in the name of P Ltd, the mother established that this company is the father’s alter ego. In this regard, instructions were sought from him about payment of the $65,559.67 deposit which was duly paid. When read in conjunction with other material produced by the mother, she has shown that the father established at least four corporate entities overseas (China, Singapore and Hong Kong) through which he traded and was able to transfer significant amounts of money. The evidence does not establish whether the father retains or has disposed of the Building 2 or Building 3 units. Irrespective it is appropriate to infer that in relation to these properties he either owns property of significant value or they have been sold and he received a not insignificant amount therefrom. It would make little sense to engage in such significant subterfuge and fail to fulfil disclosure obligations to a Court for a mere trifle.
Again, without the mother’s knowledge, the father acquired a residential unit in Town S in China. The property was acquired in the name of N Ltd, which the evidence shows is the father’s alter ego. That property was valued in 2009 at $133,412.00. There is no evidence that the property has been disposed of and it is appropriate to infer that it has not been.
As far as the mother has been able to establish, other than the father’s interest in G Pty Ltd and the associated entities, he does not have income or assets in Australia. It would appear that he has not insignificant liabilities, for example, to Citibank, Porsche Australia and possibly unsecured creditors. There is no evidence that he has financial resources.
On balance, it is appropriate to further infer that the father has sufficient income and assets to pay the children’s school fees and child support in the amount sought by the mother.
An issue in this matter is whether the Court, in the alternative, might properly base its decision on earning capacity rather than actual income. It is clear from DJM v JLM (1998) FLC 92-816 that a court can take into account earning capacity in situations other than those in which a person has deliberately weakened his or her economic position in an attempt to avoid their responsibility to pay child support. A distinguishing feature between these cases from cases in which the Court focuses on the actual and reduced income in calculating the level of child support is whether the person acted reasonably in taking the step that led to the reduced income. In other words, what is reasonable will be determined not only in light of the particular facts but also the particular area of law involved. In child support cases an important element of the context for determining what is reasonable is the reference in s 4 to the parents’ “capacity to provide financial support” and that the child support legislation prioritises the obligations of parents to support their children. Thus a different answer to the “what is reasonable” question may be given in spousal maintenance compared to child support proceedings.
The mother has also established that the father has an earning capacity of some magnitude. His representation to the Local Court evidences a substantial enterprise which, with him at its helm, was able to meet an annual salary bill in the vicinity of $1 million. In a similar vein, he would not, in the period immediately preceding separation, have executed a substantial lease with Porsche unless he could afford that level of discretionary expenditure. These matters point to the father’s capacity, in Australia at least, to earn a very substantial income. It is his decision alone to reside in South Africa, which decision appears to have been taken with no obvious regard to his parental responsibilities and his obligation to support the children. I also infer that he would not have relocated to South Africa unless he was confident that he could continue to maintain a significant earning capacity.
None of the children has an income, earning capacity, property or financial resources.
Thus, in relation to Y too, the mother has established grounds for departure.
The effect of the mother’s evidence in relation to the children’s expenses is that, including school fees, these reflect the amount sought by her. In this regard, they involve a compromise compared to the standard of living enjoyed by the children prior to separation but, nonetheless, are considerable.
Is it Just and Equitable to make a Departure Order?
The next question then, having established special circumstances, is whether it is just and equitable to make a Departure Order?
Until the mother has re-established herself and realised her interest in Suburb B she does not have the capacity to support herself, let alone the children. There can be no doubt, having regard to earlier findings, that the father is in a manifestly superior financial position and that in the exceptional circumstances of this case it is both just and equitable that he has total financial responsibility for the children. However, once the position with the company, third party creditors and the property settlement proceedings are finalised and the mother and children resettled, it may be that it will no longer be just and equitable for him to have sole responsibility for the children’s financial needs and for the quantum of those needs to be reconsidered.
Is it otherwise proper to make a Departure Order?
For the reasons already given and in the unusual circumstances of this case, the mother has established the propriety for a departure order. However, consideration must be given to the duration of the order sought by her. It is her proposal that the departure order continues until the youngest child attains the age of 18 years or completes secondary schooling, whichever is the latter. As has already been mentioned, her and the children’s circumstances, at least, are likely to change after the property settlement proceedings are finalised and she and the children resettle. This may result in it no longer being just and equitable that the father is solely responsible for the children’s financial support, as well as it no longer being feasible that the elder children continue to attend a private fee paying school.
Because of the complexity of the parties’ circumstances it is difficult to determine when these changes are likely and when further consideration of the children’s attendance at private fee paying schools and the mother’s contribution to their financial support will be appropriate. A departure order which operates until the end of 2014 would appear to be an adequate timeframe within which to finalise, implement and adjust to the completion of the property settlement proceedings. So that it is clear, this includes the probable sale of the family home and the children settling into somewhere new. This means that there is a prospect of future proceedings under the CSAA which, although unfortunate, cannot in the interests of justice be avoided.
The form of order will make provision for a lesser sum in the event the children are unable to continue at M School. In this regard, it is reasonable to anticipate that the mother is likely to face difficulty in enforcing compliance with the departure order and it may be that the school is unable to continue to subsidise the elder children’s attendance. The point being, that the higher amount provides for the payment of school fees for so long as the children attend M School and the lower amount in the event that the elder two children no longer attend.
In relation to the component of the departure orders concerning school fees, these will commence from the date of the mother’s application. This reflects actual expenses in relation to which the father has had ample time to arrange his affairs to meet these expenses. That portion of the order which relates to the children’s living expenses will, as proposed by the mother, be prospective.
In relation to the date of commencement of the order in relation to school fees, this will be stayed for six weeks during which the father has liberty to apply.
I certify that the preceding sixty one (61) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 28 May 2012.
Associate:
Date: 28 May 2012