Harris & Harris

[1999] FamCA 1228

[1999] FamCA 1228

CHILD SUPPORT (ASSESSMENT) ACT 1989
FAMILY LAW ACT 1975

IN THE FAMILY COURT OF AUSTRALIA

AT MELBOURNE   No.ML9607 of 1996

BETWEEN:

SEAN ANTHONY HARRIS

(Husband)

and

WENDY ANNE HARRIS

(Wife)

CORAM:  THE HONOURABLE JUSTICE KAY
DATE OF HEARING:          30 August 1999
DATE OF JUDGMENT:      30 August 1999

REASONS FOR JUDGMENT

APPEARANCES:

The husband in person (135 Wildwood Road, Bulla, Vic 3428).

Ms Tulloch of Counsel, instructed by Morrison Bianchi, Suite 5, 456 St Kilda Road, Melbourne, Vic 3004, appeared on behalf of the wife.

HIS HONOUR:   This is a matter which raises a philosophically difficult issue.  Sean Harris and Wendy Harris are the parents of J, born 22 August 1990, and S, born 20 January 1993.  They separated in 1996 and since that time there have been a number of assessments of child support issued requiring the father to pay child support for the children.  There have also been a number of reviews of the administrative assessment of child support.  The most recent three assessments are relevant to the present dispute between the parties: 

• For the period 1 July 1998 to 30 June 1999 child support has been fixed at an annual rate of $4076 as a result of a review officer's determination.  It is the equivalent of about $78 per week. 

• For the period 1 July 1999 to 30 June 2000 child support has been fixed at an annual rate of $4250 which is a weekly rate of a little over $81 per week. 

• For the period 1 July 2000 to 30 September 2000 child support has been assessed using historical taxable income figures at the rate of around about $68 per week. 

The father has brought the application before the court, seeking to reduce his liability for child support from the date described as "September 1998", which for convenience I will take as 1 September 1998.  He wishes to reduce his liability to $150 per month, which is the equivalent of $34.50 per week.  In the one year from 1 September 1998 to 31 August 1999 that would have the effect of reducing the child support payable in approximate terms from $4120 down to $1800, a saving of about $2320 to the father.  He wishes to have that rate continue until he obtains full-time employment, which is not in the foreseeable future.  The mother opposes the application and seeks to have it dismissed. 

The unusual circumstances of the case are that the father has an acknowledged limited earning capacity due to an amputation of his lower left leg and continued complications.  The injury was sustained in an accident in 1992 for which he has been compensated.  The issue brought into focus by this case is the extent to which the compensation should be considered in determining his capacity to pay child support. 

The father is a cabinet maker and a swimming instructor by occupation, but his unchallenged evidence is that he can no longer carry out his trade as a cabinet maker because it requires long periods of standing and he does not have the capacity now to stand for long periods.  He says that his work as a swimming instructor is limited because the chemicals in the pool aggravate his wounds, particularly ulcers.

The father is presently between jobs.  He was teaching swimming part-time at the Armadale Swimming Academy and earning in the vicinity of $200 a week, and he then applied for a job at the Royal South Yarra Tennis Club.  Upon learning of his application his employers at Armadale terminated his employment.  He has not yet heard from the Royal South Yarra Tennis Club as to whether or not they will employ him.  He expresses an anxiety to work and an anxiety to support his children. 

The father has formed a new relationship of recent years and lives with H, whom he describes as his fiance.  She teaches horse-riding to disabled children.  

In anticipation of the acquisition of compensation, a property was purchased at Bulla which was suitable to use for horse-riding purposes.  It cost, including stamp duties and legal fees, about $190,000, and this money was advanced by the husband's mother.  The property was registered as to nine-tenths in the name of the husband and as to one-tenth in the name of H.  A house was subsequently erected upon the property that is as yet unfinished.  It cost $134,000 and that money was borrowed, as to $120,000 jointly by the husband and H from a bank, and as to $14,000 solely by H.  The current value of the improved property is not known.

In October last year the husband received $215,000, being the balance of his injury claim by way of WorkCare payment.  He applied $190,000 of that in reduction of the debt to his mother and the balance was spent on sundry personal debts.  I am satisfied that it was appropriately dissipated without any element of personal indulgence on behalf of the husband. 

He says he cannot afford to pay child support beyond the offer that he has made of $150 a month.  His life is financed to a large degree by H, who is on a package earning about $36,000 a year.  She is paying off the mortgage requirements of the parties which are running at around about $14,000 a year, and she is helping to support him.

The mother's position is quite parlous and she needs every cent she can get to help support the children.  She has no capital base.  She is earning from personal exertion $450 a week.  She is in a relationship with a man who earns some $42,000 gross income. 

The husband says to me "I cannot afford to pay child support", and I complete the sentence by adding, "and keep the house". 

This is an application for a departure from administrative assessment of child support. It is governed by s 117 of the Child Support (Assessment) Act. If I am satisfied that one or more of the grounds for departure exist, and that it is just and equitable as regards the children, the carer entitled to the child support and the liable parent, and otherwise proper to make an order under Division 4 of Part 7 of the Child Support (Assessment) Act, I may make the order. 

It is said that, having regard to the income earning capacity, property and financial resources of the husband, the administrative assessment of child support in this case at about $80 a week has resulted in an unjust and inequitable determination of the level of financial support.  The husband says he is a man with a mortgage, an equity in a small property, a health problem and very limited earning capacity.  In those circumstances he says his obligation to pay child support ought be limited to that which he offers. 

The obligation to pay child support is defined by ss 3, 4 and 114 of the Child Support (Assessment) Act.  It is an obligation to pay, but only to the extent that the payer can afford to do so, and has a priority over all commitments other than commitments necessary for self support and the support of others to whom there is a duty to support.  In this case there is no such person.  The children are to share in changes in the standard of living of both their parents whether or not they are living with them.  The children are to have their proper needs met from reasonable and adequate shares in the income earning capacity, property and financial resources of both of their parents. 

The compensation package received by the husband was made up essentially of money to compensate for future economic loss.  The nature of the compensation paid in this case is unknown because it was done by way of settlement.  Whether it was based on actual economic loss or based on a table arrangement in accordance with the provisions of the Workers' Compensation Act 1958 (Vic) is not clear.  But essentially a workers' compensation payment is an economic loss payment, and without that economic loss these children could clearly have been expected to share in the bounty of their father as he earned his income on a weekly basis, and to have their child support paid. 

Rather than earning his income on a weekly basis the father has had it paid up front by way of compensation.  He has utilised that money to acquire an equity in the farm property.  The issues as I perceive them are whether, in those circumstances, the application of the capital was a commitment necessary to enable him to support himself, and whether, having applied the money in that manner, an assessment based on an artificially created income which takes into account not only actual income but also deemed income for which he has already been compensated has resulted in an unjust and inequitable determination of the level of financial support.

The husband would have it, as I understand his case, that the horse having bolted it is a bit late to close the stable door.  He has bought the farm and he does not have the wherewithal readily to pay the shortfall in child support because his capital is otherwise tied up.  As attractive as that submission is I do not think that it meets the criteria of the legislation, which is that the children have their needs met from the reasonable and adequate shares of income earning capacity, property and financial resources of both parents, and that the parents should share equitably in the support of their children. 

In this case the husband has had available to him in anticipation and in actuality, sufficient capital in my view to meet the rather modest child support obligation which is about $40 per week per child.  Spread over the entirety of the future lives of these children, at that rate of about $2000 per child per year, there is only another $40,000 in child support to be paid. 

The husband has received $215,000 in compensation within the last two years. Setting aside 20 per cent of that as a fund upon which child support could be drawn down would have been adequate to have met his obligations for child support and still have left a sum to place a significant deposit to help acquire an appropriate piece of land. In the circumstances I am not satisfied of the existence of a s 117(2) ground and in those circumstances the application is dismissed.

Costs
This is a case in which I would perceive it is appropriate that the costs follow the event.  Having regard to the fact that the application has been wholly unsuccessful, and having regard to the relative financial position of both of the parties, I propose to fix the costs in the sum of $1000.  The formal orders of the Court will be as follows:

1. The Form 63 filed 28 June 1999 be dismissed;

2. The husband to pay $1000 towards the wife's costs;

3. The parties attend confidential counselling with a view to resolving their differences concerning issues of parenting responsibility.

I certify that this and the preceding 4 pages
is a true copy of the reasons for judgment
herein of the Honourable Justice Kay
The 7th day of September 1999

Associate: Elizabeth Hore

CHILD SUPPORT - DEPARTURE - WORKCARE PAYMENT SPENT ON ACQUIRING HOUSE - WHETHER LIABILITY EXISTS WHERE NO INCOME