H and H
[2003] FMCAfam 194
•11 June 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| H & H | [2003] FMCAfam 194 |
| CHILD SUPPORT – Application for departure order – application for child support by way of lump sum payment – where certain income of the respondent had not been included in the Child Support Assessment – where the respondent is presently remanded in custody pending sentence – where the respondent has available proceeds of the sale of property – whether there are any special circumstances – where calculations made on basis of parties’ property and financial resources – where most of claim relates to earlier years in which respondent was paying only minimum payment – where parties’ financial resources are similar – where a lump sum is most appropriate way of ordering payment. |
Child Support (Assessment) Act 1989, ss.3, 4, 114, 117, 121, 124, 125
Savery and Savery (1990) FLC 92-131
In the Marriage of Gyselman (1992) 15 FLR 219
Hides v Hatton (1997) FLC 92-759
Prpic & Prpic (1995) FLC 92-574
| Applicant: | PH |
| Respondent: | LH |
| File No: | PAM 472 of 2003 |
| Delivered on: | 11 June 2003 |
| Delivered at: | Parramatta |
| Hearing date: | 30 May 2003 |
| Judgment of: | Raphael FM |
REPRESENTATION
| Counsel for the Applicant: | Mr D Levy |
| Solicitors for the Applicant: | Harman & Co Solicitors |
| Counsel for the Respondent: | Mr R Battley |
| Solicitors for the Respondent: | FD Hammond & Associates |
ORDERS
That child support for the children, MH, RH and JH, from 1 January 1997 to 6 June 2000, be payable by way of a lump sum payment of $40,132.60.
That the child support for the children, RH and JH, from 7 June 2000 to 6 May 2003, be payable by way of a lump sum payment of $23,021.14.
That the child support for the child, JH, from 7 May 2003 to 6 June 2006, be payable by way of a lump sum payment of $10, 827.40.
Payment of the total of the above amounts, $73,981.14, to be made within 14 days of this date from the moneys presently held in the Trust Account of the Respondent’s solicitors pursuant to the Orders of Scarlett FM dated 17 February 2003. The balance of the sum of $92,000.00 there held may be returned to the Respondent save for the sum of $7,500.00 to be held as security for the applicant’s costs and paid to her solicitors upon completion of all costs assessments.
The respondent father to pay the costs of the applicant mother including any reserved costs to be assessed in accordance with Schedule 1 of the Federal Magistrates Court Rules.
It is certified that it was appropriate for the applicant mother to employ an advocate pursuant to Part 21 Rule 21.15.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAM 472 of 2003
| PH |
Applicant
And
| LL |
Respondent
REASONS FOR JUDGMENT
Proceedings
These proceedings relate to child support and whether there should be any departure from the administrative assessments of the Child Support Agency (“the CSA”) in respect of three children; MH born 8 June 1982, RH born 7 May 1985 and JH 7 June 1998. The application has been divided up into separate periods namely, 1 January 1997 to 6 June 2000 in respect of all the children, 7 June 2000 to 6 May 2003 in respect of RH and JH and 7 May 2003 to 6 June 2006 in respect of JH only. There is a further application that the child support payable by the respondent to the applicant with respect to the said children for the said periods be capitalised and paid by the respondent to the applicant as a lump sum in substitution of periodical child support; such lump sum being $91, 994.42. The respondent opposes such a departure order and seeks that the child support payments be in accordance with the assessment and formula prescribed by the Child Support Assessment Act 1989 (Cth) (“the CSA Act”).
Applications
The mother, filed an application in form 63 for a departure from the child support assessment in this Court on 5 February 2003. The father did not file a response. On 17 February 2003 Federal Magistrate Scarlet made orders which had the effect of securing $92,000.00 of the proceeds of sale of a property owned by the father pending the outcome of these proceedings. The money has been retained in the Trust Account of the father’s solicitors pending further order.
Background
The father and the mother were married on 19 November 1983 and cohabited until 1 January 1997. Consent orders were made with regard to the matrimonial property pursuant to which the mother paid the father $10,500.00 by way alteration of property interests. The mother kept the matrimonial home at K and the father kept a property in WW. There was a small mortgage of approximately $20,000.00 upon the family home which has now increased to approximately $35,000.00. The mother deposed to problems she had in re-taking possession of the matrimonial home and the condition in which she found it. She alleges she spent money putting it into a state in which it was habitable for herself and her children. The children have lived with her at all times. Although the father has submitted to assessments from the CSA he claims that he has not been gainfully employed during the whole of the relevant period and is in receipt of a disability support pension. The assessments from the CSA have either been nil or, since the advent of the minimum payment, the minimum payment. The mother has had some employment although for a considerable period of time she was unable to work due to medical conditions. The mother deposed at length in her affidavit to difficulties in providing for her three children.
The mother also deposed to a series of payment made by the father to each of the children, which the father does not deny. Indeed, the father’s evidence is that the payments were slightly larger than those deposed to by the mother. The son RH received a trail bike valued at between $6,000.00 and $7,000.00. The son MH received assistance for legal fees valued at approximately $3,000.00 to $4,000.00. The daughter JH received at least $1,800.00 to spend on furniture for her room.
There was also evidence that the father had rented out the WW property for $400.00 per month during the whole of the relevant period. He had never tried the raise the rent and, although he did have difficulty in obtaining it sometimes, it seems to have been regularly paid overall. There is some doubt as to whether this rent was factored into either the father’s social security payment or child support assessment.
The value of the mother and the father’s individual properties was much the same at about $250,000.00. The father’s property was unencumbered. The mother’s property is encumbered but only to a relatively small extent. Apart from the payments previously referred to and possibly some other payments in lump sum cash amounts, the mother has had the responsibility for paying for all of the children’s needs since separation.
The father is currently remanded in custody pending sentence on certain drug-related charges. This is not his first offence. He has not previously served a custodial sentence. The mother argues that it is more likely than not that he will now serve a custodial sentence. In any event, she claims, the father has evinced an ability to earn funds and that he was employed from time to time (in casual work) but these matters were not taken into account in assessing his child support liability. It is unlikely that he will make any further payments even if he is not incarcerated. The sale of his property represents the only opportunity for him to comply with his obligations to support his children which are found in ss.3 and 4 of the CSA Act.
The law
Sections 114 and 121 of the CSA Act identify that the additional particular objects to Divisions 4 and 5 of the Act include (a):
“That children have their proper needs met from reasonable and adequate shares in the income, earning capacity, property and financial resources of both their parents;
And (b):
The parents share equitably in the support of their children.”
The provisions of s.117 of the CSA Act empower a Court to make an order for departure from administrative assessment in special circumstances.
Section 117(1)(b) provides as follows:
“i)that one or more of the grounds for departure mentioned subsection (2) exists or exists; and
ii)that it would be:
(A)just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(B)otherwise proper;
to make a particular order under this Division ; the court may make the order.”
If these three conditions are satisfied then the Court should make the departure order sought.
In Savery and Savery (1990) FLC 92-131 Kay J said that “special circumstances” were “facts peculiar to the particular case which set it apart from other cases.”
In the Marriage of Gyselman (1992) 15 FLR 219 at 225, the Full Court of the Family Court said as follows of the phrase “special circumstances”:
“Whilst it is not possible to find with precision the meaning of that term, as a generality it is intended to emphasise that the facts of the case must establish something that 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.”
The grounds for departure
Section 117(2) of the Act sets out the various grounds for departure. After considering these various bases for departure and whether or not in the special circumstances of the case it is appropriate for a departure order to be made, the Court must then consider s.117(4) of the Act which deals with the circumstances in which it is just and equitable to make the departure order sought.
Section 117(4) of the Act reads as follows:
“117(4) In determining whether it would be just and equitable as regards the child, the carer entitled to child support and the liable parent to make a particular order under this Division, the court must have regard to:
–the nature of the duty of a parent to maintain a child (as stated in section 3); and
–the proper needs of the child; and
–the income, earning capacity, property and financial resources of the child; and
–the income, earning capacity, property and financial resources of each parent who is a party to the proceedings; and
–the commitments of each parent who is a party to the proceeding that are necessary to enable the parent to support:
himself or herself; or
any other child or another person that the person has a duty to maintain; and
–direct and indirect costs incurred by the carer entitled to child support in providing care for the child; and
–any hardship that would be caused:
to:
the child; or
the carer entitled to child support;
by the making of, or the refusal to make, the order; and
to:
the liable parent; or
any other child or another person that the liable parent has a duty to support;
by the making of, or the refusal to make, the order.”
Finally, it is necessary for the Court to consider s.117(5) and determine whether or not it is proper to make the departure order.
Section 117(5) reads as follows:
“117(5) In determining whether it would be otherwise proper to make a particular order under this Division, the court must have regard to:
–the nature of the duty of a parent to maintain a child (as stated in section 3) and, in particular, the fact that it is the parents of a child themselves who have the primary duty to maintain the child; and
–the effect that the making of the order would have on:
any entitlement of the child, or the carer entitled to child support, to an income tested pension, allowance or benefit; or
the rate of any income tested pension, allowance or benefit payable to the child or the carer entitled to child support.”
In Gyselman (supra) the Full Court of the Family Court said at page 240 as follows:
“As we have already indicated, the exercise under section 117 involves three steps. The first, which we have already examined, is whether one or more of the grounds in subsection 2 has been made out. The legislation then requires the court to consider whether any proposed order is ‘just and equitable’ and ‘otherwise proper’.”
It is clear therefore that each of these three steps must be addressed by the court as a separate issue, namely:
a)whether one or more of the grounds of departure in s.117 is established; if so:
b)whether it is just and equitable within the meaning of s.117(4) to make a particular order;
c)whether it is otherwise proper within the meaning of s.117(5) to make a particular order.
Further, from a consideration of the case of Hides v Hatton (1997) FLC 92-759 it is clear that the court must follow this three-step process in respect of each year for which a departure order is sought.
Application of the law to the facts of the case
The applicant is relying on s.117(2)(c)(i):
“that, in the special circumstances of the case, application in relation to the child of the provisions of this Act relating to administrative assessment of child support would result in an unjust and inequitable determination of the level of financial support to be provided by the liable parent for the child;
(i) because of the income, earning capacity, property and financial resources of either parent or the child.”
I am satisfied that there are special circumstances in this case. I am satisfied that the mother has made out a prima facie case of funds being available to the father which may not have been taken into consideration by the CSA when considering that he had a nil or minimum liability. The existence of a fund of money from which a payment could be made and the very real possibility that the father may be given a custodial sentence combine to make this an appropriate case to consider whether or not the grounds for departure outlined in s.117(2) exist.
I am also satisfied that the administrative assessments which have been made resulted in an unjust and inequitable determination of the level of financial support to be provided by the father for the child because of his income, earning capacity, property and financial resources. I am satisfied that the evidence shows that the father has a greater earning capacity than may have been disclosed. In this regard I particularly refer to the $400.00 per month paid by way of rent which went straight into the father’s bank account and was drawn by him and used for his living purposes. In the absence of any evidence to the contrary I am prepared to draw an inference that the sums paid to the children to which I have referred were obtained by the father as a result of his employment or other legitimate activity. It therefore seems likely that the father had a greater earning capacity than that the CSA was prepared to fix him with. However, most importantly, we have here two parents neither of whom appear to have a great ability to work but both of whom have a property of equal value. The difference between them is that since they separated the mother has, with the exception of the payments previously referred to, completely supported the children on her own. During this time the father paid no more than a maximum of $10.00 per week by way of child support. That is not an equitable division of the burden between two people whose assets and income earning ability are otherwise almost identical.
Whilst I have not been provided with any particular evidence in relation to s.117(5) of the Act I would say that if I was minded to make a departure order and the substitution order under s.123 I am satisfied that it would be appropriately taken into account by the Social Security when assessing the mother’s obligations. The effect of making an order may well be to relieve the public purse of some the burden of bringing up the father’s children.
I am also satisfied that it would be just and equitable to make an order in the circumstances of this case within the meaning of s.117(4) of the Act based upon the matters which have been set out in these reasons.
Although I have dealt with the application as if it were for one period I am aware that it is not. The periods are defined by the dates upon which the two elder children became 18 years of age. Otherwise there really is no difference in the situation. During all the time the father was paying either nil or the minimum payment, during all the time he was in receipt of rent and during all the time he was either actually employed or had a capacity for employment evidenced by the payments made.
The mother has applied for a substitution order pursuant to ss.123 and 124. The matters which I am required to consider before making such an order as set out in s.124(1) and (2). In Prpic & Prpic (1995) FLC 92-574 the Full Court said:
“Capitalisation orders may well be appropriate where there are difficulties in enforce or where it is proper to sever the financial links between the parties. However, as a general rule, given that payment of child support depend upon circumstance prevailing from time to time which circumstances cannot be predicted with any significant degree of certainty, it seems to us that the provision of child support by way of lump sum should not be considered to be a readily available alternative but one that is only exercised where there are circumstances that make it appropriate to do so.”
I think there are such circumstances here. These are that two of the three children are already beyond the age at which child support is payable and the departure would mean that the father is in arrears. It is not appropriate in these circumstances to look at his future earning capacity. The same can be said for much of the period relating to the youngest child. She only has three more years to receive child support. I am unable to say whether the father will receive a custodial sentence or how long that sentence might be. However, given his long period of time on a disability support pension and his reluctance to reveal his true earning capacity to the CSA it is reasonable to infer that it is unlikely that he would speedily make payment of any amount ordered to be paid be him.
The matters which I am required to look at under s.124(2)(a) and (b) have already been considered. I was provided with no evidence to suggest that if I made the order the circumstances of the mother are such that taking into account the effect of the order proposed to be made the mother would be unable to support herself without an income test pension, allowance or benefit. As a majority of the order which I propose to make relates to the past this sub-paragraph has only limited relevance. I do not think from what evidence I have heard about the mother’s financial position that she would be unable to support herself if I made an order by way of a lump sum representing payments for three years in respect of the youngest child.
I do not believe that s.124(2)(d) is relevant in this case.
For the same reasons that I have already given in this case in relation to s.117 I consider that it is just and equitable to make an order of this type in this particular case and it is otherwise proper pursuant to s.117(5). These findings are made in respect of ss.124(3) and 124(4) of the CSA Act.
Calculation of the appropriate departure order
The mother has sought that for the period 1 January 1997 to 6 June 2000 the annual rate of child support with respect to the three children be set at $12,000.00 pa; a total $41,166.32 for the period. She has requested that for the period 7 June 2000 to 6 May 2003 the annual rate of child support with respect to the two remaining children be set at $10,000.00 pa totalling $29,267.62. The mother has asked that for the period 7 May 2003 to 6 June 2006 the annual rate of child support with respect to the youngest child be set at $7,000.00 pa. She has requested that the arrears and future payments be capitalised into a sum of $91,994.42 which appears to be the addition of the three sub totals. There is in the solicitors trust account a sum of $92,000.00.
In calculating the appropriate amount for which the father should be responsible in respect of his children for the periods in question I must ensure that both parties bear their responsibilities equitably. In other words, it would be wrong to make an order that effectively has the father paying 100% of the costs of the children’s upbringing.
The evidence which is before me indicates that currently the mother is spending $582.00 per week of which $412.00 is allocated to the children. This information appears from the financial statement filed on 16 May 2003. The children referred to in this affidavit are the two younger children as the eldest son ceased living with his mother in September 2002. I have taken the figures in the financial statement together with the information provided by the mother in her affidavit to calculate that for the period from 1 January 1997 to 6 June 2000 the approximate expenditure upon all three children was $450.00 per week. Her husband’s one half share of this expenditure would be $11,700.00 pa making a total for the period 1 January 1997 to 6 June 2000 of $40,132.60. I find that for the second period between 7 June 2000 and 6 May 2003 reasonable expenditure for the two remaining children is $300.00 per week or $15,600.00 per year. The father’s contribution should be $7,800.00 pa making a total of $23,021.14 for the period.
I find that for the period 7 May 2003 to 6 June 2006 the reasonable annual expenditure on the child JH would be $10,400.00 of which the father’s contribution would be $5,200.00 making a total of $10,827.40 for the period.
The total of these sums is $73,981.14. I would order that this sum be paid to the mother from the proceeds of the sale of the property at
31 W Street, WW presently in the Trust Account of the father’s solicitor within 14 days.
In her affidavit the mother has calculated the amount which she has requested based upon a notional income of $50,000.00 pa for the father. I just do not have the evidence which would allow me to come to a conclusion that the father had an earning capacity or was in fact earning anything like $50,000.00 pa. I have based my calculations upon the property and financial resources of the father although I have taken into account such income as has been revealed.
I am required under s.125 of the CSA Act to state in my order whether the child support ordered to be provided by the liable parent is to be credited against the liable parent’s liability under any administrative assessment if the child support payable by the liable parent to the carer entitled to child support that relates to the period, or part of the period, for which the order has effect. The mother has deposed to the fact that the father is currently in arrears with his child support in the sum of $646.93. The order which I have made is intended to represent the whole of the father’s child support liability to the carer for the whole of the period in question. Therefore if payment is made in accordance with my order the arrears will be expunged. The intention of my order is that upon payment the whole of the father’s liability to child support in respect of his three children will be extinguished.
Both parties were represented in these proceedings. The fact of their representation greatly assisted the court in the speedy conclusion of this matter. It is appropriate that the father should pay the mother’s costs including any reserved costs to be assessed in accordance with Schedule 1 of the Federal Magistrates Court Rules. I certify that it was appropriate to employ an advocate pursuant to Part 21 Rule 21.15.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date:
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